Do CEOs Matter?
I've been meaning to link to the Atlantic's exploration of whether CEOs matter for awhile now. But I kept forgetting. And then I hadn't read it recently enough to remember what I wanted to say. Something about the toxic interaction of business porn and the narrative fallacy making us much more likely to remember stories of pivotal CEOs (Steve Jobs, Jack Welch) rather than average CEOs (Guy You've Never Heard Of, Woman Whose Name I Don't Know).
So things slipped. But whatever I was going to say, Mike Rorty's examination of whether CEOs are rewarded for the climate in which they operate (for luck, in other words) is much better, and he wrote his fresh today, and so I'll just link to him and consider the matter settled.
Deal?
By
Ezra Klein
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June 5, 2009; 3:00 PM ET
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Posted by: jwogdn | June 5, 2009 3:45 PM | Report abuse
You lost me at the strange delusion that Jack Welch was pivotal--assuming, of course, you mean "pivotal" in a positive sense.
Now, if your list of pivotal CEOs is, say, Michael Eisner, Jack Welch, John Sculley, Angelo Mozillo, Carly Fiorina, Jimmy Cayne, and the guys who ran Penn Central so well it became Amtrak, then you have a point--but then we have to ask why Jobs is on the list.
Posted by: klhoughton | June 5, 2009 4:33 PM | Report abuse
CEO's are a lot like QB's: while their singular value is difficult to discern from the team, their decisions have greater impact on the overall outcome.
Posted by: BeatKing11 | June 6, 2009 12:11 PM | Report abuse
klhoughton:
Jobs is on the list because his decisions in the 80s cost Apple Microsoft's position in the OS market.
Jobs took the view that he was a visionary who would transform the world. Users, OTOH, were mudsloggers who would whose role was to pay high prices for the pearls Apple dangled before them.
He failed to realize the overwhelming effect of network externalities on OS market position. This had a decisive effect on what followed.
He charged too much. To the bean counters a computer was a computer. This constrained market share.
Market share was EVERYTHING, because software developers went where the market was, and a computer is useful only if the software that runs on it is useful. Apple's superior graphics got it niche markets, but that was all.
Also, there is great pressure to use what everyone else is using.
He tied the Apple OS to Apple hardware, which had no expansion slots. His vision called for the computer to be a small desktop appliance like a telephone, and accommodating slots would have consumed desk space. So, there was no aftermarket of board makers to fill gaps in the Apple product line; if you couldn't get it from Apple, you couldn't get it
Summary: had Jobs, like Gates, ignored the hardware side, ported the OS to Intel, and cut prices, Apple would today have Microsoft's OS market share. Jobs had great flair but a flawed strategy. Perhaps he has learned.
Posted by: student16 | June 7, 2009 11:44 AM | Report abuse
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I am not sure that CEO's matter much but I think having one big owner matters a lot. Without one big owner management owns the company and run the company more for management's benefit than for stock holder's benefit. Big owners tend to have a long term interest in the company.