Death by digital: CEOs pay the price for tech trouble

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The heat is on CEOs this summer, as recent changes in the executive suite at Canadian Tire, Sobeys and Torstar show there's little tolerance for a boss who lacks a smart strategy for an increasingly tech-driven marketplace and even less patience for a leader who fails to deliver on digital promises.

Let's start with what played out behind the scenes at Canadian Tire this week, as it offers a case study in what's expected of today's CEO.

From the outside, everything seemed to be going Michael Medline's way in his second year in the top job. Canadian Tire's results were strong, as sporting goods and clothing chain acquisitions were deftly woven into the venerable auto parts franchise, and the stock was up smartly. And while it was outside Mr. Medline's control, Canadian Tire is reaping the benefits of rival Target's humbling retreat from the domestic market.

However, sources close to Canadian Tire directors, including controlling shareholder Martha Billes, say the board grew increasingly concerned that Mr. Medline didn't have a digital retail strategy capable of keeping the 94-year-old chain competitive and relevant in a digital age. The Billes family watched a long list of rival retailers – Eaton's, Dylex, Zellers – bite the dust by not keeping up with the times; a degree of paranoia is healthy.

"Canadian Tire's board was not worried about Target, they worried about Amazon. This is a group that's focused on the future," said a company adviser and friend of back-to-the-future CEO Stephen Wetmore, who took the top job back this week after running Canadian Tire for five years prior to handing the reins to Mr. Medline in 2014.

Mr. Wetmore has a proven reputation for understanding where technology is going and using that insight to create a better experience for customers. These are skills he learned as a top executive at Bell Canada and honed in his first go-round at Canadian Tire.

It's this ability to blend tech savvy with the rest of the management tool box – finance, marketing, leadership – that's essential to CEO success in every field, and critical in sectors such as retail, media and financial services. Because when the tech strategy doesn't work, corporate boards are clearly holding the CEO responsible. That accountability was not as direct in the past: The head of IT was more likely to be sacrificed, rather than the CEO. Now, the top boss is being held responsible for coming up with the tech-based strategy and executing. Which brings us to Sobeys and Torstar.

Last month, Sobeys wrote off $2.9-billion, or half the value of its 2013 acquisition of Safeway, at the same time it said farewell to CEO Marc Poulin. Part of the reason for the writedown: Poor integration of Safeway's supply management systems with that of the new owner. The CEO departure was unexpected as there was no replacement named for Mr. Poulin. Watch for Sobeys and parent Empire Co. to recruit a new CEO with proven skills at rolling out technology across a retail chain. And if Sobeys' problems getting groceries on the shelves sound familiar, it's because the same sort of inventory IT issues contributed to the departure of Loblaw's CEO a decade back.

At Torstar, CEO David Holland, aged 58, is going out on his own terms after seven years as CEO, announcing plans to leave this fall after three decades of service. But his departure comes at a time when Torstar, a family-controlled newspaper company, is struggling to define its digital strategy and has seen its stock price slide.

Mr. Holland has a finance background, and his single greatest achievement was eliminating debt by selling the company's bodice-ripping Harlequin publishing division. Mr. Holland's successor will be expected to arrive with a transformational strategy that spins old media into new, while keeping cash dividends flowing to the latest generation of the families that founded the company.

While this summer has seen high-profile departures from the corner office, there is no indication that this reflects a quick trigger finger on the part of boards. Data from the U.S. Conference Board show CEO tenure has been relatively constant over the past 15 years, with the boss of an S&P 500 company typically staying in the corner office for somewhere between seven and nine years. What we've seen at Canadian Tire, Sobeys and Torstar is a sign of the times in corporate governance.

It's healthy for CEOs to be held accountable for a growth strategy that includes incorporating tech trends, along with the ability to deliver on big-ticket IT initiatives. Incorporating ever-changing technology into the business is now central to every CEO's job description, as important as human resources, finance and marketing moxie.

Finally, it's also worth pointing out that two recent leadership changes – Canadian Tire and Telus – saw the CEO replaced by a predecessor who remained on the company board following "retirement." It's unusual for a public company CEO to stick around after calling it a career. Governance experts and common sense dictate that it's a bad idea: How useful are old bosses in passing judgment on the strategies they put in place and successors they picked?

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The Departed: Canadian bosses who left after getting tech wrong

• Canadian Tire head Michael Medline left in 2016 in part because of board concerns with the retailer’s digital strategy.
• Sobeys boss Marc Poulin went out the door in 2016 after a $2.9-billion writedown driven in part by supply chain problems.
• Torstar chief executive David Holland announced retirement plans in 2016 as the media company struggles to boost digital revenue.
• BlackBerry parted ways with Thorsten Heins in 2014 after its next generation of smartphones bombed.
• Thomson Reuters CEO Tom Glocer departed in 2011 after the company lost market share with its desktop data products.
• Loblaw Cos. said farewell to president John Lederer in 2006 after problems that included the botched introduction of a new supply chain.
• Bell Mobility president Michael Neuman left in 2005 following a troubled rollout of a new billing system; some customers went months between bills.