Investors fled Abercrombie & Fitch yesterday, causing the stock to plunge 20%, after the company reported lower sales and a downbeat outlook. This is where I would normally mention the CEO’s name in boldface, but I can’t – because Abercrombie has no CEO. It hasn’t had one since December 2014, when founding genius Mike Jeffries resigned suddenly as his magic touch abandoned him. The company sought a successor for a while but seems to have settled into life without one. Intriguingly, it isn’t the only company to operate that way, raising the question of just how much leadership a company really needs.
Abercrombie’s recent poor performance doesn’t nail the case against the CEO-free organization. Just last fall the company reported knockout results that pushed the stop up 25% in one day. CNBC’s Jim Cramer marveled, “You would think that Abercrombie would be directionless with no one at the helm, but you would be wrong.” The place is being run by executive chairman and retail veteran Arthur Martinez, 76, and a small group of executives.
Everyone knows Abercrombie, but you’ve probably never heard of Morning Star. It’s the world’s largest tomato processor, handling 25% to 30% of all the tomatoes processed in America, and it does so with no bosses, no titles, and no promotions. It has been doing this with tremendous success for 46 years. Consultant and author Gary Hamel “discovered” the company and revealed it to the world. Or consider DPR Construction, which has appeared multiple times on Fortune’s ranking of America’s Best Companies to Work For – again, no CEO. Maybe you recall Ricardo Semler radically transforming his family’s business in Brazil over 20 years ago by (among many radical changes) passing the CEO title around among top managers every six months.
All those companies have performed extremely well. So is CEO-free Abercombie onto something big and merely going through a bad patch? I don’t think so. Those other companies are all privately held, and, more important, all were built from scratch by one or more driven leaders who believed passionately in their anti-hierarchical visions. Paradoxically, it was only through powerful leaders that these companies could learn to work well without a CEO. In most other companies, with more traditional cultures, it’s just the opposite: Only when one person feels the full weight of responsibility for performance can it perform at its best.
Memo to the Abercrombie board: Maybe it’s time to revive that CEO search.
You can share Power Sheet with friends and followers here.
What We’re Reading Today
Alphabet to take on Uber
Larry Page‘s Alphabet, through its Google business, will add a feature to its GPS mapping tool Waze enabling users to find fellow commuters for carpooling. The company is testing the feature in San Francisco and plans to release it to everyone in the city this fall. It will look to keep rates low by connecting users already headed in the same direction, as opposed to setting up an on-demand taxi service like Travis Kalanick‘s Uber. WSJ
Chipotle accused of wage theft by nearly 10,000 employees
They’ve signed onto a lawsuit claiming the chain routinely requires hourly employees to work off the clock. The employees claim they worked unpaid overtime hours so Steve Ells‘s restaurant chain could meet budget goals. Chipotle says the suit has no merit. Fortune
Flights from U.S. to Cuba take off
Commercial air service between the U.S. and Cuba resumes today for the first time in over 50 years. Robin Hayes‘s JetBlue was first, with a flight from Fort Lauderdale this morning. It’s a symbol of thawing relations between U.S. and Cuba. ABC News
Donald Trump to meet Mexican president…
…hours before he clarifies his immigration policy. The meeting with President Enrique Pena Nieto comes as several Mexican leaders have scoffed at Trump’s claim that he would force Mexico to pay for a border wall. After the meeting Trump will fly to Arizona for a speech on immigration. CNN
Building a Better Leader
To improve your productivity…
…find ways to work less. Working in intense, hourly bursts makes you more productive and leaves you more time to rest. Inc.
To handle stress…
…Twitter CEO Jack Dorsey takes time through the day to get away from his desk and walk outdoors. You can also find ways to work harder, as Tim Cook does with Sunday night staff phone calls. Fortune
If you want to land a promotion…
…show your boss you’re ready to be a leader. Maintaining composure during tense meetings and being decisive can help you stand out. Washington Post
Returning to Square One
Theranos pulls request for Zika test approval
The troubled blood testing lab dropped the request after a review showed the company failed to provide proper protections for human test subjects. Elizabeth Holmes‘s company was hoping to use the FDA’s emergency use authorization to get the test to market faster. Theranos plans to reapply for approval. The Verge
CDC to Congress: We need more money to fight Zika
Centers for Disease Control and Prevention director Thomas Frieden said the agency has spent $194 million of the $222 million allocated to fight the disease. Frieden added that the CDC wouldn’t have enough money to fight another breakout as it continues to combat Zika’s spread in Florida. NYT
Alphabet moves Nest team into Google
The smart-home business’s software developers will become part of a larger Internet of Things project headed by Hiroshi Lockheimer. Investors have grown impatient with smaller business units within Larry Page‘s Alphabet, like Nest, that don’t make money. Fortune
Up or Out
Head of telecom Olivier Roussat and CFO Philippe Marien have been named deputy CEOs at Bouygues. WSJ
Uber has hired Target chief marketing officer Jeff Jones as president of its ride-hailing business. Fortune
Fortune Reads and Videos
Facebook should acknowledge it’s a media company
Mark Zuckerberg recently said it isn’t because it doesn’t make content. But that’s no longer the definition of a media company. Fortune
Fox News responds to Andrea Tantaros’s…
…sexual harassment lawsuit, calling her claims “unverified.” The company said her claims, which include accusations against Roger Ailes and Bill O’Reilly, had “all the hallmarks of a ‘wannabe.’” Fortune
Hackers broke into Dropbox…
… and stole nearly 70 million accounts back in 2012. Here’s how to find out if you were one of them. Fortune
Employers lose $17 billion…
…of productivity annually because employees are playing fantasy football. Fortune
Quotes of the Day
“Chipotle has argued this is a few rogue managers who aren’t following policy…Our view, especially given the number of people opting in, is that it’s a systematic problem at Chipotle.” — Kent Williams, an attorney representing Chipotle workers in their suit to claim unpaid wages
“A lawsuit is nothing more than allegations and is proof of nothing…Since this suit was originally filed in 2014, we have maintained that it has no merit, and we will reserve our discussion of details for the legal proceedings.” — Chipotle communications director Chris Arnold Fortune