ChainMail | Succession Drama

Why a supply chief is gone

ChainMail | Succession Drama

HBO’s “Succession” made for gripping television, and for good reason: Corporate succession fights can be entertaining. Look at the recent reporting on Disney CEO Robert Iger, who didn’t want to give up his private office shower to the new guy.

Boardroom battles also provide valuable lessons in crisis management because they show how business leaders respond to destabilizing events. So it was at Disney, when Iger returned to the top spot during the pandemic. So it is at Flexport, the $8 billion digital logistics firm, where founder Ryan Petersen reportedly pushed out hand-picked successor Dave Clark this month after just a year.

Petersen’s a rock star in the supply chain industry. Same goes for Clark, who joined fast-growing Flexport from Amazon, where he helped develop its automated fulfillment centers. Together at Flexport, Petersen and Clark were going to use digital technology to build out a global e-commerce tracking and delivery system for smaller firms. “You shouldn’t have to be the biggest company in the world to have easy, cost-effective, and fast supply chain solutions,” Clark wrote in May when Flexport acquired the logistics and fulfillment operations of Shopify. 

Some people (ahem) got pretty excited at that news. “Flexport — already hugely successful in its own niche — is going to try to compete with Amazon,” I wrote.  

Fast forward just four months and Clark is gone from Flexport. Petersen immediately returned as CEO. The crucial backdrop is the shipping industry recession after several years of sizzling pandemic-era growth.

Based on what the two executives said on social media, it appears Petersen grew uneasy with Clark’s expanding vision for Flexport and wanted to go back to basics: providing customers with data-driven, operational support for shipping and distribution. “Flexport sits at a crossroad where the choice is either to spend our way out of the current downturn in global logistics or pursue a path that gets us back to profitability quickly,” Petersen wrote. “The way we grow is by talking to customers. Flexport leaders must proactively engage with our clients to understand their needs and then lead our teams to solve their problems and earn their trust. It seems like that muscle (atrophied) recently.”

Petersen hasn’t completely rejected Clark’s strategy; he said some of the company’s new products are great. But at least six executives Clark hired also have gone out the door.

While we don’t know everything that happened at Flexport, pursuing growth through a change of strategy required commitment to see through the risk. Petersen appeared to lose faith in Clark and in Flexport’s ability to accept greater risk on the way to reward.

The company gained momentum by using tech to give customers supply chain visibility. This was revolutionary stuff, yet Petersen no longer sounds like a tech evangelist. “The culture of customer engagement is what drives growth,” Petersen told The Wall Street Journal. “It turns out that tech alone won’t do it, even if the tech is way better.”

Maybe that’s the right perspective, but it would have been fascinating to see what Clark might have accomplished.

Read the complete Issue 43 of ChainMail here.

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