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Why is any success that company experiences attributed to the CEO's actions? Warren Buffett said that when a business known for difficulty encounters a manager
by starpilot 8y ago
Why is any success that company experiences attributed to the CEO's actions? Warren Buffett said that when a business known for difficulty encounters a manager known for brilliance, it's the reputation of the business that remains. We saw this when an ex-Apple retailer tried to revive JC Penney, and when Marissa Mayer was at the helm of Yahoo. These companies died in spite of their management, how do we know that it is not the same for when they succeed?
- tathougies 8y agoAnd yet, Berkshire Hathaway, a textile manufacturer, was able to become a global conglomerate because of the leadership of one man? The cases you mention show exactly the issue with having a poor CEO. The fact is both of these managers attempted to keep their companies in markets in which they could not make money. It is useful to think of a CEO not as a day-to-day operations manager, but rather as an institutional investor charged with seeking a larger return on the money invested in their fund by engaging in direct business transactions (rather than purchasing shares for example). In this sense, both JCP and Yahoo failed to manage their money properly. (BTW, being Marissa Mayer or an 'ex-apple retailer' does not make one a good CEO, as demonstrated by your examples)
- k_sze 8y agoI haven’t really followed JCP and Yahoo, but who actually made the decision “to keep their companies in markets in which they could not make money”? Was it the CEO or the board of directors? If it was the board that made the decision, then can we really blame the CEO?
- csallen 8y agoYour assumption is that the management was good despite their failures. It's quite possible that they simply didn't perform well or make great decisions, despite their reputations.