What do CEOs do? Does anyone in the media have a clue? True, all reporters and editors seem to possess a vague idea that CEOs "run companies," which seems to involve hiring and firing, making speeches, launching memos, and, of course, playing golf. But do any of the legions of scribes who write about CEOs really know what these titans of industry do each day inside their cushy offices? Do they shuffle papers on their giant desks? Bark orders at cowering subordinates? Rub hands together and plot world domination?
We ask because CEOs are an obsession right now, thanks to the well-cushioned falls sustained by Stan O'Neal and Chuck Prince. The press is filled with all sorts of advice for their successors at Merrill Lynch & Co. and Citigroup Inc., respectively, as well as diagnoses of what went wrong during their recent reigns. One theory: These guys were just not very smart. "Prince, a lawyer by trade ... was in over his head, just hopelessly inept when it came down to understanding what an investment bank does, or at least what it should do," declared Jim Cramer in New York magazine. He is not much easier on O'Neal: "This man was Wall Street's Wicked Witch, a much-feared, totally unrespected hatchet man who appeared to be beloved by the troops but in reality didn't have a friend in the joint." And another thing -- he played too much golf.
So what's the antidote? The New York Times, for one, thinks it's "C.E.O. Version 3.0." Done with empire builders -- Sandy Weill, Jack Welch -- and fix-it men -- Prince, Dick Parsons -- it's time for "the team builder," the paper proclaims. What exactly is that? The Times lets University of Southern California management professor Warren Bennis try to explain: "It's someone who can assemble a team that functions as smoothly as a jazz sextet."
Got that, John Thain?
The Times piece was written by Nelson Schwartz, who joined the Gray Lady this year from Fortune -- a magazine that has been obsessed with celebrating, classifying and stereotyping CEOs for decades. (Last year, it declared "celebrity CEOs" like Welch and Weill passé, and "courageous CEOs," like Steve Jobs and Anne Mulcahy, the new stars -- whatever that means.) In its latest issue, Fortune weighs in on Prince and O'Neal and what went wrong on Wall Street. "WHAT WERE THEY SMOKING"? its cover demands.
That cover line, of course, is a none-too-subtle allusion to The Wall Street Journal's now-legendary story from a few weeks back about Bear, Stearns & Co. CEO Jimmy Cayne's alleged pot smoking. It's a clever piece of thievery on Fortune's part, since it basically allows it to use reporting by the WSJ to sell magazines. Inside, the issue contains a long explainer piece on how the subprime mess came to be and how it wreaked havoc on Citi, Wall Street and especially Merrill. And while it's informative enough, we were especially interested in how Fortune handled the fall of O'Neal -- a CEO Fortune had deified in at least four major stories since 2002. "Stan O'Neal may be the toughest -- some say the most ruthless -- CEO in America. Merrill Lynch couldn't be luckier to have him," the magazine cooed in 2003. He's nothing less than a "turnaround genius," it gushed.
Fast-forward to now. Here we learn that Merrill's current problems stem from a shift in culture that grew out of O'Neal's decision, in 1997, to expand the firm's relationship with hedge fund Long-Term Capital Management, which imploded the following year.
We're then told that "despite the LTCM debacle," O'Neal becomes CEO a few years later and "succeeds in putting Merrill in trim."
That's it? What happened to the "turnaround genius" from a few years ago? He's been blocked from view, of course, by $8 billion in subprime losses. As Fortune itself concludes, "When Wall Street appears in genius mode, raking in huge profits on mysterious products and complex trades, the secret isn't genius at all. It's that hubris is running wild, and so is risk. And whether it's tomorrow or five years hence, risk will jump from the shadows, knife in hand, to cut genius down to size."
But that won't stop Fortune and the rest of the media from regularly anointing new CEOs geniuses as they tumble from the sky. Got that, John Thain?
Yvette Kantrow is executive editor of The Deal.
This post first appeared on The Deal.