Executive Times

Volume 6, Issue 5

May, 2004


ã 2004 Hopkins and Company, LLC

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Sweet Talk

One critical skill is capable of tilting an executive’s performance toward success or toward failure: the ability to communicate effectively. In recent weeks, we ran across many examples of the challenges many executives face in communicating effectively, so in this issue we’re presenting several of those examples for your reflection. As you read about what other executives have faced in trying to decide the right messages to deliver to the right audiences at the right time, think about the effectiveness of your personal communications. How much time do you spend planning your own messages? Are there certain themes that you want to reinforce in all your messages? What examples can you use to leverage the values underlying your own behavior and the behavior you expect others to exhibit? How can you avoid some of the pitfalls others have experienced?


Fifteen new books are rated in this issue, beginning on page 5. One book is rated with one star, one with two stars, and thirteen with three stars. You can also visit our complete 2004 bookshelf at http://www.hopkinsandcompany.com/2004books.html and see the rating table explained as well as explore links to all 2004 book reviews. You can also check this same bookshelf to see what other books we’re reading or considering. If there’s something missing from the bookshelf that you think we should be considering, let us know at books@hopkinsandcompany.com.

You there: speak up!
The cover article in the May 2004 issue of The Atlantic is by former New York Times executive editor Howell Raines, titled “My Times” (http://www.theatlantic.com/issues/2004/05/raines-excerpts.htm). While most of the article presents Raines’ version of what created the Times culture that led to both the Jayson Blair fabrication scandal and Raines’ firing as executive editor, there are great insights for executives on how to lead effectively. You can read about how Raines communicated with his boss, Arthur Sulzberger, how Raines spent a summer doing “homework” to prepare to become executive editor, and how he tried to implement changes. While this is a one-sided story, it’s rare to gain such a glimpse of organizational life, especially one so well-written. Here’s a sampling of several lessons learned: “I knew that I was taking a pounding in the press and on the office grapevine, but I also knew, from observing my predecessors, that changes of the sort we planned would inevitably encounter resistance, and therefore had to be made in the morning of an editorship, rather than in its twilight. I also realized that I had to go directly to the staff to sell my central strategic rationale: that he newspaper had to improve itself greatly from front to back in order to ensure its long-term survival. I was working my way through a series of breakfasts and lunches at which ten or twenty reporters and copy editors at a time could get an unfiltered version of my vision for the Times and question me in any way they liked.
I’ve since heard that some of them were afraid to speak up, and I wish I had been more sensitive to that. I’ve been involved in the combat of ideas for so long that it’s hard for me to understand that people can be put off when, as the British say, one ‘fights one’s corner hard.’ Moreover, even my friends and family have warned me about ‘the look’ – an apparently warlike expression that comes over my face when I am thinking intently about something. One of my closest friends on the paper said that at such times I look like ‘an angry hawk.’ That’s certainly a failing on my part, and doesn’t accurately reflect the fact that I love conversation and contrary ideas, and am drawn to people with a quick sense of humor.
In any event, as we unveiled plans for year two, I knew I had the support of my publisher and I thought I had the luxury of time. For better or worse, I didn’t care what times people said so long as they broke stories…”

Who tells you when your communication approach puts people off? What do you do that inhibits others from speaking up when they are with you? Are some of your change efforts heavily dependent on how much time you’ll be around to implement them? What would happen if you don’t have as much time as you think you do? What would you do differently now? How likely is it that your methods for receiving unfiltered information are working? How do you know?

Pointless Dialogue
Some executives have the good fortune to take on a job and succeed where others failed. Some executives have the bad fortune to follow someone perceived as successful, and then have to report to that person. No one had worse fortune in recent years than Shell executive Walter van de Vijver who followed Sir Philip Watts as CEO of the company’s Exploration and Production unit in mid-2001. A report to the Shell Board released in April (http://www.shell.com/static/investor-en/downloads/gac_report.pdf) describes how Watts prematurely increased estimates of proved reserves, leaving van de Vijver with unrealistic performance targets to achieve. The two men engaged in dialogue over several years while the company failed to disclose what it should have about reserves. Some excerpts from the report, representing van de Vijver’s messages to Watts and others:
 “I must admit that I become sick and tired about arguing about the hard facts and also cannot perform miracles given where we are today. The single largest issue facing EP is the shrinking opportunity portfolio exacerbated by too aggressive reserves bookings in the past. … I am becoming sick and tired about lying about the extent of our reserves issues and the downward revisions that need to be done because of far too aggressive/optimistic bookings. …This is absolute dynamite, not at all what I expected and needs to be destroyed. … [W]e are heading towards a watershed reputational disaster. … Throughout this entire process, my attempts to bring the reserve issues to management’s attention were met with resistance. … Because the unspoken rule within the Company is that you are not supposed to go directly to individual Board members or to the Group Audit Committee, I had to rely on the Chairman and the CFO to advise the GAC and assumed that happened in early December.” Both executives have resigned from Shell.

What situation would lead you to go around your boss to someone else? In Shell’s case, van de Vijver communicated candidly to Watts, his boss, but Watts disagreed that there was a problem. Had you been in van de Vijyer’s position, what would you have done differently? When you disagree or are in conflict at work, how do you resolve the conflict? Does a bad situation fester, or does communication lead to resolution? When your boss is the barrier to your success, what do you do? At Shell, there was both a performance problem with unrealistic targets, and a disclosure problem about reserves. Would you have dealt with both problems? How?

Another outside investigative report (http://www.usatoday.com/news/2004-04-22-Report.pdf) was issued in late April when USA TODAY disclosed the findings of a panel of journalists asked to uncover why foreign correspondent Jack Kelley got away with fabricated and plagiarized stories for a dozen years. Here are some observations from the report:
 “…higher performance standards are putting intense pressure on some members of the staff. They may say they find a climate of fear because their own performances are marginal. Thus, to the extent there is fear, it may be an expression that some on the staff feel upset or threatened and do not want to become casualties. … We found a newsroom that worried most, not about what they were giving the readers of USA TODAY, but about giving the editors what they wanted to hear. That was an atmosphere that was bound to have its effect on an ambitious, cunning, driven reporter like Jack Kelley who, among his most obvious characteristics, had a deep desire to please those above him. The effect of this culture, whatever it is called, combined with an organizational structure that creates walls between departments and reporting lines that divide management even in the same department, has been to silence the newsroom. … It is ironic that staff members of the daily that communicates with more readers than any other publication in the nation, failed for years to communicate effectively among themselves about the problems of the reporter who disgraced himself and humiliated his newspaper. …”

What do you know about the consequences of the performance expectations that you have communicated? Have there been unintended consequences? Have you communicated in one form or another that it’s more important to please you than to satisfy the needs of your organization’s customers? What are the consequences of that expectation? How silent is the equivalent of your newsroom? What can you do to ensure that there’s a willingness to speak up, especially about concerns of quality, honesty, professionalism? How do you ensure communication among the silos of your organization? Who breaches the walls that can be built up among departments? If you’re not leading by example in this area, what are you afraid of?

None of Your Business
Privacy, even for executives of public companies, exists and needs to be respected. Clarity in understanding what not to communicate pays off, especially in crisis situations. Senior executive illness is one area where there are multiple role models to consider. Some organizations communicate a lot of information about executives’ health. Others remain relatively silent and disclose few, if any, details. The most recent example to think about came from Kraft Foods in recent weeks. At the end of March, Chairman Louis Camilleri released the following message inside and outside the company about the Kraft CEO, “I am writing to inform you that Roger Deromedi was admitted to a hospital this past weekend with an undiagnosed medical condition. I am in contact with Roger and Sandy and I have conveyed to them our strong support and good wishes. I am sure that everyone will respect Roger's privacy and allow him to devote all his energies to a prompt and complete recovery. Pending Roger's return, his direct reports will report to me.” All audiences wanted to know more, but Camilleri remained silent for two weeks. Then, this message was released: “I am delighted to inform you that Roger is in the process of making a complete recovery. After a comprehensive series of medical tests, his condition has now been diagnosed as a viral infection accompanied by acute dehydration. Roger is expected back in the office May 10. I would like to thank you for respecting Roger's privacy and for your understanding and patience during the last two weeks.” Camilleri endured the internal and external pressure to talk more about Deromedi’s medical condition, and followed the path he felt was appropriate, in effect telling everyone: “It’s none of your business.” Some say that the medical condition of the CEO of a public company is the business of interested stakeholders. Whether you agree or disagree, be prepared to know what you want to say and what you will not say.


Are you clear in your mind about what constitutes privacy for you and those in your organization? How well-known is your position on what must not be communicated? Do you have the courage to say, “None of your business?” 


Here are selected updates on stories covered in prior issues of Executive Times:

Ø      We last checked in on DaimlerChrysler CEO Jürgen E. Schrempp in the July 2003 issue of Executive Times when we called attention to a Barrons article anticipating his dismissal as CEO, an action that has not taken place. We read in Business Week (4/19) (http://www.businessweek.com/magazine/content/04_16/b3879085_mz054.htm) that shareholders made multiple calls for Schrempp’s dismissal during the April 7 shareholders meeting in Berlin. “In prior years, activists and shareholder gadflies have tossed verbal stinkbombs at Schrempp and Kopper. But everyone knew these were mere nuisances. This time the protests -- in a full-throated roar -- came from the cream of Germany's asset-management world, including DWS and Deka Investment, which represents the savings banks and is the second-largest fund in Germany. They are asking tough questions. ‘How do you justify $48 million in remuneration for the [DaimlerChrysler] management board when BMW gives its management $13 million for a better performance?’ asks Michael Schneider, a Deka fund manager. Because several big funds and the representatives of minority shareholder groups opposed a move to ratify the board's actions in 2003, the company got 87% of the vote. That is seen as a sharp reprimand in a passive shareholder culture where 99% approval of such measures is routine. If key elements of Germany Inc. start to turn on Daimler, then this annual meeting could mark the start of the real revolt against management, not the end of it. What can Schrempp and his managers do? Performance is the only thing that helps. But most of all, Schrempp has to realize that his goal in life is to make shareholders happy.” Stay tuned to see if Schrempp and DaimlerChrysler perform.

Ø      Through great restraint, we’ve remained silent about former Enron CEO Jeffrey Skilling since the January 2002 and February 2002 issues of Executive Times but when we read multiple stories about his recent intoxicated antics in New York City, we felt compelled to call your attention to the most complete description of his escapade. Read The Washington Post (4/21) (http://www.washingtonpost.com/wp-dyn/articles/A32548-2004Apr21.html) to learn some of the worst executive behavior you could ever exhibit.


Second Act
Two of the candidates the McDonald’s Board of Directors considered for the CEO job in 1998 were Jack M. Greenberg and James R. Cantalupo. They chose Greenberg, and Cantalupo retired a year later to serve on other boards. At the end of 2002, the Board was ready to oust Greenberg for poor performance, and they asked Cantalupo to come back. He did, and immediately refocused the company on customers, a not-so-typical action by a financial guy. Within a year, his refocusing was working, especially shown by increases in same store sales. Another immediate action Cantalupo took in early 2003 was to bring in Charlie Bell as COO and to prepare Bell to ultimately succeed Cantalupo as CEO. When Cantalupo died of a heart attack in late April, the Board acted within hours to appoint Bell as CEO. Cantalupo provided a model for executives to follow: clarity of focus, attention to customers, and preparation for transition. Presiding Director Andrew McKenna said of Cantalupo, “Jim was a brilliant man who brought tremendous leadership, energy and passion to his job. He made an indelible mark on McDonald’s system.” He’ll be missed, and will be remembered for making a critical impact in leading a great company through difficult times and reminding all its employees of what constitutes corporate success. 

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 2004 bookshelf at http://www.hopkinsandcompany.com/2004books.html).


Title (Link to Review)



Review Summary


The Scarlet Letters

Auchincloss, Louis

Puritan. Hawthorne’s tale updated to 1950s Manhattan. Well-written with complex characters, depth and thoughtfulness about loyalty, power, mores and temptation at work and in relationships.

Flyboys: A True Story of Courage

Bradley, James

Disturbing. A fine Memorial Day book that will leave readers perplexed about wartime atrocities by all sides during World War II in the Pacific. Heroism and barbarism described along with courage and the effects of propaganda.

The Pecking Order: Which Siblings Succeed and Why

Conley, Dalton

Size Matters. Lots of factors, but not birth order, predict sibling success, based on this analysis of lots of data. Read and recognize that you and your siblings were not raised equally.

We Are Lincoln Men: Abraham Lincoln and His Friends

Donald, David Herbert

Lonely. Outstanding historian and Lincoln scholar selects six individuals who could be considered close friends of Lincoln and explores the nature of those friendships and the impact of those men on Lincoln’s often lonely life.


Finder, Joseph

Malfeasance. As if there weren’t enough real stories of corporate malfeasance in the media, here’s a novel that takes on that theme and presents executives in the worst possible way. An entertaining thriller.

Voyage to the End of the Room

Fischer, Tibor

Home Sweet Home. Clever Brit novel, often funny, always highly creative. London recluse finds the world by bringing it to her flat, and then leaves her flat to find herself. Not your grandfather’s Robinson Crusoe.

How Congress Works and Why You Should Care

Hamilton, Lee H.

Representative. Plain-spoken former Indiana congressman and vice chair of the 9/11 commission tells the simple and complex story of how things get done in Congress and why we should all pay attention to the work of Congress.

The Real Thing: Truth and Power at the Coca-Cola Company

Hays, Constance

Arrogance. 400 pages about arrogant executive behavior from the beginning of the company until almost the present. Recent executive turmoil at the company calls for a sequel.

The Dumbest Moments in Business History

Horowitz, Adam

Dim. Some chuckles, but not nearly as amusing as the 101 Dumbest Moments in Business listed in Business 2.0 that led to this book. Silent on the whole S&L debacle: how dumb is that?

A Spectacle of Corruption

Liss, David

Politics as Usual. Foray into 18th century British politics provides entertaining respite from current U.S. presidential election cycle. Well-written historical fiction with meticulous description of London scenes and period dialogue.

Five Days in London: May 1940

Lucaks, John

On the Brink. Defeatists and appeasers in the British government were ready to give up the fight against Hitler, but Churchill convinced them otherwise. Lucaks claims these five days saved Western Civilization from the revolution of National Socialism, its greatest threat.

My Father’s Footprints: A Memoir

McEnroe, Colin

Da Paradox. Second only to the power of mother-daughter relationships would be father-son relationships. Well-written memoir delves into mortality, grieving, and losing a parent while being a parent.

Bad Business

Parker, Robert B.

Human Nature. 31st Spenser novel presents Enron-like company (Kinergy) and the consequences of its culture of marital cheating and corporate malfeasance.

Old School

Wolff, Tobias

Prodigal. Fine, tightly written novel set in 1960s at prep school. A study in how character is formed by expectations, failures, and redemption.

Walking to Vermont

Wren, Christopher S.

Take a Hike. Well-written personal tale by retired NY Times writer and editor of his journey into retirement by walking from Times Square to his home in Vermont in five weeks. Even readers under age 65 will enjoy this chronicle.


ã 2004 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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About Hopkins & Company

In addition to publishing Executive Times, Hopkins & Company engages in a variety of other activities focused on helping executives succeed, including:

Ø      Coaching: helping individuals or teams find ways to do more of what works for them, and ways to avoid what's ineffective

Ø      Consulting: helping executives solve business problems, especially in the areas of strategy, service to market, performance and relationship management

Ø      Communications: helping executives improve their written and oral messages

To engage the services of Hopkins & Company, call Steve Hopkins at 708-466-4650 or visit www.hopkinsandcompany.com.