Ceo brand and corporate success by bolaji okusaga

367 views

Published on

The CEO embodies the ideals and goals of the eneterprise. Little wonder then that Brands rise and fall based on the strength of the CEO brand.

Published in: Business, Technology
0 Comments
0 Likes
Statistics
Notes
  • Be the first to comment

  • Be the first to like this

No Downloads
Views
Total views
367
On SlideShare
0
From Embeds
0
Number of Embeds
1
Actions
Shares
0
Downloads
9
Comments
0
Likes
0
Embeds 0
No embeds

No notes for slide

Ceo brand and corporate success by bolaji okusaga

  1. 1. THE CEO BRAND AND CORPORATE SUCCESS By BolajiOkusaga In the normal context, a company as corporate citizen should have a life, an essence and a personality, which will distinguish it from other companies which offer similar products or service. However, most companies as corporate citizens take the definition of their life, character and personality from individuals who are either founders or operators. Indeed, companies are defined by the character and personalities of their founders or those who run them. This is so because, the values, the philosophies and the characters of these individuals usually rub-off on these entities and determine their success or failures. Hence, it is difficult to think about Apple without thinking of Steve Jobs, or Microsoft without Bill Gates or Virgin without Richard Branson or South-West Airlines without Herb Kelleher or General Electric without Jack Welch. These individuals function as the lifeblood of their enterprises in such a way that the company takes its functional existence from these eponymous personalities. In other words, there is a kind of symbiotic relationship between corporate brands and the personality brands of their principals. The pertinent question to ask then is: what is the significant correlation between the success of a Corporate Brand and the personality of its CEO? The obvious answer is: the personality of the CEO either as a change agent, a deal maker, a quiet and conservative builder, a hardline technocrat or a people person, will have an impact on the direction of the company he / she runs. Since the buck stops on the CEOs table, the direction of the enterprise is certain to be shaped by his/her temperament. Cases abound of enterprises that were stipe in legacy, losing market share and tottering on the brink of collapse. However, the arrival of a CEO on the scene turned-around the fortunes of the company. In this instance, a CEO does not just make the company to rise above water;he also rethinks the route to market – either by selling under-performing units of a company, acquiring anothereither in similar industry or a complementary one. The CEO’s managerial ingenuity can further be demonstrated by vertically or horizontally integrating an acquired company into the old either to gain scale and scope advantage, overcome legacy issues, move to primary production from the secondary market in order to leverage the value chain approach to resolving critical supply and access to market hurdles. Aside from the strategic focus enumerated, the CEO may also take a soft or human approach to waking up a dead enterprise – either aligning a demotivated work-force, rousing them to rebuilding the enterprise through a better management of soft-issues.
  2. 2. From Roberto Goizueta in Coca Cola to Lou Gerstner at IBM, CEO’s as eponymous characters are critical factors in corporate success. This can be attributed to the fact that not only does a CEO carry the burden of change and progress at critical times in the life of an enterprise, the man at the driver’s seat determines how the company he drives travels. He / She may decide to toethe line of tradition and maintain the well-travelled road as Tom Cook is doing at Apple with the demise of Steve Jobs. Or at other times may decide to make a U-turn like Jack Welch who shut down the white-goods side of GE because it could no longer compete with the Asian white-goods market. Jack Welch upon taking over from Reg Jones in 1981 embarked on a number of reform measures. His first strategy was to either fix or sell any business within the conglomerate that was not playing either as number one or number two in its industry. The second was to refocus the enterprise by choosing to acquire companies in Broadcast and Finance Industries and integrating them into the operations of the erstwhile electrical and white-goods business. Welch prioritized the chemical plant, turbines, heavy-duty and medical equipment business by leveraging the GE heritage while acquiring strategic companies which were either competitors or had critical skills needed to consolidate GE’s market growth. The earnings of the business grew by well over a thousand percent before his exit in 2001. Furthermore, beyond following tradition or departing from tradition, a CEO may decide to do a mix of both in order to bring back the spark in his / her business—Robert Goizueta did just that at Coca-Cola.Goizuieta, a Cuban-American, arrived as CEO of the Coca-Cola Company in 1981 at a time when the company’s mystique had begun to wane as Coke was fast losing its marketshare to rival Pepsi. Immediately he got on the job, Goizuieta made a detour from legacy byradically re-inventing the brand portfolios of the Coca-Cola Company, essentially focusing on consumer preferences such as the need for less sugar, a demand of the emerging health conscious consumer, positioning the diet range for this class of people. He toyed with the agelong formula of Coke, making a departure from what was the originalmix by John Pemberton. This experiment immediately raised a quest for the original coke taste, which he later brought back as Coke Classic. This action drove sales northward and created exceptional shareholder value never before witnessed in Coca-Cola’s contemporary history. Aside from adopting a mix of tradition and inventiveness, Goizuieta’s witty personality and grass to grace story, having arrived in America as a Cuban immigrant and rising to the top of corporate America also captured the popular imagination and broke down a lot of resistance to his corporate moves while at the CEO suite at Coca-cola. Bringing home the point I am making on the relationship between the personality of the CEO and corporate success, let us look at the story of Guaranty Trust Bank in Nigeria. A bank started by two young turks seeking to change the banking landscape in Nigeria.FolaAdeola and TayoAdenirokun before venturing into owning a bank at the behest of the liberalization of the
  3. 3. Banking and Financial Services Industry by the General Ibrahim Babangida regime, had jointly owned a barbing saloon and had used this experiment to hone their skills as entrepreneurs as regards what a consumer actually desires from a player in the service industry. While running the barbing saloon, they discovered that central to the success of any service business, is the ability to create a differentiated service experience. Based on their antecedents as professional bankers, who had risen through the ranks, they transferred their insightsfrom running a barbing saloon into the banking industry. Upon winning a banking license, they immediately raised service experience, a value-added strategy that most bankers usually avoid in order to save cost and created a value proposition which differentiated Guaranty Trust from its competitors. Looking at the drab way in which service was delivered in the banking halls of the old order, Fola and Tayofrom the outset, resolved to build banking halls with grandiloquent facades and boutique interior designs which offered comfort and style and beyond ambience, also elevated customer experience using people and technology. This apparently attracted the young and young at heart. The strategy paid off because it immediately won converts to this “new generation” banking style and it created exceptional shareholder value in the process. It is noteworthy that despite Fola and Tayo’s exit from the management of the Bank, this novel tradition continues today with the result being the creation of a huge banking franchise that ranks as one of the most efficient bank in the Nigerian banking industry in terms of cost to income ratio and return on equity, easily defeating the earlier held notion that a value-added strategy such as the like pursued by Tayo and Fola will make a bank uncompetitive in terms of cost. That said, the magic at Guaranty Trust Bank did not just happen, it took the over-riding influence of FolaAdeola and TayoAdenirokun – two out-going and cosmopolitan individuals – who created a system which placed a premium on customer experience and pursued a strategy that elevated customer value and changed the way banking service is delivered. It did not take much for the magic at Guaranty Trust Bank to happen; it took the personalities of the founders and successive CEO’s of the enterprise. THE CORPORATE PERSONALITY - IS IT HUMAN OR INSTITUTIONAL? From the fore-going, a critical question arises: is the corporate personality human or institutional? This may appear to be a difficult question, but I will attempt an answer. a. Corporate Governance and the Institutional Route to Creating Value Corporate Governance often lays water-tight rules which prevent individuals from overpowering an enterprise. This perspective looks at an enterprise as institutional citizen which must be protect and seeks to create barriers which will mitigate the overpowering influence of
  4. 4. individual(s) over the enterprise, because such influence, when not exercised with a conscience, often-times corrupts a system and destroys shareholder value. Taking a cue from corporate history; with the movement of business from Laissez-faire attitudeat the advent of the industrial revolution, to the era of corporate citizenship which dictates a need for the operations of business to come under regulatory scrutiny and statutory contributions to society in the form of taxes to government, to the era of enlightened selfinterest, which gave rise to corporate philanthropy; to the era of Corporate Social Responsibility, which presupposes that because companies draw their profits from society, they must of necessity exercise a duty of care by giving back to society; and the most recent being the era of sustainability which preaches the need to ensure continuity of business by ensuring that the social, economic and technological environment in which businesses operate is not destroyed. Looking at developments through these various epochs, corporate historians discovered thatthe concentration of too much power in the hands of an individual in the quest at raising shareholder value may be counter-productive as such individual in exercising his discretion, if not checked by written corporate rules and the board which needs to exercise the needed oversights, may become power drunk or corrupt. Therefore, the thinking is that creating processes and procedures which defines the corporate direction of an institution as opposed to allowing the discretion of the CEO prevail all the time, is a better route to attaining year-on-year growth and stability of the enterprise. Hence, the widely held notion CEO’s as individualsoperating within the corporate context must operate within an institutional framework for corporate success. However, the problem with this approach when rigidly followed is that an enterprise may not be nimble and fast enough to re-invent itself in the face of changes within the operating environment. We have seen businesses such as IBM before Lou Gerstner and Apple before the comeback of Steve Jobs go under because of the rigid application of the Institutional approach. Let us look at the Apple story: Apple was founded by two young and ambitious geeks – Steve Jobs and Steve Wozniack - who wanted to put the computer on every table in America. Along the line, Apple needed venture capital to expand its operations and this gave rise to a need to have an institutional framework with a board at the head of the whole company’s structure. The board, aided by Steve Jobs himself, appointed a CEO, John Sculley, who had a responsibility to expand Apples product portfolio and market-share. Steve Jobs and John Sculley disagreed on a number of issues regarding Apples product and marketing strategy and given that John Sculley had garnered a lot of goodwill coming from his success as a President in charge of operations and marketing at Pepsi, the Apple board sided with John Sculleyand Steve Jobs had to exit from the business he founded.What followed Steve Jobs exit was years of near-misses and outright blunders by Apple which Sculley’s exit and a succession of other CEO’s could not
  5. 5. fix until the comeback of Steve Jobs himself in the mid 1990’s. And upon his arrival, the board agreed to take a back-seat and gave Steve Jobs a free hand to re-launch Apple’s success, leading to the creation of the world’s most valuable company before the death of Steve Jobs. b. The CEO’s Personality Being Synonymous with the Enterprise Beyond tight corporate governance, another school of thought believes that the CEO’s personality and the corporate personality should be subsumed in each other, in such a way that the CEO’s personality becomes the hallmark of the brand and business. Here the reference is Richard Branson and the Virgin brand and Donald Trump and the Trump Organisation. Both personalities define their enterprise and not just doing so, they continue to capture the popular imagination because of their maverick and unusual approach to business. Both personalities have grown their enterprise, surpassing expectations and creating exceptional shareholder value. However, one critical risk that dogs this approach is the key-man risk! A risk which comes as a result of placing so much premium on the discretion and ability of one human being at the expense of other variables which may catalyze corporate success. Hence the share price of such enterprise will react either positively or negatively to physical and intellectual as well as the psychological disposition and mortal existence of a personality while tying it pungently to the enterprises they run. Imagine what is today happening in Apple without Steve Jobs? Imagine how Samsung a company without an eponymous character and a charismatic CEO is stealing Apple’s fire and creating exceptional shareholder’s value at Apple’s expense? Imagine what the situation would have been like if Steve Jobs were to be alive? Striking a Balance – The Asian Example The scenario above shows that while the CEO has the power to create exceptional shareholder value, he or she also has the power to destroy value and given the need to keep value growing, organizations need to strike the right balance. Let’s look at the success of Asian companies like Toyota, Honda, Tata, Samsung, LG and Hyundai.Let’s consider the context in which these companies grew to become global powerhouses in their industries. It is glaring that a lot of these companies focused on building systems as opposed to promoting the CEO’s image. An example is Toyota’s focus on six sigma as part of its quality assurance and customer experience strategy; building automobile products that outperformed their American counterpart and not only dominating the American market and giving Detroit a run for its money but also conquering the world.
  6. 6. Another example is Samsung, a global Original Equipment Manufacturer, Mobile Phone and Electrical Appliance Company, which leveraged its access to cheap but skilled labour to create a scale and a scope advantage which its western competitors could not beat even with offshoring and outsourcing. Samsung built a learning organization, one that was receptive to changes within its external environment, adaptive to new trends and nimble and fast in its market rollout. It must be noted that one critical fact that cannot be controverted is that all the successes recorded by these Asian companies is that success cannot be traced to just one individual as opposed to the Hollywood styled CEO’s in corporate America, but rather to systems and processes with a usually unseen and oftentimes uncelebrated eponymous character working behind the scene and leading change, while embarking on an aggressive succession plan which leaves no room for the erosion of corporate value upon his or her exit. BolajiOkusaga is the CEO of the Quadrant Company, a Public Relations firm and can be reached at bolaji.okusaga@quadrantcompany.com

×