Editor's note: This blog was written by Zac Bissonnette, author of the new book Good Advice from Bad People: Selected Wisdom from Murderers, Stock Swindlers, and Lance Armstrong. The Daily Ticker's Aaron Task interviews Zac in the video above.
Complacency in the C-suite is dangerous, and when a CEO seems to be taking a victory lap, investors should get nervous. A 2007 New York University study found that shareholder returns tend to decline after a CEO builds his trophy home and other research suggests a similar decline in performance after companies build lavish new headquarters.
While researching my new book Good Advice from Bad People: Selected Wisdom from Murderers, Stock Swindlers, and Lance Armstrong, I noticed another trend: There are an awful lot of management guides, self-help books, and speeches delivered by CEOs at the apex of their power — right before their kingdoms turned into dumpsters, and they traded the keys to their Ferraris in for prison jumpsuits.
Fortune 500 CEOs, even crooked and/or inept ones, are generally well-spoken oracles of advice. Here are the top seven tips from seven of the worst CEOs of all-time:
“The only barriers in your career are self-imposed.” – Al Dunlap
Chainsaw Al Dunlap was, at one time, one of the most respected CEOs in America. His tough, take-no-prisoners approach to cost-cutting made him an icon of the 1990s, and his book Mean Business: How I Save Bad Companies and Make Good Companies Great
was an instant bestseller. When he was hired as CEO of Sunbeam in 1996, the stock surged close to 50% in a single day. But in 1998, the whole thing collapsed under the weight of management mistakes and aggressive accounting. Dunlap was fired, the company went into bankruptcy and in 2002, Dunlap settled SEC fraud charges by paying a $500,000 fine and an agreement not to serve as an officer or director of a publicly-traded company for the rest of his life. Not that anyone was asking him to.
“As an impresario, I encourage and elicit contrarian views and contrasts. . . It’s important to place tension between points of view to extract the best from people. Dissent stimulates discussion, prompting others to make more perceptive observations.” – John Sculley
As CEO of Apple (AAPL) from 1983 until 1993, John Sculley worked hard to brand himself as a thought leader and management icon. His 1987 book
as a bestseller, even though The New York Times called it “severely overwritten."
But when Sculley placed tension between himself and Steve Jobs, arguably the most creative man in the history of the world, he extracted the worst from the situation. The two were locked in a power struggle and when Sculley learned that Jobs was plotting to have him ousted, he went to the company’s board of directors. The board stripped Jobs of his management responsibilities in response, and Jobs left the company in 1985. Sculley was fired in 1993.
“Leaders must have a strong sense of renewal—an eagerness to create new opportunities through an entrepreneurial approach.” – Kay R. Whitmore
As CEO of Kodak from 1990 until 1993, Kay Whitmore was slow to respond to changes in the industry.
“They didn’t believe the American public would buy another film,” Alecia Swasy wrote in "Changing Focus: Kodak and the Battle to Save a Great American Company," explaining the company’s blasé attitude about competition. Whitmore’s complacency descended into caricature: He fell asleep during a meeting with Bill Gates that was supposed to focus on ways to win back the market share Kodak was losing to Polaroid. Kodak never did regain its edge and it filed for bankruptcy in 2012.
“[G]reed is not good. . . Every deal is a series of negotiations, and negotiation is not about taking or winning; it’s more often about sharing and compromise.” – Lou Pearlman
Lou Pearlman was a career conman who stumbled on a spectacularly successful career as packager of boy bands in the late 90s and early 2000s. He was the man behind NSYNC and Backstreet Boys—both of which later sued him.
Pearlman’s greed knew no bounds; in 2006, he was exposed as having run one of the largest Ponzi schemes in U.S. history. Investors lost $447 million and Pearlman fled the country. He was arrested in 2007 and in 2008, he was sentenced to 25 years in prison.
“When you know what you are talking about, others will follow you because it’s safe to follow you.” – Richard Fuld
On May 12, 2006, Lehman Brothers CEO Richard Fuld returned to his alma mater, The University of Colorado at Boulder, to deliver a commencement address—in which he told students about the leadership opportunities that would come with knowing what you were talking about. Less than two-and-a-half years later, Lehman Brothers became the largest bankruptcy filing in U.S. history. Those who'd followed Fuld because they thought he knew what he was talking about lost everything.
“[T]aking a problem head on is better than hiding from it, even when it hurts. Not doing the right thing because it's too hard or too uncomfortable is not acceptable. Not today, and not ever.” – Jon Corzine
Jon Corzine wrote that was when he was governor of New Jersey—but a few years later, following his loss to Chris Christie, he was back in the private sector as CEO of MF Global.
There, a series of bad trades made at Corzine’s behest led the company to a spectacular financial collapse—and when regulators descended on the futures trading firm, they found that money was missing from customer accounts. In June 2013, the Commodities Futures Trading Commission filed a civil case against Corzine, accusing him of illegally using customer funds in a desperate effort to keep the firm afloat. Corzine has denied the allegations but having led MF Global into a spot on the list of the ten largest bankruptcies in U.S. history was enough to ruin his reputation either way.
“When you let your imagination win, there’s no limit to what you can accomplish.” – Ron Johnson
As senior vice president of Retail Operations at Apple, Ron Johnson ran the roll-out of the company’s hugely successful stores.
J.C. Penney (JCP) lured him away with a huge pay package to serve as CEO, and the stock soared when his hiring was announced. At J.C. Penney, Johnson let his imagination run wild. Without any testing, he tried to move the stores away from discounting and into a higher-end model. Sales plunged, the company chalked up a nine-digit loss in a single quarter, and Johnson was ousted after a year and half on the job.
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