Coming Home

As we plan to travel for the holidays, a different homecoming theme has emerged in this week's business news.

First, the passing of former HP board chairwoman, Patricia Dunn, whose biggest claim to executive brand fame was allegedly knowing about phone wire tapping of other board members and not properly disclosing the behavior. By the time others, including HP board member Tom Perkins of Kleiner Perkins, got done with the public character assassination, Dunn's reputation resembled mincemeat. She was later exonerated of any legal wrongdoing. Now we learn about her long battle with ovarian cancer, which resulted in the former executive's death. This passing is great reminder of what's important in life vs. business. It's our sincere hope that as publicly reported Dunn died peacefully with love from family, friends and God close by.

The next example is someone who hasn't died but faces a rare terminal illness called PSP or "progressive supranuclear palsy." Famed deal maker Richard Rainwater is battling for his life after a long run of Midas touch business investments and dealings. Fortune has a great profile of both the man and situation http://management.fortune.cnn.com/2011/11/07/richard-rainwater-psp-fight/; it's why we still turn periodically to magazine journalism. As a personal aside, Rainwater's second wife, Darla Moore, is a legendary philanthropist and public figure in South Carolina. I have seen her modest house in Lake City and can personally attest to the private jet air strip for quick deal making trips.

These two examples may not conjure up visions of sugar plums, but the takeaway is important. Please take stock of health and key relationships this holiday season. Life is too short not to.

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HP: Interim to permanent CEO

Who says rock star CEOs are dead? The expected announcement that former EBay CEO and current H-P board member Meg Whitman will become CEO of Hewlett Packard (HP) underscores how much personal brand power matters in tumultuous crisis situations. Normally when there's turnover and the preceding position holder came from outside the company, Fortune 100 companies will turn to an internal executive candidate. HP, however, has quickly become a poster child of horrible governance, which means they probably felt like they had to go with a known brand name. Insert Whitman who joined the HP board earlier this year.

The real question now becomes whether or not the board considered internal candidates before offering the position to Whitman. It's often perceived as a conflict of interest for a director to join a company board without stating his or her intentions on becoming a company executive. In this case, it would help inform the story if the company were willing to say that they considered internal and external candidates before naming Whitman. Of course they can always say that publicly without really meaning it, which is why more reporting on the process will be necessary. Another easy out is the fact that Whitman is a brand name leader, which provides yet another buffer to a board that clearly has lost track of its own -- and the HP Way.

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HP: Turmoil = Interim CEO or acting director

As presciently forecasted last year -- http://povblogger.blogspot.com/2010/08/h-p-ceo-follies-let-games-begin_09.html, Hewlett Packard remains mired in turmoil. Latest case in point: News that the company's maligned board will replace their third CEO of the last six years. While no one knows publicly yet what the company and its board will do next, it's fairly certain that an interim CEO or board member acting in a similar role will fill the primary leadership position. What's not known, despite reports to the contrary, is who that will be. Here's a dirty little truth that few seem willing to accept: It now doesn't matter who the executive is. Until the board can correct itself (begs the question: Is this even possible?) and find a way forward, no one filling the CEO position can be successful. Classic chicken and egg scenario if there ever was one...Aside from the leadership question, it's always interesting to note that while Leo Apotheker has now failed publicly just as his predecessors did, it's hardly failure of the every day sort. He will walk away with $35 million in severance pay, a princely sum by any measure. Whoever said jobs weren't all about money and prestige never worked at the highest corporate levels.

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When Brian Met Sally; 10 steps to recovery

One of the most powerfully perceived women in business, Sallie Krawcheck, has essentially lost her job for the second time in three years. According to today's Wall Street Journal, Krawcheck has been forced out of her position at Bank of America Corp. (BofA) following a consolidation of power by CEO Brian Moynihan. This follows a similar post at Citigroup where she worked prior to joining BofA. Here's a list of transition recommendations for this high powered brand to consider:

1. Join Obama's Jobs and Competitiveness Council. Bring some diverse truth in love to GE Chairman and CEO Jeffrey Immelt. Commiserate with his private/public plight as the council struggles mightily with the issue of the decade. Avoid 10-year later "what are you doing now?" stories at all costs.

2. Go back to the recruiter who helped land the BofA job and beg for payback on other plum assignments. If that doesn't work, call Ken Lewis and ask for a payday loan.

3. Write a real book titled, "Failing UP." Become a guest host on CNBC's Squawk Box. Mend brokenness by confirming everything hosts Joe Kernen and Becky Quick have to say about banking.

4. Join more boards -- Preferably big international banks that have an eye on unseating BofA such as HSBC. Disregard non-compete agreement. Remember success is sweetest form of revenge.

5. Consult friends in private equity, the last bastion where Linked In connections and failing up meet square on to create new career opportunities.

6. Start a powerful yet virtual women's career transition and support group named: "Recovering Divas of Industry." Invite former co-worker Barbara DeSeor and fired Yahoo CEO Carol Bartz to become members. Track down Marcy Fuller, Carly Fiorina and Paula Rosput Reynolds to serve as special advisers.

7. Get out of town. Keeping with international/global re-positioning theme, travel and meet with as many bank CEOs and boards as possible. Leave no stone unturned. See if BofA will grant some severance fly time on one of their corporate jets.

8. Re-discover balance at home. Support husband's dreams following his service raising family and managing household. Attend any and all special functions, events and games at children's schools. (Re-read last year's WSJ special feature on Most Powerful Women, which referenced these points at length.)

9. Wait patiently by phone for recruiters to call with next opportunity. Set PDA on vibrate during day; silent at night. For those sleepless nights consult the book of Psalms.

10. After six months of dust settling, re-emerge as head of a regional bank in U.S. such as Regions or SunTrust. Move their headquarters to Wall Street, merge with Goldman Sachs and then jointly declare that the "era of big bank consolidation is over." Continue on chosen privileged path.

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Two big brand names, one different take

Yesterday's news that Steve Jobs was stepping aside from Apple and today's announcement that Warren Buffett will invest $5 billion in Bank of America provides business leadership pause of the first order.

First, Jobs. Silicon Valley Icon. Successful entrepreneur. Failed CEO then back to a higher degree of success than ever before -- with the same company he founded. Unarguably the vision behind what may be the most successful suite of consumer products that the world has ever seen. Apple is a business case study of the highest order by any measure. The only possible exception may be the company's governance, or lack of clear succession plan. Then again, in reality, it's impossible to think that Apple's board could replace Jobs with anyone without taking a hit so why not kick the can down the road when everything is going well. Classic short-term vs. long-term thinking, which is another issue not worth going into here.

Now let's turn to the man himself. According to separate first-hand accounts from those who have actually worked with Steve Jobs (note to close readers: One was a Point of View LLC client; the other was someone who had close dealings when Jobs was replaced by John Scully as CEO), Jobs is at best a hard charging, take no prisoners, crush the competition business man. At worst, an asshole, according to first-hand impression.

The question then becomes: Does this type of behavior indicate anything relevant to standing as a business leader? Or are these traits simply what's necessary to be effective at a big business level? For comparison purposes, is there any difference between what Jobs demonstrated in one-on-one dealings to create great products vs. what Gen. George Patton (played brilliantly by George C. Scott in "Patton") modeled during World War II?

Oracle of Omaha comes to the rescue again

Buffett's investment in Bank of America Corp. essentially rescues an equity headed into the ditch following questions about the bank's capital reserves. The $5 billion investment, which comes with a guaranteed six percent return, also recalls a scarier time back when the market crashed in 2008 and the Oracle of Omaha came to the side of Goldman Sachs, which at the time was the country's largest still standing investment bank (if those distinctions matter anymore.)

Now, three years later, this gesture is viewed as absolutely necessary in the era of Too Big to Fail or negative reminder of how little banking has progressed since TARP bailouts. The Buffett brand remains directly positioned in the mix.

As a long-time observer and admirer, I'm slowly arriving at a different place when it comes to Warren Buffett's standing as a brand-name leader. It started back when his memoirs were published in 2008, and the Wall Street Journal reported that Buffett opposed some of what eventually was revealed with his own approval. This isn't uncommon but it still created a new perception. Buffett also been very vocal and publicly visible on CNBC almost to the point of calling into question when is it enough? When President Obama sought public approval to help reach a deal that eventually led to the nation's debt being downgraded, he called on Buffett and then proceeded to broadcast to the world what "my friend, Warren Buffett" had said. So much for confidential decorum.

There's a underlying nagging question out of all of this and that is...Do we need to see and hear from our leaders as much as we do now in the 24-7 news culture? Doesn't that take away a certain amount of gravitas or perceived credibility? Has the public/private disclosure balance been forever imbalanced?

Please let us know what you think sometime about these questions in the context of effective leadership. Always reaching for a different view to help sharpen our own. Thanks for reading,

JG

Lost dignity of work

The oldest employment rule in the book is it's better to have a job when looking for another job. No one can argue that truth except of course if you're someone who needs to close one door to open another or you're stuck in the crosswinds of structural change.

Fast forward to the present or wake of the Great Recession. Employers are taking the current employment rule to the streets, according to today's New York Times: http://www.nytimes.com/2011/07/26/business/help-wanted-ads-exclude-the-long-term-jobless.html?ref=business

While not hiring the long-term unemployed is understandable from the employer point of view, especially the point about incompetence, there's something fundamentally wrong about denying someone work simply because he or she doesn't have a current job. This slope started with the advent of credit checks to deny applicants work.

Try going a little deeper here or beyond the surface of basic dollars and cents. Those who haven't worked for a long time generally need or want to even if they have to depend on public assistance. To be denied this desire can lead to mental or emotional problems. Or the loss of basic dignity.

It would serve large employers and their leaders well to evaluate whether the value called the dignity of work still exists in their workplace. Chances are if it doesn't exists then it becomes easier for HR folks and lawyers to list current employment as an essential for consideration.

Let us never forget that there are human beings behind these laws and rules even though it's difficult to recognize at times. Is the dignity of work a leadership responsibility?

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Just do something, please (Part II)

While the last TGR post laid out fallacies of taking a macro-approach to the jobs issue, this installment speaks to why it's nearly impossible to find actionable common sense among leaders in the public square. Following is an anecdote to help explain the case.

A client and friend runs a small business in Decatur, GA. It's a 25+-table restaurant that's been extremely successful for more than 15 years. Family owned and operated, this business represents what traditionally has defined the American Dream. Man/wife find local niche, decide to take risk and then establish customer base highly loyal to the niche. Pricing premium serves as no obstacle due to high quality product and delivery rewarded by customers willing to pay again and again.

This isn't to say that managing the business has been a bowl of cherries. Between trying to remain cash flow positive to keeping uninsured employees from walking out the door, the challenge is palpable -- hourly, daily and weekly. The basic difficulties, combined with personal physical toll, create complexity that the conventional "9 to 5" worker never experiences. Anyone out of the roughly 50 million independent small business or "free agent" workers who own their own companies in the United States is familiar with similar difficulty.

To compound the situation, no special interest or lobby has my friend's back. Plenty of organizations, such as local chambers of commerce and the Small Business Administration (SBA) pay lip service to the plight of small business. At least one political party likes to wax on about how small business creates 70 percent of the nation's jobs. Yet very little empirical evidence ever makes a difference when stacked against a system that's rigged to reward big business, big labor and big government. This reality is showing no signs of hope and change anytime soon. No one currently in the presidential race has the credibility to stand up for small business despite what they may be spinning.

It wasn't always this way. Our nation's founding fathers all worked "in the fields" so to speak. Necessity was the mother of invention. Jefferson and Franklin were land owners who invented everything from the dumb waiters to plows, bifocals, stoves and clocks. Going back to post-World War II, some veterans returned to start general stores, many of which were given rise out of debilitating injuries or chronic illness. The modern day version of this type of entrepreneurship is absent or mediated to appear like it only exists on-line in the technology sector. Today's military veteran returns home with very few benefits, if any, and very little chance at starting a business due to lack of financing and exorbitant costs. There's something fundamentally wrong with this picture -- one that's distorted even more by negative profiles of people outside of large cities depicted as simple minded and intolerant. Recall Joe the Plumber from the 2008 election before the ensuing publicity circus.

Doing something in this context means removing more obstacles for Mom and Pop, identifying with their cause and standing up to take the (country) economy back. This isn't to suggest ignoring the global marketplace; it's more about getting down to the local core where many have re-congregated. That's leadership defined. Too bad no one with the pulpit seems able to make a difference at this level. Herein lies the key to unlocking value and more domestic job creation; not continuing to move the chairs around on the big business tax cut/debt Titanic. Good day,

JG

The Garlington Report (TGR)

Top leadership blogs

Niche bloggers normally bask in obscurity, flourishing in the weeds as they wait to pounce on gaps or scoops otherwise not covered by mainstream media. Until of course they're recognized. Here's our own latest example via blog aggregator/evaluator, The Daily Reviewer. See link for more background: http://thedailyreviewer.com/blog/11830. TGR appears on page five (5.)

Politics vs. performance

One of the nagging headaches with commenting on issues perceived as public policy is how so few are willing to discern substance vs. partisan viewpoint. It nearly always takes gravitas not to sound shrill these days, present company included. This is why reading over today's latest opine from Bill George provides pause. George is arguably the nation's leading "in the lab" expert on business leadership. Not only has he run and led a successful company, Medtronic, George has captured the experience via teachable content approaching on par with Peter Drucker. (Pity those who have to Google Drucker to be informed.)

Here's hoping TGR readers did not miss this substantive call for action from today's DealBook, New York Times: http://dealbook.nytimes.com/2011/06/27/obamas-choice-on-jobs-politics-or-policy/?ref=business

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Just do something

When it comes to jobs, has there ever been a time when so few leaders seem able to address much less solve an issue?

Exhibit A is whatever the President's Jobs and Competitiveness Council (JACC or JACK?) is trying to accomplish with their new publicity push, which was kicked off with a media blitz earlier this week. Here's a WSJ op-ed that spells out the perceived mandate: http://online.wsj.com/article/SB10001424052702304259304576380323311523538.html

For those left scratching heads on how the Council formed, consider a refresher course. President Obama appointed General Electric CEO Jeffrey Immelt in January to head a lofty group whose mandate is to to generate more domestic jobs -- as in work for those in this country vs. everywhere else in the world. That leaves five months from formation to current frame. Hold that thought for later in the post.

Immelt's appointment was widely hailed despite the fact that as CEO of General Electric he has overseen one of the largest destructions of shareholder value in the company's history. Not to mention the additional fact that at the time of Immelt's appointment the company seemed unwilling to admit that they had failed to generate any high paying jobs in this country since the Jack Welch era. Efforts to contact the company directly for comment would be made with more vigor if there were assurance it would yield revelation beyond their standard line about operating as a global company.

Immelt has since teamed up with fellow smooth sailor American Express CEO Ken Chenault to address the situation. Following are some interpretative highlights of their recommendations. (You will need to read the previous WSJ piece to understand the takeaways.)

1.) Process isn't the product. "Ninety-day recommendations" proceeded by more "strategic actions" over the next 90 days translates into a lot of nothing for six months. Combine the lag between official appointments and final recommendations and we may have nearly a year of inaction during a period when economic recovery indicators have softened. Unfortunately those who occupy rarefied leadership air stumble around according to these frames all the time while Main Street burns. Those of us who actually have to work every day know that life doesn't allow extended strategic review. It requires actually doing something. Pity the rafts of PR staff and executive assistants who have to endure this nonsense.

2.) Flawed content. Specific content contained in the recommendations doesn't inspire a lot of hope in something new and better emerging to replace the old hinges. "Rehire more construction workers" and "boost jobs in travel and tourism" sounds like a pre-Digital Age prescription from the Carter or Reagan administration. If the Council and Obama administration are serious about more employment in the construction sector, where's a renewed public/private sector call for a Manhattan project to rebuild national infrastructure? (originally called for by former NYT columnist Bob Herbert.) Or has stimulus money from the Economic Recovery Act already run out? As to tourism jobs, does this mean turn the country into a big Disney World so more will come and spend their higher valued currency? Someone needs to go interview retailers in southern Maine about what they think about French Canadians from Quebec who invade every summer. That might actually yield some better ideas, or at the very least, dislodge tin ear wax at the 50,000-foot leadership level.

3.) Divide extends even further. Combine 1.) and 2.) with lack of entrepreneurial friendly focus, i.e., "hey guys, did anyone mention trying to start or build something new vs. masking the old via 'innovation?'" and you've got more of what got us into this mess. Status quo thinking from those who have felt zero personal pain in the Great Recession. Which in turn has yielded very little if any forward progress. Granted the economy has been on its ass for a few years but still. Left wing NYT columnist Paul Krugman calls the disconnect a "top down disaster," and more recently has compared the current climate to "rule by rentiers," http://www.nytimes.com/2011/06/10/opinion/10krugman.html?ref=paulkrugman, which refers to special interests that reign supreme by pacifying the asset rich vs. serving common Joe and Jane. This is the most glaring issue that the current administration and none of the Republican candidates for president seem able to tackle. It spreads into most sectors, including big banks, which seem immune to change and forever determined to rig the system to their own benefit at the expense of fixing anything, such as the housing mess. Until the disconnect between the have mores and have nots is restored with something of meaningful value, Nighttime in America will remain present for the foreseeable future. That's a damn shame. We're better than this -- or at least better than what our leaders are supposedly doing to lead. Good day,

JG

Editorial note: Despite named subjects, this is not a political message. It's a call for more common sense that must exist somewhere but doesn't seem to make its way to the highest levels of perceived power.

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Rare display

From the New York Times (April 26, 2011:) Sports Tuesday

BEHIND THE DECISION

'The public interest represented by the fans of professional football -- who have a strong investment in the 2011 season -- is an intangible interest that weighs against the lockout.'

-- U.S. District Judge Susan Richard Nelson

Leave it to a judge in a labor dispute to give life to a dying cause: The public interest. The above quote leapt off the page the other day mainly because the value is so seemingly fleeting in leadership circles. Whether one side or the other "wins" in the NFL lockout case is beside the point. For a shining moment, the fans' interest was represented in full glory. Other spheres should take note.

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Quote of the year

Intellectual honesty can be difficult to find sometimes when an executive speaks on the public record. In the case of Exxon's Chairman and CEO, Rex Tillerson, honesty last week in the Wall Street Journal ("Exxon tilts to oil again," March 10, 2011) came through with blunt candor. The context was a story describing how when most oil companies are diversifying exploration efforts Exxon has decided to focus on their bread and butter. Here's the quote:

...Rex Tillerson, Exxon's chairman and chief executive, said the company doesn't have a specific preference for producing oil or gas. "There is no bias for us one way or the other. Our bias is to make money."

During a time when big business enjoys low approval, this quote is refreshingly clear. Critics can cry all they want about means to an end in Exxon's case but at least shareholders know job number one. Thanks mainly to a leader who doesn't mince words.

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Welcome to new normal transparency

Are you and your leadership position standing on a "burning platform?" Nokia CEO Stephen Elop has posed that question internally to employees in the following memo published this morning by the Wall Street Journal: http://blogs.wsj.com/tech-europe/2011/02/09/full-text-nokia-ceo-stephen-elops-burning-platform-memo/. It lays out a ringing indictment for why the company needs to transform due to an untenable market position. More significantly, it shows how the lines of communication and disclosure have now permanently blurred. "Public" is every time you hit the send button. Ignore this reality at your peril. Or in Nokia's case, to a future potential market advantage.

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Founder's syndrome at Apple

This blogger that could would like to point to a previous post on Apple succession originally published back in January 2009. Here's an excerpt:

...It's a little better in iPod land from a performance point of view. But not necessarily at the board level. Apple has been forced out publicly recently with the hormone imbalance admission by Steve Jobs, which hardly quelled speculation that he will need to be replaced. For a board filled with high powered names such as Gore, Wexler, Jung and Schmidt, Apple's slate leaves a lot to be desired in the area of succession, which is arguably a board's first or second largest responsibility. Yes, we know Jobs is an icon and only he (or God) will decide his ultimate fate. But that doesn't negate a stronger need to show investors what the post-Jobs era will resemble. For every day that they obfuscate this issue, the board loses credibility and founder's syndrome takes deeper hold...

Bottom line: Apple is Steve Jobs; Steve Jobs is Apple. The personal and business/product brands are one. The company is a dramatically successful commercial enterprise, which tends to render the governance argument moot. That is until something happens to the brand, which in Jobs case, is an extended illness that everyone has known about for years. Why the board wouldn't take steps to reduce dependency on Jobs speaks volumes on where business is right now in the new New Normal.

Oh, and if you're wondering what we mean by Founder's Syndrome, then please review the attached link sometime: http://startitup.indieword.com/view/curing-the-founders.

Thank you,

JG

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Where will the next set of CEO shoes drop?

The New Year is barely two cold weeks old, and already, brand name CEO changes have been occurring at a rapid clip. Newell Rubbermaid, NPR, Fox Networks, fallout from AMD. Name it to claim it.

The flurry of activity underscores a trend that started last fall: Turnover reflects companies need to change from a low to zero growth climate to a more aggressive posture in a slowly improving marketplace. Leadership tends to fall at the top of the change list, proving once again the chicken and egg battle facing boards. Do we need a star performer to create a winning strategy, or do we need better systems, process and culture/people to ensure sustainable performance? The answer is both but unfortunately far too many remain enamored with the savior mentality. We'll keep watching for exceptions to this conventional rule and will ask you do the same here.

Here's a prediction: After several years of declining turnover, this year will see more executive exodus than the previous two combined. Of course we said the same thing when the Great Recession was gathering steam back in 2009 and nothing really changed. Many boards decided the devil they know was better than the devil they didn't know. Guess that's how predictions go sometime. Some stick, others fail -- proving once again that trying to determine a new new normal future is a lesson in futility. It might just be better to enjoy the moment?

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