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Anatomy of a CEO Failure

By Rob Enderle TechNewsWorld ECT News Network
Jun 15, 2015 9:50 AM PT

Much to Apple's dismay, I cover Apple events. One of the questions that frequently came up during its recent developer conference centered on Tim Cook. Was he becoming Steve Ballmer? The implication was that Steve was a failure at Microsoft, so the comparison didn't reflect well on Cook.

Anatomy of a CEO Failure

I think this idea is wrongheaded. Yes, Tim Cook's situation bears some similarity to Steve Ballmer's. However, while Ballmer did fail, Cook is succeeding, and I think a lot of this failure talk is simply the result of overset expectations, and the fact that he isn't and never will be Steve Jobs.

Given the similarities in their positions, and the fact that none of the usual causes for failure have been evident for either of them -- no affairs, no misuse of company funds, no excess focus on compensation or benefits, no lack of industry knowledge, no falsified credentials, and no signs that either man is an idiot -- why is Tim succeeding while Steve clearly didn't? I'll share some thoughts about that and go one step further by connecting the dots to Microsoft's Satya Nadella and HP's Meg Whitman.

I'll close with my product of the week: the only WiFi extender that I've ever actually gotten to work. (That's kind of a low bar, I know, but it tells you how much of this stuff is just crap.)

Setting the Stage

Both Tim Cook and Steve Ballmer lacked the ideal skill sets to run their respective companies. Tim's strengths are oriented more toward logistics and operations, and Steve excels at sales and problem-solving. Both spent most of their time as the designated No. 2 in their firms, doing things their bosses didn't want to do, which would tend to create skill sets that were the polar opposite of the persons they replaced.

In short, neither man had great odds of being successful. Both men worked their butts off, putting in long hours and pretty much living their companies, and both likely felt underappreciated for their efforts.

Jobs was far harsher than Gates was, and there are accounts of his abuses toward staff. Gates had a temper, but he considered Ballmer his best friend and should have been far more supportive as a result.

Jobs, on the other hand, reportedly was upset by Cook's early success while he was ill. He clearly set up Cook to fail, so that if he had been able to recover, he could replace him. After Jobs died, there was no confusion over Cook running the show. Because Gates remained a power in and around Microsoft, people deferred to him and often requested that Ballmer be replaced.

The Key Differences

Cook had to know that Jobs had set him up to fail, that he couldn't depend on any help from Jobs, and that folks outside the company were betting on him to fail. In addition I think Jobs' abuses drove the executive team together, much as an abusive parent often will drive the siblings together. Cook's team wraps around him in a protective layer.

For Gates, the environment was aggressively competitive. Given Ballmer's background, it was clear many of the senior folks felt they should have been given a shot at the CEO Job. In addition, when friends work for friends, they tend to give easy reviews -- and Ballmer likely stepped into the job feeling all he had to do was work hard.

So Cook stepped into the job knowing the odds and Jobs were against him, while Ballmer stepped into the job thinking it was not going to be that difficult.

Cook was armed for bear -- and with Jobs' death, the job actually was easier than he thought it would be. Plus, he had a ton of built-in support. Ballmer stepped into the job with the mistaken belief that it was going to be relatively easy, and the team that wanted him was gone. Even if the jobs had been equal, Cook had more resources behind him and was operating at a battle level of focus, while Ballmer was largely alone -- in fact, Gates was more of a liability than an asset -- and he didn't know he was at war until it was really too late to save his job.

Finally, Apple was in far better shape as a company. Granted, Google had emerged as a major competitor, replacing Microsoft, but it was a replacement -- not an addition. Ballmer was facing a customer satisfaction collapse, as a result of excessively focusing on enterprises and not users, and due to an effort to simplify pricing, which went horribly wrong.

Oh, and he was also under an antitrust cloud and at war with the EU right from the get-go. His only real personal mistake was trying to buy Yahoo, which actually was killed, but the effort cratered the stock so that it never recovered. That was kind of fascinating, in that the stock went down when the deal was announced but didn't recover when the deal was killed -- showcasing that the market effectively revalued the company. It's likely that also was due to the shift from being a popular consumer company to an enterprise product provider.

Wrapping Up: Whitman and Nadella

I've been on Meg Whitman's case for a while, because I think she is killing HP. However, as many have pointed out, it's correct that after four unsuccessful CEOs, the problem is less likely with Meg than with HP's board and CEO support in general, which actually makes what Ballmer had look damn good.

Apple is a great example that the support that surrounds a CEO is more important than the CEO's skill set. Cook was able to step into a job that he shouldn't have been successful in and make it work because his team had his back. Ballmer failed, and Whitman is failing because neither got enough support -- and this may be a cultural problem in both HP and Microsoft.

Satya Nadella has a far better skill set match, and people in Microsoft feel he is right for the job. In addition, Gates has been turned from a liability into an asset. Still, I expect some of the cultural problems in the firm remain, which could hurt Nadella's execution.

If Whitman can't find a way to get stronger support, then she'll leave HP a failure -- and folks will pillory her, much as they now do Fiorina, Hurd (who actually is doing a lot better at Oracle, giving weight to the support theory) and Apotheker.

One final thought: At WWDC, which normally is an all-male event, one woman stood on stage. I watched folks use this to comment on Apple's diversity problem. I would suggest when any company moves positively to address a problem like this that we praise them instead, because that will promote more progress, rather than criticize them for not going far enough. Just saying, nice job Apple! And I apologize to Meg Whitman -- it's your board that needs to be fired.

Rob Enderle's Product of the Week

I live and work in a 4,000 square foot, three-level house with a lot of technology in it. Even the best routers simply don't cover all of this place. While I've pulled cable to most of the rooms, the master bedroom has resisted my best efforts to wire it.

I've tried a number of range extenders over the years, and they all seem to set up fine but crash regularly. When that happens, the time it takes to get them to work again is painfully long.

Linksys sent me its new RE6700 AC1200 Wi-Fi Extender, and it was not only easy to set up, but also has stayed running -- only having issues when the router crashed (a problem that has been happening a bit and I'm working to resolve).

Linksys RE6700 AC1200 Wi-Fi Range Extender
Linksys RE6700 AC1200 Wi-Fi Range Extender

So the reason I'm making the Linksys RE6700 AC1200 Wi-Fi Extender my product of the week (it's pricey for the class at US$120) is that it actually works and didn't make me regret installing it.

This is a low bar, but you'd be surprised how many products in this class don't meet it. So, while it is more expensive than most, that whole "works" thing turns out to be a pretty important feature and worth the extra cash.


Rob Enderle is a TechNewsWorld columnist and the principal analyst for the Enderle Group, a consultancy that focuses on personal technology products and trends. You can connect with him on Google+.


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What effect is social media having on the current discussion of sexual misconduct?
It's enabling many more people to engage in serious discussions.
It's functioning mostly as an echo chamber.
It's giving everyone a voice.
It's creating much more divisiveness.
It's enabling a cultural re-education.
It's making my news feed so unpleasant I'm staying away.