A study of companies in the U.S. and Denmark found that while MBA-led firms achieved better short-term shareholder returns, this came at the expense of employees through suppressed wages. Critically, these leaders showed no evidence of increasing sales, productivity, or investment. The resulting wage declines led to higher-skilled employees leaving, crippling long-term company health.
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A founder's real boss is their customer base. While keeping a board happy is important, some CEOs become so consumed with managing up that they lose sight of the product and customer needs, ultimately driving the company off a cliff despite running perfect board meetings.
Public company boards often hire CEOs using fuzzy adjectives like 'leader.' A better method is to first define 3-5 key strategic goals, creating a 'scorecard of success,' and then find a candidate whose track record specifically matches those objectives.
Unlike a functional manager who can develop junior talent, a CEO lacks the domain expertise to coach their entire executive team (e.g., CFO, VP of HR). A CEO's time is better spent hiring world-class leaders who provide 'managerial leverage' by bringing new ideas and driving their function forward, rather than trying to fix people in roles they've never done.
A study found that CEOs trained to prioritize shareholder value deliver short-term returns by suppressing employee pay. This practice drives away high-skilled workers and cripples the company's long-term outlook, all without evidence of actually increasing sales, productivity, or investment.
A business transitions from a founder-dependent "practice" to a scalable "enterprise" only when the founder shares wealth and recognition. Failing to provide equity and public credit prevents attracting and retaining the talent needed for growth, as top performers will leave to become owners themselves.
Unlike a line manager who can train direct reports in a specific function, a CEO hires experts for roles they themselves cannot perform (e.g., CFO). A CEO's time spent trying to 'develop' an underperforming executive is a misallocation of their unique responsibilities, which are setting direction and making top-level decisions.
Sludge is profitable in the short term. With CEO tenures shorter than ever and compensation tied to quarterly stock performance, executives are incentivized to cut customer service costs now, even if it harms long-term customer relationships and brand loyalty.
A company’s true values aren't in its mission statement, but in its operational systems. Good intentions are meaningless without supporting structures. What an organization truly values is revealed by its compensation systems, promotion decisions, and which behaviors are publicly celebrated and honored.
Rapid sales growth creates a powerful "winning" culture that boosts morale and attracts talent. However, as seen with Zenefits, this positive momentum can obscure significant underlying operational or ethical issues. This makes hyper-growth a double-edged sword that leaders must manage carefully.
When a private equity investment thesis is primarily built around a single person (e.g., a star CEO), it's a sign of weak conviction in the underlying business. If that person fails or leaves, the entire rationale for the investment collapses, revealing a lack of fundamental belief in the company's industry or competitive position.