Comment - Wehring's Way - The Devil's in the Detail for Today's CEOs
The CEO of Treasury Wine Estates left the business with immediate effect today
When it comes to being the CEO of a company, knowing where the stapler is kept - and how to order replacement staples - is way more important than the sweeping, quotable gesture.
The time of the charismatic leader comes and goes, but only ever lasts for long when it's backed up by the rest of the family. Examples that spring to mind are Patrick Ricard at Pernod Ricard, and Vijay Mallya at India's UB Group. Colourful CEOs at PLCs, meanwhile, rarely surface, and hardly ever for long, usually clutching the reins during a transitory phase for the company, and proffered as a familiar sort to a company undergoing a sizeable change.
Exhibit A: David Dearie at Treasury Wine Estates.
Earlier today, the wine company announced that Dearie has left the business with immediate effect. Dearie is just such a charismatic type, popular with the media and happy to share his opinions while being not the most operational-savvy sort. “The board believes the company now needs a chief executive with a stronger operational focus and the right balance of skills to deliver our ambitious growth targets,” said Treasury in today's announcement.
Now, I mean no disrespect at all to those less colourful folk holding the hot seats elsewhere. Hey, you're charged with running a company, not with wooing the press.
But, it's clear to me that a CEO big on making bold statements might – just might – be found wanting on the detail. Recall, Dearie was promoted internally to head up Treasury, then part of Foster's Group, in 2012, as Foster's prepared to demerge its beer and wine businesses.
A demerger process is stressful at the best of times – even moreso for Foster's, I'll wager, after failing to find a buyer for its wine operations. So, a familiar face will help the medicine go down. Whether that individual covers the full range of job requirements is secondary.
Treasury's announcement in July that it would destroy its old and out-of-date stock in the US, resulting in a AUD160m (US$145.7m) hit to fiscal 2013 pre-tax profits, is operational weakness writ large. Again, Treasury backs up this theory: “The recent inventory issue in the USA ... significantly dented our overall performance for fiscal 2013 and was a key factor in this decision,” it said today.
Irrespective of Dearie's backing of the decision to take the writedown in the US, and much as I argued at the time that the move was the right one to take, hindsight suggests that Dearie was the right man at the right time.
But, not this time.
Pernod Ricard has completed the sale of a bond that will net the company EUR850m (US$1.18bn)....
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