Two foreign CEOs and a committee-based board (2008)

The power to choose, and the machinery to replace

Attributing three presidents in four years to the qualities of the individuals brought in is to misread the situation. In a company with 80% of its sales and staff abroad, no one inside had been developed who could run execution at that scale. With a single overseas base before the acquisition, there was no reason for the international bench to be deep, and in practice there was no alternative to entrusting execution to foreigners. When chairman Fujimoto Katsuji said that the president of an international company should be a foreigner, the remark was less a principle than a description of the state of the talent pool.

The power to choose whom to entrust and the machinery to replace the person chosen were not, however, in balance at this company. The nomination committee did function as a mechanism for changing the president when results deteriorated, revising the mid-term plan in 2012 and isolating Naylor. Chambers’ departure after little more than a year, by contrast, was accepted without reproof. An acquisition can more than double the size of an organisation, but the depth of people able to run it does not thicken at the same speed. The miscalculation lay not only in misreading European demand but in that lag.