Should We Blog?

Pardon the interruption from the usual topics. But we've been repeatedly asked to speak to an issue that seemed worth addressing via this channel.

"Should We Blog?" speaks to the challenge of incorporating social new media into the standard flow. Here's a starter course:

• Set aside new vs. old media for a few seconds and ask a three-part question: What's the core issue or topic from an audience point of view? What's our message? And what do we want an intended audience to do as a result of receiving that message?
• As attractive as blogs may seem, keep in mind that web logs are highly specific and generally offer a deeper, richer experience than traditional media. Just spouting off the usual run of the mill "stuff" will not cut it.
• The blogosphere is not for the faint at heart. Nor is it ideally suited for big monolithic organizations who haven't figured out what their audience wants down to the nth degree.
• If something that has been said is untrue and you feel compelled to quelch the rumor, remember this axiom that any professional pyschologist will confirm: The more you repeat something that's incorrect, the more others will believe it's correct.
• You can't market the same old way to Generation Y, or those young, valuable buyers that everyone covets. Anything that smacks of contrived marketing will get its due. Just ask Oberlin College, which has seen its share of student backlash after coining a new slogan, "We are Oberlin. Fearless."

For individuals or small businesses, an answer to "Should We Blog?" is clear: No, unless what you're bringing offers specific, helpful insight to those already connected to what you provide.

Isn't that the whole point of effective communication in the first place?

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Which came first: Performance or Credibility?

Editorial

That headline isn't a trick question. Or at least it shouldn't be for the original three GE Amigos, all of whom presently find themselves in challenging stages.

Messrs. McNerney, Nardelli and Immelt might want to plan a summer reunion to share war stories. Sans their former boss turned CNBC talking head, Neutron Jack, who is known for a quick word or two. While each CEO made his mark via performance (or lack of), the current challenge is all about credibility. Forming it, keeping it and yes, even losing it -- only to hope it returns later.

Jeffrey Immelt proved this in one fell swoop earlier this month, blindsiding his hallowed constituencies with with an earnings report that led to GE's worst daily stock price loss in more than 20 years. But the core of the issue wasn't lack of performance. It was disbelief that the company could blow something that badly without forewarning. Put in simpler terms, it's never the infraction and always the cover-up or lack of disclosure that gets people worked up.

Second on the original GE succession list is James "Jim" McNerney, who is now having to step things up at Boeing after delay of their long awaited 787 Dreamliner, the closest thing to innovation the airline industry has seen since, well...TVs behind seats. While Boeing remains profitable, the stock's slide combined with a key product delay has pushed credibility to the fore.

Last but never least is the poster boy of everything that could go governance wrong, Robert "Bob" Nardelli, who now steers Chrysler after leading Home Depot into relative ruin. The recent Fortune magazine slick with Nardelli, Press and LaSorda dressed in black was enough to make any serious business reader gag. But thankfully they're now on record with a turnaround. We'll see what the credibility meter has to say about those vows down the line sometime.

Interesting to note: Unlike Immelt, McNerney and Nardelli are now on their second tour of duty after being passed over for the top GE job. Their mobility supports the widely published CEO turnover average of five to seven years, which now seems to be slowing down a bit.

Here's a key takeaway for all aspiring hot shots. Performance and luck might be what gets you the top job. But to keep it, it's about remaining credible. Lose that and you're generally toast. Unless you're already a brand name leader or have a great recruiter willing to line up the next gig.

Lesser mortal leaders who haven't become major CEOs yet tend to dismiss the importance of credibility only to realize its value after the (*&^ hits the fan. That's too late -- much like everything less that travels down the chicken and egg path of performance vs. credibility.

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Delta-Northwest -- Time to go east

Here's our latest published view:
http://www.btobmagazine.com/Articles/2008/April/garlington.html

This marks the end of following Delta -- or at least until one of their top executives leaves the building. Bound to happen sooner or later.

Thanks for reading,

JG

Bear Stearns, JP Morgan, credit crunch, etc.

Confession: This topic was too rich to resist. Thanks to Business to Business magazine for allowing a wider audience to share in the content. What a great example of how easy it is to get caught up in the news cycle only to discover later that things aren't always what they appear to be. We'll stop there and allow you to form your own conclusions on the attached link:

http://www.btobmagazine.com/Articles/2008/March/garlington1.html

Ethics in the Blogosphere

Okay, so we're studying up in advance of next week's panel discussion, which is being joint sponsored by the Atlanta Press Club and Georgia State University's Center for Ethics and Corporate Responsibility. Please join us if your in-town schedule allows. Should be a lively event. Here's a link with more details on registeration:

http://www.atlantapressclub.org/events/event.php?id=113

In the News

http://www.bloomberg.com/apps/news?pid=20601109&sid=aMJLU7lbllbI&refer=home

Mr. Non-Fix it?

Editorial

Home Depot CEO Frank Blake will likely retain his role while the company continues to reach for a growth trajectory. Whether he should or not, however, remains open to debate.

The nation's largest home improvement retailer needs Blake’s trusted, reliable style and ability to “stick his fingers in the dikes,” according to an individual close to the situation.

What’s less certain is whether Blake is the guy to lead the company back to growth, something that investors have been clamoring for since the original founders left the building.

The answer is clearly “no” looking at things on paper. Blake is a Nardelli (as in former CEO Bob) disciple, has no contract and is a lawyer by training. So far his tenure has gotten above average marks -- even despite the previous facts, which rarely define big company leadership. At a simpler level, ask a long-time Home Depot shareholder about what their stock is worth today vs. 10 years ago. Watch out. You'll get an earful.

Let’s be clear. Unlike the analyst of the day on CNBC, we’re not calling for Blake’s scalp. That’s silly. Our main interest is determining when a board should ask the interim guy to turn the keys over to a more growth-oriented leader.

What won’t continue to wash indefinitely is the following line. Blake is a breath of fresh air following his predecessor. Duh! -- as any teenager would snap. Fresh air aside, sentiment needs to be future-oriented with a feeling of trust and confidence. It’s more about what a forward-looking strategy feels and looks like, and whether three years down the road, the current CEO will be driving strategy through effective execution.

One thing is for sure. Turnaround CEOs rarely make growth-oriented leaders. The landscape is littered with casualties. Recently ousted Citigroup CEO Charles Prince is one, but there are countless others.

So the question now becomes: When will the board act and who will they get? Stay tuned.

Conventional wisdom says nothing will be done until the markets bottom and growth can be more readily forecast. But that’s not how these situations generally play out. If the board decides it needs to make a change, recessions have little to no impact on their decision. Until then, they have to keep asking the relevant questions.

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Coast to Coast

To blog or not to blog? is the question. Actually, that's not the question at all. The real question is: Who reads, or better yet, what do they do with what they read? For at least one day this year, we have an answer. See the attached, which presents a much better capsule of a presidential candidate-CEO pairing posted last week. Found Read is a Silicon Valley web log followed by IT and developer types occupying the normal Silicon Valley places. Thanks to them, we've added more capacity for readership without lifting a finger ourselves. Isn't that the whole point?

http://foundread.com/2008/01/11/mccain-welch-have-guts-clinton-is-a-gerstner-who-is-obama/

Can We Have This Dance?

It's the season of political dance. The Republicans look a bit lost with their normal waltz, while the Democrats are doing the three-step. The only absolute is the current narrative will change -- over and over and over again.

In the spirit of don't bite the fund raising hand that feeds you, we would like to issue a candidate-CEO pairing. Consider it two parts "Dancing with the Stars" and one part instructional for mere mortals.

Let's start with the Elephants, or Republicans. Mitt Romney (first picture below) talks endlessly about "his experience in the private sector" and "changing Washington." We would suggest pairing him with General Electric CEO Jeffrey Immelt, who despite popularity and innovation talk, has led during an era when the company's equity has remained virtually flat. Key takeaway: Beware of the platitudes.


New Hampshire winner and Comeback Adult John McCain is similar to Immelt's predecessor, Jack Welch, who ushered in much of business' preoccupation with leadership. Welch and McCain have published a litany of tomes, and their views seem to strengthen and resonate with time. The McCain-Welch pairing stands for experience, which has been unfairly overshadowed by change in the current cycle. If anyone thinks change is anything beyond good campaign rhetoric, then they need to take a couple aspirin and call their history doctor in the morning.

CEOs to pair with the Huckaboo and Mayor Giuliani don't leap to mind. These two are highly communicative, entertaining, funny and as energetic as the best used car salesmen. But that probably sells them too short.

Then there's actor/Senator turned candidate, Fred Thompson, who looks like he would rather be telling dirty jokes out back than running for high office. Chairman and now former CEO Jimmy Cayne at Bear Stearns may strike the greatest resemblance. This pairing desperately needs a week's supply of Red Bull and more hands-on execution.

Turning to the field of Donkeys, or Democrats...

We don't have a current CEO match for O'Bama (closest may have been Stanley O'Neal coming of age as Merrill Lynch's leader back when he first got the job.) Not having a CEO pairing is to O'Bama's advantage -- at least for right now while's new. Think media savvy, charismatic and thin on experience, which we saw our fair share of back during the rock star CEO era.

Clinton resembled former HP CEO Carly Fiorina right up until last night's come from behind win in New Hampshire. Pivoting off a comeback, candidate Clinton has newfound energy to run even the greatest turnaround. Perhaps Andrea Jung at Avon deserves this dance, or better yet, Lou Gerstner, the last notable guy who actually turned a large corporation around?

John Edwards strikes us the quintessential hedge fund trader turned Huck Finn who made all his profits during the last market turn and has simply been re-investing since then. In real life, he was heavily vested with Fortress so this depiction isn't entirely off the mark. The raised up by bootstraps turned multi-millionaire story is inspiring -- especially with John Mellencamp ballads playing in the background. But it all seems a bit hollow when measured against his belongings and thin political track record.

As to Bill Richardson, who arguably has the deepest resume of the entire field, we don't have an adequate CEO pairing for him, either. But he is the king of thoughtful personal views and one-liners (LOL: "I've been in hostage negotiations that were more civil.") That's a rare combination in CEO circles. Maybe John Chambers at Cisco before his second cup of coffee?

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Delta's Drama Kings

Sometimes things aren't what they appear to be.

In an official announcement yesterday, Delta Airlines said that current President Ed Bastian will retain the CFO title, which effectively cancels previous plans to hire a new CFO. That was the official line along with some corporate speak about "seamlessly maintaining relationships and momentum..." Whatever.

Here's another take based on a leadership truth that often gets shoved aside.

According to sources familiar with the situation, Bastian and CEO Richard Anderson have developed a strong personal dislike of one another. No big surprise there, taking into account the original chain of events that led to Anderson's hiring. But since the personal dislike factor can't be applied specifically to a news context it gets dismissed as normal vagaries of the executive suite.

Anyone following this company would be wise to watch closely how this personal riff plays out with personnel and business decisions. We often learn a lot more from human behavior managing a company than events perceived as materially consequential to the business. Then there's the irony, which every rich story contains. CEO Anderson is reportedly more operations inclined while the "brain" and main strategist from the original team, Jim Whitehurst, left the building awhile back. Whitehurst is rumored to be the next CEO of RedHat in Raleigh, N.C., but we can't confirm that to be true. Look for Bastian to leave early next year if things don't improve.

As to rumors of a Northwest merger, well, it doesn't make a lot of business sense. But according to our own stated rule, that probably doesn't mean much in the high stakes deal making world. The board is clearly consolidating its view around what comes next. Guess we'll just have to stay tuned for now.

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Merger of Two Unequal?

A little rationale sense would go a long way in explaining the current carnage at Citigroup and Merrill Lynch. So would some humor. Unfortunately neither is in current supply.

Before we try to insert any, here's an idea: Merge the two unequal on their way down. Or better yet, invite Bank of America to make bids on Merrill and then merge the combined entity with Citigroup. Mother Merrill always wanted to be the world's largest bank so why not give them their chance? If the supermarket approach to banking can really work, then this chain of events would quickly reveal the strategy's viability. Otherwise it's time for an alternative preferably one without interim CEOs or what http://www.breakingviews.com/ calls "need for a plumber." Sorry, but the last time that term was used in such a high profile story was when a few rogues were breaking into Watergate.

What we don't know or can't seem to figure out is why Merrill and Citigroup would act so rashly without a clear successor or even candidates in waiting to take over from O'Neal and Prince, respectively. It's not entirely explainable by lack of succession planning although that's clearly a rationale reason worth reporting.

So is the involvement of former Treasury Secretary, newly installed Chairman Robert Rubin who will now lead an effort to find a new CEO at Citi. There's only one slight problem. He fully endorsed Prince's strategy and doesn't seem to think anything is wrong about the current direction. Okay, fine. But then why push Prince to resign? To satisfy a few investment crazies mad about sub-prime? Aren't boards supposed to stand up to pressure and present continuity vs. desperation?

If anyone thinks Rubin is the type of guy who will roll up his sleeves to get a solution in place, then they need to go back and read Ken Auletta's list of works more closely. But wait. It gets better. According to The Wall Street Journal, the only other person on the Citi board with banking experience is Dick Parsons, current head of Time Warner who used to run a small investment firm earlier in his career. Sorry, but we don't think the Cable Guy qualifies as a handpicker of talent to rescue a structured investment mess. Not to mention the overseer of his own semi-failed strategy. Where's Carl Icahn when you need him?

Meanwhile, the Merrill board is probably letting out some cigar air somewhere praying that they'll stay out of the fray. But that's wishful thinking. Their board is even more in-bred and will have a hard time convincing anyone qualified for the CEO position that they'll step aside for the right person.

Both of these major institutions have dropped the ball. And since it's football and CEO turnover season, it's a safe bet that their fumble will stay live on the ground for awhile.

Perhaps the high heeled boys of Wall Street could take a cue from their burger, fries and shake brethren at McDonald's? Now there's a succession success story. Not even death of a leader could stop this brand from marching onward and upward.

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Merrill Lynch CEO Snooze Fest

In the realm of CEO turnover, the pending dismissal of Merrill Lynch CEO Stanley O'Neal is a real "So What" snooze fest. Here's why:

1.) Nothing will really change from a leadership point of view. ML will get a new guy, maybe BlackRock's Mr. Fink. He'll talk a good game, hire a few new faces, move things around and then proceed to manage the balance sheet like it's the last day of his and the firm's life. But that's about the extent. Leaders don't always translate into leadership. This is proving particularly true on Wall Street these days. If anyone thinks risk as far as the eye can see behavior is going to change, then they're delusional. Case in point: The structured investment vehicle (SIV) bailout and its dwindling list of "debt on top of debt" contributors.

2.) Big banks are all the same. Very little to no differentiation. No real products or services set them apart. Insiders will argue this point vehemently. Here's a test. Go to anyone -- business and/or consumer -- who has an account with Merrill, Bank of America or Citi. Ask them point blank, "what do you get from your bank that you can't get anywhere else?" That's right. NADA, nothing. No wonder O'Neal was interested in Wachovia other than the potential payoff despite the fact he will likely get a similar amount via his separation agreement.

3.) Very little board room or palace intrigue. Unlike the Morgan Stanley drama that played out for months between Purcell, Mack and investors, Merrill Lynch is getting caught relatively flat footed. O'Neal handpicked most of the board, and with the exception of a few lone voices, there's not enough conflict to get any of the usual juices flowing. "Largest ever" loss highly damaging but not all that revealing in a forward looking turnover or succession context. Mainly because the poor judgment was so obvious. About the only thing left worth watching is how high the loss number will go, not who takes the reins.

Looking ahead...How many top people will bail out of Merrill in the coming weeks? That's where the real consequences lie, not how many millions Stanley gets to take home. Someone wake us when this one is over.

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CEO Turnover: From Watch to Oust

Throw out the first ceremonial board pitch. Let the compensation pigskins fly. CEO turnover season is here.

The resignation of Gary Forsee, the now former CEO of Sprint, ushers in that rare time of year when boards conclave to "assess" their CEO leadership. Proxies are being written and rehashed, and for a chosen few, axes are getting polished. If you listen quietly from October to December, that whispering sound is scuttlebutt about who is on the way out and who is on the way in.

Forsee's resignation follows a board decision to put out a public search for new candidates. That's probably not the best way to proceed, but then again, maybe they'll get what they're looking for. No one knows except the board, which now seems to be running the company. That's never good.

Within that same sector, pay careful attention to the line between watch to oust on Ed Zander at Motorola. Different situation than Sprint, but at the core, same dilemma: Can we have trust and confidence that this CEO's leadership will propel the company's growth over the next five years? On the surface, the answer is nearly always no. But it's not the board's role to make snap decisions in a vacuum. They must think outward and long-term vs. inward in their own personal interests.

Other candidates for the Watch to Oust list include: Patricia Russo at Lucent/Alcatel, Stanley O'Neal at Merrill Lynch and Charles Prince at Citigroup. Both O'Neal and Prince have some leadership to do on recent billion dollar losses in the credit markets. Bad risk is bad risk -- we get it. But that shouldn't provide an excuse for poor judgment. They didn't provide accurate pro-active or even reactive guidance, and in Prince's case, simply compounded a string of errors that raise questions of judgment.

And while we love the touch of the Saudi Prince's endorsement of his fellow Prince reported in The Wall Street Journal, it's nearly the equivalent of New York Yankees owner George Steinbrenner coming out and saying, "Joe Torre is our man." Be very weary of public endorsements during a crisis. The outcomes are rarely positive.

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FIRST

Okay, so "The Garlington Report" was the first to call the Delta CEO announcement. That's a fact that a few have noticed.

For the record, however, we were factually incorrect on at least one specific: COO Whitehurst will not resign effective immediately. Timing is beside the point as conveyed to Fortune (go to http://money.cnn.com/2007/08/21/magazines/fortune/delta_boyle.fortune/index.htm?postversion=2007082117.) Talent at that level rarely hangs around for scraps left after the power gets divvied up.

We could be wrong, but in this case, it's nearly impossible to see how a guy who made over a million dollars with Boston Consulting Group prior to joining Delta would hang around in an unclear position. Particularly after what he was able to accomplish. Listen quietly and you'll probably hear the buzz of recruiters ringing through on his BlackBerry.

High achievers want to achieve; it's not always about money. In fact, when you have that much money, it's about higher levels of success, which can include money but that's rarely the only measure.

Oh, and here's a weird nagging detail: They've given the CFO, Ed Bastian, the additional title of President while the "new guy" becomes CEO. Does that have precedence in major companies?

Someone needs to trace the relationship between Bastian and the head of the pilots union more closely. That may be more revealing than what the creditors' influence indicates.

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Delta to name new CEO later today

ATLANTA (August 21, 2007) -- Delta Airlines will name current board member Richard Anderson CEO in an official company announcement later today, according to undisclosed source close to the company. Ed Bastian, current CFO, will be named president, and current chief operating officer (COO), Jim Whitehurst, will resign effective immediately. Daniel Carp will remain non-executive chairman of the board.

Naming a recently appointed board member raises questions about whether Anderson's candidacy was impartial when he joined the company's board. As The Wall Street Journal first reported earlier this month, Anderson was not present for interviews of internal candidates. This would suggest, at least perceptually, that Anderson was in it for the CEO job all along vs. the organization's long-term strategic interests. The same firm that recruited Anderson, Spencer Stuart, also recruited Carp, whom according to sources, led the search process.

This appointment also means Delta will lose arguably their strongest leadership talent responsible for turning the company around coming out of Chapter 11 bankruptcy. Whitehurst, a former BCG partner, is widely credited with some of the company's improvements in customer service and execution of the successful international expansion strategy. He is perhaps best known for orchestrating the Velvet Rope Tour, an effort to restore confidence among non-union flight attendants.

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Nardelli Hit Parade

It's hard to recall a more galvanizing executive appointment than Bob Nardelli being named CEO of Cerebrus' Chrysler. No lack of opinions or views. Here's mine: http://www.usatoday.com/money/autos/2007-08-06-chrysler-bob-nardelli_N.htm

Not many get that level of second chance, particularly after what he left in his wake at Home Depot. The original tag to this story was, "Failing Upward." The best unpublished comments range from "this type of buffoonery is bad for capitalism" to "what's the (betting) 'over under' on his tenure?"

What to watch: Will Nardelli learn from previous mistakes? Or more importantly, hone his leadership skills? One thing is for sure. He's not going to be successful driving his original love, a Dodge Dart. Eeesh!

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Delta Delay

Delta's search for a new CEO represents another delay. But not the type that leaves you in the Crown Room begging for a way out.

The challenge is two-fold: How to find someone to fill the chief post while keeping operations and the business moving continuously forward away from Chapter 11. The company says a decision isn't likely until at least the end of August when the board re-convenes. No lack of opinions out here on what they should or should not do. Some are informed while others, well...

Here's my personal favorite: "It's a cat fight to the finish between Paula Rosput (a current Delta board member and former CEO of Atlanta-based AGL Resources) and Marce Fuller, who used to run Mirant Corp. The fact that one of them (Fuller) is unemployed and the other semi-retired at a Seattle insuror makes it even more intense. Wake us when it's over."

According to an informal poll of search experts, the most likely option will be identifying a strong Chairman/CEO type along the lines of current CEO Gerald Grinstein. This person would then allow the two top internal candidates, Ed Bastian and Jim Whitehurst, to remain in their existing roles. Two other rumored contenders currently fit the bill but only one has experience operating a large airline. Daniel Carp currently serves as non-executive Chairman.

But that's all conventional wisdom. It's difficult to see how the board will just go with what's so obvious. Prior to Grinstein, there was Leo Mullin, the consummate outsider and McKinsey expert who inherited not only a flawed business model but also was forced to manage through 9/11. Some defend Mullin with great gusto, but we're not among them. It's a credibility thing. The last insider was a Delta original, Ron Allen, which, well, it's not worth turning that far back.

It's our view that the "new Delta" needs a fresh new leader, one that can continue the momentum, remain optimistic but accept a reality that no one else seems willing to: Sustained profitability for a large carrier in the current system is dreaming at best, living a lie at worst.

Would anyone like some peanuts? Okay, sorry, snack mix and complimentary beverage?

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Pay to Patter

'Rahodeb' here. Ok, not really. Anyone still scratching their heads after reading the latest on Whole Foods' CEO? We're moving quickly from the issue of pay to patter. Here are some observations for your own edification:

1.) Patter matters. Ironically, digital communication now has a longer shelf life than print. Emails, IMs, Yahoo chat room postings (who has time?), you name it. All subject to ready search and fast distribution.
2.) To update an old saying, it's never the (crime) indiscretion, always the (cover-up) trail. 'Rahodeb' not alone by any stretch. High time flat footed Baby Boomer executives caught up to the realities of new media. Taking this point a step further...
3.) Digital Dumb doesn't provide a free pass to decline participation in the electronic age. Information is moving too fast for some figures, such as New Jersey Gov. Corzine, to start thinking he can claim privilege and everything will go back to the way it was before. Distinctions between official and personal don't wash publicly.

Before the Whole Foods situation explodes into a Paris-like cable news frenzy, here's the key question that their board needs to answer: When the antitrust comments first surfaced, why did the CEO (or did the CEO) fire back on his own blog? Did he know then the extent of what we all know now? And if so, then does that represent an omission that was voluntary or one endorsed by a privileged source such as a lawyer?

Better yet...Take these questions/answers and then measure against the company's stellar performance and cult-like brand status. Then and only then can the "Fire Mackey?" be deliberately answered.

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Founder's Syndrome

Click here for the perfect summer read: http://www.foundread.com/view/curing-the-founders. Okay, maybe not perfect but entirely true. Take it from a founder who learned the hard way.

Inclusive Era Over Before it Started

Before anyone tries to stereotype the latest CEO casualty at Yahoo, they would benefit from taking a step back. Terry Semel's departure falls smack dab in between two widely claimed trends: Founders returning as CEOs -- insert Yang now in the CEO seat at Yahoo, Citrin at Vonage and Dell at well, you know -- and inclusive CEOs, which three Booz Allen consultants report at length in the latest issue of Strategy+Business (see link http://www.strategy-business.com/press/article/07205?gko=04dd3-1876-26242394)

In the Yahoo case, neither trend applies. It's time for the company to move away from its legacy and into areas that help grow and differentiate the business. There's no way a founder or long-time insider can accomplish turnaround on their own. Particularly in entrepreneurial companies, which Yahoo is despite their incredible rise as a brand.

Even Michael Dell, who no one would bet against, has turned outside for a rapid infusion of talent. What's the takeaway here? Performance rules. Always has, always will. Change means real change, not more of the same. Or heaven forbid, a call for "let's return to the basics."