Ralph Lauren’s Monarch Ways

This was the least surprising CEO resignation in recent memory, clearly predictable since Larsson’s arrival was announced in September 2015. That was big news; Larsson, who had turned around Old Navy and previously had helped build H&M, was the Ralph Lauren company’s first CEO other than Lauren himself. Headlines worldwide trumpeted that Lauren was stepping down as CEO, a message he apparently did not like seeing. So the very next day, Lauren emailed all employees: “I will continue to lead [the company] today as I have for almost 50 years. I am not stepping down, nor am I stepping back. I am stepping up.” Translation: The new CEO isn’t really the CEO; I’m running the show. It’s surprising Larsson remained as long as he did.

The larger issue is that Lauren is shaping up as what Yale’s Jeffrey Sonnenfeld termed a “monarch” in his classic study, The Hero’s Farewell: What Happens When CEOs Retire. A monarch is a CEO who will not go willingly. As Sonnenfeld reported of the monarchs he examined, “They identified with the heroic stature they held in the firm. The monarch’s arena of accomplishment was within the firm.” Obviously we don’t know whether Lauren, 77, fully fits this mold, but when you’re named Ralph Lauren, and your company is named Ralph Lauren Corp., it seems clear that a large element of identification may be present. The problem is that monarchs often damage their companies by hanging on too long. It must be noted that Lauren’s company has lost almost 60% of its value in the past two-and-a-half years, including a 12% drop yesterday on the news of Larsson’s departure.

The inspiring pattern that Lauren exemplified for many years was the extraordinary power of the right two-person team at the top. His partnership with longtime president Roger Farah fit the pattern exactly: Lauren was the company’s famous public face, Farah largely unknown to the general public; their skills were entirely different and highly complementary, with Lauren being the visionary and Farah the operating genius. Steve Jobs and Tim Cook were a classic duo, though unusual in that Cook became Apple’s CEO when Jobs died. Other great pairs: Berkshire Hathaway’s Warren Buffett and Charlie Munger, or, longer ago, Disney’s Michael Eisner and Frank Wells, or Coca-Cola’s Roberto Goizueta and Don Keough.

As teams, they all performed spectacularly. But sometimes (not always), when the secondary member leaves, the magic evaporates. That’s what happened at Disney, and it happened at Ralph Lauren Corp.; Farah retired in 2014, and the stock hit its all-time high later that year.

Ralph Lauren transformed the apparel industry and created a magnificent legacy. Let’s hope he breaks the monarch mold by finding a great new CEO and this time letting that person carry the legacy into the future.

You can share Power Sheet with friends and followers here.

What We're Reading Today

Snap files to go public
Evan Spiegel's company filed for its IPO yesterday, providing a look at its financials. While sales jumped 600% from 2015 to 2016, investors may be concerned that the company still lost $515 million last year. The numbers also call into question the $25-billion valuation Snap is reportedly seeking. The dual-class share structure gives Spiegel and co-founder Bobby Murphy near total control over decision making. Coins2Day

Ralph Lauren CEO quits
Stefan Larsson stepped down less than two years after taking the helm. The falling out with executive chairman Ralph Lauren reportedly happened fast, as the two were on the same page as recently as a few weeks ago. But Larsson felt he needed control of the creative side of the business, which Lauren runs. WSJ

Uber CEO quits Trump council
Travis Kalanick  has left the group of CEOs that counsel President Trump on economic issues after a vocal backlash from employees, drivers, and social media against his involvement, following the president's immigration orders. Los Angeles Times

France's leading presidential candidate battles scandal
French politicians routinely secure government jobs for family members, but François Fillon, presidential candidate of the rightwing LR party, faces a crisis over it. His wife and children received over $1 million for fake jobs he secured for them. The anger over the common practice indicates the rise of populism in the country and offers an opportunity for far-right candidate Marine Le Pen.  NYT

Building Better Leaders

Creating American jobs...
...isn't something the federal government does very effectively. Too many larger trends - globalization, technology, increasing longevity - are at work. So job creation happens mainly through the efforts of businesses and local governments. Knowledge@Wharton

The most in-demand job is data scientist
Average salary is $128,000 because demand is strong. Other in-demand jobs include financial adviser and software engineer. Coins2Day

When the company seems stuck...
…ask basic questions, including who, what, where, why, and when, in order to understand the problem. Then find small steps to begin turning things around. SmartBrief

Worth Considering

Trump administration questions Israel settlement expansion
Two weeks before Israeli Prime Minister Benjamin Netanyahu is set to visit the White House, a Trump administration statement says expansion of settlements "may not be helpful" in achieving peace. That's in line with previous U.S. Policy but not as supportive of Netanyahu as Trump had been.  Coins2Day

Senators reassure Australia
After a confrontational phone call between President Trump and Australian Prime Minister Malcolm Turnbull, Republican Senator John McCain and others have reassured the country of the U.S.'s continued commitment as an ally. Democratic Senator  Ben Cardin plans to travel to Mexico soon in an effort to repair the relationship with President Enrique Peña Nieto.  ABC News

Trump targets fiduciary rule
President Trump will sign an order delaying a fiduciary rule intended to reduce conflicts of interest by retirement advisers, set to take effect in April. The financial industry strongly opposed the rule but was preparing to comply. Trump has called for the Labor Department to review whether the rule should be revised or scrapped.  Reuters

Up or Out

FireEye CFO and COO Michael Berry will leave the company, to be succeeded by Frank Verdecanna. WSJ

Coins2Day Reads and Videos

Apple to begin making iPhones in India
The decision to start manufacturing in April comes after months of negotiation with the country. Coins2Day

Nordstrom will drop Ivanka Trump's line
Sales of her branded clothing and accessories suffered from boycotts. Coins2Day 

The government still doesn't trust SpaceX rockets
Congressional investigators remain concerned about the rockets' safety, having  discovered "persistent cracking of vital propulsion components." Coins2Day

Evan Spiegel will reduce his salary to $1...
...once Snap goes public. Mark Zuckerberg did the same after Facebook's IPO. Coins2Day

Quote of the Day