I am an outsider (an Australian) who keenly observes the ways of American CEOs. As a group they have not covered themselves with glory – fat cats – overpaid and led their companies to ruin. But they have their strengths and their weaknesses. Mostly I like to focus on their strengths.
The strength of American CEOs is to a large extent an artefact of the strength of the US economy. The US has a bigger and more homogeneous market than anywhere else on the planet (China included). It has a decent swathe of entrepreneurs – and in almost every industry there is – as a result – fierce competition. Competition is usually good for consumers – but rarely as nice for shareholders or managers. It destroys bad businesses and it punishes bad management. Competition breeds stronger businesses and stronger management. It kills the weak and toughens the survivors.
The best American CEOs are – as a rule – the survivors from this competitive grind. They are toughened – and in my opinion they are on balance the best senior executives in the world. I am as a rule a fan of American management.
But not entirely. Corporate governance in America sucks. Only in America is it standard to combine the job of CEO and Chairman of the board – making the CEO answerable to nobody. Only in America are boards so stacked with scratch-my-back-on-compensation buddies to make CEOs breathtakingly rich. [Unfortunately America is exporting that cultural trait to the rest of the world.] Moreover the pay of CEOs (often 100 times average) and the perks (private jets and exclusive golf clubs) have bred a CEO culture that is overweening and arrogant – and simply tone-deaf when it comes to many issues. Only in America could a bunch of CEOs take private jets to Washington to beg for taxpayer dollars.
So I have a piece of advice to offer boards when searching for a new CEO.
If you are a business which is struggling with fierce competition from numerous and new directions – and where your response to that threat will determine your future –then your default position should be to hire an American. That is what they are generally good at.
If your business problems are not fierce competition but dealing with complex competing interests and government regulators in a way that creates win-win outcomes then do not hire an American. You run the risk of alienating your target groups with arrogance and private jets.
There are exceptions – a few CEOs – especially in drug industries but also in IT – have created truly inclusive work places in which talent is catered for as individuals, and thrives. Google springs to mind.
Also there are the obvious non-American ruthlessly competitive CEOs who seem to meet any competitive threat with overwhelming force and tactical brilliance (Rupert Murdoch stands out).
But despite the obvious exceptions the stereotype rings true because it has a basis in reality. That really is how the modal American CEO is.
Sol Trujillo – the bad American CEO
Telstra is the dominant Australian phone company – the now privatised former government owned monopoly. It still owns the twisted copper pair of wires that goes into every home and now carries an increasing variety (and speed) of traditional telephony, voice over IP, internet and entertainment. How it extracts value from that monopoly position will be the ultimate determinant of Telstra’s long term position.
That however requires continuous and careful negotiation with government as the monopoly is (justifiably) regulated to ensure appropriate contractual arrangements with a host of other parties that want access to the copper loop. If you want the CEO to do that you don’t hire the stereotypical American Imperial Overlord.
Alas that is what Telstra did. His name was Sol Trujillo – and almost immediately the wags noticed the self-centeredness of the man and dubbed him the Sole True Hero. He proceeded over several years to alienate governments of both political persuasions with bombast and dodgy lawsuits. He hired cronies who were equally tone deaf.
And he singularly failed to improve the competitive position of the company in the competitive business.
In other words Sol Trujillo was everything bad about American CEOs with few of the redeeming features. He was a failure.
He departed Australia early – and there was no love lost. When told of his departure the Prime Minister (Kevin Rudd) responded with a single word – “adios”.
Sol Trujillo says that word proves his assertion that his difficulties in Australia was because of racism. Well say what you will about our Prime Minister but he is not a racist. He speaks a few Asian languages – including Mandarin fluently. His daughter has married a Chinese man. He is empathetic to other cultures and has indeed immersed himself in them.
Sol is grasping at straws to justify his failure – a failure rewarded, in American imperial CEO style, with cumulative pay above AUD30 million.
So – lest I be accused of racism I will give him a more appropriate farewell.
PS. Yes - I agree that Kevin Rudd's comment was a lapse. But racism is not the explanation for the total failure of Sol Trujillo.