Every day, I walk to work past St Paul’s Cathedral. Its architect Christopher Wren is buried inside, his tomb famously engraved with the words “Lector, si monumentum requiris, circumspice” — reader, if you seek his monument, look around you.
When chief executives start thinking about their legacy, I suspect it is Wren that comes to mind: “What can I do that generations will talk about years after I’m gone?”
This can be a dangerous train of thought. Sometimes a business leader in thrall to posterity creates not so much a monument to his or her tenure, but a monumental error.
Seeking glory, Richard Greenbury, Marks and Spencer’s chief executive until 1999, set out to become the first UK retailer to record £1bn in profit. The group reached its goal in 1997, but Greenbury had sown the seeds of complacency that presaged M&S’s long subsequent decline.
Jack Welch made a “last swing for the fences” with General Electric’s bid for Honeywell in 2000, for which he delayed his well-heralded retirement as CEO. Rather than helping Mr Welch to leave on a high, the deal was stymied by the European Commission.
Those were simpler times. Some broad succession principles remain the same. It is as true as it ever was that it is not always a good sign if the world remembers you. Poor Mike Coupe, outgoing boss of Sainsbury’s, seems more likely to become a case study for singing “We’re In The Money” on camera, after launching a takeover of rival Asda, than for anything he did for the supermarket.
At the same time, any legacy is only as secure as the chief executive’s replacement. When I interviewed Mr Welch on the eve of his departure in 2001, he told me “if Jeff Immelt doesn’t grow GE, Jack Welch will have failed because Jack Welch’s most important job over the last several years has been to pick his successor”.
You may rightly quibble with the chief executive having the final say on who comes next — the task is better handled by the board — but the point stands. Mr Immelt’s recent fall from grace at GE has raised questions about the durability of the model he inherited from Mr Welch. The little-known Charles Coffin, GE’s first president, has a better claim to business immortality for laying the managerial groundwork for the conglomerate’s 20th century success.
Chief executives now have less time to prepare their legacy, though, as median time in office falls. Teamwork, rather than individual omnipotence, has gained favour, so it has become harder to attribute credit for corporate achievements. Critically, the terms on which posterity will judge bosses are changing.
As chief executives’ public posturing in Davos last week showed, stakeholder capitalism is displacing shareholder primacy in the struggle over the future of business. Thoughtful leaders now need to ask themselves how they would respond to a 21st century equivalent of the famous first world war recruitment poster, showing a girl asking her pensive father “Daddy, what did YOU do in the Great War?”
Consider, for example, Alison Rose, who recently took over at the helm of Royal Bank of Scotland.
Twenty years ago, Fred Goodwin was gearing up to lead the bank, on an expansionist ticket inherited from his predecessor George Mathewson. We know how that ended: in the financial crisis and government bailout.
Ms Rose, liberated of many of the consequences of that grim legacy, has an opportunity to lay out a different future with her new strategy. It is likely to depend more on good stewardship than on transactional prowess or stark investor returns.
Mr Goodwin helped make “former bank boss” a term of abuse. What will she and her peers do now to make it acceptable in 2030?
Leaders used to launder their corporate reputations with good works and lavish charitable donations. The decline of the Sacklers’ family name, trashed by the US opioid crisis, which critics blame in part on opioid painkillers made by Sackler-owned Purdue Pharma, shows the limits of such old-fashioned legacy-varnishing.
Cynics may say that former chief executives will still do this, or fade happily into retirement, comforted by their corporate pensions and cushioned from the consequences of their actions when in office. That may be true for some. But in the words of one former executive, “relying on your PR to write your Christmas lunch speech to your grandchildren isn’t going to cut the mustard any longer”.
When future generations look around, they will not judge today’s corporate architects by their companies’ share price, their philanthropy, and least of all by the names they see on public buildings, but by the state of the world those chief executives left behind.
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