Team builders often trot out the catchy slogan that there is no “I” in Team. But guess what? There is one “I” in Chairman. There are two “I”s in Managing Director and there are three “I”s in Chief Executive Officer. So, while a collection of disparate individuals may not make an effective team, the same might not be true of a leader who spearheads a business or a corporation. Consider the time when Dame Marjorie Scardino left Pearson. During the time that Scardino was at the helm, she transformed a sprawling business that had its finger in an unconnected selection…
There is one “I” in Chairman. There are two “I”s in Managing Director and there are three “I”s in Chief Executive Officer.
So, while a collection of disparate individuals may not make an effective team, the same might not be true of a leader who spearheads a business or a corporation.
Consider the time when Dame Marjorie Scardino left Pearson. During the time that Scardino was at the helm, she transformed a sprawling business that had its finger in an unconnected selection of pies. The company was involved in investment banking, tourism, television and, of course, printing. But during her reign, Dame Marjorie shifted the company’s focus to publication and education through brands that include the Financial Times, the Economist and Penguin books.
In the 15 years that Dame Marjorie had been in charge, sales had tripled to nearly £6 billion and profits had grown more than three-fold. Over that period, shareholders were rewarded with a total return of over 200%. In other words, it delivered an average return of around 7% a year over a decade and a half. Since her departure, the shares have continued to delivered similar return – almost as though nothing has changed.
Budget airline EasyJet was founded by entrepreneur Sir Stelios Haji-Ioannou in1995, though it was only floated on the London market at the back end of 2000. During his two-year stint at the airline since its IPO, shareholders have been rewarded with a 5% total return. But after his departure, the total return has improved to around 14% a year.
Apple is an interesting business, whose flagging fortunes were spectacularly revived when co-founder Steve Jobs returned to the company after a 12 year absence. During his 14 year stint, he turned a company that had been on the brink of bankruptcy to one of the most successful high-technology businesses in the world.
The shares jumped 60 fold as Apple rolled out one “insanely great” product after another. In other words, shareholders enjoyed an annualised return of 34% on their investment. Since his untimely death the returns, whilst still impressive, have fallen back to around 21%.
Apple recently poached the boss of Burberry, Angela Ahrendts, to head its retail operation from the middle of next year. Ahrendts who succeeded Rose Marie Bravo at the fashion retailer is credited with building Burberry’s image into a global brand. During her time at Burberry, shareholders have enjoyed a return of around 20% a year for seven year. Ahrendts will be succeeded by Christopher Baily who is reckoned to be as creative as Ahrendts was astute. Whether Apple will flourish or whether Burberry will founder with the Ahrendts transition remains to be seen.
Here in Singapore, the revolving door is as prevalent as anywhere else in the world. Notable high-level changes include Neil Montefiore leaving M1 (SGX: B2F) to join StarHub (SGX: CC3) in 2009. Montefiore left StarHub this year and he was replaced by Tan Tong Hai. 2009 also saw Magnus Bocker move from NASDAQ OMX to Singapore Exchange (SGX: S68).
It is unclear whether the departure of key personnel from a business can have an impact on performance. In some instances, a business could even carry on as though nothing has changed. In other instances, a business might appear to be adversely affected. But cynics might say that the executive was just very good at making a timely exit because the business prospects had already taken a turn for the worst.
From an investor’s perspective, perhaps the sage words of Warren Buffett might provide some guidance. He once quipped that we should buy shares in businesses that are so wonderful that an idiot can run because sooner or later, one will.
A version of this article first appeared in the Independent on Sunday.
The Motley Fool's purpose is to help the world invest, better. Click here now for your FREE subscription to Take Stock -- Singapore, The Motley Fool's free investing newsletter. Written by David Kuo, Take Stock -- Singapore tells you exactly what's happening in today's markets, and shows how you can GROW your wealth in the years ahead.
Like us on Facebook to keep up-to-date with our latest news and articles. The Motley Fool’s purpose is to help the world invest, better.
The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore Director David Kuo owns shares in Burberry