Steve Blank

Nvidia’s board announced that Jensen Huang had resigned 33 years after he co-founded the company.

What happens to a company when a visionary CEO is gone? Most often innovation dies and the company coasts for years on momentum and its brand. Rarely does it regain its former glory.

That’s the danger facing Nvidia. Here’s what their board should be considering.

Here’s why.

Jensen Huang reinvented Nvidia three times. In 2006 he launched CUDA, turning a graphics chip for PC gamers into a general-purpose computing platform – and funded it for years ahead of any revenue. In 2012, when researchers used Nvidia chips to win the ImageNet contest, he pointed the company to deep learning. In 2020, with the acquisition of Mellanox, Nvidia went from selling boards with GPUs to selling integrated racks that power AI datacenters. 

These were not just product transitions, but radical business model transitions; new channels, new customers and new markets. Nvidia pivoted from a vendor of graphics boards, to a software platform, and then to systems company. It’s hard to imagine a CEO focused on executing an existing business model funding CUDA through those years.

Steve Jobs did the same at Apple, transforming it from a niche computer company into the most profitable company in the world. Between 2001 and 2008, Jobs reinvented the company three times.

Visionary CEOs are not “just” great at assuring world-class execution of a successful business model, they are also world-class innovators.

The best are agile and know how to pivot, making substantive changes to their business model while or before their market has shifted. The very best of them shape markets – they know how to create new markets by seeing opportunities before anyone else. They remain entrepreneurs.

Visionary CEOs don’t need someone else to demo the company’s key products for them. They deeply understand products, and they have their own coherent and consistent vision of where the industry/business models and customers are today, and where they need to take the company. They know who their customers are because they spend time talking to them. They use strategy committees and the exec staff for advice, but none of these CEOs pivot by committee.

Microsoft and Apple are two examples of what happens when a visionary CEO is replaced by an execution CEO.

Microsoft and the Cost of Missing the Next Market
Microsoft entered the 21st century as the dominant software provider for anyone who interacted with a computing device. After running Microsoft for 25 years, Bill Gates handed the reins of Microsoft to Steve Ballmer in January 2000. Ballmer went on to run Microsoft for the next 14 years. 

Ballmer organized the company around execution of its then current strengths – Windows and Office businesses. He tripled Microsoft’s sales to $78 billion and profits more than doubled from $9 billion to $22 billion, but those results hid missed opportunities that would reshape computing.

Ballmer failed to understand and execute on the five most important technology trends of the 21st century: in search – losing to Google; in smartphones – losing to Apple; in mobile operating systems – losing to Google/Apple; in media – losing to Apple/Netflix; and in the cloud – losing to Amazon.

In early 2014, Satya Nadella took charge. Nadella got Microsoft organized around the cloud (Azure), freed the Office and Azure teams from Windows and killed the phone business. Nadella saved Microsoft from irrelevance. Today Microsoft is worth about $4 trillion. It is one of the few companies that regained its former glory, after its board replaced a salesman with a product and engineering insider.

Innovation CEOs Hire Execution VPs
Successful visionary CEOs build an executive staff of world-class operating executives and technical leaders (and they unconsciously force out any world-class innovators from their direct reports). The problem is in a company driven by a visionary CEO; there is only one visionary.

Nvidia is the extreme case. Jensen had about 60 direct reports and discouraged one-on-one meetings. No long-term plans. Much like Jobs, he made himself the point where technical, product and business decisions came together. Replacing that role is harder than filling a box on an organization chart. He said he didn’t believe in succession planning.

When visionary founders depart (resignation, death, firing, etc.), their operating executives believe it’s their turn to run the company. At Microsoft, Bill Gates chose Steve Ballmer, and at Apple Steve Jobs chose Tim Cook. Jensen anointed no one.

Once in charge, one of the first things these operations/execution CEOs do is to get rid of the chaos and turbulence in the organization. Execution CEOs value stability, process and repeatable execution. On one hand that’s great for predictability, but it often starts a creative death spiral – creative people start to leave, and other executors (without the innovation talent of the old leader) are put into more senior roles – hiring more process people, which in turn forces out the remaining creative talent. This culture shift ripples down from the top and what once felt like a company on a mission to change the world now feels like another job. 

(Amazon is a counterexample. Before succeeding Jeff Bezos, Andy Jassy had already founded and led AWS. He was an innovator who had built a new business inside the existing company.)

At Nvidia this step isn’t optional. No one else can run a company with 60 direct reports, so the next CEO’s first move will be to add layers of management.

Why Tim Cook Was the New Steve Ballmer
Tim Cook ran Apple for 15 years. Apple under Cook grew its revenues from $108 billion to $416 billion and its market value from $350 billion to about $4 trillion. The iPhone continued its annual upgrades of incremental improvements. The transition to Apple silicon showed that major technical change on the chip level was possible under his leadership. But Apple silicon was a better engine for the existing products Apple already had, not a new market.

Apple stumbled badly on the one major product category launched under Cook – Apple Vision Pro and missed badly on AI (Siri was actually first with a Chatbot.) This year it turned to Google to help fix Siri. In September 2026 Cook handed the job to John Ternus.

How Nvidia Could Miss the Boat
The threat to Nvidia is already visible: its biggest customers are becoming its competitors. Google, Amazon, Microsoft, Meta, OpenAI and Tesla are all building their own AI chips. Jensen’s answer was to keep innovating and bring to market a new generation of chips every year, build a moat around an integrated hardware and software platform (CUDA), and invest ~$50 billion in the AI labs that run on Nvidia. 

It’s likely these are the bets an execution CEO trims first.

The irony is that in the 21st century, the tighter you hold on to your current product/markets, the likelier you will be disrupted. The rapid change of technology will create new disruptions that will force “bet the company” decisions about product direction, markets, pricing, supply chain, operations and the reorganization necessary to execute a new business model. In the GPU market, the difference between market dominance and Chapter 11 may be a hands-on product/customer, and business model-centric CEO with an entrepreneurial vision of the future.

Four Challenges for the Board of Directors
The dilemma facing the board at Nvidia or any board of directors on the departure of an innovative CEO is strategic: Do we still want to be an innovative, risk taking company? Or should we now focus on execution of our core business, reduce our risky bets and maximize shareholder return. Ultimately a board would like both – preserving the speed and ambition of Jensen’s decision-making while distributing enough authority for the company to function without him.

Tactically, that question results in asking: Do you search for another innovator from outside, promote one of the executors or go deeper down the organization to find an innovator?

Herein lies four challenges. 

1. Steve Jobs and Bill Gates chose execution executives as their successors. The result was they confused world-class execution with the passion for product and customers, and market insight. From the perspective of Gates there was no difference between him and Ballmer and Jobs believed Cook could be equally creative. Yet history has shown they were world-class stewards of a business model each had been handed. Yet long-term survival in markets that change rapidly require innovation and execution..
   
   Nvidia’s board has a different version of this problem. Jensen suggested no one, and he left the board the day he left the job. The decision belongs to a board in crisis, led by the first chair the company has ever had. Boards in crisis reach for stability. That gets you an execution CEO by a different road. Nvidia’s board should ask what its candidates have built under uncertainty.
2. If the board decides that the company needs another innovator at the helm, you can almost guarantee that the best executor – the number 2 and/or 3 vice president in the company – will leave, feeling that they deserved the job. Now the board is faced with not only having lost its CEO, but potentially the best of the executive staff.
3.   Many innovative/visionary CEOs have become part of the company’s brand. Steve Jobs, Mark Zuckerberg, Elon Musk and Jensen Huang. This isn’t a new phenomenon, think of 20th-century icons like Walt Disney, Edwin Land at Polaroid and Henry Ford. But they’re not only an external face to the company, they were often the touchstone for internal decision-making. Years after a visionary CEO is gone, companies are still asking, “What would Walt Disney/Steve Jobs/Henry Ford have done?” rather than figuring out what they should now be doing in the changing market.
   
   Jensen was more than the brand. He set Nvidia’s foreign policy, and was the company’s face in Washington, Beijing and Taipei. No Nvidia operating VP has done that job. The next Nvidia CEO inherits a Congress and investigators asking how many restricted Nvidia chips reached China.
4.     As companies grow larger and management falls prey to the fallacy that it only exists to maximize shareholder short-term return on investment, companies become risk averse. Large companies and their boards live in fear of losing what they spent years gaining (customers, market share, revenue, profits.) This may work in stable markets and technologies. But today very few of those remain. And certainly not Nvidia’s market.

Lessons Learned

•  Nvidia’s order book and CUDA will make the next two or three years look fine no matter who is CEO 
  • (unless a meaningful share of that revenue turns out to be chips that were diverted to China.)
• Innovation CEOs are almost always replaced by one of their execution VPs
  • If they have inherited a powerful business model (like Nvidia) this often results in gains in revenue and profits that can continue for years
  • However, as soon as the market, business model, technology shifts, these execution CEOs are ill-equipped to deal with the change
  • The result is a company obsoleted by more agile competitors and their company is left to live off momentum in its twilight years
• Nvidia’s board has to decide what it is hiring its next CEO to do. Executing today’s business is essential. So is reinventing it before someone else makes it obsolete.
• Execution pays your salary, innovation pays your pension

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