Why does an entrepreneur reshuffle his entire management team at the peak of his company's success?
That was the question I had when I heard about the big shake-up at Bloomberg L.P., the company behind Bloomberg News service, from Inc 's deputy editor Karen Dillon upon her return from the annual luncheon hosted by the American Society of Magazine Editors. Michael Bloomberg had been the guest speaker, but instead of discussing his plans to run for mayor of New York City, he'd talked about what he had just done with his company.
It seems he'd walked in one day and told nine of his top managers that they were banned from having anything to do with their departments for the next two months. They had to appoint temporary successors and leave. No further communication was permitted with people in their former domains, other than perhaps a "hello" in the hallway. During their exiles, the managers were to study the other departments in two-week stints. They were to learn everything they could about the department and how it worked, and then report their conclusions.
In the end some of the managers returned to their original departments, and some didn't. One person who had worked in the technology end of the business for 20 years wound up as head of worldwide sales for the Bloomberg Professional service division. Another, Lex Fenwick, who'd been running European operations out of the London office, concluded that the company would be best served by eliminating his job. Bloomberg was so impressed that he made Fenwick the company's chief operating officer, while he himself went off to run for mayor.
I'd never heard of anything quite like that happening in a thriving business. Karen and I decided to follow up with Bloomberg. I was particularly curious about his motives, because I believe it's impossible to delegate unless what you get in return is more than what you're giving up.
So was the shake-up prompted by the opportunity to run for mayor?
No, I was going to do this whether or not I ran for mayor. I've got 7,900 employees. I have an obligation to those people. They need to know that we have young, innovative management looking out for their careers.
But what's the theory behind moving so many top people around at the same time?
From the moment people start a new job, two things happen: they acquire experience, and they get increasingly jaded. When you move people around, they take the experience with them, but they start from scratch in the jaded arena.
Yes, it's true that the new people don't know as much as the people they're replacing. But the reverse is also true: the new people are just at the beginning of their learning curve. And generally -- not always, but most times -- they go blasting right through where their predecessors were and move on to higher levels the company would never have achieved otherwise.
Could a small company move people around like that?
It's easier in a small company. You have fewer people to move. And the management typically is more direct. It's more focused on the bottom line. The great danger in a small company is that you become overly dependent on one or two people. And that's all the more reason to move them around. In a small company, Joe the salesman has the contacts with all your big customers. I don't know how you can go to sleep with that on your mind. I'd have Joe switch positions with Sally for two months. That way, if Joe walks out, he won't take all your business with him.
OK, but let's go back to your company. Why did you decide to replace yourself now? You've been running the business for almost 20 years.
Yes, and that's too long to be doing the same thing. I suspect even 10 years is too long. I just didn't have something else to do after 10 years, or maybe I wasn't smart enough or didn't have the guts.
So what persuaded you to do it after 20 years?
Things are going great now, and that's the time to leave. If you want to walk out rather than being carried out, you have to go when everybody says, "How could you possibly leave? Things are so good." Every time I hear that, I think, "Damn it, I have to go. I don't have any choice." Or when people say, "We can't live without you." That more than anything convinced me I have to move on, whether by running for mayor or doing something else.
In addition, the timing felt right. The company really is in great shape, but you can always make it better, and now is the time to go for it. If I say to our managers, "You have to have a successor," so do I. If I say, "You've got to try new things," so do I. It all applies to me as well.
Isn't it painful to let go so completely?
Of course, but it's like dealing with your kids when they're old enough to be on their own. Do you want them to stay at home all their lives? It's very painful to throw them out of the nest, but what's the alternative? Do you love them or do you love yourself so much that you're going to screw them for your own self-satisfaction? If you love them, you hurt yourself a little bit in their interest.
Besides, I'm very good at delegating. I always have been. That's the secret to this company's success. And when I delegate responsibility, I delegate the authority to go along with it. I never second-guess the managers, at least not in public. If I second-guess someone at all, nobody knows about it except me and the manager.
Aren't you concerned that a new COO might change things in ways that will destroy the unique culture you've built?
Absolutely. Absolutely. But I picked Lex Fenwick because I don't think he'll do that. I think he'll make our culture even more unique. I watched what he did in London. More of the innovation in this company was coming out of the London office than from the New York office.
So what about you now? Technically, you're still the CEO, but do you have a real role to play in the company?
Absolutely. Succession planning, giving other people opportunity, making sure we aren't dependent on any single person -- those things are always on my mind. They still are. It's my job. I worry about the downside. The upside will take care of itself.
You said you would have made these changes whether or not you ran for mayor. What will you do if you don't win?
Which is likely, by the way. I clearly have an uphill battle.
So what other options have you thought about? Harvard Business School dean Kim Clark described you as someone who would never sit on the beach.
Well, I've said that the people with the four best jobs in the world are the president of the United States, the secretary-general of the United Nations, the president of the World Bank, and the mayor of the city of New York. I'm trying for the fourth job. If I lose, maybe I'll go for one, two, or three.
But you won't sit on the beach.
I'd like to learn how to hit with a three-iron, but I'm not that badly motivated.
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