"What got you here won’t get you there." - Marshall Goldsmith
CEO in a Box, Plug-and-Play CEO, Off-the-Shelf CEO, One-Size-Fits-All CEO, Ready-Made CEO, and we can keep going for many other ways of calling it the same way, yet, in this misconception resides a huge peril - leadership cannot be prepackaged.
Leading a company is not as simple as plugging in a ready-made executive and expecting them to produce the desired results. This overly simplistic view overlooks the nuances and complexities of the CEO position, which requires far more than just technical expertise or management acumen.
Let's start with the Roman Empire, and segue into Nike and Starbucks as examples of corporate leadership turbulence, revealing key lessons for businesses everywhere.
Table of Contents
Parallelism Between the Ancient Rome and the Corporate World
Let's draw a parallel between the ancient Roman concepts of imperium, auctoritas, and potestas and the modern corporate leadership structure, focusing on the Board of Directors, the CEO, and the executive team.
Imperium (Supreme Power) → The Board of Directors
In ancient Rome, imperium represented supreme authority, especially in military or judicial contexts. Those with imperium had the ultimate power to command and make decisions that impacted the entire state. In the corporate leadership world, this role can be compared to the Board of Directors. The board holds the highest level of power in terms of governance and strategic leadership direction. They make key decisions, like appointing the CEO, approving major initiatives, and ensuring the company adheres to its long-term vision and mission. The board oversees but does not involve itself in the day-to-day operations, retaining supreme authority over the corporation's direction.
Auctoritas (Influence/Prestige) → The CEO
Auctoritas in ancient Rome was about moral authority, prestige, and influence. It didn't necessarily involve direct control but relied on the weight of one’s character, reputation, and ability to persuade. This is similar to the role of the CEO in modern companies. The CEO carries auctoritas through leadership, vision, and business strategy. While the CEO might not have the final, formal decision-making power (that rests with the Board), their influence shapes the company's trajectory. They execute the board's strategy, inspire the executive team, and are the face of the company in public and internal matters, gaining trust and driving the company's culture.
Potestas (Legal Power/Authority) → The Executive Team
Potestas in Roman terms referred to the legal and official authority to enact decisions, usually within specific boundaries. In a corporate leadership structure, this translates well to the executive team. Executives have the formal authority to manage their respective domains (e.g., finance, operations, marketing, etc.), making decisions within their areas of expertise. Their power is more focused and operational compared to the broader authority of the board or the influence of the CEO. They execute day-to-day activities, ensure the company's functional success, and implement the CEO's vision.
This structure highlights the balance of power, influence, and operational control within a modern corporate leadership setting, mirroring how ancient Rome functioned under these distinct forms of authority.
Every Organization is Unique
Think about it: The Imperium (the Board) selects the Autoritas (the CEO) who checks all the boxes - a polished Ivy League education, big consulting experience, impressive leadership stints across various industries. But then, despite all the right ingredients, something feels off. The strategic leadership decisions are slow, the cultural fit seems shaky, and the promised turnaround is nowhere to be found - ouch!
This is where most Boards drop the ball. Too many Boards are blinded by shiny résumés and don't dig deep enough into whether a candidate truly understands the nuances of the business they are about to lead. They assume that because a CEO succeeded in another company, they will do the same here. But leadership doesn’t travel well if it doesn’t adapt.
Companies are ecosystems with unique cultures, histories, habits, routines, processes, systems, and market positions as well as beliefs. What works for one company may not necessarily work for another, even if they operate in the same industry. CEOs must adapt to these specific organizational dynamics. The biggest fear of a Board should be “prepackaging” a CEO who may struggle to align with the values and culture of the company they are leading - there is no cookie-cutter approach, and the biggest loser in this forced and unnatural exercise is simply the business.
Here’s the catch: credentials don’t guarantee alignment with a company’s culture, values, or mission. And that’s the real issue.
An obvious one that is worth remembering: past performance is no guarantee of future results.
Why "Prepackaged" CEOs Are Dangerous: CEO in a Box
There’s a certain arrogance in thinking you can pick up a CEO from Company A and plop them into Company B without considering the differences between the two. It's like taking an expert swimmer out of the pool and expecting them to win a race in the ocean. Sure, they know how to swim, but the environment is entirely different. New currents, new challenges, new risks.
The Result? Please, see below 🫢
Why? Because leadership isn’t about fitting into a pre-determined mold; it’s about adapting to the very specific ecosystem you are leading. You can’t force-fit leadership. The CEO may be brilliant, but if they can't translate their Auctoritas - remember: their ability to influence and lead - into the language and culture of the company, they are destined to fail.
Successful CEOs don't come with a one-size-fits-all manual. Instead, they are adaptable leaders who tailor their strategies to fit the company's needs, stakeholders, and market conditions. Trying to replicate a leadership style or strategic leadership playbook from one company to another ignores the depth of understanding required to steer an organization effectively.
The best leaders are those who can blend their expertise with a deep understanding of the company’s unique culture, challenges, and opportunities.
CEOs need to be chameleons, not copycats. They need to absorb and adapt to the company’s environment, not impose a preordained playbook. And Boards need to stop treating them like interchangeable parts.
As said before, great CEOs don’t come with a one-size-fits-all manual. They come with the wisdom and humility to adjust their approach, to listen before they lead, and to learn the language of the company they are about to steer.
They leverage the best of where the company comes from - those processes, routines, habits, and energy-, and combine it with their vision, and build a credible path to get there. They honor the past while building a future towards a compelling vision.
The bottom line? Don’t settle for a prepackaged leader. Great leadership is bespoke, not off the rack. And the companies that understand this will be the ones to thrive.
Why Inertia Is the Most Underrated Factor in Leadership
Here is another harsh truth that’s often overlooked: when a new CEO steps into a company, they are not starting from zero. They are taking control of an organization already in motion, with all its momentum - whether that momentum is good, bad, or somewhere in between. This organizational inertia (I like better that word) is a force unto itself, and if not properly understood, it can quickly become the biggest barrier to successful leadership.
Inertia is not only momentum - it’s the weight of history, habits, routines, processes, and decisions made before the CEO’s arrival. It can be cultural, operational, or market-driven, and it’s often underestimated by both the CEO and the Board. This is where the real challenge lies: how does a new leader turn that inertia in the right direction without breaking everything along the way?
Change is inherently disruptive, and when it’s not managed with precision and empathy, it can lead to chaos, resistance, and disengagement. This is especially true when a CEO tries to impose new strategies or processes without first understanding what drives the company’s current behavior. It's not about bulldozing the old way of doing things; it's about knowing which parts of the organization's inertia can be leveraged for growth, and which ones need to be reoriented.
The pain of change is inevitable, but the way it’s managed defines the success of any leadership transition. Too many CEOs walk into a company and immediately begin to force changes without taking the time to diagnose the underlying currents. The result? Alienation of the very teams they need to drive execution, and a quick unraveling of strategic leadership initiatives.
John Donahoe's Leadership and Nike
Nike’s recent struggles have been attributed to the strategic leadership direction set by its outgoing President and CEO, John Donahoe - aptly dubbed "the man who made Nike uncool" by Bloomberg News.
Donahoe, who became Nike’s president and CEO on January 13th, 2020, and served on the Board of Directors since 2014, is set to step down, with longtime company veteran Elliott Hill emerging from retirement to take the reins on October 13th, 2024.
Now, let’s assess whether Donahoe was truly the right choice at the time.
While Donahoe’s background in the digital world - with senior roles at eBay, ServiceNow, and PayPal - undoubtedly equipped him with a deep understanding of the digital landscape, it begs the question: was Nike's core issue really about its digital presence? His expertise in driving digital transformations was a key strength during the pandemic-driven online boom, but Nike is not a tech company - it’s a brand deeply rooted in physical retail and athletic culture.
This makes us wonder if the Imperium (the Board), read the real challenge correctly. It wasn’t going digital in the long run; it was innovation in a very congested and competitive market, managing the complexities of brick-and-mortar retail and maintaining strong relationships with key wholesale partners. This is where Donahoe's leadership arguably fell short.
Let's also "render unto Caesar that which is Caesar's and to God that which is God's". Under Donahoe’s tenure, Nike grew annual sales from $39.2 billion in fiscal 2019 to $51.4 billion in fiscal 2024 - a commendable achievement! 👏🏻
Now, let's review the stock performance since he joined the company - very different story, right?
To complete the picture, let's also look at the market capitalization year-over-year. If we compare October 4th, 2024 against December, 31st 2021, you will notice more than a 53% drop and a +25% compared to December 29th, 2023 - ouch! ouch!
Nike's market success during Donahoe’s first two years brought remarkable returns to investors, largely fueled by his focus on direct-to-consumer sales. Donahoe’s business strategy reduced reliance on wholesale partners - such as Foot Locker, Macy’s, and Dick’s - while boosting Nike’s website and their own retail store traffic.
This shift was well-suited for the pandemic era, with consumers shopping mostly online - Donahoe nailed that one 👏🏻 He definitely did great in a COVID-dominated, digital-first environment. He proved to be the right Auctoritas (the CEO) for the moment. However, this momentum was not destined to last. As the world transitioned back to 'normal,' consumer behavior inevitably shifted, leading many to revert to their established routines, which highlights the critical role that habits play in shaping both individual and organizational identities.
What all this meant to Nike? The pandemic helped digital-first companies such as Zoom, Peloton, Microsoft, and many others sell and sell way more, and Nike was no different - we could say that COVID was the biggest accelerator for IT transformation and Donahoe was the right leader - no doubt about it!
Nike sold more running shoes than ever before. Their webpage was booming with sales and their stores had more traffic than they could have ever expected. However, on the flipside, by having that sole focus and leaving long-standing wholesale partners behind with inventory and new releases, it also made a big mistake. It gave smaller, upstart brands like On and Hoka more time to shine and increase in popularity in the brick-and-mortar retail space filling the void left by Nike’s diminished presence.
Consumers found themselves confronted with limited Nike inventory and variety at their trusted retailers. What did they do? They explored. They opened their minds to alternative brands - something new and different,. Can we really blame them for seeking out fresh options when their go-to brand seemed to turn its back on them?
Everyone versus Nike
Donahoe underestimated the impact retail partners, especially independent specialty stores, play in driving demand and continued loyalty to the Nike brand in a post-COVID era. Last year, the company tried to make amends with retail partners, but the damage was done - too late, too bad 😞
Earlier this year, Donahoe acknowledged that Nike went too far in its efforts to move away from its wholesale partners and said the company was in the process of fixing it - ouch!
Additionally, Donahoe restructured the Nike team around what was labeled a “simpler consumer construct”, categorizing products into Men’s, Women’s, and Kids’ segments. This shift moved away from the brand's traditional emphasis on specific sports and performance enhancements. However, consumers aren't just looking for generic categories; they want soccer (or football, as I like to call it), basketball, golf, tennis, running, and trekking sneakers that resonate with their passions.
This business strategy effectively transformed Nike into just another fashion sportswear brand, diluting its unique essence - its commitment to enhancing athletic performance. As a result, we witnessed a significant lack of innovation - a disappointing turn of events. Again, too bad 😢
It “turned more lax on product innovation, particularly in running, as up and coming brands started to resonate,” wrote Oppenheimer analyst Brian Nagel.
In December 2023, it also announced a broad restructuring plan to reduce costs by about $2 billion over the next three years so it could invest in its growth areas, such as running, the women’s category and the Jordan brand.
At the close of fiscal 2024 ended May 31, Nike planed to shave about 5% of its workforce from 2023, from 83,700 to 79,400, according to the company’s annual reports.
In the latest round of 740 job cuts announced in May, more than 40% of those let go were at the director level or higher, including 32 vice presidents.
So, what did the Imperium (the Board) decide to do? Simply put: Let's "Just Do It" 👏🏻
Goodbye John Donahoe. Welcome Elliot Hill.
Nike stock jumped 9% in after-hours trading after the news broke, according to CNN.
As the market turns its gaze toward Elliott Hill, a longtime Nike stalwart set to rejoin the company on October 13th, there’s a palpable sense of anticipation. Hill began his journey at Nike as a sales intern in 1988, steadily climbing the ranks to become president of consumer and marketplace by 2020.
The question now looms: can this seasoned leader - part of Nike's own Praetorian Guard - guide the empire to renewed victory and success? At first glance, he certainly appears to possess the right Auctoritas to lead the charge 👑
Starbucks Shifting from Laxman Narasimhan to Brian Niccol
Another similar case. Narasimhan was announced by Starbucks as incoming CEO on September 1st, 2022 and joining on October 1st, 2022, succeeding company founder and former CEO, Howard Schultz. He arrived with the right credentials (see below 😊): a wealth of experience in transforming large organizations, particularly within the realms of consumer goods and digital innovation during 30+ years.
However his tenure as CEO highlighted a misalignment between his skill set and the unique demands of leading a retail and food service giant. While his extensive background in technology and consumer goods equipped him with valuable insights into global markets, it lacked the hands-on experience required for managing the complexities of a service-oriented business. Starbucks’ distinct corporate leadership culture, which emphasizes community engagement and customer experience, may not have resonated with Narasimhan’s operational focus, potentially alienating both employees and loyal customers.
"I am very disciplined about balance. If there's anything after 6 pm and I am in town, it's got to be a pretty high bar to keep me away from the family. Anybody who gets a minute of time after that better be sure that it's important... Because if not it will just wait for another day," Narasimhan said in an interview to Fortune
As the company faced increasing competition and shifting consumer preferences, a leader who could effectively balance innovation with Starbucks’ core values became essential - underscoring that the right fit for leadership is not just about experience but also about understanding and embodying the brand's identity.
This raises (again!) the question of whether the Imperium (the Board) fully understood Starbucks' real challenges. It wasn’t about driving further digital transformation in the long run - it was about navigating the intricate dynamics of retail operations and maintaining Starbucks' deeply rooted connection with its community and in-store customer experience. This is where Narasimhan’s leadership arguably fell short.
Unfortunately (ouch!), Narasimhan stepped down as CEO and as a member of the Starbucks board "with immediate effect," said the company in a statement on Aug 13th, 2024.
However, not everything was 'bad' during his tenure. We must "render unto Caesar that which is Caesar's and to God that which is God's". Under Narasimhan’s leadership, Starbucks grew annual sales from $32.3 billion in fiscal 2022 to $36.0 billion in fiscal 2023 - a great achievement! 👏🏻
However, behind the revenue growth, something else was brewing - pun intended 🫢
Now, let's also look at their quarters to understand a bit better the current trend - ouch! 🥲
Even better, let's also look at their 2024 outlook - ouch ouch! 😭
And don't forget about the market reaction and perception through their stock performance - not the greatest, huh?
Let's now see what happened when Starbucks announced Narasimhan stepping down - it seems that behind scenes news run faster than PRs. Someone spilling the beans? 🤐
Fun fact: Starbucks shares were around 21 percent higher in early afternoon trading on that day, while Chipotle Mexican Grill shares fell by about 8 percent - wonder why?
Narasimhan’s tenure was characterized by ambitious strategies aimed at modernizing the company’s operations and enhancing customer engagement.
The company made notable strides in integrating technology into its business model, fostering a more robust online presence and streamlining supply chain processes.
However, despite these efforts, the organization grappled with challenges that hindered its ability to fully capitalize on the momentum of the digital age. As competition intensified, it became increasingly evident that the strategic leadership direction required a more agile approach - one that Narasimhan's vision had yet to fully realize. The rapid shifts in consumer behavior, particularly in the wake of the pandemic, highlighted the need for nimbleness that was becoming increasingly elusive.
Was Narasimhan Full of Beans?
As market dynamics continued to shift, Narasimhan faced mounting pressure to adapt quickly. Investors and stakeholders were eager to see the results of his strategies, yet the company struggled to maintain the pace needed to keep up with rapidly changing consumer expectations.
Questions about the effectiveness of his initiatives began to surface, especially as competitors emerged with innovative solutions that resonated more strongly with a generation of consumers looking for authenticity and engagement.
Also, Narasimhan has also been contending with pressure from activist fund Elliott Investment Management, which took a stake in the chain and had been seeking ways to boost the share price.
To make things a bit more difficult, he has been working to finalize contracts with unionized stores - exactly what he need, right?
On top of all of the above, Howard Schultz has been very vocal about how he feels in relation to the company's direction under Narasimhan's leadership 🫢
And more recently...
Ultimately, Narasimhan's departure was not a reflection of a lack of capability but rather a recognition that a fresh perspective was needed to steer the company in an increasingly competitive landscape.
So, what did the Imperium (the Board) decide to do? Simply put: "To inspire and nurture the human spirit" - from Starbucks.
This is why Chipotle' shares fell by about 8 percent when Starbucks announced Narasimhan stepping down. Chipotle's CEO was going to be Starbucks; CEO 😱
Enter Brian Niccol, a seasoned executive celebrated for his transformative leadership at Chipotle Mexican Grill. With a remarkable track record of reinvigorating brands and driving operational excellence, Niccol’s appointment heralds a new era for the company. As he steps into the role, the question on everyone’s mind is: can Niccol leverage his extensive experience to guide the company toward renewed growth and innovation?
At first glance, Niccol appears to embody the dynamic leadership style needed to navigate today’s complex market. His experience in the food industry has honed his ability to understand consumer trends, develop compelling marketing strategies, and foster significant brand loyalty - qualities that are essential in any sector, particularly as customers demand more personalized experiences. During his time at Chipotle, Niccol was instrumental in transforming the brand’s image and operational processes, making it more responsive to customer needs and preferences. This hands-on approach and commitment to innovation could be just what the company needs to regain its competitive edge.
What sets Niccol apart is his focus on refining core offerings while enhancing customer interactions. His leadership style is rooted in an understanding of the intricate relationship between brand identity and consumer sentiment. By prioritizing authentic connections with customers, he aims to foster a culture of transparency and engagement that resonates in today's marketplace. While Narasimhan emphasized broad-reaching strategies that aimed for scale, Niccol is expected to hone in on delivering quality experiences that reflect the brand's heritage while embracing modern demands.
Let's see Chipotle's stock performance since Niccol joined the firm as CEO - almost x10! 😱
Niccol’s appointment signals a shift toward a more agile organizational structure. His experience at Chipotle taught him the importance of adaptability, especially in responding to market disruptions and evolving consumer preferences. As he embarks on this new journey, the market is keenly watching how Niccol will integrate his operational insights and consumer-centric strategies to breathe new life into the organization. Will he succeed in turning the tide and leading the company back to a path of innovation and success?
The challenges ahead are significant, but Niccol's proven ability to navigate complex business landscapes provides a promising foundation. As he crafts a vision that harmonizes the company's legacy with the need for contemporary relevance, stakeholders are hopeful that his leadership will usher in a new chapter of growth and reinvigoration.
Ultimately, the stakes are high. Niccol's ability to rally the team around a common purpose, to inspire innovation, and to cultivate a deep understanding of the consumer will be critical as the company seeks to redefine its place in the market - is he the right Auctoritas? With the right mix of strategic leadership foresight and operational agility, there is potential for a remarkable turnaround that honors the past while boldly stepping into the future.
The Real Question Boards Should Be Asking
So, how do you ensure you have the right CEO? Here is the punchline: you can't guarantee it by checking off a list of past achievements or basics. Instead, you need to ask the tough questions:
Does this CEO understand the company's culture and values?
Are they ready to adapt their leadership style to fit the company’s needs?
Can they navigate the specific challenges and opportunities that the market presents?
Can they transform a business by honoring its past?
Will their auctoritas translate also here, or will it be lost in the shuffle?
Rewriting the Leadership Playbook
The myth of the perfect CEO needs to die. Leadership is not a template; it’s a practice in adaptability and alignment. It’s time to challenge the conventional wisdom of what makes a successful CEO and, more importantly, how Boards select them. Don’t just look for success stories - look for CEOs who can write a new one, with your unique organization at the heart of it.
Because in the end, every organization is unique - and so should its leadership.
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An outstanding dissection of the dangers of 'CEO in a Box' leadership! The parallel with imperium, auctoritas, and potestas brilliantly underscores the need for adaptability and alignment in leadership. At HRS, we champion bespoke leadership tailored to an organization’s unique culture and challenges. Thank you for the profound insights!
Very thoughtful analysis
Great post.
So true and real!
This is very interesting! It is definitively hard to continue innovating after years in the market. Companies who are leaders in their market tend to become complacent and that leads to a lack of innovation, and sometimes they try to turnaround their business with too much of a change, evolving into something different than what they were originally. However, people are not the same over the years. They change, they mature, they evolve. Keeping rooted to your roots is easier said than done with so many things happening in the market.