Invisible Governance

Go ahead potential Flubbers in Chief. Whale away at "greedy CEOs" and Wall Street corruption. Congress, parade the villains in front of committees so the public can feel better. Or is it you, Congress, who needs to feel better? We can't tell anymore, nor do we care.

The outrage surrounding the financial crisis isn't about compensation. It's not even about incompetence or leadership failure although a good argument could be made on the latter.

The market crash heard around the world has many of the best and brightest looking pretty dumb these days. Cries of "failure in leadership" tend to ring hollow when something called an irrational market continues to destroy more value than a Category Five hurricane.

Don't let the revisionists mislead you. What preceded the eye of the current storm cuts to the issue's core. Invisible governance describes the raft of gutless boards and government regulators who allowed what amounts to stealing to ruin a free market system.

Pick your culprit: Merrill Lynch, Lehman Brothers, WaMu, Wachovia, AIG, Fannie, Freddie, etc. Each firm had an invisible slate of directors, and in Lehman's case, a former theatrical producer rounding out its membership ranks. Look over a few compositions, and you'll pick up on an over-abundance of "retired" or inactive executives. Not to mention a litany of money management and finance types when more value-driven business builders could have inserted more real world reality. But that's hindsight now.

Every day brings new damning revelations of how invisible these boards were leading up to the collapse, including clear evidence that AIG's board stood by while irrational risk was being taken on a complex derivative called credit default swaps (Wall Street Journal, October 11-12.) You don't have to be a Wall Street whiz to understand that credit default swaps are code for unregulated insurance with no required reserve.

Consider the intangibles, which have just as much consequence but rarely generate much debate. Boards, working with management not against it, are responsible for setting and enforcing shared values. The collective bodies that fill these board seats are accountable for firm culture, which has now been shot up more than the Godfather's Sonny Corleone riding through the toll booth.

In AIG's case, lack of enforcement provided the impetus for managers to take on unprecedented leveraged risk without anyone calling out the obvious. The fact that this type of behavior was allowed going back to the tenure of former AIG Chairman Hank Greenberg is the real culprit, not all the damaging byproducts that have surfaced over the past few weeks (yes, that includes the lavish St. Regis retreat approved after receiving public bailout money.)

Ironically boards also are the ones who set the terms of CEO pay, which is determined by market dynamics, pay consultants and, if anyone was being honest about the process, gamesmanship by recruiters and their firms, which are generally hired by boards to find a CEO. After all, everyone has to get paid their fair share. Recruiters, lawyers, consultants, secretaries, etc. Boards also lead the process known as CEO retention, which seems quaint right now with everyone trying to stem the tide.

What seems to be missing the most is a basic fundamental. It's a board member's primary responsibility to ask tough questions such as, "hey, wait a minute. What happens if risk on these derivatives blows up and we don't have any reserves to cover the investment?" Difficult questions are foregone when profits are going through the roof and only rarely asked during normal times. That's the real crime here, and the situation won't be corrected until more are held accountable for lack of fiduciary responsibility.

The worst part is banks have not been traditionally held to the same governance standards as corporations. We've heard our fair share of experts say, "oh, they're just banks." But that's just rationalization, which leads to denial, which leads to projection. Hence the current mess.

The buck has to stop somewhere, right?

While we're not holding our breath, an overhaul of governance in the banking and financial system will be essential if anyone wants to see real change. It's becoming abundantly clear that the government will be the ones calling the shots, not the smooth water sailors currently occupying their seats. Let's pray that it's not FASB, another stealth culprit in this shadowy systemic mess. There's also bound to be a few shareholder lawsuits aimed against individual board members. Especially at AIG, which has generated the most outrage.

No solution to combat invisible governance will be perfect. The blame game is still in the first quarter. But anyone that tells you the solution can't be found in the problem's root causes either isn't being intellectually honest or is trying to cover their tracks. We simply can't afford anymore disappearing acts at the highest decision-making levels.

# # #

Is political leadership over as we know it?

Let's start at the top on the $700 billion financial bailout or whatever you want to call it:

President Bush. Done. End of story.

Treasury Secretary Henry "Hank" Paulson. A bit better but suffering from an incurable disease: Perceived ties to investors on the street formerly known as Wall, which has destroyed the public interest and pitted small business against big business in ways that haven't been seen since the Great Depression. Ok, sorry for that last phrase. We had to work the cliche in somehow. Paulson, an appointee not an elected official, isn't helping his cause by laying blame on foreclosures and then saying things like "we're doing this for the American taxpayer." That just doesn't wash.

Fed Chairman Ben Bernanke? While understandably difficult to follow Alan Greenspan, the original architect of sub-prime mania, Bernanke looks like he's on the verge of a nervous breakdown every time he visits Capitol Hill. Fully understandable -- just not what anyone wants to see from the guy in charge of cash flow.

Congress? Members of the House and Senate are notorious for appearing to stand up for the folks while the cameras are rolling -- only to cave in later out of fear. That's what feels like is happening now. In political terms, a vote for the bailout may put the 2002 Iraq war vote to shame. We're holding out hope that the counter balance to the conventional wisdom -- do this now or else -- will produce a better outcome.

Where are the nation's "best and brightest" CEOs? Oh, that's right. Hiding away counting up their cash while dialing their hedge fund and private equity buds to see where the next deal may lie. Others are polishing up their resumes with turnover season now in full swing.

The exception always seems to be Warren Buffett who has invested $5 billion into Goldman Sachs. It shouldn't always take a brand name such as Buffett to step up. But thank God he does.

The two presidential candidates? Not even in the park. Both are holding back, making political calculations about what to say and do instead of standing up right now and declaring what they think should be done in definitive terms. If anyone thinks Barack Obama and John McCain are capable leaders in the mold of Teddy Roosevelt, then we have some free beachfront property that's not foreclosed. It's not entirely their fault -- more about this inane way we go about electing the leader of the free world.

Yes, leaders and students of leadership, we are now entering uncharted territory.

No one has shown capability to lead the country right now. Out of fairness to the current slate, maybe a better question is: Can the country even be led in its current state?

If nothing else, the bailout issue gives new meaning to the saying: All politics are local. Former titans (and friends) such as Tip O'Neil and Ronald Reagan may need to be raised from the dead at the current rate.

# # #

Fear is not an option

Perusing today's news is enough to make any reasonably minded business person gag.

Two New York Times pieces, in particular, about how media are tempering what they say http://www.nytimes.com/2008/09/22/business/media/22press.html?ref=business and how advertisers are trying to decide whether to ramp up advertising http://www.nytimes.com/2008/09/22/business/media/22adcol.html?ref=business in the wake of last week's, uh, negative turn of events.

No wonder the public has tuned out media and no longer trusts government. Both institutions continue to fail on providing clear cut solutions -- much less well thought out ways to even find a solution.

Message to business leaders: Don't rush to judgment. Remove obstacles where you can. Take the appropriate actions to protect and help key constituencies in your business. That means serving customer need, being clear and up front to employees and investors and aligning strategy and execution with the appropriate systems, capabilities and people.

This message may not be sexy enough for public consumption, but it's what matters. Difficult times require steady hands, not a bunch of flailing motions that simply reinforce existing anxiety.

# # #

Clarification

Evidently, some readers thought Tuesday's "Where was the Lehman board?" post was a copycat of a much better rendition that was originally posted Monday on the Wall Street Journal's Deals blog.

Go to http://blogs.wsj.com/deals/2008/09/15/where-was-lehmans-board if you would like to review a copy. You also can read the same exact copy that appeared online Monday in today's print edition. Odd repetition but part and parcel of this brave new world.

It was never our intention to steal someone else's idea. Or in this case, a professional journalist at a reputable publication who we like to read when there's time. Chalk up the oversight to not reviewing as many web blogs as possible. "The Garlington Report" is not our full-time job either. But that's beside the point.

To avoid future oversights, we will leave the Wall Street meltdown to the legions of reporters currently on the case. They're the pros. We're just an niche observer who likes to underscore points relevant to our audience.

# # #

Where was the Lehman board?

What do a theatrical producer, retired Rear Admiral and the long ago retired CEO of IBM have in common? It's not a trick question. But you might mistake the answer for the punch line of a bad joke.

The answer is they're all now former members of the Lehman Brothers board of directors.

The entire cast counts four retired hands, two private investor/advisory types and one self named independent investment consultant who serves as the Chairman of the Finance and Risk Committee. Ok, the latter is well known name and respected investor, Henry Kaufman. But still. Where was Mr. Kaufman on the risk that obviously did this firm in? Does anyone know?

Taken together, the list (http://www.lehman.com/who/bios/board_directors.htm) looks more like the casting call for the movie, Cocoon, than a robust slate of active directors looking out for shareholder interest. Fuld is a dead man walking so we'll give him a pass on governance.

As to the others, well, good luck with getting new directorships. You probably won't have any problem, seeing that the old boys network likes to recycle the same old bodies into the same old chairs. It's a mystery that remains unsolved for now. But the day of directorship reckoning is coming. Keep screwing up at this level, and the secret is bound to get out.

We remain completely mystified that nothing seems to have been learned or applied since the collapse of Enron.

# # #

Memo to Ken Lewis

"Overnight, the shotgun merger will transform Bank of America into the nation’s largest player in wealth management." -- New York Times, September 15, 2008

"Acquiring one of the premier wealth management, capital markets, and advisory companies is a great opportunity for our shareholders," Mr. Lewis said in a statement. "Together, our companies are more valuable because of the synergies in our businesses." -- Wall Street Journal, September 15, 2008

Asked by an analyst if he had a desire to pursue a deal with Bear Stearns, Mr. Lewis shot back: “I’ve had all the fun I can stand in investment banking.” -- Wire services, September 2007.

============================
To: Ken Lewis
From: Jeremy Garlington

While you're soaking up status as Wall Street's newest darling, we thought we would offer up a sobering reminder that seems lost every time a big deal comes calling.

More than half of all mergers and acquisitions fail (percentage higher -- verify with consulting and strategy advisory firms who publish endlessly on this subject) due to what's commonly known as culture clash.

We highly recommend you throw out the scripts and platitudes about "synergies and scale." It's time to get real. Here's a primer:

*For all those valuable existing wealth managers under the U.S. Trust umbrella that you purchased from Charles Schwab, what does the absorption of Merrill Lynch's wealth management unit mean to them? What can they expect to gain or lose?

*Will the collective businesses under the Bank of America be compensated in identical fashion? Or will there be different scales for different folks? More specifically, will a loan officer in Crawford, Texas (not named Bush) be incentivized to do his job the same way a wealth manager gets paid in Cleveland?

*How do the assets and liabilities of Countrywide and Merrill Lynch intersect? Are there economies of scale or redundant debt vehicles that need to be written down? Better yet, is there a vehicle that you can ride between them before they go at each other's throats?

*Who is going to lead the combined operations of the combined entities? You? Someone new? Better yet, who is qualified to do so? A bunch of retail bankers who previously lost their shirts in investment banking, or new whiz kid managers and leaders from other industries?

Good luck with getting to the bottom of these questions, the key to being in the ballpark of successful integration. This challenge obviously will require all the collective ability you can muster. We will be watching closely for an outcome that demonstrates reality-based leadership.

Oh, and one last thing: Are you sure your board, or is your board sure, that this deal is in the best long-term interests of shareholders? Paying 70 percent above market value begs an answer.

# # #

Life after Linked In?

Here's a link to a conference we're taking part in this week: http://www.onrec.com/conferences/090908/schedule.html

Our session, scheduled as the conference's final panel discussion, is titled, "Recruiting and Social Media...Interactive dialogue with the experts." This probably should be re-named, "The Business of Social Media: What's Worked vs. What Hasn't and Why." But we digress.

The only real clear takeaway is the widespread use of Linked In, the networking tool that a majority of business people over 30 and under 50 now use.

If Linked In represents social media's first generation, then blogs and micro blogs, such as Twitter, represent the second generation. Of course, that assumes blogs don't blow up based on the backlash being created in the presidential race and micro blogs such as Twitter don't find the dot.com ditch.

It's still not clear yet who will shape a third or next generation. Here's hoping other panelists and audience members can offer up an answer.

# # #

In one door, out another

On the surface, the two don't appear to be connected. Lou Gerstner's decision to step down as chairman of The Carlyle Group comes as little surprise, while serial private equity executive Greg Brennerman's move to a smaller fund leaves even less suspense.

Do they know something we don't? It's likely that they do but don't tell them that. We can't take anymore hubris than what already exists.

With private equity deal flow down, premium on proven niche has increased. So has getting back to what business is about vs. what some PEGs have tried to dictate.

Business leadership is about finding ways to grow, and if that can't be done right way, getting into future position to do so. Private equity investors' role is to squeeze every dime or nickel out of a business -- often to the point where it's impossible to invest in what needs to be invested in to grow. They often want quick fixes, such as big name talent, when building an organization is the best solution.

We're not suggesting that every PEG has this philosophy or that some don't strike a balance. Certainly there are fund investors taking a longer view.

The larger net effect, however, has produced an adverse impact on the marketplace. It's transactions at all costs, or in this case, fewer costs and fewer deals. Relationships and building for tomorrow have been replaced by greed and squeezing margins for short-term ownership reward. Some may say that's the name of the business game. But we're not buying it and suspect others who have led businesses through ups and downs aren't buying it either.

Maybe Gerstner will treat us to his views on private equity sometime soon. "Who Says Elephants Can't Dance?" remains must reading for any aspiring leader.

# # #

Public apology, take seventeen

John Edwards' mea culpa should lock the door shut on a 24-7 culture phenomena otherwise known as the public apology spectacle, take seventeen.

We're a nation of many things, but empty apologists, we are not. In Edwards' case, his attempt to come clean came after years of lies, millions of dollars in hush money and potential violations of federal election law. Sorry, dude, but the time to apologize came and went awhile ago. What's really scary here is how this same individual came close to becoming vice president and that his wife, a lawyer in remission with cancer, felt compelled to defend her husband's latest indiscretions. Truly amazing. We have now arrived at full scale public delusion.

Some private sector leaders probably look at John Edwards and say to themselves, "oh, he's in the public eye, that's why he got caught." While that may be technically true, it's misguided rationalization that needs no projection. YouTube will gladly show what you think no one else is watching -- no matter whether you're a CEO of a publicly traded company or leader of a small town school system. If that doesn't make the case, then maybe a passage from the New Testament will: Nothing is hidden that will not be revealed, and nothing is secret that will not be known and come out into the open. (Luke 8:17)

Leaders, if you do something that requires saying you're sorry, please do so privately and then exit the stage gracefully without further word. "This is a private matter" has a much better ring these days than "I'm sorry, but let me tell you what really happened."

# # #

Failing Up

There's a bad rash spreading right now in leadership circles. It's called "Failing Up." Beware. Unfortunately, or fortunately depending on your view, there's nothing to keep the rash from spreading.

Our top aggravator is Erin Callan, the maligned former CFO of Lehman, who last week joined Credit Suisse where she'll be in charge of hedge fund operations. Now there's a transition to write home about. "Look Ma, one bank fired me but another just hired me. Ain't life grand?"

Next is the entire enterprise called Citigroup or Citibank or whatever it operates as now (Citi-Sovereign?) You know you're living right when you report a $2.3 billion loss and somehow that leads to a market bump because performance came in above expectations. Yes, these are tough times on Wall Street. We get it. But why does the bar keep dropping lower and lower? Oh, that's right. No real bottom to the market has formed yet.

Out in the, ahem, Real World (somewhere between Wall Street and Main Street), Failing Up features a raft of characters trying to paddle their way through the current mess. These include but aren't limited to:

• Rick Wagoner, CEO, GM. Is it just us, or this guy so toast that no one will state the obvious?
• Lanty Smith, Chairman, Wachovia. While some may say this selection is unfair, here's what needs to be answered but rarely ever is. Who was guiding the board when all the bad decision-making was taking place that led to the current huge losses? Who was supposed to hold management accountable to their actions? Why did it take so long to see the obvious, which is now playing out like another bad movie that we've already seen? Find some answers and you, too, can fill in the "Failing Up" puzzle.
• Patricia Russo, Alcatel-Lucent. Now here's an example of how to fail up and stay there for awhile. This tenure is downright amazing by modern CEO performance standards. Full disclosure: Russo is the only survivor from a previous installment of TGR's "Watch to Oust" list. Congratulations!
• Any and all so called leader that is either currently or formerly associated with Fannie Mae, Freddie Mac, Sallie Mae and Smelly Hay. Ok, sorry, that last entity was fake for comic relief. To understand scope of the mortgage mess and the government's implicit role in propping up lenders requires suspension of free market beliefs. Currently proposed congressional legislation is beyond fleecing; it's more like robbing the last guy standing, Us!
  

Anyone who would like to challenge this last point or any of other content is welcome to do so in the comments section. We always welcome counterpoints.

In the meantime, watch for signs of a bottom in the leadership market. That's right. The key word is "watch." Much like what's going on in the financial markets, we're not saying one has formed yet or has even shown signs (unlike another CEO who thinks one is "close." Whatever.)

When a bottom does form, look for boards to start accelerating their change and succession plans.

# # #

Three Cheers for Steenland!

It's a rare moment when a corporate CEO shows public conviction of his or her beliefs. So we're delighted to recognize Northwest CEO Doug Steenland and his testimony on oil prices held this week on Capitol Hill. To quote directly from today's Wall Street Journal, A-4 for you old school print readers:

...Steenland endorsed banning pension funds and other institutional investors from future exchanges, and he urged lawmakers to close loopholes that allow traders to dodge regulation by trading on foreign exchanges or over the counter.

"Addressing excessive speculation is the most immediate remedy Congress could deliver," Mr. Steenland said.

Amen, brother. That move and a little more spine directed at our OPEC friends would go a long way in helping Joe and Shirley Six-Pack. Too bad it takes the courage of a business leader to bring this issue to light among our so called elected representatives. We won't even go there on the two remaining candidates for president.

In fairness, however, Steenland is somewhat of a lame duck having sold the Northwest farm to Delta. He and the airline business also are being hit particularly hard on this issue, while other commodity producers such Monsanto reap profits from higher grain prices.

But it's still significant to note these rare public leadership moments from CEOs. Particularly on an issue as complex as energy.

Thank you, Mr. Steenland, for going where no one else seemed able to go.

# # #

The Big Brown Rule

According to an anonymous source, Wachovia Corp. will select privately held search firm Spencer Stuart to lead an external CEO search. The bank cited the firm's strong credentials in banking and current track record helping other stalwarts such as Delta and Yahoo.*

"The Garlington Report" also has learned that this move will not only produce a slate of eminently qualified candidates, but it will also do absolutely nothing to improve the bank's lack of leadership and broken culture. Not to mention complete inability to transfer new or even old ideas into new practices.

Here's why:

• Insular board won't address what needs to be addressed. Instead they will try to anoint a Messiah that doesn't exist, thanks to a willing Search firm eager to collect a fee.
• Down market environments that haven't bottomed yet aren't the time to make change. Particularly ones where bad acquisitions have impaired ability to see straight, much less drive.
• No one is going to spin-off AG Edwards and let them operate independently like they should have been all along. As to all that sub-prime junk, well, live and learn.
• Nothing ever changes inside banks where change is a foreign concept. Always has been, always will be.

Whether Wachovia selects a search firm or which firm it is has nothing to do with the core issue. Same old shoes lining up in the same old closets. Just move the chairs around, guys. Save yourselves some time.

Look at this way: If you don't have effective leadership heading into a fire, chances are you're going to burn for a long time -- or at least until the flames get doused. Even after the fire burns out it generally takes a long time to see anything new.

# # #

*Note: The lead graph can neither be confirmed nor denied. Simply blogging conjecture. Its content doesn't matter anyway so consider it a play on the horse race that so many others seem consumed by.

We're tagging it "The Big Brown rule" for lack of a better connection. This refers to the Triple Crown contender who didn't want to run last Saturday in the Belmont Stakes after winning the Preakness and Kentucky Derby. Wachovia wishes they were that lucky.

HD: Where's the real fix?

'Dark night of change.' 'End is near when memories outlive dreams.' 'Best of times, worst of times.'

Shall we continue or has the cliche meter clicked loudly enough already? For more passive business news readers, all of the previous phrases have now been offered by Home Depot's executive brass so far this summer.

Sorry, but cute little quotables have a way of obfuscating a larger issue.

Someone needs to step up and answer two main questions: When the housing market bottoms, which it will, where will the company be? What are the number one, number two and number three things that you're doing to make sure equity value returns to the bottom line?

Time to turn the page, folks. Present a real vision. Quit blaming the market. Leadership is about the future, not the past. Getting back to "the Home Depot culture" is impossible.

Or to use a jingle from an old preamble: Yesterday is gone forever; tomorrow is yet to be. But where are you going to be? Fully mature, trying to find original DNA or re-positioned to win the do-it-yourself market at all costs?

Message to the board: If you can't answer these questions publicly or find leaders who can, then it's time to evaluate whether you're headed in the right direction. Plain and simple.

Or keeping with the subject's affinity to quip, "Toto, we're not in Kansas anymore."

# # #

Where's the weather chief?

Editorial

Crises have a way of revealing character, and the current firestorm over sexual harrassment at The Weather Channel is no exception.

We are now in Day Two of the story, which you can gather from other other reporting sources, such as http://www.ajc.com/metro/content/metro/stories/2008/05/07/channel_0508.html?cxntlid=homepage_tab_newstab. And still we have not heard from the company's top leader, Debra Wilson. Instead a range of muted responses have been offered through lower ranking employees.

Darts for a lack of visible leadership at the top. The Weather Channel is arguably Atlanta's, ahem, hottest cable brand (ok, sorry for the weather reference.) As they pursue a sale, it's clear that the so called corporate police have shuttered any attempts to calm their constituencies, including the thousands of female employees who must be wondering where the company's female CEO stands on what is now a heated public issue. Speaking of heat, we are often treated to their founder's views on global warming only to be left wondering where the company stands. We sincerely hope a pattern isn't forming here.

Does anyone else see the irony here? Where is the CEO? Granted this type of situaton is far too common with fear of reprisal on everyone's mind. It's a scene that repeatedly gets played out by large companies trying to shill themselves out to potential suitors. Little do they realize how much is lost every time a credible voice fails to step and lead on issues that people care about.

# # #

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?

# # #

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.

# # #

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!

# # #

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."

Timeless Classic

Sometimes when you're beginning anew, it helps to consult pages from the past.

Following are excerpts from Stephen Covey's "Seven Habits of Highly Successful People," which was first published in 1989. The excerpts are not only applicable today but also quite telling about how much work remains to be done defining and applying leadership.

In many ways, Covey's original a-ha moments are just now beginning to play out on a wide scale. Leaders, companies and boards, beware. Keep ignoring these basics and be prepared to face the consequences.

"...If I try to use human influence strategies and tactics of how to get other people to do what I want, to work better, to be more motivated, to like me and each other -- while my character is fundamentally flawed, marked by duplicity and insincerity -- then in the long run, I cannot be successful. My duplicity will breed distrust, and everything I do -- even using so called human relations techniques -- will be perceived as manipulative. It simply makes no difference how good the rhetoric is or even how good the intentions are, if there is little or no trust, there is no foundation for permanent success. Only basic goodness gives life to technique.

To focus on technique is like cramming your way through school. You sometimes get by, perhaps even get good grades, but if you don't pay the price day in and day out, you never achieve true mastery of the subjects you study or develop an educated mind...

Many people with secondary greatness, that is, social recognition for their talents, lack primary greatness or goodness in their character. Sooner or later, you'll see this in every long-term relationship they have. It is character that communicates most eloquently. Then there are situations where people have character but lack communication skills and that affects relationships as well. But the effects are secondary.

...What we are communicates far more eloquently than anything we say or do. We all know it. There are people we trust absolutely because we know their character. Whether they're eloquent or not, whether they have human relations techniques or not, we trust them and work successfully with them.

In the words of William George Jordan, "Into the hands of every individual is given marvelous power for good or evil -- the silent, unconscious, unseen influence of his (or her) life. This is simply the constant radiation of what man (or woman) really is, not what he (or she) pretends to be."

Fast forward to today. Try applying this timeless summary to your own behavior and spheres of influence. If that's too difficult, then use these words as criteria to evaluate the next leadership crisis that lands in the news. Chances are the aforementioned qualities will be either on full display or entirely absent.

True or False? Leaders, take the test

Following summarizes the leading true/false rules straight out of the executive leadership lab. From the candidate and search points of view. Ranked in order of most commonly heard, experienced and/or ill conceived.
1) Executive recruiters are my best source of career advice. False. Recruiters work mostly for companies, not individuals. While some do a better job helping individuals than others, their interests are not generally aligned with your own. Personal and professional networks account for more than 60 percent of all new jobs, while recruiters represent six to eight percent. As clear as this to some, actions tend to suggest otherwise. Anyone who says they work the client and talent side equally simply isn't telling the truth.
2) What I've accomplished to date will always apply. True with a caveat. Best summed up by the title of guru coach Marshall Goldsmith's latest book, "What Got You Here Won't Get You There." Everyone has special talents and accomplishments. Key is making sure those apply to potential new positions first, our own egos second. Fundamental rule but grossly overlooked in our transaction heavy culture.
3) What I do or offer matters more than who I am. Increasingly false. Particularly at the CEO and board levels. Character counts. According to another guru, Stephen Covey, nearly three-quarters of all leadership failures can be attributed to character flaws. That percentage is based on empirical research of more than 50,000 subjects cited in "The 8th Habit." Please don't make us cite the page number.
4.) Work with passion is a passing fad. False. Remember the old saying, "do something you love and you'll never have to work a day in your life?" Dreamy yet true over time. All the great ones exemplify work with passion. They don't necessarily love their jobs every day, but they generally do something that they like and/or believe in a majority of the time.
5.) The law of reciprocity applies more than half the time. False. A personal favorite. Taught at ad nauseam in the management schools and seminars, this rule is only true 20 to 30 percent of the time, not 50 percent, the generally cited figure. If you doubt this point, then consult any major figure who has to produce or generate revenue tied to himself or herself. The honest ones will vouch.

The New Economy is Here. Oh, wait, not that New Economy.

There are always more questions than answers for the thoughtfully uncertain. Lately, however, even that truism is out of kilter.

CEOs and boards are under attack. We get it. But why does that mean leaders have to fall back on their heels? Is it because they’re scared, paranoid, beholden to investors or all of the above? The Cs have every right to be scared but running scared is not an option. We desperately need more to step up and act more boldly and broadly. Rolling over isn’t going to cut it nor is "going green," the latest bandwagon movement.

If investors don’t hold under-performing companies accountable, who will? Self-governing boards? Government? Management? Ok, this isn’t a trick question. None of the above. Investors and those who genuinely want to see more value are the only ones with an ability to impact change. Minus a few exceptions, companies and their managers can’t be left to their own devices. And that’s just it. Managers don’t always make leaders despite off-the-shelf training tools and off-site pow-wows.

Is a PEG coming to a company near you? Major private equity groups, or PEGs for short, are scouring the pads for businesses flush with cash flow that they can load up with debt and then turn around and sell. That much we know. What we don’t really know is how they do it entirely. Largely because they’re private. Maybe that’s a good thing? For more on the talent repercussions, please visit http://www.pointofviewllc.com/views_and_news.html.

Recession coming or merely another blip and dip in the gyrating global economy? Who knows. What we do know: The housing industry has a long way to go before hitting complete bottom, consumer spending continues to see-saw and the U.S. personal savings rate is negative. Employment, a lagging indicator, remains strong as does the stock market, a leading indicator. That combo. normally bodes well for growth but evidently not always. Could it be...we're in The New Economy that so many yammered about back during the Bubble?

April Pointe

Language and its ugly step cousin, communication, represent a true Catch 22. Never before have so many waxed on about the importance of these areas. Never before have so many come up short. Sorry, but we have to ask why?

The first reason is obvious. Effective use of language is not openly rewarded in the executive marketplace. It's one of those traits that everyone is supposed to have (insert the term "commodity") but so few do (insert "value.") The only time language and communication are rewarded usually comes at the ninth hour when someone wakes up to realize something has to be done.

The second reason is language and communication aren't taught effectively in schools. Colleges, b-schools, grammar schools, you name it. Few remain in command. When Strunk and White wrote their classics on style and grammar, not even these two masters could have predicted how email and the Internet would demote the value of language.

The next reason, and last one for Pointe purposes, is language and other matters of the executive brain have been largely outsourced to consultants, underpaid writers and other so called literary types called ghost writers, my personal favorite. Even political operatives such as Frank Luntz have emerged as experts. Too bad he couldn't have had more influence with the Bush administration. "Surge" ranks as one of the all-time worst word choices at a most inopportune time. On the other side, "war is lost" may be direct, but it's not what most would call a wise choice of terms.

Leaders, quit ignoring language at your peril. Read, write, listen and/or go to a seminar. Stop and think clearly before the next communication. Get outside help if you must. Your audiences may not clap loudly, but they will welcome continuous improvement.

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Hypocrisy Is Alive and Well

It’s fairly safe to conclude that Don Imus and Steve Heyer aren’t boyhood chums. Imus needs no introduction unless you’ve been under a rock for the past five days.

Steve Heyer is the outgoing CEO of Starwood Hotels. He was forced to resign recently after an anonymous letter was sent to the board accusing him of indiscriminate behavior with female employees.

Moving intros. aside, here’s why these two are worth examining in a leadership context.

Institutions dependent on the almighty dollar – in these cases, boards and advertisers – nearly always come off as hypocritical when controversy surfaces. The normal modus operandi is outrage first, action second. The action, however, nearly always exceeds the crime, particularly when the institution is caught red handed for having it both ways.

Don Imus generates $50 million in revenue for NBC and CBS radio. Yet one slip up, albeit major, now threatens to derail a 35-year career. Largely because, despite how it may seem on the surface, money comes first, principle second. Watching the firestorm erupt, you would have thought Don himself had burned a cross in Al Sharpton’s yard.

This is no defense of what Imus said. It was wrong. What makes it hypocritical is how advertisers are bailing out after benefiting for years off his routine, which featured far raunchier and incendiary comments than “nappy headed hos.”

Turning to another highly charged environment, corporate board rooms, the ouster of Steve Heyer confirmed what his track record had left before. Hard charging, acerbic, controversial and dismissing the status quo.

When an anonymous letter accusing him of misconduct surfaced, Heyer either decided to leave the company or was forced to resign, depending on how you want to read the situation. Perception ruled again with an iron fist. You’re guilty. And away he went.

Simple question: Why would the board hire someone who was essentially thrown out of his previous two jobs and then act surprised when controversy surfaced? Answer: Because when you’re fighting the “war for talent,” you’ll do anything to land a star performer who can generate higher returns, which Heyer did. Again, greed first, principle second.

Imus and Heyer are just part and parcel of this trend, which unfortunately is more of a continuous movie reel than it is an issue anyone is willing to address, much less accept.

# # #

Dig deeper

Two crises, same common thread: Business leadership under attack.

In one corner of the ring punching and jabbing like life depends on it is David Neeleman, CEO of JetBlue Airlines. You would be, too, if your business had completely broken down for the world to see on Lover's Day, or what some have quickly labeled the Valentine's Day Massacre. "We've been JetBlued" has now entered the traveler lexicon. But that's another story.

In the other corner, not really jabbing but taking wide swings is Ken Lewis, CEO, Bank of America, which has been singled out for peddling credit cards to illegal immigrants. The company would tell you otherwise. What made the program highly controversial were 24 percent APR interest rates on cards marketed in Los Angeles' Hispanic community. Whether the immigrants were legal or illegal misses the larger business point.

The easy conclusion to draw here is obvious: CEOs under attack for their company's performance and bad behavior. How each has handled their respective crises, however, bears further examination. So do exploring the sum of their experiences, the forgotten variable often overlooked when reporting about monolithic companies.

Neeleman is a devout Mormon with nine children. His first experience in business was observing his grandfather's convenience store, where if a product sold out, he would run down to the nearest supermarket and buy more of the item in demand. A self described sufferer of Attention Deficit Disorder (ADD), Neeleman dropped out of a college to start a travel agency. He then founded an airline which was subsequently sold to Southwest Airlines whose CEO at the time was Herb Kelleher, an entrepreneurial legend in his own right. According to a previously published profile in Fortune magazine, Neeleman was fired after about five months on the job. By the time he started JetBlue in 1999, it's safe to say that he had experienced just about every up and down (no pun intended) an airline executive could experience.

Now juxtapose this personal history with Ken Lewis, the iron clad CEO of Bank of America, which has witnessed incredible growth under his watch. Lewis joined what was then NCNB in 1969 as a credit analyst and worked his way up to the top job through grit and determination over 30 years. No small feat in its own right.

Ok, interesting personal histories. But what's the point? We are framed by influences, events and experiences that create who we are. Leaders, however, are held to a higher standard. Hence the term, “leadership.” It's their responsibility to help others adapt and respond to change, which often rears its ugly side through crises.

Applying this rule to the Neeleman and Lewis examples, who do you think is more suited to lead?

The short answer is we won't know for awhile. JetBlue has to re-earn the trust and confidence of customers, which is no easy task with or without a "bill or rights." Bank of America seems to have weathered its storm despite not appearing to be forthright and visible on the controversial credit program.

Neeleman has chosen a star-driven public profile, appearing on the David Letterman show and in other countless formats to answer criticism. Other than an op-ed on the Wall Street Journal’s sympathetic editorial page, Lewis has remained relatively tight lipped like a good banker always is taught to be. Different strokes for different folks. Savvy public relations can only provide air cover for so long.

The harder answer to the leadership suitability question generally requires digging deeper beyond the surface, which regrettably, our attention spans do not allow. Whether Neeleman and Lewis meet some unknown threshold may make good news, but it doesn't produce any lasting lesson. A far more productive exercise would be if more business leaders could apply their core values, assuming they have some, to the issues at hand. Then we might get somewhere on the trust and confidence meter.

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In the News

Following is an excerpt from a recent USA Today piece that quotes yours truly. For the full article, please go to http://www.usatoday.com/money/companies/management/2007-02-02-comeback-ceos-usat_x.htm. Dell is more about namesakes reclaiming their brand than boomerang CEOs. But why quibble.
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Dell joins ranks of once-hot trend: Boomerang CEOs

By Del Jones, USA TODAY (All Rights Reserved)

Does Michael Dell signal a new era of the "comeback kid?"

When he was rehired late Wednesday, Dell became the first so-called boomerang CEO to be brought back to rescue a Fortune 500 company since 2005. Dell, 41 and founder of the PC maker (DELL), replaced Kevin Rollins, 54, who was Dell's hand-picked replacement two years ago.

Boomerangs used to be common. From 1999-2003 an average of 10 former CEOs were brought back each year at the largest 1,500 companies, so many that it prompted Ohio State assistant finance professor Rudi Fahlenbrach to co-author a study published last November called "The Market for Comeback CEOs."

But there were no boomerang CEOs at Fortune 500 companies in 2006 and just two in 2005 (at TJX Cos. and First Data (FDC)), says Leslie Gaines-Ross, chief reputation strategist at Weber Shandwick...

Michael Dell is a true comeback kid at one year younger than Steve Jobs when Jobs returned to Apple in 1997 to begin his iPod curtain call and oversee a stock rise approaching 2,000%. Jobs is also an atypical boomerang CEO because most leave again within three years, or just long enough to right the company and line up proper succession planning.

It won't be easy for Michael Dell to mimic Jobs, says Jeremy Garlington, who runs an executive leadership consultancy. Unlike Apple, Dell is in an industry "racing to the bottom of the commodity barrel. No one will bet against Michael Dell, but even he would have to admit that a turnaround could take a long time," Garlington says...

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Earth to Michael Dell and Phil Kent

Ok, one name is quite familiar and speaks for itself. Michael Dell will have his hands full trying to turn Dell Computer around. The Apple Steve Jobs analogy is apt but lacks one key detail: Jobs didn't make it all the way back the first time around. It was only later on a second better timed tour of duty that he got Apple back on track. Does anyone remember John Sculley?

Phil Kent is the CEO of Turner Broadcasting, which runs The Cartoon Network. Their promotional brilliance around a sketch called, "Aqua Teen Hunger Force," (no, we're not making this up) caused quite the terror shock yesterday in Boston. Some light boards featuring the characters were mistaken for bomb devices by local authorities. Springing into action, Kent and Turner issued a long winded statement apologizing for the screw-up, which was obviously bungled by a third-party marketing vendor that no one was managing properly. The vendor's employee mug on cable last night being led out of his residence said it all.

It's an odd situation to say the least, but anyone who recalls the H-P spying case from last year will remember how the same type of vendor arrangement was blamed at the outset. Different issue entirely with thankfully less harmful of an outcome. If Kent is with it, he'll go on "The Comedy Show" with Jon Stewart and the Boston airwaves and take his lumps. No way out of this one without some action, sincerity and self deprecating humor that toes the line. One last question: Did anyone think about picking up the phone and calling the Boston police chief to apologize and lend support? These "devices" were evidently in place for weeks, according to callers to a local radio call-in show. Amazing...

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The HD Roller Coaster

Get ready for a wild ride following last week's abrupt resignation of Bob Nardelli as Chairman and CEO of Home Depot. This one makes no real business sense so chalk it up to the powerful personalities involved. Hard to see how the "new guy" fits over the long term...

Following is an excerpt from last week's mainstream coverage (Atlanta Journal & Constitution, 1/4/07):

Management experts say Nardelli's driven personality overshadowed his accomplishments at Home Depot. Sales doubled under Nardelli, to more than $81.5 billion, and earnings per share rose more than 140 percent.

"At some point, he turned himself into the story, and there's an old rule in crisis situations: You don't let yourself become the story," said Jeremy Garlington, an Atlanta-based executive coach and managing partner of Point of View LLC. "Under Nardelli, Home Depot had record profits and record revenues, but the stock price was stagnant. It doesn't make sense from a business standpoint ... but business often comes down to personalities and relationships, not figures."

Two Quintessential Americans, One Common Theme

The Godfather of Soul and the Accidental President may not have had much in common, but both will be remembered for their unique contribution to pop culture and leadership. Can you say the same?

Legacies have a way of separating the truly thoughtful leader from the not so thoughtful. Lasting, living and otherwise. How we're remembered is always impacted by what we're doing in the present -- even when the outcome is not entirely clear.

Here's an excerpt from Gerald Ford's strongest political foe turned world ambassador, former President Jimmy Carter: "An outstanding statesman, he wisely chose the path of healing during a deeply divisive time in our nation's history...One of the most admirable public servants and human beings I've ever known."

That may be an understatement. Ford will be most recalled not for falling down the stairs, which he did, but for pardoning Richard Nixon, which closed the final chapter of Watergate or so it seemed at the time.

During the same era, James Brown, who died on Christmas Day, was lighting it up as a soul and funk singer. His greatest legacy may best be summarized through the song lyric, "I Feel Good." Or Get up...Get on Up."

Get on Up, indeed. Leaders everywhere should heed this call and determine what they want their legacy to be -- preferably before it's handed to them.

'Tis the Season

'Tis the season to evaluate and plan. Here are 10 tomes to help advance the process:
1. Clutter. Get rid of it. Any and all extraneous material or paper. Chances are there's another copy somewhere anyway.
2. Eliminate cliches once and for all. "Talent management" seems to have pushed aside "leadership development" to no avail. "War for talent" should be erased for eternity. But that's another story.
3. Coaching vs. advising. It seems as though everyone is a coach these days. Sigh. How many can honestly say that they consistently provide selfless advice and service? Tough question with no perfect answers.
4. Don't discount 2007 as an off election year. It's make or break time on a host of matters, most of which centers around a War that no one wants to acknowledge but wants to go away.
5. Change or Else. It's our adopted theme for the coming year so please hold us to the fire. Right now it's somewhere between a seminar/speaking topic and new partnerships and affiliations. Stay tuned for more in the coming year.
6. Dancing with the Transformation Stars. We're desperately in search of figures, executives, etc. who have demonstrated successful transformation from one profession or station to another entirely new field or endeavor. Key criteria: They lived to tell about it.
7. True success. Hint: Try defining success on your own terms and see what you come up with. Answers may startle you.
8. Embrace fears or insecurities instead of running from them. Easier said than done but critical. Far too few practice this one.
9. Laugh, think and cry. The late great Jimmy Valvano (former basketball coach for N.C. State University for you non-sports types) had it right with his daily motto: Laugh, think and cry and your day will be complete. Tissues, anyone?
10. Finally, instead of worn out resolutions, try this exercise: Where are you going to create the most value next year? For whom and with whom?

Attention: Executives in Transition

If you're someone going through career or job change (hint: all of us at any given time), following are some not so subtle tips on how to manage transition:

1.) Clarity is leadership. Be absolutely clear with your intentions even if you don't know what they are. Taking time off? Fine, do so with a stated purpose and specific time frame. Periods of transition are the last time to be unclear about what you're trying to accomplish.
2.) Lose the money obsession. Now, this isn't to say leave money on the table, or in BellSouth's case, forgo a lucrative severance package for an unproven opportunity. That's not the point. De-emphasize money on your list of considerations. Most motivation driven solely by money ends up wreaking havoc later.
3.) Help and serve others. The natural tendency during uncertainty is to focus on Self at all costs. But this is bone-headed for multiple reasons. Help others, and new paths will unwind. Don't become over-isolated or consumed with reflection.
4.) Passion and purpose. Passion and purpose are two of the most widely cited yet misunderstood variables of job and career change. Yes, you need to get excited about what you do everyday. But that doesn't mean passion is a cure all. "Life's purpose" also is a career myth. What we're doing today is purpose for all intents and purposes (no pun intended.)
5.) Career? What career? Consult any successful figure. Chances are they'll tell you while they may have had a career in the conventional sense, it never seemed that way because they were pursuing something much more meaningful.

These tips are brought to you by Jeremy Garlington, managing partner of Point of View, LLC. For more information, please visit www.pointofviewllc.com or reach him directly at 404-606-0637. Thanks for reading. Good luck managing your transition.

Hot Air

So it's August, the doggiest days of summer. Many have either been on vacation or are headed that way. Here's an advisory: Beware of hot air, the leadership kind. At last check, there was a lot of talking going on without much action.

First, however, we have to recognize the grand exceptor, Warren Buffett, for his gift to the Gates Foundation. It is absolutely without compare. Buffett's stamp of leadership was taking the action without much fanfare, while at the same time, demonstrating wit, self awareness and humor.

The lesser mortal CEO crowd unfortunately can't say the same. Whether it's back dating or springing forward options, executive pay hangs around their neck like an albatross. But instead of thinking through various dimensions, some fire back with inane comments such as these: "We have an enterprise that stands tall among corporations here in America...The last thing you want to do is withdraw into a fetal position on some of this stuff."

Fair enough. But leaders don't spit out defensive speak. They calibrate and act according to their audiences' will, which is fed up with single dimensionality. If you don't mean what you say or aren't willing to accept views from a multitude of voices, then shut thy mouth. We won't even go there with politicians. To borrow some Yoda speak, political leadership in an election year, you will not find. Leadership may be a journey. But it's not an bottomless pit where words replace action. Never has, never will.

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Upcoming seminar

Here's an upcoming audio seminar that some may want to tune into:

Brand 101: What Every Executive Recruiter Should Know
A 90-Minute Audio Conference Featuring Jeremy Garlington,
Managing Partner, Point of View LLC
Friday, August 18, 2006 – 1 P.M. EST
Register

Are you a brand? The harsh truth is most individual recruiters are not brands, according to the term's conventional meaning. Branding, or the act of creating brand, has shoved aside the process' true value, which is defining and keeping a unique promise in clients' hearts and minds.

Join Kennedy Information and presenter Jeremy Garlington for this seminar and explore how brand building can be properly integrated within standard business and search practices.

Designed specifically for individual leaders, content will address the intersections between personal leadership and organizational brand.

Knowledge and insights you'll take back to your organization:
*Brand vs. branding – what the terms really mean
*What we can learn from industry leaders
*How to create differentiation, with yourself, practice and firm
*Proven techniques and tips for establishing and communicating a brand promise
*The dos and don'ts of effective brand building

Experienced search consultants, or those aspiring to reach new heights, will discover new ways of thinking – both about themselves and their firms.

Jeremy Garlington – Managing Partner, Point of View LLC

Jeremy Garlington is an executive coach and branding consultant who specializes in working with retained executive recruiters and search firms. He currently serves as managing partner of Point of View, LLC, an executive leadership consultancy in Atlanta.

Know (and Be) Yourself

When the hit TV show, “American Idol” crowned its 2006 winner last night, millions of viewers suddenly embraced a somewhat awkward contestant named Taylor Hicks. The premature gray haired 30-something from Birmingham, Ala., had not only survived the competition, but he had won after 63 million votes being cast.

What few have been willing to admit, however, is how Hicks represented something alien from the image that the hit show had created through its five-year run.

Here was a relative country boy, older than most contestants brandishing about, letting out rebel yells and one line chants called, “The Soul Patrol.” Judges liked him, although Simon Cowell looked incredulous at times about Hicks’ ability to advance. Late night comedians had a field day when it looked as though Hicks was going to make the final round.

But what made this unlikely winner stand out from the competition? Hicks did nothing more than be himself. He sang songs that he knew, felt comfortable doing and when he stumbled, he simply admitted to it and kept on going. Hicks’ self deprecating style soon endeared him to fans everywhere, and his following ultimately made the difference in winning the contest.

What do figures such as Taylor Hicks and visible business leaders have in common? Well, for starters, scrutiny. Hicks withstood weeks of heady competition and fishbowl review on national television. Viewers watched for any potential strength or flaw that could affect his standing. Questions such as, “can this guy really be the next American Idol?” passed through more than one conversation, blog or other shared communication.

In the end, Hicks and his Soul Patrol emerged victorious, while the rest of us remained mere mortals.

The familiar saying that first you have to know yourself to be a winning leader has never been truer. But there’s a subtle shift going on. Know yourself is only half the battle. The other more critical half is be yourself. At all times and especially when others are watching.

Rants and Raves

Rant number one goes to dishonesty in the immigration debate, an issue that affects everyone so much that no one can adequately address, much less do anything about. Terms such as “amnesty” and “illegal alien” have been spun out of control. Business leaders would be wise to step up with a stronger voice. But they’re in the back seat. Perhaps it’s a La Katrina giving hangover?

Rant number two goes to executive pay. This issue registers off the charts on opinion surveys, yet no one has a credible viewpoint on what can be done. Vanguard founder J. Bogel comes close, but isn't he a big money man? Someone from within the governance complex, preferably not a shareholder shill, needs to shed light on how to find more balance between pay for performance and pay for failure. It's difficult to see how self governing boards can address the issue adequately on their own.

Now the good stuff. Here are several raves that exemplify effective leadership:

Warren Buffett for stepping off the Coke board while proposing that director pay be strictly based on the company's performance. Odd nod since members are already multi-millionaires. But solid move nonetheless. We will hold off on questions about his purchase of Russell Athletic...

CNN's Lou Dobbs. Like or loathe him, Dobbs has unmasked hypocrisy in the immigration debate. Steam comes out of his ears some nights. Off-the-charts point of view...

Jamie Dimon, J.P. Morgan Chase. Wall Street dudes haven’t made many most admired lists in recent years, but this guy looks and sounds real. Anyone who could put his dukes up in a cover shot for Fortune magazine (April 3, p. 54) gets a rave on hubris alone...

Charles Brewer, original Mindspring founder now chairman of Green Street Properties and leader of New Urbanism. Leadership, transformation, values-driven. Need we say more?

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Who are YOU?!?

In deference to the legendary rock band with similar lyrics, the question isn’t, WHO are You? It’s more about that dreaded first impression remark from someone who doesn’t know you: Who are YOU?!?

Personal and professional journeys are pre-occupied with trying to instill a sense of who we are, both within ourselves and others. We all want the same thing: To be recognized, known and/or recalled for what we want others to know us by.

But there’s a catch. We never fully get to answer Who are You? The audience does.

Comedian/actor Albert Brooks, not to be confused with Mel Brooks, says that even after 25+ years of performing comedy, he doesn’t know what makes people laugh other than the unexpected. Brooks’ newest work, “Looking for Comedy in the Muslim World,” cuts through the seriousness of global politics with biting humor to connect with everyday hearts and minds in India.

Howard Stern, the new king of satellite radio, personifies the saying, “true geniuses are misunderstood.” After his latest deal with Sirius, it may need to read ‘performing geniuses are misunderstood all the way to the bank.’ Say what you want about Stern, FCC standards and the chimp- like state of radio. Fact remains that he has created one of the largest, most loyal followings ever achieved by a single individual in any field.

Even the Godfather movie series has its own special stamp called The Code of Silence. Good or evil, pale or bloody, you knew where the family stood at all times. There wasn’t anything morally upright about what transpired, yet clarity was always achieved.

Corporate and business leaders cling to the notion that influence is determined strictly by pulling their own chosen control levers. But that’s simply not true, and it may never have been. Throw in a crisis and this axiom moves even further away from reality.

Similar to performing artists, business leaders are only as good as their audience. If no one believes what you’re saying, nothing of lasting value will be created. It’s true in Hollywood, and it’s true in business despite heavy denial to the contrary.

Know your audience on multiple levels: professionally, personally and otherwise. Identify their needs and offer valid, valuable insights. Dare to break through the conventional norms. Speak and act clearly and candidly.

When it’s all said and done, being at one with yourself and audience may be the only leadership attribute worth trying to fulfill.

Extra! Extra!

Sorry, no pithy content here. Just shameless self promotion.

If you haven't already visited the new Point of View, LLC web site, please click here www.pointofviewllc.com. Bookmark and visit often. Send the link to a friend, preferably one that's an aspiring leader with career and/or business issues.

Look for more targeted content that you can use in the weeks, months ahead.

Thanks for checking in,

JG