Executive Times
Volume 2, Issue 9	September, 2000
ã 2000 Hopkins and Company, LLC Note re: links---certain hyperlinks assume that you are registered as a subscriber to the site. If you are not a subscriber to certain sites, the links will fail. If you register, the links should work. Also, certain hyperlinks expire and may not be available when you try to go to the site. Your side of the story Many successful executives use a variety of different approaches to ensure that the critical messages about their company get across to key audiences. Investor and analyst meetings cover the shareholder community, using graphs, slides, video over phone lines and the Internet. Town-hall style meetings can provide two-way communication between executives and large numbers of employees. We were amused several months ago when Carly Fiorina, Hewlett-Packard’s CEO, appeared in clever television ads to communicate to a wide audience that she’s leading changes at H-P. Since then, we’ve seen a rise in print ads from companies and CEOs trying to convey their side of the story to a wide audience. Some of the ads are “issue” related, while others provide a company response to particular events or circumstances. As you read about what others are doing in this area, think about how effective you and your organization have been in getting across your side of the story to the many stakeholders in your business. “My personal guarantee” Who was that guy from Ford interrupting Monday Night Football on August 21 during prime time? It was Jacques Nasser, Ford’s CEO, conveying the values and priorities of the company to a wide audience of customers and other stakeholders, following the Bridgestone/Firestone recall of tires used for a decade on best-selling Ford Explorers. Nasser’s message was precise: “You have my personal guarantee that all the resources of Ford Motor Company are directed to resolve this situation. I want all of our owners to know there are two things that we never take lightly -- your safety and your trust.'' Given a difference in personal net worth, Ford Chairman William Clay Ford’s personal guarantee might be considerably more valuable than Nasser’s, but that’s no reason to diminish the importance of Nasser’s message. Executives at Ford are world-class experts at getting their messages dispersed to wide audiences. The details of Ford’s potential culpability in the tire fiasco, such as their recommendation to inflate tires at lower levels than those recommended by Firestone, may emerge during litigation. For now, the Ford message conveys care and responsibility. We’ll see if sales of Explorers pick up next year. What personal guarantee do you give to others about your work? What does the guarantee mean? Are your messages as clear and concise as the one from Jac Nasser? What would cause you to depart from your typical communication channels to use a different medium? How long would it take you to compose and deliver such as special message? What else can you do to prepare yourself and your company to get your side of the story across to a wide audience, if you need to? Tire Pressure Executives at Bridgestone/Firestone have spent several weeks working around the clock, trying to manage a massive, “voluntary” recall of six and a half million tires, and deal with all kinds of stories about the possible cause of the problem. From the initial company announcement on August 9, through our publication date (August 23), there have been no fewer than a dozen separate corporate statements from a variety of individuals attempting to control the damage. We’re confident that this activity wasn’t part of the company’s 2000 business plan. In fact, we’re sure this wasn’t the way the organization planned to celebrate it’s centennial. Instead, the company’s executives have been caught up in a serve and return volley of statements about quality, safety and trust. When claims were made (see The Washington Post, August 13, 2000) that the tires produced during a strike at a Decatur, Illinois plant may have been of lower quality due to inexperienced employees, the company denied any decline in quality. When Firestone locations were swamped with consumers unable to get their tires exchanged fast enough, the company announced an alternative replacement by any tire dealer, with reimbursement from Firestone. The print ad of an open letter from Tire Sales President John Lampe to consumers features his stock corporate photo at the top of the page oozing sincerity and conveying a message full of thanks to consumers for cooperation, loyalty and trust. We’re skeptical that the Firestone brand will survive this episode, and Lampe’s letter represents wishful thinking. Auto buyers may avoid buying cars with Firestone tires, and consumers can buy replacements easily from other manufacturers. When Bridgestone bought Firestone, they kept the name because of its perceived value. We think that value may not recover and the name will disappear. How prepared are you to operate during a crisis? Will your damage control efforts be effective? What goodwill have you established with customers and others, and will that be enough to overcome a crisis? Do consumers trust you and your company? Are they loyal? Will they be there after the crisis has passed? Consider reading an article in Fast Company (September 2000) about Saatchi CEO Kevin Roberts and the replacement of brands with “trustmarks” and “lovemarks”. “This isn’t getting us where we want to go” United Airlines began placing issue ads in newspapers during August containing the quote above from Chairman James Goodwin. Our first reaction was that Goodwin just doesn’t get it. It’s not where United wants to go that counts: it’s getting passengers where they want to go on time. At the end of the ad, the text reads: “But we’re not going anywhere until we get you to your destination first. Right now, that’s our only priority.” United has offered bonus mileage awards for its most frequent travelers as an incentive to stick with the company. Maybe Goodwin and United get it after all, but it might be too late for Goodwin. With thousands of flights removed from the schedule, a pending acquisition of USAir, labor unrest, and regular weather delays, Goodwin seems to have more than one priority. If Goodwin makes it through this year, regaining consumer support and labor peace, he’ll be an executive hero. We expect a new CEO instead, because it was Goodwin and his team who created the environment that led to many of the current problems at United, and we doubt that Goodwin will be given the chance to turn things around. What are your priorities? Do they match the priorities of your customers, employees and shareholders? Have you taken on too many priorities? Which ones can be delayed or eliminated? Are you and your stakeholders going where you want to go? What needs to change to achieve alignment? Will you have the time and opportunity to change or will that be left for your successor? “Respect is earned, not bought” We knew we were in for a treat when we opened the newspaper and saw the American Cancer Society reprint one of Philip Morris’ image ads with a caption in the same typeface as cigarette label warnings saying, “Is Philip Morris serious or just blowing smoke?” The Executive Times November 1999 issue called attention to the $100 million Morris makeover with the title, “Blowing smoke?,” so the ACS ad caught our attention. ACS conveys its skepticism about the new Philip Morris, and makes five specific recommendations that, if followed, might reduce skepticism. Our favorite line from ACS in their ad was, “Respect is earned, not bought.” We’ll see whether Philip Morris follows any of the ACS recommendations. Does your image need a makeover? How expensive will it be, and can you cause it to happen? Have you listened to your most severe critics, and will they feel that your makeover has taken their criticism into account? Did you obtain their advice before or after sending out new image messages? Can you see over the Verizon? Give ‘em a break The Communication Workers of America may have touched a nerve among many employees working in different jobs around the country when they included a demand to eliminate mandatory overtime as one of the issues in their strike against Verizon Communications. We continue to hear quality-of-life concerns from workers who face routine 60+ hour workweeks. It’s becoming clear that while many workers enjoy the monetary rewards of overtime, others want to be able to pick and choose when to work extra hours. In a category of issues the union calls “eliminating needless job stress”, the CWA calls attention to “relentless forced overtime” on workers because Verizon hasn’t hired and trained enough employees to meet the demand for new products and services. We think tech companies are particularly vulnerable to quality-of-life issues, as the value of incentive stock options remains uncertain. We can expect union organization of tired tech workers at firms not paying attention to this employee issue, especially at companies who may have misclassified too many employees as exempt from hourly work rules. How many choices do your employees have about their work hours? Are your workers under any form of “needless job stress?” Are you confident that you have classified workers properly as exempt or non-exempt from hourly rules? How flexibly can your staff respond to the peaks and valleys of workload? Eight minutes a day Pleading no time to plead We read in The New York Times (8/17/00) that pro bono work by lawyers has dropped, based on a survey done by American Lawyer magazine. Annual time spent by the 50,000 lawyers at the top 100 law firms dropped from about 56 hours in 1992 to 36 hours in 1999. According to the Times, “Representing the poor is an integral part of being a lawyer, ingrained in the profession since its origins in ancient Rome. In the United States, the commitment to pro bono work is in the code of ethics that has governed the profession for nearly a century. For many, the leadership of corporate firms is critical for setting the tone that pro bono work is still more a responsibility than an act of charity.” Some reasons for the decline include the need to serve paying clients who are expanding with the economy, and the need for increased billable hours to pay higher salaries. Many organizations encourage employee volunteerism. Do you back up your encouragement by removing barriers for those employees? What do you do to recognize or acknowledge volunteer contributions? Are there hidden or even blatant punishments to employees who provide pro bono services? Follow Up Here are selected updates on stories covered in prior issues of Executive Times: Ø The August 1999 issue of Executive Times called attention to an increase in co-CEO’s. We read in The Wall Street Journal (8/7/00) that since John Reed’s retirement from Citigroup, sole CEO Sandy Weill has consolidated power and control, entrusting key roles to his trusted, loyal colleagues from Travelers. Ø Since we led the June 2000 issue of Executive Times with examples of mistakes and their consequences, we’ve run across dozens of fresh examples. Our favorite for clarity and humility came from George Soros by way of the International Herald Tribune (8/12/00). In reflecting on his 1998 book on the imminent destruction of global capitalism, Soros said, “Basically, I got carried away in thinking that the system might actually collapse. I goofed.” Well said. Second favorite came from John Meriwether of Long Term Capital Management infamy, “Our whole approach was fundamentally flawed. I feel enormous remorse.” (The Wall Street Journal, 8/21/00). Ø We learned in The Wall Street Journal (8/14/00) that the three large banks involved in currency trading that did not join the FXall.com alliance described in the July 2000 issue of Executive Times have formed an alliance of their own, tentatively called Atriax. Sounds more like a disease than a currency exchange network. Legacies When President Clinton presented the Presidential Medal of Freedom to a dozen individuals in early August, one name stood out for us, a business leader among political figures. The President’s citation read, “Jim Burke has set the highest standards for corporate responsibility and civic involvement. As CEO of Johnson & Johnson, he promptly responded to a public health and corporate crisis of unprecedented proportions, placing the safety of consumers ahead of company profits. As Chairman of the Partnership for a Drug-Free America, he has energized America’s advertising and media industries to create hundreds of powerful anti-drug messages, and he brought the Partnership together with the National Youth Anti-Drug Media Campaign in a historic public health education effort that is changing American youths’ attitudes about drugs. America salutes Jim Burke for his deep commitment to the welfare of its citizens.” The health crisis came during the Tylenol product tampering and poisoning of the 1980’s when Burke was CEO. We’ve all seen and remembered the drug ad showing eggs frying, “this is your brain on drugs”. When he retired in 1989 after 37 years with Johnson & Johnson, he became the full time, unpaid Chairman of the Partnership for a Drug-Free America, where he continues to work today. Many of us also remember Burke as the outside director who led the search for a new CEO for IBM, and selected Lou Gerstner for that job. Our favorite quote among many who heard of Burke’s award came from Warren Buffet, “If major corporations were all run by managers with Jim’s abilities and integrity, this would be a better country indeed.” Burke puts his abilities and integrity to work every day. Reading (Note: readers of the web version of Executive Times can click on the book covers or titles to order copies directly from amazon.com. When you order through these links, Hopkins & Company receives a small payment from amazon.com. Subscribers to the print version of Executive Times can receive the web version at no additional cost. Send e-mail to hopkinsandcompany@att.net with a request to be placed on the web version distribution list. Also, not all books we read make it to the pages of Executive Times. Check out other book selections on our bookshelf at http://www.hopkinsandcompany.com/bookshelf.html). Practical, usable advice We hate business books that present interesting theories, but offer little guidance on how to implement a theory in the complex everyday world inside a company and its markets. By that standard, we found nothing to hate in Trusted Partners: How Companies Build Mutual Trust and Win Together by Jordan D. Lewis. Fully a third of the book is devoted to tools that you can actually use to implement ideas from the book. Rather than standing alone, these tools complement and expand the text. Lewis has spent a long time working with companies around the world on building alliances. In this book, he presents stories with enough detail on what individuals in companies actually did to create and maintain profitable alliances. Some examples include Hewlett-Packard and Canon, Ford and ABB, Proctor & Gamble and Wal-Mart, and Sealand and Maersk. We’ve heard lots of talk about “partnerships” and “alliances” from many companies. This book separates the marketing pitches from the line organization to line organization relationships that can lead to dramatically improved performance for both business partners in an alliance. If you’re involved in a significant business alliance, or are considering one, read this book that we recommend highly. Movable Assembly Line If you enjoyed Tom Friedman’s The Lexus and the Olive Tree as much as we did (see Executive Times, August 1999), pick up a copy of Mollie’s Job: A Story of Life and Work on the Global Assembly Line by William Adler. This fascinating story follows the same job as it moves from Paterson, New Jersey where it was held by Mollie James beginning in the 1950’s, to cheaper labor costs in Mendenhall, Mississippi in the 1960’s, where Dorothy Carter held the same job at a lower wage than Mollie was paid. The next stop on the global assembly line was moving the job to Matamoros, Mexico, where it was held by Balbina Duque who was thrilled to be paid a lower wage than Dorothy or Mollie. The next likely move may be a new factory in Asia. Adler presents a business and social history through personalizing the changes for specific individuals, each of whom worked at manufacturing ballasts for fluorescent lights. In addition to the three characters mentioned above, we also run across old friends Bill Farley and Michael Milkin, and see the impact of their actions on the lives and jobs of workers in these plants. We came away from this book somewhat confused and disturbed. It’s clear that the history of business has included the displacement of high costs with efficiency. In this book, the standard of living for factory workers improved when the new plants came to each community. At the same time, when jobs were eliminated in Paterson, most workers never regained their former standard of living. They didn’t make a transition to the information economy. Is cheap labor too big a price to pay for the elimination of a middle class in America? “Our Time is Up for Today” or “I miss my mind the most” There’s little disagreement that the optimal treatment for mental maladies involves a combination of drugs and talk therapy. Psychiatrists have been trained both in psychopharmacology and in psychotherapy, and most individuals gravitate toward dominance in one area or the other. In the olden days of psychiatry, the “gods” of the profession were the psychoanalysts, who listened to patients almost daily for years and years. An anthropologist, and daughter of a psychiatrist, T.H. Luhrmann, has written a fascinating book about the current state of psychiatry, Of Two Minds: The Growing Disorder in American Psychiatry. While we found several chapters tedious, we became absorbed in the story of inadequate physician training, and the lack of funds for talk therapy in a managed care world. In the course of her several years of fieldwork, the training of new psychiatrists focused almost exclusively on psychopharmacology, and the attempted repair of damaged brains rather than gaining insight into individuals. Here’s a sample from toward the end of the book on some of the moral issues remaining to be addressed: “We also need, however, to make a moral decision, which is whether to understand such people only as the detritus of a broken brain or also as people whose suffering implicates us, whose struggles are resonant with our struggles, who are located in a particular culture, and whose complexity and depth demand that we see their suffering as engaged in the struggle to be decent, responsible people. We are so tempted to see ourselves as fixable, perfectible brains. But the loss of our souls is a high price to pay.” An Executive Times subscriber recommended this book to us, and we’re pleased to pass a recommendation along to other readers. If you have any interest at all in psychiatry, you’ll find this book disturbing and fascinating. Another Path Across the Chasm If you enjoyed reading Geoffrey Moore’s Crossing the Chasm, you may also enjoy Malcolm Gladwell’s The Tipping Point: How Little Things Can Make a Big Difference. While Moore focused on technology products, Gladwell provides a construct for examining the pace of social change. Gladwell proposes that there are three rules that cause a change to accelerate: the Law of the Few; the Stickiness Factor; and the Power of Context. We turned pages quickly as we learned about the few people Gladwell calls “connectors,” who call trends to the attention of a wide range of acquaintances. Others called “mavens” enjoy helping others by sharing their expertise and pointing the rest of us toward new developments. “Salesmen” are natural persuaders who lead the rest of us to embrace change. The stickiness factor teaches that there’s a simple way to package information that, under the right circumstances, can make it irresistible. Gladwell says, “All you have to do is find it.” That’s where context rules, and momentum pushes a social change over the tipping point. “In the end, Tipping Points are a reaffirmation of the potential for change and the power of intelligent action. Look at the world around you. It may seem like an immovable, implacable place. It is not. With the slightest push-in just the right place-it can be tipped.” Mildly recommended.
ã 2000 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 rates for first class mail delivery of the print version are $60.00 per year (12 issues). E-mail subscriptions are $30.00 per year. Single issues: $10.00 print; $5.00 electronic. To subscribe, sign up at www.hopkinsandcompany.com/subscribe.html, send an e-mail to hopkinsandcompany@att.net, 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 hopkinsandcompany@att.net. We will send sample copies if requested. The company’s website at www.hopkinsandcompany.com/archives.html contains the archives of back issues beginning in the month after the issue date. To subscribe to Executive Times, sign up at www.hopkinsandcompany.com/subscribe.html and we’ll bill you later. About Hopkins & Company In addition to publishing Executive Times, Hopkins & Company engages in a variety of other activities focused on helping executives succeed, including: Coaching: helping individuals or teams find ways to do more of what works for them, and ways to avoid what's ineffective Consulting: helping executives solve business problems, especially in the areas of strategy, service to market, performance and relationship management 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.