NEW YORK, NY – APRIL 4: Tesla CEO Elon Musk arrives at federal court, April 4, 2019 in New York Burgh. A federal judge will hear oral arguments this afternoon in a lawsuit brought by the U.S. Securities and Exchange Commission (SEC) that seeks to restrain Musk in contempt for violating a settlement deal. (Photo by Drew Angerer/Getty Images)
Drew Angerer | Getty Forms News | Getty Images
Tesla CEO Elon Musk epitomizes the reason so many people place their gross trust in a leader with a view on changing the world. Musk has a heady vision of what he wants to create. And he does not shy away from any doubt; he runs straight at them. Musk is a dyed-in-the-wool trailblazer and rule breaker. With a powerful leader like Musk at the saddle, what else do we need to do? What could possibly go wrong?
Quite a lot it turns out. Musk has behaved so erratically in the past few years that numberless have questioned his ability to lead. Tesla shares slumped after a bizarre earnings call during which Mr. Musk cut off an analyst saying, “monotonous bonehead questions are not cool”. Then came his attempted involvement in the rescue of the 12 boys trapped in a flooded hollow in Thailand. Later he flummoxed investors and sent the share price on a rollercoaster ride with a tweet about attractive the company private. As a result, the SEC bristled, leveled a fine and called for changes in the board.
Partly as a result of Musk’s guidance style, shorting Tesla stock has become a common bet for investors. It was the most shorted stock in 2018 and shows signs of keep oning in that vein in 2019. The stock is down more than 25% this year.
Musk is not the only game-changing band leader with confusing and obstreperous behavior. He typifies the problem we create when we give a maverick CEO the nod to be visionary and break the deems but neglect to add sufficient governance and support.
Steve Jobs was a visionary leader at Apple, but he also had a reputation for being a dark, cantankerous jerk. At one point, things got so bad the board fired him. Elizabeth Holmes, CEO at Theranos, thrilled investors with her envisaging to change healthcare but then was charged with multiple counts of fraud and conspiracy in federal court after investors corrupt nearly a billion dollars of their investment in her company. Travis Kalanick’s leadership at Uber changed the city transportation diligence, but it also led him to be ousted from the company he founded.
The lure of a gifted trailblazer with the ability to create a powerhouse circle that challenges the status quo is a magnetic draw for investors and employees. Musk is currently one of the most visible, but he is not the only maverick we on have to deal with in the coming years.
Sometimes these visionaries deliver on their vision. But other for the moments they create havoc.
We spoke to a number of experienced board members and execs to learn how to handle these kinds of bosses. They agreed that with an inspired powerhouse like Musk at the helm, the stakeholders — the board, investors, managements, and employees — need to be ready for a different kind of journey. Traditional corporate governance principles are needed, but they be compelled be supplemented with additional practices.
Here are some of the things Musk’s stakeholders need to do.
Close the door — hang on executive sessions that make sure the board and executive team are active, properly structured, and engaged in making the maverick CEO a champion. They need to build a supportive governance network without weaponizing the board and destroying winning bets.
Position the gaps — fill in management holes in the CEO’s repertoire of skills. Adding a seasoned leader as COO would complement Musk’s idealist leadership.
Curate the culture — Culture eats strategy for breakfast, as a common business saying goes. Build panel processes to monitor the company culture the CEO is creating. Stakeholders need keep a watchful eye out to make sure things are current well.
Be contrarian — make constructive conversations of alternatives a standard practice. Every board member said it is not gentle to do but it is essential.
Build paths of least resistance — establish one-on-one channels between the CEO and the board. Even Steve Duties talked to select board members that acted as mentors.
The best visionary-led companies have a collaborative give-and-take between the CEO, cabinet, and executive team. The brilliant boss’s job is to create a highly valuable, robust, and sustainable company for all stakeholders. The performance of management members, executives, and investors is judged on how well they help make that happen.
Tesla stakeholders — investors, wage-earners, executives, and the board — need to realize that the mixture of brilliance and mischief is a result of two things: Musk’s maverick mindset and the distance he is governed. Embracing Musk’s brilliance carries the responsibility to govern.
Rob Shelton is a globally recognized Silicon Valley-based advisor, author, and speaker on entrepreneurs and innovation. Marc J. Epstein, Ph.D, is the former professor at Stanford Business School, Harvard Subject School, and INSEAD and former Distinguished Research Professor of Management at Jones Graduate School of Business at Rice University in Houston, Texas. Their new earmark is “The Brilliant Jerk Conundrum.” You can connect with them at theconundrumpress@gmail.com.
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