Why star managers sometimes fail?

 The Importance of Industry knowledge and team expertise

In the business world, the arrival of a renowned CEO or manager often brings high expectations. Companies and the public anticipate a new era of success fueled by the leader's past accomplishments. Yet, it’s not uncommon to see these same companies facing financial difficulties or even bankruptcy within a year. This raises a crucial question: why do some celebrated managers fail to deliver the expected results?

The answer lies in the often-overlooked truth that behind every successful manager is an even more successful team. This team, composed of individuals who deeply understand the business, plays a vital role in sustaining and growing the company. While a manager might bring valuable leadership skills and vision, the team’s industry-specific expertise often determines the company’s fate.

Two case studies: VanMoof and Sonos

Let’s delve into two real-world examples that illustrate this point: VanMoof and Sonos.

VanMoof (before August 2023): a cautionary tale of leadership disruption

VanMoof, a company once thriving in the electric bike industry, experienced significant success under the guidance of managers who had grown with the business. These leaders understood the intricacies of the market and the technology, and they knew how to recruit the right talent. The company functioned like a well-oiled machine, with each team member contributing to its success.

However, as VanMoof gained recognition, it brought high-profile managers from different industries. These new leaders lacked knowledge of the electric bike market and its unique challenges. The result was a series of missteps, leading to poor decision-making and a decline in morale. Experienced and talented employees are left feeling undervalued and ignored, further exacerbating the company’s struggles. Ultimately, VanMoof faced massive debts and was forced into bankruptcy in 2023 before Lavoie acquired it.

Sonos: the downside of misguided leadership

Sonos, Inc., an American audio equipment manufacturer, has long been a trusted name in home audio and is known for its commitment to quality. However, this year, the company faced a significant setback due to a technical failure in its software update. In response, 100 developers were fired despite following their leaders' directives. This incident highlights how even the most capable teams can falter if their leaders lack a clear understanding of the industry and its demands.

The common thread: lack of industry expertise

While VanMoof and Sonos are very different companies, they share a common issue: leadership changes disregarding the value of industry-specific knowledge. No matter how talented, new managers often struggle when they don’t fully understand the business they are entering. This is particularly problematic when these managers are brought in during times of crisis, as they have little time to learn the internal processes and adjust their strategies accordingly.

Why industry knowledge and team expertise matter

Some might argue that a talented manager can succeed with any team, but this is only true under certain conditions. If a manager is brought in while the company is still stable, they have the luxury of time to learn the business, understand the team dynamics, and make informed decisions. However, when a manager is hired during turbulent times, their lack of industry knowledge can lead to disastrous outcomes.

Successful management is not just about personal accolades or leadership skills; it’s about leveraging the collective expertise of a well-integrated team. Managers who value their team’s knowledge and understand the industry's specific demands are more likely to steer the company toward growth and stability.

Ensuring success in leadership transitions

VanMoof and Sonos's stories are powerful reminders that industry knowledge and team expertise are crucial for successful leadership. Companies must prioritize hiring leaders who bring vision and value to the existing team’s expertise. Additionally, new managers should be given the time and resources to fully understand the business before making significant changes. By doing so, companies can avoid the pitfalls of leadership transitions and ensure a stable path to long-term success.