Thomas Cook Group: Do Insiders or Outsiders Make Better CEOs?

In September 2019, Thomas Cook Group Plc (Thomas Cook), an iconic 178-year-old travel company based in London, United Kingdom, ceased its business after a failed negotiation to fund its huge debt of £1.7 billion (US$2.25 billion). The collapse caused about 9,000 employees in the United Kingdom to lose their jobs and made it necessary to repatriate about 150,000 holiday travellers. The company had experienced several profit warnings during the tenure of Chief Executive Officer (CEO) Manny Fontenla-Novoa, who was replaced as CEO by Harriet Green, an outsider, in 2012. Between 2012 and 2014, the company’s share price rose from historic lows of about £14 to £130. However, the board unexpectedly asked Green to leave the company before completing her turnaround strategy and appointed Peter Fankhauser, an insider, as the new CEO, calling the departure a “hand-over from a turnaround specialist to a travel expert.” Despite his efforts, Fankhauser also failed to revive Thomas Cook. Who or what led to the collapse of Thomas Cook? Among the three CEOs, who should be held responsible, and on what grounds?

The case is intended for senior undergraduate- or graduate-level courses on strategic human resource management, corporate governance, business ethics, leadership and organizational behaviour, and enterprise risk management. After working through the case and assignment questions, students will be able to do the following:<ul><li>Analyze the internal and external environment of a firm operating in an industry that encounters disruptive innovation.</li><li>Evaluate the effectiveness of different turnaround strategies.</li><li>Analyze and identify appropriate leadership styles and qualities.</li><li>Evaluate the advantages and disadvantages of outsider and insider CEO succession.</li><li>Identify good corporate governance practices that avoid top-management biases.</li></ul>

• CEO succession
• succession
• strategic leadership
• organizational leadership
• corporate governance
• turnaround strategy
• bankruptcy