Twitter, the company, is losing altitude. Its stock is down more than 20 percent this summer, and several top leaders have quit. A lot of that is because Twitter hasn’t had a CEO for more than two months.
The company’s board met, and there were rumors of an announcement. But it got us thinking: Why is it so hard to find a CEO? And at what point do you just need to … get one?
The No. 1 job of a corporate board is leadership succession, says Harry Kraemer, a former CEO and chairman of the healthcare giant Baxter International.
Ideally, he says, a company is constantly grooming several CEO candidates. The key: several internal candidates.
“Studies would say that 80 percent of CEOs who come from the outside, it ends up being a failure,” Kraemer says. “Because they don’t have the knowledge of the company, they don’t have the knowledge of the culture. Very, very difficult.”
A frequently cited example is Hewlett-Packard’s hiring of a software executive to run a traditional hardware company. He lasted 11 months.
But Bill McComb, the former CEO of Kate Spade, says that as long as the odds are, sometimes it may be worth taking a risk on an outside leader with fresh eyes. He was, in fact, that outside guy, lured away from Johnson & Johnson to run a fashion company.
“We were a company whose strategy didn’t just get tired — it literally broke down,” McComb says. “And upon reflection, they actually began to think that there were some advantages to not have an industry incumbent.”
Either way, going without a CEO for months — which is the case at Twitter — often sends a bad sign to investors and employees.
Sydney Finkelstein of the Tuck School of Business at Dartmouth says companies can’t look too long for the perfect person who checks all the boxes on the wish list.
“The way most search processes go, you start with your wish list, and it’s a very long wish list,” Finkelstein says. “And it becomes a walk-on-water candidate that pretty much doesn’t exist. So check-the-box thinking is risky. There’s one thing I would put on that check list, though, that you can’t give up, and that’s the ability to adapt and adjust in real time.”