Like Steve Jobs, More CEOs Are Hoping that the Second Time’s a Charm
A number of former CEOs of top companies are finding out what it’s like to come back as CEO – of the same company. Since the late Steve Jobs handsomely succeeded in his second tenure at Apple, the idea has lost its traditional stigma. The steadily growing group of such chiefs are succumbing to the pleas of boards of directors who are certain that they’re the only people for the job – again.
December 1 2013 by ChiefExecutive.net
Three of the highest-profile returnees are Howard Schultz, former and current CEO of Starbucks; A.G. Lafley, former and current CEO of Procter & Gamble; and Myron Ullman, former and current CEO of JCPenney. The common denominator among those three – and Jobs, for that matter – was that they came back to help a company that fell onto harder times after they left the first time. But the jury certainly is out on whether their performances since returning to the ultimate corner office also share the characteristic of being successful. Overseas, Taiwan-based Acer’s 69-year-old founder, Stan Shih, has returned without pay to try to steer the company out of its third major crisis since its founding in 1976. Shih, viewed as one of the grandfathers of Taiwan’s high-tech industry, will serve as chairman and interim president as Acer searches for more permanent leadership, the company said.
Schultz’s return may be the best argument thus far for encore performances by CEOs. This was the best fiscal year in Starbucks’ 42-year history. He bought the tiny Starbucks store from his bosses in 1987 and took his startup public in 1992. Remaining longtime chairman, he returned as CEO in 2008 after an eight-year break to turn around the struggling retailer; since then, the company’s value has nearly quadrupled.
Plus, in his second tenure, Schultz has operated with unbounded confidence upon his personal strategic vision for the brand. He repopulated Starbucks across the country, expanding into new menu areas ranging from tea to yogurt, and staking Starbucks as a major “lifestyle” brand that stands for both the tolerance of gay marriage and gun rights, among other things.
It’s not as easy to evaluate the return engagements of Lafley and Ullman just yet. Lafley led P&G to phenomenal growth and achieved a reputation as an innovation leader before he retired from the CEO post in 2010. But Bob McDonald, his hand-picked successor, struggled with the Great Recession, increased global competition and unclear brand priorities.
Lafley’s return last summer has been quiet yet seemingly diligent. Lafley said he’s taking a “deep dive” to see where the company has broken down since he left it and has promised a “transition year” in 2014. At this point, his encore act seems to pose a potential threat to the positive legacy forged during his first administration.
Ullman’s return has to rank as the biggest surprise among this trio. Board members restive about the retailing giant’s long decline, including hedge-fund manager Bill Ackman, eased Ullman out of the CEO spot in 2011 when they became convinced that he didn’t have the requisite vision. But the radical transformation attempted by his successor, Ron Johnson, who had headed Apple’s retail operations, fell flat in the face of a revolt by JCPenney’s traditional customers.
Initially invited back as an interim head after Johnson’s ouster last spring, Ullman eventually was re-installed in his old job over the summer by an Ackman-less board. And sure enough: Ullman has stopped most of the bleeding, largely by undoing practically everything that Johnson did and simply trying to do a better job of following a refined version of the strategy he was using when he, arguably, failed the first time around. The next question now is the same question that faced the JCPenney board two years ago: Is Ullman the CEO who can turn around the brand over the longer term?
One thing is for sure: If these companies’ boards and, to some extent, these very CEOs hadn’t mishandled succession planning in the first place, likely none of them would have needed to come back to rescue their beloved companies. In that regard, most boards are happy they’ll never have to visit a second-tenure scenario for their CEOs.
At P&G’s fellow corporate institution in Cincinnati, for example, Kroger CEO David Dillon has been enthusing about his heir apparent, President and COO Rodney Mullen, who is slated to succeed Dillon at year’s end. “If you like what you’ve seen the last few years,” Dillon said at a recent meeting of financial analysts, “you ain’t seen nothing’ yet.”