Monday, January 30, 2006

Outsider CEOs -- The Nike News


Surprising news out of Nike last week. Or perhaps I should say "not" so surprising. Few outsider CEOs are as lucky as IBM's Lou Gerstner, the ultimate outsider. The Nike succession plan probably soured due to several predictable factors:

1. Phil Knight, former Nike chairman, CEO and co-founder, was obviously not ready to give up his top dog role. He undoubtedly clashed with incoming CEO William Perez's decisions. Most founders do not enjoy sharing power.
2. New CEO Perez spent nearly 10 years at S.C. Johnson, a privately-held, family-controlled company. Nike is a publically-held company with a wide range of stakeholders that may have been difficult for Perez to get his arms around -- a board of directors vs. a family that does not want to shake the boat.
3. Nike makes sporting equipment and renown running shoes while S.C. Johnson produces brands such as Glade, Drano and Pledge. The emotional resonance of the Nike brand probably takes some getting used to.
4. Nike's culture is built on creativity and Knight is not known for his by-the-book leadership skills. Perez, on the other hand, is known for his masterful organizational skills. Creatives vs. process-driven are polar opposites.
5. Most outsider CEOs deliver less long-term shareholder value than insider CEOs. Apparently outsider CEOs begin their tenures with lots of action, decisiveness and new ideas. They are known for quickly losing interest when it comes to the mundane activities of running a business. Insider CEOs create less hoopla but know the culture well, have a cadre of loyal supporters and know the blind spots.

It needs no repeating but succession rarely works if the iconic CEO does not leave the premises shortly. Think about Jack Welch's smart exit. Knowing when and how to leave is a CEO's finest hour.

Saturday, January 28, 2006

Great CEO Communications Lesson


I hate to overlook an excellent CEO lesson even when it comes from my own company Burson-Marsteller. The lesson was so perfect (in its uniqueness) that it still sticks with me days later.

During my visit to our Tokyo office, our Asia-Pacific CEO Bill Rylance gathered the office together for a slide show on his trip to Africa with his 13 year-old-son Eliott. Bill spoke for nearly an hour taking us through their three-week journey climbing mountains and living with the Maasai tribe. [You should know that Bill rarely takes vacation but his son's birthday was a milestone he wished to mark. As he explained, a male 13-year-old Maasai turns from boy to man during this time and is sent to live on his own in the bush for 90 days after the ritual of circumcision. He wanted Eliott to experience this passage as special too (circumcision not included).] What was remarkable to me was this glimpse into our CEO's non-work life, his family values, the legacy he wishes to leave his son and those enduring "teachable moments" imparted to his young man.

You can learn alot from what pictures people take. Bill's photos were of faces -- the faces of natural beauty, magnificent animals, beautiful young and old Maasai, smiling guides, blinding sand storms and exhausted father and son. The cameradie among those making the journey with Bill and son was also striking.

The colorful slide show was more than another workday powerpoint presentation. Our AP CEO shared glimpses of his inner life and added a new dimension to who he was beyond a smart, hard-working, hard-charging committed CEO. He no longer stood there as chief executive but as a father, journeyman, guide, servant, pupil, friend and adventurer.

I tried to think about other CEOs who might have communicated to employees this way. Not many. But Bill reminded us all of our humanity, collectiveness and ability to touch one another in ways that are not "billable."

An impactful lesson worth repeating.

Friday, January 27, 2006

Tony Blair's Day in the Life


On the 10 Downing Street web site, Prime Minister Tony Blair has his own version of A Day in the Life. The four minute video is worth listening to as an interesting form of communication for such an important and busy person. Blair tell us that there is no such thing as a typical day as prime minister, the job comes with an entirely "different order of stress" and requires being able to switch from one subject to another in a heartbeat. Kind of fun as leadership examples go.

More challenging than being filmed for a short snippet is PMQ. Blair participates in the Prime Minister's Question Time (PMQs) 30 minutes each week. MPs get to ask him questions on any subject. The questions usually focus on the key issues of the day. These sesssions are also available on the Downing Street web site. Hard to imagine President Bush being open to this type of unrehearsed format and challenging questions.

Worth thinking about for CEOs who want to be transparent.

Thursday, January 26, 2006

Tokyo CEOs

Tokyo business seems to be churning in many different ways. The Livedoor incident where the young entrepreneurial Internet CEO Horie-san was arrested and charged with financial irregularities has the public divided. On one hand, elder business people are glad that this young upstart who snubbed their ceremonial ways got his due. In contrast, many younger people are dismayed that this inspiring maverick has been proven to be as bad as the Enron bandits.

The entrepreneurial spirit that was kindled by Horie-san has been dampened for the time-being. Unfortunately there is no one to take his place. The Livedoor incident raises the problem of independent board members (not many in Japan), celebrity CEOs vs. credible CEOs (Horie-san was more the former than the latter) and building relationships with ALL stakeholders (the brash CEO seems to have ignored the regulators he needs now -- reminded me of Bill Gates and Microsoft a decade ago).

However, despite the recent bad news, business is indeed changing in Japan. More CEOs are accountable for losses and bad performance (NEC, Pioneer, Sanyo), CEOs are getting abit younger (from 60 years 10 years ago to 55 now), financial performance is trumping consenus management (Matsushita and Canon) and outsiders are starting to populate the CEO-set (Sony's Stringer and Nissan's Ghoan). I am confident that change is afoot.

Once my head clears from all the smoke in the airport waiting room, I will give you some more thoughts.

Sunday, January 22, 2006

CEO Capital in Japan

Japanese CEOs have alot to teach us. Since I am speaking at several events in Tokyo this week as my book was translated into Japanese, I have spent time reading about how CEOs build corporate reputations in Japan. Of course, we all know about the success of The Toyota Way and its enduring leadership example. However there are many other interesting lessons for the taking.

One example comes from Canon. Canon's president Mr. Fujio Mitari understands the meaning of building mutual trust among his senior team. Every morning at 8am he convenes an unofficial meeting of senior managers to just talk. There is no agenda or theme to the conversation. He does not take roll call or minutes. The meeting is meant to build cameradie and exchange information, be it sports, work or the weather. "When you meet people face to face and engage in casual conversation with them every morning, you come to better understand their personalities and the way they think. It helps to build trust." Additionally Mr. Mitari believes that meetings such as these helps to spread Canon values and traditions down through the organization.

What a fine way to begin the day.

Saturday, January 21, 2006

Do CEOs Count Sheep?


I laughed out loud while reading an interview in SmartMoney with Ramani Ayer, CEO of The Harford, the 10th largest insurer. A typical CEO interview question is if the chief executive has trouble sleeping at night in light of all the challenges and pressures of running companies today. Most CEOs say they sleep like babies giving the impression that they are confident about their decisions and do not second-guess themselves. I can confidently say that nearly 95 percent of CEOs who have been asked this question by journalists respond by saying they do not stay awake counting sheep. Of course, many of us non-CEOs lay awake at night worrying about what we did that day, said or did not say.

Therefore I have to hand it to Mr. Ayer. When asked by writer Evelyn Twitchell about how his nights go,the CEO said, "I sleep like a baby -- I get up every two hours and I cry." I know that his comment was meant to be tongue-in-cheek but my immediate reaction was here's a CEO with a true human side (and a nice touch of humor). It was heartening to read and quite commendable.

Wednesday, January 18, 2006

Communications as Reason for Departure? Huh?


Today's Wall Street Journal (1/18/06) reports that Hyundai Motor America replaced its CEO with a new CEO. One of the reasons quoted in a statement that the Journal was obviously privy to was to "enhance communications." The Journal went on to say that Hyundai wanted "better communication at the CEO level with the U.S. office." Mr. Bob Cosmai steps down and Mr. Ok Suk Koh steps up. The change in leadership was apparently a surprise.

I have two reactions. First, it is not often that executive communication becomes a reason for a CEO exit. We usually hear about poor earnings, slowed growth, misstatements, poor handling of a crisis, financial irregularities, etc. Trust me, if they had asked me about what CEOs need to be good at today, I would have told them that effective CEO communications is an absolute must. Our research has repeatedly shown that internal communications from the top is a prime driver of favorable CEO and corporate reputation. CEOs do not have to be charismatic communicators but they do need to be open and motivate the employee workforce.

Second, I went to the Hyundai Motor America Web site to learn more about the unexpected switch and found no mention. Tried the Hyundai international Web site as well and found no clues. Seems that for a company using executive communication as a reason for a sudden changing of the guard, Hyundai's communication with its stakeholders would be forthcoming. The last news release on the U.S. site was January 10th,"Hyundai Azera Named Best New Luxury Family Sedan."

I guess I should be happy just knowing that enhanced CEO communication is getting its due.

Monday, January 16, 2006

CEO Direct


My London colleague sent me some information she found online about how to best reach CEOs. The insights came from a blog called the consumerist. Basically there is a 4-step approach to get the CEO's ear with your complaint or criticism. A CEO-proof strategy is also provided. Here they are:

Step 1: Go to Google, find out where your problem company’s headquarters is located. Sometimes you can find this on the corporate part of the company website as well. Good search terms include: Company X headquarters and Company X corporate offices.

Step 2: Find the phone number for that location. Use switchboard.com, Google, superpages, or yp.yahoo.com.

Step 3: Use Google or the company site to determine the president’s name or the name of the executive you are looking for.

Step 4: Call the number after the main offices have closed. Generally one of the first choices available is the option of using the directory. Start by dialing the CEO’s last name and you will get to the CEO’s voicemail box or one monitored by his assistant which is generally good enough.

Making your case:
--Praise the company’s past service or products
--Focus on one problem while maintaining a positive tone and pleasant demeanor
--Always being professional and concise

I recall that Robert Crandall, legendary CEO of American Airlines, used to list his telephone number in the phone book for customers to call (hoping that they had some restraint on calls at 2am). This old-time CEO assumed that was his job -- hearing from customers who were dissatisfied!

Good luck to anyone who reaches a CEO voice mail or actual person. Let me know if it works.

Sunday, January 15, 2006

PR Industry Gets Reputation Boost

A recent article (14 January 2006) in the Financial Times reported that Prime Minister Blair's son Euan Blair would be working at pr firm Finsbury Group for two weeks. The reporters note that young Blair will now see how pr truly influences the decision-making and strategic choices of the high and mighty. Reporters' Saigol and Croft write: "As Euan Blair's interest shows, it has also become a desirable profession for graduates. A quick glance around London's PR community reveals that it is the profession of choice for many figures of the establishment, particularly those with political links." It is nice to see something positive about the industry. The pr industry is not all about celebrity endorsements and spinmaking as the pundits make it out to be. Most pr professionals provide sound, thoughtful advice. After all, good public relations counsel can make or break a company's reputation.

I am glad that Euan Blair is giving pr a chance. The industry deserves more respect. Next I hope to see Princes' William and Harry learning the craft.

Saturday, January 14, 2006

CEOs and Work/Life Balance


One of the prime reasons that upcoming executives do not want to be CEO is the lack of work/life balance. When you look at the coverage of work/life balance in major global news and business publications, there has been an increase of 262% from 2001 to 2005. No surprise then that rising execs have this on their minds. For the younger generation, having a life in addition to work does not escape them either. For the first time, a Universum study among university students cited "balancing work with personal life" as the most important career goal. A large 54 percent put this goal as their top ambition.

The focus on a balanced life has not escaped marketers. In Fast Company, two campaigns are cited that focus on having a life. Ikea's campaign -- www.lifeoutsidework.co.uk -- features a Work-Life-Balance'O'Meter and Beringer's -- Living5to9.com -- has a time-to-go-home alarm. Blackberry would do us all a favor by locking down at a reasonable hour. However, I guess that would defeat its purpose.

I was thinking about work/life balance today (as I was working) when I received an e-mail from Aaron Kwitten who led the North American region and largest unit of Euro RSCG PR Worldwide. He left to start Kwitten & Company, an "intelligent" (their positioning) pr firm (www.kwitco.com or www.kwittkenandcompany.com).

In his e-mail announcing the new firm, Kwittken remarked that his "firm is rooted in seven non-negotiable principles," one of which is "Family/life balance obligations always come first, always." Interesting commitment for a pr firm and one that is probably on the cusp of something very important.

Thursday, January 12, 2006

Ghosn & Japanese Management


Lately I have been reading about Japanese CEOs because I will be paying Tokyo a visit. Although I read Carlos Ghosn's book, Shift, I did not realize the deep impact he had on Japanese business thinking. As you know, Brazilian-born Ghosn was sent to Japan on behalf of Renault to turn around failing Nissan. To many people's utter surprise, he revived the car company and changed the insular culture of Nissan's management. He was hailed a company hero. A comic book was written about him as pictured above. I recall reading two years ago that Japanese women were offering themselves up to Mr. Ghosn to have his babies! Ghosn-mania.

Ghosn's success conveyed the message in Japan that good management can make a difference. The impact of the leader or CEO is now believed to have a profound impact on the company's reputation, bottom line and market value. Japan will always have CEOs who are humble, modest and consensual. But Ghosn's aggressive and American-Euro management style undoubtedly changed the world order in Japanese business for good. My trip should be interesting.

Tuesday, January 10, 2006

Sago Mine Communications

Do you agree that the communications fiasco at Sago Mine was shocking?

Several facts are hard to understand. The Sago Mine web site had no information on its home page until they hired pr firm Dix & Eaton. We have been auditing Web sites of companies in crisis for years now and Lesson #1 is acknowledging that something has happened and quickly informing your publics online. We began auditing Web sites of companies in crisis after 9-11 and many of those lessons should be second-nature today.

Second, there was obviously no one advising the company's leaders on how to communicate during this trying time. Neither was there any press source to turn to. Instead the president Ben Hatfield was fielding questions and the miners' families and pastor were all talking to the press and breaking news. Yet another Lesson -- identify one person to speak on behalf of the company and no more. All news starts and ends with that person.

Not sure if you have heard of the Hot Shots. They are the elite team of professional wildland firefighters. The rule is that the first person who lands on the ground in the vicinity of the fire is the boss. He/she is in charge. Sago Mine needed one person in charge, not a village.

The reputation of the mining industry has to be reeling. Hopefully with good wishes and wise counsel they will get back on their feet.

Sunday, January 08, 2006

Corporate CPR


Carl-Henric Svanberg, CEO of Ericsson, has been credited with the turnaround of the Swedish mobile telecom company. In an interview with the Financial Times on 20 March 2005, he said: “We had only one bullet, only one shot to make it right.”

It is not unusual for CEOs to think that corporate resusitation requires just one deep breath or single bullet to make things right. However most of the turnarounds we have witnessed require more than one hit. Most turnarounds consist of many small steps that collectively add up to success. It is these consistent incremental actions that make the difference between success and failure, not one big lunge forward.

To Mr. Svanberg, he probably felt that he had only one bullet to transform the company and keep it out of imminent danger. Obviously Svanberg hit his target between the eyes. I think that if he looked backwards over the past three years at the make or break decisions along the way, he would see that there was a pattern of many small breathes that revived the patient.

Friday, January 06, 2006

Reputation & Communications

Good communications and reputation go hand in hand. Research consistently shows that the most admired companies have effective top-down communications. Information flows from the top to bottom and back up.

I always like reading Watson Wyatt's research on the ROI of effective communications. The newest study (2005/2006) found evidence that communication effectiveness is a leading indicator of financial performance and that companies that communicate effectively also have...

**19.4 percent higher market premium than companies that do not
**higher levels of employee engagement
**lower turnover rates than peers.

These findings are staggering if you are concerned about talent and growth. It makes you wonder why companies do not treat communications as seriously as financial and legal matters. Amazon CEO Jeff Bezos says: "It is not our job to convince people of our strategy. It is our job to articulate it clearly." How often can you say that you worked in a company where the CEO thinks this way about communications? Maybe once in a lifetime.

CEOs and leaders have to plan their communications, coordinate communications internally and externally, and measure the impact. I know one well-respected company that surveys its employees monthly to see if communications are cascading downward and being understood. When the information is not reaching the right people or is too complicated, supervisors are asked to repeat the messages and clarify any ambiguity.

Reputation is many things. Good communications only helps.

Wednesday, January 04, 2006

Reputational Failure

I would be remiss if I did not mention that an article I wrote (with my colleagues' help) about the early warning signs of organizational failure ran in The Wall Street Journal Manager's Journal on December 27th. It is below.

As the new year begins and leaders return to their offices, it is important for chieftains to recognize internal signs of wear and tear that could halt their progress in 2006. Some of the telltale signs are mentioned in the article and eight more will be released later in the month.

Equally important, employees who see these early warning signs should speak up now and get their message to the right people. Every organization has people who are receptive to hearing about trouble and who will effectively deliver the message. No sense in sending out your resume unless you have tried to get the message upstairs or have tried to do something about it. Some companies provide anonymous hot lines and confidential e-mail addresses. Put them to use!

As the new year moves forward, get your house in order so that your company's reputation is safe from harm.

*************************************
Manager's Journal
On Business Storm-Proofing
By Leslie Gaines-Ross
895 words
27 December 2005
The Wall Street Journal
A14

AFTER PHIL PURCELL resigned from Morgan Stanley, he spoke not of opportunities lost but of warnings missed. "It was many, many little waves," he said. "It wasn't one storm."

He might as well have been speaking of the ebb and flow of the reputations of companies and the people who lead them. In the end, a good reputation is the most competitive and valuable asset of any individual or institution, but it can be easily eroded. In our ongoing survey of 685 global business leaders in 65 countries, some 81% report that there are more company reputation threats today than there were two years ago.

Great reputations are not accidents; they are not the result of good luck or built overnight. They are carefully planned, nurtured and managed as the vital asset they are. Likewise, reputations are not always destroyed outright, but are often gradually eroded by a ripple effect.

However, there are clear warning signs -- or little waves -- that signal a company or leader is in trouble. The good news is that in corporate life, as elsewhere, early detection is critical in damming against the oncoming surges. If leaders can identify the signs of oncoming reputation failure, they can take immediate steps to halt its progress.

This is not as difficult as it might sound. In Burson-Marsteller's research, we were struck by the near universal agreement of the order and magnitude of the early warning signs. Remarkably, business leaders across all regions -- North America, Europe, Asia-Pacific and Latin America -- listed virtually the same seven conditions in virtually the same order: (1) Employee morale is low. (2) Internal politics are more important than doing the job well. (3) Top executives are departing. (4) CEO celebrity is displacing CEO credibility. (5) Employees speak of customers as nuisances. (6) Employees stop telling positive stories about the company. (7) Management spends more time inside than outside headquarters.

If any of these signs sound familiar, then it's time to take an objective look at your company and begin the challenging process of protecting your company's reputation while there's still time.

According to published reports, these signs should have been evident to Mr. Purcell toward the end of his tenure at Morgan Stanley. Top executives were bailing out; others were politicking internally by anonymously bad-mouthing Mr. Purcell to reporters. And, customers complained of feeling unappreciated.

Yet every one of these issues can be resolved if management heeds the warning signs. Take the issue of low employee morale. Companies need to keep a closer eye on employee satisfaction and make better use of internal communications. It also doesn't hurt to have an approachable boss who regularly walks the halls. Internal politics can be minimized when leaders set -- and adhere to -- a policy that is based on a meritocracy and incentivizes employees in different departments to think of themselves as teammates. Motorola CEO Ed Zander had this type of silo-busting in mind when he had the company's marketing and public relations employees spend a day in the company's lab.

Talented executives are always in demand, so some high-level departures are inevitable. However, companies can stem the turnover tide by frequently updating their succession plans, developing one-on-one relationships with their rising stars and, when high-level people depart, seriously considering and acting on exit interview comments. Companies should also avoid the temptation to turn the CEO into a celebrity. Instead, they should choose select exposure -- rather than over-exposure -- and promote the c-suite as a team so that continuity is protected in the event of a CEO departure.

Know any positive customer stories? Then begin every internal communication with one to remind all employees that customers are not annoyances. Having senior executives staff the customer service lines now and then, and listen in on disgruntled customer calls, are other good ways to keep the focus on the customer. As Wharton Professor Robert Mittelstaedt reminds us, for every one lost customer you hear about, there are 10 more you don't.

Spreading the word on upbeat employee stories is another way to help keep a reputation afloat. They should be woven into the company folklore and play a key role in employee orientation and the Intranet. People also speak more positively about their company when accomplishments large and small are acknowledged and celebrated. Finally, keep in mind that a successful reputation can never be built within the four walls of the executive office. Former GE Chairman and CEO Jack Welch always reminded himself that "headquarters doesn't make anything or sell anything."
Being accessible to customers, the media and other audiences, and delegating to qualified management team members, can put a company on course for a long and successful journey.

When a company's reputation suffers, so do the company's culture and bottom-line. By keeping these warning signals in their line of sight, leaders can avoid being pulled under by the intensifying waves of reputation failure and successfully navigate their way through 2006 and beyond.

Sunday, January 01, 2006

Crushing Misery & Reputation Damage in South Korea

Two words stayed in my mind over the year-end holiday weekend -- "crushing misery." They were articulated by the South Korean government who vigorously promoted cloning scientist Dr. Hwang as the symbol of its biotech and entrepreneurial ascendency (The New York Times). Dr. Hwang is the man who reportedly created the first cloned human embryo and extracted stem cells from it only to be found as having faked parts, if not all. The "crushing misery" applies not only to the South Korean government who financially supported this research but to the 48 million Koreans who took pride in its nation's scientific brilliance.

The reputation of South Korea has certainly taken a hit. It is amazing how quickly the reputation of this one individual, Dr. Hwang, rubbed off on South Korea as a whole. Dr. Hwang, not entirely in agreement with findings that he fabricated results, did acknowledge one clear fact -- he deeply disappointed his own people: "I apologize to the South Korean people for creating an unspeakable shock and disappointment."

South Korea now needs to disclose all facts quickly and honestly. The government should initiate an investigation (beyond the university panel) into how this happened and set up stringent controls so that their scientific accomplishments are never questionned again. Those in charge should also work hard to reassure those still working at Seoul National University that there is confidence in their work and they should carry on.

The South Korean government and Seoul University should also look at the work of Wake Forest University professors' Charles Iacovou, Ron Thompson and H. Jeff Smith. They have researched why some team members misrepresent progress reports. Their goal was to learn whether respondents had ever intentionally withheld or manipulated information when filing their progress reports and if so, why. They hypothesized that personal interest -- career advancement or survival in a competitive workplace, for example --was a primary motivating factor. Instead they found that the project's size and complexity and one's relationship with his/her superior turned out to be the two determining factors most often cited. It would appear that Dr. Hwang did not feel that he could trust his superiors in admitting failure or lack of progress. Learning to fail should probably be at the top of lesson plans in South Korean universities.

The South Korean government would be wise to seriously explore how to repair its image over the many months ahead as this story remains top-of-mind in the media and South Koreans struggle with the challenges of lost pride.