Analysis and commentary on economic news, trends and issues, with an emphasis on Seattle and the Northwest.
September 10, 2013 at 10:45 AM
Mulally, Microsoft and the savior CEO
Some top institutional shareholders are reportedly pressuring Microsoft to put Alan Mulally on the short list of candidates to succeed Steve Ballmer as chief executive officer. This is sure to gladden some hearts in Seattle. Mulally was the one who got away. He was the beloved head of Boeing Commercial Airplanes who was passed over when the CEO position went to outsider Jim McNerney. If Mulally had become the head of Boeing, this narrative goes, “things might have been different.” As in, better for the Puget Sound region. Mulally left to run Ford Motor Co. with great success. Ford was the only one of the Big Three that didn’t require a federal bailout to survive.
This involves some selective history. Boeing moved its headquarters to Chicago in 2001 under then-CEO Phil Condit, who wanted a “neutral location.” It’s unlikely that Mulally, in 2005, would have reversed that decision. Mulally also saw the early development of the 787 Dreamliner, and it’s impossible to know if the airplane’s delays and troubles would have been avoided had he stayed with Boeing. It’s also impossible to know if he would have resisted pressure to move some Boeing work out of the region. Maybe so. Maybe not. McNerney is said to “dislike Seattle,” especially the unions. Whether that’s really true or not, Mulally likes Seattle and skillfully handled the United Auto Workers at Ford.
The deeper question is whether the skills of a successful, large-company chief executive translate to any company. Cars aren’t airplanes, but both Ford and Boeing are large manufacturing concerns. Yahoo’s Marissa Mayer was previously with Google. On the other hand, Lou Gerstner, famous turnaround artist of IBM, had been chief executive of RJR Nabisco, and had also worked for American Express and McKinsey & Co.
Gerstner, especially, reinforced the business-school fad of the 1990s of the celebrity CEO as savior. That such a creature not only had special moves and aptitudes that could work in any situation, but these could even be taught. But Gerstner was a rarity. More common was the case of C. Michael Armstrong, who enjoyed great success as chief of Hughes Electronics but crashed and burned when he took over AT&T in 1997. The stock price enjoyed a bump from Armstrong’s celebrity, but that was his last triumph. The complexities of the company’s troubles, badly executed strategy and finally the dot-com bust left Armstrong with ashes (but, of course, handsome compensation).
The consistently superior CEOs tend to be (co) founders (Henry Ford, George Merck, Bill Gates, Steve Jobs, Jeff Bezos), prodigies inside a single industry (Jamie Dimon) or longtime employees who know every hidey hole of a corporation’s history, culture and operations (Andy Grove, Howard Schultz, Jack Welch and the granddaddy of modern management, Alfred Sloan of General Motors).
Mulally has said he’s staying at Ford at least through the end of 2014. That would stretch Ballmer’s exit strategy. And there’s no guarantee that Mulally could wrestle to the mat Microsoft’s incredibly complex challenges.
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Today’s Econ Haiku:
BofA kicked out
Of the great DJIA
FYI, who cares?