Many within Silicon Valley see Huang as a visionary genius, whose vision as the “Godfather of AI” has improved billions of lives around the world and contributed greatly to American prosperity and innovation. When attending our Yale CEO forums, he has been revered by CEOs across sectors and around the world for his bold, entrepreneurial vision and his revolutionary technological triumphs.
That follows a tortured sequence of events. On Nov. 8, NVIDIA’s board of directors announced it had launched an independent investigation into reports that Huang has been the target of a foreign intelligence effort.
Then, on Nov. 11, The New York Times reported that Huang allegedly had a relationship with an executive who reports to him. The saga culminated in The Wall Street Journal reporting that the NVIDIA board is preparing to oust Huang.
Ideally, boards working with visionary founders can help ground the leader in reality while also supporting creative, calculated risk-taking. A lot of visionary founders have grown tremendously in this model. In fact, when managed the right way, these founders have the ability to drive their organizations to become more, not less, nimble. That is why our research reveals that long-tenured CEOs often outperform.
NVIDIA's board had three choices when it comes to Huang’s future: remove him, force him to take a leave of absence, or let him off the hook with a reprimand amounting to a slap on the wrist. And it did the right thing by moving to oust Huang. Of note, NVIDIA does not have dual-class shares, and Huang only owns a single-digit percentage of the company’s shares, so the board controlled his fate, not Huang himself.
Likewise, there are some examples of CEOs who were forced to take a leave of absence, either by their boards or for personal reasons, and then subsequently returned to the job successfully. Some notable examples include Steve Jobs of Apple, who took a six-month medical leave to focus on his health in 2009, and then returned to run Apple alongside Tim Cook; Tony Fernandes of AirAsia, who gave up his role for two months amid allegations that were later disproven by an independent review which cleared him of all wrongdoing; as well as Kraft Foods CEO Roger Deromedi, who returned as CEO of Kraft after a medical leave.
The board likely weighed all three but came around to the right decision: Huang would be hard to replace, but the time was right to make a move and to replace Huang amidst escalating scandal and controversy.
Potential replacements for Huang
Unfortunately for the NVIDIA board, they are unable to draft someone with requisite CEO experience off the board on an interim basis that would buy them time, unlike some other emergency succession parallels. For example, Lew Platt, an honorable former CEO of Hewlett-Packard, stepped in off the board when CEO Phil Condit left Boeing amidst a series of scandals; and similarly, when John Akers imploded at IBM, the company brought in Jim Burke of Johnson & Johnson fame as Chair of the search committee for a new CEO, ultimately landing Lou Gerstner.
Nevertheless, there are many CFOs who stepped in as CEOs during crisis situations, despite not having any CEO background, with no need for any outside messiah. For example, when founder Steve Wynn left as CEO of his eponymous Wynn Resorts, CFO Matt Maddox stepped in. Likewise, Greg Hayes, then the CFO of United Technologies, took over amidst succession challenges and then led the company through a soaring transformation and merger with Raytheon and the formation of RTX.
NVIDIA has an impressive and deep bench of management talent, including an admired tech superstar Ian Buck, the vice president of Hyperscale with strong relationships with NVIDIA’s largest customers. Buck would be a hugely strong replacement who brings the right technical expertise, customer relationships, experience, and employee relationships for the role. He has garnered influential endorsements as the next CEO from several key commentators, including Jim Cramer.
That bench strength will be crucial for NVIDIA in the months ahead. But should the board decide that an outside captain is needed to stabilize the ship in the long term, two candidates who stand out as obvious choices would include Tim Cook, who has an unparalleled track record of succeeding a bigger-than-life founder who is synonymous with their company and proving that the company can thrive without the founder. Cook’s accomplishments need little explaining; after he followed Steve Jobs, Cook took Apple from roughly $350 billion in market value to $4 trillion, mastering the same Asian supply chain every Nvidia chip depends on and moving Apple onto its own silicon.
NVIDIA’s moment of truth
Whichever path NVIDIA’s directors choose, the one option no longer available to them is blind deference to a single leader.
History is unambiguous on this point. Legendary companies like Polaroid, Digital Equipment, and Wang Labs arguably withered because their boards could not separate the institution from the founder. Apple soared after Steve Jobs because he and his board had prepared Tim Cook to lead.
Whether NVIDIA is an institution that can not only survive but continue to thrive for the long term beyond any single individual is entirely up to its board.
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