Like the Mother of Invention

“In a move that could mark the beginning of a nuclear-power revival, a New Jersey-based energy company today plans to submit an application to build and operate two new reactors. The request, the first submitted to the Nuclear Regulatory Commission in 31 years, comes from an unlikely source: NRG Energy Inc., a company that has never before built a nuclear plant…

“The nuclear agency has geared up for an expected flood of applications over the next 15 months, which could cover as many as 29 new reactors at 20 sites and represent a possible investment by the U.S. power industry of $60 billion to $90 billion. Companies are rushing to get their applications in quickly, hoping to qualify for potentially billions of dollars in federal incentives and loan guarantees offered in the Energy Policy Act of 2005…

“A decision by the commission could clear the path for NRG to go ahead with its plans. Congress has mostly encouraged the revival of nuclear energy, concluding the nation's aging nuclear fleet needs refreshing, though opposition could surface now that the industry appears to have momentum.

“The NRG application likely will revive debate about the wisdom of building more nuclear reactors, especially since the industry still doesn't have a federal repository for the radioactive waste from an existing U.S. fleet of 104 operating reactors...

“Still, the renewed optimism within the industry is noteworthy, given that it was virtually left for dead a decade ago, in the wake of safety worries stemming from the 1979 accident at the Three Mile Island plant, huge cost overruns and disappointing operating performance. In the late 1990s, plants were practically being given away by frustrated operators…

“More recently, the industry has regained momentum, partly because other forms of power generation have continued to show significant flaws. Coal-fired plants undermine efforts to combat global warming. Many natural-gas-fired plants rely on a fuel with volatile prices. And renewable energy mostly comes from intermittent forces like wind, rain and sunlight.”

(“Nuclear Energy's Second Act?; Bid to Build Two New Reactors In Texas May Mark Resurgence; NRC Gears Up for Many More.” Rebecca Smith. Wall Street Journal: September 25, 2007. pg. B.1)


ENDURING truths remain in force. Everything has a price. What goes around, comes around. Yesterday's excesses become today's necessities. Nothing is free -- not yesterday, not today, never. And the greater the costs today, the more fervent the search tomorrow.

Real Value

“Facebook founder Mark Zuckerberg was 10 years old when David Bohnett, then a 37-year-old mainframe programmer, hatched an idea: Set up a Web-based ‘community’ where young people could divulge their most intimate feelings. He grouped those musings into different themes, and ushered in advertisers to hawk Volvos and Volkswagens.

“This ur-Facebook of 1994 was called GeoCities. And both its rise and fall are a history lesson for Mr. Zuckerberg…

“GeoCities' tale… shows the value of humility, even in moments of the sweetest triumph.

“GeoCities grew popular before broadband… but the basic, expressive elements of today's Facebook and competitor MySpace, owned by News Corp., were all right there.

“‘It's the same as it is today -- people want to feel like they're connected,’ says Mr. Bohnett...

“By August 1998, GeoCities was the third most-visited site on the Web... Sixteen months later, Yahoo paid an astounding $4.7 billion, calling the new Yahoo-GeoCities combo ‘one powerful offering...’

“Life inside Yahoo was smothering for GeoCities, say a number of people familiar with the transition. Developing new technologies for GeoCities' communities slowed to a crawl, as its staff of 30 software developers was cut to a skeleton crew. Yahoo focused instead of building traffic, not necessarily on the programming for improving person-to-person interaction. ‘Had they done things right with GeoCities, there would be no Facebook, YouTube or MySpace,’ says one...

“Yahoo's treatment of GeoCities is particularly relevant for Mr. Zuckerberg...

“If he could give advice to Mr. Zuckerberg, [Mr. Bohnett would] recommend heavy investment in new technology to ‘stay true to what the user experience is…’

“Alas, advertisers have found Facebook users to be a huge audience -- that could care less about ads. The percentage of users clicking onto site advertisements on Facebook and MySpace are lower than typical Web sites…

“‘It's not that easy to monetize social media,’ says Eric Hippeau, a managing partner of Softbank Capital… So far, he says, ‘it's not that easy to match the right advertising with the right audience.’

“That squares with the experience of Thomas R. Evans, GeoCities' former chief executive. ‘When you're as successful as GeoCities, everyone tells you how wonderful you are. It causes you to miss opportunities… People at the time were dismissive of old media experience. But it turned out looking exactly like the old media business. You have to execute and provide both the consumer and the advertiser with significant value.’

“At some point, the questions about Facebook the business will eclipse the praise of Facebook the social phenomenon. And once that point hits, Mr. Zuckerberg will be less able to dictate the terms of how fresh capital is put to use.”

(“The Game: For Facebook, GeoCities Offers a Cautionary Tale; Can Rise and Fall of Once-Hot Site Sway Decisions on Funding, IPO?” Dennis K. Berman. Wall Street Journal: September 25, 2007. pg. C.1)


THE RULES HAVE NOT CHANGED. It is not different this time. You are not re-writing the rules. Who is your customer? Who pays? What are their needs? How can you partner with them to solve their problems and enhance their utilities? Continuously keep learning to add value to those who provide your cash flow. That is the point of innovation.

M.A.B.? Mastering the Administration of Business

“Rakesh Khurana, an associate professor at Harvard Business School... is publishing a critique of business schools' evolution over the past 50 years. His book, ‘From Higher Aims to Hired Hands,’ argues that famous B-schools, including Harvard, have lost track of their original mission to produce far-sighted leaders who can help the economy run better.

“As Prof. Khurana sees it, M.B.A. training has deteriorated into a race to steer students into high-paying... jobs without caring about the graduates' broader roles in society. 'The logic of stewardship has disappeared,' he says. Panoramic, long-term thinking has given way to an almost grotesque obsession with maximizing shareholder value over increasingly brief spans…

“For his part, Prof. Khurana would like to see business schools take much more aggressive steps to mend their ways. He is impressed by the ways that law and medical schools certify graduates' knowledge and require lifelong continuing education. Perhaps business schools should do something similar, he suggests…

“Until those dynamics change, it will be hard for top business schools to resume their traditional -- and vital -- role as training grounds for the next generation of corporate leaders.”

(“The Economy; BUSINESS: Business Schools Forgetting Missions?” George Anders. Wall Street Journal: September 26, 2007. pg. A.2)


MASTER one's self; master understanding; master perspective; master administration; master business.

(un)Free Enterprise

“Mark R. Thierman pursues a practice that in recent years has won his clients hundreds of millions of dollars from some of the biggest names in Corporate America—and produced tens of millions for himself…

“Thierman sues companies for violating ‘wage and hour’ rules, typically claiming they have failed to pay overtime to workers who deserve it. Since the beginning of this decade, this litigation has exploded nationwide. Because wage and hour laws have been so widely violated, undetonated legal mines remain buried in countless companies, according to defense and plaintiffs' lawyers alike.

“No one tracks precise figures, but lawyers on both sides estimate that over the last few years companies have collectively paid out more than $1 billion annually to resolve these claims, which are usually brought on behalf of large groups of employees. What's more, companies can get hit again and again with suits on behalf of different groups of workers or for alleged violations of different provisions of a complex tapestry of laws. Framed on the wall of Thierman's office, for example, is a copy of a check from a case he settled for $18 million in 2003 on behalf of Starbucks (SBUX ) store managers in California. But the coffee chain is currently defending overtime lawsuits, filed by other attorneys, in Florida and Texas. Wal-Mart Stores (WMT )is swamped with about 80 wage and hour suits, and in the past two years has seen juries award $172 million to workers in California and $78.5 million in Pennsylvania.

“‘This is the biggest problem for companies out there in the employment area by far,’ says J. Nelson Thomas, a Rochester (N.Y.) attorney, who, like Thierman, switched from defense to plaintiffs' work. ‘I can hit a company with a hundred sexual harassment lawsuits, and it will not inflict anywhere near the damage that [a wage and hour suit] will.’ Steven B. Hantler, an assistant general counsel at Chrysler, says plaintiffs' lawyers are ‘trying to make all employees subject to overtime. It's subverting the free enterprise system’."

(“Wage Wars.” Michael Orey. Business Week: October 1, 2007. , Iss. 4052; pg. 50)


JUSTICE, fairness, and equality for one and all...

KISS

“For the 1 million techheads who will buy one this quarter, Apple's luminous new iPhone represents pure bliss. It takes photos. It plays YouTube videos and uploads songs. It boasts a calendar, an address book, a map navigator--it is an all-purpose digital wingman.

“But if you can't handle that much juice in your pocket, consider the Jitterbug. Startlingly simple, it handles just one task: phone calls. Sold, says Jitterbug fan John Foy, age 61. ‘I believe a phone should make phone calls,’ says the Hoboken, N.J. wine critic and former chef. ‘Cameras should take pictures.’

“The Jitterbug even gets a premium for its single-minded simplicity. It costs $147, when for just $100 and a service contract at AT&T, you could get a feature-rich Samsung BlackJack laden with full keyboard, camera, MP3 music player, e-mail and Windows Office applications. In this case less costs more.

“‘The more functionality they put in single devices, the more savvy you have to be to use them,’ complains Arlene Harris, founder of GreatCall, which launched the Jitterbug late last year. She confesses that four times in the past year she found herself unable to set the alarm on a souped-up digital clock in her hotel room.

“Some customers similarly are fed up with features they can't or don't use, and makers are responding. Philips, the Dutch consumer-electronics giant, sells a line of digital photo frames that play a slide show as soon as you pop in a memory card. It's less complicated than doing the same thing on your laptop.

“At a Best Buy store in Manhattan, store salesman AndrĂ© Sam says, ‘Some consumers walk in and say, There are too many features. Give me your bare-bones product that's really easy to use.' Best Buy sells them such spartan digital tools as handheld TVs (no satellite, no cable, no DVR), pure-play CD players (no radio, no MP3 downloads) and AM/FM radios. The petite iPod Shuffle is so featureless a listener can't switch among playlists; it lacks a screen. Yet even among Apple's tech-fetishist faithful, the Shuffle has sold an estimated 30 million units since its January 2005 launch, according to Shaw Wu, an analyst at American Technology Research.

“Another victory for simplicity has emerged in e-mail. Small e-mail printers that work without hooking up to a computer at all are sold by a coterie of startups, including Presto, Celery and CaringFamily. Connect one to a phone line and it downloads e-mail and photo attachments from the Internet, spitting out a printed version…

“Making things easy isn't easy at all. Donald Norman, a tech-usability consultant, says stripping down devices to make them simpler to use is a blunder: ‘The real trick is not to get rid of the features but to make them effortless.’ He laments the size of the Jitterbug's instruction manual. Printed in large type for faltering eyes, it runs 70 pages.”

(“One-Trick Pony.” Chana R Schoenberger. Forbes: September 17, 2007. Vol. 180, Iss. 5; p. 60)


IN A WORLD OF SPIRALING COMPLEXITY, go where they ain't; focus, and remind us once again that R&D is for the customer.

The Interpretive Filter at Work

“Just about every month, CNW Market Research meets with a group of would-be car buyers and plays a trick on them.

“Sometimes the company, which specializes in auto sales trends, takes a Toyota Camry, removes any identifying logos, and tells them it's a new model from one of the U.S.-based auto makers. Or it takes a domestic car and tells them it's a Toyota or another import make.

“Either way, the result is the same. ‘If they think it's an American car, the perception of the vehicle falls dramatically,’ said Art Spinella, vice president of the Bandon, Ore.-based firm. ‘Detroit really gets a bum rap in the U.S.’

“Those negative impressions are now souring efforts by Ford Motor Co., General Motors Corp. and Chrysler LLC to halt their long slide in U.S. market share. And for these Detroit auto makers, persuading import buyers to even consider a U.S. car is becoming the new battleground.

“The issue of public perception is coming into sharper focus now because experts say the Big Three, after years of concentrating on trucks and all but ignoring cars, have markedly improved the quality and look of their sedans and compacts…

“Inferior cars that Detroit churned out in the past are still hurting the industry's image...

“‘Building a better car and assuming people will buy it doesn't work,’ GM Chairman and Chief Executive Officer Rick Wagoner told reporters at this week's Frankfurt Auto Show. GM, he said, ‘can do a better job’ marketing its vehicles...

“‘We're not on a lot of people's collective radar screens for vehicles beyond trucks and SUVs,’ said Barry Engle, vice president of marketing for the Ford division…

“The main reason import intenders stay away from domestic cars, Mr. Denove said, is that ‘today's consumer doesn't yet believe the Big Three have improved quality to the point where they are on par with the Japanese manufacturers.’

“That drives Ford, GM and Chrysler executives crazy. Independent quality studies show they've narrowed the gap with Toyota. Just a few weeks ago, J.D. Power's long-term dependability study reported that GM's Buick brand had tied Toyota's Lexus, which had stood alone on top for the past 12 years.”

(“Detroit Auto Makers Try Some New Tricks; The Big Three Improve Cars But Then Find It Hard To Get Buyers to Notice.” Neal E. Boudette. Wall Street Journal: September 14, 2007. pg. B.1)


FACTS AND DATA have little or no direct bearing on our decision-making. We all filter facts and data through the vast weavings of our experiences and desires. Thus, we form perceptions and beliefs about those facts and data that we are willing and able to process. Then those filtered perceptions and beliefs drive our decisions.

I Know What I Want to Know!

“We all make mistakes and, if you believe medical scholar John Ioannidis, scientists make more than their fair share. By his calculations, most published research findings are wrong.

“Dr. Ioannidis is an epidemiologist who studies research methods at the University of Ioannina School of Medicine in Greece and Tufts University in Medford, Mass. In a series of influential analytical reports, he has documented how, in thousands of peer-reviewed research papers published every year, there may be so much less than meets the eye.

“These flawed findings, for the most part, stem not from fraud or formal misconduct, but from more mundane misbehavior: miscalculation, poor study design or self-serving data analysis. ‘There is an increasing concern that in modern research, false findings may be the majority or even the vast majority of published research claims,’ Dr. Ioannidis said. ‘A new claim about a research finding is more likely to be false than true.’

“The hotter the field of research the more likely its published findings should be viewed skeptically, he determined.

“Take the discovery that the risk of disease may vary between men and women, depending on their genes. Studies have prominently reported such sex differences for hypertension, schizophrenia and multiple sclerosis, as well as lung cancer and heart attacks. In research published last month in the Journal of the American Medical Association, Dr. Ioannidis and his colleagues analyzed 432 published research claims concerning gender and genes. Upon closer scrutiny, almost none of them held up. Only one was replicated.

“Statistically speaking, science suffers from an excess of significance. Overeager researchers often tinker too much with the statistical variables of their analysis to coax any meaningful insight from their data sets. ‘People are messing around with the data to find anything that seems significant, to show they have found something that is new and unusual,’ Dr. Ioannidis said.

“In the U. S., research is a $55-billion-a-year enterprise that stakes its credibility on the reliability of evidence and the work of Dr. Ioannidis strikes a raw nerve. In fact, his 2005 essay ‘Why Most Published Research Findings Are False’ remains the most downloaded technical paper that the journal PLoS Medicine has ever published.

"’He has done systematic looks at the published literature and empirically shown us what we know deep inside our hearts,’ said Muin Khoury, director of the National Office of Public Health Genomics at the U.S. Centers for Disease Control and Prevention…

“Every new fact discovered through experiment represents a foothold in the unknown. In a wilderness of knowledge, it can be difficult to distinguish error from fraud, sloppiness from deception, eagerness from greed or, increasingly, scientific conviction from partisan passion. As scientific findings become fodder for political policy wars over matters from stem-cell research to global warming, even trivial errors and corrections can have larger consequences.”

(“Most Science Studies Appear to Be Tainted By Sloppy Analysis.” Robert Lee Hotz. Wall Street Journal: September 14, 2007. pg. B.1)

SO TORTURE THE DATA until they confess. There has to be a nugget of what I want to find somewhere in here! We all yearn for more and more of what we already know, not any more of what we don’t like to hear. (See Dylan below: “It'll soon shake your windows, and rattle your walls…” )

What Sells (?)

“Two years ago, General Electric Co. Chairman Jeffrey Immelt vowed to make GE a corporate leader in addressing climate change. Since then, Mr. Immelt says, he's heard a refrain from some big GE customers: 'Can't you just shut up and sell us stuff?' That would be a paraphrase, maybe with a few blanks in between.

“Customer grumbling isn't the only hurdle facing the effort to bring earth-friendly policies to a $163 billion-a-year conglomerate that sells everything from airplane engines to light bulbs. Some of Mr. Immelt's underlings have questioned whether carbon-dioxide emissions are a proven cause of climate change.

“And he himself is willing to push GE only so far. ‘I don't want to change the economic flow of the company,’ Mr. Immelt says. So GE continues to sell coal-fired steam turbines and is delving deeper into oil-and-gas production. Meanwhile, its finance unit seeks out coal-related investments including power plants, which are a leading cause of carbon-dioxide emissions in the U.S.

“Yet these limitations haven't stopped GE from making a big marketing to-do of its commitment to the environment. Indeed, the primary focus of the conglomerate's marketing efforts these days is a $1 million-a- year campaign to publicize its search for ‘innovative solutions to environmental challenges.’

“GE has dubbed its campaign ‘ecomagination,’ and Mr. Immelt calls it a success. GE is on track to sell $14 billion of its self-described environmentally friendly products this year, and projects the total will grow more than 10% annually through 2010. GE says it reduced its own greenhouse-gas emissions by 4% between 2004 and 2006, even as revenue grew 21%...

“His own lieutenants acknowledge that Mr. Immelt is creating friction. ‘Is there a tension there? Of course there is,’ says Lorraine Bolsinger, who runs the ecomagination program. ‘This is a big tough issue. The whole world is moving in a new direction. We've got to try to keep pace.’

"GE is ‘looking toward the future but they are not yet giving up all of the past,’ says Dan Bakal, director of electric-power programs for CERES, a coalition of investors and environmental groups.”

(“Greener Postures: GE's Environment Push Hits Business Realities; CEO's Quest to Reduce Emissions Irks Clients; The Battle of the Bulbs.” Kathryn Kranhold. Wall Street Journal: September 14, 2007. pg. A.1)


THE TEST over time is how one works toward balancing competing demands and apparently conflicting priorities. This appears to be one of the core capabilities for successful leadership in our age.

Ask Dylan

“China has long prided itself on being the world's workshop. Shipments of labor-intensive, low-cost goods -- everything from toys to tube socks to tires -- turned the country into an exporting colossus, powering growth of nearly 10% a year for the past three decades. But as Beijing is now realizing, there's a downside to that strategy...

“China's technocrats are introducing a series of measures designed to change the face of its export industry. On their own, each of these initiatives may not seem momentous. But as a whole they define a major change in China's industrial policy--one that favors higher value-added industries such as sophisticated electronics and heavy machinery, possibly at the expense of low-cost manufacturing and assembly. And they're sure to help boost efforts by companies at the low end to move away from simple production for multinationals and develop their own designs and brands. The potential payoffs: a cleaner environment, better-paying jobs, and an improved reputation for the country's goods.

“It won't happen overnight. But the Chinese government is using a combination of carrots and sticks to get companies to fall into line… The changes will force companies to make ‘more technologically advanced products and develop their own brands,’ Wang Qinhua, a director at the Commerce Ministry, told reporters on July 25...

“Beijing's edicts will speed a process already set in motion by market forces… ‘For years, China has beaten its competitors with low costs,’ says Liu Xueqin, a researcher at a think tank affiliated with the Commerce Ministry. ‘This strategy has now run its course.’

“One company feeling the squeeze is Wenzhou Taima Shoes… When Wenzhou built a new factory in 2005, it imported more costly shoe-manufacturing equipment from Italy to replace its Chinese-made machines...

“Other Chinese exporters are investing in foreign knowhow. Three years ago, Zhejiang-based High Fashion Silk Co. began hiring Italian and American designers to create clothing and ties for customers such as J.C. Penney and Liz Claiborne. General Manager Lin Ping says it's money well spent because his buyers are willing to pay some 10% more for the new designs. ‘A company's ability to survive depends on its innovation,’ says Lin.

“Economists point to China's changing export mix as a sign that the country is making the transition out of low-end manufacturing and into more advanced sectors. One example: China recently turned into a net exporter of industrial machinery, led by the likes of Shanghai Zhenhua Port Machinery Co., which makes more than half of all the cranes used at the world's ports. And high-tech gear accounted for 29% of China's total exports last year, up from 15% in 2000.”

(“China Rushes Upmarket; In the face of scandals, Beijing shifts incentives to higher-quality exports.” Chi-Chu Tschang. Business Week: September 17, 2007. , Iss. 4050; pg. 38)


A GENERATION HAS PASSED, and we've seen it coming...

Come gather 'round people
Wherever you roam
And admit that the waters
Around you have grown
And accept it that soon
You'll be drenched to the bone.
If your time to you
Is worth savin'
Then you better start swimmin'
Or you'll sink like a stone…

Don't stand in the doorway
Don't block up the hall
For he that gets hurt
Will be he who has stalled
There's a battle outside
And it is ragin'.
It'll soon shake your windows
And rattle your walls…

And don't criticize
What you can't understand…
Your old road is
Rapidly agin'.
Please get out of the new one
If you can't lend your hand.

The line it is drawn
The curse it is cast
The slow one now
Will later be fast
As the present now
Will later be past
The order is
Rapidly fadin'.
And the first one now
Will later be last
For the times they are a-changin'.
(Bob Dylan)

For Better And Worse

“If it seems like you are listening to music more but enjoying it less, some people in the recording industry say they know why. They blame that iPod that you can't live without, along with all the compressed MP3 music files you've loaded on it…

“Because both compressed music and the iPod's relatively low-quality earbuds have many limitations, music producers fret that they are engineering music to a technical lowest common denominator. The result, many say, is music that is loud but harsh and flat, and thus not enjoyable for long periods of time...

“Today, young artists think MP3s are a high-quality medium and the iPod is state-of-the-art sound. It isn't. Producers and engineers say there are many ways they might change a track to accommodate an iPod MP3. Sometimes, the changes are for the worse…

“This shift to compressed music heard via an iPod is occurring at the same time as another music trend that bothers audiophiles: Music today is released at higher volume levels than ever before, on the assumption that louder music sells better. The process of boosting volume, though, tends to eliminate a track's distinct highs and lows.

“As a result, contemporary pop music has a characteristic sound, says veteran L.A. engineer Jack Joseph Puig, whose credits include the Rolling Stones and Eric Clapton. ‘Ten years ago, music was warmer; it was rich and thick, with more tones and more 'real power.' But newer records are more brittle and bright. They have what I call 'implied power.' It's all done with delays and reverbs and compression to fool your brain…’

“When CDs were first introduced, they were regarded as cold and flat, compared with vinyl. But their sound improved as engineers learned the medium, a process many hope will happen again with MP3s and portable music players…

“Still, engineers experience some nostalgia about earlier technologies. Says Mr. Saylor, ‘What we've lost with this new era of massive compression and low fidelity are the records that sounds so good that you get lost in them. ‘Dark Side of the Moon’ -- records like that just aren't being made today’."

(“Are Technology Limits In MP3s and iPods Ruining Pop Music?” Lee Gomes. Wall Street Journal: September 12, 2007. pg. B.1)


HOW ABOUT the sounds of silence? Try a day without the iPod, car audio, television, etc. and hear all of what is waiting for you. Listen care-fully.

A Bit Anxious

“Stepping up its campaign to shed light on the mysteries of executive pay, the Securities and Exchange Commission has sent letters to nearly 300 companies across America critiquing disclosures in this year's proxy statements and demanding more information.

“The SEC's requests could set up a confrontation over details the agency wants that companies say are competitive and should remain secret. The federal securities regulator, for example, wants to know more about the targets and benchmarks companies use when they tie pay to performance.

“The SEC's letters, which were faxed to chief executive officers, have caused much consternation -- and some complaints...

"’CEOs aren't used to getting communications from the SEC,’ said one attorney. ‘They're a bit anxious.’ In forwarding his letter to a colleague, one annoyed chief scrawled in the margin: ‘What the hell is this?’

"’The letters are intended to help issuers better explain why they've paid executives what they've paid them,’ said John Nester, an SEC spokesman. The agency is giving most companies until Sept. 21 to either respond or provide reasons why they can't; the letters will be made public later this year. The SEC will send out another batch soon…

“One question that has generated a lot of concern relates to performance targets. Under the SEC's rule, if a company ties executive pay to performance, it must disclose the targets, or if disclosing them would result in competitive harm, explain how difficult it is to meet them. Now, the SEC is asking companies to document why the targets should be treated as confidential and excluded…

“The SEC is also asking companies to discuss whether they expect executives to meet future targets. Typical wording: ‘If disclosure of the performance-related factors would cause competitive harm, please discuss further how difficult it will be for the named executive officer or how likely it will be for you to achieve the target levels or other factors.’

“Moreover, the SEC is asking companies to name specific competitors used to create industry benchmarks for pay. It also wants additional information about the role played by the chief executive in setting his own compensation or that of other employees...

“Some letters posed highly technical questions, even though SEC officials had previously encouraged companies to simplify their often wordy proxies. ‘With comments asking companies to expand their disclosures and to provide additional discussion, the result in many cases will be longer, not necessarily more concise or readable’ proxy statements, said Ronald Mueller, a partner who specializes in executive pay at law firm Gibson, Dunn & Crutcher.”

(“SEC Asks Firms to Detail Top Executives' Pay.” Kara Scannell and Joann S. Lublin. Wall Street Journal: August 31, 2007. pg. B.1)

TRANSPARENCY? Can executives accurately assess these concerns? How well are we able to look forward? Will their confessions be valid, accurate and thus reliable? Will they be actionable? While transparency may appear to be enhanced, will we have real confidence in the process?

Deep Thinking -- A Sacred Cow?

“Investors who have grown impatient with Yahoo Inc. may have to wait awhile longer to see any pop in its stock.

“The Internet company replaced its chief executive in June and this summer kicked off a strategic review to better position it for a changing online-advertising market and compete with the likes of Google Inc.

“Now, partway through Yahoo's strategic soul-searching, people familiar with the matter say a major overhaul appears unlikely.

“When the Sunnyvale, Calif., company announced lower second-quarter profit and dropped its 2007 forecasts in July, co-founder and new CEO Jerry Yang told analysts that he planned to spend roughly the next 100 days crafting a long-term strategic plan and making any necessary changes to the company's staff and organization…

"’There will be no sacred cows, and we need to move quickly,’ Mr. Yang said in July. He promised a progress report this fall and then ducked out of public sight, declining even to give the standard postearnings media interviews…

"’Jerry Yang and Sue Decker are committed to making significant changes to the way Yahoo operates, and to sharpening its focus on key initiatives that will enable the company to improve its performance and strengthen its position as the most open, vibrant online marketplace for consumers, advertisers and publishers,’ said a company spokeswoman in a statement.

“In the absence of bold strokes, Mr. Yang's other moves are likely to seem much more mundane. The company has hired San Francisco consulting firm Stone Yamashita Partners to help guide its strategic deep-thinking and bring its new management team together. Top executives have convened for Friday off-site meetings over the summer and joined committees on issues such as corporate culture as part of that strategy-consulting process.

“The people familiar with the matter say Mr. Yang has internally played down the significance of the 100-day timeline and that no big strategic announcements are planned at the end of that period next month.”


(“Yahoo's Cautious Course; How Now 'Sacred Cow'? Lack of Major Overhaul Poses Test.” Kevin J. Delaney. Wall Street Journal: September 10, 2007. pg. C.1)

PROFESSIONAL MANAGEMENT is out; we're back to the founder, so let's call in outside consultants. Surely, they will be in deeper touch with our soul, and more committed to our mission...

Courage

"In these markets, everyone's afraid.

"It's your response to the fear that matters most. Are you going to crack up like Howard Dean in 2004? Or detach yourself, analyze and respond like Neil Armstrong in 1969?

"Astronauts, firefighters and soldiers train to respond to moments of duress. The rest of us are left on our own. And in most cases, the results aren't good. We generally underestimate the true dangers arrayed against us, overplaying the dramatically violent outcomes over the more insidious ones. And in times when we lack information, we're prone to imagine the worst, scientists say. We are only as effective as our emotions allow us...

"Neil Armstrong's cool is on vivid display in the wonderful new movie, 'In the Shadow of the Moon,' about the Apollo lunar missions. In one fraught moment, Mr. Armstrong is running low on fuel as he pilots the spacecraft to the moon's surface. The cameras pan to the smoking, sweating wonks in Mission Control. Piped in by radio, Mr. Armstrong's voice sounds unshaken, almost blase.

"His best human trait -- his intellect -- has subdued his most animal one -- his fear.

"That's been the experience of 67-year-old Lewis van Amerongen, formerly of private-equity firm Gibbons, Green, Goodwin & van Amerongen. Having pioneered the buyout business, the firm got bogged down in the now-infamous 'Burning Bed' purchase of Ohio Mattress Co. in the late 1980s. When the junk-bond market collapsed soon afterward, bank First Boston couldn't refinance a $457 million bridge loan and ended up owning most of the company.

"'Each generation has to go through it and has to emotionally experience it,' Mr. van Amerongen said in an interview. 'Without that, it's just an academic exercise.'

"In other words, there is no substitute for having survived other fearful experiences. The best antidote for fear just may be fear itself."

(“The Game: Fear the Roller Coaster? Embrace It.” Dennis K. Berman. Wall Street Journal: September 11, 2007. pg. C.1)

EMOTIONAL MATURITY and strength lie in acting so that our choices drive our feelings, thus not letting our emotions dictate our actions. Courage is making good choices while afraid. If we wait until we are unafraid to act, we will miss the better part.

Castles In The Sky -- Lines In The Sand

"Butchers, bakers and candlestick makers should enjoy their freedom while it lasts. These lucky professions have so far managed to stay off the list of livelihoods that now require a license to practice in any number of states. Taxidermists, massage therapists and interior decorators aren't so fortunate: They're among the professionals who must have their skills validated by the government.

"Overall, the level of licensing regulation in the workplace is rising precipitously, with more than 20% of the workforce now required to get a permit to do their jobs -- up from 4.5% in the 1950s...

"With a total of more than 1,000 occupations now controlling entry… some professional licensing may be a defensive outgrowth of the lawsuit culture, as business owners seek protection against, say, customers irate over how their haircuts turned out. But most is pushed by businesses for the age-old reason of restricting competition...

"But even as one silly new credential is erected, others are being challenged. One Californian is suing the state for requiring him to spend two years studying to get a license to install spikes that deter pigeons from nesting. This, despite the fact that the plaintiff is already the holder of five state pest-control licenses. His case went before the Ninth Circuit Court of Appeals last month, where the government's own witnesses acknowledged that the law is irrational and intended to make it harder for new competitors to qualify...

"The government's role in protecting the public from fraud may argue in favor of licensing in some very specialized, learned professions. A doctor or lawyer clearly needs a certified level of expertise. But even these professions sometimes attempt to create their own guild monopolies, such as when lawyers lobby to bar non-lawyers from assisting the public with such routine legal tasks as writing wills. It's even harder to see public benefit when similar rigorous oversight is applied to people who want to catch a reptile in Michigan, serve as a tribal rainmaker in Arizona, or be a fortune-teller in Maryland. That's right; it takes a license to predict the future in Baltimore, which we doubt leads to a better forecasting record."

(“Licensed to Kill.” Wall Street Journal: September 10, 2007. pg. A.14)


THE FOLLOWING QUOTATION has been sitting on the shelf, patiently waiting for the opportune moment: “Somebody is always going to try and game the system. That is… a general issue, whether it is in religion, the private sector or the public sector.” -- So what's your threshold?

(Sandy Weill, former chairman and CEO of Citigroup, in “Wisdom From Weill,” Chief Executive. New York: Jan/Feb 2007., Iss. 223; pg. 10)

Strength as Weakness

“How could Countrywide Financial veer so badly off course? For years, the Calabasas, Calif., mortgage lender was considered the shrewdest, toughest player in the industry, with its No. 1 market share as proof. Yet in the past 120 days, the intensifying U.S. housing slump and related credit scares have sent Countrywide's stock tumbling and forced the company to scramble for liquidity.

“Such calamities aren't supposed to befall market leaders. Yes, they may falter a bit in tough times. But conventional wisdom regards the biggest company in any industry -- be it Intel Corp., Procter & Gamble Co. or Anheuser-Busch Cos. -- as practically indestructible. Such companies have the most customers, the largest sales forces and the broadest grasp of their industry's nuances. They are supposed to be like champion squash players holding center court and forcing weaker rivals to scurry in the corners.


“Jack Welch… saw market leadership as a reliable path to above-average profitability and growth. In most cases, he was right.

“But as Countrywide's affair shows, market leadership is becoming far more perilous than outsiders might think. New rivals keep trying to unseat the champ. Strategies that once fueled breakneck growth may backfire in hard times. And in some cases, market leaders focus so intently on what they know best -- production and sales -- that they get guillotined by unexpected changes in other arenas, such as regulation or finance…

“A case study developed at the Massachusetts Institute of Technology's Sloan School of Management analyzes Callaway Golf Co.'s missteps in the late 1990s, after its Big Bertha drivers helped it become the leading golf-club maker. Callaway kept expanding, but demand waned as Asian economies weakened and U.S. golfers balked at constantly buying fancier Callaway offerings. Inventory built up, profit skidded and a management shake-up ensued.

“Callaway is a valuable example because it makes clear to students that managements on a winning streak can misread market conditions, explains Rebecca Henderson, a Sloan professor. ‘People assume that more market share is automatically good,’ she says. ‘It's not. Sometimes firms focus so hard on building share that they build way beyond the true market for their products’."


(“Business: Countrywide Finds No. 1 Spot Isn't Easy.” George Anders. Wall Street Journal: September 5, 2007. pg. A.2)

SOMEDAY Google, Microsoft, P&G, Exxon-Mobil, Wal-Mart may hollow themsleves into magnificent shells of their former selves. Keep our eyes open and our hearts clear so that we may be taught.

You're Not a CPA or MBA, Are You?

“When Kerrii Anderson won the permanent chief executive post at Wendy's International Inc. last November, she called the 71-year-old widow of Wendy's founder Dave Thomas with the news.

"’Can you handle this?’ Lorraine Thomas recalls asking her. She doubted Ms. Anderson, an accountant by training, was the right person to revive the hamburger chain that has struggled since Mr. Thomas's death five years ago.

“Ms. Anderson insisted she was up to it. But nine months later, the CEO's turnaround plan is floundering. Franchisees accuse her of mismanaging the chain's menu expansion and launching quirky ad campaigns that have alienated some loyal customers. Big shareholders complain that the Duke University MBA's lack of operating experience should have precluded her from the top job. And now her board is shopping for a buyer…

“Wendy's ‘was all driven by Dave,’ says Gary Rozanczyk, a Wendy's franchisee who began working for Mr. Thomas more than 30 years ago. ‘You just trusted this man that he was going to do the right thing.’

“One Saturday morning in 2000, Mr. Thomas answered the front door of his Columbus home wearing a golf shirt, shorts and tennis shoes. His invited guest was a woman sporting a black dress with a jacket. Kerrii Anderson had come to interview for a job as Wendy's chief financial officer…

“Talking with Mr. Thomas in his living room, Ms. Anderson says she was struck by how down-to-earth he was. ‘Dave’ wasn't the kind of executive who prized fancy degrees over hands-on experience -- even for high-level posts. During the interview, Ms. Anderson recalls being grilled about her credentials. ‘You're not a CPA, are you?’ Mr. Thomas asked. She told him she was. ‘You're not an MBA, are you?’ he followed up. She said she was. ‘Kerrii,’ he told her, ‘you cannot think like an accountant. You have to take care of your customer’."

(“After Dave: How Wendy's Faltered, Opening Way to Buyout; New CEO Sought Return To Founder's Values; Peltz Waiting to Pounce.” Janet Adamy. Wall Street Journal: August 29, 2007. pg. A.1)


"DOWN TO EARTH" and "in touch" sound remarkably linked, don't you think? And, doesn't the question, "Can you handle this?" take on depth and importance as we try to get our hands around something that is so much bigger than a matter of degrees?