Downfall of too hard a leader

Personal leadership in entrepreneurial companies is, it almost goes without saying, an indispensable element in their success. Where would Dyson, Carphone Warehouse, Richer Sounds, Virgin, Amstrad or The Body Shop be without the vision, drive, and quirkiness even, of the people who founded them?

Less easy to assess are the personal leadership qualities required of the chief executive in a multinational corporation. After all, what scope is there for charismatic individualism in a mature self-confident corporation, which imposes its own culture and demands unswerving conformity from its senior operatives?

Surprisingly, the answer is “quite a bit”. And there can be no better inverse example of this than the unfortunate tenure of Doug Ivester as chairman and chief executive of Coca-Cola. In theory, Ivester should have been a shoo-in after the sudden death of his predecessor, Roberto Goizueta, in 1997. He was the ultimate insider, the financial Svengali behind Goizueta’s highly successful expansion of the Coke empire.

But two short years, and the tumultuous events filling them, have proved this theory disastrously wrong. Coke faced first an unprecedented profits warning in the wake of the Asian economic crisis. Then came the recent product recall crisis, which so rocked confidence in Europe. And finally, it found itself picking up the pieces of a botched Cadbury Schweppes acquisition.

Some of this was sheer bad luck. But Ivester won few points for his handling of the situation. Where his predecessor deployed a natural charm and tact, Ivester was ruthlessly, almost inhumanly, logical. He concluded, for example, that the hospitalisation of a few consumers in Belgium was unlikely to have a material effect upon the company’s business. But in failing to take the crisis seriously, he made it infinitely worse by projecting an uncaring image. And that’s fatal, when the core of your business is something as emotional and vulnerable as a big consumer brand.

The same problem dogged Ivester within as well as without the company. He was respected, but hardly loved. One former senior Coke executive explained the difference between Goizueta and Ivester as follows. When Goizueta summoned you to his office, he would spend ten minutes on the immediate business agenda and then chat for half an hour about what novels you were reading. With Ivester, the relationship was purely transactional.

The Coke board did well to confront the management issue, so swiftly in fact, that its announcement of a successor took the markets by surprise. Many thought Ivester had another year or two to run, so that no one lost face.

Regional managers, especially in the UK, will breathe a sigh of relief now that the Ivester Effect has been lifted from their shoulders. For too long it has been clouding the good news elsewhere in the company. As to Ivester himself, it is unfortunate that he became a scapegoat for circumstances partly beyond his control.

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