WeWork, eBay and Juul all fired their CEOs this week. Others are going to talk about why. This article is written for those considering taking their jobs. Know that there’s always risk in taking a new leadership position. Indeed 40% of new leaders fail in their first 18 months. This is why you need to assess whether the risk is low level, manageable (WeWork), mission-crippling (eBay) or insurmountable (Juul) and act accordingly.
Let’s define our terms:
- Low Level Risk means there’s nothing extraordinary that you can see.
- Manageable Risk is there, but manageable with normal executive onboarding investment.
- Mission Crippling Risk is severe enough that you will fail unless you can mitigate it.
- Insurmountable Risk will lead to your failure no matter what you do.
In an earlier article here, I offered a tool to assess onboarding risk. The offer still stands.
Now, let’s look at these three situations of potentially replacing a bad manager at WeWork, a CEO with a bad strategy at eBay or a CEO with a bad product at Juul.
Manageable Risk – WeWork
CBS’ Stephen Gandel described WeWork’s fired CEO Adam Neuman as “an erratic and controversial chief executive.” His entrepreneurial vision and spark was amazing. He built WeWork from scratch into something amazing. But he violated all sorts of norms around corporate compliance and fair dealing, claiming the “We” name and licensing it to the company, giving himself super-controlling stock and the like.
In the end, his behaviors played a significant role in the company’s failed (or at least delayed) IPO. And the investors had to push him out. Of course, there are some lingering problems around whether this company is really a life-style/tech company deserving a multiple appropriate for potential rapid growth or a real-estate company with a dramatically lower multiple. And there are some short-term cash issues.
But, if you’re offered the job as CEO of WeWork, the risk is manageable. You can rebuild trust with employees by being a good manager. You can fix the cash issues. You can rebuild trust with the investors. You can succeed – if you manage the risk.
Mission Crippling Risk – eBay
Bloomberg’s Shira Ovide describes the events leading up to CEO Devin Wenig’s firing well.
“EBay has made deliberate and pragmatic choices not to chase hot e-commerce trends or low-margin areas such as groceries and instead focus on its strengths: its loyal customers, global reach and a business model with better economics and less risk than many online retailers. The approach is sensible, but eBay has been missing opportunities as online shopping reshapes the $20 trillion in annual global retail spending. Investors had lost faith in the company’s approach.”
This is a classic mission-crippling risk for you if you’re their next CEO. Unless you can figure out a way to capture a share of the increases in online shopping, you’re not going to regain your investors faith. The point is that it’s possible, but not probably. The judgement call for you is whether this risk is merely mission-crippling or actually insurmountable.
Insurmountable Risk – Juul
As Business Insider’s Erin Brodwin lays out, Juul “is confronting challenges that include warnings from national regulators, investigations by members of Congress, state- and country-wide bans, and questions about its products’ long-term health impacts.”
But today’s events suggest “challenges” is too soft a word. As Reuters reports, today, Juul Labs said it would “suspend all broadcast, print and digital product advertising in the United States, and replace Chief Executive Officer Kevin Burns.”
Let’s call a spade a spade. This product is killing people. It’s a bad product.
Go ahead and take the job at WeWork with its manageable risk. You can probably succeed by doing what you’ve done well before.
If you can figure out a new strategy and overcome eBay’s mission-crippling risk of an inability to grow, take their CEO job.
But if you’re offered the job of CEO of Juul, run away. No way you want to run a company that kills its customers in this day and age.