A new CEO has been hired to turnaround the performance of a struggling company. He gets into his new plush corner office very early on his first official day of work. He’s somewhat startled as he enters his office because there is someone sitting at his new desk closing the corner desk drawer.
He quickly recognizes the person as the outgoing CEO that he is replacing. There is an awkward silence, followed by a handshake greeting. The outgoing CEO said; Sorry, just clearing out the last of my personal stuff. I wanted to wish you the best of luck in the job. I left you three (3) envelopes in the corner desk drawer.
They are advice letters from CEO to CEO. Please don’t feel obligated to read them. They are there simply in case you feel like you’re experiencing some leadership challenges and could use some advice from someone who has been there. Again, I wish you all the best! The new CEO replied with a perfunctory thank you and a final handshake.
The new CEO met with all of his key lieutenants and received reports on what to expect from a performance perspective for the next several quarters. The CEO met with the Board to set lower performance expectations short term. He also presented a new strategy and plan to turn the company around. The Board enthusiastically blessed his new plan.
The new CEO and his CFO met with key analysts from Wall Street and lowered the financial results expectations short term and presented their new plan for turning around the business. The Wall Street analysts were impressed by the CEO’s candor and new business plan for growth. The company’s stock price still got pummeled after the news was publicly released.
The first quarter onboard was a blur for the new CEO. Ninety days seemed like nine days to the CEO. He worked tirelessly and traveled all over the world attempting to reassure employees, customers, partners and shareholders that their new business plan would be successful. He was optimistic that he had convinced the key constituents to not give up on the company.
The CEO’s first quarter onboard turned out to be an unmitigated disaster. Several of his key lieutenants resigned and left the company abruptly. Two huge orders from long time customers were canceled with no advance notice at the very end of the quarter. The new CEO was stressing out. What do I say to the Board? How do I manage this to Wall Street? Am I going to get fired after one quarter?
Then he remembered the three envelopes the outgoing CEO had left in his corner desk drawer. He opened the drawer and frantically opened envelope#1 and pulled out the single sheet of paper. It said; Blame me for the poor performance! Tell the Board that you had no idea how bad things really were and the state the company was in when you took over as CEO. It was my fault and I should have been fired a lot earlier.
The new CEO took this narrative to the Board, to employees, partners, shareholders and the Wall Street analysts. He engendered some sympathy from all and promised them that he now knew where all the skeletons were buried and what he needed to do to turn the business around. His mantra to all was; No more surprises… I have this under control.
The second quarter was even more of a blur for the CEO. He worked seven days a week with his key lieutenants to implement and execute the new new business plan. He was optimistic that his new business plan was starting to work. He was utterly exhausted as the quarter ended and he was bullish on what their financial numbers would look like.
His CFO called him and gravely informed him that their financial numbers were really, really bad. They had lost a key supplier during the quarter that severely impacted their production capabilities. They ended up at 70% of their lowered revenue expectations number. Their stock was pummeled even further.
The new CEO had never faced pressure like this before in his career. What should he do? Then he remembered the three envelopes (now two envelopes) that his predecessor had left him. He quickly opened envelope#2 and read; Blame the macro economic environment for poor performance! Surely you can’t be responsible for inflation spiraling out of control. OPEC is holding the world hostage by cutting Oil production with corresponding huge gas price increases. The stock market took a huge hit (30%) based on all of the bleak economic news and financial forecasts.
The new CEO took this narrative to the Board, to employees, partners, shareholders and the Wall Street analysts. He asked for patience and promised them that they were doing what they needed to do to turn the business around. His mantra to all was; Patience… we just need a little more time to turn this around.
The third quarter was deflating for the new CEO. His new business plan was not working. He was demoralized as the quarter ended. He was seriously concerned about his job and future as a CEO. Their financial numbers were even worse than the prior quarter.
The new CEO was in an existential position. What should he do? Then he remembered the three envelopes (now one envelope) that his predecessor had left him. He quickly opened envelope #3 and read; Start preparing three (3) envelopes…
The moral of the story: Accountability is a key trait/attribute for all successful Leaders. Excuses, finger pointing and the blame game never works long term.