Management Turnover as Change Agent

Wednesday, September 29, 2010

Recommended Reading - Open letter to Stephen Elop, Nokia’s new CEO: How to make Nokia great again, RCR Wireless

Now that Nokia has brought on Stephen Elop, the former Microsoft software executive, to be the new CEO, questions remain what he can do to revive the fortunes of Nokia. I have not been one of Nokia’s fans of its latest CEO hire. While Elop is really smart and an effective executive, I am not convinced he was the right person for the job. J. Gerry Purdy, PhD the Principal Analyst for Mobile Trax LLC has written a terrific piece in RCR Wireless outlining his ideas on exactly what Elop needs to do to be successful at the helm of Nokia. According to Purdy,

… all is not well with Nokia as you walk in the door. While the volume of cell phone production is very high, it’s clearly not the right mix of models, software and services. And, while you were one of the first firms to develop a smart phone with the N95 in 2006, you have clearly fallen in the fast-growing smart phone segment, especially in the United States. Integrated multimedia smart phones are becoming the dominate handset device type in the developed world, and Nokia needs to get back to creating truly great and innovative products.

… There’s no way around the basic fact that you’ll have to make a number of major changes. You can’t keep designing products the way you have in the past. You can’t keep doing operating system software the way you have in the past. You can’t ignore major changes in the way people use their phones (highly integrated multimedia and almost all oriented toward touch screens). You have to rebuild from the ground up. You have to re-create a culture around Nokia being “cool” again. You can’t simply declare it. Rather, you have to actually do it.

Purdy goes on to make concrete suggestions on exactly what he thinks Elop needs to do including moving the corporate headquarters from Finland to the United States. Many of his suggestions were right on target but the suggested HQ move is unrealistic for such an important Finnish firm. Anyone interested in Nokia or the wireless industry should read Purdy’s entire piece.

CEO Watch - William C. Weldon, Johnson and Johnson, Update #1

Johnson and Johnson’s JNJ (NYSE) longtime CEO, Bill Weldon remains on the hot seat. The numerous problems J and J has had with recalls and manufacturing oversight through its huge network of subsidiaries particularly its McNeil Consumer Healthcare firm continues to plague the firm and particularly the firm’s CEO. Weldon will be testifying later today before a House Congressional Committee. All eyes will be on weldon today to see how he responds to the criticism the firm has faced for its response to the continuing problems at McNeil as well as other parts of the firm. Despite the recall related proWilliam C. Weldonblems, J and J overall has continued to remain very profitable but J and J more than most drug firms has relied on its reputation as a means for success all these years. Investors and analysts are beginning to question whether Weldon’s response to the problems were adequate. More importantly whether he managed the crisis sufficiently to protect the firm’s reputation. According to piece by Johanna Bennett in Barron’s Blog entitled J and J Reputation on the Line,

… a recent survey by CLSA analyst David Maris indicates that the company’s reputation among mothers and doctors may need a Band-Aide.

When 136 mothers and 50 pediatricians and general practitioners were asked to rate J and J’s formerly unassailable reputation before and after the recalls on a scale of one to 10 (1=horrible and 10=perfect), J andJ’s score fell 26% from an eight to a 5.9, according Maris.J&J One Year Stock Performance

And for some respondents, the recalls have permanently dented their regard for the the health care titan.

Weldon has a difficult task ahead of him before Congress and his shareholders. Despite his long reputation for fine management his survival as CEO may be an uphill battle as this problem continues to have legs. Stay close to the news on this one.

For more:

New York Times

Seeking Alpha

Wall Street Journal

Monday, September 13, 2010

CEO Watch - Nokia CEO Olli-Pekka Kallasvuo, Update #1

It’s official Olli-Pekka Kallasvuo is out as CEO of Nokia NOK1V and in his place on September 21 is a former high level software executive from Microsoft, Stephen Elop. Liberum has been talking about the need for change at Nokia going back to October 16, 2009. The change at the top of Nokia was essential. Many analysts have been delighted with the change. The selection of 46 year old Elop has merit. He was in charge of Microsoft’s Business Division and is extremely well versed in softOlli-Pekka Kallasvuo, Outgoing Nokia CEOware which is the area the Nokia needs to focus on to get its smartphone business at a point where it is capable of competing again with the Apples, Motorolas and Google phones. Elop also has had experience working with Nokia while at Microsoft and in his previous job at Macromedia.

The real question remains can Nokia without a true visionary at the top of the firm make the leap to effectively compete on high end with Apple, RIM, Google and even Motorola. I am somewhat skeStephen Elop, Incoming Nokia CEOptical. Change is certainly afoot at Nokia. Just a few hours earlier, Anssi Vanjoki, Nokia’s smartphone chief and a one time candidate for the CEO position, announced his resignation from the firm. Elop will now have a chance to appoint someone to his own specific liking. The firm desperately needs a visionary at the helm and in some of the key management positions if it has real hope to get back near the top.

Investors must keep a very close eye on new management at Nokia.

Tuesday, September 7, 2010

CEO Watch List - Bill Weldon, Johnson and Johnson

Can Johnson & Johnson’s JNJ (NYSE) CEO, Bill Weldon, survive the firm’s repeated recalls? First it was a series of small recalls then it turned into a flood. Johnson & Johnson failed miserably to handle the public relations and the actual manufacturing related deficiencies in many of its McNeil Consumer Healthcare Division. As time passes it is hard to believe, the someBill Weldonwhat bewildered CEO Bill Weldon will be able to hang on as CEO at J&J. Mina Kimes wrote a terrific piece for Fortune that lays out the difficulties Weldon faces going forward. According to Mimes story,

Weldon, who has kept a low profile for the majority of his eight-year tenure, must now fight to salvage not just McNeil’s reputation — but his own. Surveys of business executives conducted by CoreBrand show that favorability ratings of J&J’s management have dropped from 88.3% in 2006 to 80.9% last quarter. That’s One year stock performance of JandJa significant decline, according to Jim Gregory, the branding firm’s CEO. “There’s something not right here that needs attention,” Gregory says. “[Weldon] needs to change it — or there needs to be a change of management.”

… Though some corporate image pundits have called for the CEO to resign, insiders say Weldon is unlikely to depart before next year, when he will be 62, the age at which J&J leaders typically retire. In fact, two former executives say Weldon may stick around even longer. He has reportedly told his board, one says, that his two younger heirs apparent, Sheri McCoy, the head of J&J’s pharmaceuticals sector, and Alex Gorsky, the head of medical devices, aren’t prepared to assume his role.

Only time will tell. Make sure to keep a close eye on the firm going forward.

Beckman Coulter's CEO Resigns

Beckman Coulter BEC (NYSE), the biomedical testing company, announced today that its CEO, President and Chairman, Scott Garrett, has resigned. Garrett, who has been CEO since 2005 found himself under increased pressure as theScott Garrett firm failed to meet analysts expectations in it second quarter results. The firm has also found itself missing FDA quality standards on some its products. Back in June the company received a warning letter from FDA regarding the marketing of one its products. The combination of all these factors appears to have been what made for the resignation. Beckman Coulter’s stock took a hit a few months back and so far nothing has happened to make for the stock’s revival.

The company also announced that an interim CEO J. Robert Hurley a current employee would take charge as the firm’s interim CEO until a successor to Garrett is found. This executive change takes place as the company is still working on integrating the acquisition of Olympus’s diagnostic’s business into the firm. Hurley, the interim CEOBecton Coulter’s One Year Stock Performance was directly involved in the Olympus integration. Hopefully, his expertise will come in helpful in making this integration more successful.The company can be expected to continue struggling to work out all these problems while the CEO search goes on. Investors should keep a very close eye on the firm’s moves going forward.

For more:


Press Release