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EDITORIAL: Lessons in leadership

During the past several months, many local companies have seen their share prices plunge amid the global financial crisis. Some business heavyweights who had refrained from running daily operations themselves returned to reinvigorate the companies they built.

One of the latest examples is Taiwan Semiconductor Manufacturing Co chairman Morris Chang (張忠謀), who announced on June 11 that he would return as chief executive officer, replacing Rick Tsai (蔡力行), who was appointed president of a new business division to focus on green energy development.

Chang’s return to address the company’s needs during the downturn followed a similar decision by Hon Hai Precision Industry Co chairman Terry Gou (郭台銘), who had intended to retire last year but told shareholders in April that he would not retire until he sees a recovery in the company’s share prices.

The same also applied to Asustek Computer Inc chairman Johnny Shih (施崇棠). After the company posted a loss of NT$2.8 billion (US$85 million) in the last quarter of last year — the first ever quarterly loss in the company’s 19 years of operations — Shih took back the reins from his top executives, hoping his stewardship of the company would help Asustek realize its full potential and improve competitiveness.

Few investors have expressed doubts about the managerial skill and entrepreneurial spirit of these top executives as they seek to maintain their business’ growth during the financial turmoil.

However, the unanimous consent these company founders’ have enjoyed as they return to the frontlines has only raised concerns. The market is still too impressed by the success of these great leaders, far less confident in their handpicked successors and downright worried if no clear succession plans are in sight.

The legends of these founders are packed with tales of their management decisions, innovative vision, market strategy and much else. But no one lives forever. At the end of the day, investors still have to ask who is going to take the helm when the founders are no longer available.

When Formosa Plastics Group founder Wang Yung-ching (王永慶) passed away last October at the age of 91, investor confidence was shaken by fears that the group’s business planning and operations would decline without its spiritual leader.

But in recent months, share prices of the group’s major subsidiaries have stabilized and it appears that investors have come to accept the fact that the group is now run without the legendary founder by a seven-member management committee — composed of his daughters, his siblings and executives — formed in 2006 at Wang’s retirement.

Arguably, the recent legal disputes between one of Wang’s sons and his family members over Wang’s fortune have seemed to further strengthen the group’s collective leadership, rather than weaken it. But it is too early to tell if the firm’s collective leadership will prevail and have a real impact on the corporate culture in Taiwan.

No one is in a position to judge the founders at TSMC, Hon Hai, Asustek or elsewhere as they return to tackle the economic crisis. But the issue provides us a chance to reconsider whether in Taiwanese culture, a great company can’t do without a “strongman” type of leadership. Perhaps we should ask ourselves: When Taiwan has seen local companies perform well globally and compete with rivals using international standards, what do we really believe about developing leadership? Do we have the courage to accept a new kind of leader?
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