Steve,
Agreed, an MBA does does not assure success as a CEO, but it indicatates the aspiration. Given the number of aspirants to be CEO’s, and the relatively unchallenging body of knowledge required to be a CEO, there is no shortage of capable potential CEO’s out there. Talent and drive are not rare comodities. What I find surprising, and perplexing are examples where boards and CEOs do not appear to be grooming successor CEOs. This would appear to me to be part of their duty to assure the future of the company. An example would be SAFECO insurance. In 2001 after a period of losses they hired as CEO an outside insurance industry executive, who brought in a few of his own people and they promptly turned the company around by divesting recent acquisitions that had not worked out. Five years later this CEO departs with a golden handshake for a good performance. His chosen replacement was a successful CEO in the energy industry, who never spent a day in the insurance industry. They touted her leadership and assured everyone that one of the board members would take her under his wing for OJT and everything would be fine. Just looking at the stock price, it went up about 18% and is now back down about 18% below where it was when the new CEO took over in Jan. 2006. No disaster, but not a great performance compared to the steady rise with her insurance industry expert predicessor at the helm. I am sure that her defenders will point to market forces beyond her control, they always do when stocks go down, but fail to mention these forces when markets go up. SAFECO had had an infusion of new blood with the new 2001 team that was such a success. These folks had not had a chance to go stale. Why didn’t they groom one of these experts to become the next CEO? I don’t understand. The risk of a home groomed insurance expert compared to a proven CEO from an intirely different industry seems like a better bet to me.
Anyhow, my basic point is that CEOs are supposed to lead and motivate, in addition to setting the right course. A very large percentage of them are abusing our system and taking too much for themselves, because they can, regardless of perfomance. This is a demotivator for their employees. This is damaging to the public’s faith in our system. This abuse will be corrected in time, either by laws that will have bad unintended consequences, or by self policing. Greed is afoot, there will be no self policing. People free to act like pigs will act like pigs.
