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Abu Dhabi, UAEWednesday 12 December 2018

Chief executives who said goodbye in 2017

Uber’s Kalanick and GE’s Immelt are among executives who decided to head for the door – or were pushed out

The big question is whether, on balance, former Uber chief executive Mr Kalanick helped Uber more than he hurt it.  Danish Siddiqui/Reuters
The big question is whether, on balance, former Uber chief executive Mr Kalanick helped Uber more than he hurt it. Danish Siddiqui/Reuters

It's that special season when we reflect on those titans of business who held center stage this year.

But let's not forget those folks who made an impact just by retreating (or being pushed off) to the wings.

So here is Gadfly's 2017 toast to the departed.

Travis Kalanick, Uber

Uber Technologies had weathered many scandals in its relatively short life. But by midyear, mounting legal and moral crises and a leadership drain proved too much, and Kalanick was forced to step down as chief executive.

The big question is whether, on balance, he helped Uber more than he hurt it. In part because of decisions he made as chief executive, and enabled by many others, the company faces angry regulators, an annoyed judge in a court battle with Google's corporate cousin, a workplace culture cleanup, and a fractured board and investor base. If SoftBank does buy a large slug of Uber stock, it will clarify that the company is worth less than investors believed a couple of years ago.

Yet Uber likely wouldn't have become such a force if Mr Kalanick hadn't been a "brilliant jerk," to use the words of one director. Mr Kalanick's legacy now depends on whether his successor can calm Uber's storms and prove the company is financially viable. At stake is not only the billions of dollars invested but the fate of an entire category of post-recession tech startups that were more disruptive than anything seen before -- both in good ways and sometimes destructive ways.

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Read more:

Uber to be treated like a regular taxi firm, rules EU court

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Jeff Immelt, GE

Jeff Immelt held the top post at GE for 16 long years before finally stepping down in August. According to his Harvard Business Review profile (written by himself, naturally), Mr Immelt's legacy is one of innovation, digital investment and the transformation of a General Electric portfolio that "was simply too broad and too opaque." GE's stock price tells a somewhat different story, one of poor capital allocation, a business mix that's still "too broad and too opaque" and a culture where bad news traveled slowly.

Since Me Immelt's departure, GE has been forced to admit its cash flow isn't sufficient to support a dividend he raised just last year and radically walk back earnings guidance he affirmed literally on his way out the door. Meanwhile, GE hung a for-sale sign on its stake in Baker Hughes, a GE, a legacy of Immelt's mistimed oil and gas acquisitions.

Mr Immelt did generally have the right idea on investing in software to make industrial machinery run more effectively, but his push to become the be-all-end-all digital provider for industrial companies was too grandiose. GE says his departure was planned years ahead, but there was hardly ever a company more in need of fresh eyes. Maybe it still is.

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Read more:

General Electric to axe 12,000 jobs in power unit

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Hugh Hendry, Eclectica Asset Management

Hugh Hendry's September decision to shutter his London-based Eclectica Fund after 15 years highlights the existential threat central banks pose to macro hedge funds. These have struggled for several years as quantitative easing distorts asset prices.

Investors are voting with their pocket books, with even the most storied managers suffering outflows. Paul Tudor Jones, for example, oversaw about US$7 billion of assets by the end of the third quarter, half what he managed in mid-2015.

Mr Hendry lost 3.8 perdcent in August, mostly betting on rising German bund yields. "The most distorted asset class in the world is the two-year German bond," he told Bloomberg Television on Sept. 15, the day after announcing his retirement as a hedge fund guy.

Not much has changed since. That German two-year yield ended August at -0.73 per cent; it's currently -0.67 per cent, versus a five-year average of about -0.3 per cent. With central banks still setting the price of money, the ranks of the global macro gang keep thinning.

Mickey Drexler, J. Crew

Mickey Drexler has been hailed as retail's Merchant Prince. His vision fueled Gap's 90's-era heyday. Later, he led a renaissance of J. Crew Group, presiding over the period when its bright hues, mismatched prints and sequins-as-daywear aesthetic commanded huge sales and influence.

But he stepped down this summer. Shoppers have been fleeing the chain after several years of ill-fitting garments, baffling price points and a so-so e-commerce plan.

Mr Drexler's fall shows just how much retail has changed. Trends move faster, e-commerce is booming and malls are floundering.

Mr Drexler and Jenna Lyons -- the creative director responsible for J. Crew's comeback-era look who also left this year -- are glaring examples of hubris. The pair seemed to believe Lyons could simply decide what was cool -- fancy pajamas as an outfit, anyone? -- and shoppers would follow. The rise of social media, however, means fashion springs increasingly from below rather than descending from on high. Ms Lyons and Mr Drexler missed that shift.

Having scored the top job at J. Crew after being forced out at Gap, Mr Drexler may yet rise again. But a resurgence seems unlikely: Apparel finally seems to have outgrown him.

Joe Jimenez, Novartis

Novartis chief executive Joe Jimenez accomplished plenty in eight years. He presided over $49bn in deals; the company's pharma division has mostly weathered generic competition for its former bestseller Gleevec; and a deal with University of Pennsylvania academics led to a pioneering cancer therapy.

But he also leaves a long to-do list for Vasant Narasimhan, who succeeds him in February.

The decision to spin off, sell, or keep struggling eye-care business Alcon has been postponed. Ditto deciding what to do with Novartis's $14bn stake in Roche Holding and its $10bn stake in a joint venture with GlaxoSmithKline.

There's also the need to deliver a long-promised return to sales growth. Meanwhile, price competition is rising for generic unit Sandoz, and Gilenya, Novartis's current best-seller, comes off patent in 2019.

Novartis simply needs more sales drivers -- meaning more deals. But it faces the same obstacles as its peers, especially high valuations, as companies chasing growth who should know better keep throwing good money after bad drugs and everyone crowds into the same drug classes. Meanwhile, no company seems willing to commit to fixing a fundamentally broken drug-pricing model.

John Bryant, Kellogg

John Bryant left his chief executive post at Kellogg this fall on a soggy note: The cereal giant's stock is having by far its worst year since the last recession.

America's leading packaged-food companies face an identity crisis. The very products responsible for turning them into household names no longer fill grocery carts. Away from sugary cereals, it's the aisles where fresh, less-processed and convenient foods are found that have become prime real estate, and upstart brands have seized it.

Long-time CEOs of General Mills and Mondelez International also stepped down this year. But Mr Bryant's departure speaks the loudest, perhaps because he's only 52 years old.

His successor, Steve Cahillane, who was hired from Nature's Bounty, has already turned to pricey bolt-on deals to revamp Kellogg's portfolio. Still, the company has a history of dropping the ball on brands it acquires that could have been booming, such as Kashi organic granola. Pricing pressure, intensified by Amazon.com's Whole Foods purchase, hasn't helped. It feels a bit like Mr Bryant and the board finally threw their hands up. Unless Mr Cahillane has the right growth recipe, Kellogg could wind up on someone else's shopping list.

And with that, it only remains to say (or paraphrase) that sometimes, nothing becomes a person's job quite like the manner of their leaving it. And sometimes, it's just time to go.