Jeffrey Sonnenfeld: Governance by Cliché, or Judgment?

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Jet Blue's board should have been proud of Neeleman's conduct, instead of embracing empty clichés about the need for an entrepreneur to move aside as a company matures.

Indeed, Neeleman gracefully stepped down to become non-executive chairman while the Jet Blue board installed David Barger as CEO—its widely admired long-time operations chief. (Ironically, Barger was the person in charge of the systems that broke down this winter.)

It's worth noting that great companies such as Microsoft (MSFT), FedEx (FDX), Crate & Barrel, News Corp., (NWS), Berkshire Hathaway (BRK.A), and Home Depot flourished for decades as their founding entrepreneurs led them.

Unnecessary Change

Yes, Digital founder Ken Olson, Wang Laboratories founder An Wang, and Polaroid founder Ed Land all stayed on too long. However, the best days of Apple (AAPL) and Dell (DELL) without question have been the years during which they've been led by their capable founders. Founders often have the unique combination of courage and competence to challenge their own models and reinvent their businesses.

At Motorola, the problems partially stem from an ill-timed, unnecessary succession. The board could not have made a better choice than the no-nonsense, battle-tested Ed Zander, but perhaps the board never should have had to make such a choice. Chris Galvin, grandson of Motorola's founder, fell victim to undeserved criticism that he was getting extra time to right the ship. Shortly after he was forced from office, the blockbuster RAZR phone that he developed rolled out.

An old film in the Motorola archives celebrates the company's recoveries from earlier setbacks. Its fellow U.S. TV makers, such as Zenith, Admiral, and RCA died, while Motorola reinvented itself as a semiconductor maker and then a telecom leader—inventing the widely copied Six Sigma quality improvement process along the way. The irony is that Motorola had long been known as a model for genuine board involvement in the development of internal top leadership.

It's In the Timing

Zander, like the company he now leads, has shown the ability to rebound. As president of Sun Computers, he helped successfully reposition the company while many of its once-strong competitors, such as Digital Equipment, Control Data, Apollo, Data General, Prime, and Wang disappeared. And at Motorola, his execution of the RAZR was excellent.

However, the challenge was for Motorola to continue turning out equally innovative handsets; because of internecine battles that Zander inherited, the pace of innovation slowed. The price of the RAZR fell, replacement models were not forthcoming, and competitors came out with their own answers to the once-hot handset (see BusinessWeek.com, 5/15/07, "Motorola's Gamble: Substance over Style"). Motorola unveiled its new iteration of the RAZR on May 15.

Research suggests that it takes roughly 18 months to master a new leadership role: to understand the processes, get comfortable with the customers, learn the key internal players, determine whom you can trust, etc. Even Lou Gerstner's transformation of IBM (IBM) took more than a few months, and in fact, Gerstner got off to a rocky start. Unfortunately for Zander, his learning period occurred as rival Nokia (NOK) was implementing the lessons learned from being trounced by Motorola and its RAZR.

Motorola's board is right to give Zander a chance to lead now that he's untangled the internal challenges he was handed—challenges that were in part created by that same board's prior hasty termination of Zander's predecessor. Now Jet Blue's board has fallen victim to governance clichés by accelerating their CEO succession. Sometimes, the board can work with their CEOs to address problems rather than rush to remove leaders.

Boards do not make themselves more diligent when they apply inappropriate governance clichés. As the old comic strip character Pogo used to say, "We have met the enemy and he is us!"

Jeffrey Sonnenfeld is senior associate dean and the Lester Crown Professor of Management Practice at the Yale School of Management. His latest best-selling book is Firing Back: How Great Leaders Rebound After Career Disasters (Harvard Business School Press).