Five business leaders who made spectacular career leaps
Wednesday, June 27, 2012/
Business leaders are often called on to lead things they don’t have a whole lot of experience in. But few make career shifts as dramatic as that being attempted by Don Voelte, the oil and gas veteran who was yesterday appointed to head Seven West Media.
He’s confident he’ll be alright, telling The Australian that “business is business”. He points out he’ll be surrounded by people with plenty of media experience to advise him, and the basic skills of decision-making apply across all industries.
It’s awfully confident for someone following in the footsteps of David Leckie, who’s often hailed as a visionary who took Channel 9 then Channel 7 to industry dominance. Whether Voelte is paid similar tributes upon his retirement remains to be seen. We wish him all the best, and in the meantime, here are the stories of some other leaders who made surprising career leaps.
Ahmed Fahour at Australia Post
Australia Post’s managing director and CEO Ahmed Fahour comes from a career in banking and consulting. Before joining the government-owned postal service in 2010, he was a senior executive at NAB and Citigroup.
How has Australia Post done under his watch? It is innovating. For one, it’s attempting to update bill-paying for the internet ages through the use of digital drop-boxes.
Last year, Australia Post halted four years of falling profits, making $241 million for the 2010-11 financial year. This was up from $90 million the year earlier.
The rise of online shopping means the postal service delivers more parcels than ever, but this isn’t a sector in which it has an absolute monopoly. For the first time in its history, Australia Post has to compete in a commercial environment, making Fahour’s appointment more suitable than it might seem at first glance.
Roger Corbett at Fairfax
A less successful story is Fairfax Media’s chairman Roger Corbett, who was CEO of Woolworths until 2006.
The chairman of Private Media, (which runs LeadingCompany), Eric Beecher, has accused Corbett of letting Fairfax die on his watch. Last week, Beecher said Corbett had, eight years ago when he was still a director at Fairfax, refused to entertain discussions on what the company should do if classified advertising moved online. This is exactly what has happened. Fairfax today is in a mess, announcing last week it was slashing 1,900 jobs, or 20% of its workforce.
To be sure, Corbett has been operating in a challenging industry facing rapid change. But if the rationale behind having an outsider head a company’s board is to inject fresh thinking and drive into a tired old strategy, Corbett has certainly failed. Fairfax has lost advertising market share to rivals online. Fairfax’s share price is currently 55 cents.
Jeff Kindler at Pfizer
Former McDonald’s vice president Jeff Kindler went from clogging arteries to selling medicine, and then resigned in humiliation as Pfizer’s stock sagged from a high of $49 to $17, vastly underperforming its rivals in the four-and-a-half years he led the company.
What went wrong at Pfizer?
A damning investigation conducted by Fortune magazine concluded Pfizer under Kindler was plagued by internal tension, ineffective decision-making, bad and manipulative advisers and muddled strategy.
This all came to the attention of the board when a number of Kindler’s subordinates revolted in 2011. The board called Kindler in to plead his case, and sided with the junior executives.
Louis Gerstner at IBM
But sometimes, an outsider is just what you need. In 1993, IBM hired Louis Gerstner as chairman and CEO. Gerstner had never worked at IBM, or even in the industry before. Instead he headed RJR Nabisco, a chocolate chip cookie manufacturer who is now owned by Kraft.
Between 1991 and 1993, IBM lost $US16 billion dollars, and was debating whether to file for bankruptcy. In only a few years, Gerstner banished such talk, increasing the market value of the company from less than $25 billion to $180 billion. Crucially, he refused to break up the company, which many had touted as a possible way to save the more profitable parts of the business. He would later describe this as the most crucial, but also the easiest decision he made while at IBM.
In his early days, Gerstner made a point of describing himself as an outsider there to kick-start the recovery. But ultimately, he said, the solutions had to come from IBM itself. He loosened the company’s white-tie corporate culture, and tried to foster creativity and initiative at the mainframe giant. Ultimately, the company would shift from focussing on the dwindling mainframe business and reinvent itself as a broader technical services company.
Scott Thompson at Yahoo
Scott Thompson wasn’t at Yahoo long. His tale is a cautionary one.
Before he became Yahoo’s CEO in January, he had been president at PayPal, the online payments company. When he joined Yahoo, many investors were dismayed. He had no experience in advertising, Yahoo’s primary source of revenue, and many doubted he had the experience and vision to rescue the ailing search company, that has for the past few years been eclipsed in almost every metric by Google.
Activist invester Dan Loeb, who’s the CEO of Third Point, a hedge fund with significant investment in Yahoo, did some digging into Thompson’s background. He found that Thompson did not hold a degree his company profile said he did (it said he had a degree in computer science, but in reality he’d only graduated with a degree in accounting). The board director responsible for Thompson’s hire has since resigned.
It’s been a shocking few months for Thompson, who revealed to his board in May that he has cancer. He has since stepped down as Yahoo CEO, to be replaced by interim CEO Ross Levinsohn, formerly an executive at News Corp.