17 May 2015

Fashioning a CEO Succession

Diane von Furstenberg
Diane von Furstenberg finally found her successor.  Tomorrow Paola Riva takes over as the first CEO other than Diane to run her fashion empire.  But why did it take her so long and is he the right guy?

Ms. Furstenberg describes her attraction to Mr. Riva.  "When I asked - why do you want to do this?" she inquired.  Apparently he responded: "First, because I love you, the person.  Second, because the potential of your brand is unbelievable.  And third, because you are a private company."

Perhaps the fashion industry is different than most, but proclaiming your love for the founder probably is tricky position to stake out for a successor CEO.  The first time he decides to make a change that Diane is not in favor of, the love affair will end.

While I am not in the business of predicting the future, my bet is that this will turn out to be a disastrous succession.  Diane selected someone she is comfortable with.  The industry is changing drastically and this business will need to undergo some drastic changes.  Success will require leaving the past behind.  Is Mr. Riva ready?

09 April 2015

Zynga's Founder Rebound

Mark Pincus has joined the growing list of founders returning to the helm replacing Don Mattrick originally hired in 2013 to replace Pincus.

As is often the case with a failed transition, the abrupt change in leadership was noted to be a setback for the company, according to a New York Times article of 8 April 2015.  In an interview, Mr. Pincus said that Mattrick was not fired, but the two agreed that it was time for Mr. Pincus to return.  Do you think Mattrick actually had a choice in this decision?

Although not visible in the office the past few years, Pincus apparently has seagulled in a bit leaving his mark, "occasionally emailing staff with his thoughts" according to the Times article.  Certainly this was not helpful for Don during his short time there.

The company's finances worsened under Mattrick.  Revenue is down from its high in 2012 resulting in a more than $200 million loss last year.  Apparently, employee turnover has also been rampant.  Interestingly, it appears that Mattrick was not a metrics guy, something that Pincus is much more focused on.

It certainly sounds like we can chalk this up to founder transition misfire.

03 April 2015

Founder's Family Joins Fray to Make Employee Uncomfortable

Julie Horvath
We've all read about how difficult it is for a woman to navigate the Silicon Valley good-ole-boy culture.  So it won't surprise you to see Julie Horvath, since gone from GitHub, describe in detail how she was impacted. But it wasn't just with the founder, or even the employees of GitHub that Julie had her issues. Apparently, according to the Business Insider, she was also harassed and even threatened by the wife of one of the co-founders of GitHub.  According to their reports, the founder's wife interrogated Horvath and suggested that she take certain actions that were antagonistic to Horvath.  In an interview published in TechCrunch, she stated her allegations about the founder's wife, who was not identified:

... the wife went on to claim that she was responsible for hires at GitHub, and asked Horvath to explain to her what she was working on. The wife also claimed to employ “spies” inside of GitHub, and claimed to be able to, again according to Horvath, read GitHub employees’ private chat-room logs, which only employees are supposed to have access to.

Apparently now, that Co-founder has been put on leave and according to a post of the GitHub blog, the co-founder's wife has been banned from the company's offices.

Horvath left the company in the midst of this episode.  She claimed an unrequited love professed by another male GitHub employee caused her code to be ripped from certain projects.  But her complaints about this episode seem to exacerbate her HR issues internally.  This combination of inappropriate behavior as well as family involvement caused an environment in which Horvath grew uncomfortable.  

The company said it is hiring an experienced HR resource to avoid this type of issue in the future.

Horvath left to Start Passion Projects, a initiative intended to strengthen the support network for women who may be experiencing similar things.

03 March 2015

Lululemon founder to leave board

Chip Wilson is finally quitting the board of directors of the yoga wear retailer.  We think its about time!
"I now believe the company has returned to the core values that made it great," he said in a statement.Wilson, who founded Lululemon in 1998, withdrew from day-to-day management in early 2012, and said in December 2013 he was stepping down as chairman. But he stayed on as a director.  
Conveniently, Wilson boomeranged back to take a conveniently took on more active role in operations in spring 2013, after Lululemon issued a high-profile recall of its signature yoga pants following complaints they were too see-through. The recall led to the departures of top executives and a public relations headache. In December 2013, the company named a new chief executive officer, Laurent Potdevin. As is often the case with founders who have stayed too close too long, problems were compounded when Wilson said fabric in some pants was not holding up because "some women's bodies just actually don't work" for Lululemon's clothing. Backpedalling, Wilson later said he was "sad for the repercussions of his actions." Tensions remained, with Wilson lashing out last June, saying the new chairman and another director were too focused on short-term growth.
"We believe Mr. Wilson's departure solidifies stability of the leadershipteam going forward, and lessens tension behind decision making and voting power," Stifel equity analyst Jim Duffy said in a research note.
"Since the Advent announcement in late summer, infighting seems to have calmed, likely in an effort to turn around public perception of the brand," said Duffy.

25 January 2015

Is Starbucks really effecting a Try Before You Buy

This morning's article about Starbucks morphing into a tech company includes an interesting approach to hiring Kevin Johnson, former CEO of Juniper Networks.  Sure sounds like Starbucks is bucking the trend of Apple Pay and trying to establish themselves as an intermediary in the electronic payment world.  I'm not so sure I believe this is a good move on Starbucks behalf.  Coffee house business, yes?  Fast food emporium, probably. Electronic payments business, sounds like a weird product line extension?  Maybe Oracle will sell them Java?  That might make some sense since  Oracle has done little to take it forward.  Not giving it much more attention than a coffee klatch.
Kevin Johnson, former CEO of Juniper Networks

What I do think is a good idea is the approach to hiring Kevin as COO and trying out how this works before installing him as CEO.  Starbucks tried the caffinated approach to replacing Howard Schultz before and the jolt was too much for the company to digest. Now approaching this transition as a try before your buy, may be just the recipe for Starbucks next new offering.

02 January 2015

Several High Profile Founder Oustings Reviewed

It's always interesting press when a high profile founder is removed from his or her role.  A recent Inc. Magazine story,  7 Founders Pushed Out of Their Companies, profiled some of the more notorious transitions.There are numerous details behind the scenes that might paint a more complete story of what really happened.  Most of us only know the headlines.  The story is subheadlined:  Why a Founder Gets Ousted, but does little to tell us much about the circumstances.  In every case there is an intriguing sub-story that often doesn't get told due to agreements among the parties or the investors' desire to avoid bad publicity.  Wouldn't it be interesting to hear what really happened?

20 December 2014

A Thoughtful Transition

With all the abrupt departures, scandals, and founders with hurt feelings, it's nice every once in a while to identify a transition that seems to be well thought out and working.  Earlier this month, XO Group, Inc. announced the completion of a multi-year transition of its two founders, the husband and wife team of David Liu and Carley Roney, while Mike Stein, who joined the company a year and a half ago will remain President & CEO.  According to the company's own press release Liu, who will remain as Chairman of the Board stated: "Two years ago, the Board and I began to execute on a thoughtful, public, and methodical plan to implement a seamless executive transition, and today marks the final step."

This runway for the new CEO with the founders in place seems to have been just the prescription for XO which has continued its growth path despite a more than 2% drop in its stock price at the announcement earlier this week.

09 December 2014

Tinder Founder to be Replaced with "Seasoned" Exec

There are few things that an early stage founder growing at double digit pace can do to cause his board to replace him.  This is one!  According to news reports Tinder will replace its cofounder, Sean Rad just two years after he founded the dating site.  Apparently, Rad had been the subject of a controversy this year when a female executive sued Tinder and its parent company IAC alleging harassment and discrimination.

“We’re recruiting a new CEO to lead Tinder through this time of explosive growth and expansion, adding world-class talent to the management team and allowing me to focus on Tinder’s product and brand,” Rad said in an e-mailed statement. “I look forward to working with the new CEO to realize Tinder’s massive potential.”

You don't actually believe that Rad is welcoming the new CEO with open arms, do you?  Not a chance.  And the new CEO will do herself good if she disposes with Rad altogether rather than let him lurk in the background undermining her ideas and authority.  I don't know Sean and he may be a very good and well meaning CEO/founder.  But after having his walking papers handed to him in such a public controversy, there really is no longer a place for him influencing the direction of the company in the future.  And his ability to work with a new CEO is certainly in question. We'll wait and see what plays out in this soap opera start-up drama.

30 November 2014

The Founder Plots a Coup ... that Backfires

Earlier this year, George Zimmer, the very public founder of Men's Warehouse, didn't like the way he looked, as he was unceremoniously terminated from his executive chairman of the board role with The Men's Warehouse.  Even Saturday Night Live found this termination newsworthy enough to parody him on one of its broadcasts.
Back in 2011 Zimmer was replaced by Doug Ewert, who then took on the role as CEO. His recent firing coincided with the company's acquisition of Maryland-based Jos. A Bank, after a back and forth battle over who would acquire whom.
Mr. Zimmer stayed on as executive director post this transition.  However, apparently he had difficulty accepting that he was no longer CEO. We know little about George's behavior prior to his termination from his role as a director.  However, from the reports of this event, we guess that he was not of much help to his successor.
According to the Board's written statement at the time of his termination, Zimmer refused to support the management team.  He demanded power to veto corporate decisions, including executive compensation.  In fact, some insiders have said that Zimmer tried to negotiate a sale of the company to a private equity group.  Zimmer shot back that they used this firing to silence his concerns.
Either way, this very public controversy reminds us that the role of the founder post termination is of critical importance to on-going corporate governance.  Simply changing titles without decisive agreement on roles and responsibilities is critical to the successor's function.  Couldn't The Men's Warehouse have done a better job for its management team by insulating them earlier from his divisive behavior?

07 October 2014

The New Culture at Apple - Circa Tim Cook

In 2011 I penned the blog posting below to Tim Cook as he took on the awesome task of following in the footsteps of Steve Jobs.  Based upon the current article in Business Week - Tim Cook Interview: The iPhone 6, the Apple Watch, and Remaking a Company's Culture - our wishes seem to have been fulfilled.  Tim is his own person.  While he respects the legacy he inherited and promotes the great traditions of Apple, he moves the company in a form that is true to his character and beliefs. Some of his actions are contrary to what Steve would have done.  Some are not.  But the performance proof is in the pudding.  My original blog post is below.

Reprinted from September 2011

An Open Letter to Tim Cook

Dear Tim,

Congratulations on your recent promotion to CEO at Apple.  Obviously, we are all concerned about what this implies about Steve's health.  However, as his hand picked successor we have all the confidence in the world in the potential of your tenure.

Last week we saw the press you generated from your initial interviews.  In those, we heard you say that "Apple would not change" under your leadership.  While that may be what your loyal Apple employees, shareholders and the press wanted to hear, it raises many concerns.

It's very difficult to be the successor of an "imperial CEO."  Just ask some of the high profile successors to Bill Gates, Phil Knight, Larry Page and a host of others.  As the returning CEO at Apple, Steve certainly generated superhuman results, commanded a cult-like following, changed the course of consumer behavior, and in doing so resurrected your company from the ashes into one of today's most valuable companies. I'm sure this is a legacy you would like to perpetuate.  But if I were going to give you any advice as you take on your new role, it is BE YOURSELF!  Don't try to live in someone else's shoes.  Be authentic.  Even if it means changing the way things are done at Apple.

Steve Jobs is a once in a century phenomenon.  Perhaps history will record him in the same league as Einstein, Ford, Ben Franklin, or Edison.  You are not Steve Jobs.  So don't try to be.  Tim, you have much to bring to Apple.  You have been the behind the scenes architect of some of the most important parts of Apple's success.  But I fear that if you try to perpetuate Jobs-ian cult-like status you will fall flat on your face.

Being yourself will require changes that Steve would not have made.  Make them.  Be sure they are thoughtful and take into account the expected reaction from the loyal Appleonians.  Start with "Why".  Make sure the employee ranks, customers, and even the press understand your deep feelings for the changes and then proceed.

Don't expect immediate gratification.  In fact expect the opposite.  Human nature abhors change.  Most of your constituents will likely oppose your changes.  Be patient.  If you are as smart as you appear, the changes you make will be for the good.  Keep the faith; don't back down.

Apple is an important American icon, especially in this fragile economy.  Finding ways to cause Apple to grow and prosper is more important than ever.  Steve hand picked you for this job.  He probably was right.  Don't let us down.