Jabulani Sikhakhane
9 November 2009
column
Johannesburg — IN ITS October 2004 edition, the Harvard Business Review ran an article, Seven Surprises for New CEOs, written by competitive strategy guru Michael Porter and two of his Harvard Business School colleagues.
The seven surprises outlined by the three professors are a useful framework for examining Jacob Maroga's performance as CEO of Eskom, the state-owned electricity generator and distributor. Maroga, who has been with Eskom since 1995, became CEO in May 2007. But after less than three years in the CEO's office, Maroga hangs onto the post only by the pigmentation of his skin.
He has fallen out with the utility's board, and has lost the support of his colleagues at Eskom. Since he become CEO, five senior executives have resigned. It is believed that most resigned because they found Maroga difficult to work with.
So, where did Maroga go wrong?
The Harvard writers, I believe, have the answers. They list the seven surprises as: you can't run the company; giving orders is very costly; it is hard to know what is really going on; you are always sending a message; you are not the boss; pleasing shareholders is not the goal; and you are still only human.
"Some of the surprises for new CEOs arise from time and knowledge limitations -- there is so much to do in complex new areas, with imperfect information and never enough time," the three professors wrote.
"Others stem from unexpected and unfamiliar new roles and altered professional relationships. Still others crop up because of the paradox that the more power you have, the harder it is to use it."
Once he moves into the top office, the CEO's greatest influence is no longer direct because he or she has so many other things to attend to, especially the external demands of the job, including dealing with shareholders, investment analysts, board members, and other stakeholders.
In short, he can't run the company.
The CEO now has to rely on indirect means; all he can do is to spell out a strategy that can be easily understood by his colleagues; create structures and processes to guide, inform and reward; and set values and tone.
"Equally important is selecting and managing the right senior management team to share the burden of running the company."
Maroga appears to have failed on all of the above; of course his failures were magnified by the urgency of the need to address Eskom's financial problems.
Porter, the Bishop William Lawrence University professor based at Harvard Business School, Jay Lorsch, the Louis Kirstein professor of human relations, and Nitin Nohria, the Richard P Chapman professor of business administration, said that even though CEOs may be flooded with information, their access to reliable information is constrained by the fact that the information that flows to the top is always filtered.
That's why some CEOs go outside the company to get information from independent sources, including customers and other CEOs. Others hire consultants who can tell them the unvarnished truth.
Consultants are also free to criticise the CEO's thinking. Maroga did hire energy consultant Susan Olsen -- but then, in the most telling indicator of his leadership style, he fired her after she had warned him, six months before last year's electricity crisis, of the utility's precarious coal supplies. The most pertinent point for Maroga that the three professors make is that the CEO must understand that he is not the boss.
A CEO may sit at the top of the management hierarchy, but he still reports to the board.
"The board hired him and can also fire him; it has the power to evaluate his performance, set his compensation, overturn his strategy, and make other major decisions."
Porter, Lorsch and Nohria advise CEOs to invest time in knowing and developing relationships with the directors, an area where Maroga appears to have failed.
Maroga's actions in recent weeks, especially the showdown with chairman Bobby Godsell, show that he was not only out of tune with his board, but didn't understand the limitations of his authority.
Despite their cinematic image as indefatigable heroes, CEOs are not supermen.
That's why they need to make "a disciplined effort to stay humble, to revisit their decisions and actions, to continue to listen to others, and to find people who will be honest and forthright".
The explanations given (privately of course) by some of the senior executives who left Eskom under Maroga's watch show that he saw himself as superman.
Sikhakhane is editor-in-chief of Destiny Man and a freelance writer.
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