Thursday, March 22, 2012

The Reason CEOs Fail: An Update

There’s a classic article called “Why CEOs Fail,” that first appeared in FORTUNE magazine in 1999. The authors reported that it wasn’t lack of charisma or the “vision thing” that brought down smart, powerful CEOs. Seventy percent of the time, it was simply bad execution.

The article is still relevant today, because CEO failures are even more visible than they were 13 years ago — and in high definition. Last year alone, the CEOs of BP, Hewlett-Packard, Burger King, Bank of New York Mellon and Yahoo were unceremoniously shown the door for failures that — in addition to lackluster execution — also included poor communications skills, an abrasive management style and the wholesale defection of unhappy executives.

Execution is as critical as ever, in and of itself, but today we also have transparency to deal with … no matter what the level. The CEO is communicating with his every move and — because of the open window into our business that has been enabled by the Internet — stakeholders are learning about poor CEO execution faster. Thus, more is at stake than ever before; and the need to vet CEO choices, during the interview process, is greater also.

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