When things go south, many leaders come under scrutiny, and their “errors” are magnified, even as they were celebrated as visionaries during the good times. But is this binary portrayal of leadership fair?
Being a CEO entails certain responsibilities. A CEO can fall short for several reasons, but as the captain of the ship, they have to take the brunt, asserts Anup Sharma, a PR and strategic communications consultant.
Sharma highlights that, both globally and in India, CEOs have had to bear the brunt of downturns or poor business results. For example, Starbucks’ Laxman Narasimhan faced an abrupt exit due to slowing sales and plunging stock prices in key markets like the US, China, and India, despite a stellar track record at McKinsey, PepsiCo, and Reckitt. Other examples include Nike’s John Donahoe, Nestlé’s Mark Schneider, Boeing’s Dave Calhoun, and Hertz’s Stephen Scherr — all of whom faced leadership changes amid sales slumps, rising competition, or shrinking markets, says Sharma.
India has other cautionary tales as well. Take, for instance, the case of Byju Raveendran, whose company Byju’s now faces insolvency proceedings amid allegations of financial mismanagement. Meanwhile, Vijay Shekhar Sharma, the founder of Paytm, has also come under scrutiny in the past.
Shadow Boards
To maintain both organizational stability and public trust, some startups are turning to alternative methods to strengthen their leadership, such as shadow boards.
Nisha Sampath, managing partner, Bright Angles Consulting LLP, explains, “Shadow boards consist of senior people who mentor and guide the founders, but it’s not a formal arrangement. They aren’t official boards of directors — they function more like a consultative panel.”
Sampath adds, “These individuals could be consultants or part of an advisory committee. I think it’s a smart way for founders to get top-tier guidance while avoiding the pitfalls of being solely reliant on VCs or other stakeholders who may have their own agendas.”
Addressing potential legalities, Sampath notes, “What I do know is that shadow boards aren’t formally part of the board of directors, so they wouldn’t be subject to the same rules regarding public disclosure.”
Accountability vs. Responsibility
Sampath puts it bluntly, “Leadership is about accountability, always. Because the CEO looks at the macro picture, is he accountable? Yes. Responsibility, on the other hand, often comes down to finger-pointing. We see blame games, with people quick to comment on startups without understanding the pressures behind the scenes.”
Sampath highlights the invisible influences CEOs contend with — from venture capitalists pushing for risky moves to systemic pressures baked into the startup ecosystem. “We need to discourage this constant assigning of blame,” she adds.
Shweta Kumar, an author and leadership coach, delves deeper into the systemic pressures. “There’s immense pressure on startups to achieve profitability within five years, become unicorns, and maintain perfect optics. These unrealistic expectations set up CEOs as scapegoats for failures that are often systemic.”
She refers to ‘CXO revolving door of leadership’ and states, “Instead of examining structural issues, we focus the blame on a single individual. CEOs are responsible for setting the tone and building systems, but systemic failures often go unaddressed because they are more complex to discuss.”
The Shadow of the Founder
The celebrity status of today’s founders complicates matters further. Leaders like Elon Musk, Richard Branson, and Bhavish Aggarwal are as much brands as their companies, and this blurred line can be both a blessing and a curse.
Sharma notes, “A charismatic CEO serves as the most visible brand ambassador, but excessive alignment with a single personality can be risky. If a founder’s public image falters, the company’s reputation suffers — a double-edged sword.”
He points out examples of CEOs like Adam Neumann of WeWork or Vijay Mallya of Kingfisher Airlines, whose personal controversies dragged their companies into disrepute. Conversely, Tata Group’s long-standing reputation for value-driven leadership offers a counterpoint.
“During crises, Tata’s leadership has consistently communicated with trust, providing reassurance and confidence. This long-term credibility has allowed them to navigate challenges gracefully,” Sharma adds.
Sampath, too, sees a healthy approach in conscious succession planning.
“Look at the Tata Group. Even as Ratan Tata remains iconic, the group’s identity is not solely tied to him. That’s intentional and strategic. In contrast, startups often view their businesses as personal legacies, which is dangerous.”
The Legal Fallout
From a legal perspective, Kirat Singh Nagra, a partner at DSK Legal, emphasizes that CEOs and founders are not always culpable for a company’s failure.
“The liability and culpability of CEOs vary case by case. Courts have consistently held that CEOs cannot be made vicariously liable for a company’s actions unless there’s specific evidence linking them to the alleged offense.”
However, governance flaws can blur these lines especially in the case of startups. “Founders wield too much power, overshadowing collective decision-making, while established companies often grapple with slow, disconnected leadership,” Nagra observes.
Ego, Identity, Crisis
Kumar highlights the importance of humility and detachment for leaders. “CEOs who admit mistakes and seek help are better equipped to weather storms. They create collaborative cultures where decisions are collective, not dictated. It’s essential for leaders to detach their identities from their roles — focusing on what’s best for the system, not personal ego.”
Examples abound of leaders who’ve faced public backlash but emerged stronger. Zoom’s Eric Yuan, for instance, issued a heartfelt apology during the platform’s privacy controversy, pledging to fix the issues head-on. Similarly, Tata Group has consistently demonstrated the power of timely, transparent communication. This was similar to the Facebook chairman and CEO Mark Zuckerberg’s apology in April 2018 at the time of hearings related to data privacy. “We didn’t take a broad enough view of our responsibility, and that was a big mistake. It was my mistake, and I’m sorry,” Zuckerberg had said.
Yet, as Sampath cautions, not all leaders are as adept at separating their voices from their brands.
“Shantanu Deshpande of Bombay Shaving Company strikes a balance, maintaining a strong personal voice without overshadowing his brand” But some founders public defense of their companies’ problems often makes it harder to separate the individual from the firm.
As Kumar puts it, “The individual is smaller than the role, and the role is subservient to the system. We need leaders who build sustainable frameworks — not empires centered around themselves.”
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