Executive Times

Volume 4, Issue 8

August, 2002

ã 2002 Hopkins and Company, LLC

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Ready, Camera, Action!

Talk is cheap; action matters. We follow readily those executives whose behavior seems aligned with our values. We don’t respect leaders who behave in ways that we believe are wrong. For executives looking to succeed, everything depends on perceptions about action. Executive behavior eventually reaches a spotlight where judgments are made about whether the actions seem right or wrong. Some executives are puzzled in the current business climate because actions that were commonplace and acceptable yesterday are questioned today as being shady or inappropriate. In this month’s Executive Times, we explore some recent images of executives in the news, especially some negative role models, and reflect on what these images mean for those executives who are looking to succeed in this rapidly changing business environment. As you reflect with us on the behavior of other executives, think about your approach to leading within your organization. How well aligned are your actions with your values? How do employees perceive what’s important to you and to your organization? Are the judgments of others about your behavior the same as your own?

Fifteen new books are rated in this issue, beginning on page 5, most of which contain three-star recommended ratings. If you’ve forgotten what the stars stand for, you can visit our 2002 bookshelf at http://www.hopkinsandcompany.com/bookshelf.html and see the rating table explained as well as explore links to all 2002 book reviews.

Handcuffs
The long-awaited image of an executive paying the price for malfeasance finally appeared during July, when 78-year-old former Adelphia Communications Corp. CEO John J. Rigas was arrested and papers across the country featured a page one photo above the fold of this man escorted from his home on the Upper Ease Side of Manhattan in handcuffs. The shift from golden handcuffs to chrome bracelets appeared dramatic, and seems intended as a deterrent to further corporate malfeasance. Four other executives were arrested on fraud charges at the same time: two of Rigas’ sons, and two finance executives. One comment from The New York Times (7/25 http://www.nytimes.com/2002/07/25/business/media/25CABL.html) caught our attention: “John Rigas and his sons appeared in business suits, though their ties, belts and shoelaces had all been removed by federal marshals.”

How do images of executives under criminal indictment change the perceptions of you as a reputable business leader? Do you feel lumped together with executives who behave wrongly? Does this visible arrest show that lawbreakers are being punished and trust may begin to be restored?

Connect the Dots
It’s too early for economic historians to evaluate and examine with perspective the watershed events and key trends of the past few decades, but it’s easy to make a case that one thing usually leads to another. The most interesting article we’ve read in recent weeks trying to explore the root cause of the current business scandals appeared in Slate (7/24 http://slate.msn.com/?id=2068448) in an article by James Surowiecki, the business writer for The New Yorker, titled “Blame Iacocca.” Surowiecki claims that Iacocca’s visible turnaround of Chrysler in the early 1980s became a symbol of capitalism’s success. Iacocca’s biography became a bestseller. “Prior to him, the popular image of the CEO had been of a buttoned-down organization man, pampered and well paid, but essentially bland and characterless. … By the time of the '90s boom, CEOs had become superheroes, accorded celebrity treatment and followed with a kind of slavish scrutiny that Alfred P. Sloan could never have imagined. Dennis Kozlowski and Bernie Ebbers reaped what Iacocca had sown.” Surowiecki goes on to say that the public bought in to the CEO as superhero myth, and boards wanted and were willing to pay big bucks for their own Iacocca: good on TV; credible with Wall Street; focused on nuts and bolts execution. The high levels of pay through stock options led to an environment that created an opportunity for shenanigans or outright crime.

Who are the superheroes now? Are your expectations of a CEO unrealistic? If you are a CEO, how do you frame the expectations that others have of you? Who are the executive leaders you most admire, and how well does your behavior match theirs? Whose behavior do you think is wrong, and how do you differentiate yourself and your behavior?

Raise Those Banners High
We’ve long been suspect of those organizations who wave their values throughout their facilities in the form of wall charts, banners or visible slogans. We read this exchange in The Christian Science Monitor (7/22 http://www.csmonitor.com/2002/0722/p11s03-wmwo.html): “Not long ago, consultant Frank Navran worked with a company that hung key words of its ethics code on banners inside its lobby. It was an impressive sight. So he asked one employee about the company's values. ‘The what?’ came the reply. ‘What do the company's values stand for?’ he asked again. ‘Oh, you mean the banners. That's just for show’ the employee assured him.” Two other articles in recent weeks gave clear direction to executives on how to ensure that values are understood and carried out. Jeffrey Seglin wrote a memo to Microsoft CEO Steve Ballmer in The New York Times (7/21 http://www.nytimes.com/2002/07/21/business/yourmoney/21ETHI.html) in reply to an internal Ballmer memo titled “Realizing Potential.” Seglin’s advice: instead of telling employees what to do, show them. Be specific. We read in The Wall Street Journal (7/9 http://online.wsj.com/article/0,,SB1026159582730334760.djm,00.html) “What must business leaders do to restore the trust of investors, employees and the public, in the wake of accounting scandals and insider-trading abuses? ‘Just saying you're ethical isn't very useful,’ says Charles O. Holliday Jr., chairman and CEO of DuPont Co., which hasn't been touched by any scandal. ‘You have to earn trust by what you do every day.’” Look around your workplace: maybe the banners and slogans need to get razed.

When you tell people what behavior you expect, do they understand what it means to them? How specifically do you reinforce your words with personal action? How do you call attention to behavior (by you and others) that’s consistent with the values you’re trying to reinforce? How are stories communicated within your organization? Are the right behaviors rewarded and punished?

Who Are Your Allies?

Burned Out Shells?

Bill Robinson, whose global firm Relentless Marketing should know, claims in an article in Forbes (7/1 http://www.forbes.com/home/2002/07/01/0701alliances.html) that, given the current corporate scandals, we shouldn’t expect to see many new strategic alliances among corporations. He doesn’t think that the alliances that have been around for the past decade have worked, and many haven’t produced any results at all. “The corporate highway is littered with the burnt-out shells of thousands of strategic alliances, which are supposed to be very close business relationships between two companies for their mutual benefit.” A few weeks later Forbes (7/18 http://www.forbes.com/home/2002/07/18/0719alliance.html) published “5 Keys to Creating Successful Strategic Alliances” by Larraine Segil, a partner of Lared Group, a strategic alliance consultancy. Here are the keys Segil proposes:

Ø Select The Proper Partners For The Intended Goals

Ø Share The Right Information

Ø Negotiate A Deal That Includes Risk And Benefit Analysis (Not Necessarily Equal) For All Sides.

Ø Come To A Realistic Agreement On The Time To Market And Corporate Expectations

Ø Mutual, Flexible Commitment On What's Appropriate To Change, Measure And Share Within Each Partner's Culture

Many executives are now making decisions about which partners to trust, and which ones to avoid. Another resource, should you choose to strengthen alliances, is the current cover story from McKinsey Quarterly (2002 Number 3 http://www.mckinseyquarterly.com/current_issue.asp) titled, “Managing An Alliance Portfolio.” The authors agree with Robinson that many companies have no idea how dozens of alliances are performing. McKinsey proposes specific performance measures to examine the areas of success and failure for all alliances.

Do you know how each strategic alliance your organization has entered into is performing? Are you meeting the expectations of your alliance partners? Are your partners meeting your expectations? Has your level of trust in your partners changed as a result of recent events?

Only a Test

What Did You Learn in School?

In case you missed the story from any of the papers you read, reporters at the Yale Daily News (7/25 http://www.yaledailynews.com/article.asp?AID=19454) broke the story that admissions officials at Princeton gained unauthorized access to the Yale online admission notification system multiple times last April. “Stephen LeMenager, a dean of admissions at Princeton, characterized Princeton's use of Yale's Web site as an innocent way to check whether the site was secure by using a random sampling of students whose social security numbers were listed on their applications to Princeton. … LeMenager said he and his colleagues meant no harm in accessing the information, and instead were attempting to assuage their own concerns about Web site security.” The FBI is investigating to determine if Princeton violated any Federal laws.

What are the rules your organization follows in gathering information from competitors? What boundaries can’t be crossed? What lessons do you teach by what you do at work?

Follow-up

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

Ø We’ve provided links to Warren Buffet’s fascinating annual shareholder letters in issues of Executive Times, including April 1999, April 2000, April 2001, and April 2002. His plain talk appeared in an op-ed in The New York Times (7/24 http://www.nytimes.com/2002/07/24/opinion/24BUFF.html) titled “Who Really Cooks the Books.” He presents a case that we’re not seeing the behavior a few bad apples, but changes need to be made at many companies. Read the article and give your organization a check-up against the opinions of the sage of Omaha. He says CEOs will be respected and believed when they deserve to be.

Ø One executive on Buffet’s “good guy list” has been Jamie Dimon, CEO of Bank One. We mentioned Dimon most recently in the April 2002 issue of Executive Times. Fortune published a profile of Dimon and his success at Bank One in the 7/24 issue (http://www.fortune.com/indexw.jhtml?channel=artcol.jhtml&doc_id=208632), titled “The Jamie Dimon Show.” According to Fortune, “He's tough. He's loud. He's irrepressible. He's above reproach. And he's just what Bank One needed.”

Ø We’ve bought into the “War on Talent” momentum over the past few years, as seen in our lead story from the February 2000 issue of Executive Times titled “Waging Talent Wars.” We’ve been rethinking the whole mess of attracting and retaining smart superstars now that we’ve read Malcolm Gladwell’s long article in the 7/22 issue of The New Yorker (http://www.newyorker.com/fact/content/?020722fa_fact) titled “The Talent Myth: Are Smart People Overrated?” Gladwell opines that companies that attracted “out of the box” thinkers have ended up on the ropes, and might have done better had they fixed the box and hired people who fit into an enterprise that’s organized right and works well.

Legacy

Loyal and Consistent

When Bill Hambrecht asked faculty friends at Princeton in 1979 for the name of the smartest student at the school, he was given the name of Daniel H. Case III. Case went to San Francisco and worked for Hambrecht & Quist from then until his death this summer at the age of 44. As investment banker to the stars of the Silicon Valley, Case’s clients included Apple Computer, Genentech, Adobe Software and Netscape. After being diagnosed with brain cancer, Case created a foundation called Accelerate Brain Cancer Cure. We read in The New York Times (6/29 http://www.nytimes.com/2002/06/29/obituaries/29CASE.html) that his brother, AOL Time Warner Chairman Steve Case said of Dan, “Like everything else he did in his life, Dan gave this battle against brain cancer everything he had. He fought with courage and with grace; he fought not only for himself, but for the thousands of people who suffer from this terrible disease.” A competitor, Kleiner Perkins partner Brook Byers, said of Dan, “He was a smart guy who found a way to get things done and made everybody feel like they got their way. He was loyal and consistent, one of the leaders of a younger generation that said, ‘I am staking my career on technology.’” Thanks to Dan Case, entrepreneurs in technology found the capital they needed to build businesses and change the business landscape. He will be missed.

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 2002 bookshelf at http://www.hopkinsandcompany.com/bookshelf.html).

Title (Link to Review)	Author	Rating	Review Summary	Purchase
Conclave: The Politics, Personalities, and Process of the Next Papal Election	Allen, John L., Jr.	•••	Learn through the eyes of a talented, balanced and authoritative writer what will happen behind closed doors when the next pope is chosen. Breezy, conversational writing style makes this book easy to read.
Fire Ice	Cussler, Clive	••	Lukewarm action novel starring one-dimensional character Kurt Austin who foils a Russian’s plot to terrorize America.
Word Freak: Heartbreak, Triumph, Genius and Obsession in the World of Competitive Scrabble Players	Fatsis, Stefan	•••	Addictive book presenting the strange people who pay competitive Scrabble, including the author who went from novice to expert in the two years he spent researching the book.
Everything is Illuminated	Foer, Jonathan Safran	•••	Clever and talented writing including witty voices and dialect.
Our Posthuman Future: Consequences of the Biotechnology Revolution	Fukuyama, Francis	•••	Read about how developments in genetic engineering and neuropharmacology endanger who we are as humans.
Complications: A Surgeon’s Notes on an Imperfect Science	Gawande, Atul	•••	Case stories from skilled writer and senior resident surgeon take readers for an insider and rare view of medicine.
Profiles in Courage for Out Time	Kennedy, Caroline	•••	Fourteen essays about Profiles in Courage award winners. Some will bring tears to your eyes; all will inspire you.
Mr. Potter	Kincaid, Jamaica	••	Using poetic images, haunting repetition, and odd time sequences, Kincaid’s new novel describes her estranged father.
Managing for the Short Term: The New Rules for Running a Business in a Day-to-Day World	Martin, Chuck	•	Useless book that parrots e-mail responses by a varying group of executives providing advice that can’t be implemented.
Gargoyles	Nayes, Alan	••	Robin Cook-like fiction, featuring made-to-order creatures offers good parallel to Fukuyama’s Our Posthuman Future.
Tumbling After: Pedaling Like Crazy After Life Goes Downhill	Parker, Susan	•••	Everything changes for Suzy Parker and her husband when he becomes a quadriplegic following a bicycle accident. Clear, poignant, short vignettes.
The Phoenix Effect: 9 Revitalizing Strategies No Business Can Do Without	Pate, Carter and Harlan Platt	••	Basic primer on how to improve corporate performance including interesting stories, with advice that’s conflicting and hard to implement.
The Whore’s Child and Other Stories	Russo, Richard	•••	Seven well constructed short stories with masterful descriptive language and character development.
Staying Tuned: A Life in Journalism	Schorr, Daniel	•••	60 years with CBS, CNN and PBS: pushing and shoving anyone and everyone to get stories.
Perpetual War for Perpetual Peace: How We Got To Be So Hated	Vidal, Gore	•••	Disturbing, agitating and thought-provoking essays from a point of view not frequently heard.

ã 2002 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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