Five CEOs that Showed Us How NOT to Run a Company

The American business landscape is littered with CEOs who, for one reason or another, showed the public, investors and their peers precisely the wrong way to run companies. At the time of their tenure, some of these former industry heads were first touted as business geniuses. Now they’ve become examples of how not to behave if you want to run your own business.

Jonathan Schwartz – Sun Microsystems

Founded in 1982 by three graduate students from Stanford University, Sun Microsystems grew to be a giant in computer hardware and services. Jonathan Schwartz was named CEO in 2006 by the founding CEO, and prior to that point, the company had grown aggressively and showed steady profits. Nearly every move Schwartz made ended poorly, acquisitions failed, the stock tanked, and thousands of employees had to be laid off. Ultimately, the company was sold to competitor Oracle.

Kenneth Lay – Enron

There can hardly be anyone in America who isn’t aware of one of the former darling companies of Wall Street, Enron. Founded as a natural gas company, Enron grew and diversified into other utility and resource distribution businesses, reaching over $100 billion in sales by the year 2000. Just a year later, it was discovered that the company had been overstating its financial results and hiding liabilities. During the subsequent investigation it was discovered that CEO Lay had an active hand in manipulating the books, and he was convicted of securities fraud; he passed away from natural causes just days before he was to be sentenced.

John Scully – Apple

Having run Pepsi Worldwide, John Scully initially seemed like a good pick to run Apple Computers. He understood building a global business and he knew how to create marketing campaigns to fuel that growth. Hired in 1983, it was hoped he could bring a more polished, executive management style to the company that was still being run by one of its young founders, Steve Jobs. Within two years, Scully convinced the board of directors to strip Jobs of all management duties, and Scully embarked on series of new investments for products, and very expensive marketing campaigns to support the products. Almost across the board, the products were failures, as Scully’s marketing and management abilities never made up for his lack of technical and product development background. Creative engineering has always been at the core of Apple’s success. Scully was shown the door in 1993, and within a few years, Steve Jobs was back at the top job.

George Shaheen – Webvan

Webvan holds the distinction of probably running through more money in a shorter period than any other start up – a billion and a half dollars over the first eighteen months. With ambitions much larger than could ever be practically implemented, Webvan tried to be a grocery delivery service. Promising grocery delivery within a 30-minute window, they hoped to eventually expand their business into 26 different cities. When they ran out of money, Webvan never came close to this goal, and filed bankruptcy. CEO George Shaheen, who formerly ran Anderson Consulting, came in with little understanding of the value proposition of brick and mortar grocers, and even less of an understanding of how slim the profit margins in the grocery business actually were. A disastrous acquisition designed to save the company resulted in a faster than ever cash burn rate, and Webvan’s fate was sealed.

John Regas – Adelphia

Adelphia Communications, formerly one of the nation’s largest cable television operators, was headed by John Rigas. Building the business to have operations in over thirty states, Adelphia filed for bankruptcy in 2002, partially because Rigas had been siphoning off cash to fund other family owned businesses. He was eventually charged with stealing over $100 million,sentenced to 15 years in prison and post bankruptcy, Adelphia’s assets were sold off to other cable operators.

Businesses can learn a lot from failed company and poor CEOs. In many of these cases, the company’s leaders egos got in the way of success; not following the axiom “do what you do best and hire the rest” can be a fatal error. The concentration of power and responsibility in one office can also lead to disaster. The U.S. Has also had many successful companies with absolutely brilliant CEOs. Learn from their mistakes and successes to help guide your company to the next level.

AUTHOR BIO: This article was written by Dixie Somers, a freelance writer who loves writing for business, finance, women’s interests, and technology. Dixie lives in Arizona with her husband and three beautiful daughters who are the inspiration for her writing. Information for this article was provided by The Calvin Center, who provide business retreats near Atlanta for companies who want to host events, conferences, and training programs.