Executive Times

Volume 6, Issue 10

October, 2004


ã 2004 Hopkins and Company, LLC

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We’ve all had bosses who haven’t listened to us. All managers have had employees that say things we’d rather not hear. Occasionally, managers are embarrassed when an employee says something different from the company line, especially in public settings. Some executives consider that kind of employee behavior as rogue, and preach and practice a “teamwork” that translates into something along the lines of: “shut up and do your job.” The most effective executives understand that all workers come to their jobs with a set of values, and a search for satisfaction in their work. Those executives take the time to explain why things are the way they are, and when challenged, are willing to re-think the status quo. Workers are encouraged to embrace the company way of doing things when the organization operates in ways that are aligned with a worker’s values and principles. The very best executives want engaged workers who will always speak up, or who have the courage to stand alone with a position or a perspective rooted in experience, values, or a way of thinking that can be perceived as unique. When such executives take into account what some may see as a rogue point of view, the outcomes can bring breakthrough achievements to organizations, or can avoid the peril of being led astray. Sometimes these employee voices are like those of the canaries that miners took underground to be early warning signals of problems ahead. As you reflect on some of the stories we present in this issue, think about how you would interact with such individuals in your organization. Think about whether your workplace encourages the alignment of values. Consider how you can encourage workers in your organization to express their views constructively. Who are the canaries in your organization, and can you hear them?


Fifteen new books are rated in this issue, beginning on page 5. Two books are highly recommended with four stars (one novel and one business book), seven are recommended with three stars, and six are mildly recommended with two 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. Thirty-two new books were added to the “shelf of possibility” during August. 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, let us know at books@hopkinsandcompany.com.

Doctor Know Nothing
When we love our work, we’re animated and engaged. Sometimes, we become emotional when we feel that our work is so important that lives depend on us. In most organizations, animation and passion are desirable traits. Sometimes, an employee will become so carried away with doing what he or she feels is the right thing to do, that an organization will find an internal challenge to its policies becomes heard in public forums. We read in The Washington Post (9/14) (http://www.washingtonpost.com/wp-dyn/articles/A18917-2004Sep13.html) that Pfizer faced this situation in recent weeks when its marketing Vice President Dr. Peter Rost stated publicly that importing drugs is safe and will lower costs. Pfizer has consistently warned that importation would place Americans at health risks. Within a few weeks, Rost was quoted widely and was invited to speak at a news conference sponsored by several members of Congress. Rost has clarified that he is expressing a personal opinion, and doesn’t speak for Pfizer, and the company agrees with him wholeheartedly on that point, and has said that Rost is not Pfizer’s expert on importation. Rost’s personal opinion is that drug costs can be reduced by importing drugs, and the safety issues can be managed, as they have been in Europe for decades. As a doctor, Rost is concerned that the biggest safety issue comes when sick people don’t use the drugs they need because they cost too much. For now, Rost remains a Pfizer employee, but we can assume that he’s violating some kind of internal policy about speaking engagements that could be perceived as speaking for Pfizer. nHHHHHH

When you disagree passionately with some position of your employer, would you be as willing as Rost to speak out with your dissent? If Rost reported to you, how would you handle this situation? How much diversity of opinion does your organization tolerate? What forums allow employee expression inside your workplace? As an executive, what opportunities do you create so you can listen to diverse opinions, and understand those opinions?


Uncommon Good
There’s been fairly broad agreement among economists that outsourcing and globalization are good for America. In a dissenting article in the current issue of The Journal of Economic Perspectives, (http://www.e-jep.org/archive/1803/18030135.pdf) 89-year-old Paul Samuelson dissents from that common view. The MIT professor emeritus and Nobel prize winner pokes a hole in the assumption underlying economists’ agreement. We read the following in The New York Times (9/9) (http://www.nytimes.com/2004/09/09/business/worldbusiness/09outsource.html) about his article: “… the mainstream economists acknowledge that some people will gain and others will suffer in the short term, but they quickly add that ‘the gains of the American winners are big enough to more than compensate for the losers.’ That assumption, so widely shared by economists, is ‘only an innuendo,’ Mr. Samuelson writes. ‘For it is dead wrong about necessary surplus of winnings over losings.’ Trade, in other words, may not always work to the advantage of the American economy, according to Mr. Samuelson.” Individuals and organizations count on basic assumptions, and it’s refreshing to hear a wise voice remind all of us that those assumptions do not always come true.


What common wisdom could get you or your organization in trouble? How well do you understand the factors that make your assumptions vulnerable? How do you seek out dissent from the common view so that you understand multiple potential outcomes? In managing change within your organization, how do you prepare both the winners and the losers for the future?

Simple questions can sometimes be the hardest ones to answer, especially when the answer may lead to even more questions. Tweedy Browne managing director Christopher Browne asked the Hollinger International independent directors in October 2001 how much the Board had authorized to be paid to CEO Conrad Black. According to Business Week (9/27) (http://www.businessweek.com/magazine/content/04_39/b3901104_mz020.htm), it took three years for Browne to get his answer. The answer came in a 513 page report (http://wsj.com/public/resources/documents/hollingerreport20040831.htm) of a special committee of the Hollinger Board, which coined a new phrase: “corporate kleptocracy” to describe the looting of the company by Black and others. Having noted a rise in fees paid to a company owned by Black despite a slump in business, Browne wanted to understand better what was happening. Unlike some shareholder activists, “… Browne didn't object to Black's high-priced lifestyle, just the fact that he and other shareholders were bankrolling it. ‘I'm not critical of how people want to live as long as they're spending their own money,’ he says.” By challenging Black’s rule at Hollinger, and prompting Board action over three persistent years of questioning, Browne’s investment in Hollinger has netted a gain of over $70 million. Sometimes, persistency pays off. The independent directors of whom Browne first asked his question included prominent individuals with valuable reputations to protect: Secretary of State Henry Kissinger, former Illinois governor James Thompson, and foreign policy advisor Richard Perle. To their embarrassment, the special report concluded, “Hollinger does not appear ever to have been run in accordance with accepted governance principles in the world of public corporations. … Hollinger wasn’t a company where isolated improper and abusive acts took place. Rather, Hollinger was a Company where abusive practices were inextricably linked to every major development or action. For most companies, operating in compliance with law and following ethical practices are key objectives, and specific concerns of the CEO. At Hollinger, Black as both CEO and controlling shareholder, together with his associates, created an entity in which ethical corruption was a defining characteristic of the leadership team.” Perhaps the Board should have asked itself some questions before Browne did.


When you ask a question and don’t receive an answer, how persistent are you likely to be in following through? When others ask questions of you that you are unprepared to answer, what do you do? Could something be happening in your organization that could damage your reputation? What could you be unaware of? What questions should you be asking?


At American International Group, Inc. (AIG), creative financial wizards come up with products that solve the business problems of their clients. AIG announced (http://www.corporate-ir.net/media_files/nys/aig/releases/092104.pdf) that it received a Wells notice from the SEC that questions certain transactions by the AIG Financial Products Corp., in which the creativity may have aided in fraud. According to The Wall Street Journal, (9/22) (http://online.wsj.com/article/0,,SB109578089812223575,00.html), three 2001 transactions between AIG and PNC are being questioned by the SEC. According to the Journal, “In July 2002, without admitting or denying wrongdoing, PNC settled allegations lodged against it by the SEC that it improperly shifted $762 million of underperforming loans and volatile venture-capital investments to three off-balance-sheet structures, called ‘PAGICs,’ that had been arranged with the help of the AIG unit.” The SEC seems to be going after AIG for its help to PNC. While any fine would be immaterial to AIG if it is found at fault, one observer noted that companies need to pay more attention to who their business partners are and the purpose behind transactions. Maybe we’re seeing a canary struggling to breathe that signals a change in business practices and processes.


How will your products and services be used by your customers? Do you bear any liability for that use? Could you be aiding and abetting a fraud? How do you know? Have your employees sold something that you do not want to offer to customers? 


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


Ø      We called attention to Cantor Fitzgerald in the October 2001 issue of Executive Times, and the 1,600 children who lost a parent, among the 70% of Cantor employees who were killed in the attack on the World Trade Center. Many periodicals provided updates on the aftermath of September 11, 2001 for selected organizations in recent weeks. According to both The New York Times (http://www.nytimes.com/2004/09/10/business/10cantor.html) and The Wall Street Journal (http://online.wsj.com/article/0,,SB109476777509214048,00.html), Cantor continues to recover as it fulfills its commitment to provide 25% of profits to the survivors for five years. Profits have been increasing at 20% a year for the past two years.

Ø      We noted in the November 2001 issue of Executive Times that investors in Nortel could have come out better that year had they bought Molson’s beer and recycled the cans. We encouraged readers to watch new CEO Frank Dunn lead the company. In case you missed it, Nortel fired Dunn for cause last April, and we read in the Ottawa Business Journal (http://www.ottawabusinessjournal.com/289219006607278.php#) recently that Dunn has since gone ahead with construction of a $15 million home in Toronto, but may have to give past bonus money back to Nortel after the financials are restated. Dunn must have needed space for beer cans.


Stand By Me
More than thirty years ago, a State Department career diplomat found himself in a situation that required moral courage and strength to speak against his bosses, Secretary of State Henry Kissinger and President Richard M. Nixon. Archer Kent Blood was representing the United States as counsel general in 1971 in what was then East Pakistan, now Bangladesh. Over a three day period, 10,000 Bengalis were killed by Pakistan’s military forces. Ten million Bengalis fled to India. It was later estimated that as many as three million Bengalis were killed. In a cable signed by Blood and nineteen junior diplomats, he said, “Our government has failed to denounce the suppression of democracy. Our government has failed to take forceful measures to protect its citizens while at the same time bending over backwards to placate the West Pakistan-dominated government. Our government has evidenced what many will consider moral bankruptcy, ironically at a time when the USSR sent President Yahya Khan a message defending democracy.” The reaction in Washington was that Blood was an alarmist, so Kissinger recalled him from his post and reassigned him to a staff job in Washington. A dozen years later, at the time of his retirement from State, he said, “I paid a price for my dissent. But I had no choice. The line between right and wrong was just too clear-cut.” Most of us believe that those closest to the customer, the work, or the situation, are the ones whose analysis or opinion should receive the most weight. In some organizations, the messages from outposts can disagree with the policies at headquarters, leading to frustration on both sides. On important differences, there can be a time of reckoning that arrives, leading to significant consequences. Blood had the courage to stand up for what he thought was right, and he was willing to live with the consequences of what happened. Blood died in early September at age 81.

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 Church That Forgot Christ

Breslin, Jimmy

Stories. Dozens of angry stories about clerical behavior in the priest abuse scandals. Memorable moniker about Rockville Center bishop: “Mansion” Murphy.

Redneck Riviera: Armadillos, Outlaws, and the Demise of an American Dream

Covington, Dennis

Scammed. Strange and true story of how Covington’s father bought Florida swampland, how the neighbors used the land for a hunt club, and when author inherited land, all that he did to retake possession.

The Summer Guest

Cronin, Justin

Restoration. Finest novel read so far this year. Six characters narrate current and past experiences at a fishing camp in rural Maine. Each character receives redemption or restoration from the caring love of another.

Heaven Lake

Dalton, John

Discovery. 450 pages unveil how young Midwestern missionary loses his innocence while in Taiwan and China and discovers, “It’s a grayer, more complicated world than I ever imagined.”

Anything You Say Can and Will Be Used Against You

Drummond, Laurie Lynn

Copped. Ten short stories about five Baton Rouge policewomen, often brutal and violent. Colorful stories, not particularly well written.

American Soldier

Franks, Tommy

Fidelity. Autobiography of life in the Army with his wife, Cathy, at his side through it all. Very timely and interesting presentation about the invasion of Iraq.

Dark Voyage

Furst, Alan

Deception. Moody spy thriller of Dutch naval deception of Germans during World War II. Authentic detail and description enlivens people and places.

R is For Ricochet

Grafton, Sue

Rerun. After so many alphabet letters, much of this sounded familiar, and not in a good way. Some new interesting characters, but not the best mystery in this long series. Wait for S.

Skinny Dip

Hiaasen, Carl

Swimming. Great ensemble of offbeat characters, funny plot, and good dialogue. A few hours of enjoyable entertainment.

Never a City So Real

Kotlowitz, Alex

Characters. Unpretentious people and their stories capture the essence of Chicago. Kotlowitz reveals them as they are, and their stories form the city itself.

Birth of a Nation: A Comic Novel

McGruder, Aaron,  Reginald Hudlin, and Kyle Baker

Secession. Graphic novel presents biting political satire of what happens when the black voters of East St. Louis are disenfranchised and a presidential election is stolen.

Five Men Who Broke My Heart

Shapiro, Susan

Engaging. Self-absorbed memoir of revisiting former partners to explore what went wrong. Disarming candor, little perspective and wisdom. Likely to be appreciated by female readers who enjoy deconstructing relationships.

The Bubble of American Supremacy

Soros, George

Bursting. Refutes neocon philosophy that guides Bush administration and proposes alternative approach to world affairs. Unlikely to sway any undecided voters.

The Second Bill of Rights

Sunstein, Cass R.

Pragmatic. Explores economic rights for social justice in a free society: employment, adequate food and clothing, decent shelter, education, recreation and medical care, as proposed by FDR in 1944.

Beyond the Core: Expand Your Market Without Abandoning Your Roots

Zook, Chris

Repeatability. Case studies, data, advice, and CEO lessons learned in implementing growth strategies, based on a decade of research about 2,000 companies.


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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