Tuesday, November 25, 2008

Studying "talking heads" - how can you become a media star?

I find it interesting to Google many of the "talking heads" on new programs. Frequently I find that they have no qualifications whatsoever to be experts. Malcolm Gladwell points out that you need 10,000 hours to be expert in anything - about 5 years of uninterrupted study and practice. Yet many of the experts on TV have barely achieved 100 hours. This also applies to politicians talking about business, or business people talking about social policy. It also suggests that someone with, say 15 years total experience cannot have the breadth to be a CEO, General or other leader. Yet we too readily anoint individuals as experts whose opinions we value.

Saturday, November 15, 2008

Business people as heroes - Harold Geneen to Vikram Pandit

At any point in time, the press anoints a few business executives as heroes. From the days of Henry Ford, through Harold Geneen at ITT, Jack Welch at GE, to modern heroes such as Carly Fiorina, to Vikram Pandit. A very few are considered to be specially talented in retrospect, but most are seen to be far from perfect. This should not surprise us we do not often see what the CEO really does. Furthermore, a large organization is a group activity, and the leader does not know or influence most of what happens in it. Middle management who have been at the company a long time are often adept at preventing any change from taking place even if the leader pushes forcefully. Thus, while A.G. Lafley probably is one of the great CEOs of all time, he could only acheive his objective because he has a superb organization in place.

There are very few really great leaders, and even they are often flawed. Alfred Sloan thought that the Allies would lose to Germany because of its superior organization! We need to scale back our expectations of CEOs and also recognize that middle managers are critical to any successes or failures. Assigning star status to a CEO is counter-productive. Robert Nardelli was pushed out of Home Depot (with a $210 Million severance - it was cheaper to pay him that than keep him in place), so was hired to run Chrysler, a dying company in an industry which he knew not at all. Few middle managers would ever be hired on that basis.

Sunday, November 09, 2008

Saving GM - throwing good money after bad?

For many years now, the issues facing the US auto industry have been known to all. The Big Three have many intelligent executives, yet market share has continued to drop for the past three decades. Back in 1995, Hedrick Smith, in Rethinking America, discussed how Ford and GM had finally seen the light and had started making changes. However, over the time since, none of them have succeeded in digging themselves out. Few long-established companies can ever really change the fundamentals. It might be more productive if the Government simply takes the money that it is going to lose, and uses it to start a completely new car company with none of the baggage of the old ones!

Saturday, November 01, 2008

Cerberus' hubris - not so easy to turn around Chrysler

So many people think it is easy to turn around a company, change culture, cut costs without hurting effectiveness. Many Private Equity executives have never run a manufacturing company or consumer services company. Yet, they think it is easy to be done. Any thinking and experienced executive has known for years that the US automobile companies have been dying and will be almost impossible to save. So why did Cerberus buy Chrysler? Why did Mullaly move to Ford - a consumer products company, completely unlike Boeing?

The answer is partly hubris, partly lack of understanding of what it will take, and also partly lack of objective and deep thought.

Having the last laugh - Erin Callan and others

It is amusing that Erin Callan was demoted from her job as CFO of Lehman Bros and pushed out. She must now be laughing uproariously!