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Welcome to An Era of CEO Activism

Welcome to An Era of CEO Activism

Gone are the days when managers would shrink back from revealing their beliefs and viewpoints on matters that had little to do with their company’s routine endeavors.

Leaders should think carefully before jumping on the closest soapbox. Starbucks’s Founder and CEO Howard Schultz learned that the hard way in 2015 when he started the Race Together campaign in the aftereffects of the killing of Michael Brown in Ferguson, Mo. Schultz inspired Starbucks baristas to converse about race relations with customers whilst serving them their morning coffee. That didn’t come down with easy. In due course, Starbucks dialed back the initiative.

  • Topic: Race relations. Starbucks’ Howard Schultz got into hot water after he launched Starbucks’ Race Together campaign which encouraged baristas to talk about race with customers.
  • Topic: Vaccination. Facebook’s Mark Zuckerberg incurred the wrath of anti-vaccine commenters when he posted a picture of his Infant daughter visiting the doctor for routine vaccinations.
  • Topic: Common Core Education. ExxonMobil’s Rex Tillerson aroused the ire of education advocates when he referred to American students as “products” that companies simply don’t want to buy.
  • Topic: Global Warming. Unilever’s Paul Polman has publicly maintained that businesses and governments should commit to environmentally sustainable practices.
  • Topic: LGBT Rights. CEOs of Salesforce, Apple, Intel, Dow, Bank of America, Facebook, Yahoo! and others have come out against a wave of anti-LGBT legislation in several states.
Posted in Global Business Leaders and Innovators Management and Leadership

Business Analyst Scott Galloway on The Folly of Twitter’s Part-Time CEO Jack Dorsey

Business Analyst Scott Galloway on Folly of Twitter's Part-Time CEO Jack Dorsey

At a keynote address at Amazon Professional Sellers’ Summit NYC 2017, the fast-talking, straight-faced New York University-academic and business analyst Scott Galloway addressed the folly of Twitter’s board of directors and part-time CEO Jack Dorsey:

I think the board of Twitter is negligent and should be removed by shareholders … To say to somebody she is better than you at 25 hours a week than you are at 50 hours a week is negligent … There is no way that cannot create negative morale in a management team and send absolutely the wrong signal at everybody … [Being a CEO] is not a part-time job, especially when thousands of people are relying on you for their livelihood and tens of thousands of people have decided to put their hard-earned money into your stock and you are literally competing in what is probably the highest stakes game in history … and that is who wants custody of the consumer in social media and yet they have a part-time CEO … that is just negligent and outrageous … if someone is talented … if someone is really impressive … and that person happens to be in their 30s and wear a beard and a turtleneck we think “Oh, it’s Jesus Christ risen again” … “It’s Steve Jobs” … we have this idolatry of innovators that is really unhealthy and unrealistic and damaging to basic common business sense and business maturity around shareholder value.

'The Four: The Hidden DNA' by Scott Galloway (ISBN 0735213658) Part of Scott Galloway’s appeal is his deadpan delivery of peppery one-liners.

Legendary investor Bill Miller has criticized Twitter on this topic: “It is insane to have Jack Dorsey be a part-time CEO at a company with the issues that Twitter has. … If a part-time CEO makes sense, then so does a part-time CFO, part-time chief technology officer. That just makes no sense whatsoever.”

Posted in Management and Leadership

Build the Reputation Capital of your CEO

By CEO capital, I mean the asset created by CEO’s reputation. It is the collective esteem that significant others, inside and outside company, hold for the company’s CEO and, for the company. It is the composite of perceptions about a CEO that a company’s stakeholders hold, whether these constituents are employees, analysts, investors, customers, media, regulators, or community leaders.

This asset can be harnessed to advance a company’s success. But, like any other wealth-creating asset, CEO capital needs to be invested in, managed, and leveraged over time to reap enduring benefits. Companies can utilize the equity that accrues from CEO capital to attract more investors, partners, customers, applicants, and trust in corporate decisions. CEO reputations, when harnessed on behalf of corporate goals, impact a company’s success and viability.

Every company must develop CEO capital, understand its underpinnings, and manage the important asset of its CEO’s reputation. When accumulated, CEO capital: Has a positive impact on a company’s reputation and success; produces clear, discernible, and valuable payoffs; is known to matter to influential constituencies; and affords more time to develop long-term solutions.

What Builds CEO Capital?

Five factors build CEO capital:

  1. Building credibility. This is critical to establishing a favorable CEO reputation. CEOs earn credibility by being consistently truthful and delivering on their promises and by matching behavior with their values.
  2. Abiding by a code of ethics. Setting and abiding by higher standards make a marked impression. CEOs must act in good faith according to ethical guidelines.
  3. Communicating internally. Unless CEOs communicate change and direction, most employees won’t know why and how they are being asked to lend their hands, hearts, and minds. To build CEO capital, CEOs must be tireless internal communicators.
  4. Attracting and retaining a quality management team. Having a highly regarded management team signals to stakeholders that the CEO has a strategy worth following. A top-notch team also signals that the CEO not only has the right people to execute his or her vision but also has prepared well for succession.
  5. Motivating and inspiring employees. CEOs must be pied pipers, serving as masters of ceremony at town hall meetings, leading anchors on global webcasts and teleconferences, and hosts at breakfast meetings. When CEOs inspire their employees, they build a better culture, leading to increased shareholder value. Everyone is a winner. Stakeholders look to see how CEOs manage people and put operating and social systems into place to build bench strength and keep employees loyal and productive.

These top drivers of CEO capital must all be in place for a CEO to earn top honors. When one is missing, a CEO courts disaster.

The goal is to leverage the wealth embedded in a CEO’s capital to enhance a company’s reputation and well-being, increasing its economic evaluation, and differentiating it from competitors. As a CEO builds capital, the CEO builds a company.

Posted in Management and Leadership

Outsider CEO v/s Insider CEO

Outsider CEO v/s Insider CEO Well-run companies like to promote from within. They view talent as a strategic asset and have robust succession planning and career development plans across the breadth of their organization.

Dysfunctional companies hire outsider CEOs to head off disaster. Sure, outsiders may bring a fresh perspective, but they have more risk. Onboarding to a new company and organizational culture takes time. This implies that outsider CEOs may not add full value for several months, or even years.

It’s rare for an internal candidate to fix complex messes that a company might be in. How could anyone, who tolerated the company’s strategic missteps and operational flaws for the past several years, quickly see the company with fresh eyes and pronounce, “Enough already! Let’s change course.”

One study concluded that insider CEOs tend to outperform outsider CEOs.

Posted in Management and Leadership

Steve Ballmer’s Final Years of Strategic Missteps as Microsoft CEO

Steve Ballmer and Satya Nadella, Microsoft CEOs

As the computing world changed over the last decade, Microsoft gradually evolved into two distinct entities: a lagging consumer and devices firm that missed the latest trends that the internet ushered, and a firm whose dominance in the enterprise world is growing. In the enterprise world, Microsoft continues to strengthen, even as computing moves from the PC server to the cloud device model.

Outside of the enterprise world, as the technology industry has shifted from software run on PCs to a focus on mobile devices and cloud computing, Microsoft missed the trend. Consumers moving away from PCs and laptops and became accusomed to computing with devices from tablets to smartphones and everything in between.

In Steve Ballmer’s final years as CEO, Microsoft’s fast-follower attempts stumbled in category after category of consumer computing and technology: Windows phones, Zune music players, and Surface tablets. During his 14 years as CEO, Microsoft tried various strategies to expand its share of the lucrative online search business, and failed there too. Google, Facebook, Apple soared ahead, transmuting the social-media-tech experience, whilst a bumbling Microsoft relied mostly on pumping out Old Faithfuls such as Windows, Office, and servers for its financial performance.

In retirement, despite being closely associated with Microsoft’s most awkward missteps—Bing Search, the Windows phone, the Zune MP3 player, among others—is celebrated for the company’s biggest successes—the Windows and Office franchises—and tripling Microsoft’s profits.

Historically, Microsoft was famous for once-invincible strategy of being a “fast follower”. In the 1990s it didn’t matter if little rivals pioneered spreadsheets, browsers or word processors. Microsoft could storm those markets with alternatives that fit into a suite of easy-to-use tools.

Microsoft needed new blood to compete in new markets. Whether Satya Nadella’s strategy will pay off may take years to tell.

Posted in Business and Strategy Leaders and Innovators