On the night of 20 April, Christian Klein gained two major responsibilities. He became a father for the second time. And Klein was named sole CEO of SAP, where he had risen through the ranks after starting at as a student more than two decades ago
Klein’s promotion was a major upset — not because the 39-year-old manager isn’t seen suited for the role. But it abruptly aborted the ascent of his co-CEO, Jennifer Morgan, who left after just six months, marking the shortest tenure of any leader among Germany’s largest 30 listed companies and the departure of the only woman from a league of white, German-speaking men.
Speaking in his first international interview since SAP announced the surprise change shortly before midnight that Monday, Klein made no secret of the fact that the decision was painful, calling his last few calls with Morgan “pretty emotional”. The co-leader model under which SAP had successfully operated for many years suddenly caused friction in the global organisation, he said.
“There are a lot of positives to this co-CEO model — you can divide and conquer and you can share responsibilities,” Klein said in a telephone interview. “But in the crisis, we also saw the downside of this model.”
Klein said that in plotting SAP’s course through the Covid-19 crisis, he and Morgan realised they were “not on the same page” on several decisions he declined to disclose. They had already experienced some disagreements in the early days of their joint tenure, but the pandemic was an “accelerator”, making the issues more pronounced, Klein said. When they went to the supervisory board to explain the impasse, the panel decided to jettison Morgan and asked Klein to carry on alone.
No longer tenable
SAP had been committed to the co-CEO structure, but when the coronavirus hit, it became clear that having two people in charge was no longer tenable, according to a person with knowledge of the matter. The leadership structure was described as disorganised and, at times, chaotic, by the the person, who asked not to be named discussing the company’s internal dynamics.
It took longer to get some things done because, in certain instances, managers needed sign off from two different CEO offices, this person said. Morgan hasn’t responded to requests for comment on her departure.
Klein now faces a range of challenges to keep the world’s largest maker of business management software on course. SAP has its headquarters in rural Germany, an hour’s drive south of Frankfurt. But there’s a huge operation in Silicon Valley that fell under the remit of American-born Morgan and may now feel disenfranchised by her exit, a risk that Klein acknowledged he must address. Then there are past acquisitions that have yet to be fully integrated, like the US$8-billion purchase of survey software Qualtrics that got a lukewarm reception from investors.
There’s also SAP’s engineering response to the coronavirus that requires Klein’s attention. The German government has drafted SAP and Deutsche Telekom to help develop an app to trace Covid-19 infections. Klein said SAP and its partners, which also include Google and Apple, are working under time pressure to ensure data security, scalability and user experience of the product, though he wouldn’t give an exact time frame when an app might be available to download.
As head of operations, everyday business also keeps Klein busy: checking in with work-from-home staff via virtual all-hands meetings, conversations with customers and calls with the German government about SAP’s role in the virus recovery. The CEO said he’s also considering how to evolve the company’s commercial model, call centre and digital marketing strategy.
Founded by a group of former IBM programmers, SAP still relies in no small part on the input of one its co-creators: Hasso Plattner, the company’s biggest individual shareholder, chairman and engineering mastermind, who created some of SAP’s most successful products. Klein and Plattner are close, with the chairman sending a glowing internal mail after Klein’s promotion in which he assured him of his support. It’s an important vote of confidence for Klein from the one voice that matters at SAP.
One thing currently not on Klein’s mind is acquisitions, and the company will rely first and foremost on organic growth, he said. Eventually, though, deals will come back into focus, and the CEO has already identified a gap in its offerings.
“I would love to have a telecommunications solution in the portfolio right now,” Klein said, referring to video conferencing tools that have been in high demand during the lockdown. “I’m a little bit jealous of not having such a solution in the portfolio – now in the crisis for sure.”
For now, though, his attention is aimed at steering Germany’s most valuable company through the upheaval wrought by the sudden leadership change, while managing the work of 100 000 employees who are largely working from home.
And then there’s the challenge of juggling the tasks of an enlarged family. Luckily for Klein, he says his newborn daughter is a good sleeper — one less distraction as he steers the technology company through a viral pandemic and economic crash. — Reported by Sarah Syed and Nico Grant, (c) 2020 Bloomberg LP
