Worshiping the Wrong CEOs

A couple weeks ago I spoke with New York Times journalist David Gelles about his new book “The Man Who Broke Capitalism” and the problem of CEO-worship today. David’s book tracks the legacy of Jack Welch, the former CEO of GE who singularly transformed the American business into a profit-maximizing, worker-minimizing machine. Partly because of our unblinking trust in the American CEO, Welch was able to slash American manufacturing and neglect the American worker during his tenure at GE.

As David puts it, “We put our chief executives up on pedestals, granting them wide latitude to influence our national discourse and endowing them with vast wealth while absolving them of accountability.”

Yet even as David and I discussed the problem with glorifying CEOs, we inevitably landed on the positive model that Yvon Chouinard is setting in the apparel industry. Chouinard is donating Patagonia to a trust and non-profit organization that will direct the company’s profits to fighting climate change (David broke the story in the Times the day before we spoke).

Chouinard, who has historically prioritized sustainable business practices, is the antithesis of Jack Welch—a CEO who has routinely placed the environment over profits, and who has run a profitable company as a result. But Chouinard’s example also challenges the thesis that consolidated leadership is the root of immoral business: after all, Chouinard refuses to turn Patagonia into a publicly-traded company precisely because that would disperse the company’s interests and undermine its commitments to the environment. By donating Patagonia on his terms, Chouinard also ensures that his singular vision for the company remains intact.

My conversation with David resurfaced an ambivalence that I have long felt about our obsession with CEOs: on the one hand, CEO-worship can blind us to the questionable practices of greedy and self-interested leaders, while on the other hand, it can bring attention to the noble agendas of ethically-minded and innovative leaders. At the very least, it seems that occasionally spotlighting the right leaders might be necessary in order to see their business practices replicated by others in industry. But if this is the case, then there is another issue at play here: we rarely pay attention to CEOs who work on the back-end of industry, and who are largely responsible for enabling the noble objectives of other companies.

Take the apparel industry, for example. We hear about the Yvon Chouinards and Stella McCartneys of the apparel world—that is, the CEOs of sustainable apparel brands. But we do not hear about the CEOs of the companies that actually source their materials, make their garments and distribute them. If brand CEOs have the power to demand change in the industry, supply chain CEOs have the power to implement and lead that change.

For example, Dang Vu Hung, the Chairman & CEO of PPJ Group in Vietnam, has heavily invested in state-of-the-art R&D centers to develop technologies that dramatically reduce water, energy and chemical use, and he has then put those technologies to commercial use. And at Grand Textile, CEO Alfred Lu personally oversaw the company’s incorporation of solar and biomass-generated energy. Lu also innovated a completely closed-loop water recycling system: using a proprietary and novel artificial wetlands that uses natural processes, Grand Textile has virtually eliminated wastewater discharge and the need for fresh water supply. These kinds of innovations in the apparel supply chain are the true drivers of sustainable fashion, and deserve to be recognized as such.

It should be said that not all supply chain CEOs are driving the industry forward: many CEOs simply adjust their practices to comply with new legislation or to meet the demands of companies like Patagonia. But certain CEOs, like Dang Vu Hung and Alfred Lu, are motivated beyond government regulation and the demands of their customers: they also believe that the industry needs to be reformed, they take proactive steps to transform their own companies, and they model best practices for other supply chain companies.

Apparel is particularly susceptible to this back-end oversight because apparel brands themselves hold the most value for consumers, and because apparel brands have been particularly adept at concealing their labor and supply chains. We trust that Yvon Chouinard hires ethical manufacturers, and we praise him for doing so. But instead, we should begin praising the CEOs of the companies that manufacture clothes for Patagonia. By redirecting the spotlight down the supply chain, we will be able to see more clearly the companies that are actually keeping carbon emissions down, using recyclable materials, and paying fair wages.

One of the worst aspects of Jack Welch’s legacy is that he obscured manufacturing for the American consumer. In off-shoring manufacturing jobs, and in transforming a manufacturing company into a financial company, Welch made it harder for Americans to understand where their products were coming from and how they were made.

If we’re going to continue stargazing at CEOs, let’s look at CEOs who actually direct us back down to where and how products are made—the CEOs of the supply chain. 

By Oliver Niedermaier

Founder, Chairman and CEO