Volume 10, Issue 7
2008 Hopkins and Company, LLC
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Free advice is usually worth every penny one pays for it. Two thousand years ago, Publilius Syrus included in his Maxims, “Many receive advice. Few profit by it.” Readers of this issue have the opportunity to join those few. Oscar Wilde inspired the writing of this issue by musing, “The only thing to do with good advice is pass it on. It is never any use to oneself.” As you read the stories packed with advice in this issue, think about how receptive you are to advice. Consider those on whom you rely for wise counsel. Think about the extent to which you seek advice as Erica Jong claims, “Advice is what we ask for when we already know the answer but wish we didn't.” Every issue of Executive Times offers this advice: consider reading something, think about it, and reflect on what it means for you.
Fifteen new books are rated in this issue, beginning on page 5. One book is highly recommended with a four-star rating; eleven are recommended with three-star reviews; and three books are rated with two-star recommendations. Visit our 2008 bookshelf and see the rating table explained at http://www.hopkinsandcompany.com/2008books.html as well as explore links to all 296 books read or those being considered this year, including 24 that were added to the list in May. 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 email@example.com. You can also check out all the books we’ve ever listed at http://www.hopkinsandcompany.com/All Books.html.
The cover story of the May 12 issue of Fortune is titled, “The Best Advice I Ever Got,” (http://money.cnn.com/galleries/2008/fortune/0804/gallery.bestadvice.fortune/index.html) and inside twenty-five executives share their insight about the advice that most changed their lives. What’s striking about this sampling is that in every case, the advice seemed simple and brief, as Horace himself advised, “Whatever advice you give, be brief.” Some of the selections are like tennis serves that ace an opponent. Pete Peterson, co-founder of the Blackstone Group, recalled how his grad school professor, Milton Friedman, embedded Adam Smith’s insight: focus on the things you do better than others. Hewlett-Packard CEO Mark Hurd recalled a single comment, “Nine years after starting at NCR, I moved to a head-office job in Dayton in 1988. An NCR executive was giving a presentation; he had great slides and an even better delivery. The CEO, Chuck Exley, listened to the entire presentation in his typically gracious, courteous manner. At the conclusion, he nodded and said something brief but profound: ‘Good story, but it's hard to look smart with bad numbers.’ And as I reflected on it, the presenter, articulate as he was, as good as his slides were, simply had bad numbers. That comment has always stayed with me. You have to focus on the underlying substance. There's just no way to disguise poor performance. I've tried to follow that advice throughout my career. Deliver good numbers and you earn the right for people to listen to you.” Like many of those selected for this article, Trian Fund Management CEO Nelson Peltz noted the advice he received from his father, “It was my dad who gave me the best advice of my 45-year career: ‘Get sales up, and keep expenses down.’ That sounds simplistic, but it's the way my father got 4% margins in his food business when his competitors made 1% or 2%. The goal is to get revenues moving and to keep expenses from rising at the same rate so that margins expand.” If you’re thinking ahead to Father’s Day, consider the advice you’re received from your father, and, if you’re able, find a way to say thanks. Think, too, about the advice you’re giving to your children, and focus on what you might want them to remember.
What advice has most influenced your life? What was the best, and what was the worst? Who provided it? What advice have you been passing along to others? At work, who looks to you for advice, and from whom do you seek advice? Are all parties getting something of value?
Sometimes the road to success shares the path of least resistance, according to Chip and Dan Heath in their “Made to Stick” column titled “Get Laziness on Your Side” in current issue of Fast Company (http://www.fastcompany.com/magazine/125/get-laziness-on-your-side.html). They note that by choosing the default option carefully for employees, customers or others, an organization can achieve desired results. That’s because most of us don’t bother deviating from some automatic elections, like newspaper delivery at hotels, 401k contributions, and organ donation. Executives who alter the default option to nudge others toward the most desired outcome are likely to see that outcome achieved.
When was the last time you examined the default options for employees, customers and other stakeholders? Can your organization benefit from a nudge that will tilt participation toward the option that produces the best results?
Of all the advice heaped on executives, that which deals with selecting and retaining the right people may be the most overwhelming. Everybody weighs in on skills needed, personality, fit with the organization, and potential. There are three recent articles that add value to the way executives go about picking and keeping the best talent. An article in the current issue of CEO Magazine (http://www.chiefexecutive.net/ME2/dirmod.asp?sid=&nm=&type=Publishing&mod=Publications%3A%3AArticle&mid=8F3A7027421841978F18BE895F87F791&tier=4&id=234591D0D8714C3EBE6B9C6ADC5D23C2) offers practical advice on dealing with an inherited executive team. There are two main issues for the new boss to consider: who will be on the team, and what can be done to foster effective interaction. On the first issues, the authors note, “…CEOs have had little guidance on how to judge whether to keep most of their inherited team, or look for new blood. There is much at stake. You do not want to be overly harsh and fire someone who could have succeeded. Headhunters are not cheap, searches take time and the dirty secret is that only half of new hires work out. So, a ‘false negative’ is costly. However, at the same time, you do not want to keep people around who are going to fail anyway. When we interviewed 20 CEOs on what they wish they had done differently during their first days on the job, the most common answer was I wished I had moved faster on the deadwood. So how do you know whether you are being too hard or too soft? Every case is different, of course, but you may find it helpful to know what turnover is typical when a new CEO arrives—so you can judge whether your planned personnel actions are gentler or harsher than others in your situation.” They provide some comparative statistics about retention, and say, “So, if you want to know how harshly you are judging your inherited team, simply determine the portion you expect to let go, and compare it to the distribution, adjusted by the sum of our three factors: internal/external appointment, company performance and industry.” For the second challenge on effective interaction, they provide this advice: “… we suggest you take three simple steps to dramatically improve your team’s effectiveness early in your tenure. 1. Provide basic guidelines on acceptable and unacceptable proposals. … 2. Teach them the essential three style preferences. Every human works differently, and executive teams have descended into tension quickly through avoidable stylistic differences. From the broken careers of many executives, we can tell you that three matter most. How do you like to interact? … How should they disagree with you? … What items should never come as surprises to you?” Whether you’re an executive leading an inherited team, or a member of such a team, you may want to consider reading this article to consider how to best make the assessment period effective. The second article of note with practical hiring advice appeared in the current issue of CFO Magazine titled “How to Avoid Finance Hiring Mistakes,” (http://www.cfo.com/article.cfm/11075949/c_11081639?f=magazine_alsoinside) and presents some ways to address both skills and fit when making hiring and firing decisions. The third article from McKinsey Quarterly focuses on the first hundred days, and is titled “Starting Up as CFO” (http://www.mckinseyquarterly.com/Organization/Change_Management/Starting_up_as_CFO_2112_abstract). The authors provide advice that’s aimed at financial officers, but has applications for all executives. There’s advice on how to do a value creation audit, and how to make a few themes your consistent priority.
What process do you use to assess talent? How do you know whether your assessments are too harsh or too easy? Have you and those who report to you had any conversations about the best ways for you to interact? Has this been an intuitive or trial and error way of finding what works, or have you stood back and talked about what seems to work better and what seems to fall short?
Almost thirty years ago, we observed the passion with which Pan American World Airways pursued the acquisition of National Airlines, and watched as Pan Am seemed willing to pay any price to succeed. The merger occurred after a high priced bid was accepted, the cultures clashed, the economy tanked, and two legendary air carriers died not long thereafter. An article in the May 2008 issue of Harvard Business Review titled “When Winning Is Everything,” (http://harvardbusinessonline.hbsp.harvard.edu/hbsp/hbr/articles/article.jsp?ml_action=get-article&articleID=R0805E&ml_issueid=BR0805&ml_subscriber=true&pageNumber=1&_requestid=70083) puts a name to this behavior. The article opens with this query: “Have you ever made a decision in the heat of competition only to wonder, when faced with the consequences, ‘What was I thinking?’ Such charged decision making is driven by an adrenaline-fueled emotional state we call competitive arousal. It’s all too common in business—and all too often leads to costly mistakes. … In this article, we describe the causes of competitive arousal, when it is most likely to derail strategy and destroy value, and how managers can avoid or reduce its pernicious effects. We identify three principal drivers of competitive arousal in business settings: rivalry, time pressure, and audience scrutiny—what we call the ‘spotlight.’ Individually, these factors can seriously impair managerial decision making. Together, their consequences can be all the more dire.” If you’re in the tiniest way excited by this topic, be sure to read this article.
In what ways are you deluded by the heat of competition? How do you know when the cost of winning is too high? How do you constrain your “adrenaline-fueled emotional state”?
Here’s an update on stories covered in prior issues of Executive Times:
Ø In the August
2005 issue of Executive Times we thought we were delivering some of the
final words on the long career of former AIG chief Hank Greenberg
when we provided a link to a Fortune
article titled, “All I Want in Life Is an Unfair Advantage” (http://money.cnn.com/magazines/fortune/fortune_archive/2005/08/08/8267642/index.htm).
Greenberg has been out, but never down in the intervening years. His nemesis Eliot
Spitzer is off the scene, and with AIG showing weak results, Hank is back
in the news with a May 11 letter to the AIG board (http://sec.gov/Archives/edgar/data/5272/000134100408000896/exh-i.htm)
saying, in part, “AIG is in crisis. The
company's shareholders need to absorb the significance of the company's first
quarter losses. They also need time to
consider the board's response to the crisis and the issues raised by this
letter. For this reason and others, a
postponement of this week's annual meeting should be considered, so that all
shareholders can give careful thought to how best to move AIG forward.” The board considered this postponement request by
the company’s largest shareholder, and declined it.
Ø When we forecast in the May 2003 issue of Executive Times that there would be murky times ahead for American Airlines and then-new CEO Gerald Arpey, we didn’t give a passing thought to fuel prices. According to Fortune, the company is now losing $3.3 million a day (http://money.cnn.com/2008/04/28/magazines/fortune/gimbel_american.fortune/index.htm?postversion=2008043011). Maybe they should take a page from the farm subsidy bill and pay frequent flyers to stay on the ground.
Latest Books Read and Reviewed:
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