CEO and strategy fit

The chief executive officer is an important person. Can anything important be learnt by watching a video of the CEO?



A CEO's influence can be direct by deciding to change the company's strategy or making big acquisitions. HTC decided to change its strategy totally and Walt Disney Corp decided to buy Pixar at a high price. 

However, the influence can also be more subtle. The prior CEO of IKEA, Ivar Kamprad, used to make it very clear that he liked taking economy flights. That was a great way of leading by example and emphasise the low-cost strategy of IKEA. A company with a differentiation strategy, will need a CEO that prioritises other issues. If Steve Jobs made a point of taking economy flights that would send the wrong signal to the employees.

It is difficult to understand the thought process of the CEO, but a lot can be gained by studying his biography and a representative set of video clips. I do not know how important such an analysis is to understand a company (from the perspective of the competitor or the investor), but I suspect it can be a quite important complement to a more substantive analysis. I am not aware of any academic research in this area. 

In this posting, I will just highlight two clips. It is not sufficient to conclude, but it is a beginning. One bad and one good. 

Video 1. Former CEO of JC Penney

Here are a few quotes:

• "We want to become America's favorite store and that will be the favorite store for all Americans, rich and poor, young and old, rural and suburban." 
• "Rethinking everything we do." 
• "We frame the new things that matter in your life."
• "Ultimately the customer knows the right price for every product"
• "We will promote for an entire month ... rather than having weekly sales"
• "All the promotional signs will go away"
• "We get one chance to really get it right"

In my opinion, this CEO does not seem to have an understanding of strategy being about tough choices (e.g. bullet 1). He also really likes to talk management speak, which is impossible to understand (e.g. bullet 2, 3, 4, 7). If you listen to more clips, you realise that he talks a lot about what JC Penney will do, but not about what the customer actually wants in concrete terms (e.g. bullet 4). I have earlier written how the actions of this CEO almost killed JC Penney (here). 

Video 2. Current CEO of Tesla

Here are a few quotes:

• "There are a lot of reasons why Tesla would not succeed. ... I think I can make those argument much better than most of the people who attack Tesla."
• "Have you seen their car [talking about BYD a competitor]?" [laughing] "I don't think they have a great product."
• "We found that China was uncompetitive ... on the order of 10-20% ... This was a chock to me too. ... Almost none of our components in Model S are sourced from China. ... We are actually agnostic with respect to sourcing components. "

In my opinion, this CEO has a clear overview of strategy. He does not like management speak (e.g. bullet 1, 2). Instead he speaks very clearly with a lot of technical detail (e.g. bullet 3). If you listen to more clips, you realise that he is slightly awkward and just answers very seriously to all questions. Here is a better video but it is 80 minutes long.