Financial Fallout: Can the 90-Day Honeymoon Survive?

Posted by: Jena McGregor on September 18, 2008

It is astonishing, really, to look back at the last three months and watch how fast AIG fell.

When AIG’s board announced that it was replacing Martin Sullivan with Chairman Bob Willumstad, nominating committee chair George Miles made the following statement in a conference call on June 16th with analysts: “Let me be clear. This is not — I repeat, not an interim appointment and Bob will be devoting his full-time attention to AIG.” At the time, Willumstad, who had once called being a CEO a “longtime personal goal,” told reporters he was a “young 62” and that he hoped to grow as old in the job as Greenberg, who left AIG at age 80.

Three months later, AIG has been bailed out by the government, Willumstad has been replaced, and the United States is in the midst of the greatest financial crisis since the Great Depression. Among the many things that are likely to change in this new world order, I believe one will be a rewriting of certain rules of the management playbook. The conventional wisdom trotted out by CEOs and popularized by management thinkers that they have 90 or 100 days to lay out their visions, their restructurings, and their reorgs just doesn’t seem to work so well in this environment. The world is simply moving far too fast.

Consider Willumstad. Like so many CEOs before him, he used the announcement on June 16 to repeat what is now a well-worn line. “In the coming months, and with a fresh eye, I will work with the Board to conduct a thorough strategic and operational review of AIG’s businesses and their performance,” he told analysts on the call. He added: “While I have no preset timetable, my goal is to complete the process in the next 60 to 90 days and to hold an in-depth investor meeting shortly after Labor Day to lay it all out for you.”

And indeed, Willumstad was planning an announcement about AIG’s restructuring on Sept. 25, almost 100 days exactly from the start of his new gig. He was scheduling press interviews.

The death of the 90-day grace period first came up in a conversation I was having with an executive recruiter who works in the financial sector. As we both stared slack-jawed at the tumbling stock market numbers on our computer screens, she made an excellent point: “The first 100 days, the first 90 days, what do you do when you need to deliver change immediately? None of the old rule books works right now. This is all about crisis management. All of those books—hundreds and hundreds and hundreds of books about what great leaders do—none of them are talking about what do you do in 72 hours.”

Alan Fishman, the brand new CEO of Washington Mutual who started on just Sept. 8, might love to have a book on those first 72 hours right now. Since becoming CEO, shares have continued to plummet, WaMu announced it was cooperating with the federal Office of Thrift Supervision to provide more information about its operations and business plans, and Fishman pre-announced third quarter earnings in an effort to soothe investors. Now, Citigroup is apparently planning a bid for the troubled thrift just 11 days into Fishman’s tenure.

Of course, hindsight is always clear, and it’s impossible to know what Willumstad knew when, or know his view from June 16. We’re in the midst of a once-in-a-generation financial crisis that is being upended by short sellers and total credit market seizures. And in plenty of less dire cases, the 90-day honeymoon may indeed hold up well.

But I do think it’s a moment to stop and consider that today’s environment is simply too extraordinary for conventional wisdom. Call a crisis a crisis. And if it is, lead like it is one.

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