Sunwords.com by Sunny Bindra » Business Daily

Yes, CEOs: you WILL need to understand and engage with social media

Sunny Bindra — Mon, 06 Feb 2012 07:34:08 +0000

“As I jogged down Wall Street in New York in October through the barricades, police horses, and thousands of activists, something became clear. The masses had self-organized and social media had added yet another social movement to its résumé. At the same time, something else became clear to me. Much higher than street level, in the boardrooms of America’s largest companies, social media expertise was far from entering the résumés of most C-suites.
Why is there confusion inside these glass fortresses around the world? Senior executives are struggling to get a grasp of what to do about the social opportunity for their kingdom. But hey, it’s new, right? The kids only started signing up eight years ago. ”

MICHAEL SCISSONS Fast Company (December 15, 2011)

“Social media? Kids, right? That’s where they hang out, arrange dates, all that stuff? What on earth has that got to do with my business?”

That sentence would be the reaction of many a CEO to the social media phenomenon. Twitter, Facebook, YouTube, Google+ et al are usually dismissed as a trivial social pursuit. Surely only the very young or the very idle have time for it.

Here’s the thing, though: your staff, your customers and your competitors have plenty of time for it.

It is indeed true, much of what constitutes social media content is irredeemably trite and banal. But that is NOT all there is to it. Social media has become an essential tool of life for the online generation. Social media is also where information is found, news is tracked, views are exchanged, opinions are refined, networks are grown, deals are done, careers are advanced, brands are built, reputations are polished.

Why would you not want to be part of that?

Consider this, too: social media is ALSO where brands are destroyed; where complaints about your organizations reach thousands of people in minutes; where you can gauge the reaction to your new product instantaneously.

If you’re an enlightened chief executive, you should be rubbing your hands in glee. One of the biggest problems most leaders have is getting hold of the right information. Leaders are usually separated from reality by many layers of bureaucracy. Market information passes through many minders before it reaches the boss. Courtiers prevent people with valuable insights from accessing the head honcho.

Now, simply having a (visible or invisible) Twitter account can allow a CEO to gain real-time, direct access to customer feedback. Unfiltered and unaltered. Straight from the horse’s mouth. And it’s free. Is this not leadership nirvana? Try it and see how your data is enriched daily.

In addition, many social media platforms allow you to follow experts, thinkers and news sources. They allow you to track opinion and competitor activity. They allow you to gain easy access to the knowledge you want to keep abreast of.

Social media, like life in general, is what you make of it. It can be noisy and meaningless and trivial. It can also be a powerful tool for leadership engagement, personal awareness and keeping tabs on the world.

Sadly, many CEOs either dismiss it out of hand, or lead botched attempts to enter the social space without any clear thinking, objectives or rules of engagement. The result is the brainlessly obvious marketing and robotic customer engagement many corporates are guilty of.

Social media is a conversation, not a brochure. It’s where things are discussed, debated, criticized, praised, rubbished, adored. To benefit from it, you have to enter the conversation without trying to control or manipulate it. Honest, open engagement is the best policy.

You can’t leave your social media engagement to a ‘department.’ In today’s and tomorrow’s world, it’s a leadership issue. It requires judgement and insight to get right, and no consultant or techie is going to do that for you.

Learn from the disastrous leadership of this ship captain

Sunny Bindra — Mon, 30 Jan 2012 08:18:19 +0000

“The Italian cruise ship the Costa Concordia sank off the coast of Tuscany last Friday night, after smashing into rocks off the island of Giglio. The 114,500-tonne vessel, carrying 3,200 passengers and 1,000 crew, hit a submerged reef at 9.42pm, after the ship’s captain, Francesco Schettino, had steered it to within 200m of shore to “salute” a retired colleague who lived on the island. The rocks ripped a 50m gash in the Costa Concordia’s hull. The ship began to list, and the captain steered it into shallow water close to a headland. At 12.30am, it suddenly capsized. As of Wednesday, 11 people had been confirmed dead and 21 were still missing.”

The Week (January 21, 2012)

We all know about the Italian cruise ship disaster – the image of the capsized luxury liner lying marooned off the Tuscany coast was on our TV screens for many days.

However, those aspiring to leadership would do well to focus on an even bigger disaster, the man whose version of leadership caused this tragedy that has led to so many unnecessary deaths: captain Francesco Schettino.

First, consider that this gentleman caused this disaster reportedly because he was using the ship to ‘salute’ a friend who lived on the island. How many leaders similarly misuse their positions and resources to feed their own egos or private aims? Leadership is not a personal enterprise; it involves taking heavy responsibility for the lives and livelihoods of others.

Second, note the captain’s laxity in taking the problem seriously. Reports suggest Schettino was terribly slow to react to the disaster, even though the ship had suffered a huge gash in its side. He is said to have told the coastguard that it was just a “technical failure”; he is alleged to have then ordered a meal for himself and a female companion; he only sent out a mayday call at 10.30 pm; and did not give the order to abandon ship until nearly 11 pm. By then the boat was listing so sharply that many lifeboats could not be lowered. It was too late to save lives.

This type of denial is also ego-related. Too many leaders are utterly loath to admit to any mistake, and in the process will worsen the problem. Honest leadership requires coming clean, quickly. If you’ve messed up, say so and get on with the more important imperative of damage control. Don’t dance around denying there’s a problem. Look at so many CEOs across the world in 2011, and you will see that this kind of dance is very common.

Lastly, and most egregiously, the captain is accused of abandoning his ship: an audio recording from the Italian coastguard, widely heard across the world’s media, suggests he left his sinking vessel with his two senior officers while hundreds of passengers were still trapped on board. He is reported to have told magistrates, in comical justification of this cowardice, that he “tripped and fell into a lifeboat.”

Again, a profound lesson is contained therein. If you have created a problem, stay to fix it and bear the consequences. If you have enjoyed the perks of leadership, you must carry the burdens as well. Too many business leaders float away from the problems they create, often with handsome payoffs. In Schettino’s case, there is no such luxury. He will face manslaughter charges. The business world similarly needs a system of repercussions for incompetence and mismanagement. At the top, there is much upside and little downside.

In the meantime, the words “Vada a bordo, cazzo!” have become famous in Italy. They were uttered repeatedly by the furious head of the Livorno port authority when ordering Schettino back onto his stricken ship.

I’ll leave you to go online to learn what the words mean. Let’s just say they could apply to many a political and corporate leader, too.

To become better at business, read more…novels

Sunny Bindra — Mon, 23 Jan 2012 07:30:25 +0000

“1. Reading stories can fine-tune your social skills by helping you better understand other human beings.
2. Entering imagined worlds builds empathy and improves your ability to take another person’s point of view.
3. A love affair with narrative may gradually alter your personality—in some cases, making you more open to new experiences and more socially aware.”

KEVIN OATLEY, Scientific American Mind (November 20, 2011)

I have often advocated the reading of novels not just as a pastime, but as a method of making you better at running your business. This was mostly just gut-instinct, as I have always been an avid lover of great fiction.

But now I have proof.

Studies done by psychology Kevin Oatley and his associates (a recent one is quoted in the excerpt) reveal great practical benefits to be derived from reading fictional works. The reason is simple: good fiction gives you an invaluable tool – a better understanding of human beings, their emotions and motivations.

Think about it: creating a great business these days is less about great technology, structures or processes. Those are not the problem, nor are they scarce. The thing that sets great organizations apart from merely good ones is the ability to engage people – staff and customers – thoroughly and wholeheartedly. It’s about inspiring others to give their best, and to feel included and integral to the work. And that’s where fiction comes in.

A lifelong habit of reading great novels exposes the mind to many more human dramas than are available in person. It enables a deeper understanding of the human animal and its subtle psychological nuances. That understanding will help you deal with people much, much better – and in business these days, it’s the people, stupid.

Oatley’s studies suggest that people who read more fiction are, amongst other things, better at perceiving emotion and reading social cues. How does this happen? Prolonged exposure to fiction, MRI scans reveal, open up neuronal pathways in the brain that assist in the understanding of human emotion.

Anne Kreamer, reviewing this work in the Harvard Business Review recently, put it nicely: “It’s when we read fiction that we have the time and opportunity to think deeply about the feelings of others, really imagining the shape and flavour of alternate worlds of experience.”

Truly great novelists have a very sharp eye when it comes to watching the way people live, relate and interact. They are able to weave this understanding into their characters and plot and dramatic structure, to create a product leaves the brain stimulated in a way few other experiences can deliver.

As I have written on this page in the past: “Business is about life, and so is fiction. The great businessperson must understand people, their driving emotions, their ambitions and their fears, and what causes their rise or fall. A great novelist delivers precisely that understanding. If you want to know your employees and their motivations better; if you want to comprehend the lives of your customers better; if indeed you want to do the Socratic thing and know yourself better; you could do worse than crack open a great novel by a great writer.”

So what are you going to do, folks? Let’s be realistic: those who hate fiction aren’t suddenly going to run out to buy Dickens and Tolstoy. Love of novels is generally created and sealed in childhood. But those who do read novels need no longer regard it as a guilty pleasure: it’s probably a vital tool in helping you run things better. For those who don’t read “made-up” stories, you’re going to have to find other ways of being exposed to the swirl of human emotion all around you, and figuring it out.

Fiction may be a lie, but as Stephen King pointed out, good fiction is the truth within the lie.

To really understand a business, don’t talk to the CEO

Sunny Bindra — Mon, 16 Jan 2012 07:23:06 +0000

“I long ago realised that to understand a business I would learn much more by talking to people involved in day-to-day operations than the chief executive. They represented “what is really going on here?”"

JOHN KAY, Financial Times (January 3, 2011)

The excerpt shown, from Professor John Kay’s regular FT column, caught my eye. I agree wholeheartedly. To truly understand a business don’t talk to its CEO. At least, not at first.

I have spent the better part of my life looking at and into businesses, and trying to figure them out. And it is true: most CEOs are not equipped to tell you the truth about their businesses.

Years ago, when I was still an active management consultant, I was asked to come and offer advice to a very successful, rapidly growing business. My response was simple: “Fine, but I won’t come to head office first. Please arrange for me to tour customer-facing facilities, talk to customers, talk to front-line staff. Only then, much later, will I come for discussions with the CEO.”

The CEO agreed, and we have had a mutually interesting relationship for years.

Most CEOs, by their nature, operate on feel-good statements. They are required to be optimists exuding positivity. They spend most of their time persuading shareholders, investors, regulators and the media to believe in their mission. They operate at the level of the vision statement and the list of corporate values. They talk loftily and aim for the stars. Don’t mock them for this – inspiring others is part of the deal in leadership.

Anyone wishing to get a true understanding of how a business works and a clear picture of its position in its industry, however, must seek out other voices. The most important of these is the voice of the customer, the person who spends money on the product and feels the value, or not, of what is being produced most acutely. Equally important is the potential customer – the person who could buy the company’s product but currently doesn’t. “Why not?” is a crucial question to put to this party.

And then we take our enquiries to employees, big and small. Especially small. Many CEOs think their staff resemble a happy-clappy church where employees are imbued with overwhelming belief in their boss and his vision, and would rather work in his organization than any other. A few candid minutes with junior employees usually explodes that notion.

Lastly, don’t ever forget to talk to competitors. If you are an acute observer, talking to a company’s rivals will reveal a great deal about its true strengths and weaknesses.

Customers, staff, competitors – and then the CEO. It’s a good rule for consultants, analysts, investors, students and business journalists. It’s almost never followed. Most allow themselves to be swept up in the boss-man’s hubris and buy the story wholesale. Remember, most chief executives are seasoned charmers and missionaries: they can spin the tale. They often even believe it, wholesale. It is part of their role to marshall the troops, generate energy and inspiration in others. Unfortunately, they often do this at the expanse of reality.

If you really want to understand a business, work backwards. Look at what it produces, and what value it adds to the lives of its users and consumers. Look at those who don’t buy the product, and study what they buy instead. Look at the people who do the producing, and study their engagement and commitment to their work. Look at competitors, and study the differences and similarities. If you find truly distinctive elements in the business model, and gauge unusual levels of satisfaction in the workplace and the shopfront, then you may be on to something good.

Then, by all means, have coffee with the chief executive.

Do you have any meaningful say in the work that you do?

Sunny Bindra — Mon, 09 Jan 2012 06:38:31 +0000

Since the mid-80s, academics have been carrying out regular skills surveys, asking detailed questions of thousands of employees. In 1986…72% of professionals felt they had a great deal of independence in doing their jobs. By 2006, that had plummeted to just 38%.
Which is shocking but also makes sense: if you’re a teacher you now have to work to a national curriculum. If you’re a bank manager you have far fewer individual powers than your predecessor would have had in the 80s. And if you’re a teller, it’s standard practice to work from a script.

ADITYA CHAKRABORTTY, www.guardian.co.uk (Dec 19, 2011)

Aditya Chakrabortty pointed out an interesting aspect of modern life in The Guardian recently: the more variety we enjoy as consumers, the less autonomy we enjoy as employees.

It is not a surprise that most blue-collar workers in large companies have little say in the work that they do. As enterprises have become more complex and more far-flung, consistency across units is paramount. When you are producing multiple product lines across multiple geographies, you cannot afford to have inconsistencies in quality and customer experience. Having a rigid, centrally defined process for everything is the path that most complex organizations have taken to address this problem. This means that the workers at the coalface simply do as they are told – there is no room for experimentation, flexibility or creativity.

The more recent phenomenon is that white-collar workers, including very senior executives, often suffer the same loss of independence. They, too, are tightly controlled from a powerful centre; they, too are permitted few decisions; they, too have to work like cogs in the system.

As a customer, you may have encountered the consequences of this. The bank manager, for example, who cannot make an exception on your loan application simply because he can’t overrule the process; the chief executive who can’t make any adjustment to his local product despite overwhelming data suggesting the global one is not what’s needed in his patch; the team leader who is powerless to make any meaningful change to the rewards flowing to his team members.

Where is this leading? Customers are increasingly facing faceless organizations where the person dealing with you, and that person’s next five superior officers, are unable to make any meaningful decision. All they can do is feed your information into the opaque system, and await a reply.

Certainly, this reduces fraud and poor local decisions; it automates mundane tasks; it makes products and services cheaper. But it also means that the number of people who actually think, create, innovate and make decisions is shrinking. Academics foresee a world in which perhaps just 10 per cent of the world’s workforce has “permission to think.” The rest simply have to do as they’re told. After decades of massive expansion in education across the globe, we may be heading back to an assembly-line model; the difference being that the worker drones are now well-educated graduates.

This phenomenon is going to trouble many an ambitious employee; it will trouble many a customer who wants a meaningful emotional engagement with a business; and it should trouble many a thoughtful leader. Good luck in keeping the best people when your business model disallows them from thinking or contributing ideas.

As 2012 unfolds, I suggest this should be one of the top issues challenging chief executives: how do you manage smooth and consistent delivery without turning your best people into drones and clones?

It also offers a huge opportunity to startups. Big, global businesses are going to struggle, really struggle, in offering human interactions to their customers. They are going to struggle to motivate their best people to be accept being mere ghosts in the machine. And that gives you every chance to thrive by playing on those very weaknesses. Go for it.

2011 was a bad year for business leadership

Sunny Bindra — Mon, 02 Jan 2012 08:06:46 +0000

“This was a year, sadly, when examples of poor leadership (bad decision-making, selfish actions and inexplicably bone-headed moves) seemed to outnumber the good.”

JENA MCGREGOR, The Washington Post (Dec 19, 2011)

As we end another year, we in the business world have to concede an uncomfortable fact: 2011 was not a great year for corporate leadership.

Too many CEOs have been involved in inexplicably bad decisions, as The Washington Post pointed out last week. Despite their vast experience and sterling CVs, business stewards seem increasingly prone to serious leadership gaffes.

Let’s start with the heads of RIM, maker of the famed Blackberry phone. How exactly does one destroy a market share as dominant as the Blackberry enjoyed just a few short years ago, and watch a share price plummet as much as 77% over the year? Answer: you place not one, but two CEOs who don’t get it at the helm. As this column commented in August, RIM is run by a coterie of insiders who all see the world in the same way. When that view is plain wrong, there’s no one around to say so. The only salvation, it seems, will come from a sale of the company.

Move on to HP, once an equally dominant maker of computers, now on its 4th CEO of recent times, all hired as messiahs from outside the company. Why this company’s board carries on being allowed to choose CEOs by its shareholders is beyond me. It has laid to waste a proud legacy and wonderful heritage of innovation.

Let’s look at another company whose woes hit the headlines in 2011: the legendary Kodak. Kodak has been a slow-puncture that began some time ago, but this year it was forced to concede that Chapter 11 bankruptcy may not be far away. This for a company that once held a 90% market share in the US? Ironically, Kodak actually invented the technology that has eviscerated it: digital photography. It just didn’t understand the power of what it held in its hands.

And what about that Japanese icon, Olympus, now revealed to have been hiding losses of $1.7 billion on its books? At the time of writing, the Olympus board is still largely intact – and trying to influence its own succession instead of slinking off in shame.

The list could continue. India’s mobile telephony firms are ensnared in that country’s 2G scam – when government officials seem to have conspired with corporates to underbid for licenses some years ago. That has now put a brake on their global ambitions – not least in Africa. Essar’s India bosses were recently charged, and more charges seem likely.

Meanwhile, the Murdochs showed how ridiculous it is for a leader to use the “I never knew it was happening, honest” defence. Having created an “anything goes” culture, Rupert Murdoch can hardly hide behind the span and scope of his global enterprise and say he didn’t know his newspapers were doing bad things. But he did, and has suffered irreparable reputation damage late in life as a result.

We are not spared back home. The venerable CMC Motors has given us one of the ugliest boardroom spats of recent times, resulting in its suspension from the Nairobi Stock Exchange. Kenya Power seems more preoccupied with collecting awards for rebranding than giving its customers the one thing they want: reliable, affordable power. And too many Kenyan CEOs are proving to be tone deaf when it comes to listening to customers, ignoring or justifying mounting complaints about service.

If you are a business leader, learn from the bungling of your less competent peers in 2011. Leading a corporation is a big deal, and it should be done with great vigilance. It is a huge responsibility to take so many livelihoods into your hands, and we owe it our ecosystems and future generations to take this responsibility very, very seriously.

Way too many leaders are proving narrow-minded, self-absorbed, intellectually hidebound by previous successes, or just plain larcenous. I hope 2012 will herald the coming of a new order, one that sets high standards in delivery and integrity, and one that works for something way bigger than the personal payoff.

I wish you all a 2012 full of wealth – in its true meaning

You should enter high-growth industries – right?

Sunny Bindra — Mon, 19 Dec 2011 12:30:52 +0000

“Managers often mistakenly assume that a high-growth industry will be an attractive one. Wrong. Growth is no guarantee that the industry will be profitable. For example, growth might put suppliers in the driver’s seat, driving up the industry’s costs and limiting profitability. Or, combined with low entry barriers, growth might attract new rivals, thereby increasing competition and driving prices down. Growth alone says nothing about the power of customers or the availability of substitutes, both of which would dampen profitability. The untested assumption that a fast-growing industry is a “good” industry, (Michael) Porter warns, often leads to bad strategy decisions.”

JOAN MAGRETTA, blogs.hbr.org (Dec 8, 2011)

Joan Magretta, blogging on the Harvard Business Review site, had an important point to make recently: don’t assume that a high-growth industry is your best bet.

Is that counter-intuitive? Surely we should all go to where the action is? Where consumer demand is strong and industry turnover is rocketing? Not at all, says Magretta, reminding us of the work of Professor Michael Porter in assessing the attractiveness of industries. You should enter an industry where you can build a competitive advantage – not to join the crowd. Just because an industry is good for market leaders does not mean it will be good for you.

Consider these examples. Should you enter the mobile-phone space in Africa, where we have had double-digit growth in recent years and where analysts predict many rosy years of growth to come? I would hope you would be a little circumspect. I hope you would see the formidable task of taking on industry leaders such as Safaricom, with their vast network advantages and grip on customers via must-use products like M-Pesa.

Would you look at the huge profit margins enjoyed by soft-drinks manufacturers like Coca-Cola, and conclude you need to get some of that action? I would hope that industry would be way down on your list of startup options, for you would be taking on a 100-year brand with one of the world’s biggest advertising budgets.

Mobile-phone apps are similarly growing amazingly fast, with 18 billion downloads already in Apple’s iOS ecosystem and 10 billion in Google’s Android world. So you should start up an app-making company, yes? Yes – but only if you have something truly distinctive, attractive or useful to offer. Remember, everyone and their uncle (or nephew, more likely) is trying to build apps now. Some of these people are very good at what they do; most are not. Unless you can be in the former group, don’t bother trying. When you’re up against hundreds of thousands of competing products, you’d better have something really different to tout.

You get the picture. An industry is not attractive because it’s fast-growing or in the news; it’s attractive because you have the capabilities with which to make your mark in it. What Porter said all those years ago is still relevant: study the barriers to entry; the power of customers and suppliers; the intensity of rivalry; and the threat of substitute products destroying the market.

Modern technology has made that last factor particularly potent. Substitutes are arriving from left-of-field at an alarming rate, and whacking many previously complacent industries. Would you care to count with me the number of industries that have been laid waste by the sudden advent of smartphones, tablets and apps? Think about it, and you will realize you need more than the fingers of both hands to count the industries where purveyors of old business models have been brought to their knees.

At the end of the day, strategic advice is not complicated. You compete by being distinctive and innovative and by delivering genuine value to customers, not by joining crowds of competitors. The first step is always to be very, very good at what YOU do.

The modern problem of corporate fluff

Sunny Bindra — Mon, 12 Dec 2011 08:07:03 +0000

“As a simple example of fluff in strategy work, here is a quote from a major retail bank’s internal strategy memoranda:”Our fundamental strategy is one of customer-centric intermediation.” The Sunday word “intermediation” means that company accepts deposits and then lends them to others. In other words, it is a bank. The buzz phrase “customer-centric” could mean that the bank competes by offering depositors and lenders better terms or better service. But an examination of its policies and products does not reveal any distinction in this regard. The phrase “customer-centric intermediation is pure fluff. Pull of the fluffy covering and you have the superficial statement “Our bank’s fundamental strategy is being a bank.” ”

RICHARD RUMELT Good Strategy, Bad Strategy (2010)

The peerless Richard Rumelt has written one of the best books on strategy in recent years, Good Strategy, Bad Strategy. It is required reading for anyone with an interest in the subject.

In the excerpt shown, the professor is scathing about the use of ‘fluff’ – meaningless, wishy-washy, feel-good jargon – to describe strategy. He makes two points: merely saying what you do in fancy language (“intermediation”) does not confer any distinction. And if you use words like “customer-centric”, you had better mean them. The bank in question does not – it’s just a nice thing to say.

Most banks, in most people’s experience, are in fact anything BUT customer-centric. They are self-absorbed, navel-gazing, inbred institutions that suit themselves, their executive teams and their shareholders at every opportunity – rather than customers. Most banks make it hard to bank, hard to borrow, hard to get served. The idea of placing the customer in the centre of anything would be anathema. Yet pretty much every bank you encounter anywhere in the world will try to say it has a “customer-centric” strategy.

This, you will agree, is absurd.

Rumelt tells us: “A hallmark of true expertise and insight is making a complex subject understandable. A hallmark of mediocrity and bad strategy is unnecessary complexity – a flurry of fluff masking an absence of substance.”

One of the most impressive strategic turnarounds ever is the return of Steve Jobs to Apple in 1997. He said at the time: “Deciding what not to do is as important as deciding what to do.” The Apple of that time was utterly unfocused, churning out dozens of unnecessary products with meaningless number tags (Macintosh 1400 to 9600, for example). This was not the Apple way. But the Apple of 1997 was doing its best to be just like any other computer company, bloated product portfolio and all. It was committing corporate suicide by destroying its uniqueness.

Jobs became enraged at one product strategy session, and shouted “Stop!” According to biographer Walter Isaacson, he picked up a marker and drew four quadrants on a flipchart. The two columns were labelled “Consumer” and “Pro”; and the two rows “Desktop” and “Portable.” That was it. Four product lines were all that were needed.

This sharp focus resulted in outstanding products for each of the four quadrants, as Apple’s engineers finally achieved focus and channeled their energies appropriately. The effect was quick: after years of huge losses, Apple returned to profitability in 1998. The rest, as you know, is history.

That is an example of a leader seeing quickly what needs to be done and why, and making it happen through clarity of communication. That, in other words, is strategy. So toss out those tired and banal statements you keep using, and get to the point. Your strategy is simply what needs to be done and why, and how it’s going to be done. Try saying that for a change.

If it’s just about you, nothing will outlast you

Sunny Bindra — Mon, 05 Dec 2011 08:01:46 +0000

“The I.B.M. lesson, Mr. Palmisano said, is never become wedded to what you make, but to the values the corporation stands for. After all, I.B.M. started out making clocks, scales, punched card tabulators, and cheese slicers (“the world’s fastest at the time,” he noted).
“The history of business is a bone pile of companies that had an extraordinary initial success,” Mr. Palmisano said, “but were unable to achieve a second act.” Mostly, he added, the bone pile companies “could not get beyond an emotional attachment to the past.”
The enduring corporate values Mr. Palmisano had in mind were not ethics or corporate responsibility, though those are certainly values, but a company’s lasting goals — in I.B.M.’s case, satisfying customer needs, building long-term relationships and pursuing breakthrough innovations.”

New York Times (3 November 2011)

I wrote about IBM’s centenary on this page recently:

“IBM’s ability to survive is driven less by being ahead of an ever-changing curve, and more by its ability to stay bonded with its customers in its role as their trusted advisor. Put that one in your pot, good people, and cook it to your own specification. It’s less about your business genius, and more about your ability to stay true to some enduring beliefs and practices. Mostly, it’s about building a unique culture inside the company, and very strong loyalties outside.”

Few companies last the longer race. Most die out after some short-lived successes. The art of longevity in business is the art of exercising wisdom over shrewdness; it is the art of valuing relationships over transactions; it is the art of cherishing values rather than products.

So it was good to hear Sam Palmisano, IBM’s outgoing chairman and CEO, confirming this message recently. In the excerpt shown, Mr Palmisano tells us that many businesses can have a successful first act: they can have a hit product, be at the right place at the right time.

To have a successful second, third and fourth acts, however – that takes some doing. IBM shows us how.

It is NOT about being wedded to your products. Sony did that, and has not produced a hit product in years now. Microsoft did that, and is now scrambling to make up lost ground as its desktop-based software suites lose relevance by the day. RIM did that, but its hit BlackBerry phone is now looking like an also-ran – its stock hit a seven-year low the other day.

It is NOT about being shrewd at the expense of your customers. Have you ever wondered why you almost never see long-lived restaurants in Nairobi? Why so many appear, offer great food and ambience – and then fade away and disappear? How many favourite restaurants from your childhood are still present? Long list? Most commit the following fatal mistakes: they cut corners on quality after their initial success; they take customers for granted; they fail to build a distinctive working culture. And so they die.

Mr Palmisano’s message is to focus on enterprise-specific culture, values and goals: to be, for example, the best relationship manager; the most innovative product developer; the most trusted supplier. Those sorts of things create long-term success – and they require consistent leadership that cherishes and deepens them.

Mr Palmisano’s final message was perhaps his most telling. A CEO, he said, is merely a “temporary steward of a great enterprise.” This humility is necessary if you are going to steer a durable enterprise. It’s not about you: it’s about keeping the great ship on its course, and then handing over to younger, better hands.

Now there’s a lesson many, many leaders need to learn. It’s never about you; it’s always about the greater good and the bigger deal. In yourself you are nothing. If it’s just about you, nothing will outlast you.

Is business really a force for good?

Sunny Bindra — Mon, 28 Nov 2011 02:38:55 +0000

“Japanese police, prosecutors and securities agencies in Japan, the United States and Britain are investigating Olympus after the firm admitted this month that it hid losses on securities investments for decades, disguising some as acquisition payments and fees. The scandal at the once-proud firm has rekindled concerns about lax corporate governance in Japan and revived worries about links between companies and organized crime. A unit from the Tokyo Metropolitan Police Department’s organized crime division has joined the investigation, a source familiar with the matter said on Friday. But the source added it was premature to say if gangsters were involved.”

REUTERS (21 November 2011)

There are news reports that make you despair. This is because I am somebody who believes in the nobility of business. I believe that corporations can be a force for good in society. I believe many products are created that are of great utility for the ordinary person. I believe corporations can provide meaning and fulfillment for their employees, in a world largely devoid of meaning.

But there are days when all those beliefs are challenged.

Reading the excerpted article about Olympus provided one of those difficult days. Yet another famous brand, yet another organization with a proud heritage, is found to have been cooking the books. Olympus’s top brass, after weeks of strenuous denials, we’re forced to admit that they had been hiding losses in the form of bloated payments for acquisitions and professional fees. In other words, Olympus was living a lie.

This comes in the wake of many similar fiascos, all over the world. India’s Satyam was revealed to have been showing inflated margins to investors and keeping fictitious cash reserves on its balance sheet. America’s Enron gave us the mother of all corporate frauds, creating a much-lauded company that was actually a phantom. Also in the US, Bernie Madoff gathered money from gullible employees for decades while pretending to invest it and earning unbelievably consistent returns.

What do these multifarious scandals have in common? In all of them, hype outstripped reality. The egos of a few took precedence over the interests of the many. Regulators were asleep at the wheel. Big-name auditors faced questions about what they actually do, and why they can’t provide meaningful oversight. The media happily constructed myths around larger-than-life business leaders. Professional advisors took the tainted coin and looked the other way. Whistleblowers were treated with aggression and derision.

Some days, it’s all I can do to stop myself from giving up on the business world.

And yet, carry on we must. Those of us who believe business should be bigger and better than glorified gangsterism need to carry on fighting. There are plenty of good businesses driven by more than the need to accumulate grotesque personal fortunes and feed bloated egos. Those businesses must be honoured and show-cased.

Casino capitalism must be seen off the premises. Society must learn to see through the spin-doctoring of PR practitioners. We must separate the wheat from the chaff. Bad businesses give you plenty of signals that they are up to no good. Regulators, journalists and business schools must join hands to analyse and expose bad practice before it gets out of hand, not partake in the gravy train that usually signifies bad companies.

If we don’t do this, we are all complicit. Those who believe in a greater good, and in the power of the business world to transform ordinary lives, must step forward and prove it. We can only do this if we anchor our businesses in genuine values.

Company directors and executives are very good at talking the good talk. They are less good at walking the good walk. What status do you attain, however, from masking the facts, selling a lie, succeeding by corrupting others, competing by cheating? There can be no pride in common criminality, where business bosses behave no better than common street tricksters.