Blog - IDEATE
The Promise And Peril Of Celebrity CEO Effect
The popularity of a CEO is a fickle and contagious measure of a company’s performance. Enlightened leaders look to build trust to fortify their business for the long haul.
The 21st century is an era of great digital disruption. Traditional media such as newspapers, magazines, and television are gradually being replaced by new digital platforms. In an era where the business landscape is constantly challenged by digital technology, the infectious charisma and charm of those celebrity CEO stands out above the noise and has an irresistible power over the masses.
Were it not for Steve Jobs’ maverick genius, Apple wouldn’t have achieved its universal appeal today, Were it not for Musk’s bold and unconventional engineering mind, Tesla would not have achieved its fame today; Were it not for Jack Ma’s diehard perseverance, Taobao might just have remained an ordinary wholesale platform.
Celebrity CEOs are those entrepreneurs , business leaders and political honchos whose fan appeal often have extraordinary personal attributes and characteristics, strong commercial performance and solid management skills. We can always count on them to deliver returns to the market and shareholders. From a social perspective, they are not just experts of their domain but also role models, public figures and even idols in the minds of their fervent following. Celebrity CEOs, by standing for intuitive product design as Jobs did, are a personal brand unto themselves, hailed as visionaries that transformed the life of the society at large.
Creating A Personal Brand
Just as celebrities know how to create a following, celebrity CEOs have the same tactics.In the early days of running for presidency, former US President Barack Obama canvassed in person and made a point to interact with voters on the ground, and appearing on video sites, answering e-mails, and attending forums for various communities, which played a key role in his subsequent election as President. Xiaomi’s founder Lei Jun, who became the general manager of software giant Kingsoft at the age of 29, founded Xiaomi in April 2010 at 41. Xiaomi’s evolution into a powerful brand is also closely related to the celebrity effect of CEO Lei Jun.
The personal brand of the CEO has a huge impact on the brand of the company, according to a 2018 survey by a global consulting giant. When asked how the public perceives a CEO’s personal branding in North America, Europe, Asia Pacific and Latin America, about half, or 49 percent, of a company’s reputation is determined by the CEO’s reputation. As for how much CEO’s reputation accounts for a company’s market value, the answer is an average of 44 percent of the company’s market value.
Overall, strong CEO personal branding in the digital era raises competitiveness for the business. Nonetheless the popularity of the CEO is a double-edged sword. Recent events suggests it is vital that the prerequisite to CEO branding should be sound corporate commercial performance as well.
Rock Star or Cult Leader?
Popularity may bring good traffic to the corporate’s digital assets, but there is also a downside.
Take the case of Facebook, when it was rocked by disclosures of privacy breaches in 2018, starting with how Cambridge Analytica harnessed the data of millions of Facebook users without their consent, its share price fell by US$36 billion on March 16. When the CEO Mark Zuckerberg addressed the problem and apologised to Facebook users, the apparent lack of sincerity in his apology attracted the greater ire of the Facebook users.
Soon, as revenue and user growth declined, Facebook’s market value fell from US$630 billion to US$10 billion in one day on 26 July 2018. Several key executives also left the company. For ordinary employees, working for Facebook is no longer that much of a cool thing. Though analysts initially believed the crisis would blow over, Facebook has lost its shine, as high-profile investors like McNamee question its vacuum of civic responsibility. Another case in point is Richard Liu Qiangdong, the founder and CEO of China’s most successful e-commerce platform JD.com after AliBaba. His profile has also been dampened since he was accused of rape by a fellow Chinese student at the University of Minnesota in September last year. From his initial release to his release without bail, to his return to China to the leaked videos earlier this year, the media has scrutinised his fate of JD.com. Over a short span of 20 days, JD’s share price dropped from US$30.66 to less than US$27, a decrease of 12.2 percent. The explosive allegations still weigh heavily on the stock.
Limits of Celebrity Status
All these star leaders have some common features:
Firstly, cultivating a high profile may stoke public interest, but how leaders run their business on a day-to-day basis will be questioned. Their sense of judgement, their values, their corporate governance will be even more closely scrutinised for any evidence of malfeasance.
Secondly, their ego becomes to big for them to bear with criticism on how they run their business. They tend to believe that the success of the company or individual depends on image-shaping and exhibit a great amount of confidence at the company. Zuckerberg’s apology to US Congress won him some kudos, but down the road, Facebook’s business model has come under fire as former executives openly call for Facebook to be broken up.
Thirdly, lingering too much on the past glory without factoring the changes in society or business environment can blind leaders how to lead in a fast-changing business landscape. If the leadership is too proud adjust, it will eventually lead to the decline of the enterprise.
Last but not least, the personal interests of the CEO can easily overtake the corporate interests of the company, particularly in rigidly hierarchical and dynastic company structures. A CEO would use the company to realise personal ambitions which do not benefit the company commercially. In the case of Samsung, when Lee Kun-hee entered the automotive industry due to personal passion, Samsung Motors division closed its doors in just two years as the Asian Financial Crisis impacted the economies of the Asia-Pacific.
So how should CEOs manage their image and reputation without excessively impacting their business?
The secret of the CEO’s star power lies in , or having social responsibility. This requires the CEO to assume the responsibility of a Chief Learner in the organisation, so to speak, where he constantly seeks to improve his learning and operations. If this function fails, the company will lose its higher vision. Secondly, for the unicorn who pursues growth and maximise profit of shareholders, they need to build trust.
Picture this: When the going gets rough, it’s as if CEOs are suddenly abandoned alone at night on a crowded highway, far from the racing track that is familiar to them. In the absence of a car, they need a protective suit with a fluorescent strip. Trust is the protective clothing with fluorescent strips. Trust is when there are still people who have your back when you are down and out. But you can only build that trust by supporting people first, rather than by exploiting them.
Last but not the least, the celebrity CEO is human. It’s important for them to get up after they fall. They must reflect on doing what’s right, as Confucius said “Reflect upon one’s deeds three times a day”. At the same time, don’t seek to be deified. Instead, actively identify and address the problems of employee engagement and business management, adapt and practise the philosophy of Kaizen, which essentially about continuous improvement, a crucial part of the entrepreneurial culture.
It is only when the popularity of the leadership and reputation of the company are balanced, can a sound financial performance of a company be achieved.