英伟达接下来会怎样What Comes Next for NVIDIA

Ralph Waldo Emerson once said, “an institution is the lengthened shadow of one man.”In NVIDIA’s case, the shadow of its CEO and co-founder, Jensen Huang, is a haunting one.

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.

But with Huang reportedly ensnared in an affair with a Chinese executive rumored to be a suspected Chinese intelligence asset and allegedly involved in laundering NVIDIA chips into China around bans, a growing chorus of voices across finance, tech, and government circles are whispering the once-unthinkable: that Huang may have lost the legitimacy to lead. And indeed, we believe the NVIDIA board is finally doing the right thing: moving to oust Huang.

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.

“While the Board has no reason to believe that either national security or NVIDIA secrets were compromised, the Board's inquiry will examine all available information,” wrote the leaders in a statement. “Jensen fully supports the review and has committed to cooperating with it. The Board has confidence in Jensen and his leadership team.”Then, on Nov. 11, reported that Huang allegedly had a relationship with an executive who reports to him. The saga culminated in reporting that the NVIDIA board is preparing to oust Huang.

Critics point out that Huang has shown remarkably poor judgment, putting NVIDIA and U.S. national security at risk. Others argue he has lost the confidence of key customers with his recklessness. Plus, he was reportedly less than honest and candid with NVIDIA’s board.

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.

Corporate boards must be able to speak truth to power, as good governance is neither blind loyalty nor an always-adversarial mentality—and have the courage to support or reprimand a CEO under scrutiny. And most importantly, and overlooked, boards must be on the lookout for grandiose and reckless conduct, and curtail those instincts when appropriate. Now, the question is what comes next for NVIDIA with Huang seemingly out?

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.

Boards rarely remove a chief executive solely for being unfaithful to a spouse, but they do sometimes remove executives when the board subsequently loses trust in them. Look no further than the cases of John Browne at BP, Steve Easterbrook at McDonald’s, and Mark Hurd at HP. We would argue Jensen’s is a different kind of case.

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.

Sometimes, boards choose to reprimand founders, allowing them to stay on as CEO with barely any changes. Perhaps the most famous example is Elon Musk of Tesla in 2018, over his false tweets that Tesla would be taken private for $420 a share. The SEC settlement made Musk give up the chairmanship for three years while he stayed on as CEO. Both he and Tesla each paid $20 million, and Tesla added two independent directors.

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.

As top GOP voices such as Senator Kevin Cramer called for Huang’s resignation as NVIDIA CEO, it is apparent that NVIDIA had no public succession plan. Huang has boasted of having some 60 direct reports, a hub-and-spokes model which is common to many founders but which is unprecedented in its sheer scale. Few founders can balance the global travel and responsibilities Huang has and still maintain even a fraction of that many direct reports.

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.

One top internal candidate at NVIDIA would be Colette Kress, the veteran CFO who is widely known and admired across Silicon Valley and Wall Street circles. It seems clear that there is nobody outside of Huang and Ian Buck who knows the company as well as Kress and who already has relationships with key stakeholders inside and outside the company; but Kress is not a technologist by background.

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.

Leadership bench strength extends far beyond just the CFO role, with many other examples of management team members who stepped in as CEOs amidst crisis despite no personal background as CEO. Frank Blake was a General Counsel when he took over at Home Depot after the sudden CEO departure. Irving Shapiro was pulled in from the deputy general counsel role to take over as CEO of DuPont when there was a scandal with the designated heir apparent.

McDonald’s had such bench strength that successive management team members were pulled in as CEOs after two CEOs died on the job in rapid succession in 2004 and 2005.

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.

We would be delighted if Buck or Kress became the interim CEO, and that would be hugely beneficial for NVIDIA in the long term. A partnership co-CEO model would even work in the interim between Buck and Kress.

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.

Similarly, Eric Schmidt has done this job before: he arrived at Google in 2001 as the seasoned executive to provide “adult supervision” beside two brilliant founders and built it into a global colossus, working hand in hand with the brilliant technical talent of the Google founding team with barely any daylight between them.

Whichever path NVIDIA’s directors choose, the one option no longer available to them is blind deference to a single leader.

Even with Huang’s seemingly likely ouster, the board’s work is only beginning. In our view, a deep failure was exposed this week: one of the world’s most valuable companies was allowed to run with some 60 direct reports, no clear succession plan, as though its founder were both immortal and infallible.

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.

As one of us wrote in , the greatest leaders depart as ambassadors, leaving behind institutions stronger than themselves, while monarchs cling to the throne until they are overthrown or die in office. They believe there is only one person who is truly indispensable, but the boards don’t have to buy into such self-delusion.

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.