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2004 Hopkins and Company, LLC
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re: links---certain hyperlinks assume that you are registered as a subscriber
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Canaries
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?
Persistency
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?
Overselling?
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?
Follow-up
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.
Legacy
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).
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Title (Link to
Review)
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Author
|
Rating
|
Review Summary
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Purchase
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The
Church That Forgot Christ
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Breslin,
Jimmy
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••
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Stories. Dozens of angry stories
about clerical behavior in the priest abuse scandals. Memorable moniker
about Rockville
Center bishop:
“Mansion” Murphy.
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Redneck
Riviera: Armadillos, Outlaws, and the Demise of an American Dream
|
Covington,
Dennis
|
•••
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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.
|
|
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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.”
|
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Anything
You Say Can and Will Be Used Against You
|
Drummond,
Laurie Lynn
|
••
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Copped. Ten short stories
about five Baton Rouge
policewomen, often brutal and violent. Colorful stories, not particularly
well written.
|
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American
Soldier
|
Franks,
Tommy
|
•••
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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
|
•••
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Deception. Moody spy
thriller of Dutch naval deception of Germans during World War II. Authentic
detail and description enlivens people and places.
|
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|
R
is For Ricochet
|
Grafton,
Sue
|
••
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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.
|
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Skinny Dip
|
Hiaasen,
Carl
|
•••
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Swimming. Great ensemble
of offbeat characters, funny plot, and good dialogue. A few hours of
enjoyable entertainment.
|
|
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Never
a City So Real
|
Kotlowitz,
Alex
|
•••
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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
|
•••
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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.
|
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Five
Men Who Broke My Heart
|
Shapiro,
Susan
|
••
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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.
|
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The
Bubble of American Supremacy
|
Soros,
George
|
••
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Bursting. Refutes neocon
philosophy that guides Bush administration and proposes alternative
approach to world affairs. Unlikely to sway any undecided voters.
|
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The
Second Bill of Rights
|
Sunstein,
Cass R.
|
•••
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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.
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Beyond
the Core: Expand Your Market Without Abandoning Your Roots
|
Zook,
Chris
|
••••
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Repeatability. Case
studies, data, advice, and CEO lessons learned in implementing growth
strategies, based on a decade of research about 2,000 companies.
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