Started reading a very cool book, sharing my notes here.

Preface

• Boards think outside candidates are better than home-grown ones.

• CEO selection is a mystery similar to the Pope selection.

• Instead of looking for a person with the relevant experience, Boards are searching for someone with a “charisma” (that’s the whole topic of the book)

• [MK: if I hear the “think outside the box” term ever again, I’ll explode]

• Expectations of an external CEO: the ability to motivate and inspire employees (so far so good) and instil confidence in investors and analysts (not a con game, no way).

• The realities of the 21st century are that investors (being more concentrated) play a more active role in the company management (not governance!) than before. The reason? If the company underperforms – there’s no market for their shares.

• The pressure by the shareholders on the Boards to hold the CEO accountable thus disrupting the historically cosy relationship between the CEO and the Board.

• When the company underperforms, the Board replaces the CEO with an outsider without the taint of the organisational history. A star CEO can give boost to share price.

• Having prestige as #1 job profile requirement is a losing proposition.

• The external CEO search is secretive (not to spook analysts who can drive the stock price down) and is focused on the already small pool of high-profile candidates; “charisma” and “leadership” are prioritised over the concrete knowledge of the firm and its problems.

• This brings a different face, but the “more of the same” CEO.

• Exorbitant CEO compensation is linked to unrealistic Board expectations (because, of course, all the firm needs to succeed is a new CEO – the corporate saviour).

• Once the incoming CEO is finally thrown under the bus with ever-decreasing (but still lucrative) golden parachute, the search starts again; the long-term goals being sacrificed for short-term share price increases and a bunch of knowledgeable senior managers.

• [MK: Board’s betrayal is not uncommon, but for ousted CEOs/COOs/CFOs this is not the end of career.]

Observations

The Trusting Leadership Style

• [MK: this is the style I’ve practiced for as long as I remember myself]

• In a nutshell, put trust in good people and remove obstacles for them to do their job effectively.

• Unfortunately, this luck runs only for as long as you don’t do lots of fast/large acquisitions where the other firm’s culture [in this example – more command and control] can overwhelm yours.

Part 2.