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| Volume 7, Issue 1 |
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In This Issue:
 What does it take to stay at the top?
Building brands
What’s ahead for CEOs
 “I no longer want to work for money”
She’s got their number
[1] Degree of Difficulty
 How I did it [Second Life]: Phillip Rosedale, CEO, Linden Labs
 Who rises to power in American business?
“Uptick” brings Wall Street pressure to students
Is there too little “Know Why” in business?
 Why good times are the most dangerous
How to keep your team talking
For the customers sake, keep it simple
The teachings of Dr. Rao
When its time to fire the boss
 101 Dumbest moments in business [2006]
 Top 10 online marketing predictions 2007
 What’s on next: The future of television
 Ready, Set, Launch
Trade like Goldman Sachs
Best new business hotels of 2006
What your car says about you
Sex lives of the Super-Rich
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What does it take to stay at the top?
| CEOs Are Getting Younger |
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Through the years, the ideal qualifications for a CEO have undergone evolutionary changes. Never has the menu of required skill sets changed as much as it has in the past five to 10 years.
In fact, in a recent survey conducted by Spencer Stuart, one of the world’s leading executive search consulting firms, more than 95 percent of recruiting consultants at the
company agree that leaders appointed to the CEO post in the U.S. today must have a different approach, skill set and set of experiences than those of their brethren who
took the helm a decade earlier.
Among the changes cited are the need to serve and interact directly with a wider range of audiences; tolerate intense pressure and scrutiny from regulators and shareholders;
champion ethics and integrity throughout the organization; and relinquish the outdated command-and-control approach with the board and the organization.
Previous criteria dealt with factors like the technology revolution, industry consolidation, globalization and increasingly persistent customer demands. But newly empowered boards of directors...
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Building brands
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| from left: Lippincot Mercer's Rick Wise and Suzzane Hogan. Gould Paper's Harry Gould |
Looking back 50 years, building a brand seems a relatively straightforward affair—develop a great product and bring it to market with a catchy name and a creative ad campaign. Of course, it was never quite that simple, but there’s no denying that capturing the values and loyalties of consumers today is an even more complex challenge.
Global companies face the challenges of building relationships in a world where media channels are virtually infinite, information spreads instantaneously, and a single person with a computer and a passion to communicate has the power to influence perceptions. They must find ways to appeal across borders and cultures not only to consumers but to a wide range of stakeholders, including shareholders, employees and even regulators.“Every corporation has to keep all those cylinders in line,” said Suzanne Hogan, COO of the brand consulting firm Lippincott Mercer, which, in partnership with Chief Executive, held a CEO Summit roundtable discussion on branding. “Look at Coca-Cola back in 1999. Their share value tumbled because of the way an acquisition in France was handled, some problems they were having with employees and a product recall in Belgium. As companies broaden globally as brands, issues like those magnify.”With the wide range of factors— including product quality, customer service, web presence, employee behavior, community relations— influencing brand value today, CEO involvement in brand management is increasingly crucial...
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What’s ahead for CEOs
The year is 2017, and the past decade has been a bruiser for Corporate America on the governance and regulatory fronts. Shareholders now have unprecedented access to proxies, and regularly nominate their own candidates for director seats, giving annual elections—staggered board terms are obsolete—a circus-like feel.
With a new cadre of hostile directors — each representing his or her own special interests — some boards look and act more like a fractured Congress than professional decision-making bodies. There are advisory boards that provide nonbinding “guidance” to managements in areas like workplace safety and the environment. Investors also have won the right to insert themselves into parts of the business that once were considered the province of management, such as...
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“I no longer want to work for money”
From a letter sent November 2 by Whole Foods Markets CEO John Mackey to his employees. On the same day, the grocery chain warned that sales growth would slow in the year ahead. Its stock dropped 23% on the news:
"To all team members, I want to announce a couple of significant changes regarding compensation at Whole Foods Market (NASDAQ:WFMI). First, as you know, we have a salary-cap policy, which limits the total cash compensation that can be paid to any team member...
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She’s got their number
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When we first started asking what resources consultants use on projects, they said every project was different. That just drove me crazy." |
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Brenda Dietrich revels in theory but lives in the real world--and her team of math geeks is changing the way IBM works.
There's a calculus to knitting. An untamed batch of wool gets twisted and fed into a spinning wheel, a wooden contraption about as high-tech as an abacus, that binds the
fibers into a single strand of yarn. That yarn, in turn, is woven into geometric designs comprised of equations: A certain number of rows combined with certain stitches yield
something functional and beautiful. In the right hands, knitting produces a precise but almost magical alchemy--chaos into order. You can see why it would appeal to Brenda
Dietrich. Dietrich, 47, runs the math sciences department at IBM's (NYSE:IBM) renowned Thomas J. Watson Research Center--the top math manager at arguably the biggest and most
important math department in corporate America. She loves math's beauty and complexity. Yet she often spends conference calls and meetings spinning yarn on the wheel next to
her ThinkPad. [Dietrich, who has coauthored 13 patents and has twice been named one of IBM's top inventors, likes to make stuff--tangible stuff, not just theorems. As a mathematician, she has a rare ability to travel between two very different worlds, says Paul Horn, head of IBM research. She can listen to a customer describe the messy details of a business, then translate those specs into math problems for her team to solve]...
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[1] Degree of Difficulty
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| Worldview Aspen Skiing resort’s first solar installation. Aspen is building two more that are larger. |
Global warming threatens the very viability of Aspen's famed ski resort. The real fix is about changing the way people think.
One degree: In the effort to confront global climate change, a single degree of warmth may seem insignificant. But at Aspen Skiing Co., which runs one of the world's top ski
resorts, a single degree is the margin between viability and disaster. Worldview Aspen Skiing resort’s first solar installation. Aspen is building two more that are larger.
Fan Gun Making snow seeded with flecks of dust costs more, but it saves water and energy. "To be in business," says Patrick O'Donnell, who was Aspen's CEO and environmental conscience for a decade before retiring in November, "we rely on putting
down 2 feet of good [artificial] snow, good hard snow that we make the last two weeks of
October and the first two weeks of November. That way, when March comes, we can still
have skiing, we can still get a full rate for our lift tickets. "But many of those nights in the fall, we make snow right on the bubble. I've had the staff go back and
collect the records--we often make snow within one degree, or one-and-a-half degrees, of
being able to. If we can't do it, we have a problem." At Aspen, the weather is the business...
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How I did it [Second Life]: Phillip Rosedale, CEO, Linden Labs
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"Second Life was just unfundable," says the man who dreamed up this virtual world. Funny how things change when you give people the ability to fly. Now everyone, including
businesses of all sizes, wants a piece.
Second Life is a place where anyone can have just that. It is a richly detailed virtual world where anything a computer programmer can imagine can exist: There are minutely
detailed replicas of Rockefeller Center and human-size raccoons; sex and sadism and spiritual retreats; conference calls and a currency exchange. Almost all of it is
created by the people who pay to dwell in it. Linden Lab, the San Francisco company that created and owns Second Life, acts as a sort of laissez-faire government. It makes money
primarily by selling property, of which it can conjure an infinite amount.
Second Life seems like an overnight sensation--it drew almost a million new residents in the last
two months of 2006, doubling its population. In fact, it began in 1999, when Philip Rosedale quit his job as chief technology officer at RealNetworks to realize his
lifelong dream of building a virtual-reality environment. Most people he knew thought...
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Who Rises to Power in American Business?
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While there are no real guarantees, being born as an insider increases the odds and likelihood of success.
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Who achieves success and power in the United States?
In the twentieth century, the easiest path to power was available to certain individuals—mainly men, mainly white—who were otherwise favored with the right
religious, family, geographic, and educational ties. But a significant number of "outsiders," such as Elizabeth Arden, created their own road to success, overcoming
significant odds.
The new book Paths to Power: How Insiders and Outsiders Shaped American Business Leadership explores the demographics of leadership in the U.S. over time and offers
lessons for the next generations. What doors are opening? Which remain closed?...
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“Uptick” brings Wall Street pressure to students
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We have some classes where students live through a pretty harrowing experience. —Joshua Coval
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In a Harvard Business School classroom, students in the Dynamic Markets class may have one minute to make a decision in a pressure cooker one called "the most stress I've
experienced in ten years." It's margin call time in a real-world market investment computer simulation called upTick.
Students whose investments have fallen below margin requirement levels are being told they have sixty seconds to liquidate part of their portfolio to cover—effectively
locking in a loss—or gamble that their investments will recover before insolvency is declared. "Many students find this minute—and the decision of whether to ride it out and hope for a recovery or to blink and 'puke their position' (pardon the phrase but it's
how actual traders describe it)—to be an extremely harrowing experience," says professor Joshua Coval. And that's the point...
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Is there too little “Know Why” in business?
Two recent books offer views of the roles of managers and leaders. The first, Know-How, by Ram Charan, sets forth eight behaviors exhibited by managers who get things done. The second, Purpose, by Nikos Mourkogiannis, could really have been titled "Know Why."
It describes four kinds of purpose, "starting points" that govern what great companies do and how they do it. Each of these purposes represents a kind of "holy grail" as
opposed to goals (often merely financial), missions or visions, or even a set of values. As Mourkogiannis puts it, "Let others play with 'strategy' and 'tactics' and
'management.' Purpose is the game of champions." According to this theory, truly transformational purpose can be found in: (1) discovery, the challenge of adventure and
innovation characterized by dot-com entrepreneurs willing to work 24/7 in search of the new or unknown, (2) excellence, in which high standards are not compromised for
short-term performance (as with Berkshire Hathaway and Warren Buffett), (3) altruism, where the primary purpose is to serve (customers, employees, etc.) first and assume that
profit will follow (as at Nordstrom), and (4) heroism, typically involving grand plans to change entire industries or even the way we live (Bill Gates and Microsoft).
The argument is that only one of these purposes, if pursued rigorously and successfully, is required for greatness. Putting mere goals, such as primarily making money, before
purpose gets us an Enron or a Worldcom. The pity, according to Mourkogiannis, is that true purpose could have enabled these organizations to make even greater "real" profits
than those they reported...
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Why good times are the most dangerous
It's easy to get too comfortable, which leaves you unprepared when disaster strikes. That's why the best leaders are always a bit paranoid.
Though managing in tough times can test a leader's mettle, the bigger test often comes when times are good. A crisis, if well-managed, can bring out the best in a
company—increasing focus, intensity, and commitment. It's when a business gets a
comfortable lead that the greatest dangers lurk: Complacency creeps in on little cat feet. When I was in my mid-30s, I became chairman of a promising Los Angeles-based technology company. The business had doubled revenues every year except one for 15
straight years, growing into a national company with 3,500 clients. It had twice made the Inc. 500 and had even been featured on Inc.'s cover. We were about to close on some
badly-needed venture capital to prepare us for an IPO and we had just inked alliances with Mellon Bank (MEL) and EDS (EDS). Times were indeed good, or so we thought. Then the bottom fell out...
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How to Keep Your Team Talking
If you still want to get the most creative ideas from your employees, have them continue to solve problems even when you're saying no
A wonderful thing about the Knowledge Economy is the way that knowledge workers get to wrap their brains around interesting problems. A hundred and fifty years ago, when my
ancestors emigrated from Ireland to Chicago and pulled barges along the Chicago Canal, the benefit of going to work every day was taking home a paycheck to the wife and 12
kids. Today, knowledge workers get to take home a paycheck and also engage in intellectually stimulating conversation with co-workers (on a good day) and continue to
learn about our functions and our industries. When all the pieces fit together, white-collar work is enriching in more ways than just financial. Management and HR groups spend a lot of time talking about "engagement," also known as "ego
involvement," which comes down to getting employees excited about the work they're doing and its contribution to the company....
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For the Customer's Sake, Keep it Simple
Simplify your message, cut out jargon, and get to the point. Your clients will hear the difference and reward you for it.
As we see our lives get more complex, many of us are starting to look for simplicity. Everything seems to be more complicated these
days—insurance, health benefits, technology—you name it. I started thinking about this the other day after reading an
article by Variety columnist Scott Kirsner. He was describing how advanced features in everyday gadgets like your TV's remote control
have actually made those devices harder to use.
"In a race to add features and buttons, get the most from every microchip, and make the wired wireless, they've forgotten (or are
ignoring) the great dictum from 20th-century industrial designer Raymond Loewy, who designed cars, trains, the Coke bottle, logos,
and refrigerators: The main goal is...
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The Teachings of Dr. Rao
"There's no destination," Dr. Srikumar Rao tells his B-school students. "The journey is all that there is, and it can be very, very joyful."
Dr. Srikumar Rao is a great guy and a wonderful teacher. His Creativity & Personal Mastery class is one of the most popular in
both the Columbia and London business schools. It's so meaningful it even has its own alumni association. Srikumar actually has students deal with the existential realities of their
careers—questions like "Who am I?" "Why am I here?" and "Where am I going?" He's training future leaders to be humans—not just
technicians.
I spoke with him recently about his course. Edited excerpts of our conversation follow:
What do you do in this course that has such a great impact on your students?
Our course helps smart people—brilliant, driven people—find deep meaning. They are all successful in conventional terms or on their way to such success. They have the skills they need or know how to get them. What they often lack...
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When its time to fire the boss
How does a board of directors go about firing a CEO or persuading him to step down? It's a question I'm asked more often, as CEO turnover increases—in part because of greater board accountability—and as abrupt departures, like that of Robert Nardelli of Home Depot (HD), are in the news.
When directors call me in to help figure out if, and how, they should remove a chief executive, they typically need the most help in dealing with their attachment to the CEO....
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101 Dumbest Moments in Business
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The year's biggest boors, buffoons, and blunderers. Business 2.0 Magazine's 7th annual look at the year in bungled layoffs, customer-service snafus, executive follies, and other madness. See all 101.
1. Wal-Mart
Because if there's anything America loves, it's a politician...
In an attempt to put a smiley face on its tarnished image, Wal-Mart hires heavy-hitting public relations firm Edelman, which sets about using tactics derived from political races to reverse public perceptions of the giant retailer.
Dubbing its campaign "Candidate Wal-Mart," the firm trumpets all manner of new Wal-Mart initiatives: improved employee health-care benefits, higher starting pay levels, new stores in downtrodden neighborhoods, reasonably priced organic foods, and a flat $4 fee for hundreds of generic prescription drugs.
As a result, candidate Wal-Mart quickly becomes, well, the most popular politician since Spiro Agnew. By year's end Wal-Mart suffers its first quarterly profit drop in a decade, sees same-store sales decline in November's run-up to the crucial holiday shopping season, and suffers a series of public relations gaffes so stunning that it lands six spots in this year's edition of the 101 Dumbest Moments...
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Top 10 online marketing predictions 2007
With 2007 in full swing, here are our predictions for the rest of the year to come. In prior years we have given you a mix of business and personal lifestyle predictions, but this year we're sticking to just the online marketing world. We busted out our omniscient crystal ball, and this is what it told us:
10. Social networking will get more and more niche. Social Networking has blanketed the news for the past 18 months because it works. YouTube and MySpace have built loyal
communities through entertaining user-generated content and great tools for communicating with other like-minded people. However, Social Networking is going NICHE.
People use specific tools to connect, recommend, rate, and communicate within their niche groups. For this reason, there are many types of Social Media now and there will
be five times this many by the end of next year...
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What’s on next: The future of television
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The union of television and the internet is spawning a wide variety of offspring.
BOSSES in the television industry have been keeping a nervous eye on two Scandinavians with a reputation for causing trouble. In recent years Niklas Zennström, a Swede, and
Janus Friis, a Dane, have frightened the music industry by inventing KaZaA, a
“peer-to-peer” (P2P) file-sharing program that was widely used to download music without paying for it. Then they horrified the mighty telecoms industry by inventing Skype,
another P2P program, which lets internet users make free telephone calls between computers, and very cheap calls to ordinary phones. (The duo sold Skype to eBay, an
internet-auction giant, for $2.6 billion in 2005.) Their next move was to found yet another start-up—this time, one that threatened to devastate the television industry. It may do the opposite, as it turns out. The new service, called Joost and now in advanced
testing, is based on P2P software that runs on people's computers, just like Skype and
KaZaA. And it does indeed promise to transform the experience of watching television by
combining what people like about old-fashioned TV with the exciting possibilities of the internet. But unlike KaZaA and Skype, says Fredrik de Wahl, a Swede whom Messrs
Zennström and Friis have hired as Joost's boss, Joost does not “disrupt” the industry that it is entering. Instead, rather than undercutting television networks and
producers, he says, Joost might, as it were, give them new juice...
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Ready, Set, Launch
Palm Desert, Calif. - DEMO, the technology conference that aims to introduce venture capitalists and journalists to tomorrow's hot tech tools and toys is appealing for folks
like me. We get to see cool stuff and hang out in Palm Desert, Calif., for a couple days.
For the entrepreneurs onstage, though, the event can be terrifying.Each of the 68 companies presenting gets six minutes to pitch a totally new technology product to the crowd. That’s longer than an elevator pitch, yet much shorter than a real conversation. "It's an awkward amount of time. That really makes you focus," says Tom Gillis, head of marketing for Web security firm Ironport. He is this year's poster child of DEMO success: Ironport presented at DEMO in 2004, and last month Cisco bought the company for $830 million...
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Trade like Goldman Sachs
I run a fund of hedge funds and, at the risk of putting myself out of business, I’m a firm believer that if you put in a little time and research you can take out the middleman and eliminate the one or (in my case) two layers of fees that are often inflicted on the retail investor.
In particular, its worth finding the best investors out there, and cherrypicking their top positions and research. For instance, I like to keep track of two “portfolios” that emerge from different corners of top investment bank, Goldman Sachs. First off, I like to follow the Goldman Sachs Large Cap Value Fund (GSLAX). This fund replaced Bill Miller’s Legg Mason Value Trust (LMVRX) as the fund with the longest winning streak versus the S&P 500. It was up 18.4% last year, 14% annualized over the past three years and 11% annualized over the past five years. That’s Goldman Sachs on the value side. Goldman Sachs research department also puts out a nice little report every year detailing their favorite (and least favorite) growth picks...
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Best new business hotels of 2006
A really good hotel can make even the most tedious business trip worthwhile.
You're far from home. You've traded friends and family for hours-long meetings and day-long flights. You're jetlagged and cranky. On the other hand, you can order room service from the first-ever Gordon Ramsay restaurant in the U.S. You can leave a suit with your personal butler and get it back, flawlessly pressed, hours later. And if you have a minute between meetings, you can pop over to the hotel spa--located in a former Renaissance church and with the original flooring preserved under glass panels--for a quick rubdown. That's right. Assuming you've chosen your hotel wisely, you can do all this and more on your next business trip.Once again, Forbes.com has rounded up the year’s best business hotels...
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What your car says about you
In Shakespeare's English, “luxury” and “lust” were synonyms.Not much has changed in 500 years, apparently, since Bentley dealers are reporting that more people ask about the brand's top-drawer luxury autos around Valentine's Day.
Seems like they are on to something. It's not a night out on the town or a bottle of fine wine, but make no mistake: A new car might facilitate sex and romance this Feb. 14, whether you purchase the vehicle for somebody else or drive it yourself in the hopes of sending out signals the opposite sex can't ignore. But while having a luxury car sends a message, not all send the right one. For example, you might think that driving a Lexus makes you alluring, but if you opt for the $60,000 Lexus LS sedan, you might seem attractive only to older, single parents; LS drivers are in their 60s, family-oriented and value politeness. In other words, if you're looking to make a more dramatic statement, you should go for something more bold...
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Sex lives of the Super-Rich
Ever wonder how your life would change if you suddenly became filthy rich?
Well, for one thing, you'd have a better sex life. That's the finding of a new report by market research
and consulting company Prince & Associates, and private wealth expert Hannah Grove.The 2006 survey released last month looked at the sexual views, behavior and experiences of
just under 600 men and women, most of whom were married, an average age of 57 and with a net worth of $89 million...
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