Where I grew up , our elders used to advise us that we should never hold a tiger’s tail . The story is that if you do catch hold of a tiger’s tail – you will have to round and round with the tiger pretty much for ever . People will cheer for you as long as you don’t let go – the moment you let go , people will cheer even more because they get to watch the tiger eat you .
Whenever a big company CEO steps down, and I start reading the commentary in press and social media – I fondly remember the proverbial tiger and its tail .
Look at Steve Ballmer . He grew the company’s revenue and profit , yet the market cap nose dived and share price stopped swinging up . And now, the world wants Bill Gates to come back and do his magic . No one particularly worries about trivial thoughts like “if Gates indeed had a bright idea, he could have implemented it at MS any time Ballmer has been CEO”. Personally , I think the world needs Gates to continue his humanitarian pursuits way more than running MS . But I digress, the point is – Ballmer held the tiger’s tail and no glory came with it .
Look at IBM – Sam Palmisano figured out that revenue didn’t matter all that much , investors just wanted steady growth in EPS . He boldly announced a plan for $20 EPS by 2015 . And he didn’t miss a beat . Then he retired, Rommety took over and continued down the path at a pace Palmisano set . And she did miss a couple of beats and voila – there she is holding the tiger’s tail . I hope she finds a few good ways to get the great company to grow again .
Then there is Apple . Steve Jobs took it to almost stratosphere and made it extremely highly valued . Three back to back successes with iPod , iPhone and iPad . And profit margins out of the world . Top line and bottom line in excellent shape . And then he passed the baton to Tim Cook . Cook didn’t miss a beat on operations – and company still has awesome financials . Yet, since the next iThingy hasn’t come yet – there he is holding the tiger’s tail too.
Pretty much the same story at HP, Intel and pretty much everywhere else . Michael Dell tried to avoid the tiger by going private – but lets see how that plays out .
It doesn’t matter whether the company is in good financial shape or bad . Everything that had an upward trend at any point has to keep going up – for ever . Not one thing , not some things , not majority of things – everything . Otherwise CEOs have to tell upfront what exactly will go up – and then they usually get a pass for everything else . But then if they slip on the one thing they promised will go up – tiger eats them immediately . That is the deal .
The tiger will maul and eat them in public – not in some closed room . And the public that watches them will be liberal with unsolicited advice throughout the process – for ever . No breaks – no time outs .
With this well known background , I am amazed how many people still raise their hands to be counted when a CEO search is going on . More power to them !
One thought on “Holding a tiger’s tail”
Vijay, It’s simple ! the answer to WHY ?
1) “CEO Compensation (Base & Stock Options) when employed
2) Golden Parachute when “mauled by Tiger” 🙂
3) (Assuming 1 & 2 is not good enough to Retire) —> Worst case baseline is set for future jobs (at least as VP / EVP … where failure experience became asset for next employer)