Kaminsky's Call: A CEO Should Never Be Too Big To Fail

There are companies with CEO's, and there are CEO's with companies.

Hewlett-Packard's headquarters in Palo Alto, California.
Hewlett-Packard's headquarters in Palo Alto, California.

If there was ever an opportunity to ponder the difference, this weekend was the time.

Hewlett-Packard, a company that has prided itself on its own "H-P Way" culture for over fifty years, is not built for the latter phenomenon. But indeed, when the Mark Hurd story hit the wiresshortly after Friday's closing bell, the reality hit home that (HPQ) had become a, "CEO with a company."

My "Call-to-Action" is to protect yourself from scandals and extenuating circumstances like those that ruined every (HPQ) holder's summer weekend. CEO's should never become bigger than the institutions they lead and we are seeing again why.

Those invested in celebrity CEO's Warren Buffett of Berkshire Hathaway and Steve Jobs of Apple have to ponder the respective health of each and consider what succession plans are in place for mortality events. But this Hurd case, this was a blindside to those who capitalized on a CEO that had become bigger than his company.

Carly Fiorina's well-documented departure from (HPQ) created a situation where the company needed a star leader, and Hurd became that individual. But the more momentum the CEO built in terms of accumulating believers just on his name alone, the deeper the hole (HPQ) dug for itself when someone of his stature could, and did, fall.

An (HPQ) stockholder may not be in the mood for riddles but what do Johnson & Johnson, ExxonMobil, and Wal-Mart have in common? None have that cult-of-personality CEO, the type of leader where a power transition would send rumbles throughout the infrastructure. These three titans are examples of "companies with CEO's," an important distinction from what (HPQ) had become.

CEO leadership is pivotal, and in no way am I sacrificing its importance with this defensive call-to-action. For two of the members of The Strategy Session's "One-Decision Club," I sang the praises of the leaders as evidence of their propensity for success—Peter Rose of Expeditors International of Washington and J.Bruce Flatt of Brookfield Asset Management . But it is important to distinguish that it is their approach to business and not any star status that warrants consideration for the investor's dollar.

What has happened at (HPQ) actually makes a great deal of sense. Stock-pickers were buying on the Hurd name. This is not a first-time happenstance. When Larry Ellison, rival or not, writes that Hurd will be, "very hard to replace,” reliance on the individual may be too correlated to performance.

These are the times to either learn from your own mistakes or someone else's. A CEO is merely an individual, a human being who can bring down years and years of progress with a flaw. The Mark Hurd story provides a learning ground.

No individual should be bigger than the institution he or she leads. Should there be another stock choice made for the CEO first and foremost, the K-Call will refer back to a sleepy Friday in August where one scandal quashed this strategy, present and future.

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Programming note: "The Strategy Session," hosted by David Faber and Gary Kaminsky, airs weekdays at Noon ET on CNBC.

Gary Kaminsky does not hold any equity positions.

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