Executive Times

Volume 8, Issue 10

October 2006

2006 Hopkins and Company, LLC

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Apples

This year’s harvest of heirloom apples available at the local Farmers’ Market provides a range of flavors from sweet to sour, from more than fifty varieties, in colors from green to dark red. The adage about one rotten apple spoiling the barrel came to mind when chomping on those fresh apples and reflecting about the stories in the business press in recent weeks. A director of Hewlett-Packard disclosed confidential corporate strategy information to journalists, and set in motion a series of events that distract the company. One spinach crop containing E. coli bacteria gets bagged by Dole and transported nationally causing all spinach producers to withdraw product, destroy crops, and face consumer confidence crises, following death and sickness by those who ate the spinach. Pope Benedict XVI quotes a 14th century Byzantine emperor in an academic speech about religious tolerance and the avoidance of violence, and when news of this quote travels around the world, violence erupts. How about them apples? Any executive who continues to suffer from the delusion that he or she can control the behavior of others will be hard pressed to defend that position. As you reflect on the stories selected for this issue, think about the sweet or sour apples you’re likely to taste in the coming months. Is there a rotten apple in your barrel that you need to deal with? Will the behavior of someone else lead to economic pain? When a crisis hits, how prepared are you to act?

Fifteen new books are rated in this issue, beginning on page 5. Two books are highly recommended with four-star ratings; eleven books are recommended with three-star ratings; and two books received two-star ratings. Visit our 2006 bookshelf at http://www.hopkinsandcompany.com/2006books.html and see the rating table explained as well as explore links to all 476 books read or those being considered this year, including 48 that were added to the list in September. If there’s something missing from the bookshelf that you think we should be considering or if there’s a book lingering on the Shelf of Possibility that you think we should read and review sooner rather than later, let us know by sending a message to books@hopkinsandcompany.com. As an added benefit to Executive Times readers, we’ve put all the books we’ve ever listed on one web page at http://www.hopkinsandcompany.com/All Books.html.

Smokehouse

According to All About Apples, the Smokehouse dates from 1837, and is, “large, flattish shape, yellow flushed and striped red.” (http://www.allaboutapples.com/varieties/var_s2.htm#smokehouse). The smoke in the boardroom at Hewlett-Packard goes back at least as far as the visible dissent at the time of the proposed merger with Compaq in 2002 when at least one director went public in a disagreement with the decision of the board to proceed with the merger. After that brouhaha settled down, some directors came and went, but divisions remained. According to a timeline in The Wall Street Journal, (http://online.wsj.com/public/resources/documents/info-hptime0609.html), after an article appeared on its pages in January 2005, the Board concluded that one or more of its own members must have leaked information to the press. By May of that year, Board Chair Patricia Dunn directed an investigation into board leaks. That investigation used outside investigators who impersonated board directors to obtain phone records, and used surveillance tactics to track directors and reporters. One director resigned because these tactics were being used, and another director resigned when told he will not be re-nominated because of conversations that director had with the press, even though some of those conversations were at the request of H-P management. Every day the smoke about this issue increases, generating more disclosures about what happened and who did what. Dunn has resigned, saying, “The unauthorized disclosure of confidential information was a serious violation of our code of conduct. I followed the proper processes by seeking the assistance of HP security personnel. I did not select the people who conducted the investigation, which was undertaken after consultation with board members. I accepted the responsibility to identify the sources of those leaks, but I did not propose the specific methods of the investigation. I was a full subject of the investigation myself and my phone records were examined along with others. Unfortunately, the people HP relied upon to conduct this type of investigation let me and the company down.” (http://www.hp.com/hpinfo/newsroom/press/2006/060922a.html) Some H-P employees have been fired. A large cast of characters is scheduled to appear at a Congressional hearing. CEO Mark Hurd has apologized to directors and journalists for violating their privacy, saying, “I wish to apologize both personally and on behalf of HP to each of those who were affected. We believe these unacceptable measures were isolated instances that do not reflect the broader behavior and values of HP, its employees or its board. But they cannot occur here again.” (http://www.hp.com/hpinfo/newsroom/press/2006/060922b.html) As this story unfolds, it’s likely to become clearer that there were no good apples at H-P exercising wise business judgment over some important matters, and those who are perceived now as bad apples may not be so rotten after all when all sides of the story are heard. We’ll all stay tuned.

What activities are out of bounds for those who perform work for your organization? What controls do you have over the work of outside contractors? How do you go about ensuring compliance with your code of conduct? How confident are you that you won’t be let down by some rotten apples who do things for you that are unacceptable?

Rome

According to All About Apples, the Rome Beauty dates from 1848, and is, “very round fruit, medium to very large, with handsomely striped to almost solid red, thick skin.” (http://www.allaboutapples.com/varieties/var_r3.htm#romebeauty). Pope Benedict XVI must have a very thick skin, as well as superb crisis managers, given his swift multiple apologies for how his comments were misunderstood. In a September 12 academic address (http://www.vatican.va/holy_father/benedict_xvi/speeches/2006/september/documents/hf_ben-xvi_spe_20060912_university-regensburg_en.html) at the University of Regensburg, one of the key themes of the Pope was the relationship between religion and violence and he concluded that theme with a clear rejection of the religious motivation for violence, from whatever side it may come. As academics are wont to do, the Pope quoted the opinion of somebody most of us have never heard of, the 14^th century Byzantine emperor Manuel II Paleologus. Here’s the controversial quote in context, “Without descending to details, such as the difference in treatment accorded to those who have the ‘Book’ and the ‘infidels’, he addresses his interlocutor with a startling brusqueness, a brusqueness which leaves us astounded, on the central question about the relationship between religion and violence in general, saying: ‘Show me just what Mohammed brought that was new, and there you will find things only evil and inhuman, such as his command to spread by the sword the faith he preached’. The emperor, after having expressed himself so forcefully, goes on to explain in detail the reasons why spreading the faith through violence is something unreasonable. Violence is incompatible with the nature of God and the nature of the soul. ‘God’, he says, ‘is not pleased by blood - and not acting reasonably (σὺν λόγω) is contrary to God's nature. Faith is born of the soul, not the body. Whoever would lead someone to faith needs the ability to speak well and to reason properly, without violence and threats... To convince a reasonable soul, one does not need a strong arm, or weapons of any kind, or any other means of threatening a person with death...’.” The Muslim world exploded in reaction to what Manuel II Peleologus had to say through the voice of the Pope, who did not agree with the late emperor. Demands were made for an apology. The Pope quickly apologized, saying, in part on September 17, “At this time, I wish also to add that I am deeply sorry for the reactions in some countries to a few passages of my address at the University of Regensburg, which were considered offensive to the sensibility of Muslims. These in fact were a quotation from a medieval text, which do not in any way express my personal thought. … I hope that this serves to appease hearts and to clarify the true meaning of my address, which in its totality was and is an invitation to frank and sincere dialogue, with great mutual respect.” Three days later, the Pope apologized again. More recently, on September 25, the Pope met with ambassadors from 22 Muslim countries, affirming his respect for Muslims and his interest in working together to increase tolerance and avoid all forms of violence. It’s hard to think of a better crisis management blitz of activities. It appears to have reduced tensions, but time will tell.

When your words or actions receive an unintended reaction, what do you do? Are you prepared to apologize, reconcile and move on? How quickly can you mobilize the right people and the right messages in a crisis?

Fortune

According to All About Apples, the Fortune is described as, “Very good ‘spicy’ fresh eating quality. Fruit large, with an attractive color. Flesh yellow. Subject to bitter pit.” (http://www.allaboutapples.com/varieties/var_f1.htm#fortune). Farmers all over the United States had to swallow the bitter pit and lose a fortune after spinach containing E. coli bacteria ended up in bags of Dole baby spinach sold in multiple states. Every bag of fresh spinach was pulled from retailers’ shelves, and some crops were plowed under rather than harvested as a result of this incident. While the Food and Drug Administration isolated its focus on three California counties, (http://www.cfsan.fda.gov/~dms/spinacqa.html#determine) some retailers ditched all fresh spinach. Consumers are likely to wait for a more comprehensive go-ahead before eating spinach again, so the shelves remain empty, despite a narrowing of the source of contamination. The FDA continues to investigate what went wrong, where, and how. In the meantime, executives who had nothing to do with the contamination have suffered because of it. Here’s another valuable lesson in understanding our vulnerability to the actions of others, over whom we have no control.

Are you prepared to manage the consequences of actions by others over whom you have no control? Will someone in your business sector act in a way that spoils the market for all participants? How can you minimize the likelihood of that outcome?

Follow-up

Here’s an update on stories covered in prior issues of Executive Times:

Ø In the legacy column of the May 2005 issue of Executive Times, we called attention to former Ford Motor Company CEO Alex Trotman, and in the July 2003 issue of Executive Times, we noted the accomplishments of Ford Vice Chair Carl E. Reichardt. When Ford recently announced (http://media.ford.com/newsroom/release_display.cfm?release=24202) the selection of Boeing’s Alan Mulally as the company’s new CEO, we considered whether this month’s legacy column should try to assess the legacy of outgoing CEO William Clay Ford, Jr. Since Bill will “remain active” in the business, we decide to defer an assessment of his legacy. There’s also the challenge that we didn’t have much that was good to say about that legacy.

Ø In the November 2005 issue of Executive Times, we noted the opinion of one observer of BP that the company’s Beyond Petroleum ad campaign brought goodwill that would be helpful during difficult times. After the company that has presented itself as responsible and environmentally friendly had to acknowledge oil leaks from rusting pipes in Alaska, we figured it was time to see if the goodwill helped. We read an update on this issue in the September 10 issue of The Telegraph (http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2006/09/10/ccbp10.xml), “When things go wrong, at least BP has a large reservoir of goodwill upon which to draw. When things go terribly wrong, as they have this year, having held yourself out as the ‘different’ kind of oil company leaves you open to charges of ‘greenwash’ or worse. Beyond Petroleum has struck a chord with US consumers and won support from some key US environmental groups but it has not done much for BP in Washington, especially with the Bush Republicans. … One industry executive with extensive Washington experience says: ‘When the Alaska story broke BP found itself with few friends in Washington and a large number of Republicans calling for hearings. BP's problems in DC are also made worse by the fact that it has a weak US government relations operation and a very weak Washington office.’” The company may be beyond petroleum, but not beyond politics.

Legacy

Relentless

Few executives can spend a half a century in the same line of work, and continue to come up new ideas and innovations. One master of this skill was Sydnor W. Thrift, Jr., who died in late September at age 77. Everyone who met Syd knew that he was passionate about baseball. Some who worked with him recognized his willingness to take risks and try anything. When he arrived as general manager of the Pittsburgh Pirates in 1985, the team had the worst record in baseball. Five years later, thanks to his rebuilding efforts, the team won three straight division championships. Syd wasn’t in Pittsburgh for those victories because of his falling out with the team owners. That turned out to be a hallmark of his career: he really didn’t like answering to anyone. In a 1990 interview, he said, in part, “My temper can get the best of me, but the bottom line is that I do my job, and I do it damned well. Quite honestly, I don't think anyone is as good as I am in getting along with players, in getting the most out of them and structuring an efficient organization. No question about it: I'm the best here.” He continued to come up with new ideas through his radio broadcasts up until the week he died. He will be missed.

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 2006 bookshelf at http://www.hopkinsandcompany.com/2006books.html).

Title (Link to Review)	Author	Rating	Review Summary	Purchase
Cellophane	Arana, Marie	***	Transparency. Set in the jungles of Peru, this debut novel presents fine prose, well-developed characters, multiple levels of meaning, and interesting ways of making hidden desires manifest.
Intoxicated	Barlow, John	***	Fizz. Addictive historical novel describes the supply chain management, market research, and product development of the fictional carbonated beverage, Rhubarilla, made from rhubarb, coca, and other secret ingredients.
Talk Talk	Boyle, T.C.	***	Identity. Not all is as it seems in this novel of identity theft and the longing for revenge. Language, imagery, plot and dialogue masterful. Memorable deaf protagonist.
Possible Side Effects	Burroughs, Augusten	**	Dark. Essays present self-deprecating dysfunctional family humor in a way that presents dark stories with vivid images, and with clumsy prose that often distracts from the story.
House of War	Carroll, James	****	Personal. Chronicles the rise of military power from World War II to today, and leaves readers to reflect on many unanswered questions. Author’s father was Air Force General, so Carroll grew up inside and alongside the Pentagon.
Artificial Happiness	Dworkin, Ronald W.	**	Engineering. Anesthesiologist claims that other doctors are prescribing anti-depressants to patients who don’t need them. Normal unhappiness is not an engineering problem to be fixed by drugs.
I Feel Bad About My Neck	Ephron, Nora	***	Funny. Readers with a healthy sense of humor, especially those well settled into their middle or later years, will appreciate the humor in this collection of essays.
Stumbling on Happiness	Gilbert, Daniel	***	Imagination. Harvard psychology professor provides light and conversational prose that presents facts about why we keep doing things that we think will make us happy, but don’t. Readers’ assumptions likely to be shaken by scientific evidence here.
Perishable	Jamison, Dirk	***	Abuse. Memoir of a California childhood featuring fine writing about an irresponsible father who dumpster dives to feed the family, a detached and stupid mother, and a physically abusive older sister.
American Gospel: God, the Founding Fathers, and the Making of a Nation	Meacham, Jon	***	Tolerance. Author explores the premise that the key success of the American revolution has been religious tolerance combined with the separation of church and state. Much insight on what religion meant for the founders and for politicians throughout our history.
A Family Daughter	Meloy, Maile	****	Fragility. Author reprises the Santerres from her debut novel Liars and Saints, using this novel to take the perspective of a daughter, Abby, on the fragility of the many family members, their secrets and passions.
Wisdom of Our Fathers	Russert, Tim	***	Teary. Selections from the many responses to author’s earlier book about his own father and commentary by the author about what daughters and sons had to say about their fathers. Sappy, teary and worth reading.
Myths, Lies, and Downright Stupidity	Stossel, John	***	Entertaining. Often entertaining (less when one disagrees) riffs on common points of view, short on facts, long on polarization. A version of author’s 20/20 segment for non-viewers.
The One Percent Doctrine	Suskind, Ron	***	Suspicion. Investigative journalist takes readers inside the policy making forums of the administration and explores how counterterrorism professionals are trying to implement a new policy: act on suspicion if there’s even a 1% chance that the suspicion is accurate.
Academy X	Trees, Andrew	***	Lessons. Debut novel is a witty satire of the closing weeks of the school year at an elite New York City private high school from the perspective of an English teacher.

ã 2006 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 rate for first class mail delivery of the print version is $60.00 per year (12 issues). Web version subscriptions are $30.00 per year. Single issues: $10.00 print; $5.00 web. To subscribe, sign up at www.hopkinsandcompany.com/subscribe.html, send an e-mail to executivetimes@hopkinsandcompany.com, 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 reprints@hopkinsandcompany.com. 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.

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