Freedom, Inc_ - Brian M. Carney [132]
When thinking about sustainability in the face of a change of ownership, it is helpful to distinguish among the different ways a company’s ownership can change hands. At Gore, there is some employee ownership through an incentive stock program, but control of the company remains with the descendants of the founders, from Bill Gore’s son Bob Gore to the current generation. Among the other companies we’ve studied, the Richards Group remains in the founder’s hands, and CEO Stan Richards has no intention of handing ownership to his successor—or to his children. “Why would I want to ruin their lives?” he answered when asked why he wouldn’t bequeath the business he’d built to his offspring.
Since Richards is still in charge and still owns the company, it is too soon to say whether his plans will work as he hopes. Recall that he has made arrangements to have the ownership of the agency put into a trust that is not allowed to sell the company. One of three named potential successors will be told that he or she is CEO when he steps aside, but not before.
Richards has taken the extraordinary step of putting his company into a trust upon his death because he doesn’t believe that the agency’s unique culture could survive an acquisition by a bigger firm. But as the experiences of other liberating leaders show, the transition of executive control can present as much of a challenge as a change of ownership—and sometimes more so.
Bob Davids grew Radica Games into an eight-thousand-person company from two people in nine years. When he stepped down as CEO in 1999, the board installed his handpicked successor. And yet, when asked what happened to the culture he’d built there, Davids said without hesitation that it is “totally gone.”6 His replacement, he said, “killed it in about six months.” Asked how he destroyed it so quickly, Davids again didn’t hesitate. “With dual standards,” he shot back. “Dual standards are the cancer of culture …. It is absolutely the biggest killer of all.” By this, he meant that his successor immediately began accruing all the perks of privilege that a liberating leader, if he is to be successful, must eschew. In isolation, taking over the corner office and other gestures may seem relatively innocent, but employees get the message immediately. The new man in charge is no longer subordinating himself to his employees; he feels he has arrived and is announcing it to the world.
Bob Davids relayed this fact—the swift dismantling of what he spent nearly a decade building—matter-of-factly. One of his favorite phrases is, “If you don’t have an exit strategy, your job owns you.” This is true, he argued, regardless of whether you or someone else owns the company on paper. In this respect Davids is very different from Stan Richards and Bill Gore. He has run a half-dozen companies in his career and measures himself by their performance while he is in charge, not by the standards of posterity. He would view the attempts of Gore and Richards to preserve what they built as quaint.
While at Radica, Davids said, he had a conversation with a promising employee who was resisting a promotion to plant manager.
Davids asked him, “You want me to tell you the secret of being a CEO?”
“Yes,” the reluctant manager said, and took out a pencil.
“Okay, write this down. [This is] the secret to being a CEO. You’ve got to—ready?—make more mistakes than anybody else. But never make the same mistake twice.” Because you can only choose your successor once, the chances of making a mistake are high. But in the end, all you can do is try to groom the newcomer and leave behind the best person you can. If the new CEO—or the shareholders, if the CEO is not also an owner—takes the company in a different direction,