Editorial: Top dogs

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Published: November 14, 2014 12:42:23 AM

An engineering or management education is behind the success of most top honchos worldwide

The Harvard Business Review (HBR) has just come out with its annual listing of the top 100 CEOs and, apart from Amazon’s Jeff Bezos, who ranks number one, the top 30 are from relatively unknown companies, at least in India. So, what’s behind the rankings? More pertinently, how do you measure a CEO’s worth? Basically, HBR has looked at the increase in total shareholder return and market capitalisation.

The top 50, on average, have delivered total shareholder returns of 1,350% during their time on the job. That translates into an annual return of 26.2%.

One interesting takeaway is that the top 100 have got where they are taking two preferred pathways. Over a quarter of the CEOs have MBAs and a similar number are engineers. At technology or science-based companies, it is not a big surprise to find an engineer at the helm. But engineers thrive at the top of other kinds of firms, too: Carlos Alves de Brito of brewing giant Anheuser-Busch InBev, Jeffrey Sprecher of the financial services firm Intercontinental Exchange, and Kari Stadigh of the insurance company Sampo. What makes an engineering degree useful to people leading a business? “Studying engineering gives someone a practical, pragmatic orientation,” according to Nitin Nohria, the dean of Harvard Business School, who holds an undergraduate degree in chemical engineering from IIT, Bombay.

So what’s the ultimate takeaway from this ranking? Bezos’s place on top of the list says it all. Amazon often reports quarterly losses, even as sales continue to rise. More importantly, Amazon and Bezos have a long-term track record of delivering shareholder value that is second to none.

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