Wednesday, November 17, 2004

Leadership and fame

Fortune (Nov 2004) has an article by Nicholas Varchaver discussing how executives went from being virtually invisible to celebrity status back to being executives but remaining of significant reputational value.
  • Before Chrysler boss Lee Iacocca, the vast majority of corporate managers were virtually invisible, although entrepreneurs like John D. Rockefeller, Andrew Carnegie, Henry Ford, and Thomas Watson loomed large in American mythology.
  • In the 1950s the business of America may have been business, but that hardly conferred glamour on big corporations.
  • The antiestablishment mood of the '60s only made that image worse.
  • Then came the economic doldrums of the '70s. Charismatic and straight-talking, Iacocca was a star. All of a sudden, you couldn't turn on your television without seeing a CEO.
  • Still, in the early '80s managers remained hesitant to be too visible. As the '80s wore on, the tone would begin to change. The rise of high-tech companies was focusing attention on another group of leaders.
  • By the mid-1990s, CEOs were praised for their decisiveness when they instituted layoffs. Where once stocks had fallen after such announcements, now they climbed. Just hiring a celebrity CEO made a stock spike.
  • Today, buffeted by scandals and the restrictions of the Sarbanes-Oxley law, CEO charisma is almost a liability.

Yet the new restraint may not last long: to the outside world a CEO still embodies his company. A recent survey suggests that 50% of a corporation's reputation is attributable to that of its CEO. Stock prices still routinely rise and fall with the news of a CEO hiring or firing.

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