Silicon Insider: Faking It, CEO Style

CEOs are faking it. Bless them -- and pity them -- for doing so.

An interesting wire story this week quoted Robert Sutton, a Stanford management science and engineering professor, at an industry conference saying, "In just about every study I've ever seen … the amount of control a leader has over the company is exaggerated," adding, "If you look at these Fortune 500 companies where they get paid a fortune, they have the least impact."

In other words, crediting a CEO for a company's success or blaming him or her for its failure is fundamentally wrong because it assumes that the captain actually controls the rudder of the great corporate ship. The CEO is being mistakenly honored for directing actions and events for which he or she was only a marginally a participant.

As comforting as this sounds -- see, those big shots aren't the Masters of the Universe they think they are! -- I think it is fundamentally wrong. Having spent my professional career around CEOs, and having known just about every major figure in the high-tech world, I have no doubt that CEOs have a profound effect upon the fates of their companies. Not in detail: any CEO who attempts to micromanage every decision made by his employees is a damn fool and should be fired.

But in the big picture it is another matter. For 30 years I have watched strong, decisive, and thoughtful executives lead their companies to glory. And I've watched weak, indecisive and self-absorbed CEOs kill great companies large and small. Many of those successful companies had second-rate employees and products; and many of those dying or dead companies had terrific technologies and smart, hard-working workers and managers. In the first case, the CEO made the company and its employees better than they were, in the second, the CEO screwed the employees and the marketplace.

Intel and Apple Followed Different Leaders

As an example, consider Andrew Grove, who took a good company, Intel, and turned it into a great one -- all the while navigating a 20-year minefield that included vicious competition, an unpredictable technology, government investigations and a series of disastrous mistakes (the Pentium Bug, letting Motorola get ahead, etc.). Now compare him to John Sculley, who took a great company, Apple, with a great technology and market leadership and led it aimlessly around for a decade until it was a pathetic also-ran.

Were Intel employees that great? No, but they got better as time went on; partly because they got used to being winners and partly because Intel was able to attract ever-better talent (which may be the mistake people like Sutton make when investigating after the fact). And were Apple employees that lousy? On the contrary, they were some of the smartest people in Silicon Valley -- until demoralization and departures sapped their energies. The only real difference between the fading Apple of the Sculley era and the red-hot Apple of the second Jobs era two years later was the CEO.

Frankly, the counterexamples to Sutton's claim are everywhere. To my mind, the most powerful is that of the great return at HP, when an aged Bill Hewlett and Dave Packard returned to the company they founded (based on a single memo from a secretary!) and almost overnight restored it from a sclerotic, tired, over-bureaucratized old corporation to the fastest-growing big company in history -- all with the same people and (at the beginning, at least) the same products.

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