August 7, 2000

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Covisint Searches For The Perfect CEO

By Steve Konicki

ne of the biggest challenges facing Covisint as its architects and business planners race to bring the exchange to life is finding a CEO with a vision big enough to make it work.

Alan Turfe, the General Motors executive who served as that company's co-CEO to Covisint until two weeks ago, says several potential candidates have been interviewed but none has surfaced as the leading contender. One reason, Turfe says, is that the new CEO will need a grasp of the global nature of the automotive business and how it interoperates with its suppliers--but have none of the baggage of having worked for one of the companies. "The companies and the suppliers demand a neutral CEO," he says.

There's a very small pool of people, whose talents are in great demand, who can be successful as Covisint CEO, says Charles Phillips, a managing director at Morgan Stanley Dean Witter. A Covisint CEO needs to understand the workings of large companies and manufacturing and have an appreciation of logistics and supply chains, but doesn't need to be a supply-chain manager, he says. He or she does, however, need to be a world-class leader.

Phillips points to IBM chairman and CEO Lou Gerstner as an example of the type of leader Covisint requires, though he's careful to note that he's not identifying him as a potential candidate for the job. Gerstner had little high-tech experience when he joined IBM in 1993 after a four-year stint as chairman and CEO at RJR Nabisco Inc.; before that, he spent 11 years as president of American Express Co. Despite IBM's recent unimpressive quarterly results, Gerstner has been credited with turning the company around at a time when its future was extremely bleak. "If you needed a specialist to run a modern company, Lou Gerstner wouldn't have ever been hired by IBM," Phillips says.

The yet-to-be-named CEO must also be able to sell the exchange to companies outside the auto industry because Covisint's founding members believe they will be marketing the exchange to large manufacturing companies and other logistics-intensive businesses, says Kevin Costello, managing partner of digital markets solutions with Arthur Andersen. "Unless the CEO can bring in a large volume of participants, it will be very difficult for the business to be liquid, and as we're learning from other attempts at exchanges, they must be liquid or they go out of business in a very short time," Costello says.

Covisint won't comment on the status of the search. A spokesman for the exchange will say only that there are no plans to appoint a new GM co-CEO to replace Turfe, who is leaving to become CEO of Metalspectrum, a startup metals exchange. The exchange's business is being conducted by the remaining Ford and DaimlerChrysler co-CEOs and various management committees.

The task of developing the auto exchange's business plan and corporate structure is left unfinished as a result of Turfe's departure. But Turfe says the permanent Covisint CEO will want to fashion the exchange "in his own way" and that his resignation won't slow Covisint's progress. Some question that assertion, saying the central issue of how Covisint is to be run needs to be resolved quickly--the marketplace's launch is just a few weeks away.

Return to main story, "Covisint's Rough Road."

Illustration by Peter Horvath

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