Why past success isn’t always a good indicator of future success

 In Industry News

Carol Bartz: Was she the wrong choice from the start?

The title is taken from a recent article by Maxwell Wessel on The Harvard Business Review blog.  Maxwell is discussing if the apparent failure of ex-Yahoo CEO Carol Bartz could have been foreseen.  Maybe Carol Bartz was the wrong person for the job, but the Yahoo board should have known so from the start.

Picking the right top executives is always a extremely critical exercise. Picking one for a business in turmoil can be a matter of life and death of the company.

Maxwell Wessell has made some interesting observations. He says:

“To understand my stance, it’s important to understand one basic idea; past success isn’t always a good indicator of future success. Clayton Christensen has long been a proponent of hiring managers with the right “schools of experience.” His basic argument is that it is more effective to evaluate managers by looking at the situations they have been in than their track record of success.”

“By looking at past success without considering the situation in which the manager was successful, we neglect to account for the wisdom accrued over time when a manager faces a specific set of problems. This may seem straightforward, but it runs contrary to what boards do in practice. Boards tend to look at candidates for executive positions and hire them based on past success in generating shareholder return. A board might assume that having generated great returns at the helm of a growth company yielded relevant skills for generating returns at the helm of a failing media firm.”

Read the full article.

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