For New CEOs, the Art of Doing Nothing

At issue in each of these cases, and many other chief executive transitions, is not whether the new executives are men or women. What is at issue is whether each of these new CEOs will find it necessary to plunge their companies into a sea of changes, or be patient with the direction of public corporations that are already largely successes. Sometimes the best thing for a new CEO to do is nothing.

GM does not need to be changed much. Departing CEO Dan Akerson may have done a poor job of reversing the company’s decline in Europe, a good job of exploiting the company’s lead role in China and a fair job of holding GM’s top spot in the United States. However, for the most part, product line-up choices have been fairly good. Turning around in Europe is impossible for now. GM has tried nearly everything it can to improve its fortunes there. But, as was true in the U.S. five years ago when the American economy was in a recession, GM cannot get blood out of a stone. Barra inherits a huge corporation in fine shape. Major changes for the sake of change would be counterproductive.

What holds true for GM also holds true for Ford, which recently announced a set of aggressive expansions around the world — a major decision that may be Mulally’s last one there. Under his stewardship, Ford has done as well as any other major car manufacturer in the world. Over the past five years, Ford’s shares are up 475%, against a 100% rise in the S&P. By most major markers, Ford does not need even a modest overhaul.

Of the companies that have recently appointed new CEOs, Lululemon appears to have an immediate change in direction. However, Lululemon’s greatest liabilities were Chip Wilson, who could not keep his mouth shut, and a set of workout pants that were too sheer. Wall Street was disappointed with Lululemon’s recent sales forecasts. But its revenue rose 20% during the most recent quarter to $380 million. Net income was up to $66 million from $57 million in the same quarter a year ago. Revenue in the current quarter is expected to be in the range of $535 million to $540 million. Most clothing companies would be lucky to do so poorly. A sudden revamping of Lululemon’s product line and marketing would almost certainly do more harm than good. Other than the see-through pants, consumers seem to be happy with the company’s clothing.

CEO transitions are often marked by sudden changes in strategy. For companies that have had a fairly impressive period of success, even if there have been glitches, there is a great deal to be said for patience.