394 Part 3: Strategic Actions: Strategy Implementation
Their familiarity with the company’s oper-
ations supports their efforts to “maintain
order” for a period of time. Indeed, a pri-
mary advantage of appointing an interim
CEO is that doing so can generate the
amount of time the board of directors
requires to conduct a thorough search to
find the best candidate from the external
and internal markets.
Not all changes in CEOs are success-
ful. For example, some Japanese firms have
experimented with foreign CEOs. The
intent is to encourage strategic changes,
but foreign-born CEOs must have the
capability to gain acceptance from other
managers and employees in the firm, or
their changes are unlikely to be imple-
mented effectively. Thus, most Japanese
firms that hire foreign CEOs search for
one who has work experience in Japan so
that he or she understands the culture and
the typical styles used in Japanese firms.^73
Additionally, firms have learned that it is
generally important to retain target com-
pany executives after the firm is acquired.
Without them, integration of the newly
acquired firm into the acquiring firm is
commonly more difficult. Moreover, the
executives often have valuable knowledge
and capabilities that are lost to the acquirer
if they depart. Thus, turnover among these executives makes the acquisition less valu-
able to the acquiring firm.^74
Changes in top management positions other than the CEO are also important. These
changes often occur because a promising manager is recruited for a better position at
another company, as Apple did with Angela Ahrendt who was recruited to manage its
retail operations. She received a highly attractive compensation package to join the Apple
top management team, as explained in the Opening Case. Adding high performing man-
agers in key positions can help the firm build its capabilities, as Apple has done with
Ahrendt. Yet, some managers are asked to depart because of the poor performance of
the operations that they oversee.^75 In fact, this was the case for Ahrendt’s predecessor
who managed Apple’s retail operations. Interestingly, performance was not an issue when
Google changed its chief financial officer (CFO) in 2015. Patrick Pichette, Google’s CFO at
the time, announced he was retiring after seven years. He wanted to spend more time with
his family and achieve more balance between his work and family. He was encouraged to
retire by his wife and travel more with her. His replacement was Ruth Porat, who held the
CFO position at Morgan Stanley when she accepted the CFO position at Google.^76
As we have discussed, managerial succession in the CEO position is an important
organizational event. In the Strategic Focus, we further describe the importance of a
selection in choosing Mary Barra as CEO of GM. Although an insider, she has made
several changes to increase efficiency (e.g., reducing the number of lead engineersHelga Esteb/Shutterstock.com
Sir Howard Stringer, the first foreign CEO of Sony in Japan.