It can be a risky strategy allowing a chief executive to become the embodiment of a company, but the benefits of this rock-star approach can make it worthwhile, writes Karlin Lillington

HAVING A rock-star chief executive can be a risky bet. The chief executive of a company can become so well known and identified with a company that the two are synonymous. That can mean the illness or loss of the leader spells shareholder and market panic, or alternatively, that their personality turns into a lightening rod for public opinion, which then batters the company or causes the chief executive to eclipse them.

On the plus side, rock-star chief executives can create a strong corporate culture and brand identity. Of their own accord they can bring media attention and the "oxygen of publicity" that advertising cannot buy.

For past and present examples of the rock-star chief executive think of Steve Jobs at Apple; Richard Branson at Virgin; Larry Ellison at Oracle; Bill Gates at Microsoft; Michael Dell at Dell; Carly Fiorina at Hewlett Packard or Anita Roddick at The Body Shop.

Closer to home we have seen Fran Rooney at Baltimore Technologies; Fergal Quinn at Superquinn; Chris Horn at Iona Technologies; Denis O'Brien at Esat and Michael Smurfit at Smurfit.

"What they do is they set the tone, the culture of an organisation and the company identity. They're a kind of embodiment of the organisation," says Prof Mary Lambkin, of UCD's School of Business.

"They are actually so closely part of it that you can't separate them," she adds.

According to Gerry Hennigan, a research analyst with Goodbody stockbrokers, chief executives tend to fall into two camps: firstly there is the investor-backed, management-focused chief executive, such as Hewlett Packard's (HP) current chief Mark Hurd; secondly there is the entrepreneurial company-founder chief executive, such as Jobs, Gates or Horn.

"Branding tends to stick more with the founder chief executive and I think investors let founder chief executives get away with a bit more," he says.

"Investors know that the founder chief executive may not understand as much about business management, but they also know that the founder created the company, has the interests of the company at heart and will take the long view," says Hennigan

"A lot of the corporate chief executives tend to have the Wall Street view - that the short term is more important - which isn't necessarily good for the company," he says.

However, founder chief executives rarely remain at the helm of their company. In most cases, there's a natural transition between the founder chief executive and the corporate chief executive, says Lambkin.

"In the first stage of a company's life, it usually follows the founder model. It is run by the entrepreneur with a messianic passion for the company. That's what gets the company going to begin with, that incredible zeal. Then you often get a messy transition, with a lot of blood-letting, as either the corporate-style chief executive is brought in or the founder chief executive has to change the structure and management of the company," she says.

The rock-star chief executive is generally the founder chief executive who navigates those changes successfully.

If they do not remain as chief executive but are still seen as an asset, "they often get kicked upstairs to become chairman of the board", says Lambkin. This way the company can take advantage of their visibility without having to take direct leadership, she adds.

The positive side of the rock-star chief executive is that, ideally, a company gets vision, leadership and media visibility. It's very important to have this visibility, something "the bland bunch of men in grey suits" generally can't bring, says Lambkin.

Technology companies in particular benefit from a visionary leader. "Company culture comes from the top down. The top guy sets the pace," notes Hennigan.

"A lot of the people who work for these companies are technical staff who can find a job anywhere. They are not motivated by money as such.

"They are motivated by the quality of the company. They want a sense of loyalty and of following someone with a clear vision. This tends to be a founder, not a suit," he says

Often the company value is measured not by hard assets "but by the quality of management", he adds.

That is the risk for the company with a rock-star chief executive. They can derive enormous value through their strong ties to the company but they can become bigger than the company too.

"The person can become so dominant they overwhelm the profile of the company,"says Lambkin.

"If the person is too strong, it may mean they get a great profile and become a celebrity product in their own right."

HP's Carly Fiorina became one of the most visible, interviewed chief executives in the US when she joined HP, with much focus going towards her "most-powerful-woman" status.

However, her profile meant HP's woes in the market coming out of the technology downturn also got an enormous, unwanted profile. Forced out by her board, she was hammered in the media for this fall from grace.

Both Lambkin and Hennigan feel this was unfair to Fiorina, who "was brave and took on huge, high risk propositions", says Lambkin. Some commentators felt that as a woman she was judged more harshly for such decisions, which might have been seen as daring if taken by a man.

Fiorina's departure from HP, followed by founder chief executive Meg Whitman's from eBay this year and founder Diane Greene's ousting from EMC-owned VMWare this month means no high profile women chief executives remain at the forefront of the technology sector.

Greene's departure is an example of a blood-letting transition - the techie chief executive of a company with high geek credentials discarded and replaced by a grey suit management chief executive after acquisition by a corporate giant.

Such an enforced transition, or even a planned transitions such as the Gates to Ballmer handover, says Lambkin, can make investors and customers nervous, and cause employees to leave. Microsoft carried it off, says Hennigan, but then again, he notes, Bill Gates is still a highly visible chairman.

An illness, even the possibility of an illness, can also cause market jitters. Steve Jobs was diagnosed with pancreatic cancer in 2004 and was said to have successfully recovered. However, his gaunt appearance at last June's Apple Developer's Conference to announce the 3G iPhone stil caused alarm in some quarters and much market speculation. The Apple share price flucuated as a result.

Jobs, who returned to the company he founded in 1997 to transform it into one of the world's mightiest brands, is thoroughly synonymous with trend-setting Apple. Were he to step down, shudders would pass through Wall Street and beyond.

Jobs, Michael Dell and Iona's Chris Horn are all examples of how the rock-star chief executive brand can be so valued that, though gone from the chief executive post, they are recalled to the stage in times of trouble.

"The individuals who founded those companies are so strong that there's a legacy of reputation. They're able to revive that asset value," says Lambkin.

However, she notes that bringing back the founder chief executive can be "an admission of total failure, a salvage operation".

Hennigan views such moves as a sign of boardroom alarm, but also as generally reassuring for investors. "When things go bad, bring back in the founder," he says.

He worries that visionary entrepreneurs who can also run a large company are yesterday's men and women. Newcomers are not coming up through the ranks, and younger, high profile chief executives, like the founders of Yahoo or Google, are few and far between.

"A lot of people running these companies are the older generation. It's a bit like rock and roll," he says. "My kids are still listening to the old guys, who are still setting the trends."