Monday, August 31, 2009

CEO Sissy Factor

The Trouble Your Business School Buddies and Networks Can Get You Into

Recently, I was having dinner with the leadership of a large industrial company and the dinner table discussion turned to crises, reputation, and other kinds of problems I come across in my work. The CEO, someone I just met, asked a really interesting question. “What common leadership factors or threads do you find that might cause the crises management failures you wind up handling?”

While all crises have unique patterns, this is a Chief Executive Officer asking, and his question is really about people like himself. Here’s what I told him and his assembled managers:

There are three common behaviors among top leaders, it seems to me, that either cause, complicate, or contribute to management failures and make problems or crises worse.

1. Predecessor Paralysis

The CEO defers taking action, primarily because it will unduly embarrass or otherwise reverse or repudiate something a key predecessor has accomplished or put in motion. The thinking is, apparently, that the CEO “wouldn’t want to make their predecessors look silly.”

2. The Staff Straightjacket

The senior staff can’t agree on what an appropriate plan of action might be. They seem torn between neither wanting to offend key players or key peers, nor wanting to put themselves in any particular danger. You’ll hear the refrain, “You’ll make us all look bad, probably for no reason.”

3. The Peer or Pal Sissy Factor

This is when a buddy, peer, or pal calls and says, “Don’t give in to those buggers, you’ll look silly and foolish, and you’ll make it much, much harder for the rest of us. Besides, if you’re wrong about this, you’ll make us all look bad and set a precedent we’ll all have to live up to or live down.”

Bonus: The Jerk Factor

Some years ago, I had a client who pled guilty to hundreds of felonies. I worked very closely with the lawyers and corporate monitors to help this company resolve its issues, and to prepare for their new life and the impact of the guilty plea. We briefed managers on the company’s guilty plea the previous afternoon in Boston, by reading and then explaining the plea agreement.

Even after reading and hearing the plea agreement read out loud, the first question from the audience was for “the real story of what happened.” So I spent a little bit of time talking about the importance of understanding that the plea agreement is the story and the new tough rules, regulations, and sanctions under which the company would be operating for a while. At which point, the new president of the company (who really didn’t like me anyway) stood up and remarked, for all to hear, “Jim, when you are talking, it seems a bit like Sunday school around here.”

I responded by saying, “Bill, if my company just pled guilty to nearly three hundred felonies, I would think a little Sunday school is in order.” He didn’t laugh, although almost everyone else did. He was gone in four months, and I still occasionally consultant with the company after all of these many years.

Labels: , , , , , , ,

Friday, August 7, 2009

Radical But Necessary: A New Way Forward

The 13 Commandments of Economic Change in America

Ever notice the formula for moving ahead in America? Catastrophe + democracy = progress.

It takes catastrophe to force democracy forward: Black Friday; Pearl Harbor; 9/11; Hurricane Katrina; and the market crash of October 15, 2008, so many were and remain hurt so desperately by so few.

It’s far more than a crisis management or crisis communication problem. The incompetence, ignorance, and political paralysis of government, combined with the implacable gall of America’s Greed Team—real estate, banking, Wall Street, insurance, and the commercial credit industry—has created a fragile but powerful epiphanal moment when real change in America’s economic structure and destiny is possible.

We have a brief chance to recalibrate and reset crucial economic processes that will help us deter, detect, and prevent similar situations from occurring in the future. How will we capture this moment? I believe that what will catalyze the opportunity for change is America’s growing revulsion toward Wall Street and the major economic and financial engines upon which we have relied for the last couple hundred years, and who financially robbed, raped, kicked, and stabbed so many, so easily, for so long.

Since an outbreak of business and leadership integrity is highly unlikely, and President Obama’s amorphous and nebulous quest for “change we can believe in” notwithstanding, Americans now realize that those in charge of our economic institutions (even the “new” people) are the same folks who brought us this catastrophic mess in the first place, and they are simply incapable of getting us out. We need a new strategy, a new roadmap. In the coming days, I’ll be making 13 demands for change that radically depart from the failed old formulas and arrogant greed perpetrators of yesterday and today. Here’s a sample:

  1. Tie all investment transactions, of every kind, to real dollars (or currencies) and common sense.
  2. Prohibit and eradicate all transactions that fictionally expand (leverage) the value of any underlying investment, including speculations, indexing, and derivatives.
  3. Significantly escalate the regulations, oversight, controls, and restrictions on all transactions where any third party is investing, managing, hedging, or otherwise manipulating the financial resources of another party or parties.
  4. Require extreme transparency for all transactions and related activities.
  5. Completely revise how businesses are established and authorized in law to put greed second (or lower), and the community and protection of citizen wealth first.
  6. Establish state-based offices to oversee and regulate Tax Subsidized Organizations (TSOs), currently known as Not-for Profits.
  7. Prohibit transactions that bet on America’s failure or loss of value, including bankruptcies and short selling.

We need to break the cycle where one generation of perpetrators remains in place to teach and coach the next generation to conduct ever more sophisticated scams, deceptions, and frauds with greater frequency. This is truly a moment for innovative thinking and the breaking of old, corrupt models. Thus far, it appears very little change will occur. America’s Greed Team is already well on its way to recovery, at the expense of everyone else. All of which means that the next catastrophe will happen sooner rather than later.

I hope you’ll join the conversation and help make some demands or your own.

Labels: , , , , , , , , , ,

The Lukaszewski Group 550 Main Street, Suite 100, New Brighton, MN 55112 U.S.A.
651.286.6788-Office 651.631.2561-Facsimile 203.948.7029-24/7
Carin M. Leonard-Gorrill, Executive Assistant Office 651-286-6729

Copyright ©, James E. Lukaszewski. All rights reserved.
Permission to print one copy for personal use is hereby granted by the copyright holder.
Reproduction of additional copies without written permission of the copyright holder is strictly prohibited.