Several months ago I linked to an interview with J. Crew CEO Mickey Drexler, who as head of Gap Inc. brought it to greatness before getting fired. "PCC" made the following comment to that post:
Ever since that day I've been haunted by PCC's challenge. OK, not really haunted, at least not haunted enough to do a full case study. But I came across some articles that shed some light on the question:
1) First was this recent Fortune article on CEOs who got fired. In a sidebar, which appeared in print but which I can't seem to find online, Drexler blamed his fall on the decision to open too many stores. Intriguing but vague.
2) The plot thickens with this New York Times article by Joe Nocera, published in March [By the way, does anyone else hate it when www.nytimes.com publishes Olympic results, right in front of your face in big bold headlines, before you get a chance to see it on TV?] Here is the money excerpt:
For most of his time there, he had a magical run. Behind the scenes,
however, he had a contentious relationship with the company’s founder,
Donald Fisher, who also held the title of chief executive (Mr. Drexler
was president). In 1995, Mr. Drexler became chief executive. And then
came the late 1990s, and it all started to unravel.
As president,
Mr. Drexler did what came naturally — obsessing about clothing and
style and stores and customers. But as chief executive he suddenly had
a whole new set of issues to deal with at a very large company, which
Gap had become. “Mickey was suddenly underqualified to make decisions
about real estate, cash flows, debt levels and employment problems,”
Mr. Jaffe said.
Worst of all, customers stopped buying his
clothes. “I made some mistakes,” Mr. Drexler acknowledges today. “I
lost some of my confidence.” It seems clear now, though, that the real
problem was that as he focused on all the things that consume a modern
C.E.O., he lost touch with the customer. The customer, it turned out,
was his muse.
3) Finally, this 2004 article from New York Magazine:
In May 2002, however, Drexler found himself in trouble. The veteran
retailer had many skills, foremost among them a seemingly magical
ability to divine what clothing styles would separate consumers from
their money. But recently, Drexler had made a series of bad calls.
Faced with increasing competition from a pack of imitators—everyone
from Abercrombie & Fitch
to Wal-Mart—he decided to steer the Gap away from its signature basics
look to a trendy, Britney-esque aesthetic: cropped T-shirts, low-rider
pants, brighter colors. The result was a 29-month slump. Drexler had
lived through ups and downs before, but nothing like this. “I was
damned nervous,” he says. “I kept thinking, We’ve got to fix it. The
press and the stock market were killing us.”
Even
as Drexler mounted a massive turnaround effort—firing staff,
transferring executives, commissioning new merchandise—tensions that
had long simmered between him and the Gap’s board began to boil. Having
come of age in the sixties, Drexler was a retailing maverick. When
choosing product, he made decisions with his gut, not market research
and spreadsheets. As a manager, he let it all hang out, doing a victory
dance when he was pleased, yelling when frustrated, leaving endless
“What if . . . ” “Why not . . . ” voice mails. There was a time when
that kind of freewheeling spirit suited the Gap; you could argue that
it was vital to the company’s success. But the Gap was a Fortune 500
megalith now—more grown-up, more corporate—and there were rumblings on
the board that Drexler was no longer the right man to lead the company.
“Mickey wasn’t so passionate about compensation committees and budgets
and strategic plans,” says a former board member. “We knew the company
couldn’t continue to operate with a master merchant driving the brand.
My own view was that there should be a transition to a more
management-oriented CEO.”
It
didn’t help that friction was growing between Drexler and Gap founder
Donald Fisher, whose family owned one third of the company’s stock.
“Mickey was given 99 percent of the credit, but Don had started the
company, and maybe he felt he deserved more credit than he was
getting,” says John Bowes, a philanthropist and high-school classmate
of Fisher’s, who invested in the launch of the Gap and was on the board
for 21 years before retiring in 1997. Two of Fisher’s sons had worked
at the Gap during Drexler’s tenure. “It puts extra strain on the
relationship,” says Bowes, “when the founder’s kids come in and start
running a division.”
As I read these accounts I was struck by how familiar they would seem to any businessperson, large or small. I believe that "business anthropology" is essentially fractal in nature. Wikipedia defines a fractal as "a rough or fragmented geometric shape that can be split into parts, each of which is (at least approximately) a reduced-size copy of the whole." What I mean is that if you'd followed Jack Welch around during his glory days as CEO of the gargantuan General Electric--sat in on his meetings, listened to his direct reports, watched him deal with the business and human problems that came up--and then done the same with a GE divisional junior vice president in Worthington, OH with just 100 people under him, you would have found that the two led essentially the same lives. With the exception of scale, life in the C-suite looks a lot like life in a small division of a large company or in a small business. Personality clashes, people being promoted to jobs for which they're ill-suited, even resentment caused by nepotism--it's there no matter how high you go.
