The film, "Executive Suite," was on TCM this past Saturday. I tried to get everyone I know to watch it because it makes business succession look thrilling and heroic. It also inspires some serious thoughts about business succession. (Unfortunately, the film's most flagrant flaw is that the female characters are relegated to roles outside the executive suite, but even that flaw can generate constructive discussion.)
The Plot (without spoilers)
In the film, Tredway Corporation is a furniture manufacturing company in a Pennsylvania town, where it is a major employer. Although the company's stock is publicly traded, the daughter of the last owner-operator still holds a substantial block of shares and sits on the board of directors. The CEO was selected by the founder, but he is not a family member, and there are no family members still active in the business.
As the film starts, the CEO is under pressure to identify a successor from among the company's vice presidents. As he is wrapping up a trip to New York on a Friday afternoon, he calls his secretary and tells her to convene a meeting of the VPs to take place that evening. He has decided on a successor, but he does not tell his secretary who it will be. He promptly dies getting into a taxicab, and the police find no identification on his body, except his monogrammed clothes and accessories.
The CEO's death, the delay in identifying the body, and the pressure to elect a successor before trading begins on Monday set up a thrilling weekend as the various VPs and other interested parties compete and scheme to control who will become the new CEO.
MGM released the film in 1954. It involved some big name talent.
The director was Robert Wise, who had won Best Director Oscars for "West Side Story" (1961) and "The Sound of Music" (1965). Although musicals are not my cup of tea, Wise also directed a number of films that I really like, including "The Body Snatcher" (1945), "The Day the Earth Stood Still" (1951), "The Haunting" (1963), and "The Andromeda Strain" (1971).
The screenplay was written by Ernest Lehman, who also wrote the screenplay for Hitchcock's "North by Northwest." The original source material was the 1952 novel, "Executive Suite," which was written by Cameron Hawley. Hawley reportedly had worked as an executive at a manufacturing company in Pennsylvania before he retired and began writing novels.
The cast included William Holden, June Allyson, Barbara Stanwyck, Frederic March, Walter Pidgeon, and Shelley Winters. (Trust me, kids, that was an all-star cast in 1954.)
Despite the plot's apparent melodrama, the film and the book investigate themes that are truly important. I say "apparent" melodrama because the elements of the plot that provide intrigue and urgency are often present in real life succession events.
Primarily, the film's succession contest is a battle for the soul of the company. The company's controller wants to run the company based on spreadsheets and cost cutting, making cheap furniture and eliminating jobs. Other characters want the company to pay higher dividends. One of the directors is trying to make a profit by short selling his stock. Eventually, a minority coalition emerges in support of a young furniture designer who wants the company to return to its legacy of top quality furniture and commitment to the community.
The film's questions about the purpose and role of a corporation are still relevant today. The characters in the film make fair arguments on various sides. Should the board be willing to invest in innovation and quality if that means a lower short-term return for the investors and a risk of losing value? Should the board consider the needs of the customers and the employees? Should the board try to preserve the value of legacy?
Other themes in the film include the stress that entrepreneurship can place on family relationships, and the ways in which ambition and greed can distort corporate governance. The film also illustrates why a business should plan for succession, rather than assuming that succession can be decided when the time comes.
Most of the film still plays well today, but the lack of diversity among company management and on the board is a glaring vestige of its time. This is especially noticeable because most of the women in the film are smart people with strong moral convictions. It seems obvious to us that the CEO's secretary, the furniture designer's wife, and the last owner's daughter could have been at least as effective in management as most of the men who run the company.
I'll return to each of these themes in future posts, and now you'll know why those discussions might refer to "Executive Suite" from time to time. In the meantime, if you get the opportunity, watch the film and/or read the book. It will inspire some profound thoughts about business, succession, and leadership (and it might help you understand how thrilling business succession can be).