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| Volume 8, Issue 8 |
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In This Issue:
 Get lost [on vacation]
 What can CEOs do to develop leaders?
 The 7 toughest questions (and how to handle them)
 Employment contracts: How to cut the best deal
 Seven tips for managing price increases
 How to wage executive warfare
Why sharing with competitors is smart
Worst IPO market on record?
 Receive a counter-offer? Don't take it
Using employees' E-mail against them
Sky-high oil will make U.S. go broke
Are you taking too many medications?
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Get lost [on vacation]
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Norm Brodsky is a veteran entrepreneur whose six businesses have included a three-time Inc. 500 company. His co-author is editor-at-large Bo Burlingham.
Taking more vacations increased the value of my company. How cool is that?
No reader of Inc. needs to be reminded of the challenges of going into business. I wonder, however, how much you have thought about the challenges of getting away from it. I've been thinking about them lately, and not just because I sold a majority
interest in my company to a private equity firm last December. Long before the sale, I had set a goal for myself of spending 16 weeks annually -- yes, that's almost a third of the year -- traveling or skiing or simply taking time off. I reached the goal three
years ago, and I have continued the practice ever since. Along the way, I have become increasingly aware of the mistakes other people make when they take a break from their companies. Those mistakes fall into two broad categories that roughly correspond to
the age groups of the people involved. The first group is made up largely of younger people who think they are taking a vacation when in fact they have simply moved their offices outdoors. They spend most of the time doing work. The second group includes
all those baby boomers for whom vacations are no longer enough. What they really want is a change in lifestyle. But because they haven't done the necessary planning, they wind up alienating their customers, undermining their employees, and damaging their
businesses. Now, I will admit that I haven't always been as strong a believer in the importance of taking time off as I am today...
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What can CEOs do to develop leaders?
Forget capital, strategy, R&D. In today’s fast-paced, global economy, the most important criteria for success may well be a robust, active process for identifying, developing and retaining leaders three or more levels below the
CEO. The role talent development plays in a company’s success is hardly news. After all, a smooth succession is the mark of a world-class chief executive and widely viewed as the most important duty performed by a leader and his board. But despite the
intense attention paid to the selection of and transition to a new CEO, succession is a far from perfect science. In any given year, chances are good that you can find one or more headline examples of a troubled transition. Witness Howard Schulz, who
recently returned to the helm at Starbucks to perk up the flagging coffee company. Or Michael Dell, who reclaimed the top seat at his namesake company early last year, looking to pull a Steve Jobs-style founder recovery effort. In fact, with Jack Welch
ripping into his anointed successor for missed earnings, even the much-celebrated GE succession story is looking less than stellar. [That companies falter at even this most critical of leadership development endeavors underscores the challenge CEOs face
in nurturing new leaders—whether for the CEO post or for leadership roles two to three levels down the line.] [What can CEOs do—what should they do—to influence the development of critical talent? Often, companies best known for producing leaders
share a common trait: assiduous involvement of the boss. P&G’s A.G. Lafley takes time coaching regional leaders one-on-one to be “courageous and inspiring.” GE’s Jeff Immelt personally teaches up and comers on leadership style. Personal involvement is
also key for Ed Ludwig, CEO of Becton, Dickinson, who sees spending time with top employees at the company’s BD University as a way to both...]
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The 7 toughest questions (and how to handle them)
Managesmarter Classic: In the professional world, tough questions are as fundamental as paper clips and staples.
Starting with the employment interview and ranging through staff meetings, management reviews, informal briefings and formal presentations, almost every business encounter has the potential to draw dangerous crossfire. And in many circles, inquisitorial
grilling is as much a part of the business ritual as a handshake to seal a deal. Why do business people ask tough questions? Because they are mean-spirited? Perhaps. Because they want to test your mettle? Maybe. More likely it's because when you make a
presentation, you assume the role of a solicitor. In that role, you ask those you solicit (i.e., opposite parties, target audiences) to change. Most people are resistant to change and so they kick the tires. You are the tires. How then to avoid
damage from the kicks? How do you survive slings and arrows unleashed? How do you handle tough questions in the line of fire? The savage seven During my 40 years in the communication trade, which has ranged from control rooms in the CBS Broadcast Center
in Manhattan to the boardrooms of some of America's most prestigious corporations, I have heard — and have asked — tens of thousands of tough questions. But all of them
can be distilled into just seven types. [Here they are and here's how to handle them...]
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Employment contracts: How to cut the best deal
You've negotiated debt covenants, mergers, and supply contracts — but do you know what should be included, and struck, from your employment contract? Among the first
things to think about when reviewing a new job offer is what's going to happen when you leave the job.
To be sure, termination clauses are often the most-negotiated elements of employment contracts. They can also be deal busters. Consider a recent situation that pitted a highly sought-after CEO against a hard-nosed chairman of a real estate development
firm. They had a hand-shake agreement for the CEO to leave his current job and join the developer. The coveted executive was regarded as the number-one candidate in the entire region, and potentially a key driver of the company's future success. The
chairman, who prided himself on being a savvy negotiator, told lawyers to include a harsh termination clause in the employment contract that was being drawn up for the new CEO. By the chairman's lights, the clause would serve as a bargaining chip he
could use to whittle down his original lucrative offer. Among other things, the chairman had promised the future CEO a huge supplemental retirement benefit because he
was leaving a lot of money on the table at his existing job. The lawyers balked at the idea as risky and unnecessary, but they eventually acquiesced to the boss's demand. As a result...
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Seven tips for managing price increases
More customers than usual will be looking out for price promotions, but don't give away the store to those who don't need the discount.
Strong brands can hold consumer loyalty while increasing retail price points.
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When driving these days, do you look at the prices every time you pass a gas station?
Do you notice yourself paying more attention to the prices of everything you buy? You are not alone. Consumers everywhere are more price aware. People who've been indifferent to price increases for years are suddenly amazed at what things now cost.
How can marketers cope not just with inflation but with consumer sticker shock? [Here are 7 savvy tips to better manage price increases...]
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How to wage executive warfare
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David D'Alessandro wasn't born with much business acumen. The Utica (N.Y.) native went to Syracuse University with the idea of becoming a journalist.
"Unfortunately," D'Alessandro says, "I just wasn't a good enough writer." So he left journalism and turned to corporate management, rising to the CEO spot at John Hancock Financial Services, in 2000. Now he has written his third book, Executive Warfare, a
guide to climbing to the top of the corporate ladder. Executive Warfare follows D'Alessandro's Brand Warfare and Career Warfare, his guides for beating other brands and beginning that corporate ladder climb, respectively. [I was stunned at how many
people I know become deer in the headlights when they make it to upper management," D'Alessandro says. In middle management, it's enough to work hard and be smart. But at
the top, it's suddenly not. "Everyone up there is smart and hardworking," he points out. What separates the wheat from the chaff, then, is ...]
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Why sharing with competitors is smart
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Jim Koch, founder and chairman of Boston Beer Co., explains why it shared 10 tons of hops at cost with craft brewers.
Earlier this spring, we at Samuel Adams decided to share 10 tons of hops at cost with other craft brewers whose businesses had been imperiled by price hikes and crop shortages.
Some business leaders may see this as enabling the competition at the precise moment we could have beaten it. I see it as both the right thing to do and smart business. The craft beer segment is championed by a fairly close knit group of passionate
brewers who operate as much like colleagues as competitors. Brewers are entrepreneurs, but they are also craftsmen and artisans who love comparing brewing tips, ingredients and beers. We also love educating consumers about what makes beer great. In turn,
those curious consumers seek the variety we tell them is a hallmark of craft brewing. Variety comes through having many entrepreneurs, competitors, simultaneously innovating with new recipes. There's a palpable sense that we succeed together or not
at all. This is true for many business sectors that have a core of small, entrepreneurial players, but it's especially true when those small businesses have to compete with giants one hundred times their size, the way craft brewers have to
compete with multi-national breweries like Anheuser-Busch, SAB Miller-Coors and Diageo. [What can leaders in other industries take away from our experience? Of course a rising tide lifts all boat, but more than that, leaders can be...]
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Worst IPO market on record?
When M. Benjamin Howe headed up technology investment banking for Montgomery Securities in the mid-1990s, the market for initial public offerings was a fountain of profit.
In 2006 alone, Howe and other bankers helped take public 270 companies that were financed by venture capitalists. With so much deal flow, it was a wonderful time to be a boutique investment bank like Montgomery, which made a fortune catering to the
high-tech set. "We all used to chase the IPO," says Howe. Today, Howe and other bankers are shunning such deals.[ The market for initial public offerings is on ice. In the second quarter of 2008, there were no IPOs for companies with venture capital
financing, according to the National Venture Capital Assn. (NVCA). That's the first time a quarter has passed without an initial public offering since 1978. This dismal performance follows an unusually slow first quarter during which only five
venture-backed companies went public. The situation is so dire that representatives from the NVCA are making a press tour and calling it a "capital market crisis" for the startup community. "It will be the worst year in IPO volume in 20 years," predicts
Howe. ] [Such a crisis, they claim, could have terrible consequences for the U.S. economy. If the current IPO drought continues, venture capitalists fear fewer new
companies will get funded. More venture capital firms are likely to go out of business. And without more new businesses, that could crimp the creation of ...]
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Receive a counter-offer? Don't take it
Pitting your employer against another in a bidding war for you is often career suicide.
A few years ago, I recruited an executive to run a mid-level company. The night before he was supposed to start his new job, the executive called to say he was staying put. The board of directors at his current company--a major multinational retailer--had
offered to name him CEO in one year's time. I was aghast, but my former candidate could hardly envision a better scenario. He had leveraged an offer to run a mid-sized
company and used it to land the coveted top spot at a retailing giant. No greater career coup exists, right? Wrong...
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Using employees' E-mail against them
Two Bear Stearns executives learned a hard lesson this week:
If you're going to say something inappropriate, don't write it in an e-mail. An online exchange between fund managers Matthew Tannin and Ralph Cioffi questioned the performance of certain funds in which they were investing clients' money. But their
public comments told a different story, and now those e-mails are the smoking gun in the civil and criminal cases against them. If convicted of conspiracy and securities fraud, the two could face jail time and heavy fines. Will employees ever learn that
anything they write in an e-mail can and will be used against them? "This stuff is obtainable, and it's difficult to deny once it's printed out," says Josh Bowers, a labor lawyer in Washington, D.C. Of course, we're not encouraging you to behave
illegally offline, either. But the risk of getting caught online is high. Employees send hundreds of e-mails daily from their work computer, and experts say they too often broach subjects that should be avoided. The most common? Sex. Many employees
write e-mails or forward jokes with sexual overtones. On the one hand, forwarded jokes are usually meant to be harmless. The danger comes, however...
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Sky-high oil will make U.S. go broke
Stratospheric crude oil prices precipitated by speculation are wreaking havoc on the U.S. economy.
Based on income tax withholdings data from the Daily Treasury Statement, the wages of all U.S. workers on payrolls were unchanged on a year-over-year basis in the past two weeks (Friday, June 6 through Thursday, June 19) and rose 1.1% year-over-year in the
past four weeks (Friday, May 23 through Thursday, June 19). Both of those growth rates are well below the 2.8% year-over-year in May, and they are consistent with an economy that is contracting sharply. As long as oil prices stay above $120 per barrel, the
economy is more likely to slow than strengthen, and companies are not likely to announce much float shrink. With real wages falling, large numbers of jobs being shed, gas prices exceeding $4 per gallon almost everywhere and home prices falling about 1%
per month nationally, this year is going to be tough for American consumers. Believe it or not, there is plenty of oil in the world. What is in short supply are investors willing to go short oil futures. The open interest on oil futures
worldwide is 2.6 million contracts. With oil prices at $135 per barrel, each contract is worth $135,000. To control $135,000 of oil, investors have to put up no more than $10,000. [ What is happening now is not demand destruction, it is a financial
disaster. The U.S. consumes 21 million barrels of per day. At $135 per barrel, the U.S. spends $1.0 trillion per year on oil, which is equal to 15% of the $6.8 trillion in take-home pay of everyone who pays taxes. If oil prices rose to $200 per barrel,
the U.S. would spend $1.5 trillion per year on oil, which would be equal to 22% of take-home pay. Moreover, those percentages of 15% and 22% do not even include the cost of coal or natural gas. In other words, the U.S. will be broke long before oil prices
hit $200 per barrel, and the rest of the world would be sure to follow. Another way to put the oil crisis into perspective is to ...]
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Are you taking too many medications?
The next time you take a peek in your friend's or neighbor's medicine cabinet, don't be surprised if it's a little crowded.
Statistics are showing that more and more Americans are taking prescription drugs, and in increasing quantities. It's estimated, for instance, that from 1994 to 2005 the number of prescriptions purchased increased 71% (from 2.1 billion to 3.6 billion) compared with a 9% growth in the U.S. population, according to the Henry J. Kaiser Family Foundation, a nonprofit that analyzes health care issues. During roughly the same period, the average number of retail prescriptions per capita increased from 7.9 to 12.4. Now, new research by the pharmacy benefit manager Medco Health Solutions (nyse: MHS - news - people ) is showing for the first time that a majority of...
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