Good morning.
Things change fast in the world of business. Earlier this week, we published Michal Lev-Ram’s Leadership Next interview with Flexport CEO Dave Clark, a supply-chain ninja who left Amazon after he lost the CEO bake-off to Andy Jassy. “It’s hard to believe I’ve been a year already at Flexport,” Clark told Michal, “but I’ve had a lot of fun in that amount of time.” Yesterday, the fun ended. Clark resigned, handing the reins back to founder and “executive chair” Ryan Petersen after just one year on the job.
That came just a few days after Walgreen’s CEO Roz Brewer, who was slated to speak at Fortune’s CEO Initiative in November, stepped down after just three years on the job. Neither Brewer nor the company provided much detail—and Brewer canceled her CEO Initiative appearance. But all signs point to strategic differences with the company’s former CEO and current “executive chair” Stefano Pessina.
Which raises the question: What is an “executive chair”? I’ve long been an advocate of independent board chairs as a means of providing accountability for the CEO. But if that chair is also an “executive,” then is the CEO really “chief”? And if the executive chair is a former CEO, does the new one really have freedom to pursue change?
Fortune’s Geoff Colvin did a deep dive into this issue last month, which you can read here. Some takeaways: The executive chair position is on the rise—up 50% over the last decade. Today, 64 companies in the Fortune 500 have someone in the job, including Nike, FedEx, Visa, Honeywell and Southwest. Most of them—54 of the 64, and all those just mentioned—are also past CEOs.
Given the complexity of these companies, I get the desire for an orderly transition. Six months to a year of overlap between an old and new CEO may make some sense. That’s what Mastercard’s Ajay Banga, J&J’s Alex Gorsky, and IBM’s Ginni Rometty did. But beyond that, it quickly becomes cumbersome. Colvin cites a Spencer Stuart study showing companies with executive chairs significantly underperform those without. And that should be no surprise. In today’s rapidly moving world, having clear lines of authority helps companies navigate change. Having two bosses doesn’t.
But of course, there are always exceptions. Later this month, we’ll be publishing the interview Michal and I did recently for Leadership Next with Gensler co-CEOs Diane Hoskins and Andy Cohen, who insist two heads are better than one. For them, that may be so. But I suspect Dave Clark and Roz Brewer would disagree. (You can listen to the podcast interview with Clark here.)
More news below.
Alan Murray
@alansmurray
alan.murray@fortune.com
