Wednesday, July 28, 2010

A Tale of Two CEOs

Recently, there have been two very good examples of the perceived importance of CEOs: Steve Jobs' dealing of the iPhone 4's antenna issues (not to mention the way he has turned around Apple since he re-joined them over 10 years ago) and Tony Hayward's imminent departure from BP are two examples that seem to suggest that a CEOs actions can make or break a company. While the example of Jobs is clearly that of a CEO having a positive influence and Hayward's is an example of the negative influence of a CEO, they both suggest that a single person, at the top of a company, can have a disproportionate impact. The question that then arises is - is this true or not? Is Apple's success due to Steve Jobs? Is BP's failure Hayward's fault?

The truth is that it is impossible to say how much of a company's situation (positive or negative) can be attributed to factors associated with its CEO. Is a company's success attributable to its CEO or merely a result of circumstances? While, for obvious reasons, it should be impossible to conclude how much of a company's situation is directly the result of a CEO's actions, it seems that everybody has concluded that the role of a CEO is of paramount importance - the public, which has been demanding Hayward's head ever since the spill begun; the boards that decide to pay CEOs vast amounts of money; and shareholders who often make investment decisions based on management teams.

The importance of a good CEO and management team is undeniable but what is often ignored is that successes (or failures) that are sometimes attributed to the company's leader may simply be a result of context rather than personality. Will BP be better able to clean up the Gulf and its image now that Hayworth is no longer there? Are people willing to buy the iPhone 4 in spite of its call-reception problems solely because Jobs says that it is not that big of an issue? I, for one, am not so sure...


  1. With regards to the vote on whether Hayward should go, in my opinion his situation is untenable. Throughout this crisis, BPs response has been undermined by Haywards gaffes and reluctance to lay the responsibility at failures within his own company which I am afraid extends to their procurement of sub contractors- a classic case of slopey shoulders. In this instance the CEO had a magnificent effect on how BP was being viewed in the wider public with their share price tumbling after each of these public gaffes. Surely in this context his personality did not fit in with the image BP would wish to portray?

  2. I would agree that Hayward is unable to continue his position, especially in light of his PR gaffes. However I would be interested to hear the other side of the story to understand the positive impact that Hayward brought to BP - he was an employee there for 25+ years and was recently praised for his safety efforts. While the oil spill is undoubtedly a catastrophe, we would do well to remember that Hayward, as a CEO, was put in a near impossible situation that few would come through unscathed.

  3. I'm sure his wage packet and pension completely justify the fine margins he his operating under.Using a sports analogy, you are only as good as your last game. For how long had this catastrophe been building? Complacency had obviously crept in and this was clearly manifested in his response. His gaffes were clearly freudian slips and the wider public picked up on this.Having said that I don't doubt others would have acted in the same way but you just dont play with fire or you going to get burned. Unfortunately on this occasion he wasn't SLICK enough.