Bill Gates is one in a million. Most founding CEOs eventually become a liability that can destroy shareholder value faster than you can say Bernie Ebbers. They're fine for a while, and then, without warning, they go bad on you. Why not just fire them? Good question, but it's not that simple. It almost never is.
For one thing, CEOs don't come with expiration dates stamped on their foreheads. They're kind of like coconuts. Just the other day I cracked one open and it was all moldy inside. On the outside it looked perfect. But coconuts are kind of hairy so it's hard to tell. This one must have had a tiny crack somewhere, so it rotted. Who knew?
Short of cracking their heads open with a hammer and chisel, how do you know if a founding CEO has gone bad? Well, it's up to the board of directors to make that determination. And therein lies the rub. Boards are notoriously squeamish about dumping what was once a nice, ripe executive in the corporate compost heap.
It's ironic, because hiring and firing the CEO is a board's primary function. Didn't know that? That's exactly my point. Boards are so ineffective at it that lots of folks are not even aware that it's their job.
Why is that, do you think? I don't know, but maybe some directors are rotten too. I'm just thinking out loud here, but you know what lots of ex-CEOs do? They become directors of other companies. Are you starting to see a pattern here?… Read more