Today's CEOs are like "small ships in a turbulent sea - they have very minimal control over their destinies," says Jeffrey Garten, dean of the Yale School of Management and author of the recent The Mind of the CEO. The image of CEOs as mere mortals buffeted by forces they cannot harness - such as technology-driven globalization - contrasts sharply with the conventional view of corporate leaders as superstars. Lee Iacocca of Chrysler is the archetype of the flamboyant, old-school CEO, credited with bringing his company back from the dead with his unbending will.
Iacocca's steady hand is no longer enough to steer a company in today's choppy seas, where technology makes it possible for competitors to emerge almost overnight. Speed is the key asset in the global economy, yet CEOs still have to make correct decisions or face the consequences. In 1999, when Wall Street analysts were bubbling over learning software for kids, Mattel (MAT) CEO Jill Barad decided to buy the Learning Company (dossier). But the software firm began hemorrhaging money almost immediately, a problem Mattel hadn't predicted. Nine months later Barad moved on. "Leadership comes into question more quickly today," says Kenneth West, a senior consultant for corporate governance at TIAA-Cref and a board member of Motorola (MOT).
Then again, a CEO can't ponder big decisions too long for fear that a new competitor might get the upper hand. Recall how former Oracle (ORCL) executive Tom Seibel blindsided Oracle when he launched Seibel Systems, forcing the software giant to play catch-up. "There are so many more players in the game," says Garten.
CEOs can thank the formerly high-flying technology and Internet companies for putting them in this speed fix. As companies like eToys (ETYS) (now bankrupt) and Amazon.com (AMZN) grew at triple-digit rates, investors and corporate boards came to expect better results from their companies. "Venture capitalists have created a get-rich-quick philosophy that [has] penetrated the corporations," says Mike Hagan, CEO of VerticalNet. "It's like a baseball manager: You've got two years to get me to the playoffs; no more five-year plans." Former Maytag (MYG) CEO Lloyd Ward found out that the growth he envisioned for his Fortune 500 company wasn't enough to please investors. "I remember talking about 10 to 15 percent earnings growth, and there weren't many takers," says Ward, who lasted only 15 months as Maytag CEO before taking the helm at iMotors.
Tech and Net companies also put pressure on CEOs to rapidly improve stock prices. "I think there were a lot of people managing traditional companies that probably had more pressure that they put on themselves," says Neil Austrian, who is on the board of directors at several companies, including Office Depot. Austrian insists that no responsible board would expect to see an artificially high stock price. But CEO sackings often coincide with a sinking stock price. Last year after Office Depot's stock dropped from $11 to $6, the board fired then-CEO David Fuente. "That's what's distressing to me," says Tom Neff, chairman of the U.S. division of executive recruiting firm Spencer Stuart. "It really is too short-term-oriented, and it's certainly not very forgiving."
The faster you go, the more likely you are to crash. That's a lesson former Office Depot chief exec Fuente learned the hard way. He came aboard in 1986 shortly after Office Depot was founded as a single store in Fort Lauderdale, Fla. Initially a hands-on and inquisitive leader, Fuente led the company through a lengthy period of dazzling growth, turning it into the nation's premier office-supply chain. In 1997 Office Depot had $8.1 billion in sales and 641 outlets in 10 countries, including France and Colombia.
