Editor’s Note: Charles M. Elson is the director of the John L. Weinberg Center for Corporate Governance at the University of Delaware. Laurenz Lankes is a fellow of the Weinberg Center for Corporate Governance at the University of Delaware. The opinions expressed in this commentary are their own.
It’s been a tumultuous several weeks, to say the least, for real estate company WeWork. With Adam Neumann out as CEO, the most pressing question facing the startup right now is who will replace him. Many names have been put forward. But none are as ostensibly intriguing and vexing as that of T-Mobile CEO John Legere.
Clearly the cash-burning company is in desperate need of a turnaround, but Legere is not the right man for the job.
Legere worked for AT&T, Global Crossing and Dell before taking over the top position at T-Mobile and helping to turn the struggling company around. He is known for his eccentric and “outside the box” leadership style. Every Sunday, Legere can be seen cooking on his weekly show “Slow Cooker Sunday,” of course always wearing T-Mobile´s magenta colors from head to toe.
With his similar leadership skills and somewhat eccentric personal style, Legere would seem a natural successor to the charismatic and controversial Neumann. Of course, these traits also may have led to Neumann’s downfall. It is clear that an entrepreneurial business needs entrepreneurial management. But given WeWork’s troubling instability, a Legere leadership has the potential to be very problematic.
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Take WeWork’s extensive employee departures and widespread morale issues. What WeWork needs now is a calming, steady leader who can stabilize the organization from both a financial and personnel standpoint. A dynamic change agent like Legere, though ultimately necessary at the beleaguered organization, isn’t what is appropriate now.
Turnaround experts come in many different flavors and styles. A highly electric manager may not be as effective in such a rattled climate. Instead, a steady, perhaps even somewhat staid, manager could cut through what is necessary to stabilize expenses and retain necessary talent.
More concerning, however, is the fact that WeWork is considering a telecom/technology expert. WeWork, as the failed IPO showed, is not a tech company, but rather a real-estate venture. While it has been fashionable in some circles to suggest that managerial “superstars” are easily transferable between disparate industries, history has often proven otherwise.
Recall Robert Nardelli, who left General Electric for Home Depot and was eventually forced to resign from his position following various performance issues. But perhaps the most notable was “Chainsaw” Al Dunlap, a self-described executive “superstar” who moved from Scott Paper to run Sunbeam and was terminated less than two years later.
It is quite a risky proposition to believe that a successful telecom star could easily restructure and reinvigorate a real estate company. While Legere’s turnaround skills are unquestionable, the necessity to multi-task here — changing industries while executing a difficult turnaround of a failing enterprise — may prove even too challenging for such an obviously talented individual. This really is the issue at hand.
WeWork has provided a treasure trove of business lessons for the corporate world. Among the most salient are the problematic consequences arising out of combining a dual-class share structure with a strong-willed CEO like Neumann. Today’s lesson is more far-reaching. While WeWork may believe that it has found a solution to its woes in potentially hiring Legere, it may find itself back in the soup as a turnaround star does not easily transfer. There’s a reason why few remember Michael Jordan’s brief baseball career. Perhaps WeWork’s owners should think similarly.