Saturday, June 22, 2024

CEO Search: What AMD Needs

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Dirk Meyer, the former CEO of AMD, was let go by AMD because he didn’t have the vision AMD’s board wanted in a world where the PC market is owned by AMD competitor Intel and PC’s are being rapidly being overwhelmed by tablets and smartphones.

But this brings to mind another company, HP, which replaced Lewis Platt because he lacked vision with Carly Fiorina – who did have vision – and then replaced her with Mark Hurd, who didn’t have any more vision than Platt did and created a whole bunch of new problems.Currently Steve Jobs is the top-ranked CEO in the world but he isn’t a visionary, yet he does have the knack of being able to recognize a great vision and then co-opt it and, through excellent execution, own the result.

Let’s explore replacing a CEO this week.

Dangers of CEO Replacement

For AMD, the danger, as HP’s history demonstrated, is that visionaries often suck at execution and it is that execution skill that is the more valuable long term.

Or, in some cases, it may be easier to improve the guy you have than replace him. From Microsoft’s Steve Ballmer to Yahoo’s Carol Bartz, the call to replace CEOs is common and it isn’t unusual to see one booted.

But it is also not unusual to see the situation degrade, unless the board really thinks through what they want in a CEO and recognized both the weaknesses and strengths of the replacement.If they don’t, the replacement could actually be worse than the CEO that is being replaced. Much worse.

A CEO Isn’t a “Normal Employee”

A CEO isn’t someone who can typically be pulled out of an existing support structure and dropped in someplace else.The best example of this was the selection of Bob Frankenberg to run Novell in 1994. He failed spectacularly after only two years in the CEO job.He had been very successful in HP but was lost in Novell.

But his performance at HP had been as a member of a team in a unique environment that only existed in HP.He didn’t pull his team with him and attempted to build a new one from scratch.It didn’t go well and he became one of a series of failed CEOs, with the end result that Novell was recently broken up and sold in part.

Another example of a CEO who parachuted in without bringing his own team was Jim Barksdale at Netscape.He was brought in to be the adult in what was a very young company and attempted to drive the firm to the enterprise long before it was ready.The end result was that Netscape, the Google of its age, was sold for pennies to AOL, which then effectively killed the company.

The latest example is Yahoo, which hired Carol Bartz, who came in as a very highly regarded and successful CEO but failed to build a successful team.She ended 2010 as the most highly paid underperforming CEO.This wasn’t her fault. She was simply the wrong person for the job. In her case she was a sustaining manager for unique software firm and they needed a turnaround manager for a web property.

Unlike, say, a Purchasing Agent, where the title and job are very similar company to company, CEOs have vastly different jobs in different firms.Steve Jobs, as successful as he is, for instance, would likely fail at AMD and Microsoft because he doesn’t partner well and can’t deal with much complexity.On the other hand, he could likely build another Apple and, with the right team and product mix, could repeat his success.

AMD needs a CEO that is strong on leadership, SOCs, operations and customer relationships and has a record of seeing market moves early and taking advantage of them.Any shortcoming would need to be assured by a member of the CEO’s staff.Louis Gerstner, who is credited for turning around IBM, couldn’t have done it without CFO Jerry York, who was handpicked by IBM’s board because of his unique turn-around skills, skills that Gerstner lacked. Jerry was actually more responsible for the initial success than Louis was.

What AMD Needs

AMD’s board appears to want someone that can go after the tablet, smart TV, and smartphone opportunities while anticipating others (like embedded systems) where AMD currently isn’t as significant as they could be. They could draw from an Asian company where the right mix of skills exists but likely would run into cultural problems much as Intel did when they hired Eric Kim to be their CMO.

Ex-Intel executive Pat Gelsinger, who was the visionary in Intel and showcased strong execution skills and is now in line for the CEO position at EMC, would probably be the best domestic example of the type of talent they should look for. He has the right skills and visionary requirements for the job; the only issue is that he likely wouldn’t take it. But, were I running the search, that’s where I’d start in terms of building a decision template for the perfect AMD CEO.

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