Star CEOs are bringing into question what makes a good leader in a flatter, networked world. Aviva Investors explores what this means for the overall governance of companies.
If Google or Baidu didn’t exist, would we have search engines? If Mark Zuckerberg hadn’t dreamt up Facebook in his dorm room, would we have social media platforms?
These may seem absurd questions, as the answer is an obvious ‘yes’, yet the god-like status we bestow on the leaders of organisations often borders on the fanatical. However, when you consider that the incandescent lightbulb was invented by 20 different people within the space of a couple of decades, the randomness of who apparently ‘succeeds’ is hard to comprehend.
Nevertheless, every era has its stars – leaders who take ideas and grow them into hugely powerful companies. Martin Sorrell at WPP, Steve Jobs at Apple, Jack Ma at Alibaba, Zuckerberg at Facebook, Elon Musk at Tesla…the list goes on. Often, their success is closely bound with an ability to set out a vision then drive relentlessly towards that goal.
The rewards on offer for those who are the face of the company, as well as its innovator and driver, can be immense – stock options worth more than a billion dollars, for instance.1 Getting the right person in place can add vastly to a company’s market capitalisation, and cause investors to sell if their star heads for the door.2 But it’s hardly worth mentioning the skills needed to maintain a workforce of thousands are different to those required to direct a small, tight-knit team.
Understanding what motivates and what ties; these are the things that will determine the CEO’s tenure. Perhaps it’s time to check how rewards might be aligned and structured for the long haul, rather than a sprint towards a bonus cheque; and to look more closely at whether tomorrow’s organisations are likely to turn away from a dictatorial style and morph towards flatter structures.