From Fortune · Phil Wahba · · 1m 40s
Nvidia's flat structure left no heir to Jensen Huang
The chipmaker's stripped-down management may have cost it a succession plan when its founder suddenly resigned.
In brief
The chipmaker's stripped-down management may have cost it a succession plan when its founder suddenly resigned. Jensen Huang resigned as Nvidia CEO after an affair scandal, leaving no clear successor. His flat organizational structure, while efficient, may have prevented the company from developing leadership talent…
Nvidia's founder steps down
Jensen Huang resigned as Nvidia CEO on Thursday after confessing to an affair with Alice Huang, a former Megaspeed executive and suspected Chinese spy, and reports of a second affair with an Nvidia subordinate.
No clear successor in place
Huang left the job at age sixty-three after nearly thirty-four years as chief executive with no obvious number two.Finance chief Colette Kress will serve as interim CEO while the board hunts for a permanent successor.
The flat organization explained
Nvidia exemplified the flat org structure popular in corporate America. Huang had some thirty-six direct reports and eschewed one-on-one meetings. Employees were encouraged to share suggestions directly with leadership regardless of seniority.
Flat structures eliminate future leaders
By eliminating managers, companies potentially eliminate their next generation of leaders. Flatter arrangements concentrate power with CEOs and make it harder to groom future leaders through one-on-ones and stretch assignments.
“where the development happens”
Founder-CEOs resist board oversight
Founders tend to be more powerful than typical CEOs, so boards do not really want to challenge them.This can lead to boards dropping the ball on one of their key duties: the board owns succession.
“The board owns succession”
Stock market reacts to uncertainty
Investors wiped as much as ten percent from Nvidia's share price in the hours after Huang's exit, reflecting concern about the lack of a seamless handoff and the future of the broader AI boom.
The key point
Jensen Huang resigned as Nvidia CEO after an affair scandal, leaving no clear successor. His flat organizational structure, while efficient, may have prevented the company from developing leadership talent.
