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THE RIGHT KIND OF WRONG: The Science of Failing Well

By:

Amy Edmondson

New York; Atria Books, 2023

ISBN 978-1-9821-9606-9

Amazon Price: $14.49

 

 

 

Leadership in times of failure is a dilemma. If your corporate culture is intolerant of failure, the result is not a failure-free company. It is a culture that hides failures and cannot learn from them. If your companyembraces "Fail Fast, Fail Often," it will not pause to investigate basic mistakes that could easily have been corrected.

 

Failure as a Binary Concept.

 

Amy Edmondson is the Novartis Professor of Leadership and Management at the Harvard Business School. She has a useful perspective on failure (2023).

 

Binary thinking places concepts into either/or categories. Failure is bad. Success is good.

 

For example, an instinctive aversion to failure leads to wasting Board Directors' time with "Dog and Pony Shows" focusing on success. Meantime, the Board remains ignorant of festering problems.

 

At the supervisory level, viewing Failure as a binary concept encourages micromanagement. And micromanagement leads to high levels of resignations among young workers. (Banerjee & Bannerjee, 2023).

 

 

Level 1 Failure.

 

Professor Edmondson suggests reframing failure and your management of failure. She describes three different failure categories we will call Levels 1, 2, and 3. And we will describe a fourth category.

 

Level 1 Failure is a "Basic Failure." These involve errors in well-trodden terrain. Time, energy, and resources have been wasted. A common example might be forgetting to lower the garage door this morning when driving off to work.

 

Managing level 1 Failure involves forgiving the person who made the error. Level 1 errors are part of being human. Focus on what can be done to reduce the probability of the same error being committed in the future.

 

Notice we said, "reduce the probability" rather than "make sure it can never happen again."

 

The idea is to encourage realistic failure reduction and not idealistic failure elimination.

 

Help yourself and your team articulate issues like attention to detail, assumptions, overconfidence, etc. You want to create psychological safety for team members to discuss Level 1 errors. Board Directors might thank CEOs who provide them with information about Level 1 errors plus plans to reduce the probability of the same error occurring again. This type of information is more valuable than "Dog and Pony" shows.

 

 

Level 2 Failure.

 

Level 2 Failures is a complex system that has broken down. "Many little things" come together at the same time to produce failure.

 

Whereas Level 1 Failures can be blamed on one individual, Level 2 errors usually involve a combination of internal and external causes. Examples of Level 2 Failures would include the problems of the supply chain during COVID, The Torrey Canyon ship hitting a reef at full speed,and spilling 13 million gallons of oil.

 

Elizabeth Findell and Sadie Gurman (2023) reported on a 600-page United States Department of Justice report accounting for the failure of nearly 400 Texas law enforcement officers to rapidly intervene in a 2022 tragedy where one gunman killed 19 fourth graders and two teachers.

 

This was a classic Level 2 Failure: the first officers at the scene failed to treat the situation as an active shooting incident. Police later compromised the crime scene by refusing to cooperate with the FBI.

 

Professor Edmondson says there may be some emotional relief when the company fires the leader of the group that committed Level 2 failure. Such firings focus on individuals and do not focus on the system-wide errors.

 

Board Directors should retain the services of outside experts to investigate the systems issues involved in the Level 2 Failure. The experts should report to the Board and not to the CEO. Outside experts look for the small warning signs that preceded the failure. Such warning signs are usually missed, ignored, or downplayed.

 

At a supervisory level, reducing the probability of Level 2 Failures involves focusing on team training in simulated crises. Supervisors should never assume things will go well. They should create failure scenarios and then have the team rehearse responses repeatedly. This repetition increases the probability that team responses in real situations will be automatic.

 

 

Level 1.5 Failure.

 

Professor Edmondson does not discuss this in her book, but we frequently see Level 1.5 Failures in our consulting practice. A Level 1.5 Failure is a Level 2 Failure, and everybody recognizes that there is something fundamentally wrong with the system. However, they do not know how to address the problem from a system perspective.

 

Their intervention pretends the problem is a Level 1 Failure. A classic example is focusing on employees on your team who are constantly late for work. It is addressed as a behavioral problem. But it could also be a symptom of a corporate culture that arbitrarily requires a timesheet mentality unrelated to the business needs. It could be that the company fails to appreciate the logistical difficulty of taking children to school and then driving off to work.

 

Passive Aggressive team members may be a symptom of too much work and too few resources to manage the work.

 

 

Level 3 Failure.

 

Professor Edmondson calls Level 3 Failure "Intelligent Failure." Intelligent Failures involve problems associated with grappling with novel situations.

 

According to Thomas A. Edison’s records, he failed 2,774 times to find a light bulb filament that would glow in a vacuum when electricity passed through. Treating this type of exploratory failure the same way you treat Level 1 or Level 2 Failure defeats the purpose of research. Such failures should be celebrated.

 

Level 3 Failures also occur outside the laboratory. An appropriate Level 3 Failure is an attempt to climb Mount Washington in New Hampshire only to discover that you are not physically up for the task. It could involve baking a pie for the first time with results that are not tasty.

 

A primary care physician experiments with a new medication, a sales professional tries a novel approach to bring prospects, and a store manager changes the usual assortment on the shelves.

 

Professor Edmondson argues that Level 3 Failures be encouraged since they are the only way to achieve Level 3 Success. Create a safe environment for employees to try novel approaches. One company established Failure Fridays. It provides colleagues opportunities to safely share what did not go well and what was learned.

 

Boards should encourage CEOs to report Level 3 Failures as a way of encouraging a corporate culture of innovation. We recommend one hour a year be devoted to formal presentations of Level 3 Failures within and outside the R&D function.

 

 

Summary and Conclusions.

 

Failure is Bad and Success is Good is a framework for failure. Not all Failures are alike. There are four types of failures. They need to be managed differently. And the Board needs to play its part in failure management.

 

Steve Jobs is the symbol of 20th Century Entrepreneurial Success. When he gave a Commencement Address at Stanford University, however, he chose to discuss the importance of failure in his development as a leader.

 

The link below has been downloaded 43 million times:

 

https://www.youtube.com/watch?v=UF8uR6Z6KLc&t=6s

 

 

References.

 

A. Edmondson. The Right Kind of Wrong: the science of failing well. New York: Atria Books, 2013.

 

S. Banerjee & S. Banerjee. "The Managerial Traits Responsible for the Disappearance of Employees in the Organisation." May 17, 2023. EasyChair Preprint. No. 10200. https://easychair.org/publications/preprint_download/8NLV

 

E. Findell & S. Gurman. "DOJ Details Failure to Stop Uvalde Horror." The Wall Street Journal, January 19, 2024, A1.


REWIRED: the Mckinsey Guide to Outcompeting in the Age of Digital and AI

By:

Eric Lamarre, Kate Smaje, and Rodney Zemmel

New York: Wiley, 2023

ISBN: 9781394207114

Amazon Price: $31.99

 

 

 

In Rewired, authors Eric LaMarre, Kate Smaje, and Rodney Zemmel tell the following story about a McKinsey & Company client:

 

A large global credit card issuer had 200 different digital applications managing customer data. Each application was selected on a project-by-project basis. They cost an average of $300,000 per year per application.

The result was that regulators faulted the company for lacking a consistent way of assessing risk.

To address this issue, the company created a company-wide team to map use and assign each value. The team built a set of company-wide shared analytics codes. This enabled them to roll up 200 different digital applications into a single system.

The result was $300 million per year in savings, more accurate customer data, and better compliance.

 

Most readers of this blog work for smaller companies, but the implication of this case still applies: corporate digital transformation can yield significant benefits. This blog focuses on how to position your company for change in a constantly changing digital world.

 

 

Leading From Fragmentation to Enterprise.

 

Rewired looks and feels like a text. It is designed as a guide for "leaders (who will be) digitally transforming their companies for the rest of their careers."

 

Digital and Artificial Intelligence (AI) transformations are hard to undertake and violate traditional "stay in your lane" corporate cultures. McKinsey surveyed 1,300 senior business executives. 70% of the top performers use advanced analytics to develop insights and 50% use AI to improve decision-making. And yet only 25% of AI Transformations are rated as "successful." How can you avoid being one of unsuccessful 75%?

 

 

Vision Alignment and Commitment.

 

Digital transformation involves both technology and corporate culture change. The effort must be actively led by the CEO with help from multi-functional work teams. If the CEO is not willing to be actively involved, do not undertake the journey. The CEO needs to be viewed as the driver of culture change.

 

Digital transformation is a multi-year journey. In other words, the book's recommendations may not be of value for companies with exit strategies of four years or less.

 

If the CEO fails to generate strong commitment from the Board, the CEO cannot expect to be supported by the Board when the "going gets rough." And it inevitably will get rough because it changing technology involves changing corporate culture.

 

The authors talk about the importance of creating a culture where a silo mentality cannot thrive. They do not discuss the reward systems required to achieve such a culture. That is a major omission. If you want to change a "stay in your lane" culture, the reward systems must signal that desired culture change. The hiring system needs to change towards recruiting people who welcome team-based innovations that cut across functional lines. In other words, recruitment and retention will become even more critical and more expensive.

 

 

Summary and Conclusions.

 

The authors stress that digital and AI transformation is a journey of constant evolution. It is also the modern way that businesses will work.

 

If you have the Board's support and the appropriate time horizon, this book can be of value.

 

If you are a functional head given the mandate to lead the charge by a CEO who lacks the time/interest to be an active leader, you may want to respectfully decline or look for a graceful exit from the company.

 

 

Reference.

 

E. Lamarre, K. Smaje, and R. Zemmel. Rewired: The McKinsey Guide to Outcompeting in the Age of Digital and AI. Hoboken, NJ: John Wiley & Sons, 2023


MIXED SIGNALS: HOW INCENTIVES REALLY WORK

By:

Uri Gneezy

Yale University Press, 2023

ISBN: 0300255535

Amazon Price: $24.95

 

 

 

From elementary school on, we are taught "don’t fail." Imagine a parent celebrating a child’s "F?"

 

Research institutions of higher education subscribe to a "publish or perish" culture. And this win/don’t lose approach has compromised scientific integrity. For example, The Boston Globe (2023) reported that Stanford University President Marc Tessler-Lavigne abruptly resigned in the wake of an investigation into data manipulation in his laboratory. (Wosen, 2023). A Harvard Business School professor was placed on administrative leave for the same reason (Koller,2023).

 

On the other side of the win/don’t lose continuum, Uri Gneezy (2023) relates this story:

 

During the 1973 Yom Kippur War, the Israeli Air Force (IAF) sent out two formations of F-4 fights with one mission: destroy the Syrian military headquarters in Damascus. There was a layer of clouds that covered the area. This created a dilemma: IAF planes could fly safely above the clouds but could not see the target or fly below the clouds and be easily spotted by Syrian defense forces.

One squadron leader decided to abort the mission. A second leader continued to fly above the clouds. A hole in the clouds appeared above the Syrian headquarters and the IAF was able to destroy the target.

 

During the post-attack debrief, the IAF commander commended both squadron leaders for their sound decisions.

 

The commander sent a powerful signal bout failure. In this blog we will discuss failure and the signals leaders send about failure.

 

 

Signals That Boards Send to Their CEOs.

 

Uri Gneezy holds the Epstein/Atkinson Endowed Chair in Behavioral Economics at the University of San Diego’s Rady School of Management. He argues that corporate reward systems send powerful signals. And these signals may run counter to leaders’ verbal statements.

 

Companies tend to verbalize commitment to diversity, equity, and inclusion (DEI). One of the writers of this blog wanted to see if CEO compensation systems had an impact. He created pairs of public companies of similar size and similar industry sectors and then counted the number of female names listed as Vice President or higher.

 

Consistent with Professor Gneezy’s prediction, companies with the highest number of female Vice Presidents had DEI goals as one of the components of the CEO’s bonus program. The Board was sending a strong signal to CEOs: moving forward on DEI will have a positive impact on your personal wealth.

 

The second important lesson from this research was the percentage of bonus associated with DEI was less important than the fact that it was included as part of the bonus structure. It didn’t matter if the percentage was 2% or 5%. Assigning 0 in the bonus calculation sent the strongest signal to CEOs.

 

 

Win/Don’t Fail Culture.

 

A "Don’t Fail" culture may be counterproductive. Consider Thomas Edison’s search for a filament for the lightbulb. After trying two thousand different materials, his assistant complained, "All our work is in vain." Edison disagreed: "We now know that there are two thousand elements that we cannot use to make a good light bulb." It took 6,000 failures to find the most suitable filament material.

 

A positive emotional reaction to failure is required of leaders in certain industries. Venture Capital typically experiences a 90% failure rate on investments. The failure rate for pharmaceutical R&D is 90%. The failure rate for software development ranges from 50-80%. The failure rate in M&As is 70-90%.

 

Below is a link to Steve Jobs’ Stanford University communicant address where this legendary success discussed three major failures in his life and his approach to failure:

 

https://www.youtube.com/watch?v=UF8uR6Z6KLc

 

 

What Are Your Company’s Failure Signals?

 

If the verbalization is "Fail Fast," but bonuses are given only for success, then there is a gap between the signal and the verbalization. This is equivalent to the company espousing the values of DEI but providing zero incentive in its compensation system.

 

Below is a way of transforming the binary concept of Succeed/Don’t Fail into an ordinal framework. This is a model prototype for a bonus associated with a successful program.

 

% of Bonus for Item   Description
0   Failed slowly and did not learn from failure.
1   Failed Fast and did not learn from failure.
5   Failed Fast and learned from the experience.
40   Succeeded and got positive results.
100   Succeeded and met or exceeded expectations.

 

 

Beware of Leaders Who Follow ‘Best Practices:’

 

A "Win/Don’t Lose" corporate culture often translates into the following verbalization: "We "follow best practices." This is a good strategy to minimize failure. It will do little for a company’s ability to be successful.

 

Over time, a "following best practices" corporate culture leads to hiring people who are relatively closed-minded about experimentation. Another problem with "following best practices" is business is constantly moving. By the time a copycat company manages to institutionalize "best practices," the real leaders have already moved on.

 

Are there reward systems in place for heads of functions to "try new approaches, fail fast, and learn from failure?" Rewards can be financial or public acknowledgments.

 

 

Summary and Conclusions:

 

"Success is Good; Failure is Bad" is drummed into us from elementary school. In business, on the other hand, learning from failure can be positive. We need to change our binary attitude about failure.

 

Companies may "say" they value learning from failure. What is said is less important than the compensation signals sent. A zero reward sends a loud signal about a company’s real values.

 

 

References:

 

A. Koller. "Studies retracted after Harvard professor who researches honesty faces allegations of fraud." The Boston Globe, July 28, 2023.

 

J. Wosen. "Stanford president to resign after investigation finds he failed to decisively and forthrightly correct research." The Boston Globe, July 19, 2023.

 

U. Gneezy. Mixed Signals: how incentives really work. New Haven: Yale University Press, 2023.


THE EXPERIENCE MINDSET: CHANGING THE WAY YOU THINK ABOUT GROWTH

By:

T. Bova

New York: Penguin Random House, 2023

ISBN: 059354269X

ASIN ‏: ‎ B0BCKSLLQ

Amazon/Board Options Price: $15.99

 

 

 

Southwest Airline’s founder Herb Kelleher famously said:

 

"If you treat your employees right, guess what? Your customers come back and that makes your shareholders happy."

 

This simple declaration implies looking at employee satisfaction, customer satisfaction, and shareholder value as a system. It begins with employee satisfaction. The readers of this blog will probably have first-hand experience with how seldom this system view is put into practice.

 

Let’s discuss the implications and what leaders can do about it.

 

Silo Mentality

 

Contrary to Herb Kellher’s statement, Tiffani Bova (2023) reports that nine out of ten C-Suite executives in the United States focus on customer experience as the first priority. She argues that it is indeed possible to grow a business with great customer experience and mediocre employee experience. But to achieve sustained, major growth, companies need to focus on positive Employee Experience (EX) AND positive Customer Experience (CX) simultaneously.

 

Ms.Bova is the global customer growth and innovation evangelist at Sales force. She has also been a Research Fellow at Gartner. Ms. Bova was named one of the Top 50 business thinkers in the world by Thinkers50.

 

The CX Dilemma

 

CX is defined by how your customers feel when they engage with your products/services.Ms. Bova provides data to show when you keep industry and size constant, companies with high CX scores had three times higher shareholder returns than the lowest-performing CX competitors.

 

Jeff Bezos, founder of Amazon, described the CX dilemma:

 

"One thing I love about customers is that they are divinely discontent. People have a voracious appetite for a better way, and yesterday's 'wow' quickly becomes today's 'ordinary.'"

 

Managing this CX Dilemma means improvement never ends. That means your employees are constantly thrown into new situations. Eventually, they begin to leave or remain at the company with little enthusiasm. Recruiting competent, open-minded employees gets more difficult.

 

Superior CX depends onsuperior EX. Ms. Bova reports that 74% of surveyed institutional investors agreed that a company’s ability to win the best talent is more important than gaining new customers or increasing valuation.

 

Below are some suggestions.

 

Who Is Responsible for EX/CX?

 

If you view EX/CX as an integrated system, then the responsible entity should consist of the Chief Marketing Officer, The Chief HR Officer, and the Chief Technology Officer. Working as a troika they can view issues from a system-wide perspective. Job descriptions should be changed to reflect the importance of EX/CX and yearly bonus awards should include EX/CX goals.

 

The Chief Digital Marketing Officer should report to this troika and not to marketing. And having the CHRO as a peer of the Chief Marketing Officer and the Chief Technology Officer helps move the CHRO away from reporting to the CFO or Chief Legal Officer or Chief Administrative Officer.

 

This arrangement sends a powerful message: HR contributes to top-line growth. In too many companies, HR is perceived as an administrative function whose key mission is to reduce risk/cost.

 

Begin By Asking Your Employees

 

Before hiring consultants, ask your employees for their ideas. Responses should be differentiated by the degree to which employees have direct contact with customers. For example, the emergency room nurse’s comments should be more valuable in a health care system than the Chief Legal Officer.

 

According to Ms. Bova, 61% percent of surveyed employees agree that employers need to do a better job of listening to employees.

 

We recommend using open-ended questions rather than forcing choices between options selected by management. Design the questionnaire so that it can be completed in 5 minutes or less.

 

Benefits of a Strong EX/CX System

 

According to Ms. Boya, companies with both high EX and CX exhibited a three-year compound annual growth rate (CAGR) of 8.5% versus 4.35% for companies with low EX and CX.

 

She describes a three-year study at one retail chain. Customer-facing employees with more tenure, more cross-departmental experiences, and full-time status generated $87 per person hour versus $57 per hour for those employees not having these three experiences.

 

What about the added costs of full-time employees versus interim? When Ms. Bova factored in costs, the hourly per-employee profit was $41 versus $59 for contingency talent.

 

Metrics That Matter

 

Useful measurement tools are mandatory to measure improvement over time. Within the CX arena, Ms. Bova recommends the Net Promoter Score (NPS).

 

For EX, Ms. Bova recommends the Employee Net Promoter Score (eNPS). The author recommends collecting this information monthly or quarterly at a minimum. These surveys should not be a one-time event but an ongoing process that allows for constant improvement in the system.

 

No Inexpensive Quick Fix

 

Looking at CX and EX as an integrated system for generating growth requires a corporate culture change starting with the Board of Directors.

 

If a private equity portfolio company's Board of Directors is dominated by PE Partners looking to sell the business in four years or less, this CX/EX Journey may be too costly and too frustrating.

 

And Board commitment requires a change in CEO compensation away from short-term stock performance or year-over-year EBITDA. It may require the removal of key leaders who remain wedded to an outdated "stay in your own lane" framework.

 

A strong CX/EX System is a journey that never ends. But the journey benefits the right employees, the right customers, and the right shareholders.

 


 

References:

 

T. Bova. The Experience Mindset. New York: Penguin Random House, 2023


A GUIDE TO NONPROFIT BOARD SUCCESS: Answering the Call of Leadership

By:

Cynthia Jarboe

Santa Barbara: Praeger, 2020

ISBN: 978-1-4408-7266-2 (print)

078-1-4408-7267-9 (ebook)

List Price: $39.00

 

 

 

Cynthia Jarboe is a former partner with PWC, where she led a regional nonprofit audit practice. She has worked with over one hundred nonprofit nonprofit corporations. A Guide to Nonprofit Board Success is an easy read yet worth retaining on your bookshelf as a useful nonprofit reference.

 

The first Chapter is called "Should I Serve?" and it contains 16 practical questions you should try to answer before you decide.

 

Ms. Jarboe makes the following observation:

 

"You may be asked to serve because you represent a particular demographic. All of that is good governance as longa you are willing to assume responsibility for that representation."

 

In other words, if one of the reasons the Board brings you on is because you are a member of a certain ethic group that is part of the nonprofit’s mission, you should present the Board with your personal perspective. But that is insufficient. You are a representative of a group and you need to remain in touch with that group.

 

The rest of the book focuses on committee structure, working with volunteers, board-staff relations, understanding financial statements, and board self-evaluation.

 

The book contains basic models for structuring Conflict of Interest Policy, Investment Policy Statements, and Requests for Proposals.

 

Ms. Jarboe brings a wealth of experience to the readers. This is a book that deserves to be provided to each nonprofit Board member as part of new member board orientation.


FRAMERS: THE HUMAN ADVANTAGE IN AN AGE OF TECHNOLOGY AND TURMOIL

By:

Kenneth Cukier, Viktor Mayer-Schonberrger and Francis de Vericourt

New York: Penguin Random House, 2021

ISBN 9780594195049

List Price: $28.00

 

 

 

Are you proud of your analytical skills? The authors of Framers (2021) warnthat this skill may be less valued in the future. You want to develop a reputation as a "reframer."

 

The authors are Kenneth Cukier, senior editor at The Economist, Victor-Mayer-Schonberger, Professor of internet governance and regulation at the University of Oxford and Francis de Vericourt, professor of management science at the European School of Management and Technology.

 

In this blog we will summarize the key ideas of the book and provide our perspective.

 

Reframer Ben Bernanke

 

In 2008, Federal Reserve Chair Ben Bernanke was confronted with the bankruptcy of the global investment bank Lehman Brothers. The Fed let Lehman Brothers collapse. AIG, a large insurance company, also faced bankruptcy. Why should the Federal Reserve bail out AIG when it had decided not rescueLehman Brothers?

 

In analyzing this problem from one perspective, using taxpayer dollars to bail out a failing company goes against the Capitalist notion that companies should rise or fall on business merits. We live in an economy based on Creative Destruction. In analyzing the problem from other perspective, the Federal Government’s bailing out wealthy capitalists who make bad decisions was unethical. It only encourages more risky decisions.

 

Ben Bernanke, however, reframed the problem. If banks and insurance companies become fearful of providing business credit, economic chaos would ensue. The most important thing was about preventing an economic system-wide credit crunch.

 

With the benefit of hindsight, we can appreciate the wisdom of Ben Bernanke’s reframe of the issue.

 

Framing at the Individual Level.

 

The authors argue that we are at the beginning of the confluence of Big Data, Artificial Intelligence (AI) and Robots. We are far enough into the process, however, to understand that no human or team of humans can be more efficient than AI in analyzing large quantities of information. If your unique value proposition is your ability to analyze data, you are on a path to a short career.

 

If you want a winning career strategy, focus on what AI systems cannot do: change the conceptual framework. In a previous Psychology Today blog, we gave an example of how we reframed an issue for a client:

 

A physician’s father-in-law had invited her husband, son, and her to spend ten days at a cabin in rural Michigan. She framed the trip with the focus on her discomfort with her father-in-law. She focused on how to avoid stress for herself. We helped her reframe the purpose of the trip as providing happy memories for her son. This reframe allowed her to enjoy her vacation in Michigan. (Stybel Peabody, 2021).

 

Another way to conceptualize reframing is to consider the figure-ground effect. Reframing takes the image that appears to be in the foreground and places it in the background. AI cannot do this. But humans can.

 

Creating a Corporate Culture Open to Reframing.

 

As a company moves towards the growth phase of its life cycle, there is a tendency to want to hire like-minded individuals so the company can focus on operational efficiency/scalability. The authors warn leaders that this natural desire is dangerous.

 

They recommend continuing to hire for diversity of perspectives. Our experience with Boards of Directors would confirm the importance of conceptual diversity: we see too many boards that are racially diverse and have powerful male and female directors. But if they approach problems from the same cognitive framework, you lack real diversity of thinking.

 

Diversity of faces look good in a photograph. Homogeneity of thought look bad in a balance sheet.

 

The authors recommend that companies institute policies to have team members show a variety of options from different frames of reference. Ask a plan’s major champion to take the role of the plan’s biggest critic. Ask a plan’s biggest critic to take the role of its biggest champion. Create multiple scenarios of success. Create multiple scenarios involving failure.

 

You might consider designating one team member as the Reframer. As the team closes in on a solution, the designated Reframer should look for alternative paths to the same solution. For example, one of the writers was working with the Finnish company Nokia. At the time Nokia had a mobile device on the market that was losing customers to market-leader Blackberry. The foreground was "develop a new product to beat Blackberry." Many of the engineers, however, were using the Iphone as their personal mobile devices because they could do so much more with it.

 

A Question to Ask in Considering an Employment Opportunity.

 

In considering employment, ask yourself how open is the culture? We recommend you ask current and former employees this one question:

 

"One a scale of 0 (Never) to 10 (Always) how open is the corporate culture to new ideas?"

 

If responses tend to clump around the 8-9 range, that is good. If responses clump around 6-7, be cautious. Anything below six is a warning.

 

You can find current and former employees by doing a LinkedIn Search. Check your online college alumni database.

 

Summary and Conclusions:

 

Are you proud of your analytical skills? You may be on a path towards being replaced by Artificial Intelligence. The future belongs to those who can reframe.

 

Reference

 

K.Cukier, V. Mayer-Schonberrger, F.de Vericourt. Framers: the human advantage in an age of technology and turmoil. New York: Penguin Random House, 2021.

 

L. Stybel and M. Peabody. "How to Have Better Conversations with Yourself." August 2021. Psychologytoday.com.


ACROSS THE BOARD

By:

Mark Pfister

Port Jefferson, Pfister Strategy, 2018

ISBN-13 978-0-692-06426-9

Amazon/Board Options Price: $24.95

 

 

 

Mark A. Pfister is CEO of Pfister Strategy Group. It serves as a strategic advisory council for executives and Boards of Directors.

 

This book’s mission is how to build a Board from scratch or how to rebuild an existing Board. The author uses the term "foundational architecture" to look at the "nuts and bolts" of successful Boards. And he assures the reader that "there is a successful formula and discipline to do this correctly!"

 

I think the book is worth reading. You will find some ideas interesting and practical. You will also find some ideas you disagree with.

 

The author repeats several times in the book that Board members should expect to put in 200 hours a year if they intend to be effective Board members. My own Board experience would agree with this.

 

He argues that the Board and not the CEO should be the ones to articulate the company’s mission, vision, and values. And those three frames should be reflected in every decision made by the Board or proposals that come to the Board. The Board should constantly evaluate itself regarding how they are symbolizing vision, mission, and values.

 

The "Balance Sheet" for Expertise Coverage on the Board is an outstanding, practical tool to help diversify perspectives on the Board.

 

My chief objection to the author’s ideas can be symbolized by the title of this book: "Across the Board." Mr. Pfister makes no distinction between public or private or nonprofit Boards. Mr. Pfister says his ideas apply to all Boards, even Boards of Advisers.

 

My experience has been different. Private equity dominated Boards and Family dominated Boards at some high levels of abstraction are indeed Boards just like a four-year-old boy and a sixty-year-old woman are both "human beings." And yet there are differences!


HOW INVESTORS AND BOARDS ARE REDEFINING TSR

By:

Bill McNabb, Ram Charan and Dennis Carey

Boston: Harvard Business Review Press, 2021

ISBN: 078-1-63369-832-1

eISBN: 978-1-63369-833-8

Hardcover: $35.00

Kindle: $33.25

 

 

 

Bill McNabb is former Chairman and CEO of Vanguard. Ram Charan has spent forty years working with CEOs and Boards around the world. Dennis Carey is Vice Chairman of Korn Ferry with expertise in CEO succession and board engagement.

 

These authors interviewed top tier leaders in business, including Mary Barra (GM), Warren Buffett (Berkshire Hathaway), Michele Hooper (Directors’ Council), and Raj Gupta (Delphi Automotive).

 

The framework of the book is TSR. It is thought to mean Total Shareholder Return: the change in a company’s share price plus accumulated dividends over time. The authors state that focusing on traditional TSR often means focusing on short term results, which pleases traders at the expense of long-term shareholders. The TSR concept also lacks no rules of behavior.

 

Boards of public companies are caught in a bind: if they focus on the needs of stock traders, a high TSR will often come at the expense of long-term shareholders. An increasing number of investors hold shares through index funds. And index fund managers are forced into being long-term shareholders.

 

Long-term institutional investment managers are becoming more openly vocal about bad corporate governance.

 

The authors recommend Boards be explicit in stating that their fiduciary responsibilities are primarily focused on long-term investors. It should also focus on what the authors call The New TSR: talent, strategy, and risk management. Get these three concepts done correctly and long-term shareholders will benefit.

 

We define a book as "worthwhile" if we can take away two practical ideas that could be brought to a Board’s attention at the next meeting. Using this as a framework this book is outstanding. We counted at least 15 ideas we think are worth implementing.

 

Below are a few of these ideas:

  1. It is time for a "radical change" in the role of the Compensation Committee. The new name should be Talent and Compensation Committee. It should focus on the top twenty positions.
  2. The traditional 360 assessment is too internally focused and not good at predicting how the executive will function in the future. Use a 450-degree assessment which includes an impartial assessment by a third party.
  3. When considering an acquisition, the Board should hire two external investment bankers. One banker will make the case for the deal. The other banker will make the case against the deal.
  4. Institutionalize a Board-directed after-action review on every acquisition two or three years after the deal is signed.
  5. Companies usually conduct HR Audits of a potential acquisition after the deal is done. But then it is too late. Do the HR Audit before the deal is done and focus on the top 25. How many of them are likely to leave?


GIVING VOICE TO VALUES IN THE BOARDROOM

By:

Cynthia Clark

New York and London: Routledge,2021

ISBN: 978-0-367017930-7

Paperback: $39.95

 

 

 

Cynthia Clark, Ph.D. is a Professor of Management at Bentley University and Director of the Geneen Institute for Corporate Governance. Her expertise is corporate governance, business ethics, and shareholder activism.

 

Speaking up can be emotionally challenging and put a collegial Director culture at risk. Director fiduciary responsibility, however, may require you to do it. Giving Voice to Values (GVV) is a structured framework for articulating your position during times when values conflicts arise. The GVV framework was developed by Mary Gentile. In this book, Professor Clark adapts the GVV approach to archetype dilemmas faced by many Board Directors.

 

The Chapters are organized around five cases: Director Independence, Director Selection, CEO Succession, CEO Compensation and Cybersecurity. Prior to each case, Professor Clark provides a well-researched overview of the topic. The overview itself is worth the price of the book.

 

Another useful contribution is the author's classification of the common "push backs" your Board colleagues typically offer to champion the status quo. These push backs are (1) standard practice (2) materiality (3) locus of responsibility and (4) locus of loyalty. The book goes into depth about how to confront each of these rationalizations. GVV provides a structure to confront each of these rationalizations.


THE END OF EPIDEMICS

By:

Jonathan Quick, M.D.

Bronwyn Fryer (2018)

New York: St. Martin's Press

ISBN: 9781250117779

Regular Hardcover Price: $34.99

Amazon/Boardoptions.com Price: $13.00

Kindle Amazon/Boardoptions.com Price: $16.99

 

 

 

This book is so important, I recommend Board members and business readers read it and construct two strategic scenarios: (1) Scenario 1 where COVID-19 is a once-in-a-hundred-year occurrence. (2) Scenario 2 where COVID-19 is called "Twenty-First Century Pandemic #1."

 

Jonathan D. Quick, M.D., MPH was President and Chief Executive Officer of Management Sciences for Health and is now Senior Fellow Emeritus at the organization. His area of expertise is global health security. He was previously Director of Essential Drugs and Medicines Policy at the World Health Organization. Dr. Quick is on the faculty of the Harvard Medical School Department of Global Health and Social Medicine and is a Fellow of the Royal Society of Medicine.

 

Bronwyn Fryer is the former senior editor for Harvard Business Review and has written articles in The New York Times, Newsweek, Businessweek, and Fortune. She works with thought leaders to produce influential books and articles.

 

The Quick-Fryer team thus has global health substance and the writing skill to express complexity in a readable manner.

 

The End of Epidemics provides a chillingly convincing rationale for why Scenario #2 is our collective future.

 

This book was written in 2016 and published in 2018. The word COVID-19 never appears, yet the book forecasts its reality.

 

The end of the book details the positive steps that can be taken by governments. It offers little help for businesses seeking to craft plans under Scenario 2. That is why reading the book and discussing its implications is important.

 

The authors state "this book is ultimately about hope."

 

"Can prevent and end epidemics in the future? I have no doubt we can achieve this seemingly impossible goal. Why am I so convinced? Because I have seen what happens when visionary leaders imagine the impossible and then make it happen."

 

For example, AIDS was a death sentence in Africa as in most low-income regions. Within a decade, large-scale prevention efforts stemmed the tide of new infections. Treatment increased from fewer than 50,000 in 2000 to more than 5 million by 2010.

 

Many believed that eliminating smallpox for good was impossible. But Donald Ainslie Henderson spearheaded a successful effort to eliminate smallpox on a global basis. The last wild case of smallpox was diagnosed on October 26, 1977. The authors describe the elimination of smallpox as the "single greatest achievement in the history of medicine. After suffering repeated epidemics over thousands of years, mankind was freed from this disease in about a decade."


DECONSTRUCTING CONFLICT: Understanding Family Business, Shared Wealth and Power.

By:

Doug Baumoel

Blair Trippe (2016)

Beverly, Massachusetts: Continuity Media

ISBN: 0-996-42560-5

Paperback Amazon/Stybel Peabody Price: $19.80

Kindle Amazon/Stybel Peabody Price: $14.99

 

 

 

Doug Baumoel is Founding Partner of Continuity, LLC, a global firm working with family businesses and their stakeholders. Educated in engineering at Cornell and with an MBA from Wharton he is a national figure in family business governance. Blair Trippe is Managing Partner of Continuity, LLC is known for helping adult siblings manage issues confronting aging family members. She has an MBA from Northwestern’s Kellogg School and studied psychology at Connecticut College.

 

At the end of the book the authors clearly state the value of this book for non-family members of family dominated Boards of Directors:

 

"Peace is not the absence of conflict. It is the ability to handle conflict by peaceful means."-President Ronald Regan.

 

 

Over 85% of American businesses are family-owned and operated. Family dominated businesses are responsible for 90% of the job creation in the United States. Family dominated firm are generally more successful than non-family counterparts in longevity and long-term profitability. Part of this is due to the ability of the owners to keep a long-term perspective.

 

But these impressive numbers come at a price. And the price is family conflict.

 

All business systems have tension, but family dominated business systems have unique and highly emotionally charged conflict. This book is a framework to help outside board members frame conflict so that appropriate intervention strategies can be developed.

 

Core to this book is The Conflict Equation. I wish the authors had selected a different framework because they spend too much space clarifying why their Equation should not be thought of as a mathematical equation, yet it is expressed as a mathematical formula.

 

It would have been more helpful to think of this book as an open system check list.Before intervening in a family conflict, does the external Board member have a grasp of the subtle, covert dynamics behind the overt conflict?

 

This is not a text. Reading this book from beginning to end will make Board members frustrated. I recommend reading Chapter 1 to get an overview of the authors' key points. Once that is done, go to page 191 to review the factors that the authors cover. If there are terms that are not clear, go to specific chapters that deal with the unclear element or elements.

 

You will get more benefit from this book if you read it as a manual.

 

As a manual for non-family Board members dealing with family conflict, the authors have done an excellent and thorough job.


DIGITAL TRANSFORMATION: Survive and thrive in an Era of Mass Extinction.

By:

Thomas M. Siebel

Rosetta Boos (2019)

New York

ISBN 978-1-9481-2248-1

ISBN 978-0-7953-5264-5

Regular Price: $25.00

Amazon/Stybel Peabody Price: $17.74 Hardcover; $14.00 Ebook

 

 

 

Thomas M. Siebel was the founder of Siebel Systems, a pioneer in the Customer Relationship Management (CRM) and is CEO of C3.ai, a provider of enterprise artificial intelligence software. He was named by BUSINESSWEEK as one of the top 25 managers in global business and is a three-time recipient of EY Entrepreneur of the Year.

 

Let's assume this person knows what he is talking about!

 

Here is our takeaway from Mr. Siebel's new book, DIGITAL TRANSFORMATION: SURVIVE AND THRIVE IN AN ERA OF MASS EXTINCTION. (2019):

 

Once a year, the Board of Director agenda should include this question: is our industry facing evolutionary change or are we going through a period of "punctuated equilibrium?"

 

This question sounds like something a philosophy professor might ask in an undergraduate seminar. The question is anything but academic.

 

How the Board responds to this question can then be a North Star for creating corporate strategy, corporate culture, hiring, and compensation.

 

 

Evolutionary Change vs. Punctuated Equilibrium:

 

When Charles Darwin wrote ON THE ORIGIN OF SPECIES (1859), he proposed evolution as a process of continuous change-a slow and unceasing survival of the fittest over vast periods of time.

 

In business we constantly see evolution. Each year new and improved car models appear. Each year our computer operating systems are upgraded. Apple comes out with a new and better mobile device every two years, etc. The laptop you are using may be "modern" but its evolution can easily be traced to the Xerox' Alto Personal Computer of 1973.

 

Evolutionary change implies that there is time to spot industry trends and slowly adapt at your own pace.

 

Thomas Siebel issues business leaders this warning: evolutionary change is the exception and not the rule.

 

Fossil records show discontinuity as the rule.

 

As opposed to Darwin's evolution concept, Punctuated Equilibrium suggests long periods of slow evolution punctuated by dramatic transformation.

 

Species may stay in equilibrium for thousands of generations. And then there is a rapid explosion of new species. This period of disequilibrium is followed by a long period of relative stability.

 

 

Punctuated Equilibrium in Business:

 

Siebel's thesis is that we are amid an evolutionary punctuation.

 

Since 2000, 52% of the Fortune 500 companies have either been acquired, merged, or have declared bankruptcy. It is estimated that 40% of the companies in existence today will shutter their operations in the next ten years.

 

Mass corporate extinction doesn't happen without a reason.

 

The author states the reason is the confluence of four technologies: cloud computing, big data, the internet of things, and artificial intelligence.

 

Each technology is important. The interaction of these four technologies, however, means massive industry disruption.

 

 

Metcalfe's Law:

 

In the 1970's, Bob Metcalfe invented Ethernet. This was a technological breakthrough that allowed previously discrete computers to move into interactive networks. Metcalfe understood that the power of the network itself would be greater than the sum of all its components. To dramatize this idea, he formulated Metcalfe's Law: the power of the network is a function of the square of the number of devices connected to that network.

 

When one person was on Facebook, the service at little value. As the network of Facebook users expanded to 2.38 billion in July 2019 the commercial importance of the total Facebook user network has become greater than any one Facebook user or even the totality of Facebook users at the individual level.

 

Imagine Metcalfe's Law as it applies to the Internet of Things.

 

According to Siebel, do not think of a sensor as only a sensor. It is a small computer or will soon become a small computer.

 

We will have 50 billion small computers connected to a network. Fifty billion squared is equivalent to the number of stars in our universe. Siebel states:

 

The Internet of things may be the single most important defining feature of the 21st century economy.

 

A powerful global network becomes a new computing platform. And much of the computing will take place within the sensors at the periphery of the network rather than at the core of the network. For example:

 

A sensor will alert a grocery store employee that a particular lettuce has a shelf life of four days.

 

 

Metcalfe's Law Meets Moore's Law:

 

In 1965, Gordon E. Moore-the co-founder of Intel (NASDAQ: INTC)-postulated in a magazine article that the number of transistors that can be packed into a given unit of space will double about every two years.

 

Gordon Moore did not call his observation "Moore's Law," nor did he set out to create a "law." Moore made that statement based on noticing emerging trends in chip manufacturing at Intel. Moore's insight became a prediction, which in turn became the golden rule known as Moore's Law.

 

Moore's Law proved to be generally true.

 

For decades following Gordon Moore's original observation, Moore's Law has guided the semiconductor industry in long-term planning and setting targets for research and development (R&D). Moore's Law has been a driving force of technological and social change, productivity, and economic growth that are hallmarks of the late-twentieth and early twenty-first centuries.

 

Moore's Law implies that computers, machines that run on computers, and computing power all become smaller and faster with time, as transistors on integrated circuits become more efficient. Chips and transistors are microscopic structures that contain carbon and silicon molecules, which are aligned perfectly to move electricity along the circuit faster.

 

The faster a microchip processes electrical signals, the more efficient a computer becomes. Costs of these higher-powered computers eventually decrease by about 30% per year because of lower labor costs.

 

In other words, technology will get faster, smaller, and cheaper every two years.

 

 

How Big Is Your Data Moat?

 

According to Siebel, the combination is going to promote a flurry of industry consolidation.

 

"The future has never looked brighter for large companies embracing digital transformation."

 

The reason is Metcalfe's Law: large companies tend to have dramatically more data than smaller companies. Metcalfe's Law predicts access to a vast amount of proprietary data becomes a "data moat" to discourage competitors.

 

Think of the data moats around Amazon, Facebook, and Google.

 

Companies with large data moats have an easier time attracting capital and attracting the best technological talent.

 

 

The Board's Role in Creating a Corporate Culture To Fit a Period of Punctuated Equilibrium.

 

If the Board concludes that the company remains in a period of evolutionary change, then there is no need to make dramatic change to culture. Keep things customer-centric, reliable, and predictable. Follow "Best Practices" of others rather than take a leadership role.

 

If the Board, however, concludes that we are in a period of Punctuated Equilibrium, then the Board needs to examine if it has a corporate culture that can rapidly deal with disruption.

 

The silo mentality needs to be quickly destroyed. Companies must be highly sensitive about attracting and retaining people who are open to change/new ideas. Those employees who view change as a threat may be a threat to the survival of the company.

 

 

Consider Blockbuster and Netflix:

 

At its peak, Blockbuster employed 60,000 people and earned $5.9 billion in revenue. Netflix CEO Reed Hastings proposed a merger with Blockbuster whereby Netflix would run Blockbuster’s online presence.

 

Blockbuster declined as it did not see any value in the combination.

 

In 2019 Netflix has a market capitalization of $160 billion and Blockbuster filed for bankruptcy.

 

Netflix had been wedded to video by mail order but saw the technological shift to streaming video. It dropped its mail order business and quickly transformed. Blockbuster remained committed to its franchise retail store model.

 

 

Questions to Consider Each Year at the Board Meeting:

 

Is our industry in a period of evolutionary change or are we in a period of punctuated equilibrium?

 

Depending on the Board's answer to this question, the following are follow-up questions to consider:

 

Is digital and cultural transformation being driven by the CEO across functional boundaries or is it driven by key C-Suite function leaders meeting resistance from other functions?

 

How does the company attract talent open to change/new ideas?

 

How does our answer influence the corporate strategy?

 

How does our answer influence the type of people we need to serve with us on this Board of Directors?

 

How does our answer influence how we pay our CEO?

 

 

Summary and Conclusion:

 

Kevin Coffee of Bajan Waters cautions boards about the importance of making public underlining assumptions. And one underlying assumption is the nature of change.

 

The assumption that the change will take place gradually means that the Board may lack appreciation for critical discontinuities that competitors grasp earlier. (2019).

 

 

References:

 

Coffey, K. Personal Conversation (2019)

 

Darwin, C. ON THE ORIGIN OF SPECIES BY MEANS OF NATURAL SELECTION, OR PRESERVATION IOF FAVOURED RACES IN THE STRUGGLE FOR LIFE (1859). London: John Murray.

 

Siebel, T. M. DIGITAL TRANSFORMATION: SURVIVE AND THRIVE IN AN ERA OF MASS EXTINCTION. (2019) New York: Rosetta Books.


The Compliance Handbook: A Guide to Operationalizing Your Compliance Program.

By:

Thomas Fox

Compliance Week

Houston, Texas, 2018

ISBN-13 978-1725935464

ISBN-10 1725935465

Amazon Price $395.00 (Paperback)

Amazon Price $199.95 (Kindle Edition)

 

 

 

Thomas Fox has practiced law in Houston for thirty years. He is now an independent consultant assisting Boards of Directors and companies on such compliance issues as anti-corruption policies, anti-bribery issues, and international transaction issues. He is the author of the "FCPA Compliance and Ethics Blog."

 

This is a BIG one-volume book whose mission is to provide compliance practitioners and Board members with "the most recent information about what constitutes the most current thinking on best practices from a variety of sources."

 

The framework of the book is 31 days to a more effective compliance program, including the role of the Board of Directors.

 

Each section provides three key takeaways you can incorporate into your compliance program for little or no cost.

 

The good news about this book is that it is written for a Board member or a compliance officer who is not necessarily an attorney. The book is refreshingly free of legal jargon.

 

Another good thing about this book is that as a digital book it is easy for Board members to carry with them on trips. They can do key word searches to focus on what is relevant. The less expensive price makes the Kindle version of this book more attractive as well.

 

The bad news about this book is that as a paperback, it takes up too much library space. It is not convenient to take to Board meetings.

 

The appendix needs extensive rework. For example, there are several important references to the design of compensation/reward systems in the text. But you can't look up "compensation" in the index.

 

The critical value proposition of this book is to provide compliance practitioners "with the most recent information" yet this book format insures that your $395 investment will eventually become little better than a weight to keep your office door open.

 

When will the book become obsolete? We do not know. And neither does the author.

 

I wish Tom Fox would sell an annual subscription to THE COMPLIANCE HANDBOOK as a web-based tool. The subscription price would then include automatic updates. Subscribers can then be assured that they have constant access to fresh material.


Driving Digital Strategy: A Guide to Reimagining Your Business.

By:

Sunil Gupta

Harvard Business School Publishing, 60 Harvard Way, Boston, MA, 2018

ISBN: 9781633692688 (hardcover)

eISBN: 9781633692695 (ebk)

Regular Price: $32.00

Amazon Price: $26.02 (hard cover) or $17.99 (ebook)

 

 

 

The author, Sunil Gupta is the Edward W. Carter Professor of Business Administration at Harvard Business School. He is also Cochair of the Executive Program on Driving Digital Strategy. Gupta advises and speaks to companies around the world on issues related to digital transformation. Representative clients include Adidas, IBM, Franklin Templeton, Heineken, Johnson & Johnson, Novartis, PwC, TD Bank and Vodafone.

 

For those interested in understanding the disruption that digital marketing will bring to entire industries while enabling companies such as Facebook and Amazon to achieve exponential growth, this is a must read. This easy-to-read book is about how incumbents have struggled as new and nimble players have emerged with innovative business models. Through engaging stories and real-life examples, Gupta showcases how digital presents opportunities for companies to reinvent a business and be ahead of the competition providing customers value and differentiation from those who they compete against both known and unknown.

 

Gupta suggests these important considerations for those seeking to develop a digital strategy:

 

  1. Business strategy – Gupta discusses new business models, such as product-as-a-service or product-as-a-platform and how they are redefining the competitive landscape. For those without a digital business strategy in today’s world, the reality is that they may not be around for too long.
  2. Value chain – Open innovation has dramatically changed the research and development process and Gupta details why and when it works, and when it does not. In today’s new digital age, one must be mindful of the new methods to improve efficiency and effectiveness of operations, as well as the challenges of managing channel conflict and defining the role of each channel.
  3. Customers – Through digital technology the way in which customers search for information and buy products has changed dramatically. It's also enabled businesses to collect data about their customers and opened up new ways to acquire them. Gupta provides insightful ways to engage customers in a more personal and differentiated way using digital and the power of data.
  4. Organization – The organization you have today likely isn't the organization you need for the digital future. Gupta provides insights around the organizational structure and talent needed to succeed for the future.
  5.  

    I personally like how Gupta provides thought provoking concepts and ideas to strengthen one's core business and build for the future at the same time. You may not agree with all his thinking, but for sure his thoughts will cause you to pause and rethink what's needed to succeed in the future. Certainly, he dissects a topic being discussed in most board rooms today.

     

    ###

     

    Brian J. Wagner is Chief Digital Marketing and Operations Officer for GE Healthcare. He has spent the past 20+ years in healthcare leading sales and marketing with world class companies such as Boston Scientific, Guidant VI, Kimberly-Clark Healthcare and Philips Imaging. He's also sat on boards for small entrepreneurial healthcare companies.


SMART BUSINESS: What Alibaba's Success Reveals about the future of Strategy.

By:

Ming Zeng

Harvard Business Review Publishing, 2018

ISBN: 978-1-6339-329-6

eISBN: 978-1-6339-330-2

 

 

 

Ming Zeng received a Ph.D. in international business and strategy at the University of Illinois. His first role was Assistant Professor at INSEAD, one of Europe's top business schools. China's technology company Alibaba's founder Jack Ma invited Ming to become Chief Strategy Officer of the firm. Ming Zeng thus has solid footing in Western and Chinese ways of doing business.

 

Zeng's book SMART BUSINESS (2018) has the following objective:

 

"I do not want to increase Western apprehension about China, especially when so much anxiety is already unwarranted. Instead I want to shine a light on China's extremely relevant and enlightening experience".

 

B: B; B:C; and C:B

 

Most Western leaders understand the difference between a Business-to-Business (B: B) revenue model versus a Business-to-Consumer (B:C) model.

 

The real world is more complex. For example, Is health care delivery in the United States B:C or B: B? The answer, of course, is "Yes".

 

Ming introduces us to a third business model.

 

He calls it Customer-to-Business or C: B.

 

DELL Computer had an early version of C: B:

 

Thirty years ago, a customer could go to dell.com and select the specific components she wanted in her next personal computer. She designed the computer she wanted to purchase form a list of online specifications.

 

Once the "Send" button was pressed a complex information system went to work to insure supplies were ordered, manufacturing time was scheduled, delivery systems established, and payments received.

 

Ming calls this C:B because the customer was the prime mover. Each DELL PC was made to order and yet it was also a mass production system.

 

In this early version of C:B, DELL owned or tried to own as many of the key components of the production-delivery system as possible. Amazon is a modern U.S. version of the C:B model. The customer is the prime mover. Every order is unique and yet it is a mass production. Amazon seeks to own as many of the key components of the delivery-production system as possible or wants customers to work through Amazon.

 

A Modern Chinese version of C: B:

 

Twenty-five-year-old entrepreneur Zhang Linchao is the face of China's online clothing brand, LIN Edition. She is a social media influencer, a model, and a fashion designer.

 

At 3:00PM on a Spring day, Zhang's company placed fifteen new clothing pieces designed by her on sale. Customers have seen previews of today's sale on social media.

 

By 3:45PM, 10,000 items were sold at an average price of $US150 per order.

 

Like DELL, each order will go through a complex supply chain to ensure that customers receive the item specified. Each order is unique to the customer and yet it also is mass produced.

 

Unlike DELL or AMAZON, Zhang's company does not own the supply chain or even control it.

 

Zhang provides the creativity and the social media presence.

 

In the first four months of 2015 her company earned U.S. $11 Million in sales with a profit margin of 30%.

 

Alibaba provided Zhang with the front-end customer facing system and then coordinated all the order information to a network of small businesses manufacturing companies and delivery systems.

 

Unlike Dell or Amazon, Zhang does not control the delivery system. Alibaba does not control the system. Everything works through information sharing and social coordination.

 

How has this C: B system worked for Alibaba?

 

Alibaba is the largest retail commerce company in the world. More than ten million merchants run their businesses on Alibaba's platforms and most of these operations are small. Alibaba connects these small businesses to a network of four hundred million active buyers. Each year, Alibaba's Chinese retail marketplace generates gross merchandise volume of more than U.S.$0.5 trillion.

 

This C: B model is a network of buyers, sellers, and service providers coming together and coordinating with each other through real-time data. The Alibaba model is all about using machine-learning and social networking to achieve scale and to manage complexity in a C:B world.

 

This is a different model from the U.S.-centered framework. That model views scaling-up through command/control of as many components of the customer delivery system as possible.

 

The author states:

 

"Alibaba does not by any means have everything figured out. Its notions of strategy and organization have diverged dramatically from traditional models and are producing previously unthinkable levels of growth. I have written this book to summarize the lessons we have learned at Alibaba and to guide businesses around the world through the new strategic landscape of smart businesses."

 

A Real-World Example:

 

Our company does leadership development work and retained search for health care delivery systems in New England. Health care is B:C, B: B, and C: B.

 

We are seeing consolidation of health care delivery systems to produce greater efficiency and cost savings. We are also seeing the gradual erosion of independent physician practice groups as physicians are encouraged to become employed cogs of a giant health care delivery machine.

 

From our perspective growth through more command and control underweights the risks associated with system failure/human error. A highly public horrible patient experience in one component of the health care system will impact the credibility of the entire system.

 

Growth through data sharing and social networking with independent entities could also establish similar growth with less enterprise-wide risk. A problem with one component of the system is a problem with that component. It does not necessarily infect other components of the enterprise.

 

Implications for Leaders:

 

You do not necessarily have to agree with the ideas of this book. But you should be aware of them. How can you grow without increasing command/control?

 

One clear implication is to that strategic planning needs to move from move away from something that looks good on a PowerPoint or a flow chart to the idea of strategy being constant learning/experimentation. And that is not common practice in the United States. U.S. strategic thinking often tends to be static rather than dynamic.

 

Using data and social networks to "figure it out as we go along" sounds less robust to members of Boards of Directors but that is exactly what may be required. The flow between what is internal versus what is external is going to be more fluid. Flexibility is going to replace rigid hierarchy. Rapid responsiveness to changing customer needs to exist along with consistency in following procedures.

 

Does your company have the ownership structure to think C: B?

 

Culture change requires years. The CEO, the Board of Directors, and the investors all need to agree on a multi-year effort.

 

Mcdonald's Corporation, the legendary fast food chain, makes it clear in written publications that it wishes only long-term investors to purchase stock. Traders are encouraged to make investments elsewhere.

 

Moving to a C: B model requires Boards of Directors to think about attracting/retaining long-term investors. For example, if the goal is rapid top line sales growth over three years and then get acquired, the Board should not think about moving to a C: B model.

 

How will your company talent management system change?

 

At present, many U.S. schools do a fabulous job of turning out conscientious students well suited for mid-twentieth century manufacturing companies.

 

In the rapidly changing C: B world of social networks and information systems, one wonders if the education system is providing company with students who can are adaptable/open to change?

 

Companies are starting to be less impressed with degrees and are more focused on evidence of continual learning/curiosity as measured by certificates of completion in specific topics of interest. Companies are going to have to spend more time identifying people who are open to change/new experiences.

 

Summary and Conclusions:

 

Ming Zeng has the following equation for a C: B enterprise:

 

    Social Network Coordination + Data Intelligence=Smart Businesses

 

Should your company leaders be thinking along these lines as well?


THIS BRAVE NEW WORLD.

By:

Anja Manuel

Simon & Schuster, 2016

ISBN 978-1-5011-2197-5 (hardback)

ISBN 978-1-5011-2199-9 (ebook)

 

 

 

This is the third time "brave new world" has been used in a literary sense.

 

William Shakespeare first coined the expression when a character in The Tempest describes the positive future of the New World. The second time it is used is by Aldous Huxley in his novel Brave New World. The concept refers to a dystopian world set in 2540.

 

Two identical phrases, one of hope and one of despair.

 

In this book, author Anja Manuel uses This Brave New World a third time.

 

It is a metaphor to describe the relationship between the United States, China, and India. In her view, these three countries are bound together in the future. But will they be beacons of hope or create the rubble of despair?

 

For the positive scenario to emerge, business leaders from these three countries need to look at the world from a U.S., China, and India perspective.

 

The rationale for this view is compelling.

 

In 2030, Asia will surpass the combined power of North America and Europe in economic might, population size, and military spending. The United States will still be the most powerful player on the international scene, but China and India will be the new indispensable powers. Due to their size and economic might, both China and India will have veto power over most international decisions. India and the United States will have the most outside impact in changing China for better or worse.

 

There are also business opportunities for leaders willing to see the world through the prism of each country's history and norms.

 

By 2030, 70% of the Indian population will be of working age. This means India will have a need for using the latest distance learning to educate millions of children, need to hire/train 1-2 million teachers, and need infrastructure development to rapidly build roads, housing for young families, and schools.

 

By 2030, on the other hand, only 47% of China's population will be of working age. There will be a boom in seniors requiring health care, senior housing, and other support services.

 

Anja J Manuel is cofounder and partner of a strategy consulting firm. Her partners are Former Secretary of State Condoleeza Rice, former Secretary of Defense Robert Gates, and former National Security Advisor Stephen Hadley. From 2005 to 2007, she served as an official with the U.S. Department of State responsible for South Asia policy. Anja graduated from Stanford University and Harvard Law School.

 

In other words, she knows what she is talking about!

 

Any company aspiring to be global in 2030 should begin to look at the world from a U.S./China/India prism. It might be a book to read before a Board retreat and then to discuss during the Board meeting.


THE FOUNDER'S MENTALITY

By:

Chris Zook & James Allen

Boston, Harvard Business Review Press, 2016

ISBN 9781633691162 (hardback)

LCCN 2016004772 (ebook)

 

 

 

How important are founders?

 

Ben Narasin of Triple Point Ventures and Michael Abbott of Kleiner Perkins (2015) examined 1.195 transactions between 1994 and 2014. These transactions involved private equity-backed companies going through exits: initial public offerings or being acquired. The authors gave the company "1" if the CEO at the time of the transaction was the founder or one of the founders and "0" the CEO was not.

 

Founder CEOs raised more capital than professional managers.

 

They produced higher valuations when it came time to exit.

 

Founders generate more value for owners than "professional" CEOs.

 

In their excellent book THE FOUNDER'S MENTALITY, Chris Zook and James Allen of Bain Consulting examined the same issue with a different database. Instead of private equity-backed companies seeking exits, they examined the world's largest public companies.

 

Their conclusions were the same: owners are better off with founders than without them.


 

"So Boards Would Want to Keep Its Founders?"

 

Not really....

 

Using archival data from 126 private equity investments in the United States between 1990 and 2006, Gong & Wu documented a CEO turnover rate of 51% within two years of the transaction (2011). According to the authors, these removals are usually related to CEOs having failed to retain the confidence of the private equity dominated board of directors. They are not often related to the company having outgrown the CEO.

 

Zook and Allen agree. According to their data only one of every three founders is fired because the founder cannot or will not grow the business.

 

THE FOUNDER'S MENTALITY addresses the three critical values founders bring:.

 

  1. Founders consider themselves industry insurgents. They are waging war on the status quo or are creating a new industry entirely. Insurgent. This creates a deep feeling of what the company stands for.
  2. They are obsessed with the details of their business and focus on the front line of the business.
  3. They have an owners' mindset and foster an owner's mindset among employees through equity and insistence that employees think like owners.

 

As a company grows, Boards often find founders sloppy, inefficient, and self-centered. The founder is then replaced with a "professional" CEO. Zook and Allen argue that by replacing the founder, you have also replaced the founder's three core values so important for success.

 

"Professional" CEOs focus on bottom line results while forgetting the three core components of the Founders Mentality. This results in the destruction of morale, and the hiring of bureaucrats who are not obsessively focused on customer experience.

 

Obsessive focus on customer experience is replaced by a focus on financial measures. For example:

 

We provided leadership coaching for the founder of one of the world's leading resort companies. When the founder visited resorts, he would ask questions like "why are those red flowers here when the blue flowers are more consistent with the surroundings?" His questions tended to obsessively focus on guest experience. Through these constant detailed questions, employees learned to be obsessive about the details of guest experience. They knew what was important to the boss.

 

This founder was eventually replaced with a CEO who had been President of a Fortune 500 consumer products company. This individual got an MBA from a leading business school. When we accompanied him on visits to resorts, there were n discussions about flowers or customer experiences. His first and often only question to local managers was, "What is the occupancy rate this quarter?" That was the core financial index. Local resort managers learned what was important to their new boss. And there are ways to manage quarterly occupancy rate measures without having to provide guests delightful experiences.


 

The Case of Home Depot:

 

Home depot founded by Arthur Blank and Bernie Marcus. Their mantra was "whatever it takes." The two founders would tutor store employees in customer service. Employees were hired because they were experienced trades people. Home Depot leveraged their construction knowledge to help customers manage do it yourself projects.

 

From 1978 until 2000 Home Depot eclipsed its 20% annual earnings growth targets.

 

In 2000, the company missed an earnings target and the Board brought got rid of its two founders. It hired Robert Nardelli, as CEO. He was a senior executive from General Electric.

 

Nardelli replaced a "whatever it takes culture" with a command and control environment.

 

Instead of making customer relationships and front line enthusiasm the top priority, Nardelli replaced full time employees with part time workers who lacked the trade experience but cost less.

 

This move was good for reducing expenses. It also destroyed front line obsession with customer service.

 

By 2006 the University of Michigan released its annual American customer satisfaction index. Home Depot was dead last among U.S. retailers. It was eleven points behind Lowes.

 

It had four years of declining foot traffic and market value declined by 55%.

 

Eventually the company replaced Nardelli with Frank Blake who tapped into the power of the Founders' Mentality.


 

The Growth Dilemma:

 

Zook and Allen's book focuses on how to manage the following dilemma: How can we manage growth without destroying the founder's mentality?

 

A good example of scaling up without destroying the founders mentality would be Sweden's Ikea International Group. With 300 stores in 40 countries, the original idea was one of insurgency within the home furnishing market: focus on the young, urban consumer who only wants furniture for "now" and not "forever." (Zook & Allen, 2013).

 

Ikea has kept its strategic focus on that core customer as it grows. It does not alter strategy in response to a dynamic business environment. It doesn't "reinvent" itself. It keeps its focus and replicates its business model and corporate culture.


 

"My One Mistake:"

 

In 1973, the late Eric Rhenman published a study examining a community hospital from a manufacturing operations perspective: if we run a community hospital with the same efficiency as we would run a manufacturing plant how could we improve the operations?

 

We see this type of operations thinking in many health care systems right now.

 

One of the authors had the opportunity to speak with Rhenman years after the book's publication. In reflecting on his work, Rhenman said, "In general it was a fine book but I made one mistake. And that one mistake made my entire book irrelevant: in a manufacturing company, the further away you are from hands-on touching the product the more powerful you are. But in a professional services environment like a hospital, law firm, or consulting firm those who actually touch the patient or customer have the most real power." I failed to appreciate that.

 

That one mistake is being made in health care delivery systems around the country today.

 

THE FOUNDER'S MENTALITY causes us to appreciate it and to take practical steps to keep that issue at the forefront in the way we define strategy, the way we hire front line people, and the way we design compensation systems.


 

References:

 

Gong, J. J., & Wu, S. Y. (2011). CEO turnover in private equity sponsored leveraged buyouts. Corporate Governance: An International Review, 19(3), 195-209.

 

Nasarin, B. & Abbott, M. (2015) "The Importance of Founders." Techcrunch, https://techcrunch.com/2015/05/11/the-importance-of-founders/.

 

Rhenman, E. (1973). Managing the community hospital: systems analysis of a Swedish hospital (Vol. 27). Saxon House.

 

Zook, C., & Allen, J. (2016). The Founder's Mentality. Boston, MA: Harvard Business School Press.

 

Zook, C., & Allen, J. (2013). Repeatability thriving amid constant change: though many companies reinvent themselves in response to change, triumph comes, too, to those that focus on a simple core strategy and learn to replicate and adapt early successes over and over again. Financial Executive, 29(7), 28-33.


Reclaiming Conversation: The Power of Talk in a Digital Age

By:

Sherry Turkle

Penguin Press (October 6, 2015)

Regular Price: $27.95

Board Options/Amazon Price: $18.08

Kindle Edition : $6

ISBN-10 1594205558

ISBN-13 978-1594205552

 

 

 

This is an important book and well worth your time to read. Below is a classic vignette from our practice that we find common:

 

The CEO across the table from us was furious. He was seeking to consummate a deal with the CEO of another company and wanted to get confirmation that the deal with "on." He had used his mobile device to send an email to the CEO asking for a status report. No response. He sent a text message. No response.

 

Embedded in this executive's anger are the following assumptions.

 

  1. If I send an electronic communication, it will be sent to the right address.
  2. I my electronic communication is sent, it will be received.
  3. My electronic communications will be read shortly after my having sent it.
  4. My electronic communications will not be accidentally deleted.
  5. Electronic communications are the appropriate communications vehicle to discuss something that might require a conversation.

 

These individual assumptions when shared by others tend to guide corporate culture.


 

Are We Managing Our Mobile Devices or Are Mobile Devices Managing Us?

 

Sherry Turkle is the Abby Rockefeller Mauzé Professor of the Social Studies of Science and Technology in the Program in Science, Technology, and Society at MIT. She received a joint doctorate in sociology and personality psychology from Harvard University and is a licensed clinical psychologist. Her book Reclaiming Conversation is a well written, lucid, and research-oriented exploration about people's relationship with their mobile devices.

 

Consider this: those who are entering the work force in the developed world today have never been without mobile devices. Does constant exposure to mobile devices as an extension of each employee change thinking patterns?


 

Talking Versus Conversation:

 

It is easier to send an electronic message than to arrange a face-to-face meeting or a telephone call. Most employees automatically go with the easier form of communication. Professor Turkle agrees that this is a way of talking. But it is not communication.

 

Talking is about sending information one way. Confirming a date for a meeting is a good use for emails. Communication, on the other hand, is to be "fully present to one another. It is there we develop the capacity for empathy. It's where we experience the job of being heard, of being understood. And conversation advances self-reflection."

 

Texting is not conversation.

 

The paradox of mobile devices is that it allows us to hide from each other even as we are constantly connected to each other.

 

She sees young people actively engaged in a "flight from conversation." And yet it is in conversations that the creative collaboration of work thrives.


 

Your Mobile Devices: Symbol of Non-Conversation.

 

A client sent me an email as she was in the playground with her eight year old daughter. For her this simple act is an example of good multitasking. How long would it take for the daughter to realize that her mother was not "with" her?

 

The very sight of a silent mobile devices on a table sends a signal to others around the table that you are less connected to the real people around you. If we think we might be interrupted, we tend to keep the conversations light.

 

The most effective communicator s we know take out their mobile devices and show us that they are turning it off. They then put it into their brief cases. This is symbolic communication for "I am truly with you."

 

A client proudly spoke about his new digital watch that had a blue tooth connection to his mobile device. Instead of picking up his mobile device and examining the screen every time he got a call, there would be a slight buzz on his wrist. He could discretely gaze at his watch to see if the call was important enough to interrupt the conversation he was having with the person in his office. What assumptions does the client make to assume that the person on the other side of table can't figure out the chilling impact on conversation of a raised left elbow?


 

Crisis of Empathy.

 

Talking is not conversation. Using a team meeting as an opportunity to empty your email inbox is not conversation. Limiting your sources of information to news feeds that happen to provide only the information that interests you only empowers intellectual isolation.

 

As we isolate ourselves we begin to lose empathy for others.

 

In our work, we see the evidence of lack of empathy every day: people in accounting who sincerely fail to understand problems faced by manufacturing, underwriters who sincerely fail to appreciate the problems of sales professionals.

 

Mobile devices may re-wire our brains to make us less empathic.

 

Dr. Turkle calls this the "Goldilocks effect." Face-to-face communication increases the chances of getting too close, too personal, or disrupting one's deeply held beliefs. Online communication avoids these things from happening. Digital relationships are not too close, not too far, just right.

 

The problem with the Goldilocks effect is that true innovation and new ideas require human relationships. And human relationships are information rich, messy, and demanding. Technology moves us away from meaningful conversation to the efficiencies of connection.


 

Bring People "Home" to Work:

 

Dr. Turkle describes the experience of Rador Partners, a high tech consulting firm. Since the 1990's it had encouraged telecommuting as a method of reducing costs while improving employee morale. This is the "common sense" of the management today.

 

The CEO, on the other hand, saw the extensive use of virtual meetings as people talking without really communicating. Real communication takes place in over dining room tables, in parking lots, in hallways, in bathrooms, and by copy machines.

 

Radnor Partners did away with virtual commuting and required office presence. Physical proximity sparked new conversations. When analysts, sales people, and consultants began working in the same space, Radnor began to grow at five times its former rate.


 

Do You Live in a Binary World?

 

The digital world is based on a technology involving splitting data into binary forms. Information is often presented in the digital world as a succession of binary decisions called Menus. Over time, this way of looking at the digital world influences the way we look at the real world. The middle ground disappears. We cannot see the gray spaces. There is polarization of options. It is the job of leadership to assure that this binary perspective does not infect business.

 

Encourage your team to focus on the gray spaces and the middle ground.

 

The digital world is designed to be binary. The real world is sloppier.


 

"Tools Down."

 

We all have had the experience of being at team meetings where participants are monitoring their mobile devices. If challenged they might state that they are perfectly competent to multi-task despite the research evidence that the cerebral cortex is designed to be poor at multi-taking. Dr. Turkle suggests we think of "unitasking as the next big thing: in every domain of life it will, increase performance and decrease stress."

 

Consider people who open their lap tops at team meetings and take notes.

 

According to Dr. Turkle, these people have moved from participants to transcriber roles. If called upon to make a comment about the ideas in the room, they often get angry because they have been "interrupted" in their task of taking down notes.

 

Do not ask participants turn their phones off. Ask them to deposit their computers and mobile devices on a table away from the desk. Resist the impulse to assume that good intentions will overcome years of learned habit.

 

At the same time, do not put your employees in a situation that they are away from their phones for sixty minutes. They cannot tolerate being away from their devices for 60 minutes. Have a ten minute break after forty minutes of conversation.


 

Have Conversions with People You Don't Agree With.

 

The internet allows us to limit interaction to people we agree with and only hear information we wish to hear. Life may be cozy that way but it does not help your effectiveness. You need to reach out and have conversations with the people you disagree with and appreciate their perspective.

 

For example, when we give a seminar at a conference, we ask people to sit next to someone they do not know and arranger for exercises where there will be communications between them.

 

Reach for the gray spaces of life.


 

An Example with Professional Service Firms:

 

Many of our clients are professional service firms that have a track to partnership. After proving technical competence, the next hurdle to partnership involves proving business development capability.

 

Usually in the third or fourth year after receipt of one's professional degree, associates have achieved the first hurdle.

 

We recommend that our client firms hold a small celebration and provide these associates with the new title, Senior Associate.

 

These Senior Associates have been connected to mobile devices since childhood. Their ideas about effective communications may not be the same as yours. They may have developed a set of behavioral habits around communications that worked well for them as students and as associates. But as Senior Associates, these same behaviors may limit their abilities to generate new client revenue. It is the responsibility of firm leadership to help Senior Associates manage their mobile devices in a way that fosters effective communication with prospective clients.


 

Conclusions.

 

Common sense says that using the latest technology is a good thing. We are saying that the uses of technology need to be managed deliberately to enhance effective communications. And that may sometimes require leaders to set limits on its use in Board rooms and meeting rooms.

GOOD FOR THE MONEY: my fight to pay back America.

By:

Bob Benmosche, Peter Marks, and Valerie Hendy

New York: St. Martin's Press, 2016

Regular Price: $27.99

Board Options/Amazon Price: $18.96

YOU SAVE : 32%

Kindle Edition : $18.01

ISBN 978-1-250-07218-4 (hardcover)

ISBN 978-1-4662-8357-4 (e-book)

 

 

 

In the financial collapse of 2008, Lehman Brothers and Bear Stearns were allowed to go bankrupt. But AIG was one of the "too big to fail" institutions:

 

The U.S. taxpayers rescued public company AIG with $182.3 billion in asset purchases. As a practical matter, average Americans-many of them living in houses newly under water or terrified about losing their jobs in a tanking economy-were underwriting the survival of the very company that had caused the problem. In addition, some of those very employees who had underwritten the Toxic Assets that started the collapse were still at AIG and receiving bonuses. Children of AIG employees of workers had been beaten up at school. Other employees were being harassed online or confronted in person.

 

In the midst of this demoralizing situation, Bob Benmosche, former President of Met Life, was brought back from retirement to become the President of AIG.

 

Under Benmosche's leadership AIG paid back the American taxpayers for their rescue of AIG plus settled the account with $22.7 billion profit.

 

Along the way to this inevitable business success were the following roadblocks: Benmosche's diagnosis of lung cancer, the Chairman of the Board of AIG active opposition, the WALL STREET JOURNAL, key management employees, politicians, and the Board of Directors.

 

GOOD FOR THE MONEY is part memoir and part insider story about how a leader maneuvers in a highly emotional, highly political situation.

 

One governance lesson repeatedly stressed in the book is the necessity to have "F---k You" money safely in the bank.

 

If you cannot afford to walk away, you cannot stand your ground. It is an obvious lesson but a very difficult one for CEOs of early stage or private investment funded companies.

 

A second governance lesson is to be sensitive that the Board of Directors is an open social system. The Directors of AIG were part of the Wall Street financial community. Many of them had social and business ties to investment bankers, consultants, and attorneys advising AIG.

 

The former President of AIG had developed a program called Project Destiny: rapidly sell AIG 65% of the company representing 7,000 employees. This would quickly get AIG out of having American Taxpayers as its largest shareholder. Benmosche perceived Project Destiny would only benefit those investment bankers, attorneys, and consultants who would gain fees from an asset fire sale. Benmosche first wanted to rebuild AIG and then sell units at a better price. As he bluntly writes, "If they wanted a guy simply to take the place apart, they could call 1-800-GOT-JUNK. It wasn't going to be me."

 

A third governance lesson is to be unflinching in confronting the Board. When he forced the issue, the Board backed Benmosche and forced his adversarial Chairman of the Board to resign.

 

This dramatic stance may be necessary at times and it is important to have your "F--k You" fund to pull it off. This can be a difficult issue for CEOs of private equity dominated Boards of Directors. But if you are not willing/able to do it, then expect to become the defacto COO of your company.

 

In a river of CEO resumes where leaders describe themselves as "strategic"or "team player" it was refreshing to read how Benmosche described himself: "I Get S..t Done."

 

In the case of AIG, that is exactly what he did.

 

This is an engrossing story about leadership from one person's perspective without apology and with justifiable pride.

THE ONE THING: The Surprisingly Simple Truths Behind Extraordinary Results.

By:

Gary Keller

Austin, Texas: Bard Press, 2012

Regular Price: $24.95

Board Options/Amazon Price: $17.95

YOU SAVE : 30%

 

 

 

Gary Keller is co-founder and chairman of the board of Keller Williams Realty International. It is the largest real estate company in the United States. He was an Ernst & young Entrepreneur of the Year. Jay Papasan is Vice President at Keller Williams Realty. They both live in Austin, Texas.

 

This book would be in the category of self-help books for leaders but can have some implications for Board members.

 

This is a book with one voice and two distinct sentiments. It would a better book if one of the sentiments had triumphed. But the two sentiments make the total book less than the sum of its parts.

 

There is a single voice throughout the book. And that voice is charming, funny, and makes the reader feel like he is listening to stories told by a friend.

 

But there are two sentiments.

 

One sentiment has found a balance between education and entertainment. This sentiment anchors key ideas in chapters with research and shows how the research could apply in business. When this sentiment is in control, the book becomes a useful guide for leaders and for board members.

 

For example, in Chapter 7, the authors tie several research studies to come up with the following perspectives. None of these perspectives are novel but they are well presented: (1) viewing the mind like a computer is a dangerous analogy. The mind is a muscle and needs to be treated like one. In creating Board agendas, give plenty of breaks between agenda items to relax in the same way that you would allow for recovery periods between gym exercises. (2) will power is like the power bar on your cell phone. It can be recharged but it requires downtime. It also needs to be managed. The more we use our mind, the less minding power we have. Therefore, set the most important Board agenda items at the beginning of the day and not at the end. This is an interesting observation since the beginning of most Board meetings tend to be consumed by the routine (approval of minutes from last meeting; review of the financials) and the most critical issues might be placed on the agenda towards the end of the day. Chapter 5 links research to practical management of multitasking. The authors say the brain does an excellent job multitasking autonomic and cognitive issues. For example you can be simultaneously reading this review and decide on your breathing rate. The brain is designed for conscious/unconscious multi-tasking. The brain is not designed to do an excellent job multitasking cognitive issues. If you do two things at once, you will end up doing neither well. This has implications for the management of meetings where members are not 'called' out for reading emails during conversations.

 

The second sentiment is one where the balance between entertainment and education is tilted towards entertainment. Presentation has taken priority over substance.

 

This sentiment lacks substantial research and is more guided by personal vignettes. It is based on the dubious premise that "I am successful using this perspective therefore you will be successful by copying me."

 

For example, the core theme of the book is "ONE." Find one thing and do it exceptionally well. The authors quote Andrew Carnegie: "the concerns which fail are those which have scattered their capital, which means they have scattered their brains also." The "one" core question in this book is: "what"s the one thing I can do such that by doing it, everything else will be easier or unnecessary?"

 

The authors cite Mark Twain and Andrew Carnegie to justify the concept. They fail to mention economist Adam Smith and strategist Michael Porter. Each of them has articulated the same idea in a more effective manner. The problem with the core idea of ONE is that it s old wine poured in an old bottle with an attractive new label.

 

In Chapter 12, the authors present a framework for asking "great questions." They have four types of questions based on two variables (Broad/Specific and Big/Small). They recommend only one of them: Big Questions that are Specific. For example: "what can I do to double sales in six months?" is Big and Specific. Small Questions that are Broad would be "what can I do to increase sales?"

 

This type of logic might make sense for a private company aggressively sales focused and operating in a growth environment where the CEO controls the Board.

 

The authors fail to look at important contextual issues. Would a CEO say the same thing to a private equity dominated board? Would a public company make Broad/Specific statements and risk the Wall Street labeling the CEO "overpromise/underperform?" Public company CEO and CEOs reporting to private equity Boards learn it is best to "under promise and over deliver." It is the role of the Board to push the CEO.

 

Another contextual issue is leadership position. Do you want the manager of a deep water oil rig in the Gulf of Mexico making Big/Specific commitments?

 

In other words, this segment of the book is presented with a flair for the dramatic, a tendency to not base ideas on evidence beyond personal experience, and to assume "since it worked for me it will work for you."

 

The core premise of the book is problematic for me.

 

That premise is Define that One thing that is critical and Keep Your Eyes on it at all times. This can work if you define that One thing as "Excellent Customer Experience." The Ritz Carlton does this and it works. I have a client where we have defined the One thing as: "120/16." That is code for we will be a $120 Million company by 2016. Everybody uses the slogan obsessively. It is helpful to focus priorities.

 

Sometimes ONE makes sense.

 

And sometimes ONE will create failure.

 

But there is a reason why only 2% of automobile crashes in the United States are direct frontal hits and 25% of crashes are side collisions. As the speed of the vehicle increases, driver peripheral vision erodes. As the speed of business increases, leaders' peripheral vision deteriorates as well. For my company and with my clients, the greatest dangers and opportunities are not directly in one's line of vision but 45 degrees off the line of site. In Chapter 1, the author talks about being so focused on his business problems, he could no longer see his problem with perspective. He retained a coach and the coach helped him to understand that the core problem was at the peripheral of his vision.

 

ONE may be the answer in some limited circumstances. But it is not always the answer. And it can be dangerous.

 

A more useful book title would be "How to Keep Your Eyes on the Ball AND 45 Degrees From It."

 

###

 

Laurence J. Stybel is Vice President of Boardoptions.com, a global retained search firm for great Board members. He also is Executive in Residence (Rank of Professor) at the Suffolk University"s Sawyer Business School in Boston. PSYCHOLOGY TODAY MAGAZINE publishes his column on leadership every month, "Platform for Success." lstybel@boardoptions.com

GOVERNANCE REIMAGINED: organizational design, risk, and value creation.

By:

David R. Koenig

Hoboken, NJ: John Wiley & Sons, 2012

ISBN 978-0-470-59878-9 (cloth)

ISBN 0781118220574 (ebk)

Regular Price: $75.00

Amazon/Board Options Price: $46.29 (cloth) or $43.98 (ebook)

 

 

 

David R. Koenig is CEO of the Governance Fund Advisors. He has been active in financial markets for more than 25 years. David is a member of Risk Who's Who and the author of a number articles in the leading risk management journals.

 

This is an easy-to-read book about complex ideas: the role of risk in an interconnected world. Risk is not just a negative term. A company Board ought to fire a CEO if the CEO is not taking enough risk with investor's money as well. The issue is how to achieve balance in this complex world.

 

The author suggests several specific things for Boards and CEOs to consider:.

 

  1. The Board must ensure that there is no single risk being taken that could disable the pursuit of its mission. If there is a known Single Point of Failure and the Board does not take decisive action then the Board is not doing its job.
  2. Boards too often view things from a closed network perspective: the board is a system, the CEO and the CEO's team are a system, and the investors are a system. That's all the Board need think about. Koenig argues for a broader systems perspective. I have seldom heard the term "stakeholders" uttered in a Board Room but that is what he is talking about.
  3. Time, structure and money should be allocated so that there can be an effective and routine audit of risk management. And remember, Koenig is using the term risk in a broader sense than the audit committee might use it.
  4. The Board should delegate one of its members formal responsibility for understanding the risk governance of the organization and have a regular report to the full Board.

 

I like the specific proposals he suggests. Whether you agree with him or not, they do deserve to be discussed.

 

David Koenig is an expert in risk management and I am not. In my perspective as a CEO, when he writes that his definition of risk 'reflects ALL activities of an organization in pursuit of its objectives' then he has crossed a line from looking at risk as a useful framework to defining risk as 'everything.' Definitions that broad tend to be difficult to manage or measure. His risk is that business leaders refuse to take seriously some of his more substantive ideas.

 

I like it when David Koenig gets 'down to earth' like the four principles of governance in his book. He gets scary when he gets abstract. For example, if one accepts Koenig's definition of risk as "everything" a company does then the Board member charged in understanding "risk governance" is really the Board Czar. This is not going to happen.

THE NATURE OF RISK: ARE YOU A BEAR, A SQUIRREL, A TURTLE, OR A FOX?

By:

David X. Martin

New York: David X. Martin, 2012

ISBN-13: 978-1475184396

Amazon/Board Options Price: $10.95

 

 

 

David X. Martin is a senior advisor at global management consulting firm Oliver Wyman and former Chief Risk Officer for AllianceBernstein.

 

I recommend you, your family, your team, and your board read the Forward to this book and skip the last chapter.

 

The Forward is the fascinating story behind this story book: the sudden death of David's friend forced him to confront the family with the fact that the friend had not managed family financial risks well. And when David tried to 'teach' the family the basics of risk management, they were not interested. This book is a result of that rebuff: a fable about animals in the woods and how they confront or deny risk.

 

The heart of the book is clever and the story has coherence/drama. It works well for children and adults.

 

If your board or team stops reading this book at the conclusion of the story, try this exercise: self-identify yourself as a bear, a red tail squirrel, a black tail squirrel, or a fox. Once that is done, have the others in the room write down how they perceive you on a confidential basis. Do you see yourself as others see you? And what does it mean to be a fox or a black tail squirrel?

 

The final chapter explicitly defines 'what it all means.' And that is the most disappointing part of the book. It is too lite a book for realistic 'answers.'

 

But that is not the purpose of this book.

 

This book is an easy and charming way to get a family, a board, or a team to confront this issue: 'Are we asking the right questions when it comes to risk?

WHO WILL DRIVE THE BUS?

By:

Gerard J. Donnellan

Boston: 2011, Gerard J. Donnellan

ISBN 1456379909

Regular Price: $21.05

Amazon/Board Options Softcover Price: $17.65

Amazon/Board Options Kindle Price: $18.99

 

 

 

Gerry Donnellan is a consulting psychologist and Brandeis University Adjunct Professor who specializes in working with family-dominated businesses.

 

External Board members who of such businesses have a fiduciary and moral responsibility to raise the issue most family members would prefer not to discuss: who leads the company once the current generation leaves?

 

Gerry tries to uses humor to make this complex issue accessible to the reader. But the issue itself is serious: Family dominated companies employ 60% of the U.S. working population but create 78% of new jobs. And only 30% make it past the founder stage. 3% will be operating at the 4th generation stage.

 

One of Gerry's humorous lines is 'denial is not just a River in Egypt.' To one extent of another, we all use denial as a defense mechanism.

 

Family dominated business CEOs who are in denial about their own mortality or are in denial about the leadership capacity/lack of capacity of offspring create conditions to insure that the family business becomes another negative statistic.

 

It is the role of the external Board member to raise succession issues at least five years before the issues need to be raised.

 

Managing the competing tension between business continuity and family stability is not for the feint of heart. Gerry Donnellan shows CEOs and Board members how to do this with humor and humility.

 

Larry Stybel

Board Options, Inc.

lstybel@boardoptions.com

CORPORATE GOVERNANCE MATTERS

By:

David Larcker and Brian Tayan

Upper Saddle River, NJ: Pearson Education FT Press, 2011

ISBN 978-0-13-218026-9

List Price: $59.99

Amazon/Board Options Price: $44.83

 

 

 

The authors work at the Stanford University's Graduate School of Business. David Larcker is James Irvin Miller Professor of Accounting. Brian Tayan is a member of the Corporate Governance Research Program. Some governance books are written from a legal perspective. Some books about boards are written from personal observations. Some publications are 'Best Practice' guides.

 

This book is unique in that it is a dispassionate review of evidence based research in the field of corporate governance. It is designed for practitioners who are serious about understanding the complexity they must confront.

 

This is not a book to read cover to cover. It is a book for Board members and students of governance to have at the ready. When the appropriate topic presents itself to the reader, this book will provide a thorough overview and present relevant studies to the topic at hand.

 

In addition to the physical book, there are web based resources to keep the material fresh.

 

The good news about this book is that it is wise and comprehensive. There is no 'one best way.' There is a presentation of different and sometimes conflicting research. Readers must be comfortable enough with themselves to draw their own conclusions from the evidence.

 

For example, the chapter on executive compensation covers internal inequity of CEO pay, the role of compensation consultants in creating high levels of CEO compensation, short term incentives, long term incentives, pay for performance, deferred payouts, performance-based stock options, etc. The authors manage to deal with these topics in almost a conversational tone and never get into preaching. They are informed guides and will show how reputable studies might contradict each other and why.

 

The structure of the book is suitable for practitioner Board members or for students taking a graduate course on corporate governance: Board of Director Duties; Board of Director Selection; Board Structure; Labor Market for CEOs and Succession Planning; Executive Compensation; Financial Reporting and Audit; Institutional Shareholders and Activist Investors; and Corporate Governance Ratings.

 

Larry Stybel

Board Options, Inc.

lstybel@boardoptions.com

OUTRAGEOUS FORTUNE: the twelve surprising trends that will reshape the global economy.

By:

Daniel Altman

New York: Times Books Henry Holt & Company, 2011

ISBN 978-0-8050-9102-1

List Price: $25.00

Amazon/Board Options Price: $16.50

 

 

 

Daniel Altman received his doctorate in economics from Harvard University and teaches at the New York University Stern School of Business. He also is President of North Yard Economics. Altman previously wrote economics columns for THE ECONOMIST and then became an economic advisor for the British government dealing with crime and immigration.

 

Dr. Altman focuses on he calls 'Deep Factors:' geography, climate, culture, politics, and historical accident. He views these factors and how they combine as having more long term impact than transitory matters such as tax rates, stock prices, currency fluctuations, and interest rates.

 

'Deep Factors' sounds rather academic. It isn't. OUTRAGEOUS FORTUNES is one of the few books I desperately needed to re-read because out of fear of missing something important.

 

Here is my recommendation: organize a Board Retreat around OUTRAGEOUS FORTUNE. Ask Board members to read the book before the Retreat. Get a moderator to lead a focused discussion about the implications of OUTRAGEOUS FORTUNES on the corporate strategy. Make sure you have an outsider lead the discussion so that no one person dominates.

 

Fear not: the 250 pages is a fast read. Daniel Altman may be an economist but he also is a journalist. Below are just some of the points he makes in OUTRAGEOUS FORTUNES:

 

Democratic countries will embrace left-leaning populist governments but will then shift to the right and then back to the left. These constant regime changes will slow economic growth-an unfortunate reality since growth is the only way to settle the political pendulums down.

 

China will get richer, and then it will get poorer again by 2050.

 

The European Union will disintegrate as an economic entity.

 

The United States will change its immigration policy to attract highly educated and well trained foreign workers. This will create massive brain drain the developing world. Inequality between countries will worsen.

 

The fundamental pillar of the United States' success is its commercial culture: 'selling power, the desire for self-improvement, the desire to be rich, and the desire to be a star.' No other country's sales people are so accustomed to adapting and refining a sales pitch. Foreigners will want to come to the United States to learn how to sell. 'The American way of selling may generate a large numbers of jobs.'

 

As globalization moves more people around the world, there will be more profits for middlemen: relocation firms, recruiters, outsourcing experts, lawyers, and even gangs who smuggle people. Middlemen will be the key to opening new opportunities to niche groups of target customers. Sellers in poor countries are unable to sell directly to rich countries. They require middlemen.

 

There will be 'lifestyle hubs' of highly compensated, well educated professionals who chose to live and work in congenial places. These will include the familiar cities plus Vietnam, the Czech Republic, Bulgaria, Malaysia, Singapore, Argentina, Slovenia, Costa Rica, Uruguay, and Tunisia. Many of the inhabitants in these hubs will be educated foreigners. And this may polarize countries into wealthy lifestyle hubs and struggling traditional inhabitants who serve wealthy foreigners. The first touch points will first be within cities. There will be resentment and perhaps violence.

 

Globalization reduced inequality between countries but increased inequality within countries. That increase was the result of rich people getting richer rather than poor people getting poorer. The next round of inequality will work in the opposite direction: poor people will get poorer. Inequality will worsen within countries and across countries. The potential for resentment, hatred, and war will be much greater. And this will destabilize the global economy.

 

Political leadership will be an obstacle to solving national and global problems. 'They have every incentive to aim for short 'term wins rather than long-term gains and to go it alone rather than build coalitions.' Don't expect politicians to change the system in which they have been successful. Only grass roots efforts will work.

 

Yes, this indeed is dismal forecasting by a practitioner of the dismal science. But money can still be made!

CHASING STARS: THE MYTH OF TALENT AND THE PORTABILITY OF PERFOMANCE.

By:

Boris Groysberg

Princeton: Princeton University Press, 2010

ISBN 978-1-4008-3438-9

List Price: $35.00

Amazon/Board Options Price: $21.76

You Save: 38%

 

 

 

Our client Boards constantly are asking us to find them 'trophy' CEOs and asking us to bring them 'name brand' Board members. We argue, 'You want stars you better be prepared to pay for stars!'

 

Boris Groysberg of Harvard Business School asks a better question: you want stars? You assume that their star qualities are transferrable. Is that assumption valid?'

 

This book provides an empirical answer to Professor Graysberg's profound question.

 

That answer is 'no.'

 

To develop this answer, Groysberg look at a population called Wall Street investment analysts who work for investment banks. He looked at 1,000 investment analysts who had been ranked as superior by INSTITUTIONAL INVESTOR MAGAZINE. He then compared this 'star' group with 20,000 analysts at 400 investment banks who had not been ranked by INSTITUTIONAL INVESTOR MAGAZINE.

 

If exceptional investment performance is a product of bright individuals, then when those bright individuals move from one investment bank to another, their ranks will remain constant or will leap back to high status after a short adjustment period.

 

It doesn't work out that way.....

 

These high performing analysts tend to think of themselves as free agents with highly portable skills. Recruiters and hiring authorities like to believe the same. All parties tend to discount firm specific culture and firm specific skills that allow excellence to flourish and are difficult to transport.

 

I can certainly agree with Professor Groysberg's conclusion that stars need onboarding when they move from one organization to another but they seldom believe they need it. They tend to put too high a premium on past experience and fail to appreciate the difficulty of unlearning learned patterns of behavior that were so successful in the past.

 

There are several lessons to be learned from this book.

 

Companies can reduce the illusion of portability of stardom by constantly letting their stars know that they are in a unique culture and have learned unique skills that won't necessarily work well in other settings.

 

Hiring authorities can be skeptical of the confidence of stars' ability to successfully move from one context to a new context without significant assistance in mastering 'unlearning.' In other words, provide newly hired stars with a strong on boarding program. And then expect the stars to say that the program is not necessary.

 

The clich' 'what got you here won't get you there' turns out to be true for stars and the organizations that hire them.

 

Finally, don't bet too heavily on trophy CEOs and trophy Directors. We all know the horror stories as anecdotes.

 

Now we have empirical evidence.

 

--

 

Larry Stybel

lstybel@boardoptions.com

 

 

DIRTY ROTTEN STRATEGIES: how we trick ourselves and others into solving the wrong problems precisely.

By:

Ian L. Mitroff & Abraham Silvers

Stanford, CA: Stanford Business Books, 2010

ISBN 978-0-8047-5996-0

Regular Price: $24.95

Amazon/Board Options Price: $16.47

You Save: 34%

 

 

 

These are two powerhouse authors: Mitroff is one of the great figures of 20th Century organization behavior. He is Visiting Professor at the University of California at Berkeley. Abraham Silvers was Associate Professor of Statistics at the Baylor College of Medicine and now provides environmental statistical consulting services.

 

An interdisciplinary perspective pervades in this book.

 

If you purchase this book, be aware you are really buying two books. And the title gives away the problem as you will see in this review.

 

One book is superb.

 

The superb book is called HOW WE TRICK OURSELVES AND OTHERS INTO SOLVING THE WRONG PROBLEMS PRECISELY. The authors make the case that statistics only looks at Type 1 and Type 2 Errors. Type 1 Errors mean that the decision makers conclude that there is a meaningful difference when there is not. In other words, affirmatively getting the wrong answer. Type 2 Errors mean that decision makers conclude there is not a meaningful difference when there is. In other words, a failure to get it right.

 

Any leader will have at least an hour worth of Type 1 and Type 2 horror stories. We have all been victims. And we have all been perpetuators.

 

The authors then introduce a Type 3 Error: precisely solving the wrong problem.

 

This is a helpful perspective and a valuable one for Boards when they review strategy submitted by the CEO. Instead of asking, 'Will it work?' Why not start with "are we looking at the right problem in the first place?"

 

Because Type 3 errors are part of the human condition, organizations can set up checks and balances to deal with it. For example, at the Board Level, meaningful Board of Director Self Evaluation does help the Board be aware of when its own group dynamics might cause it to logically and correctly solve the wrong problem.

 

We are all imperfect creatures and are prone to Type 3 Errors.

 

Ah, but then there is that second book.

 

It begins with the discussion of Type Four Errors: deliberate manipulation of data to cause leaders to solve the wrong problem precisely. They say it is due to 'self-righteousness, overzealousness, malice, and narrow ideology.' In other words, dirty rotten scoundrels contribute to DIRTY ROTTEN STRATEGIES.

 

This second book clearly is driven by the authors' own ideology and lack of historical perspective. They are out of their league. There is nothing new in Type 4 errors except the commonsense notion that people do manipulate information to suit their advantage. Is that news?

 

This second book has vitriol but lacks depth or practical solutions.

 

I want to emphasize that the first book is admirable. Too bad you can't buy one without getting the other.

 

--

 

Larry Stybel

Boardoptions.com

 

 

DILEMMAS, DILEMMAS: Practical Case Studies for Company Directors.

By:

Julie Garland McLellan, (Ed.)

Charlestown, SC: Createspace,2010

ISBN 978-1449-92196-5

Regular Price: $35.00

AMAZON/BOARD OPTIONS PRICE: $27.76

 

 

 

Full Disclosure Alert: I am one of the forty-five contributors in this book.

 

Julie Garland McLellan is a professional non-executive member of Boards of Directors. She also consults with companies on governance matters and is based in Australia. Julie is the author of "The Directors's Dilemma," a global email newsletter written for directors. You can subscribe at www.mclellan.com.au.

 

DILEMMAS, DILEMMAS presents twenty-two small cases or vignettes. Each case is based on a real incident with names disguised. Each case frames a governance dilemma that has no "right" answer but could be handled in a variety of ways.

 

For example, the first case in the series is called "Melissa" and it is about what does a Board do when one of its members is leaking confidential information.

 

After each case, one or two or three contributors provide their perspectives. Sometimes the editor joins in and provides a contribution as well. There is also space for the reader to write down observations and analysis.

 

PP 12-13 present the name of each case plus the substantive governance issue addressed by the case.

 

The simplicity of the book's structure is appealing and the variety of perspectives provided is also helpful.

 

I see three values of this book, beyond the obvious one of individual board members reading it:

 

1.

 

From a board of directors education perspective, I could see value in taking 1-2 cases and using it as a platform to get the board engaged in a particular issue. This allows Board members to talk with each other outside the confines of the urgent problems of the day while learning more about governance matters. This technique could be an in-house Board education program conducted for one hour a year every year.

 

2.

 

We do Board retained searches. It will present candidates with 1-2 cases and see how they respond. This allows us to compare/contrast using a reliable technique with high face validity. It would really assist in helping go beyond the careful fa'ade crafted by candidates during interviews and gives a mirror into candidates' logic.

 

3.

 

These cases are excellent ice breakers for an educational program centered on ,"So You Want to Be on a Board??," Many professional associations offer such programs.

 

Julie has contributed to the practice and to the art of governance in this carefully crafted and thoughtful book. Bravo!

 

--

 

Larry Stybel

Boardoptions.com

lstybel@boardoptions.com

Boston, Massachusetts

USA

 

 

OUTLIERS: The Story of Success.

By:

Malcom Gladwell

New York: Little Brown & Company, 2008

ISBN 978-0-316-03669-6

Regular Price: $27.99

AMAZON/BOARD OPTIONS PRICE: $11.68

 

 

 

Three blocks from our office in Boston is the spot where Benjamin Franklin was born and played as a child. Franklin is the American icon of the Self Made Man we so admire today. His story is that those with ability and willingness to work hard can change the world. Don't be defeated by humble origins, lack of money, or lack of education.

 

Beyond a threshold of innate ability, hard work may be more important.

 

Author Malcom Gladwell argues that those who are successful put in at last 10,000 hours of practice into their art or craft. He shows how the 10,000 hour rule applies for Mozart, the Beatles, and Bill Gates.

 

Gladwell also argues that there is more to success than ability and hard work.

 

There is cultural heritage. In the case of Jewish and Chinese culture, it has provided a clear advantage in American society.

 

There are other random factors that contribute to success: what month you were born, what year you were born, whether your parents encouraged you to strive, whether your parents had money, etc.

 

From a Board of Directors perspective, it should caution those who get involved in CEO and Board selection not to be too infatuated with impressive resumes. And not to overpay someone because he/she was smart enough to be born in a certain year or a certain month.

 

From a social policy perspective, this book gives hope that perhaps success is not about Great Men and Women. There are positive factors that can be engineered to contribute to success. The KIPP Academy, discussed in the book, for example, takes poor urban children and makes them work as hard as Chinese Rice Farmers---with dramatically positive results.

 

And those of you whom society regards as "successful," read this book and prepare to feel humbled.

 

Your success is the gift of cultural legacies you barely comprehend, accidents of birth, and random events you had the good sense to seize on.

 

One last comment: there is a chapter about Geert Hofstede's research on how culture shapes personality. In particular, there is a full discussion about one dimension called Power Distance. Those cultures with high Power Distance or respect for power tend to have more airline fatalities than cultures with low Power Distance. It is a fascinating discussion. But it also has implications for those of us concerned with quality control and ethics in business. The steps an American CEO of Korean Airlines took to reduce Power Distance within his Korean employees are well worth reading. Companies with operations in different parts of the world will find this chapter of greatest value. What does it have to do with the book's basic theme of success? It really has nothing to do with it. The entire chapter could have been eliminated. We suspect he put it in because he thought it was important.

 

It is important. Read it.

 

--

 

Larry Stybel & Maryanne Peabody

Boardoptions.com

 

 

THE WAY WE'LL BE: THE ZOGBY REPORT ON THE TRANSFORMATION OF THE AMERICAN DREAM

By:

John Zogby

New York: Random House, 2008.

ISBN 978-1-4000-6450-3

Regular Price: $26.00

AMAZON/BOARD OPTIONS PRICE: $9.08

 

 

 

John Zogby's company conducts research for organizations such as Coca Cola, Microsoft, CISCO Systems, and the U.S. Census Bureau. This book is a non technical summary of his findings about the changes he is seeing among younger U.S. citizens that will permanently alter how companies manage employees and how they structure their relationships with customers.

 

The older cohort of the American population is still comfortable thinking about Red States versus Blue States, and the supremacy of materialistic fulfillment as the core mission of human destiny and economic systems.

 

This older cohort is being replaced by a young cohort that sees the world in a very different way.

 

And their world IS very different:

 

They do not have the same upward mobility expectations as their parents.

 

They see the world as global and interconnected and not through a nationalistic prism.

 

They have no confidence that they will achieve the materialistic gains of their parents or grandparents.

 

Zogby coins the term "secular spiritualists" to define the values of America's Youth. And these values should continue into their adulthood.

 

Eighteen to 29 olds actually care about more them just themselves.

 

They seek common ground on tough social issues and are not attracted to politicians who try to divide the electorate.

 

They are easy to reach because for them everything is in the public domain.

 

They buy in accordance with their values. That means give good value and get back to basics.

 

They seek more meaning and more value rather than more doctrine.

 

They have a generous giving nature.

 

One in four is working at jobs that pay less than their previous work. They reject materialism.

 

They respect humility and the willingness to apologize for mistakes.

 

They expect companies to first treat employees with respect.

 

This is a great book to read as part of a board retreat and then engage in a discussion of how the company ought to reach investors and customers of tomorrow. My implication of this book is that the investors who will directly dominate through stocks and indirectly dominate through fund ownership will respect companies focusing on long term growth rather than quarterly stock pops. Being an icon of product quality and ethical treatment of customers/employees will be part of the buying calculation. If I am right, considering these issues could be a fruitful 30 minute agenda item every two years. And if the Board's values become part of the CEO's compensation structure, there is a chance for institutionalization of these values.

 

--

 

Larry Stybel

Boardoptions.com

lstybel@boardoptions.com

 

 

OWNING UP: THE FOURTEEN QUESTIONS EVERY BOARD MEMBER NEEDS TO ASK

By:

Ram Charan

San Francisco: Jossey-Bass, 2009.

ISBN 978-0-470-39767-1

Regular Price: $29.97

Board Options/Amazon Price: $15.66

 

 

 

Ram Charan's Harvard Business School doctoral thesis was on Boards of Directors. For nearly four decades, he has continued to expand and to deepen in this area of expertise. He works with boards on board self-evaluations, CEO evaluations, and director succession planning. Charan also serves on the Board of at least one major public company.

 

Former CEO of DuPont Jack Krol describes this book as both practical and wise.

 

My own sense is that people will have one of two reactions to this book: (1) concise, focused, and on target and (2) vague and idealistic. For example, Charan states that "the role of the board has changed forever. 'Governance' now means leadership, not just over-the-shoulder monitoring and passive approvals." If you think that is an easy concept, then you have not been doing a lot of board work recently!

 

Charan raises a number of thoughtful questions. Question #1 "is our board composition right for the challenge?" And his response is that in too many instances, the answer is "no." Boards tend to over focus on functional/industry expertise and systematically overlook over factors. Charan provides a useful Director Skill Matrix for the benefit of the Nominating & Governance Committee.

 

We think people who lack significant board experience will find this book abstract and preachy. Those with board experience who also find the book abstract and preachy are probably the same board members who waste too much time talking about how great things used to be before Sarbanes-Oxley. Those with significant board experience and who are thinking about the future will find this book provocative and challenging.

 

###

 

Larry Stybel & Maryanne Peabody

Board Options, Inc.

www.boardoptions.com

Tel. 617 594 7627

"Specialists to Nominating & Governance Committees on Board Talent"

 

 

WHAT WOULD GOOGLE DO?

By:

Jeff Jarvis

New York: Collins Business, 2009.

ISBN 978-0-06-170971-5

REGULAR PRICE: $26.99

AMAZON/BOARD OPTIONS PRICE: $17.81

 

 

 

THE fundamental value Boards of Directors have for shareholders is to hold management accountable for having appropriate answers to the following questions:

 

''''''''''' What Business Are We In Today and Over the Next Three Years?

''''''''''' Who Are Our Customers Today and Over the Next Three Years?

''''''''''' Who Are Our Competitors Today and Over the Next Three Years

''''''''''' How Do We Make Money Today and Over the Next Three Years?

 

If the answers to these questions are satisfactory, then the Board holds the CEO accountable for delivering results based on the answers to the above questions.

 

WHAT WOULD GOOGLE DO by Howard Jarvis gives Board members and CEOs reason to question if yesterday's answers will stand up to tomorrow's business model.

 

The premise of the book is that Google has a different business model from the business model we all learned in Business School. Fail to grasp that model at your peril. For example:

 

In the service business, you eventually take the form of the customers you work for. If you want to change, go get a new breed of clients. Google began its life as an advertising agency for companies that normally would not use advertising agencies. Eventually the advertising agencies played the rules Google set.

 

Is money being made through the side door or the front door? Google gives the 'front door' away for free and then makes money on the side. How many companies try to make money all the time from every product/service, only to find that they have angry customers who tell other prospective customers to stay away?

 

Your worst customer is your best friend. Invest the effort in learning the social tools that allow customers to tell you what you should be producing. The goal is not customer satisfaction. The goal is products that people love. If they will love it they will tell the world. This is called Apple Love. And in a highly networked world, it is easy for customers to demonstrate Apple Love. Your customers are your new advertising resource.

 

Hand over your brand to your customers. They have always owned it. Don't tell them what your brand is all about. Ask them what it means to them.

 

**

 

Does this sound complex and abstract? It sure is for me!

 

Jarvis has several cute chapters showing what other company business models might look like by embracing Google's business model. These companies include airlines, real estate, banks, hospitals, insurance, and universities.

 

Google's business model is complex and organized around clich's like the ones cited above. Google did not break the old rules. It just ignored the old rules and established new rules. Some of these rules are:

 

Customers are now in charge. They can find their peers anywhere in the world. Your choice is will they coalesce around you or against you?

 

The control of products and distribution routes no longer guarantees a premium or a profit. Enabling customers to collaborate with you is the premium in today's market.

 

Grow big networks that extract as little value from customers as possible so that you can grow it as big as possible.

 

***

 

I understand Yahoo. I understand AOL. But I also understand that their business model is no longer the future.

 

I can't quite grasp Google after the first reading.

 

This is a book I plan to read again''slowly.

 

I suggest you read it twice yourself and then have a Board Retreat to discuss the implications of the Google Business Model for your company business. The chances are that your CEO will not want this discussion to take place.

 

And that predicted reluctance is even more reason why it should take place.

 

Larry Stybel

Boardoptions.com

lstybel@boardoptions.com

 

 

OUTSMART: HOW TO DO WHAT YOUR COMPETITORS CAN'T.

By:

Jim Champy

Upper Saddle River, NJ: FT Press, 2008.

ISBN 0-13-235777

REGULAR PRICE: $22.99

Amazon/Board Options Price: $15.63

 

 

 

Jim Champy is an MIT-educated business leader who co-founded Index Systems in 1969 and grew it into a $240 million company. He currently is Chairman of Consulting for Perot Systems.

 

Champy knows a few things about growing a company.

 

He is also knows how to write clearly and compellingly. His first book, Reengineering the Corporation, discussed the importance of having business processes perspective. It is a classic in the field.

 

This book begins with the identification of "outsmarters:" companies that growing 15% or more a year for the past three or more years. From an initial pool of 1,000 high velocity businesses, companies that were just lucky or riding an industry trend were eliminated.

 

The companies that remained were investigated to see what m made these companies unique.

 

The book is a series of stories of some of these companies and lessons learned. They range from 155 year old gun maker Smith & Wesson to MinuteCare Clinics.

 

The stories are well worth reading and well written.

 

From a Board perspective, there would be value in having Board members and C Suite executives all read the book at the same time and then addresses the following issue: is our company more or less like the Outsmarters in Champy's book?

 

A few vignettes:

 

Companies that outsmart competitors focus on how to better serve customers, while other companies focus doing better than the competition.

 

Companies that outsmart accept risk as a normal part of doing business, instead of allowing fear of risk to paralyze decisions.

 

Companies that outsmart have corporate cultures that value innovation and place a premium on quickly turning ideas into action: try it out, test it out, and move on if it doesn't work.

 

Companies that outsmart use corporate culture to manage employee behavior versus an emphasis on policies and management control systems.

 

Laurence J. Stybel

www.boardoptions.com

 

 

MYSELF AND OTHER MORE IMPORTANT MATTERS.

By:

Charles Handy

NY: AMACOM, 2008.

ISBN-13:978-0-8144-0736-7

REGULAR PRICE: $25.00

BOARD OPTIONS/AMAZON PRICE: $16.50

 

 

 

Charles Handy has had a most interesting professional life. His roles have included global executive with an oil company; academic administrator who developed a framework for business education for Britain; head of a think tank based in one of the Queen's official residences, a commentator on life for the BBC Radio, and a best selling author. This is a man worth getting to know

 

The book's title is accurate. While the basic framework is Handy's life story, it really is a platform for his much broader discussion about capitalism and where it is going.

 

To cite one concrete example, Charles Handy coined the term "Shamrock Organization" to refer to the structure of the corporation of post industrial Capitalism. One leaf of the Shamrock is a core of full time employees. The other leaves are interim employees brought in for project assignments (think temporary retail employees brought in around Christmas) and specialists brought in to solve complex problems beyond the time/competence of the full time team. This Shamrock Organization has three leaves. I think most of us would recognize that there is actually a fourth leaf in the Shamrock: suppliers who so readily integrate themselves into the company, it is hard to distinguish them from the core employee group. Think of the people who sell mobile phones at Staples or Costco. They are not part of the organization and yet they are part of it. Handy pointed out the Shamrock organization yeas ago and gave it a name. He said that within the Shamrock, who lives on what leaf of the Shamrock is terribly important. But the customer only sees the entire Shamrock and doesn't care about the individual leaves. The implication about Handy's acute observations are still not effectively dealt with by corporations. Most talent management policies focus only on the full time employee group while ignoring the others components. If indeed the customer only sees the entire Shamrock, who should be invited to the company picnic? Who should be eligible for bonuses?

 

Another Handy gem for Board consideration is to ask, "If this product or service did not exist, would we invent it today?" I find that a simple and powerful question.

 

Let me quote the following paragraph about the use of clich''s to drive business:

 

"The language organizations have invented for themselves is pretentious, unrelated to what actually happens on the ground. Every organization claims that they care deeply for its customer, although you might be dubious if you are still trying to get to their helpline after forty minutes. Every organization proclaims that their employees are their most previous asset, even while making swathes of them redundant. Every business is committed to excellence and to aiming for world-class even though research suggests that only a tiny few achieve it. Then there are the pseudo-technical terms that make the obvious seem clever: core competencies, JIT, 360 Feedback, CRM."

 

I could go on and on and on. You get the picture.

 

Now get this book.

 

Laurence J. Stybel

Board Options, Inc.

lstybel@boardoptions.com

www.boardoptions.com

 

 

EXECUTING YOUR STRATEGY: how to break it down and get it done.

By:

Mark Morgan et al

Boston: Harvard Business School Press, 2007

REGULAR PRICE: $29.95

BOARD OPTIONS/AMAZON PRICE: $19.77

 

ISBN 978-1-59139-956-8

 

 

Mark Morgan is Chief Learning Officer at IP Solutions, Raymond Levitt is Professor at Stanford University's Engineering School, and William Malek is Strategy Execution Officer for Strategy2 Reality. LLC. The three authors are associated with the Stanford University Advanced Project Management Program (APM).

 

The authors point out that the business landscape is littered with expensive, well-intentioned strategies. The authors believe that leaders overestimate their company's ability to make the day-to-day operational changes necessary to implement the vision. The authors state:

 

"Executives have a tendency to think this kind of work as being too "tactical" to take up their precious time. Nothing could be further from the truth. Some executives get this, but too many don't."

 

The authors argue that the "journey from boardroom to marketplace must pass through project management." The rest of the book provides a structure to link strategy with day-to-day operations management. Cases are presented to illustrate their concepts.

 

This is a great business journal article that has been blown up to become a forgettable book.

 

I would urge the authors to write an article (not a book please!!) about what needs to be done at the Board of Director level to insure that shareholder money is being spent in ways that are advance a few key strategic goals approved by the Board. For example, the audit committee does look to see if money is being spent prudently. To the best of my knowledge, it doesn't ask itself "Here Are Five Strategic Goals and Here Are Seventy Discrete Projects. How do these Seventy Projects Advance the Strategic Goals?"

 

 

Laurence J. Stybel

Board Options, Inc.

lstybel@boardoptions.com

www.boardoptions.com

 

 

MIND SET

By:

John Naisbitt

Regular Price: $24.95

Board Options/Amazon.com Price: $15.72

 

ISBN 978-0-06-113866-7

 

 

John Naisbitt is the popular business thinker who helps leaders understand what comes next. In MEGATRENDS, he spoke about "high tech/high touch" being key for success in the future. In GLOBAL PARADOX he warned that the reality of a global market will set off a simultaneous increase in tribalism.

 

In this book, Naisbitt is less concerned with predicting the future but in disclosing the way he thinks through the information he reads:

 

"Mindsets work like fixed stars in our heads. Holding on to them, our mind finds orientation. They keep it on course and guide it safely to its destination."

 

There are eleven mindsets in the book. But the premier one is "Understand how powerful it is not to have to be right." I find that easy to say.

 

My favorite Mindset is "While Many Things change, Most Things Remain Constant." Leaders can be driven into hysteria by the drumbeat of change, change, change. Naisbitt does acknowledge that actually fads, fashion, and technology do change dramatically. But most of the core goals of people's lives remain constant. Most change is in how we do what we do. The reasons why we do what we do tend to be as stable as men's fashion. Home, family, and work are the great constants. The rhythm of life is still determined primarily by the seasons. As leaders are we reacting to temporary fads or responding to true trends.

 

One true trend is that professional sports will be the framework for talent management in business And local sports teams seek the best talent on the planet On opening day of the 2006 baseball season, 30% of all major-league players were foreign-born In the minor leagues, 50% of the players are foreign born The 2005 National Basketball Association champions were the San Antonio Spurs Seven of its 12 man team were not from the United States Outsourcing of talent is not just about shipping low wage jobs overseas There will be "amazing opportunities" for talented individuals to serve on a global basis And there will be "amazing opportunities" for small to medium sized firms to be outsourced providers to large companies.

 

 

Laurence J. Stybel

www.boardoptions.com

lstybel@boardoptions.com

 

 

John Hegel and John Seely Brown. THE ONLY SUSTAINABLE EDGE: why business strategy depends on productive friction and dynamic specialization.' Boston: Harvard Business School, 2005.

Reg. Price: $25.00

Board Options/Amazon Price: $16.50

 

ISBN 1-59139-720-0

 

 

John Hagel is a Senior Advisor at McKinsey & Company.' For two decades, John Seely Brown was Executive Director of the legendary Palo Alto Research Center.' The authors argue that the only sustainable edge is to generate shareholder value through constant innovation.' Current approaches to strategic thinking are inadequate to the task.

 

The book has one irritating quality and one large value for Board members.

 

This is a small booked packed with lots of ideas.' I was distracted by the use of 'new words' to describe old concepts.' It is almost as though the authors are trying to invent a new vocabulary using concepts that could be best explained in plain English.' Examples of this business psychobabble include 'radical incrementalism,' 'performance fabrics,' 'process networks,' and 'productive friction.'' 'These are really not new concepts but they have invented new words.' I want to read a business book that would help me improve my company's effectiveness.' I didn't sign up to learn a new language.

 

The good news is that Boards and CEOs ought to carefully consider their matrixed approach to talking about strategy.' They call this matrixed approach 'dynamic specialization.'' ''

 

The current fad is to talk about business models organized along industry lines.' The authors argue that industry focus is insufficient for a proper conversation about strategy.' Within that industry-focused model, there needs to be a second strategic focus.'

 

They see this new strategic focus along three dimensions:

 

''''''''''' Infrastructure Management.' Financial services, pharmaceuticals, and the computer industry are already structured in significant ways along these lines.' State Street Corporation is an example of a company that services the financial services industry but its value clearly revolves around infrastructure management. UPS revolves around infrastructure management of logistics.' An infrastructure management theme works well for relatively routine, high volume business activities.

 

Product Innovation.' Specialized biotech companies are taking on more of R&D activities so that large pharmaceutical companies can focus on scale intensive manufacturing and distribution.' There are specialty design shops that serve the fashion industry.' There are specialty semiconductor design shops that serve the electronics industry.

 

Customer Relationship.' These firms concentrate on identifying target customer segments, getting to know that segment very well, and using its resources to mobilize third party products and services to address the needs of their customers.' Physicians who practice general medicine, financial planners, real estate agents, and attorneys all provide this framework.' Accenture is a company with this type of framework.

 

From a strategic perspective, most companies today like to say that they do all three types of services within their walls.' But each approach requires different economics, different skills, and different cultures.' When Boards accept the CEOs notion that all three models are appropriate in the strategic mix, the inevitable implication is sub optimization of one or all of these strategies.'

 

This sub optimization increases company vulnerability to its more focused competitors.

 

 

Laurence J. Stybel

Boardoptions.com

lstybel@boardoptions.com

 

 

LEADING LEADERS

By

Jeswald W. Salacuse

New York: AMACOM, 2006

ISBN 0-8144-0855-9

 

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Jeswald Salacuse is Professor of Law at the Fletcher School of Law and Diplomacy at Tufts University.' From 1986-1994, Professor Salacuse served as The Fletcher School's Dean.' He also served as Dean of the School of Law at Southern Methodist University.' In addition to his role as a higher education leader, he is a specialist on international negotiation and international law.' Dr. Salacuse is an independent director of several mutual funds and a member of the Steering Committee of the Program on Negotiation at Harvard Law School.

 

Much of today's literature on leadership use sports or military analogies.' Indeed successful Generals and Coaches often command premium speaker fees to speak to leaders about leadership.' The presumption is that there is a technique that can be used to 'inspire' 'mobilize' 'energize' and 'direct' players to work together for the sake of the team.

 

Such programs can indeed be of value in hierarchical work systems.

 

But what about law firms, investment banks, accounting firms, physician practices, Boards of Directors, consulting firms, higher education and research organizations?' Do these military-type models of leadership work?

 

Dr. Salacuse argues that leaders in professionals firms must 'lead leaders' and not 'troops' or 'employees' or 'players.'' By leaders, he refers to people who have an independent power base outside their organizational roles. That power base might be the marketability of their own talents, their network of contacts, their stature within their professions, their wealth, their ability to access clients/funding sources.

 

This book asks how can a leader lead leaders?

 

Dr. Salacuse employs political metaphors rather than military or sports analogies to make practical points.' He reasons that politics is the art of managing other leaders who have their own power base and are not necessarily dependent on the leader.

 

He has a fascinating chapter on 'the medium sends the message' and uses the different managerial approaches of President George H.W. Bush versus President George W. Bush to illustrate the concept.' In organizing a coalition to go to war against Iraq, George H.W. Bush spent considerable time on 1:1 discussions with the phone with leaders.' He appealed to the unique interests of each leader one at a time and used the phone as the primary communications tool and himself as the primary communicator.' In seeking to form an alliance to go to war with Iraq, George W. Bush, on the other hand, delegated much of the communications role to others.' He used broad appeals without customizing the message 1:1.' Dr. Salacuse argues that the father represents the model for how to engage other leaders while the son represents the model for how not to do it.

 

In my own experience with CEOs who get fired by their Boards of Directors, I often find that these CEOs saw 1:1 conversations with Board members as side-track issues that prevented them from managing their companies.' They often did not find the time valuable and it showed in their dealings with Board members. They preferred 1:1 chats with the Chairperson combined with memos and reports to everyone else on the Board.' They felt that they could inspire the group at Board meetings rather than to use the Board meeting to ratify what had been worked out quietly in 1:1 conversations.

 

Dr. Salacuse has a fascinating chapter on how to make stars into a team.' As a good negotiator he turns the topic upside down and asks leaders to first look at the issue from the perspective of the professions within the organization:' how much should I allow integration to happen and how much should I allow this integration to damage my professional goals?' This is the followers'mdilemma.' And leaders of professional service firms need to explicitly address making stars into teams by looking at the followers' dilemma first.

 

There are practical leadership suggestions for dealing with talented spoilers and how to constantly remind people about their common organizational history.

 

Laurence J. Stybel, Ed.D.

BOARDOPTIONS, INC.

www.boardoptions.com

lstybel@boardoptions.com

Tel. 617 594 7627

 

Thomas C. Schelling.' THE STRATEGY OF CONFLICT.' Boston: Harvard Press, 1980

 

ISBN 0-674-84031-3

BOARD OPTIONS/AMAZON PRICE: $21.95

 

The 2005 Nobel Prize for Economics was awarded to Robert Aumann and Thomas C. Schelling.' Schelling is professor of Economics at the University of Maryland and applied game theory to conflict.' His focus was on the weapons issues but his ideas have been applied to a host of business issues.

 

''''''''''' In this review, we will apply some of Shelling's concepts to how companies fire employees.

 

''''''''''' Schelling says 'uncertain retaliation is more efficient than certain retaliation' when bargaining and 'the capability to retaliate is more useful than the ability to defend.'' Now let's get practical.

 

''''''''''''''''''''''''''''''''''' GOODBYE SCENARIO

 

''''''''''' As a verb, 'goodbye' is the act of parting.' It is also an acknowledgement of parting.' A goodbye scenario assumes that once employees physically leave the building, they will never be a factor for the company's future.' The relationship was transactional and the transaction is now over.'

 

''''''''''' If the firm defines the termination as a goodbye scenario, the firm should be guided by a business model that says, 'What's the least expensive way of terminating this relationship?'' And Board members should ask tough questions about paying too much.

 

''''''''''''''''''''''''''''''''''' AUWIEDERSEHEN SCENARIO

 

''''''''''' 'Auwiedersehen' is German for 'Until we meet again.'' It has a more open-ended quality than the English 'goodbye.'' In an auwiedersehen scenario, the assumption is that once employees physically leave the building, they may continue to be a factor in the firm's future.' But it is unclear what that factor may be.

 

After their non-compete contracts are over, they may join a smaller competitor and become potential allies or opponents in your firm's efforts to develop strategic alliances or acquire the firm.'

 

They may join firms that touch your industry and become potential referral sources of new business for you or a potential source of caution to others about using your company.

 

They may attend alumni programs at their schools and encourage/discourage graduates from joining your firm.

 

Each of these scenarios assumes capability of retaliation plus uncertainty of retaliation.''

 

The best practical defense in terminating employees under these conditions is 'Treat' people with dignity on the way out because the assured costs of such positive treatment are less than the potential downside retaliatory risks.

 

''''''''''''''''''''''' AUWIEDERSEHEN VS IT'S NICE TO BE NICE

 

''''''''''' We work with companies that treat departing leaders with dignity

on the grounds that' 'it is good public relations and good for morale if we help former employees achieve a' 'soft landing.'' This positive rationale works only in cultures supportive of such a rationale.'

 

''''''''''' The Schelling rationale does not depend on an organizion having a specific culture for treating people with dignity.'

 

''''''''''' It develops a contingency approach to management based on a risk assessment.

 

There may be times when a 'goodbye' scenario does indeed make good sense.' There are other times when 'auwiedersehen' makes better economic sense.

 

In applying Professor Schelling's theories, management's failure to take defensive measures with those possessing abilities and options to retaliate is just bad economics.' One sees it at work every day.

 

 

 

Maryanne Peabody and Laurence J. Stybel are co-founders of Stybel Peabody Lincolnshire. Its mission is to assist organizations in managing critical leadership transitions when the stakes are high. Their website is www.stybelpeabody.com and www.boardoptions.com

 

Donald N. Sull. REVIVAL OF THE FITTEST: why good companies go bad and how great managers remake them.

 

Boston, MA: Harvard Business School Press, 2003

ISBN 1-57851-993-4

 

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Donald Sull is Associate Professor of Management at London Business School.'

 

Leadership is about making commitments and seeing them through.

 

There are two dangers with commitment making.' The first danger is that the commitments fail.' Sull argues that the second danger is that the commitment succeeds.' A series of successful commitments can be bundled up in what Sull calls a company's success formula.' In an every changing world, leaders must guard against being prisoners of their own success formulas.'

 

The most interesting part of this book is his creative pairing of similar companies in similar industries who took different paths of either honoring or destroying their success formulas.' The stories of Firestone versus Goodyear in the tire industry have extraordinary value for us today and are well worth reading.

 

What does this mean for those who serve on Boards of Directors?

 

BOARDS WANT TO HIRE CHAMPIONS''

 

Boards want to hire champions.' Champions are bred to be decisive and self-confident. They love making commitments and seeing them through.

 

As Donald Sull argues, when champions make commitments you have a double edge problem.' It is predictable that champions will have difficulty admitting that their commitments no longer fit the times.' Indeed this trait is so predictable I called it the LBJ Effect in honor of the American President who escalated commitment to a failing war once it became clear that the war could not be won.

 

LESSONS FOR REVIVAL OF THE FITTEST FOR BOARDS OF DIRECTORS.

 

'

1.' Good CEOs are champions. Champions believe in themselves and their commitments.'

'

2. In the absence of a strong countervailing force, some CEO Champions will rigidly hold on to what Sull calls the success formula when it ought to be thrown away.' We even take the more extreme position that in the absence of a strong countervailing force, champions will pour more resources into an inappropriate success formula.

'

3.' This strong countervailing force is called the Board of Directors.

'

 

SETTING THE RIGHT CULTURAL TONE '

 

At a cultural level, the LBJ Effect can be fought by the board insisting on a culture where it is acceptable to fail, to learn from mistakes, and to try again. It is a culture where "mid course correction" is not necessarily a sin and "stick-to-itness" is not necessarily a virtue.

 

Perhaps the most famous example of a corporate culture that supports this notion is Johnson & Johnson. On the desks of most executives within the J&J organization is a framed one-page document called, "Our Credo."

 

''''''''''' The J&J Credo is a series of principles that govern management decisions:

 

When there was a concern that a batch of Tylenol had been poisoned, a division manager unilaterally ordered all bottles of Tylenol off the U.S. market. That action was taken without consulting corporate headquarters. It was justified to management on the basis of the credo. Senior management at J&J backed the local manager and the employees were enormously proud of it.

 

This use of a corporate values statement is not unique at J&J. We have consulted at other companies with credos. And some of these companies had problems as severe as the Tylenol crisis. But in no other company would a middle level manager make a major decision based on an esoteric company principle. With respect to failure, the J&J Credo states:

 

"Employees must feel free to make suggestions and complaints....We must experiment with new ideas. Research must be carried on, innovative programs developed, and mistakes paid for."

 

In other words, failure is not "bad." It is part of the necessary price for being innovative.

 

''''''''''''''''''''''''''''''''''' Board Influencing Tactics

 

Boards seeking to influence CEOs to make mid-course corrections have a semantic problem. Leaders must be convinced that mid-course corrections will not be labeled as "indecisive" or "waffling."' Such negative words are inconsistent with a positive sense of self. On the other hand, adaptability in the face of changing circumstances is consistent with a positive self-concept.

'

''''''''''' 'Some CEOs deride Sarbanes Oxley as an example of legislative overkill.' They say that it will move the board/CEO relationship into an adversarial stance.' Such a stance will only harm shareholders and waste resources.' Sull's perspective is powerful people are only too human.' And they are all too human in predictable ways.

 

A valid checks and balances system should keeps the LBJ Effect from getting out of hand and help companies decide when it is time to destroy their own success formula before competition does it for them.''

 

 

''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''' ###

 

Maryanne Peabody and Laurence J. Stybel,Ed.D. are co-founders of Board Options, Inc. Its mission is to increase Board effectiveness through the application of practical behavioral Science. (www.boardoptions.com).

 

Jack Uldrich. SOLDIER, STATESMAN, PEACEMAKER: leadership lessons from George C. Marshall. '

 

New York: AMACON, 2005

ISBN 0814408575

 

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This review was written by F. Gorham Brigham, Jr.'' Mr. Brigham served in General Marshall's Office from September 1940 until November 1945, the critical Word War II period.

 

I am an avid reader of books written about General Marshall.' Mr. Uldrich did a remarkable job in bringing out the key incidents of this remarkable leader.' What makes the book exciting are the examples.' The author relates how Marshall's skills can relate to today's managers.' Most of us like to believe we live in dynamic times and perhaps we do.' Few of have been critical leaders in the most dynamic period in America's history.' This book is well worth managers' time as General George C. Marshall continues to be a role model for leaders of today.

 

 

www.boardoptions.com

lstybel@boardoptions.com

 

 

 

LINKING MISSION TO MONEY: Finance for nonprofit board members.

 

Allen J. Proctor

 

Columbus, Ohio: The Academy for Leadership & Governance, 2004

 

ISBN 0-9706039-4-0

 

REGULAR PRICE:  $16.00

 

ORDER FROM: www.thejeffersoncenter.org/alg

 

      Or

 

Telephone: 614-228-7444

 

 

This small book is designed for non-financial types who serve on Boards of nonprofit companies. The author has impressive credentials to be providing such advice.  He was Chief Financial Officer of Harvard University and Executive Director of the New York State Financial Control Board.  This was the body that was brought in to oversee New York City when it went into receivership.  He is a national figure in the area of nonprofit governance and taught at Harvard University as well as Columbia University. 

The book provides a balance between the conceptual and the practical while not drowning in numbers.  That is an impressive accomplishment for a book about finance.

At the conceptual level, the author says that core role of a nonprofit is to provide a sustainable set of services.  And yet there is always the pressure to expand services:

The dilemma of sustainability versus growth pervades the nonprofit world and you have to decide early on how your organization will deal with it.  Is it better to provide a service and then suspend it when finances are tight?  Or is it better not to provide the service at all?  If you grow and later cannot sustain your service, you may jeopardize the survival of your organization.  But expansion shouldn't be a four-letter word.

At the practical level, the book contains a number of financial forms that are useful for Board members, including a form for separating continuing expenses versus initiative expenses.  There is also a cogent discussion about why the Board's Treasurer should NOT be a financial expert.

Many Boardoptions.com readers serve on Boards of both for profit and nonprofit organizations.  This is an excellent reference book.

SHAKESPEARE IN CHARGE 

Norman Augustine and Kenneth Adelman

New York: Hyperion Books, 1999

ISBN 0-7868-6601-2

AMAZON PRICE: $12.95 

 

Norman Augustine was CEO of Martin Marietta, Chairman of Lockheed Martin Corporation and served on the Boards of Procter & Gamble, Black & Decker, and Phillips Petroleum. Kenneth Adelman is former ambassador to the U.N. and U.S. Arms Control Director. These savvy and practical leaders use this small, clever book for a discourse on the nature of leadership. The platform they use is that keen observer of human nature'William Shakespeare.

The use of The Bard as a platform is clever at two levels. Many of us know Shakespeare's characters. But we only know them in the context of our own vision. Looking at the same characters through two different and highly perceptive sets of eyes is both educational and entertaining. For example, Claudius is now perceived as an outstanding role model for leadership during times of crisis rather than a supreme villain who kills his brother. Shylock presents the example of someone who lets emotion get in the way of solid business judgment and over-reaches.

There is a second level where the selection of Shakespeare as a platform is both clever and useful.

Most modern books on management are often simplistic in content and often do not deal with the complexities of human nature. Shakespeare's characters, by contrast, are complex, contradictory, and fascinating. Yes, Claudius is the very model of a crisis management leader. He is a very sympathetic, guilt-ridden figure. And he also is a murderer. In the play 'Hamlet,' the public is said to adore the hero. Hamlet punishes the guilty at the end of the play. To get to this point, however, he also kills the innocent. And he kills them without remorse. How many leaders do you know where there is a chasm between public image and private conduct?

The authors are not content to focus on Shakespeare. At every turn, they show how their concepts are illustrated by leaders of modern enterprises, large and small.

Ken Adelman now teaches Shakespeare on management in Washington, D.C. I wish I could audit his course! 

Laurence J. Stybel,Ed.D.

www.boardoptions.com

www.stybelpeabody.com 

 

PAY WITHOUT PERFORMANCE: the unfulfilled promise of executive compensation.

 

Lucian Bebchuk and Jesse Fried.

Cambridge, MA: Harvard University Press, 2004

ISBN 0-674-01665-3

 

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In his letter to Berkshire Hathaway investors in 2004, Warren Buffett wrote:

 

In judging whether Corporate America is serious about reforming itself, CEO pay remains the acid test.' To date, the results aren't encouraging.

 

 

PAY WITHOUT PERFORMANCE expands on Buffett's comments and provides a research base to support it.' The authors also suggests what needs to be done to effectively deal with this 'acid test' of corporate reform.

 

Lucian Bebchuck is the William J. Friedman and Alicia Townsend Friedman Professor of Law, Economics, and Finance at the Harvard University School of Law.' He is also a Research Associate of the National Bureau of Economic Research.' Bebchuck has a doctorate in economics from Harvard and a law degree from Harvard.' Jesse Fried is Professor of Law at the Boalt School of Law at the University of California at Berkeley.' Prior to his academic career, he practiced tax law in Boston.' Fried holds degrees in economics and law from Harvard University.'

 

The authors argue that Sarbanes Oxley reforms may have marginally improved the independence of Boards from CEOs.' But Board members are still not dependent enough upon the shareholders they are supposed to represent.' This dysfunctionality in the system makes it impossible for Compensation Committees to conduct true 'arms length' compensation discussions with CEOs.

 

The result is a CEO compensation system that tends to verbalize pay for performance without actually achieving it for CEOs.' '

 

When CEO pay is uncoupled from performance, Board members seek to avoid having to pay 'outrage costs' from the shareholders.' One of the ways of avoiding paying 'outrage costs' is to make it difficult for the average shareholder to truly understand the level of CEO compensation and how that level is unrelated to corporate performance.' The authors call these techniques compensation 'camouflage.''

 

The authors are quite clear in describing examples and providing research to support their ideas.

 

They propose remedies that focus on two themes: tying CEO compensation to real corporate performance and tying Boards to shareholders.

 

With respect to tying CEO compensation to real corporate performance, they would seek to remove 'windfall' and 'rising tide' factors from CEO bonus/option payments.' Windfall factors involve one-time rises in shareholder value.' An example might include a sharp rise in stock value because the CEO makes a decision to downsize or receives a large payment from the successful settlement of a law-suit.' Another windfall factor might be allowing accounting for revenue to move from one quarter to the next so that the stock will look like it is rising at a steeper angle.' 'Rising tide' factors would factor out increases in CEO compensation because an average company is benefiting from average industry growth that impacts all average players.' These issues merit serious consideration from Compensation Committees.' And Warren Buffet is correct in his assessment that most Boards have thus far failed the 'acid test.'

 

With respect to tying Boards to shareholders, the authors would terminate staggered Board elections.' They would have the entire Board be up for election at the same time. I am reasonably sure that the authors' remedy here would be worse than the disease they are seeking to cure.'

 

A Board of Directors is a work group that is supposed to be thoughtful and deliberative in nature.' Their proposal would make the Board a far more responsive body at the expense of thoughtfulness.' To make an analogy, the U.S. Senate is a more effective deliberative body because it is less subject to the passions of the moment.' And it is less subject to the passions of the moment because only 33% of its members are up for election every two years.' The U.S. House of Representative is far less effective as a deliberative body.' And one of the reasons is that all members are accountable to the voters every two years.

 

Regardless of whether you agree or disagree with their analysis, their key theme deserves consideration:' if Boards allow CEO pay to be unrelated to corporate performance, it is important to define the problem correctly.' The problem is not about greedy or lazy individuals.' The problem is about a system that is not rewarding leaders for doing the right things.'

 

As Warren Buffet has said, fixing that system will be the 'acid test' of the free enterprise system in the 21St Century.

 

Larry Stybel

www.boardoptions.com

lstybel@boardoptions.com

Paul P. Brountas.'

 

BOARDROOM EXCELLENCE: a common sense perspective on corporate governance.'

 

Boston: Hale and Dorr, LLP, 2003

 

 

The law firm of Hale and Dorr in Boston has published Paul Brountas' musings in board service.' A key theme in this book is that corporate America needs to CREATE investor trust and not simply to RESTORE it.' The "Good Old Days" were really not all that good from a governance point of view.' The past cannot be used as a model for the future:

 

"We keep searching for solutions, standards, and rules that will restore ethics and public trust and confidence in our corporations.' But did that public trust and confidence ever exist? Or was it merely a passive acceptance of a past system of corporate governance that was wholly unsuited?"

 

Brountas provides a commonsense perspective about Sarbanes-Oxley.' It is indeed true that Congress cannot legislate morality and ethics. But Sarbanes- Oxley creates a road map to guide leaders who seek to create a climate of Board integrity that will be expected of public companies operating in a Post-Enron world.' Good governance is good for business, even if the business is not subject to Sarbanes-Oxley.'

 

There is an excellent discussion about the Duty of Care required of Board members plus sample Board accountabilities that can easily be turned into a Board of Director position description.'

 

In his introduction to the book, attorney Jeff Rudman of Hale and Dorr' says that Brountas takes his "40 years of advising officers and directors and distills it into 84 pages without producing either a self help book or a paean to those who made a bundle and lived to tell about it."

 

BOARDROOM EXCELLENCE is a useful review for experienced Board members who seek perspective and an excellent introduction for new Board members who want a basic overview from a thoughtful participant/observer.

 

 

THE TRUSTED LEADER: bringing out the best in your people and your company.

 

Robert Galford and Anne Siebold Drapeau

New York: The Free Press, 2002

ISBN 0-7432-3539-8

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Robert Galford is managing partner at the Center for Executive Development in Boston.' Anne Siebold Drapeau is Chief People Officer of Digitas and held management positions with Pepsi, J.P. Morgan, and FTD.' It is hard to believe that they conceived of THE TRUSTED LEADER before Enron, Worldcom, et al.

 

But they did and we should be grateful.

 

The authors state that 'trust is intangible, but it is useful to think of it as an 'outcome' that results from very tangible processes.'

 

This book provides some of the critical management tools to achieve that objective.

 

For example, there is a Trusted Leader Self-Assessment in Chapter 2.' Based on your scores, you can then read the rest of the book as a whole or focus first on those Chapters where you want to build your competence.

 

What are the implications for Board members?

 

One of the critical roles for Board members is the annual evaluation of CEO performance.' Many of us grew up with a Management by Objectives philosophy: state the outcome measures clearly and then leave it up to subordinates to figure out how to achieve those objectives.

 

In a world where institutional and individual investors/contributors have valid reasons to mis-trust leaders, the very concept of MBO needs to be changed.' Boards must be concerned not only with what is accomplished but also how it is accomplished.' Accomplishing objectives without breaking the law is a necessary but insufficient standard of CEO excellence. The Trusted Leader Self Assessment is a concrete tool which can be used by Boards to set quantifiable measures of performance for the critical intangible of trust.' The vague concept of 'trust' can thus be discussed in very specific ways.

 

On page 95, the authors extol the virtues of Doug Baker, curator and sexton of a Church.' He is described as a quietly, competent 'fixer' rather than a charismatic leader who draws attention to himself.' The authors state that we need more Doug Bakers leading our organizations.

 

And to this we say, 'Amen.'

 

Maryanne Peabody

www.boardoptions.com

Tel. 617 371 2990

 

 

 

Jim Collins

 

GOOD TO GREAT: why some companies make the leap and others don't.

 

New York: Harper Business, 2001

ISBN 0-06-662099-6

 

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Twenty-one researchers looked for public companies with the following patters: Fortune 500 Companies with fifteen-year cumulative stock returns at or below the general stock market, a transition period followed by cumulative returns at least three times the general market over the next fifteen years.'

 

Eleven companies were identified and compared to similar companies within industry that had not transitioned from good to great.' For example, Abbott was compared with Upjohn; Circuit City with Silo; Gillette with Warner-Lambert, Kroger with A&P, etc.

 

The project involved coding 6,000 articles, 2,000 pages of interview transcripts, and 384Million bytes of computer data.

 

What was learned?

 

Since THE key role of the Board of the hiring and firing of the CEO, we will focus on this area only.' But the book has lots of strategic implications for Board members and senior executives beyond CEO recruiting.

 

Boards of public companies often assume that salvation can be achieved by hiring a well-known, charismatic CEO from outside the company.' In a world of supply & demand, Boards ask shareholders to pay dearly for such rare talent.' Are the results worth it?

 

According to Collins and his team, such charismatic leaders are NEGATIVELY associated with good to great companies.

 

Ten of the eleven good to great CEOs came from within the company.' Good to great CEOs are self-effacing, even shy.' They have a blend of personal humility combined with fierce determination for the organization as a whole.' Boards of Directors are looking for Julius Caesar when they should be looking for Abraham Lincoln.

 

The research-based nature of this effort takes the book out of the ordinary category of 'pop' management books.' It is a book to read, digest, and re-read.

 

Larry Stybel & Maryanne Peabody

www.boardoptions.com

 

 

Jay W. Lorsch and Thomas J. Tierney.'

 

ALIGNING THE STARS: how to succeed when professionals drive results.'

 

Boston: Harvard Business School, Press, 2002.

ISBN 1-57851-513-0

LIST PRICE: $29.95

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Jay Lorsch is the Louis Kirstein Professor at the Harvard University Graduate School of Business.' Thomas J. Tierney is former Chief Executive Officer for Bain & Company.' Lorsch and Tierney are a powerful duo for an examination of the world of Professional Service Firms (PSF).

 

Eighteen highly successful U.S.-based PSFs were examined.' They represented the fields of accounting advertising, retained search, investment banking, IT consulting, law, and management consulting.' Firms surveyed included McKinsey, Bain, Skadden Arps, Wachtell Kipton, IBM Global Services, J.P. Morgan H&Q' , Goldman Sachs, Young & Rubicam, Ogilvy & Mather, Ernst& Young, Price WaterhouseCoopers.

 

The authors argue that when leaders exclaim, "people are our most

important asset" they are being hackneyed and inaccurate.' Within the business world outside PSFs, the honest statement would be "competent people are a necessary component of our success but even they are expendable."'' Critical differentiators exist apart from the individuals who created them: distribution channels, cost position, brand strength, location, technology, etc.'

 

In the PSF world, most people are also expendable.' But there is a category of people that determine the future of PSFs: Stars.

 

Stars build enduring client relationships and become role models for junior professionals.' PSFs stars may be partners but not all partners are stars.'

 

Aligning stars with the PSF strategy is the foremost job of PSF leaders.'

 

This book deals with the complexities involved in creating such alignment.

 

For those on Boards of Directors of PSF organizations, ALIGNING THE STARS helps to crisply focus on what are critical questions to be asked:' who are the stars, what system is in place to insure continuity of stars, what system is in place to align individual star needs to strategy.

 

 

Maryanne Peabody & Laurence J. Stybel

www.boardoptions.com

 

 

Morgan W. McCall, Jr. and George P. Hollenbeck

 

Developing Global Executives: The Lessons of International Experience

 

Harvard Business School Press, 2002

Boston, Massachusetts

ISBN 1-57851-336-7

List: $29.95

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Alexander (Sandy) von Stackelberg is a senior international marketing/sales executive whose career includes medical devices and other high tech equipment.

 

Here is Sandy's reaction to the book:

 

More and more firms are expanding their horizons beyond their own border and need competent managers to be successful. This book is perfect for those domestic individuals who must direct the companies that are expanding abroad without having much direct experience in the subject. Similarly, those who have had a more extensive international familiarity may find this book a bit too basic, however the various tables offered were of particular interest.

 

Properly the authors queried not just US expatriates say in France, but also Asians posted to Latin America, etc. The book defines what characteristics make up a "global executive" and contrasts those to their purely domestic counterpart. The individual's stories may be of interest to a few of the uninitiated; for they define some of the experiences that were most critical to mastering their profession.

 

More important for the organization is how to identify potential

Individuals and how to have the right "internal bias" to foster growth overseas. Further the authors define what the Organization's role should be and describe what the responsibilities are of the individual.

 

All in all this is a worthwhile book on the subject.

 

'
 

CORPORATE BOARDS:

 

San Francisco: Jossey-Bass, 2001

 

ISBN: 0-7879-5620-1

 

PRICE:' $31.95

 

Jay Conger, Ed Lawler, and David Feingold are professors who have written a review of corporate governance issues.' This book best serves as an overview for new Board members.

 

The topics cover the "usual" corporate governance issues: evaluation of the CEO, term limits, Board responsibilities, term limits, etc. etc.

 

I have mixed reactions to this book.

 

On the negative side, I think the authors put too much reliance in a survey conducted by Korn Ferry.' As a result, the book has a dry tone, integrating survey results and academic papers.' I think the authors spent too much time reviewing one survey and not enough time talking to Board members.' The result is an academically skewed perspective.' For example, in reading this book one would think that there is a keen debate among Board members today regarding which constituency or constituencies Board members are responsible to: shareholders versus employees versus society, etc.' I think this is a debate academics WISH board members would have!' Perhaps I am on the wrong Boards, but this is not an issue that is "hot" among my colleagues.

 

Here is another example of how this book is skewed to towards an academic perspective:' there is a very interesting section on the relationship between Board practices and company performance.' The tables are hard to interpret and the entire section merits only three pages of a 206-page book. A McKinsey study called "Putting a value on Board Governance" is mentioned in the introduction but never discussed.

 

On the positive side, each chapter concludes with a statement of Principles and concrete practices that can be established.

 

On one hand, the authors discuss how valuable it is for Boards to get outside perspective through the use of external Board members and term limits.' On the other hand, this team of authors lacked outside

perspective. There is too much academics talking to other academics in this book.

 

CORPORATE BOARDS would have been stronger had one of the three authors been a current or retired CEO.

 

 

Larry Stybel

STYBEL PEABODY

www.boardoptions.com

Sixty State Street, S. 700

Boston, MA 02109

Email: lstybel@stybelpeabody.com

 

 

E-BOARD STRATEGIES: How to survive and win

By Ram Charan and Roger Kenny

New York: Boardroom Consultants, 2000

ISBN 0-615-11524-1

 

BOARDOPTIONS/AMAZON PRICE: $27.95

 

Roger Kenny is managing partner of Boardroom Consultants and Ram Charan is a' consultant and professor at Northwestern University Kellogg School of Business.

The heart of this slender volume' is a mention of a study done by the venture capital firm, Onset Ventures.' Nearly 80% of startups fail to survive the first 18 months of life.' Onset surveyed 360 startups and found that one group had a 70% chance of making it.' This group of companies had CEOs who used mentors with experience running both startups and large businesses.

Such mentors can often be developed and effectively employed in a Board of Directors/Board of Advisors capacity.

Effective Boards in startups involve partnership between Board members and managers, not oversight.' The term "E-Board" is used to differentiate this kind of structure from the traditional governance-oriented Boards of established companies.

We think this is a book well worth having if you are a CEO or someone interested in serving on a Board.' Facilitating and advancing such E-Boards is really what boardoptions.com is all about.

www.boardoptions.com

Stybel Peabody

Sixty State Street, S. 700

Boston, MA 02109

lstybel@stybelpeabody.com

 

 

THE PRESIDENTIAL DIFFERENCE: leadership style from FDR to Clinton. Fred I. Greenstein
New York: The Free Press, 2000
ISBN 0-684-8273306
List Price: $25.00
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Fred Greenstein (Greenstein, 2000) provides us at Peabody Stybel Lincolnshire with a template with which to evaluate presidential leadership.

While his focus is on the U.S. Presidency, we find Greenstein's analysis appropriate for Nominating Committees of Boards seeking a template for evaluating CEO candidates.

Greenstein is Professor of Politics at Princeton University and Director of Princeton's Woodrow Wilson School program in leadership studies. Analyzing Presidential leadership from FDR to Clinton, he articulates a six-factor model:

(1) Public communication---effectiveness in communicating with key constituencies.
(2) Organizational capacity---systematic approach to management; ability to forge a team and get the most out of it; proficiency in creating effective system arrangements.
(3) Political skill---using formal and informal power effectively.
(4) Vision---"event making" perspective versus reactive perspective. It also includes the ability to articulate overarching goals for the enterprise.
(5) Cognitive Style---conceptual ability to cut to the strategic heart of problems versus nibbling around the tactical fringes.
(6) Emotional Intelligence.

We use these six factors as frameworks for checking references of candidates. You might consider them as reference checking frameworks as well.

Standard job descriptions tend to focus on variables 1,2, 4, 5. It is rare that variable 3 gets explicit attention in business. But the CEO role requires mastery in the art of power. We have developed a series of reference questions that focus on this issue.

In our work with corporations, we find skilled communicators and highly organized managers overvalued by Boards.

And yet factors 1 and 2 may not be the most important factors. People may be great communicators in job interviews, highly organized, and still be ineffective leaders!

Factor 6 is hardly mentioned in job descriptions. And yet we all know it is totally critical. Presidents Johnson, Nixon, Carter, and Clinton had emotional handicaps that impacted the United States in extraordinarily negative ways. Haven't we all seen emotional handicaps within a CEO crippling the total organization?

In our retained search work, we find the best way to get a handle on emotional intelligence is to carefully, carefully, carefully check references with with former subordinates. Good leadership creates good followership. In the case of U.S. Presidents since FDR, only Truman, Eisenhower, Ford, and George Bush had subordinates who praised their leader without reservation. Of the eleven Presidents evaluated, only these four stand out as fundamentally free of distracting emotional perturbations.

There is a correlation here!

How important is emotional intelligence as a factor in selecting a leader?

None of the U.S. Presidents surveyed were paragons. All had flaws in one or more of the six leadership variables. Most organizations can work around the leader's inevitable human weaknesses.

Professor Greenstein reminds us that the United States has survived and even thrived under less than perfect leadership. In the area of emotional intelligence, however, "beware the presidential contender who lacks emotional intelligence. In its absence all else may turn to ashes." It is this critical that nominating committees tend to spend the least attention.

Laurence J. Stybel,Ed.D.
LINCOLNSHIRE STYBEL PEABODY
Sixty State Street, Suite 700
Boston, MA 02109
Tel: 617/371-2990
Fax: 617/371-2992
E-mail: lstybel@stybelpeabody.com
Web Site: www.boardoptions.com (The Board of Directors Resource Center)

SINCE 1979, HELPING COMPANIES ACHIEVE "SMOOTH TRANSITIONS" OF SENIOR EXECUTIVES IN, UP, AND OUT: retained search, executive coaching, and helping senior executives find new chapters in their professional lives. *

ONE HUNDRED THIRTEEN OFFICES AND 224 CONSULTANTS TO SERVE CLIENTS IN NORTH AMERICA, WESTERN EUROPE, EASTERN EUROPE, ASIA, AND AUSTRALIA. *

STRATEGIC PARTNERS WITH THE AMERICAN MANAGEMENT ASSOCIATION, THE WORLD'S LARGEST MANAGEMENT DEVELOPMENT ORGANIZATION WITH 70,000 COMPANIES AROUND THE GLOBE. *

SPECIAL RELATIONSHIP WITH THE FINANCIAL EXECUTIVES INSTITUTE REPRESENTING 14,000 SENIOR FINANCIAL EXECUTIVES IN THE UNITED STATES AND CANADA *

SELECTED AS PARTNERS BY THE ASSOCIATED INDUSTRIES OF MASSACHUSETTS TO PROVIDE SENIOR EXECUTIVE TRANSITION SERVICES TO THE MEMBERS OF MASSACHUSETTS' LARGEST EMPLOYER ORGANIZATION *

SELECTED AS PARTNERS BY THE MASSACHUSETTS HOSPITAL ASSOCIATION TO PROVIDE SENIOR EXECUTIVE TRANSITION SERVICES TO MASSACHUSETTS' LARGEST HEALTH CARE INDUSTRY ORGANIZATION *

REFERRALS FROM THE AMERICAN MEDICAL ASSOCIATION *

WINNER, MASSACHUSETTS LAWYERS' WEEKLY "BEST" IN CLASS AWARD FOR THE FOLLOWING YEARS: 1996, 1997, 1998, and 1999. *

THE BOARD OF DIRECTORS RESOURCE CENTER:

www.boardoptions.com

**

The following review appeared in THE WALL STREET JOURNAL (July 20, 1997, p. 27).

"Technically savvy corporate leaders don't have to rely on old fashioned techniques. www.boardoptions.com offers a wide variety of services for top managers, including career tips, innovative ideas on corporate governance, and a Board of Director Talent Bank."

Margaret F. Riley, author of THE GUIDE TO INTERNET JOB SEARCHING, calls www.boardoptions.com "unique in the ocean of Internet career and management sites. The resources assembled to serve executives are well chosen, authoritative."

Jared Hendler, Vice President of Creative Services for a division of Grey Advertising in New York City, calls www.boardoptions.com a "most comprehensive site.....a consideration for the future."

PROFIT PATTERNS: 30 ways to anticipate and profit from strategic forces shaping your business.
New York: Random House, 1999
ISBN: 08 1293 1181
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I think of this book as first rate meat placed between two stale pieces of bread.

Let's get to the meat first.

This book challenges Board members and senior management to get beyond the obvious question, "What does our team need to know?" It addresses the more profound question, "What is our team afraid to find out?"

The authors, all Mercer Management Consultants, argue that business leaders who first understand and then act on industry-wide patterns are the inevitable winners. Those who fail to understand or those who understand and fail to act are the inevitable losers. There are only a limited number of these business patterns and they are predictable.

Reading through this book, I had a number of "Ah Ha!!!" experiences similar to the experiences of watching John Madden diagram the strategy of a just completed football play. I thought it was just a bunch of over-weight, over-paid guys chaotically smashing into each other!

Here is one example of the authors at work:

A classic business pattern is called moving from multi-polar standards to defacto standards: customers crave compatibility and some competitor will create high value by providing it. But moving to industry standards is not always the best choice for a company. For example, what is the rationale for NOT conforming to ISO9000 standards? The rationale is simple: standards tend to organize customer thinking about the performance side of the price/performance equation. This leaves the customer free to focus on'price! The authors conclude that "The widespread rise in standards of the past twenty years is a testament to the ''widespread threat to supplier profitability." Isn't it better to set your own standards?

The first 260 pages focus on showing the reader different patterns and then discussing them. The next fifty pages provide concrete examples of how companies implement pattern analysis using well known organizations such as Cisco Systems, Capital One, SAP, Staples, Nokia, Dell, Amazon.com, and Bang & Olufsen.

There is lots of sirloin in this sandwich!

The two slices of bread are my problem and my only problem with this book.

To allow the reader a metaphor to "get it," the authors spend the first part of the book focusing on chess and the works of Picasso. They come back to the chess metaphor at the conclusion of the book. And just in case you don't get it, they also throw in football metaphors as well.

I think this is overdone, particularly the expensive Picasso drawings. Chess alone would have been sufficient.

But this is minor carping about what is ultimately a real contribution.

PROFIT PATTERNS deserves a place on your library shelf.

It also deserves to be in a less expensive paperback version, minus all the expensive Picasso pictures. Picasso plus chess plus football contributes to intellectual overkill and raises the book's cost beyond what is really necessary.

LINCOLNSHIRE STYBEL PEABODY
Sixty State Street, Suite 700
Boston, MA 02109
Tel: 617/371-2990
Fax: 617/371-2992
E mail: lstybel@stybelpeabody.com
Web Site: www.boardoptions.com (The Board of Directors Resource Center)

HARVARD BUSINESS REVIEW ON CORPORATE GOVERNANCE
Boston, MA: Harvard Business Review, 2000
ISBN: 1-57851-237-9
REGULAR PRICE: $19.95
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This paperback is designed to be a reference, focusing on both policy and strategic challenges for senior managers working with Boards and Board members. Some of the chapters are articles; others are transcripts of interviews with key business leaders.

Like any edited series, there is a range of quality here.

Some of the pieces are far-out prescriptions from academics that will never see the light of day.

And some of the pieces are practical, thought-provoking ideas written by academics, consultants, and Board members themselves.

For example, Walter Solomon serves on the Board of Neiman Marcus Group, Hannaford Brothers Company, Tufts Health Plan, and Circuit City Stores. He has an excellent article that provides a framework for Board size and composition.

Philip Caldwell is former CEO of Ford Motor Company and former member of the Boards of the following companies: Chase Manhattan, Federated Department, and the Kellogg Company. He notes that the selection of the CEO is one of the most important roles of a Board. It is in the interests of the company that there be viable internal candidates and that the Board have options. It is sometimes in the interests of the incumbent CEO that the CEO be the one to nominate the one and only internal candidate.

For this reason, the Board needs to annually monitor CEO Succession development. The Board also must make sure the program is focused on the competencies of chief executive officers. For example, being a better team player may or may not be a critical issue in the role of CEO. Great team players don't necessarily make great CEOs.

Laurence J. Stybel,Ed.D.
LINCOLNSHIRE STYBEL PEABODY
Sixty State Street, Suite 700
Boston, MA 02109
Tel: 617/371-2990
Fax: 617/371-2992
E-mail: lstybel@stybelpeabody.com
Web Site: www.boardoptions.com (The Board of Directors Resource Center)

SINCE 1979, HELPING COMPANIES ACHIEVE "SMOOTH TRANSITIONS" OF SENIOR EXECUTIVES IN, UP, AND OUT: retained search, executive coaching, and helping senior executives find new chapters in their professional lives. *

ONE HUNDRED THIRTEEN OFFICES AND 224 CONSULTANTS TO SERVE CLIENTS IN NORTH AMERICA, WESTERN EUROPE, EASTERN EUROPE, ASIA, AND AUSTRALIA. *

STRATEGIC PARTNERS WITH THE AMERICAN MANAGEMENT ASSOCIATION, THE WORLD'S LARGEST MANAGEMENT DEVELOPMENT ORGANIZATION WITH 70,000 COMPANIES AROUND THE GLOBE. *

SPECIAL RELATIONSHIP WITH THE FINANCIAL EXECUTIVES INSTITUTE REPRESENTING 14,000 SENIOR FINANCIAL EXECUTIVES IN THE UNITED STATES AND CANADA *

SELECTED AS PARTNERS BY THE ASSOCIATED INDUSTRIES OF MASSACHUSETTS TO PROVIDE SENIOR EXECUTIVE TRANSITION SERVICES TO THE MEMBERS OF MASSACHUSETTS' LARGEST EMPLOYER ORGANIZATION *

SELECTED AS PARTNERS BY THE MASSACHUSETTS HOSPITAL ASSOCIATION TO PROVIDE SENIOR EXECUTIVE TRANSITION SERVICES TO MASSACHUSETTS' LARGEST HEALTH CARE INDUSTRY ORGANIZATION *

REFERRALS FROM THE AMERICAN MEDICAL ASSOCIATION *

WINNER, MASSACHUSETTS LAWYERS' WEEKLY "BEST" IN CLASS AWARD FOR THE FOLLOWING YEARS: 1996, 1997, 1998, and 1999. *

THE BOARD OF DIRECTORS RESOURCE CENTER:

www.boardoptions.com

**

The following review appeared in THE WALL STREET JOURNAL (July 20, 1997, p. 27).

"Technically savvy corporate leaders don't have to rely on old fashioned techniques. www.boardoptions.com offers a wide variety of services for top managers, including career tips, innovative ideas on corporate governance, and a Board of Director Talent Bank."

Margaret F. Riley, author of THE GUIDE TO INTERNET JOB SEARCHING, calls www.boardoptions.com "unique in the ocean of Internet career and management sites. The resources assembled to serve executives are well chosen, authoritative."

Jared Hendler, Vice President of Creative Services for a division of Grey Advertising in New York City, calls www.boardoptions.com a "most comprehensive site.....a consideration for the future."

Channel Champions
Steven Wheeler & Evan Hirsh
San Francisco: Jossey-Bass, 1999
ISBN 0-7879-5034-3
STYBEL PEABODY/AMAZON PRICE: $35.00

Booz, Allen & Hamilton consultants Steven Wheeler and Evan Hirsh ask you to respond to the following question: how do you keep your customers too happy to look elsewhere for the goods / services they want?

If you don't have a crisply articulated answer, then perhaps you should purchase their book and read it CAREFULLY!

The authors argue that product based differentiation strategies are ephemeral. What can't easily be copied are differences in service and support.

To cite an example, think of Amazon.com vs. Barnes & Noble bookstores. Same physical product but very different customer experiences!

Think of Saturn vs. Pontiac. Is it the physical car or the customer experience that is key in the buy decision?

Think of Dell vs. Radio Shack.

How much effort is being spent at your company on focusing on that customer experience?

The authors bring in excellent real world examples from a variety of industries: General Electric, Home Depot, Wal-Mart, Providian Bancorp, Snap-on-Tools, Armstrong, Pella, and W.W. Grainger.

Too many companies think customer service is a function within the company. Typically it is called customer support. The authors argue that such a perspective dooms the company.

The business process necessary for creating the desired customer experience is cross-functional in nature, requiring the intense cooperation of finance, information systems, sales, operations, and marketing.

That means that the CEO must exhibit a passion for cutomer service.

Think about your last Board meeting.

How much time was spent in understanding how the company defines and operationalizes the customer experience from an enterprise-wide basis? If the Board does not consider the subject appropriate for discussion, then why should your CEO care?

This book is focused, practical, and important.

RIGHT FROM THE START: taking charge in a new leadership role.
Dan Ciampa and Michael Watkins
Boston: Harvard Business School Press, 1999
ISBN 0-87584-750-1
List Price: $24.98 STYBEL PEABODY/AMAZON PRICE: $17.47
YOU SAVE: 30%

Our firm provides senior level consulting for companies seeking to ensure "smooth transitions" for very senior level people: retained search, coaching, and retained search. We plan to provide RIGHT FROM THE START as a gift to all successful senior level job candidates we work with.

That gives you a sense of how much we value this book! The authors focus on how new senior executives can make the first steps positive steps. The Tables on pp. 134-139 are a nice framework to use during the initial six months.

RIGHT FROM THE START does have flaws. When a book is co-authored, I usually make an assumption that I am going to be reading a combined perspective. I expect a duet and not two soloists humming their own tunes. There is a lack of unified voice that detracts from RIGHT FROM THE START. The first half to three quarters of the book appear to have been written primarily by one author. It is time sensitive, focused, and practical.

Chapters 8,9, and 10 have a very different flavor. While it constantly refers to earlier chapters, the author of this chapter lacks the time sensitivity and the practical-application of the earlier part of the book. For example, the earlier part of the book simply speaks about the following dilemma: senior executives get to their high level positions by having confidence in their abilities, and yet if they don't reach out and quickly develop a source of inside and outside advisors, they will surely fail. The authors come back to this simple dilemma with an entire chapter about the taxonomy of advise versus counsel. This taxonomy might make some sense in an introductory textbook on management. In the context of the proposed readers of this book, however, such a taxonomy doesn't add much value.

There is a sense that Chapters 8, 9, 10 are too much "Cut and Paste" from some other work and are not focused on the needs of the readers of this particular volume. The three chapters could easily have been deleted from the entire work.

LEGACY: the giving of life's greatest treasures.
Barrie Sanford Greiff, M.D.
New York: HarperCollins, 1999
ISBN 0-06-039283-5
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Barrie Greiff is a psychiatrist who works with corporations and executives. I have known Barrie for a number of years and he is a first class "Mensch." That quality comes through in this book. The author of LEGACY writes, "Words that come from the heart enter the heart." You will feel that Dr. Greiff is speaking from his heart to yours. Those of us who work on Boards of Directors of family businesses or work with families of wealth often know that the concept of "net worth" is not necessarily the same definition we learned in Accounting 101.

In family businesses, net worth is the sum of three things: cash and securities, material objectives, and values. Passing on wealth without effectively passing on values through the generations dooms families of wealth to the stereotypic "From Poverty to Poverty in Three Generations!" Greiff ties the lessons of his personal and professional life to define values as a legacy consisting of loving, learning, laboring, laughing/lamenting, linking, living, leading, and leaving.

The core of the book focuses on defining these issues.

Freud was once asked to define mental well-being. His famous reply: "To Love and To Work."

Most of us don't need to be told what it means to work! But we do need a conceptual template of what it means to love. Dr. Greiff gives us such a template from which to measure how we are doing for ourselves and as role models for the next generation.

The cover of LEGACY shows Michelangelo's famous picture of God's finger ALMOST touching Adam's finger. It's inclusion on the cover is designed to highlight both the importance of passing on a legacy of values and the fact that most of us will do well if we can ALMOST get it right.

This book is a great companion piece to Marshall B. Paisner's book SUSTAINING THE FAMILY BUSINESS. That book also is available on our website and is reviewed by us.

Maryanne Peabody & Laurence J. Stybel,Ed.D.
STYBEL PEABODY LINCOLNSHIRE Boston, MA
e mail: stybel@aol.com
The Board of Directors Career Resource Center: www.stybelpeabody.com
Tel: 781-736-0900 SINCE 1979,
HELPING COMPANIES ACHIEVE "SMOOTH TRANSITIONS" FOR VERY SENIOR LEVEL EXECUTIVES INTO, UP THROUGH, AND OUT OF SYSTEMS: retained search, coaching, and retained search.

VALUE-CREATING GROWTH: how to lift your company to the next level of performance.
Thomas L. Doorley III and John M. Donovan San Francisco: Jossey-Bass, 1999.
ISBN 0787 79 46613
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Did you know that less than 2% of all public companies created 32 percent of all jobs.

Tom Doorley and John Donovan are with Deloitte Consulting.

The theme of this book is simple, but the "how-to" is hardly simplistic. The theme is that "high growth companies generate five to ten times the return of slow-growth companies. Such companies churn out new products at twice the "normal" rate. Employee satisfaction soars in high growth companies.

High growth companies are an elite class. These companies are not merely competitive. They are thumping their competition.

The authors provide a conceptual road map for achieving high growth status, based on analysis of a large sample of companies combined with case studies of key companies in North America, Western Europe, and Asia. They show how their ideas are being used in manufacturing, consumer products, financial services, and technology.

This is a small but dense book. It only covers 163 pages. But there are lots of ideas here, and some are very practical. For example, the authors found that 60% of fast growth companies have clearly articulated commitments to growth in writing. On the other hand, only 15% of slow growers have such written commitment.

Is your company following the practices of high growth companies? At the time of this writing, the United States is experiencing a sustained period of rapid expansion. A book that focuses on rapid growth suits these times to perfection.

But what do rapid growth companies do during inevitable times of economic downturn? Doorley and Donovan have done their homework. Based on a longitudinal analysis plus their own consulting experience, the authors found that those companies that fought hardest to sustain their commitment to growth survived the recessions in best shape. Some specific action steps included: substitution of relative growth during a period when absolute growth could not be achieved. They targeted growth at greater than market rates or faster than key competitors.

During bad times, high growth companies protected their long term investments in R&D, marketing, and employee development from the budget ax.

Maryanne Peabody & Laurence J. Stybel,Ed.D.
STYBEL PEABODY LINCOLNSHIRE Boston, MA
e mail: stybel@aol.com
The Board of Directors Career Resource Center: www.stybelpeabody.com
Tel: 781-736-0900 SINCE 1979,
HELPING COMPANIES ACHIEVE "SMOOTH TRANSITIONS" FOR VERY SENIOR LEVEL EXECUTIVES INTO, UP THROUGH, AND OUT OF SYSTEMS: retained search, coaching, and retained search.

SUSTAINING THE FAMILY BUSINESS
Marshall B. Paisner
Reading, MA: Perseus Books, 1999
ISBN: 0-7382-0114-6
REGULAR PRICE: $26.18
AMAZON/STYBELPEABODY PRICE: $18.20
YOU SAVE: 30%

The dreary statistics are familiar to all of us who work with family businesses: family businesses make up 90% of the 15 million operations in the United States. Only one-third make it to the second generation. And only 10% make to the third.

Given such depressing numbers, isn't it only logical that owners can easily be convinced by industry consolidators to turn their ownership into cash?

Marshall Paisner takes strong objection to this view.

Accountants can only consider market value when making pricing decisions. Family business owners need to take market value into account, but they also need to consider family values. In the long run, family value is more important. The goal of a family business is to live a desired lifestyle and give the next generation the opportunity to do the same thing.

And if you don't like Paisner's "soft" view of business, he argues that the return on a successful family business is almost always greater than the after-tax return of an estate produced by the sale of such a business.

Much of what Paisner says has been said elsewhere. This book is worth reading because Paisner is the Chairman of Scrub-A-Dub Auto Wash Centers, Inc., one of the world's largest car-wash chains. Founded in 1965, he has successfully transitioned the business to his two sons. And we can personally attest that Scrub-A-Dub is one of the best consumer products marketing companies we have ever seen! And we have seen many.

SUSTAINING THE FAMILY BUSINESS is a "How I Did It" book plus an integration of published research plus an integration with other family businesses around the country.

Topics include: Creating a Family Culture, Managing Family Conflict, Developing Tax Strategies, Developing Estate Strategies, When Selling Makes Sense, Navigating a Successful Sale.

For those of you who serve on Boards of family businesses, Paisner speaks positively about the use of true outsiders to serve on his Board of Advisors, how he selected them, and how he compensated them.

He has a section on what actions to take when spouses perceive that their mates are being unfairly treated. Such perceptions can poison both the business atmosphere and the family atmosphere. Paisner has a cogent prescription for what those steps ought to be.

Dr. Laurence J. Stybel & Maryanne Peabody
STYBEL PEABODY LINCOLNSHIRE
Sixty State Street, Suite 700
Boston, MA 02109
tel: 617-371-2990 e mail: stybel@aol.com
The Board of Directors Career Resource Center:
www.stybelpeabody.com

THE AMERICAN DESIGN ADVENTURE
Arthur J. Pulos
Cambridge, MA: MIT Press, 1988 ISBN: 0262-161060
STYBEL PEABODY/AMAZON PRICE: $60.00

Once upon a time it was possible to grab market share and hold it by offering the lowest price or having the greatest technology, or by having the best distribution system on the planet.

No longer.

Price, technology, and distribution appear to be transitory advantages at best. Without price, cutting-edge technology, and a great distribution system your business will surely fail. But will they ensure long-term success?

Great product design can be a factor to keep customer mindshare long term.

IBM understands this in its design of the personal computer. Packard Bell, however, does not. Think of the distinctive brown color of United Parcel Service, the shape of a Jeep, or the classic Bau Haus Chair. In 1956, Charles Eames designed a lounge chair for the Herman Miller Company. More than 100,000 of these leather and wood two piece units have been sold and continue to be sold. (You probably don't know what is it called, but you have seen this chair in many, many homes).

Arthur Pulos provides you with a richly photographed review of America's premier design products. It is a great business gift for a friend or a way to stimulate your own creativity.

Its most important value for a member of a Board of Directors is to help ask the right questions about product design.

The book ends with an intriguing question that Board members should think about as members discuss new products: as separate nations become one, can we achieve a truly global design for our products? Coke and McDonald's have achieved this universality. On the other hand, there may be no single mass market for our products. Will we require an infinite variety of demographic groups that determine final configurations? For example, Virginia Slims is designed for a very specific market.

Maryanne Peabody & Laurence J. Stybel
STYBEL PEABODY LINCOLNSHIRE
Sixty State Street Boston, MA 02109 Tel: 617-371-2990
E mail: stybel@aol.com
The Board of Directors' Career Resource Center: www.stybelpeabody.com.

SHAKESPEARE: The Invention of the Human
Harold Bloom
New York: Riverhead Books, 1998
ISBN: 1573 221 201
Regular Price: $35.00 Stybel Peabody/Amazon Price: $24.50
You Save: $10.50 (30%).

The Board of Directors Career Resource Center (www.stybelpeabody.com) usually reviews books about corporate strategy, corporate governance, and senior level career management. Why should a book about Shakespeare's plays be in our line up?

At a professional level, Bloom sensitizes the reader into understanding that Shakespeare is a master, timeless psychologist who still has much to teach us.

Here is but one example: I was working with a CEO who had a brilliant subordinate. But that subordinate appeared to delight in creating chaos in the office. The CEO was failing in attempts to rehabilitate this brilliant individual. The CEO could not comprehend why this subordinate would spend the time and energy on chaos-producing behavior. The CEO's image of himself was as someone who knows how to master chaos.

Rather than get into a lengthy discussion with my client, I simply asked the CEO to re-read Shakespeare's "Othello" and pay attention to the character of Iago. Such people do exist in our own companies! Not only was my client able to appreciate the Iago-like qualities of the subordinate, but he also comprehended his own, unflattering Othello-like failings.

Bloom believes that Shakespeare was THE master psychologist of the Western World in addition to being THE major poet and dramatist.

Indeed, Bloom makes the case that our core Western notions of ourselves are essentially inventions of Shakespeare. What other author before Shakespeare created characters that simultaneously value and deplore themselves? Shakespeare took literature beyond eloquent caricatures. Our concept of personality is Shakespearean more than it is Freudian.

SHAKESPEARE: THE INVENTION OF THE HUMAN makes a great gift. It can simultaneously be used as a reference book when thinking about specific plays or as a text for reading about Shakespeare.

But I think of the book as a core book about understanding people.

Ask me "Why Shakespeare?" and I will say. "Who else is more worthy of your reading time?"

Laurence J. Stybel
STYBEL PEABODY LINCOLNSHIRE
Boston and 26 cities in five countries
Tel: 617-371-2990
E mail: stybel@aol.com
The Board of Directors Career Resource Center: www.stybelpeabody.com

SMART ALLIANCES: a practical guide to repeatable success
John R. Harbison and Peter Pekar, Jr.
San Francisco, Jossey-Bass, 1998
ISBN 07879 43266
List Price: $35
Stybel Peabody/Amazon Price: $24.50 You Save: $10.50 or 30%

Booz.Allen & Hamilton consultants John Harbison and Peter Pekar make a compelling case for the following:

  1. (1) Strategic alliances have consistently produced a return on investment that is 50% more than the average on investment that the companies produce overall.
  2. There is a positive correlation between experience in alliances and return on investment per alliance. In other words, there is an experience curve that one needs to go through.

The ambitious goal of this book is captured by its title: provide leaders with a repeatable, pragmatic framework for alliance planning and implementation. Through this framework, the experience curve might be shortened.

The framework is based on the authors' consulting experiences as well as surveys of more than five hundred major corporations. From a Board of Director perspective, alliances create value but how the investment community reacts to alliances will vary depending on the structure of the alliance and the industry within which the alliance is formed. Pages 85-86 offer a useful framework for Board members when questioning CEOs about alliance efforts. Based on our own experiences in developing an alliance of international firms offering senior level career consulting services as ours, we think the book is a useful addition to your bookshelf.

But it is a dry, abstract book.

In relation to our own experience, we think the authors did not devote enough space to the unanticipated pleasant and unpleasant conceptual leaps that one must make in day-to-day alliance work. The term 'transfer of technology' does not capture these unanticipated leaps. For example, we had certain expectations about an alliance we formed in 1987.

These expectations materialized but only weakly. On the other hand, the alliance created opportunities we had not planned for. These opportunities included leveraging our participating in the original alliance to yet another alliance that was even more fruitful. The alliance forced us to create new services and gained leverage in areas unrelated to the original alliance objectives.

We call these events happy surprises.

Both the happy surprises and the unhappy surprises are worthy of more mention. They are one of the reasons to enter alliances.....and one of the reasons to be careful about them!

STYBEL PEABODY & ASSOCIATES
Sixty State Street Suite 700
Boston, MA 02109
tel: 617 371 -2990
e mail: stybel@aol.com
THE BOARD OF DIRECTORS' CAREER RESOURCE CENTER: www.stybelpeabody.com
HELPING COMPANIES BETTER MANAGE KEY 'MANAGEMENT TRANSITIONS:'
retained executive search, coaching, and retained search.

Christina Maslach and Michael P. Leiter THE TRUTH ABOUT BURNOUT San Francisco: Jossey-Bass, 1997
ISBN 0-7879-0874-6
REGULAR PRICE: $25.00
STYBEL PEABODY/AMAZON PRICE: $17.50 YOU SAVE: $7.50 (30%)

THE TRUTH ABOUT BURNOUT is that it is not an imperfection of the individual employee. Burn-out is a symptom of an organization in trouble.

Christina Maslach is Professor of Psychology at the University of California at Berkeley and the creator of The Maslach Burnout Inventory. Michael P. Leiter is Dean of the Faculty at Acadia University in Nova Scotia, Canada.

The traditional perspective about burnout is that it is an individual problem. The natural solutions to this perspective focuses on providing courses on stress management, bringing in Employee Assistance Programs, and doing a better job of selecting in people who can handle stress.

The authors argue that these interventions are positive but incomplete.

If employee burnout really is a symptom of an organization in trouble, then the interventions need to be organizational in context. They begin by analyzing job-person fit from the following dimensions: workload, control, rewards, community, fairness, and values. There is a case description of a 750 bed hospital which illustrates these concepts in practice.

As it stands, the book makes its case well and provides concrete suggestions. The Maslach Burnout Inventory would appear to be an excellent tool for use in organization development interventions. The authors clearly have a solid grasp of their subject.

But will CEOs take employee burnout seriously?

For CEOs to take employee burnout as seriously as Maslach and Leiter would like, we think there needs to be some recognition at the Board of Directors level that this is an important issue.

In our work with Boards of Directors, we seldom see that recognition.

Future editions of THE TRUTH ABOUT BURNOUT would benefit from more discussion about how burnout effects share holder value. Only five pages out of 178 focus on how burnout impacts the financial performance of a company.

To get CEOs to take burnout seriously, the Compensation Committee of Boards would have to add that a percentage of each CEO's bonus pay be determined by positive or negative deviation from some desired employee turn-over statistic or some desired customer satisfaction statistic.

As it currently stands in North America, few companies even bother to collect employee turnover and customer satisfaction statistics. Few companies bother to collect the true costs of recruiting/training new employees. If it is not important enough for the Board of Directors to measure, then why should the CEO assume that it counts?

That's a problem we would love to see Maslach and Leiter address.

Fortunately for them, a model exists. When a Board is serious enough to count diversity as a component of a CEO's variable compensation, companies often seem to take diversity seriously!

And if the Board does not count it important enough to be part of the CEO's variable compensation system, then the company is apt to engage in more talk and training than action.

But THE TRUTH ABOUT BURNOUT is that it is well worth having on your library shelf.

If you have any reactions/comments, please make them to stybel@aol.com. We will add them to our review of this book.

Laurence J. Stybel,Ed.D. & Maryanne Peabody
STYBEL PEABODY
Sixty State Street, Suite 700 Boston, MA 02109
tel: 617 371 2990 e mail: stybel@aol.com

Ford Harding. RAIN MAKING: the professional's guide to attracting new clients. Holbrook, MA: Adams Media Corporation, 1994
ISBN" 1-55850-420-6.
Regular Price: $12.95
Stybel Peabody/Amazon.Com Special Price: $10.36
You Save: $2.59

What is a rainmaker?

Rainmakers have the ability to gain access to decision makers while they have high concern about confidentiality and are still in the process of formulating their needs around specific problems.

This access means knowing key people so well, they feel comfortable confiding in you.

One has to be a good sales professional to be an effective Rainmaker. But one need not be a Rainmaker to be an effective sales professional. Sales and Rainmaking are not necessarily the same thing, even though both contribute to the revenue side of the accounting equation.

At Stybel Peabody, we value this book so highly we use it as the basic text in our work with professional service providers who seek to develop rainmaking skills.

The title of this book, however, is somewhat misleading.

Ford Harding has written a first rate "how to" book on attracting new clients via all kinds of sales and marketing techniques. Rainmaking is only one of those techniques.

One of the book's strengths is that Ford Harding doesn't "preach." He talks about his own failures as well as his successes. Harding integrates his own experiences with survey research he has done with practitioners. Finally, his approach is contingency-based. By contingency, we mean that he provides readers with descriptions of different client development techniques available and some frameworks when tech technique is appropriate or inappropriate.

We'll be surprised if you don't get at least three good, useful ideas from this book. If you have any reactions to the book please write them to stybel@aol.com and we will post them on this website.

If you have any reactions to the book please write them to stybel@aol.com and we will post them on this website.

Cliff Hakim. WE ARE ALL SELF EMPLOYED: the new social contract for working in a changed world. San Francisco, CA: Barrett-Koehler, 1994. ISBN 188 105 2478
LIST PRICE: $24.95
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YOU SAVE: $7.48 (30%)

The title says it all. The theme is to develop a mentality of self- employment, regardless of whether you are actually self employed or currently working for someone else.

Cliff Hakim probably wrote this book in 1993, when the message might have been startling to some of us.

Five years later, the message is no longer novel.

I will cite two examples:

Most job search books talk about networking in terms of a "random walk." You know the drill. It goes something like, "I'm not looking for a job. I'm just looking for opportunities to talk with people who might be able to tell me what is going on in sales." Cliff would propose standing that nonsense on its head with what he calls the "I Am Looking For" summary.

Another example of Cliff's ability to provide practical yet poetic advise is his suggestion to forget about career ladders. With ladders, up is the only way to advance. Cliff argues for the career lattice. The image is both simple and powerful.

Just to give the book even more grounding, the end of it contains mini biographies of some of the people who have turned their professional lives into powerful career lattices. It was fun to read because I know and admire some of the people he mentions!

Laurence J. Stybel,Ed.D. THE BOARD OF DIRECTORS RESOURCE CENTER (www.stybelpeabody.com) Boston, MA
e mail: stybel@aol.com

M. Wheatley.LEADERSHIP AND THE NEW SCIENCE.
Berkeley: Ten Speed Audio, 1994. ISBN 157 453 0178
List Audio Price: $16.95
Board of Directors Resource Center/Amazon Price: $11.86 You Save: $5.08 (30%).

I don't like this title. It is too bland.

The heading of Chapter Two of the book would have been a more meaningful and accurate title: "Newtonian Organizations in a Quantum Age."

Wheatley says that many of our models and metaphors about effective management are explicitly or implicitly derived from a Newtonian perspective. She says:

"The universe that Sir Isaac Newton describe was a seductive place. As the pendulum swung with perfect periodicity, it prodded us on to new discoveries. As the Earth circled the sun, we grew assured of the role of determinism and prediction. We absorbed expectations of regularity into our very beings. And we organized work and knowledge to fit this universe.

"It is interesting to note just how Newtonian most organizations are.

"Until recently, we really believed that we could study the parts to arrive at knowledge of the whole. We have reduced and described and separated things into cause and effect, and drawn the world in lines and boxes.

"A world based on machine images is a world filled with boundaries."

This essentially Newtonian view of management conflicts with the current knowledge we are deriving from quantum physics and chaos theory. In years to come, the metaphor for management will be chaos theory and quantum physics. This elegant book helps the novice manage begin to understand these complex ideas in terms of how they can influence your perspective about the management of people and events.

This book is a testament to Wheatley's command of writing, command of the scientific subjects she explains, and her practical experience in organization behavior. She pulls of a complex exercise off with grace, interest, and practicality.

We are selling the audio tape, but you can go into www.amazon.com to order the book itself. The book has some wonderful pictures which illustrate chaos theory.

Laurence J. Stybel. Board of Directors Resource Center, www.stybelpeabody.com tel: 617/736-0900 Boston, MA USA

BUILT TO LAST: successful habits of visionary companies
New York: Harpercollins, 1994 ISBN: 0887 3067 13
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You Save: $7.50 (30%)

FAMILY BUSINESSES ARE BUILT TO LAST By Richard L. Narva, Esq.

Attorney Richard Narva is co-founder of one of the nation's premier consulting firms specializing in helping family businesses. His perspective his shaped by the fact that he grew up in a family business and managed one. Richard can be contacted at 781/444-9200.

Some family businesses are built to last. Many are not. In my view there are two clear indicators of whether a family business is built to last: its balance sheet and its vision statement. My experience tells me that when the balance sheet of a family business is relatively unleveraged because the owners reinvest the bulk of their profits consistently each year, they are voting with their dollars to build a family business that will endure. I do not question the choice of business owning families who choose to maximize withdrawals of cash for personal consumption. I simply argue that their companies are built to serve the current generation of owner/managers--a legitimate choice, but one which is inconsistent with an enduring family controlled business enterprise.

My primary purpose in this brief article, however, is to address the vision of family businesses that are managed to endure for generations. In their classic text, Built to Last: Successful Habits of Visionary Companies, two Stanford Business School professors, James Collins and Jerry Porras, compare and contrast 18 of America's large corporations who dominate their industries with their largest (and less successful) competitors. In the process of a six year long empirical study which compared truly great companies who became industry leaders and their less successful competitors, such as Marriott with Howard Johnson, Motorola with Zenith, Hewlett-Packard with Texas Instruments, the authors concluded that the primary distinguishing characteristic of the truly great companies (which their competitors lack) is that these truly successful firms "...[P]reserve a cherished core ideology. Put another way, they distinguish their timeless core values and enduring core purpose (which should never change) from their operating practices and business strategies (which should be changing constantly in response to a changing world)."

The book reaffirms the competitive validity of being a values driven enterprise and offers abundant research based, practical recommendations for owners who wish to create a business that is "built to last." I recommend this book to all of the readers of our newsletter and we have copies available upon request for our clients.

Rather than give a more comprehensive review of the book, I want to point out something that intrigued me about the list of 18 companies selected by the authors as paradigms of visionary companies, a point not made explicitly by the authors in their text: that is the extent to which family control is a characteristic of these now huge and hugely successful visionary companies. Of the 18 companies, four founding families (whose patriarchs were the architects of their vision) continue to control the companies through ownership: Ford, Marriott, Nordstrom and Wal-Mart. Of these, Nordstrom and Marriott retain family CEO's and Ford appears to be grooming a fourth generation member for that position. Of the remaining 14 companies, four others enjoyed at least two generations (and many decades) of family leadership in the CEO position: IBM, Johnson & Johnson, Merck, Motorola (where a third generation Galvin is now CEO).

My purpose in highlighting this observation is that at Genus we find that most of our clients are truly values driven organizations, although often the enterprise's core values are assumed rather than articulated. Moreover, these core values are often rooted in the multigenerational history of the founding family. We believe that these family businesses have, therefore, a running head start on the journey of becoming visionary companies that are "built to last." We encourage you all to consider the wisdom in this powerful book.

TUESDAYS WITH MORRIE: an old man, a young man, and life's greatest lesson.
New York: Bantam Doubleday Dell Publishing Group, 1997. ISBN 0-385-48451-8
List Price: $19.95
Board of Directors Resource Center/Amazon Price: $13.97 You Save: 30%

Peter Rabinowitz of PAR Associates of Boston gave me this book as a gift. I passed it along to my wife as a gift. I am sure she will pass it along as a gift as well.

Peter called the late Professor Maurice Schwartz of Brandeis University someone "you know but didn't know you knew."

A victim of amyotrophic lateral sclerosis (ALS) or Lou Gehrig's disease, he was interviewed several times by NIGHTLINE host Ted Koppel on what it is like to die.

This book is an extension of the Kopppel interviews, lovingly and beautifully written by one of Professor Schwartz' former Brandeis students.

Who would want to spend time on such a depressing subject?

Professor Schwartz said, "Every one knows they are going to die, but nobody believes it."

This book is about learning to really, really believe in your own death and how it can make living the remainder of your life a more vibrant experience.

Peter Rabinowitz passed on Morrie Schwartz' wisdom wisdom to me, and I am passing it to you.

Laurence J. Stybel
THE BOARD OF DIRECTORS RESOURCE CENTER Boston, MA
WWW.STYBELPEABODY.COM
e mail: stybel@aol.com tel: 781/736-0900

David Savageau and Geoffrey Loftus
PLACES RATED ALMANAC
David Savageau and Geoffrey Loftus.
New York: MacMillan General Reference, 1977
ISBN: 00286 12337 List Price: $24.95 Board of Director Resource Center/Amazon Price: $19.96 You Save: $4.99 (20%)

For a senior executive contemplating relocation, this is an outstanding reference book---with one caveat.

WHAT IS GOOD ABOUT THIS BOOK

350 statistical metropolitan areas are compared on such issues as job markets, cost of living, housing markets, educational standards, crime rates, health care, recreational facilities, climate, etc.

The information is presented in an unbiased manner.

ONE CAVEAT

The last chapter of the book sums up all the different factors and statistically derives the top ten areas to live.

The assumption behind the last chapter is that all people will give all factors equal weight.

That assumption is bogus, to say the least.

For example, with a sixteen year old daughter we would rate educational facilities higher than transportation. On the other hand, an 80 year old retiree might rate transportation and health resources higher than education!

Skip the last chapter and focus on the facts in the rest of this great reference book.

If you order this book, make sure you are getting the latest latest edition of PLACES RATED ALMANAC.

Harry Beckwith
SELLING THE INVISIBLE: a field guide to modern marketing by , Jeffrey Jones (Narrator)
New York: Time Warner Audio Books, 1997
ISBN: 157 0424 713
Regular Price: $12.98 Board of Director Resource Center/ Amazon Price: $9.09 You Save: $3.89 (30%)

There are few of us who would NOT benefit from listening to Harry Beckwith's wisdom on marketing and selling. And there are few of us who are NOT selling intangibles these days. Even widgitt companies are selling intangibles.

Beckwith makes a good case that marketing is not a function. Marketing is what a business is all about. Every function is engaged in marketing or should be.

He also says that for those of us in professional services industries, our biggest competitors are not our competitors. Our biggest competitors are our prospects!

When a prospect meets you, there are three options for the person to do other than retain you. One is to use a competitor's service. A second is to not do do anything at all. A third option is for the prospect to perform the service him/herself.

Two out of the three negative events involve prospects themselves and not competitors.

Beckwith's ideas on how to effectively deal with your REAL competitor make this tape a worthwhile investment.

Kalman M. Heller
STRATEGIC MARKETING: how to achieve independence and prosperity in your mental health practice.
Sarasota, Florida: Professional Resource Pres, 1977
ISBN 1-56887-0310-0

The great value about Kal Heller's book is that he doesn't just teach how to market a health care professional service, but he also lives it. Heller is President of Needham Psychotherapy Associates of Needham, MA, a group practice with seventeen multi-disciplined professionals.

The subtext of Heller's book is how to run a successful solo or small group practice when everyone says it can't be done anymore. His chapter on selecting a practice strategy is of particular value. This book is designed for the professional service professional who thinks of "marketing" as another word for "hustling." Cal shows that it is indeed a bit of hustling. But there is far more to it than that. He then proceeds to give examples of his own private practice and group management experience.

Gerald M Weinberg
SECRETS OF CONSULTING
Dorset House ISBN 0932-633-013 $29.95

Twelve percent of our clients are novice consultants. We give them this book as their introduction to the practical aspects of business development. Weinberg is a technology consultant. When you read it, you will initially think, "Is This Guy Pulling My Leg?" Consider this a very serious and practical book. Weinberg simply enjoys conveying serious, practical messages in ways that also make you smile.

Nigel Viney
BLUFF YOUR WAY IN CONSULTANCY.
London: Ravette Books ISBN 0948 456 40X
Regular Price $5.95. CAREERLINC.COM Price $4.76
You Save 20%

John Courtis
BLUFF YOUR WAY IN MANAGEMENT.
London: Ravette Books ISBN 0948 456 752
Regular Price $5.95. CAREERLINC.COM Price $4.76
You Save 20%

Maryanne and I ran into the Bluffer's Guides while at Harrod's. A lovely, funny satire on management and consulting "How To" books. We give them as Graduation Gifts to our retained search clients!

If you are not a client of ours, then give yourself a present.

Don Tapscott
THE DIGITAL ECONOMY
NY: McGraw-Hill, 1996
ISBN 0-07-063342-8
$11.96 for CAREERLINC.COM readers--a 20% savings over the regular price.

IF YOU PLAN TO BE ALIVE DURING THE NEXT DECADE.....

Lewis F. Platt, Chairman of Hewlett-Packard Company, says "If you plan to be alive during the next decade and want to understand the world you'll be living in, you should definitely read this book. It will scare you and excite you. Best of all, it will teach you how to succeed in a dramatically different environment."

Thomas J. Stanley,Ph.D. and William D. Danko, Ph.D.
THE MILLIONAIRE NEXT DOOR
Marietta, GA: Longstreet Press, 1996
ISBN: 1-56352-330-2

One half of America's wealth is owned by 3.5% of the population. Should it be your business to know more about this elite group?

Bill Danko is Chair of the Marketing Department of the State University of New York at Albany. Tom Stanley is a researcher and lecturer who studies the affluent. This book is based on two decades worth of surveys and interviews, some of which is available nowhere else.

THE MILLIONAIRE NEXT DOOR provides a measure of rigor to an important subject. While keeping their eyes on that critical 3.5% group, they operationally define people as Prodigious Accumulators of Wealth (PAW), Average Accumulators of Wealth (AAW), or Under Accumulators of Wealth (UAW).

Their book is an analysis of the lifestyles of PAWs and contrasts it with UAWs. They thus provide a useful psychological dimension to segment this elite group.

Beyond it, they raise disturbing implications about how the commendable lifestyles of adult PAWs may set the stage for their children to become UAWs.

The inevitable result is that most families of wealth lose their wealth within two to three generations.

At STYBEL PEABODY, we do career planning for adults and children in wealthy families. We find their perspective both useful and clinically valid.

Wealthy families are tasked with passing on wealth to the next generation.

Beyond that, they need to find a balance between passing on a spirit of philanthropy with a strong savings and work ethic. We think few wealthy families meet these necessary challenges.

Regular Price: $22.00
YOUR PRICE: $15.40 (You Save 30%)

John Carver
BOARDS THAT MAKE A DIFFERENCE
San Francisco: Jossey Bass, 1997.ISBN 1555 422 314

John Carver consults and writes on Board issues, with a particular emphasis on nonprofit and public organizations. He calls himself "The World's Most Published Author" on the design of governance. This book is a manifesto of how Carver believes boards ought to work. Unfortunately, there are few illustrations of how these ideas have been carried out in practice or could be carried out. In general, I found it full of ideas but lacking in detail.

Howard Putnam.Reno
THE WINDS OF CHANGE
Howard D. Putnam Enterprises, 1995 ISBN 09637

Putnam was CEO of the both Braniff and Southwest Airlines. During the period covered by this book, the airline industry went from being regulated to de-regulated.

Putnam's challenge was to (1) cut costs (2) increase perceived customer value and (3) change the corporate culture. It is an easy read and a useful story for CEOs of industries currently going through de-regulatory crisis.

Tom Gorman
MULTIPRENEURING
Fireside Press, 1996.
ISBN: 0684811804

Do you think a diversified portfolio is a reasonable strategy for retirement planning?

What about developing a portfolio of income streams from the work you do?

Tom Gorman wrote MULTIPRENEURING while engaged as a middle manager for a consulting firm. He thus has lived the model he writes about.

This book is based on interviews with more than forty multipreneurs. Tom is an outstanding writer and the suggestions he provides are VERY practical. He has given talk to our clients in Boston. Tom is a magnetic speaker.

This book is actually a basic text in how to set up your own business and start producing revenue.

It is recommended for consultants with less than five years of experience.

List: $11.00; CARERLINC.COM Price: $9.90--YOU SAVE: $1.10 (10%).

John Lucht
RITES OF PASSAGE AT $100,000 TO $1 MILLION+: YOUR INSIDER'S LIFETIME GUIDE TO EXECUTIVE JOB-CHANGING AND FASTER CAREER PROGRESS IN THE 21ST CENTURY.

ISBN: 0942785304

This is the book we use with our senior clients. We don't agree with everything Lucht has to say, but we agree with enough of it to use it as the basic job search text book. Lucht is an executive search consultant out of New York City. His perspectives on recruiters and direct mail are dead on target!

This edition is substantially revised from the original one. We find THE NEW RITES OF PASSAGE to be a more thoughtful perspective. Your local library may have RITES OF PASSAGE on its shelves. Make sure it is the same one we are selling here at a discount.

The book regularly sells for $29.95, but we are able to provide CAREERLINC.COM readers with a 40% discount. Your cost for the book is $17.97. This is a savings of $11.98!

David Stiebel
WHEN TALKING MAKES THINGS WORSE!
an audiotape
ISBN 1888-430435 List $24.95
CAREERLINC.COM Price: $22.45

All of us have experienced wasted time and wasted money with team building efforts.

David Stiebel would suggest that many organization development efforts are based on an assumption that any communications problem is a problem of misunderstanding. If the parties could clearly communicate, things would work smoothly.

Stiebel argues that some failed OD interventions are really not misunderstandings. The parties actually understand each other well. The problem is one of disagreement. And in a situation of disagreement, traditional team building exercises may only make things worse.

Stiebel discusses how to diagnose disagreements versus misunderstandings. He then goes on to describe how to handle each category.

David Stiebel teaches at the University of California at Berkeley. He also consults to corporations and governments on conflict resolution. Clients include

Xerox and Lockheed.

ABC Television's Rich Walcoff says: "I have used the tools in this book every day since I read it. Even with my kids. What's amazing is that this information just isn't available anywhere else. This is an extraordinary book."

We are featuring the audiotape for CAREERLINC.COM browsers at a discount of 10%. You can also purchase the book through WWW.AMAZON.COM.

Thomas B. Wilson.
INNOVATIVE REWARD SYSTEMS FOR THE CHANGING WORKPLACE.
(New York: McGraw-Hill, 1994) ISBN 0070709602

"EXECUTIVE PAY--IT'S OUT OF CONTROL."

"By relying heavily on stock options, many companies make exorbitant payouts for so-so performances, dilute real shareholder return, and glorify CEOs at the expense of other employees.

The bottom line: don't confuse a bull market with managerial genius!"

*

The above statement appeared on the front page of BUSINESS WEEK ( April 21, 1997). It is a fitting way to introduce INNOVATIVE REWARD SYSTEMS FOR THE CHANGING WORKPLACE.

The function of the Compensation Committee of the Board to make sure that the CEO and the top management team are properly and effectively compensated. The BUSINESS WEEK article strongly suggests that members of these Committees are asleep at the switch. Are you?

Tom Wilson is an internationally recognized remuneration guru. Beyond that, his clients include both public Fortune 500 and private family businesses. He understands both worlds.

Most compensation books focus on the topic as part of managerial control systems, marketplace practices, or legal requirements. And most Board of Directors members we observe tend to ask compensated-related questions along these three lines. This book focuses on compensation as the missing link in the process of managerial change.

I like Wilson's chapter on measuring customer focused performance. Most approaches are simplistic or control driven. This chapter redefines the purpose of performance measures and outlines a process for developing measures that are meaningful. He also has a separate chapter on reward systems for emerging companies.

Tom Wilson is one of the most creative and practical thinkers in the field of compensation today. I have known Tom for twenty four years and he is the god-father of my daughter. You MIGHT say I am biased, but you WON'T if you read his book.

The book sells for $32.95. CAREERLINC.COM readers can get the book for 10% less. Your cost is $29.66.


Alan Weiss.
MILLION DOLLAR CONSULTING.
New York: McGraw-Hill, Inc.,1994 ISBN 0070691789

We buy so many copies of MILLION DOLLARS CONSULTING for the use of our retained search clients, Alan Weiss called us up to invite us for lunch!

We visited Alan's home in Rhode Island. It overlooks the ocean; this modern home has an outdoor pool that snakes indoors to end up in the living room. He then showed us around the neighborhood in his Mercedes Benz convertible.

Alan wanted to make a point with us.

When Alan writes about MILLION DOLLAR CONSULTING, he actually has used his own principles to his advantage!

Alan''s book challenges many of the conventional wisdoms of how you build a professional service practice. We think he is on target.

This book is not a good introduction to consulting. It is best suited for the consultant who has become reasonably successfully and now wishes to get to the next level of success.

The regular price of this book is $14.95. CARERLINC.COM readers can obtain it for a 10% discount. The price is $13.45.

Kelin E. Gersick et al
GENERATION TO GENERATION: life cycles of the family business
Boston: Harvard Business School Press, 1997 ISBN:0-87584-555-X

Frank Perdue of Perdue Farms calls this book a "Rand McNally for family businesses.... Participants will find this book an invaluable road map and guide."

Many of our CAREERLINC readers are involved in family businesses as Board members, owners, or consultants. The interdisciplinary authors of this book attempt to provide a comprehensive developmental overview of the dynamics of family businesses as these organizations move through their life cycles. The book is based on more than a decade of research and consulting with hundreds of family businesses around the world.

Anyone involved in family businesses knows that there are unique issues of organizational structure, leadership, strategy, financial management, and succession planning. Applying businesses models appropriate to public companies can be grossly inappropriate. This book provides a framework to show what works.

It is important to understand that family business does not necessarily mean small business. One third of the Fortune 500 are family businesses.

Family business does not necessarily mean insignificant business. Family businesses generate half of the U.S. gross domestic product and employ half of its workforce. In Asia, family firms hold dominant positions in all of the most developed economies, except China. In Latin America, family firms are the primary form of private ownership.

Your price will be $26.96. To order, click on the authors names.

Margaret Riley, Frances Roehm, Steve Oserman, Public Library Association


The Guide To Internet Job Searching
Vgm Career Horizons, 1996, ISBN 0844281972

"Using powerful electronic job search technologies, anyone with a computer can benefit from the power of on-line bulletin boards, job listings, recruiters, discussion groups and resume posting services."
Your price will be $13.95. To order, click on the authors names.

Robert P. Bauman, Peter Jackson, Joanne T.Lawrence
FROM PROMISE TO PERFORMANCE: a journey of transformation at SmithKline Beecham. Boston: Harvard Business School Press, 1997. ISBN #087584343.

THE INSIDE STORY OF A SUCCESSFUL MULTI-NATIONAL MERGER

One of the most successful transnational mergers of all time was the transformation of SmithKline Beckman and the Beechman Group into SmithKline Beecham, a leading healthcare company.

Unlike many books on corporate mergers, this book was written by the key players in the transformation itself--the former CEO of SmithKline Beechman, the former head of Human Resources at Beecham and the former director of communications/investor relations at the company.

To give you a sense of the magnitude of this task, SmithKline Beechman has 52,000 employees around the world.

These practitioners discuss (1) how to implement major change while simultaneously tending to the needs of the ongoing business within an industry in flux (2) how to manage the different corporate and cultural styles of companies from two very different countries (3) how to get critical "buy-in" (4) how to utilize external consultants in the merger process (5) how to manage CEO succession.

Board Level Career Resource Center readers qualify for a 10% discount off the regular price of $27.50. Your price will be $24.75. To order, click on the authors names.

Carolyn Kay Brancato, Institutional Investors And Corporate Governance: best practices for increasing corporate value. Irwin Professional Publishing, 1997. ISBN 0786305584. ($45).

A GUIDE FOR INSTITUTIONAL INVESTORS INTERESTED IN GOVERNANCE ISSUES

Carolyn Kay Brancato is Research Director for Corporate Governance and Strategy at The Conference Board. The book details how companies make allies out of institutional investors.

Board Level Career Resource Center readers get a 10% discount off the regular price of the book.

Lester C. Thurow,The Future Of Capitalism: how today's economic forces shape tomorrow's world. New York, William Morrow and Company, Inc. ISBN 0688129692

LESTER THUROW EXPLAINS WHERE ARE WE GOING................

Professor Thurow was the Dean of Massachusetts Institute of Technology's Sloan School of Management and one of the few economists I know who writes well and has genuinely interesting things to say!

This book is an expansion of Thurow's Castle Lecture's, delivered at Yale University in 1995/1996. His central message is that Capitalism's competitors--fascism, socialism, and communism--are all gone. If other economic systems have lost, does it necessarily mean that capitalism has won?

Thurow points out that real economic growth, full employment, financial stability, and rising real wages seem to be vanishing just as the enemies of capitalism vanish. Using the metaphor of plate tectonics, Thurow shows how key "plate tectonics" are shifting to create new ground under our economic feet and void where once there was certainty.

Our technology has adjusted to these new realities and is indeed one of the key plate tectonics. But our values as a society have yet to grasp the implications.

Robert K. Mueller
Anchoring Points For Corporate Directors
(Westport, CT: Quorum Books, 1996) ISBN 1567 200 680

Bob Mueller uses personal experience to illustrate points regarding the unwritten elements of conduct and effectiveness of the member of a board of directors.

Ralph D. Ward
21st Century Corporate Boards John Wiley & Sons. ISBN 0471156795

"Ralph Ward grabs the reader from page one with a Barbarians at the Gate style tale of the board revolution at General Motors. "

 

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