Showing posts with label Ford Motor Co.. Show all posts
Showing posts with label Ford Motor Co.. Show all posts

Monday, April 5, 2010

Donald Frey: He Saw the Ugly


I never knew Donald Frey was the designer of the Ford Mustang, which he did earlier in his career as an engineer with the Ford Motor Co. and which the New York Times highlighted in its obituary of him. When I published him in 1995 I knew him as the former chairman and CEO of Bell and Howell Co. and a veteran director who had served on many corporate boards. Mr. Frey died a month ago, on March 5, at the age of 86.

I also knew him as that rare corporate leader who let it all hang out — the good, the bad, and the ugly (primarily the latter two categories) — in recording his experiences in the boardroom. His article for Directors & Boards, "Reminiscences on Succession Planning," was an unvarnished set of reflections on how CEOs and boards mishandle their responsibilities for ensuring a smooth and effective succession.

Just how ugly does it get? Here are a few of his "reminiscences":

• "I have observed cases of CEOs trying to stay on (perhaps better said, 'hang on') after normal retirement. Various reasons are offered, one being that his or her successor is not yet ready and needs more mentoring by the CEO. In one case, a hidden reason was that the retiring CEO did not make any money on his stock options. In another case, no logical successor could be identified because the CEO in earlier years systematically destroyed potential successors, so that no one is perceived by the CEO as threatening or perceived by the board to be ready at his normal retirement. (Boards almost never hear both sides of a dismissal or demotion). Lack of self confidence or paranoia are surprisingly not unknown, even with successful CEOs. For whatever reason, the sitting CEO is kept on year to year by a supine board, sometimes until the roof totally caves in."

• "Another scenario has the CEO appointing, with no board involvement, one of his internal buddies as successor. The chief characteristic of this heir apparent may be loyal service—to the retiring CEO. Loyal service does not automatically mean leadership. The ultimate result is frequently disaster, with yet another new chief executive to soon follow. This can give birth to the oft-noted strong-weak-strong-weak CEO sequence."

• "I have observed on a number of occasions how long it takes to get a consensus for needed change. The reluctance to move on an underperforming CEO is palpable at first, and changing minds takes time. Seemingly competent, intelligent men and women can sit at board meeting after board meeting watching the company go nowhere, or slowly sink—"slow leakers" I call them—and do or say nothing. Nobody seems to want to speak up. Nobody says those magical and historic words,'The King has no clothes.' "

Don was 71 when he penned these reflections, and even though he was comfortably ensconced in academia at the time as a revered professor of industrial engineering and management science at Northwestern University, it still took courage to be so candid in revealing how often "the board has no clothes" when it comes to its preeminent accountability for CEO succession.

Friday, July 10, 2009

Succession: Accept that Nightcap Invitation


The passing of Robert McNamara, which I reflect on in my previous post, offers the opportunity to share this story of how he was offered the presidency of Ford Motor Co. This is a tale McNamara told in his book, In Retrospect: The Tragedy and Lessons of Vietnam (Vintage Books, 1996).

"In the summer of 1960," McNamara writes, "Ernest Breech, second in command under Henry Ford II [pictured], was getting ready to retire from Ford. In July, Henry, John Bugas [a rival senior executive with an eye on being named president] and I went to Cologne, West Germany, to visit our German company, which was headquartered there.

"We returned to our hotel about 2 a.m. after one of Henry's nights on the town. The elevator stopped at the floor where John and I had rooms, and we started to get off. Henry, whose suite was one floor above, said, 'Bob, come on up for a nightcap.'

" 'I don't want a nightcap,' I said. 'I'm going to bed.'

" 'Henry, I'll join you,' said John.

" 'I didn't ask you,' Henry told him. 'I invited Bob.'

"I went on up, and it was then that Henry asked me to become president of the company.

"I told him I would think about it, talk to Marg [his wife], and give him an answer within a week. A week later I accepted. I was formally elected by the board in late October."

A fun moral of the story: A request to join in on a nightcap can be more than just an invitation for a late-night toddie.