The Boomerang Effect

Of all ancient weapons, unpredictability of a boomerang makes it the most feared. Reason being, it hurts the most the one who throws it, if used amateurishly. When a cricket team stops performing, the ouster of its captain might cause a boomerang effect.

The first obvious thing which surfaces when a company is in trouble is replacement of the CEO. A recent example that comes to mind is of Yahoo Inc. Its Chairman Roy Bostock fired CEO Carol Bartz, and that too over phone. It is true that the CEO is responsible for overall performance of an organisation, but the CEO alone has limited influence. The major driving elements behind the actions and outcomes of an organisation are the systems and processes that operate across the organisation.

According to a research by Don Hambrick, Smeal Chaired Professor of Management, and co-author Guoli Chen of INSEAD Business School, the simple act of replacing the CEO of a company undergoing crisis has no effect on its performance. The probability that the replacement strategy will work and be productive depends on the actual characteristics of the incumbent and whether the new person has the qualities now needed. Read more...

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