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ã 2004 Hopkins and Company, LLC
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Stand Up, Sit Down: Fight, Fight, Fight
The turn of the calendar page to a New Year can
sometimes bring a certain cheerleader attitude: the expectation of improved
performance and better times ahead. There are, of course, few cheerleaders
for executives. When executives stand up during 2004, will we see images of
hands raised prior to testimony in corporate malfeasance cases? Which
executives will be asked to step (sit) down in coming months? What will the
organizational battles be about this year? Who will fight them, and what
approaches are likely to lead to success? One way or another, we’ll follow
these themes and others on the pages of Executive
Times during 2004. In this issue, consistent with our heading,
we’ll reflect on some executives who took a stand; we’ll call attention to
some who stepped down; and we’ll look at some of the current fights and what
they may mean. As always, as you read these stories, think about how you
might do things the same way or differently from those individuals mentioned
here. Consider how well prepared you are to face your own challenges for
2004, and what you’ll do in coming weeks to be as prepared as possible for
the likely scenarios you’ll be encountering at work.
Fifteen new books are
rated in this issue, beginning on page 5, in what looks like a bell curve of
ratings. Two books are rated with one star, five with two stars, five with
three stars, two with four stars and one with five stars, The
Innovator’s Solution by Clayton Christensen. We suggest you buy
and read that book right away, since your competitors probably are. You can
also visit our 2004 bookshelf at http://www.hopkinsandcompany.com/2004books.html
and see the rating table explained as well as explore links to all 2004 book
reviews. For the first time, you can also check this same bookshelf to see
what other books we’re reading or considering. If there’s something missing
from the bookshelf that you think we should be considering, let us know at books@hopkinsandcompany.com.
Standing Firm
We noted in one out of a score of
end-of-year reflection articles two items that we wanted to be sure Executive Times readers noted. In Carol Hymowitz’s “In the Lead” column in the December 23
issue of The Wall Street Journal, (http://online.wsj.com/article/0,,SB107212950894181900,00.html)
she began by calling attention to the performance of Health South’s Robert
May during 2003. Rather than being intimidated by founder and CEO Robert
Scrushy, who threatened to fire him, May stood
up and influenced other company directors to cooperate with a Justice
Department investigation and to demand that Scrushy
step down as CEO. With Scrushy gone, the company’s
problems saw the light of day, and everyone learned that financial
malfeasance had gone on for years. A crisis management team, led by May, took
over, and Health South is now back on track, thanks
to one individual who took a stand. That same year-end article reminded us of
a sidebar story relating to the United
States Supreme Court’s 5-4 ruling in favor
of allowing the University
of Michigan’s
law school to continue to use race as an admissions consideration. According
to Hymowitz, “Numerous CEOs overcame their usual
avoidance of controversial political issues by supporting the University of Michigan's defense of its
affirmative-action programs before the Supreme Court. Business leaders from
some 63 blue-chip companies -- including 3M, Coca-Cola, Procter & Gamble,
Pfizer, Kraft, Intel, Eastman Kodak, Shell Oil and UAL Corp.'s United
Airlines unit -- filed together a friend-of-the-court brief that asserted
that a diverse work force is key to succeeding in a global economy.” When you
know what you stand for, what principles are critical to you and to your
organization, the stand you take on an issue becomes obvious.
What are the few core principles or values of your organization? How are
they consistent with or difference from your personal values? Are you ready
to take a stand during 2004? Do you know for sure what you are for or
against? Would you have the courage to stand up to a long-time leader, like Scrushy if you thought he was wrong? Would your
organization have stood up to support one side in a controversial court case?
Are you prepared to make enemies if you take a position that others strongly
oppose? Does it make a difference who those enemies
are, or are your principles and values so solid that they will ensure any
opposition? What do you stand for?
Grounded
Over the course of what seemed
like a few days, events at Boeing led to CEO Phil Condit being
forced to step down, and the company has multiple wounds to heal. The best
story we read about what happened came from Stanley Holmes in the
December 15 cover story of Business Week (http://www.businessweek.com/magazine/content/03_50/b3862001_mz001.htm),
titled, “Boeing: What Really Happened: Flawed strategy. Lax controls. A weak
board. Personal shortcomings. CEO Phil Condit lasted longer than he should
have.” While the firing of the CFO and a VP for unethical acts in doing a
Pentagon deal happened shortly before the CEO’s departure, Business Week
set the Pentagon scandal in context as only the latest in a seven-year reign
of “ethical lapses and managerial blunders.”
The article goes on to say, “The story of Philip Murray Condit, 62, is
the tale of a manager promoted beyond his competence and blind to his own
shortcomings. The skills that made him a brilliant engineer -- obsessive
problem solving and an ability to envision elegant design solutions -- were
of less use in an executive position.” This is a must-read article about an
executive career full of success, to a point.
Are the skills that have made you successful so far, the ones that
will make you successful in 2004 and beyond? What skill improvements will you
be working on? Do those who surround you have skills
that complement your own? Do you communicate regularly about what behavior is
in and out of bounds for your organization? Are you confident that those who
report to you will more likely than not act in ways that are consistent will
the values you’ve articulated? How sure are you that your values are
understood and are shared?
What Was He Thinking?
Some stories about executives
present an unspeakable sadness over events and an amazing wonder about why
things happened the way they did. When we read this quote in a press release
(http://a584.g.akamai.net/7/584/1326/000/www.estrong.com/strong/pdf_forms/20031202_pr.pdf)
from Richard S. Strong, founder of Strong Financial Corporation,
we felt that sadness: “’For the past twenty nine years, this firm and what it
represents have meant everything to me and I have always tried to act in the
best interests of investors, said Richard Strong. ‘After weeks of intense
reflection, I have come to realize that the best way for Strong Financial to
pursue its promising future is for me to step down.’” As one example in the
growing mutual funds trading scandal, Richard Strong is under investigation
for short trading in the funds for his own account, reaping about $600,000 in
improper gains. In an earlier statement, Richard Strong stated that his
trades were not disruptive to the funds and he would reimburse clients for
any financial losses investors had because of his trades. As a self-made centi-millionaire, it appears that Richard Strong wasn’t
pressed for cash. Could it be that he saw nothing wrong with his trades?
Could it be that the opportunity to trade when others couldn’t was perceived
as an appropriate executive perk? Whatever he was thinking then, Richard
Strong has realized now that the firm that meant everything to him can’t be
his anymore. He’ll be divesting his interest, which probably means the name
on the company’s door will be changing as well.
How alert are you to the
impact of corporate perquisites on others? What boundaries do you set on
what’s appropriate, and what can’t be done because it would be unfair to
other stakeholders? In Strong’s situation, it appears that he may have
breached his fiduciary responsibility. What positive actions do you take to
ensure that you don’t breach your own responsibilities, even when you believe
what you’re doing may be legal? Do you ask someone to review your planned
actions to take an outsider’s look to ensure that you will not be perceived
as taking inappropriate action?
Home on the Rage
What a surprise for those
executives who find interested stakeholders bringing corporate fights to the
homes of business leaders. Executives’ castle walls have been breached by
animated protestors for years, since Michael Moore first harassed
former General Motors CEO Roger Moore for the movie, “Roger and
Me.” One creative surprise we read about in The New York Times
(12/7/03) (http://www.nytimes.com/2003/12/07/business/yourmoney/07enviro.html)
involved a woman executive at a company who answered her doorbell at home to
find an undertaker who arrived with a coffin to pick up a dead person, her.
An animal rights group that wanted to send a message to this executive of an
American company not to hire U.K.
based Huntingdon Life Sciences, a lab that uses animals for testing,
duped the undertaker into sending the hearse to the executive’s home.
According to the Times, “If the goal was to scare her out of her wits,
the tactic succeeded. Her voice cracked with fear as she insisted to a
reporter that she not be identified, lest she and her family be singled out
again. … A group called Stop Huntingdon Animal Cruelty had sent the hearse,
and it had also posted the woman's name, home address and phone number on its
Internet site, along with those of three other company executives. The
group's Web posting warned: ‘We will continue to target you until your
company ceases from doing any business with Huntingdon. We will not let you
sleep.’” If activists haven’t targeted your organization or its executives
yet, consider yourself lucky. If you’re been a target, you know that the
fight is relentless.
How deep is the moat in your gated
community? Are activists on your doorstep protesting one thing or another
about your decisions and those of your organization? Have your neighbors
tired of the traffic jams and parking problems in your subdivisions when the
protestors and placards arrive? Will you succumb to the protests, or will you
stand and fight?
Follow-up
Here are selected updates
on stories covered in prior issues of Executive Times:
Ø
The last time
we mentioned Priceline in Executive Times was in the November 2000
issue when we noted that the value of founder Jay Walker’s holdings in
the company went from $8 billion to $220 million after the bubble burst.
Prior to that, we noted their IPO success in the May 1999
issue along with William Shatner’s
successful ads. In a return to the future, we read of the company’s new
pitchman on the pages of The New York Times on 12/7/03 (http://www.nytimes.com/2003/12/22/business/media/22spock.html).
Leonard Nimoy, Mr. Spock himself, has become
a new face for the company’s ads. How predictable was that?
Ø
We last noted
former Conseco CEO Stephen Hilbert in
the June
2000 issue of Executive Times when we mentioned that despite his $70 million severance payment, he
still owed Conseco $160 million for loans he used
to buy company stock, the value of which declined precipitously. A page one
story in The Wall Street Journal (12/5/03) (http://online.wsj.com/article/0,,SB107058914336380400,00.html)
brings us all up-to-date on what’s happened in the past few years. The $160
million debt turned into $225 million when interest was added. “According to Conseco, Mr. Hilbert made a payment of $1 million in
April of 2001 and another of $6 million in April of 2002, reducing his total
debt to $218 million. After that, says Conseco, Mr.
Hilbert simply stopped paying.” Hilbert claims he owes nothing. Stay tuned as
a bitter litigation fight escalates.
Legacy
“I Am Responsible”
Among a handful of talented technology
executives in the era before the bubble, John Sidgmore
was a serial entrepreneur who produced outstanding awards for shareholders,
and who helped incubate the technology dreams of others. At the height of his
career, he provided the backbone of the Internet as he was the adult in
charge at the number one Internet Service Provider, UUNet bringing
their revenues from $6 million in 1995 to more than $4 billion in 1999. The
acquisition of UUNet by WorldCom brought profound changes, and Sidgmore, whose style contrasted with Bernie Ebbers, remained on board to help the merged entity
succeed. After Ebbers was fired, the Board asked Sidgmore to step into the CEO job, which he held for nine
months. Here’s part of what he said in testimony before the Committee on
Financial Services of the U.S. House of Representatives in July, 2002:
“About two months ago,
when I agreed to take over as CEO, it was clear that the company faced
significant challenges. But I never imagined what was in store for us. Since
WorldCom's public announcement on June 25, 2002 that the company misstated
its earnings for 2001 and the first quarter of 2002, there’s been an understandable
outpouring of anger from every quarter of American society. While the
misdeeds we uncovered occurred before I became CEO, I want to apologize on
behalf of everyone at WorldCom. And I want to underscore that WorldCom's new
management team — and our more than 60,000 employees — share the public’s
outrage over these events. I cannot change the past. But I am responsible for
what we do now and in the future.”
John
Sidgmore died in mid-December at age 52.
Latest Books Read and Reviewed:
(Note: readers of the web version of Executive Times
can click on the book covers to order copies directly from amazon.com. When you order through these links, Hopkins
& Company receives a small payment from amazon.com. Click on the title to read the review or
visit our 2004 bookshelf at http://www.hopkinsandcompany.com/2004books.html).
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Title
(Link to Review)
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Author
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Rating
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Review
Summary
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Purchase
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Split
Second
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Baldacci, David
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•
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Slow Motion. Another attempt at a suspense novel becomes entangled
in poor writing and fading reader interest over more than 400 pages of
occasional fast-paced action.
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The
Big Bing
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Bing, Stanley (Gil Schwartz)
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••
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Too Big. Collection of years of Fortune and Esquire columns by CBS
executive. Delivers laughs and underlying truths about executive life.
Savor one at a time with single malt and Cuban cigar.
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Gentleman
Revolutionary: Gouverneur Morris, the Rake Who
Wrote the Constitution
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Brookhiser,
Richard
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••
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Cheerful. Short biography of a Founding Father few learn about in
school, but one who made a huge contribution to the creation of the United States.
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The
Hornet’s Nest
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Carter, Jimmy
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•
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Stung by Curiosity. A novel set during American Revolutionary War
with wooden characters, slow moving plot and weak dialogue, but written by
ex-President. 150 or more pages could have been edited out.
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The
Innovator’s Solution: Creating and Sustaining Successful Growth
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Christensen, Clayton M. and Michael E. Raynor
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•••••
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Using Theory. Dozens of tough questions about innovation explored,
theory explained, success and failure illustrated, conclusions drawn, and
sources documented in footnotes galore. Advice to think about and use in
growing your organization.
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Living
a Year of Kaddish
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Goldman, Ari L.
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••
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Grief. Anyone experiencing the loss of a loved one will find some
empathy and consolation on the pages of this book. An added bonus is
insight into modern American Orthodox Judaism.
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Pompeii
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Harris, Robert
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•••
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Salve Lucrum. Hail Profit may have been
the motto of Pompeii
in 79, but readers know what happened next. Harris’ fine research and
writing brings the era alive through characters and memorable, exciting
plot momentum.
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Franklin
Delano Roosevelt
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Jenkins, Roy
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•••
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Eloquent. Another well written volume in the American Presidents
series. Jenkins died before finishing the last few pages,
and this final work from a great historian and politician leaves an
eloquent legacy.
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Mountains
Beyond Mountains
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Kidder, Tracy
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••••
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Over the Top. Fine writing by talented writer about the amazing life
and work of Paul Farmer, a medical doctor and anthropologist working in Haiti for
the past two decades, and how his methods for community based treatment of
communicable disease have changed international medicine.
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The
Namesake
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Lahiri, Jhumpa
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••••
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Alienation. Novel of identity explores the first and second generations
of a family from India
and their ties to their old and new lives. Finely written debut novel from
author who won Pulitzer for 1999 collection of stories.
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So Many
Books, So Little Time: A Year of Passionate Reading
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Nelson, Sara
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••
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Hyperlinking. Busy New Yorker
chronicles her year and the many directions her reading led her toward or
away from what she planned.
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Shameless
Exploitation in Pursuit of the Common Good
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Newman, Paul and A. E. Hotchner
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•••
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Worth the Hustle. Entertaining and informative story of how a
business was formed, grew and thrives, despite
following paths not recommended by the experts consulted. Includes moving
stories of helping children in need with the profits from the business.
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Blacklist
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Paretsky, Sara
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•••
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Loyalty. Detective V.I. Warshawski returns
in deftly written, often strident, novel about the loss of rights after
9/11, the parallels to the McCarthy era, and how personal loyalty and
closely held secrets can lead to conflicts with the law.
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Blood
Canticle
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Rice, Ann
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••
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Love. Rice claims this is her last Vampire Chronicles novel.
Considering how Lestat is presented as a kind and
generous lover, she may be right. Imaginative, as always, and not very well
written.
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There
Must be a Pony in Here Somewhere: The AOL Time Warner Debacle and the Quest
for a Digital Future
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Swisher, Kara
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•••
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Culture Clash. Neither AOL nor Time Warner felt they could learn
from each other. Reading their foibles is the print equivalent of reality
TV shows, and the episodes Swisher describes are often enjoyable, if you
like watching the misfortune of others.
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