Executive Times

Volume 9, Issue 4

April 2007

2007 Hopkins and Company, LLC

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Moody

While the majority of Executive Times readers didn’t find their names on the Forbes’ Billionaire List (http://www.forbes.com/2007/03/07/billionaires-worlds-richest_07billionaires_cz_lk_af_0308billie_land.html) this year, somewhere or other there’s a ranking or list or rating that cheers those who are at or better than expected, and can distress those who are ranked low. The information could come from the reams of proxy statements released this season, or from internal performance ratings or from any of the countless wins or losses that an executive scores each day. The smiles or frowns that follow rankings can spread throughout the workplace, since the attitude of leaders can be contagious. Frowns come easily this time of year when personal tax returns are filed. Maybe your picks reached the final four, maybe they didn’t. Wise executives understand how moods, attitudes and outlook can have a huge impact on results. As you read the stories selected for this issue, think about the ways in which you can improve the results in your organization by improving your own attitude, and the ways in which you influence others for the better. If you’re gloomy about your current situation and are thinking about a change, consider sending your resume to Warren Buffett, who announced in his annual shareholder letter (http://www.berkshirehathaway.com/letters/2006ltr.pdf) that he’s looking for someone to manage a huge portfolio and who would succeed him as Berkshire Hathaway’s chief investment officer. He said, in part, “Temperament is also important. Independent thinking, emotional stability, and a keen understanding of both human and institutional behavior is vital to long-term investment success. I’ve seen a lot of very smart people who have lacked these virtues.”

Fifteen new books are rated in this issue, beginning on page 5. One book is highly recommended with a four-star rating, twelve books are recommended with three-star ratings, and two books are mildly recommended with a two-star rating. Visit our 2007 bookshelf at http://www.hopkinsandcompany.com/2007books.html and see the rating table explained as well as explore links to all 312 books read or those being considered this year, including 45 that were added to the list in March. If there’s something missing from the bookshelf that you think we should be considering or if there’s a book lingering on the Shelf of Possibility that you think we should read and review sooner rather than later, let us know by sending a message to books@hopkinsandcompany.com. You can also check out all the books we’ve ever listed at http://www.hopkinsandcompany.com/All Books.html.

Kicks

Some executives find fun while at work, while others seem to have one personality in the office and another outside. We read in a Page One story in The Wall Street Journal on March 7 (http://online.wsj.com/article/SB117323155011829034.html) that executives at Wal-Mart lead the way for all employees in promoting and having fun with what they call Value Producing Items or VPIs. For decades, the company has rewarded employees for finding creative ways to promote selected products, without following the approaches taken by other retailers, or by relying on the promotions of manufacturers. Sam Walton mentioned his first VPI, Moon Pies, in his autobiography. According to the Journal, “The designation, especially for products selected by executives, ensures that a product will get special treatment at the world's largest retailer. Store employees, who sometimes adopt their bosses' VPIs as their own, give their pet products the spotlight and dream up offbeat marketing gimmicks to promote them. Store workers who push their chosen VPI to top-seller status can reap cash prizes of up to $500 and trips to Wal-Mart's annual meeting in Arkansas, a raucous celebration more like a rock concert than a typical corporate get-together. … Manufacturers pull out all the stops to get Wal-Mart executives to pick their products as a VPI. Kellogg Co. promoted its Special K cereal as a 2003 VPI by distributing collector cards within Wal-Mart's ranks depicting Wal-Mart executives as superheroes. One card has a doctored photo of Wal-Mart Vice Chairman John Menzer in a tight ‘Captain Wal-Mart’ outfit. Mr. Menzer signed on to tout Special K, but company officials couldn't say whether that was before or after the ‘Captain Wal-Mart’ card was made. Kellogg declines to discuss the program. Last year, General Mills Inc. found an unexpected champion for its Cheerios cereal as a VPI. General Mills discovered that Pam Pike, a two-decade Wal-Mart employee in Bentonville, Ark., had shed 50 pounds by eating Honey Nut Cheerios, reducing her meal portions and walking for 30 minutes a day. General Mills stationed in Wal-Mart's headquarters cafeteria a life-size poster of Ms. Pike touting Cheerios and printed her weight-loss story on fliers it distributed to Wal-Mart workers. Mr. Scott, Wal-Mart's CEO, chose Cheerios as one of his VPIs that year. And Ms. Pike, now 57 years old, has lost an additional 14 pounds.” Kicks are not just for kids, and the executives at Wal-Mart have found ways to align business growth with having fun.

Are you so serious at work that others think you lack the fun gene? What’s the equivalent of a VPI for your organization? What can you do to have fun in producing better business results? Does your temperament create a barrier to finding creative ways of achieving growth?

Contagious
When someone walks through the work area where you and your direct reports gather, are they more likely to be infected with positive or negative emotions? Does that match what you want? Are good moods and bad moods contagious at work? According to the Career Couch column in The New York Times (3/11) (http://query.nytimes.com/search/query?query=Barsade&srchst=nyt), in reporting on the research of Wharton professor Sigal Barsade (http://www-management.wharton.upenn.edu/barsade/), moods at work are contagious. “Professor Barsade has done studies on emotional contagion that show that we unconsciously mimic the expressions and demeanor of those around us, along with the moods behind them. We may be oblivious to the effect, ‘but it still influences how we think and what we do,’ she said. Fortunately, good moods are also contagious, she has found. So the clichés that you should put on a happy face and let a smile be your umbrella actually have some validity.” According to the Times, Rice professor Jennifer George (http://jonesgsm.rice.edu/Faculty/JenniferGeorge/Default.asp) notes the value of negative emotions. “Positive moods are better for promoting confidence, creativity and new ideas, but negative moods can be good for focusing on the work at hand and getting it done, she said. That is because people in bad moods tend to be more realistic, more self-critical and more attuned to detail, she said. Both positive and negative moods are needed to work effectively, Professor George maintains. As moods inevitably fluctuate throughout the day, the best workers -- and their managers -- know how to harness that energy, she said. Moods are also important signals. Some moods originate in an argument at home or in a fleeting irritation; others have a cause that is directly related to work. ‘If everyone in a workplace is in a bad mood, maybe it's a signal that there's something wrong there,’ Professor George said. In that case, awareness of the problem can be the first step toward fixing it. On the other hand, if you are the only one in a bad mood, and it lasts a long time, that may be a signal that the problem lies within yourself, and that you need to seek help.” Now that you know that moods at work are contagious, and that both positive and negative emotions can be appropriate, what will you do to align moods with getting the right things done?

Are you usually aware of your moods? How are emotions expressed in your workplace? Is it ok to express negative emotions? How aware are you of the ways in which your moods as a leader influence or are caught by others? Does the mood caught from you help or hinder getting the right work done?

Mix
When Wall Street Journal columnist Justin Lahart read two recent, but different survey reports, he noticed an interesting similarity, and commented on this in his 3/8 Ahead of the Tape column (http://online.wsj.com/article/SB117331699827130339.html). In both reports, CEOs has a sunnier outlook than did CFOs. The Business Roundtable’s quarterly CEO survey (http://www.businessroundtable.org/newsroom/Document.aspx?qs=5956BF807822B0F1ADC4E8422FB51711FCF50C8) “shows that leaders of America's top companies continue to see the U.S. economy in a stable growth position moving forward, with conditions generally favorable for business expansion.” At the same time, Duke's Fuqua School of Business and CFO Magazine released their quarterly CFO survey (https://www.fuqua.duke.edu/news/cfosurvey-0307.html) noting that, “CFOs say they expect to increase capital spending, hiring and merger activity. But earnings growth is expected to slow, and CFOs are concerned about rising labor costs, high health care costs and a shortage of skilled labor.” Lahart comments, “Many CFOs said CEOs were naturally optimistic and were expected to be so. The unvarnished response of one CFO: ‘CEO is a moron.’ Yet the pairing of an optimistic CEO with a pessimistic CFO might be a potent combination when it comes to running a business, says Duke professor John Graham. The CEO takes risks that help the company grow while the economy is buzzing, and the CFO keeps an eye on what may go wrong. It might be the right mix for this environment -- an expanding economy loaded with uncertainties.” This perspective leads to reflection about whether one’s role in an organization influences outlook (“show me where you sit, and I’ll tell you where you stand”), or if individuals with a certain outlook gravitate toward the roles where they best fit and can make the best contributions.

How is your outlook influenced by the role you play within your organization? Do you understand and value the differences in outlook within your organization? Do you consider anyone with an outlook different from yours to be a “moron”? Are you the moron in your organization?

Barking

Lisa Belkin, who writes the Life’s Work column in The New York Times, wrote a pleasant column in the March 11 issue, about how dogs at work can humanize the office and what started as a trend among some dotcoms has spread to many companies that now allow dogs at work. She reported on March 25 (http://www.nytimes.com/2007/03/25/business/yourmoney/25wcol.html?ref=business) some of responses to this column. ‘“On a recent Monday,’ one reader wrote, ‘I began my workweek with the discovery that a dog had defecated under my desk.’ … ‘My boss thinks his Shepherd is the sweetest thing in the world,’ another wrote. ‘But I have always been nervous around dogs, and I have to take a deep breath every time I walk past the copy room, where Killer (not his real name) spends most of his day, because I have visions of the creature jumping out at me.’” Next time you hear about an office going to the dogs, you’ll understand.

Can you imagine that something that makes one employee feel great can make another feel miserable? In your role as leader, how do you referee these differences? Do you need to be the master of both human and canine behavior?

Follow-up

Here’s an update on stories covered in prior issues of Executive Times:

Ø In the April issues of Executive Times we usually provide a selection from Warren Buffett’s annual letter to Berkshire Hathaway shareholders. While we mentioned his search for a successor on page one of this issue, here’s one of our favorite passages in the current letter: “In 2007, our results from the bread-and-butter lines of insurance will deteriorate, though I think they will remain satisfactory. The big unknown is super-cat insurance. Were the terrible hurricane seasons of 2004-05 aberrations? Or were they our planet’s first warning that the climate of the 21st Century will differ materially from what we’ve seen in the past? If the answer to the second question is yes, 2006 will soon be perceived as a misleading period of calm preceding a series of devastating storms. These could rock the insurance industry. It’s naïve to think of Katrina as anything close to a worst-case event. Neither Ajit Jain, who manages our super-cat operation, nor I know what lies ahead. We do know that it would be a huge mistake to bet that evolving atmospheric changes are benign in their implications for insurers.
Don’t think, however, that we have lost our taste for risk. We remain prepared to lose $6 billion in a single event, if we have been paid appropriately for assuming that risk. We are not willing, though, to take on even very small exposures at prices that don’t reflect our evaluation of loss probabilities. Appropriate prices don’t guarantee profits in any given year, but inappropriate prices most certainly guarantee eventual losses. Rates have recently fallen because a flood of capital has entered the super-cat field. We have therefore sharply reduced our wind exposures. Our behavior here parallels that which we employ in financial markets: Be fearful when others are greedy, and be greedy when others are fearful.” You can read the entire letter at http://www.berkshirehathaway.com/letters/2006ltr.pdf.

Ø We read a familiar name in the Wal-Mart article referenced on pages one and two of this issue. In the April 2005 issue of Executive Times we noted Thomas M. Coughlin’s resignation in the wake of a scandal. In the VPI article, we read, “Former Vice Chairman Tom Coughlin, currently serving a 27-month home-confinement sentence for wire fraud and tax evasion, was the king of VPIs before he fell from grace. He once packaged together duct tape and WD-40 lubricant as his VPI. Employees deemed it ‘the perfect redneck gift,’ says Mr. Coughlin, reached at home.”

Legacy

Sacrifice

Some executives have been known to appreciate the mood altering effects of grapes. Ernest Gallo was the business leader behind the family enterprise he started seventy years with his brother, Julio, and that now has a 25% share of the American wine market. When he died a few days short of 98^th birthday in March, he still controlled the company, which is being managed by the third generation of family members. His aggressive approach to marketing cheap wine made few friends for him among vintners. In recent years, Gallo expanded to premium wines, which have won significant awards. We read in Decanter magazine, (http://www.decanter.com/news/112180.html?aff=rss), “He was the first to advertise wine on television, and the point-of-sale materials he created to draw shoppers to his wines were eventually adopted by his competitors. He was a pioneer in exporting – albeit wines of underwhelming quality – and he funded the first endowed chair in enology and viticulture at UC Davis. Gallo sent a legion of trained winemakers and viticulturists into the industry, and his policy of paying growers for their grapes within 30 days of harvest kept many farmers afloat in the early 1990s.” Some years ago, Ernest said of his success, “We could do anything anyone else could do, not because I was brilliant or well-educated, but because I was willing to devote as much time and energy as was necessary, regardless of the sacrifice.” That’s a lesson every executive can appreciate.

Latest Books Read and Reviewed:

(Note: readers of the web version of Executive Times can click on the book covers to order copies directly from amazon.com. When you order through these links, Hopkins & Company receives a small payment from amazon.com. Click on the title to read the review or visit our 2007 bookshelf at http://www.hopkinsandcompany.com/2007books.html).

Title (Link to Review)	Author	Rating	Review Summary	Purchase
Palestine: Peace Not Apartheid	Carter, Jimmy	***	Provocative. Former President presents his three decades of perspective on the issue of peace between Israel and its neighbors and lays out a blueprint for achieving peace if the parties are willing.
Paper Trails	Dexter, Pete	***	Characters. Collection of 82 of Dexter’s newspaper columns, packed with masterful writing, especially with the efficient way in which he presents the character and personality of the people he describes.
Bad Blood	Fairstein, Linda	***	Family. Ninth Alex Cooper thriller takes readers underneath and around Manhattan as Alex learns about the power and strength of family relationships.
Returning to Earth	Harrison, Jim	***	Farewell. Four narrators in the same family combine to present in poetic prose the struggle to live a life at one with nature, and to die with dignity when that life comes to a natural end.
Nature Girl	Hiaasen, Carl	***	Desire. Each character acts to excess in the quest to fulfill specific desires. Great satire and humor throughout, with the strangest ensemble of characters yet.
The White Cascade	Krist, Gary	***	Trapped. Well-written page-turner about a 1910 rail disaster that killed 96 people in Washington’s Cascade Mountains. Debut non-fiction by successful novelist.
Tempting Faith	Kuo, David	***	Impressionable. An inside view of White House life by the former deputy director of the Office of Faith-Based Initiatives, coupled with the author’s personal story and his disillusionment about promises not kept.
My Latest Grievance	Lipman, Elinor	**	Incomplete. Eighth novel by talented writer long on satire, short on plot momentum and character development. Expect playful humor and entertainment.
Talking Right	Nunberg, Geoffrey	***	Words. Linguist diagnoses how Democrats and liberals have lost to Republicans and conservatives the battle of words and phrases that resonate with voters. He offers a prescription to cure this. All readers who care about politics will enjoy this book.
On The Wealth of Nations	O’Rourke, P. J.	***	Lightly. So we don’t have to read the full Adam Smith tome (as if many of us would), busy readers can read this clear and light alternative and glean the key points.
High Profile	Parker, Robert B.	***	Obsession. Jesse Stone and Sunny Randall return as a Paradise murder gives Parker the background to riff on the complexity of relationships, especially when love becomes obsessive.
The Poe Shadow	Pearl, Matthew	**	Uneven. Novel takes the historical facts about Poe’s death and frames them into a compelling story, slowed by the replication of 19^th century writing style and plot twists that race and then stall.
Limitations	Turow, Scott	***	Complexity. Reprised characters and current topics allow Turow to present a terse novel that leads readers toward reflection.
The Go Point	Useem, Michael	****	Templates. Wharton professor presents compelling stories of decisions made, templates for handling decisions, and principles and illustration, making this a practical guide for any reader interested in learning how to make better decisions.
Mindless Eating: Why We Eat More Than We Think	Wansink, Brian	***	Attention. Food psychologist and researcher shares university experiments that provide entertaining reading and prove that attention to small efforts can produce big results.

2007 Hopkins and Company, LLC. Executive Times is published monthly by Hopkins and Company, LLC at the company’s office at 723 North Kenilworth Avenue, Oak Park, Illinois 60302. Subscription rate for first class mail delivery of the print version is $60.00 per year (12 issues). Web version subscriptions are $30.00 per year. Single issues: $10.00 print; $5.00 web. To subscribe, sign up at www.hopkinsandcompany.com/subscribe.html, send an e-mail to executivetimes@hopkinsandcompany.com, call (708) 466-4650, or fax to (708) 386-8687. For permission to photocopy or e-mail Executive Times, call (708) 466-4650 or e-mail to reprints@hopkinsandcompany.com. We will send sample copies if requested. The company’s website at http://www.hopkinsandcompany.com/archives.html contains the archives of back issues beginning in the month after the issue date.

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