Thursday, January 19, 2012

President as CEO?

Andrew Ross Sorkin had a column in the New York Times this week defending the role that private equity plays in the economy. The idea is, I guess, that all the talk about Mitt Romney and Bain Capital has somehow unfairly turned into an attack on venture capital, private equity, and other investment entities.

What it raised for me is a different question: Does Mitt Romney help his chances of being elected President by running on his business experience?

Now, it may be that he has no choice. That's his hand, along with his governorship of Massachusetts and his role in the Olympic games in Utah, and he has to play it. And particularly in the Republican primary, his business experience sounds more compelling than his Massachusetts political career.

But what about the general electorate?

How do Americans feel about business and business leaders?

In 2008, before the Wall Street imploded and took the U.S. economy with it, a poll of average Americans found that only 11% said they had "a great deal of confidence" in the people in charge of major corporations, while 35% said they had "hardly any confidence." And that was during the good times!

Then in 2009, as the economy deteriorated, 70% of Americans said that people on Wall Street were not as honest and moral as other people. When asked to rank the honesty and ethical conduct of different occupations, business executives came in near the bottom of the list: given a choice of "most admired" professions, "business executive" came in at 21 out of 23 choices.

Which raises a question: If your campaign is based on a career in private equity, as a CEO/business executive, how do you turn that to your advantage?

And what's your campaign slogan: Mitt Romney--He's Kinda Like a Wall Street Guy, But Not Really, Except When It Comes to Experience, But You Can Trust Him, Because He's Not Like the Other Wall Street Business Guys!

We're gonna need a bigger button!

Monday, January 16, 2012

Moral Authority?

Happy Martin Luther King, Jr. Day!

I was driving home this morning, listening to the radio. They were replaying the speech Dr. King gave in Memphis shortly before he was murdered.

All these years later, his voice, his words, his message are still inspiring.

It made me think back to an experience I had about 5 years ago.

I had just given a speech to a CEO and his top-level executives. My theme was change and leadership.

After my talk, the CEO thanked me and then addressed his team.

"Who would you say has moral authority in America today? Business, government, religion--any category. Who has moral authority?"

Who, in other words, would you listen to the way I was listening to Dr. King on my drive home?

Five years ago, the room fell silent at the CEO's question. Time passed. No one spoke.
No one came up with a name. Not one name.

After about 5 minutes of dead silence, the CEO changed the subject.

But when I got home, his question had made me think.

If there is no one today--no one in business, government, or the non-profit world--who has moral authority; if there is no candidate for President who speaks with that kind of honesty and integrity; no one running a Fortune 500 company who speaks with the public interest in mind; no one at the top of an organized religion or a major philanthropy who can address the moral issues of our time; if that's the case, then it's clear who we have to look to for moral authority.

It's up to us, people.

It's up to us.

It's up to us to care enough to speak out, to know enough to say what's right and what's wrong, and to love enough to stay true to the oldest truth of all: Love thy neighbor as thyself.

Dr. King's birthday is a good day to look at each other, and see in each other someone with real moral authority.

Ultimately, that was Dr. King's message.

It's up to us.

Friday, January 6, 2012

Boxing the Compass of Intangible Value Creation

I think it's fair to say that we live in an economy that is largely made up of intangibles.
A world of brands; relationships; causes; ideas; business models.

That said, most of the way we do our accounting--either actual accounting or informal, mental accounting--still looks at tangible assets as the coin of the realm.

In an economy of intangibles, what creates real value?

These aren't the only four attributes; but if the aim of the exercise is to "box the compass" of intangible value creation, here are the four key attributes:

1. Trust. Every serious study of the history of capitalism starts with this: capitalism only works because of trust. The trust that if I invest my money in your voyage to the New World, you will actually take that journey and, to the utmost of your ability, come back with a boatload of silk, spices, tobacco and other merchandise. Trust is the glue of capitalism. Which makes Wall Street's recent sins all the more egregious.

2. Creativity. The team with the best people wins--and in an economy of ideas, creativity is the mother's milk of innovation and value creation. Granted, you have to implement: real artists ship. But if you want to build an organization that creates value, get more than your fair share of creative thinkers, dreamers, and imagineers.

3. Courage. We live in dangerous times. If you dare to be different, to play the game by different rules, to follow your own creative instincts to where ever they are destined to lead you, you gotta have heart. The world will try to tell you you're wrong, your idea won't work, you're wasting your time. Courage!

4. Teamwork. All work is teamwork. If you want to create intangible value--and then keep on doing it--create a culture and a working environment where trustworthy, creative, courageous people bring their best ideas and best effort to work every day, and where they work well together.

In an economy of intangibles, those four attributes box the compass of intangible value creation.

Thursday, January 5, 2012

All the News That Fits, We Print

Admittedly, I'm a little late to the party: It wasn't until last night that I watched "Page One," the video documentary about life at the New York Times.
Or watched some of it. Most of it.

As far as I could tell, the point of the documentary was that the internet had destabilized the old-fashioned newspaper business.

This I already knew.

Today I went back to my speech file and dug out a talk I gave about 8 years ago--maybe more like 10--at the Stanford Publishing course. I was never asked back, so perhaps they had the same reaction to my talk that I had to the documentary.

But for what it's worth, here is the outline of that speech.

We've got through an old economy; an old new economy (of dotcoms); and now we're into the new new economy.

The old model told publishers to cut costs, that bigger was better, that history equaled staying power in the marketplace, that it takes time for brands to develop, that tangible assets are the way to keep score, and that there's really only 1 right way to be in business.

The new new model flips everything; turns all the old rules upside down: growth beats cost cutting, fast beats slow, agility beats history, instant karma beats old brands, intangible assets beat tangible assets, and doing things your way beats anybody's notion of 1 right way.

So there's the new game with the new rules:

1. Talent and ideas are the only scarce commodities. Readers are looking for what happens at the intersection of talent and ideas: energy!

2. Speed wins. The first one to the future wins the competition.

3. The customer is in charge. It's no use chiding them for wanting what they want; if you don't respect your customers, they'll simply go someplace else.

4. Need to know beats nice to know. When it comes to journalism, "interesting" isn't a compliment.

5. Don't sell a product; build a community. Every successful magazine (publication, Web site) creates a community that already exists but doesn't know it.

6. Great editors are great listeners, not great geniuses. Forget the image of the brilliant editor sitting in the corner office deciding what pearl of wisdom the readers deserve to get this issue. The goal is create a dialog with the reader, not subject the reader to a monologue. A magazine isn't a message in a bottle; it's a conversation.

7. Iterate, iterate, iterate. It's never done. That's the good news and the hard work. You get to start each issue, each edition, from scratch. You don't get to re-print your last issue and get that cover story just a little bit better. You get to try again!

8. Do you know what your brand promises? And do you keep that promise? Particularly in publishing, a brand has to stand for something. Stand for it, and then deliver it.

9. Content may be king, but context beats content. "The job of the leader is to make meaning," says John Seeley Brown. That's the same job of every publication.

10. In a time of enormous change, trust your instincts; decide now, analyze later. Change hurts, indecision kills.

Got it?
Start the presses!

Wednesday, January 4, 2012

West Point Wisdom

I'm not a big fan of war.

But I'm a huge fan of the lessons in leadership that they teach at our military academies. Over the last few years I've had the benefit of getting to know Tom Kolditz from West Point, and to hear Tom give a number of very powerful talks about the fundamental practice of leadership and strategy that West Point imbues in its cadets.

Last year I got to listen to a talk that Tom gave to the board of AARP and just last week, as I was continuing to clean out my desk, I found the 3x5 card on which I had written some notes from Tom's talk.

Here's what it says, in its entirety. Few words, lots of power.

Minimum Plan Requirements
(The idea is, before you take action, go into an engagement, begin an assignment, what are the absolute minimum requirements you must meet? and by extension, if you can't meet them, don't start!)

(That's the top line: What is your strategic intent?)

(What is your purpose in taking this action?)

(How do you propose to go about doing it?)

End state
(What is the end state you aim to achieve?)

(Identify the risk factors in taking this action.)

Simple. Direct. Plain English. Straight forward.
I think this stuff is so simple, so common sense-based, it's just plain brilliant!
The kind of honest questioning that goes on a 3x5 card--and if used diligently, not only leads to better results, but also avoids horrible mistakes.
The kind of thing that all organizations need in developing better leaders at all levels.

Tuesday, January 3, 2012

Everything Old is New Again

I found an old scrap of paper, a Xerox copy of a book review I wrote for the New York Times back in 1995.
It's called "Gibraltar May Tumble, How Prudential-Bache created the costliest fraud scandal ever," a review of two books, actually, one by Kurt Eichenwald, the other by Kathleen Sharp, both chronicling the Prudential-Bache Securities scandal.

It's deja vu, all over again: I wrote in the review, "By 1994 the Rock had become a house of cards."

And the explanation for how it all happened?

It starts with government regulatory changes--the 1981 Reagan tax reform bill and changes in the SEC set off a boom in tax shelters and ushered in a new era of real estate, energy, and airplane leasing partnerships.

Here are the last two paragraphs of that old, old book review:

"The picture that emerges from both books is that of a fundamental system failure at a great name in American business. The lesson is not encouraging. Mr. Eichenwald labels his book 'a cautionary tale about an abuse of the investor faith that is an essential building block of the American economy.' Ms. Sharp quotes a former manager of the San Diego office of Pru-Bache Securities: 'I don't think you can use the Nuremberg defense and say, "My superior told me to do it." Yet that's what a lot of people did.'
"And from the epilogues in both books we learn where the major players are today: almost without exception, the innocent have suffered more than the guilty, the higher-ups have escaped responsibility, the smaller investors have lost the most. It's a sobering note at a time when Washington is again fiddling with the tax code and American companies are awash with cash and looking for deals. These two books suggest that eternal vigilance may also be the price of capitalism."

Or, perhaps more to the point, history doesn't have a way of repeating itself. It's afflicted with a chronic stutter.

Monday, January 2, 2012

Jared Diamond's Stages of "Collapse"!

And a happy 2012 to you as well!

I thought I'd kick off the new year with another of the gleanings from my desk-cleanings. Only rather than quote myself (if I don't do it, who will?), I want to bring your attention to the Four Stages of Collapse identified by Jared Diamond in his noteworthy book, "Collapse."

I'll simply cite them here, and leave each of us to ruminate on the obvious questions the list suggests (such as, I wonder how this might apply to the United States? to my company? to the social fabric? and other such questions).
So, here are the stages:

1. Failure to anticipate a problem before it arrives. (Because of a lack of prior experience or a tendency to forget prior experiences)

2. Failure to perceive a problem after it arrives. (Because managers are too far away to detect the signals; or it is a slow trend that is masked by wide up and down fluctuations; or because of "creeping normalcy" that makes the problem seem like "the new norm."

3. Failure to attempt to solve a problem after becoming aware of it. (Because even though it's bad for you, it's good for me; or because of the "tragedy of the commons" makes it hard to take action; or because the problem pits the interests of the power elite versus the masses; or because of a tendency to cling to values/mindset/beliefs/behaviors even after they no longer work; or because of groupthink and broad denial)

4. Problem becomes insolvable. (Too little, too late; too expensive to remedy; or it's simply beyond anyone's capacity to deal with).

Four Stages of Collapse: something to think about at the start of a new year!

All Rights Reserved 2009 (c) Alan Webber, Rules Of Thumb