Executive Times |
|
Volume 2,
Issue 10 |
October, 2000 |
|
|
ã 2000 Hopkins and Company, LLC Note re: links---certain
hyperlinks assume that you are registered as a subscriber to the site. If you
are not a subscriber to certain sites, the links will fail. If you register,
the links should work. Also, certain hyperlinks expire and may not be available
when you try to go to the site. All in the Family Can you recall Katherine Hepburn
delivering that great line as Eleanor of Acquitane in The Lion in Winter?
“Every family has its little ups and downs.” The business press has been full
of stories recently about family members and their dynamics. Large and small
organizations often employ members of the same family, which opens the
organization to the ups and downs of family relationships. Heir-apparent
individuals from one generation can be challenged to prove themselves while
they play out some natural conflict with elders. Non-family managers inside
family operated companies can find their careers stymied because they’ll
always be outside the family. As you read these stories, from the many we
could have chosen from the past few weeks, think about your own organization
and your own family. What skills and expectations exist inside and outside
the family? How open are the lines of communication? If it comes to taking
sides, whose side are you on? “Everyone leaves home sometime” Following in the 1995 footsteps of his
brother, Jeffrey, Evan Greenberg said good-bye
in late September to American International
Group CEO and his father, Maurice R. “Hank” Greenberg. Just a
few months ago, Hank named Evan President and COO, and he was expected to
become CEO whenever Hank, age 75, retires. Evan told The New York
Times (September 20, 2000),
“Everyone leaves home some time. This is my time.” According to The
Wall Street Journal (September 22, 2000),
Evan’s decision will cost him at least $25 million, representing unexercised
stock options and forfeited deferred compensation. Brother Jeffrey left AIG in 1995 and is now CEO of Marsh & McLennan. Evan says he doesn’t
know what he’ll do next, but told AIG employees that he’s not the right
person to become CEO of AIG. Barrons
suggests that the reason Evan may be leaving home is that in the AIG house,
it’s Hank who makes the rules, and Evan “had been chafing under the tight
management strictures that his father, 75, had imposed on him.” Have
you ever been in a situation where what others expect of you bears no resemblance
to what you think you want to do? Have you been in a job or in line for a job
that you really don’t want to do? Would you be as willing as Evan Greenberg
to leap into the unknown? Golden handcuffs didn’t mean much for AIG in this
case. Do your golden handcuffs keep you from doing what you really want to
do? Does your manager impose tight management strictures on you, or allow you
the freedom to do your job the way you see fit? Do you, as a manager, give
others appropriate levels of discretion to perform their jobs? Whose name is on the door? Back in 1996 John Whitacre became
the first non-family member to head Nordstrom, Inc. as CEO. In September, the company announced
his ouster, in favor of Blake Nordstrom as President, and Blake’s dad,
Bruce Nordstrom, coming out of retirement to serve as Chairman. They
ditched the CEO title as well. One of Blake’s early decisions was to appoint
his brother, Pete Nordstrom, as president of the full line store
group. Leaving along with Whitacre was CFO Michael Stein, who arrived
from Marriott in 1998 to bring costs under control. CIO Richard
Lennon came to Nordstrom from BrownForman earlier this year, and
has also departed. Company performance has been sluggish and changes are
likely, but what those changes are remains undisclosed for now. Lead
independent director Enrique Hernandez, Jr., stated that because of
disappointing performance, “We are now at the point where we believe the company would
benefit from a different style of leadership.” All we know is that there’s a familiar name back at the top of the
organization. To what extent is blood thicker than
water inside your organization? Who are the “in” and “out” members of your
organizational family? What does it take to succeed inside a familial
organization? Are you in the “in” or the “out” group? What style of
leadership does your organization require today? Are you, as a leader,
emulating that style? Hello, mother… You would think that things couldn’t have
gotten much worse this year for Saul Steinberg. His company, Reliance Group Holdings, Inc., has been on
the ropes, having suspended dividend payments and talking about declaring
bankruptcy. Steinberg sold his Park Avenue condo ($35 million) and its
contents ($12 million). We expect Steinberg reached his nadir when he opened The New York
Times (September 9, 2000) and
read that his mother has sued him for repayment of a defaulted loan of $4.5
million. Counsel for Mrs. Steinberg indicated that his client would have
preferred to resolve this matter without resorting to litigation, but “her
less formal appeals for payment have so far been unavailing.” Sounds like
it’s time for Saul to phone home. How well do your business associates
know your family life? What family matters are public and what do want to be
sure remains private? How does your reputation change when you are viewed
from a family perspective? Family ties We read in the Detroit
Free Press (September 15, 2000)
that Ford Chairman William Clay Ford may have been less visible
during the Explorer/Firestone tire recall controversy for personal reasons.
At a press conference, Billy Ford said, "My other great-grandfather was
Harvey Firestone and my mother was a member of the Firestone family. It's
been very disappointing and sad for this to happen. It hurts to see a family
name tarnished so badly.” The Ford-Firestone 100 year business and personal
relationship is being tested by the actions of executives of both companies.
Stay tuned to see if the weakened family bonds can assist in weathering the
current crisis. Do your personal relationships with
customers or suppliers provide you and your organization with added trust and
confidence? In a crisis, will you be able to count on those ties? Have the
ties been strained to the point where a future relationship is doubtful? What
can you do to build and improve relationships that will survive crises? Going Postal While most of the time we need to learn from
our own mistakes, the best executives look for opportunities to avoid the
mistakes made by others. Who better to learn from that the U.S. Postal Service when it comes to
addressing worker complaints? We read in The New York
Times (September 6, 2000) that
the lawyers who set up an employee complaint process called Redress at the
USPS, have set up in private practice with a renamed process called Wins.
Redress now resolves 80% of employee complaints at USPS, and the lawyers
figure that if it works that well at USPS, it can work anywhere. Lots of
companies have found themselves embroiled in lengthy employee disputes
involving discrimination or harassment. Finding ways to mediate disputes
faster and easier makes great business sense. How
satisfied are managers and employees in your organization with the process
for hearing complaints and grievances? How long does it take for your organization’s
process to reach resolution? What are the costs to your organization of your
current process? Is there a better way? His money’s not soft Just when we reached the point of
exhaustion from listening to pious and insincere politicking about campaign
finance reform, Warren Buffet comes to the rescue with an editorial in
The New
York Times (September 10, 2000). Buffet explores a scenario in which
a reform bill is introduced to increase the limit on individual campaign
contributions to $5,000. An “eccentric billionaire” comes along and proposes
a deal. If the bill is defeated, the billionaire offers $1 billion in soft
money to the party delivering the most votes. Through applied game theory,
Buffet posits that legislators would naturally shift their positions 180
degrees to prevent the big payoff from going to the other party. The bill
would sail through, and the billionaire would end up paying nothing. Buffet
dramatizes that a system that would allow a billionaire to influence
legislation by a $1 billion promise makes no sense. He proposes that since
it’s individuals who vote, not companies, it’s individuals who should be able
to contribute to politicians. “Otherwise, we are well on our way to ensuring
that a government of the moneyed, by the moneyed, and for the moneyed shall
not perish from the earth.” When you observe something in your
organization or community that doesn’t make sense to you, how do you speak
out? Are you willing to take positions that might be unpopular? Do some
approaches, like soft money contributions, make you uncomfortable, but you
participate because your competitors or other stakeholders provide soft money
too? Knight’s out While we acknowledge Bobby Knight’s
impressive winning record, we’ve never cared for his leadership style. Indiana
University President Myles Brand fired Knight in September
after months of scenes reminiscent of a Shakespearean tragedy: we knew what
would happen in the end, we were just not sure how long it would take to get
there and what would happen along the way.
Does
an employee or co-worker produce the desired results, but in a way that’s
inconsistent with your organization’s culture? At what point do you decide
that the misfit between that person and the organization demands a parting of
the ways? Follow Up Here are selected updates on stories
covered in prior issues of Executive Times: Ø The April 2000
issue of Executive Times led
with some stories called “Dirty Dealing”. We learned from The New York
Times (September 23, 2000)
that one explicit cost of the price fixing between art houses Sotheby’s
and Christie’s will be $512 million, the announced civil settlement
with art buyers and sellers. The Times estimates that the settlement
represents three or four years of profits for each firm. Ø The August 2000
issue of Executive Times
reported that the National Education Association rejected alternative
pay plan structure. We read on the Associated
Press wire (September 16, 2000)
that the Cincinnati Federation of Teachers approved a pay for
performance plan that made the Cincinnati public schools the first in the
U.S. to implement a system wide merit pay plan. Ø Hundreds of stories have appeared in the business
press in recent weeks about the Bridgestone/Firestone tire recall that
we called attention to in the September
2000 issue of Executive Times.
Our favorite story explained how the pattern in tire problems was
uncovered. The
Wall Street Journal (September 1, 2000)
told us about Sam Boyden, a State Farm Insurance employee who
researches for claims adjusters whether particular kinds of equipment
failures have happened before. After responding to a routine inquiry about
tire tread separation in 1998, and discovering 21 prior cases since 1992,
Boyden went on to study all 21 cases. He passed the results of his findings
to the National Highway Transportation Safety Administration. Legacies When the next United States Congress
convenes, the current Ranking Minority Member of the Senate Committee on
Finance, better known as Daniel Patrick Moynihan, won’t be there to
display his talents as a politician and statesman. Moynihan served in four
successive administrations at the cabinet or sub-cabinet level: Kennedy,
Johnson, Nixon and Ford. You may not recall that he was ambassador to India
before serving as U.N. ambassador. His first elected office was to the United
States Senate where he’s served New Yorkers since 1977, and either Rick Lazio
or Hillary Clinton will fill his seat next year. Author of 18 books, Moynihan
has been considered among the brainiest of Senators. Moynihan’s social science work led to
deeper understanding of welfare and racial assimilation, and he proposed
specific action to address emerging problems. The Almanac of American
Politics calls him “the nation's best thinker among politicians since Lincoln
and its best politician among thinkers since Jefferson.” He’ll be missed in
the Senate, but we expect we’ll hear and read Moynihan long after his Senate
career ends. Reading (Note: readers of the web version of Executive Times can click on the
book covers or titles to order copies directly from amazon.com. When you order through these links,
Hopkins & Company receives a small payment from amazon.com. Subscribers to the print version of Executive Times
can receive the web version at no additional cost. Send e-mail to hopkinsandcompany@att.net with a
request to be placed on the web version distribution list. Also, not all books we read make it to the
pages of Executive
Times. Check out other
book selections on our bookshelf at http://www.hopkinsandcompany.com/bookshelf.html).
Do It Yourself One of the best business
books we’ve read this year is Built
from Scratch: How a Couple of Regular Guys Grew The Home Depot from Nothing
to $30 Billion. Chapter after chapter tells
stories by Bernie Marcus and Arthur Blank (with help from Bob
Andelman)
about themselves and how and why they acted in forming and growing The Home
Depot.
One of our favorite stories was how they turned down $2 million in capital
from Ross Perot when they were forming the company. It seems that Perot wanted to
become more hands on than the founders wanted, and when he wanted them to
ditch their company cars, they decided to walk from his money. Had Perot been
more willing to let these guys do it their way, his $2 million investment
would be worth $88 billion today. If you’re trying to focus your organization
around the customer, read this book to find out what that concept really
means. If you’re trying to build an organization based on principles and
values, read this book to find out how to reinforce values through executive
behavior. If you compete against Bank One, read this book because we heard CEO Jamie
Dimon
has a copy on his desk, and has made it required reading for executives
there. Highly recommended. Revolting Reading Gary
Hamel’s
new book, Leading
the Revolution, is annoying, disturbing and uncomfortable. That’s three good reasons
to pick up this book. Hamel proposes that companies face diminishing returns
when they fail to reinvent themselves and take a fresh approach to business.
He encourages executives to imagine different ways of doing business, and
suggests that we become novelty addicts and heretics. Like those annoying
questions following each Executive Times article, Hamel asks the
reader hundreds of questions during the course of this book, and the answers
you may have are likely to make you uncomfortable or disturbed, and may lead
to some action. Another reason to read this book soon is that some irritating
colleague with a rebellious streak is likely to find favor in these pages,
and you want to be sure to beat him or her to the punch. For a sample of what
Hamel is talking about in this book, read his article in The
Wall Street Journal (September 18, 2000),
that lays out what GE will face post-Jack Welch. A league of one’s own The title, Bowling
Alone: The Collapse and Revival of American Community, caught our attention,
so we picked up a copy of Robert D. Putnam’s new book. Filled with charts and research from a
wide array of sources, Bowling Alone starts by presenting a compelling story
of the decline in social capital.
While we found this 200-page exposition tedious, we recognized that
Putnam approaches the topic from many perspectives, and leaves almost no stone
unturned. Once the groundwork on what happened has been established, Putnam
goes on for another 100 pages in a systematic way of trying to figure out
what has killed the civic engagement of Americans. While some of the causes
are those you’d expect, ones he dismisses may surprise you. Another 100-page
section explains why the decline of social capital is so important, which
Putnam describes in multiple dimensions. He wraps up the book with his own
suggestions on what could be done next to support the revival of social
capital. Putnam calls attention to one positive dimension we’ve seen
elsewhere: the volunteer activities of those in their teens and twenties
today signify a revival in civic engagement. If you enjoyed books like Ray
Suarez’ The Old
Neighborhood (Executive Times January 2000),
you’ll also like Bowling Alone. If you’re a reader who likes to see facts and
statistics to support points of view, Bowling Alone will bring you great
pleasure. Maybe Never As we read through Mary Modahl’s Now or Never: How Companies Must Change
to Win the Battle for Internet Customers, we kept veering away from now and toward never. Modal is a VP of research at Forrester
Research, Inc., and this book
recycles research Forrester has delivered to their corporate subscribers.
Since we hate pigeon holing, the names of customer groups like Mouse Potatoes
and Handshakers annoyed us, probably because we’re High Income Pessimists.
Every time we were coming close to dropping the book altogether, we read
something that encouraged us to turn another page. If you’re an executive
thinking about how your organization can better use the Internet, you may
actually get an idea or two from this book about what to do as well as what not
to do. What we noticed in our reactions while reading the book is that we
were suspicious of data from 1999 since in Internet terms that is so totally
out of date. Modahl’s advice may have some current value for you, but we
thought of this book as an infomercial for Forrester. Sample this book if you
must and see if there’s value in what you’ve missed by not being a Forrester
subscriber. If you’ve subscribed to Forrester, see whether Modahl’s recent
perspective matches what you heard when you first received the data. Orphan This Book Kazuo Ishiguro won the Booker Prize for The
Remains of the Day, so when we heard about his latest book, set in
the 1930’s, When
We Were Orphans, we were anticipating an enjoyable reading
experience. For the first hundred pages, the language and dialog fit the time
period, and the restraint of Christopher Banks, the protagonist, was
reminiscent of The
Remains of the Day. The remaining two thirds of the book just didn’t
live up to the beginning. It’s almost as if the balance of the book had been
written by someone else. We were disappointed with When
We Were Orphans because our expectations just weren’t met, and we
know Ishiguro can do better. Take a pass. |
|
|
|
ã 2000
Hopkins and Company, LLC. Executive
Times is published monthly by Hopkins and Company, LLC at the
company’s office at 723 North Kenilworth Avenue, Oak Park, Illinois 60302. Subscription
rates for first class mail delivery of the print version are $60.00 per year
(12 issues). E-mail subscriptions are $30.00 per year. Single issues: $10.00
print; $5.00 electronic. To subscribe, sign up at www.hopkinsandcompany.com/subscribe.html,
send an e-mail to hopkinsandcompany@att.net,
call (708) 466-4650, or fax to (708) 386-8687. For permission to photocopy or
e-mail Executive Times, call (708) 466-4650 or e-mail to hopkinsandcompany@att.net. We will send
sample copies if requested. The company’s website at http://www.hopkinsandcompany.com/archives.html
contains the archives of back issues beginning in the month after the issue
date. To subscribe to Executive Times,
sign up at www.hopkinsandcompany.com/subscribe.html
and we’ll bill you later. About Hopkins
& Company
To engage the services of Hopkins & Company,
call Steve Hopkins at 708-466-4650 or visit www.hopkinsandcompany.com. |
|
|