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Originally Posted by Kimmykim
I disagree with that statement, and I'm sure there are plenty of books that would disagree as well. I used to be in the furniture business and at one point the CEO of the largest furniture manufacturer on the planet was fired, after basically bankrupting the company. Definitely a celebrity CEO within the business.
His next job was as the CEO of the largest mattress manufacturer in the world. At the time we all laughed and the phrase, "your next job will be inversely proportional to how badly you fucked up you last one"...
But three years later this CEO had doubled the revenues, nearly tripled the net profit of the mattress company, and was certainly having the last laugh.
Hiring a CEO for a large company requires a knowledge of much, much more than just how your particular company runs. CEO's should be knowledgeable about many things like banking, leverage, mergers and acquisitions, dressing up a company for a sale, etc.
They don't necessarily even need to know that much about your business per se, as they do about how business itself works.
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the point of the referrence to celebrity CEO's was made in the context of growing a successful business over time - i.e. 15-30-100 years. in that respect celebrity CEO's fail everytime. Lee Iacocca for example did some great things in a couple short years and was the typical "celebrity CEO" driven by ego and selfish, narcissistic needs and not driven by what is truly in the best interest of the company over the long term.
The second half of his tenure put the company on a downhill slide from which it never recovered, largely due to his own unchecked ego and undisciplined behavior.
they were not talking about the average company. they were talking about companies that had existed for 30-50-100 years that had made significant transitions from "good to great" which they measured as being a company whos growth was flat for 15 years and then made a clear transition where they then continuously beat the stockmarket by 3 or more times for at least 15 years.
another conclusion of the study is that there is no relative connection between executive compensation and the success of the company during their tenure. people who genuinely care about the company, are driven to do whats in the best interest of the company for the sake of creating and being a part of something great. people who care about money *first* are typically selfish people putting their own needs before those of the company and making decisions based on what will make them look best in the short term, rather than what will be the best thing for the company in the long term... regardless of whether or not they recieve recognition for it or not.