“There's no question what Wall Street thinks about Motorola's new co-chief executive, Sanjay Jha. The communications conglomerate's shares jumped 11% to nearly $10 on Aug. 4 after announcing the former Qualcomm chief operating officer would take the reins of Motorola's mobile-phone business. Jha brings loads of industry experience and extensive familiarity with wireless investors, ending the Schaumburg, Ill. company's five-month search for an executive to head the troubled cell-phone unit. ‘He is the perfect guy for Motorola,’ says Mark McKechnie, an analyst with American Technology Research... ‘If anyone can turn this handset division around, it's Sanjay Jha.’
“Still, for all of Jha's experience, he faces one huge challenge: Motorola's corporate culture. For the cell-phone unit to recover, Jha will have to fully cleanse Motorola of its sluggish, bureaucratic ways and teach a company that has long let engineers drive product development to think more like marketers, in tune with consumer tastes. It's a challenge that has proved insurmountable for several top Motorola executives…
“Every CEO who has run the company since Gary Tooker took over in 1993 has attempted to infuse the company with more entrepreneurial DNA. Under Edward Zander, who left in December, Motorola managed to hasten the production of a new slim phone, which became the spectacularly successful Razr. But leadership could not keep pace when consumers turned their attention away from hardware to an increasing focus on the software that bestows new functionality on phones...
“Jha, an engineer by training, sounds hesitant to overhaul the company's deep-rooted engineering culture, however. ‘I think the engineering culture is a tremendous asset to Motorola,’ he told BusinessWeek in an interview. ‘I think the challenge is to make that culture stay in tune with the marketplace. When it's a problem is when it gets disconnected with the marketplace. And my job is to keep it connected.’”
(“Motorola: The New CEO's Real Challenge; Co-CEO Sanjay Jha has strong experience in wireless, but his most important task is dismantling the mobile-phone unit's bureaucratic culture.” Roger O. Crockett and Olga Kharif. businessweek.com: August 5, 2008)
ALL ACTION, ALL CHANGE, all strategy comes from our foundational beliefs about the way things are and the way things work, and from our values and priorities.
When shared norms exist around these beliefs and values, there will be either inertia or potency, recalcitrance or revolution, momentum or initiative.
But it all begins in the heart and soul of the firm, begging the question, "Is the CEO in touch?"
Strategy's Heart & Soul
Perceptions and Icarus
“Investors have sharply cut the stock price of Whole Foods Market Inc. in the past year, pushing shares into the low $20s from more than $50…
“A big part of the company's problems stem from its success. After branding itself as a high-end shopping experience, it's now contending with an apparent misperception among consumers that it's expensive.
“While Whole Foods is ostensibly a consumer staple (a company that performs in a down economy because consumers must shop for food), the reality is that ‘the shares actually trade like a consumer discretionary stock,’ says Mark Miller, at William Blair & Co. Stock analysts who have done apples-to-apple comparisons report that Whole Foods, despite its image, is competitive on prices. The chain doesn't sell the down-market brands its peer do, but where products overlap, and with its well-regarded private-label brand, Whole Foods is often as a good a deal or better than traditional grocers. But shoppers often stuff their carts with pricier items that fatten their bills, leading to the impression that the chain is a luxury.”
(“Ahead of the Tape.” Jeff D. Opdyke. Wall Street Journal: August 5, 2008. pg. C.1)
THE VERY THING that allows you to soar can become the cause of your downfall and demise...
...especially to the degree that our world of action is founded upon a world of decisions founded in a universe of perceptions, images and impressions.
We weave our realities as our eyes, minds and hearts filter what is being filtered by others' eyes, minds and hearts.
The New Ball & Chain
“Should a [CEO] use a computer? … Are there jobs that are too important for the office holder to be spending the day deleting spam or closing pop-up windows in a browser? …
“It's a fair question to ask: Can someone who never touches a computer truly be in touch with what is happening in the world? The computer industry has worked very hard over the past few decades to cause us to suspect as much. But what about the opposite question: Does anyone who spends all day in front of a PC, forging a river of data posing as information, have any time to think?
“A group of technology reporters once received the CEO of a midsize, low-tech company eager to impress his listeners with his connectedness. He described his day as one long session checking emails and news alerts, save for the occasional interruption of a staff meeting or a sales call.
“All this was related with pride, as though it was what modern executives were doing. His listeners, though, were struck by how he seemed to have no time left in the day to think, which was surely why he had yet to realize that he was spending his day consuming the information version of junk food…
“A computer, far from making you more productive, instead loads you down with things to do, and it's important for the machine to know who is boss…
“For a [CEO], a computer can be a … distraction. Sure, he could spend five minutes reading an especially insightful blog post from one of his core constituencies. But it would be better for him to be spending the time having coffee with the person thinking the thoughts that the world will be blogging about a week or a month hence.
“With the world at his beck and call, a [CEO] is one of the few people lucky enough to be able to learn more off-line than he would chained to a keyboard.”
(“Technology; Portals: Note to Next President: Avoid Computers.” Lee Gomes. Wall Street Journal: July 30, 2008. pg. B.6)
LOOK 'EM IN THE EYE. Listen to them breathe. See them think. Hear their hearts beating. Get in touch. Connect.
Connected strategists turn off the workplace version of the boob tube, leave their offices behind, and listen, watch and connect on the shop floor and out in the field.
That's the real world; that's the real deal. There is real insight.
My World, The World
“Many newspaper readers, recalling what they read at the beginning of this year, must be rubbing their eyes. How can the economy still be functioning despite the perfect storm of recession and housing collapse that was supposed to engulf it?
“Although markets are volatile and segments of the country are having a hard time, the national output is up, not down, this year. How has the economy pulled this off? Is there something the pessimists were missing?
“The answer is yes, and here's why. People tend to anthropomorphize the world around them, and not just in economics. We look at the outside world and assume that it is governed in the same way as our own lives…
“The same parochial streak in human nature is rife in economic commentary. In the context of a household or a business, debt is a burden and can become a threat. But for society as a whole, debt finance is a prime means of capitalizing production and growth.
“It's extraordinary, then, that in national debate the narrow view drowns out the broad…
“What's excessive now is fear, not debt: Fears of insolvency and private-sector indebtedness are misplaced and harmful. They place obstacles in the way of ill-used capital that seeks to move toward safer and more profitable employment. They plunge the stock market into turbulence. They push government into hasty actions that intrude more aggressively into private choices and decisions. They undercut the market-price system, without which the economy cannot allocate resources productively. Last but not least, these fears trigger the proverbial false alarm in a crowded theater, sending everyone stampeding for the exits…
“We shouldn't expect forecasters to shrug off the depressing effects of what's happening in their own back yards. This is human nature. We just need to keep things in perspective when we listen to them. A more objective diagnosis is especially needed during an election year, in which many unfounded fears are broadcast and amplified by the media…
“Failure to recognize this endangers the mental health of our society. We create a far bigger tragedy when we lose heart, change the rules of the game, or act recklessly with quick fixes.”
(“Economics as Metaphor.” David Ranson. Wall Street Journal: July 25, 2008. pg. A.15)
EYES, MIND, HEART, actions. That is the universal pattern of managing strategically.
Objective business and social realities are constructed out of millions of perceptions, interpretations and feelings weaving together through time. So, the way things are may not match the way things ought to be; but still, that is indeed the way things are.
Our real challenge then is to remain clear-eyed, open-minded, and true-hearted through the bobbing and weaving of our times.
Perception 1, Reality 2
“Business confidence is falling but at a less alarming rate than previously, according to the latest global business barometer, a quarterly survey of more than 1,000 executives conducted for The Economist by the Economist Intelligence Unit, its sister company. The overall confidence index, which measures the balance of bosses who think business will pick up over those who expect it to worsen, was still fairly negative. Yet most industries saw only a small decline in confidence, and the mood of executives in entertainment, media and publishing, and in health care has lifted a little. North and Latin America were the only regions to see an overall improvement in executive mood in the past three months.”
(“Global business barometer.” The Economist: July 26, 2008. pg. 53)
UNDERSTANDING that perception is reality, then what is the reality of our perceptions?
(check out tomorrow's posting for more... )
Hire, then Higher than Higher Ed
“Indian industry isn't relying on India's education system to gain an edge. Indian industry has developed a surrogate education system that can take workers with weak educational backgrounds and turn them into world-class R&D specialists…
“India graduates around 200,000 engineers a year, but the quality of the students varies widely. India's main tech trade group, NASSCOM, says that only half of these new graduates are employable…
“Yet… India is rapidly becoming a global R&D hub in several industries. Its scientists are doing sophisticated drug discovery for Big Pharma. Its engineers are designing key components of jetliners for Boeing and Airbus, [and] developing next-generation networking equipment for companies like Cisco Systems…
“In all of the companies we studied, we found that the intense focus by senior corporate executives on implementing companywide staff-development initiatives caused dramatic improvements in productivity and performance.
“Workforce development helps to explain, for example, how IT service firms have been able to increase billing rates and productivity levels and maintain high levels of growth and profitability despite skilled-talent shortages, rising salaries, falling exchange rates, and other challenges. Employee development similarly explains how companies in India are able to hire bright but largely inexperienced talent to successfully engage in R&D and other innovation.
“The achievements of companies in India show that employee investment, development, and empowerment are central and critical means to building and sustaining long-term competitiveness and innovative capacities in a global knowledge economy. The U.S. can learn and incorporate these lessons from India as it rethinks how to train and develop its workforce to maintain its global competitive edge. U.S. companies have long played the guru. Perhaps the time has come for the guru to learn from a disciple.”
(“What the U.S. Can Learn from Indian R&D; Engineering companies in India play a leading role in educating their research employees, a practice the U.S. can adopt to help keep its global competitive edge.” Vivek Wadhwa. BusinessWeek.com: July 24, 2008)
IF PEOPLE ARE INDEED potentially your greatest asset and your greatest potential liability, then what is your best investment?
Private enterprise has always out-educated educational institutions. So let's not lose our grip on the future by loosening our grasp on where the future really lies.
Retrospective Sensemaking
“Microsoft Corp. Chief Executive Steve Ballmer tried to put a good face on the software maker's failed attempt to buy Yahoo Inc. and pressed the case for Microsoft's continued investment in online services -- particularly Internet search…
“Mr. Ballmer's comments came at Microsoft's annual meeting with analysts at its headquarters in Redmond, Wash. He and other executives devoted much of the meeting to addressing investor concerns about Microsoft's Internet business. Central to his strategy, Mr. Ballmer said, will be boosting spending on online-related technologies and marketing, and on buying other companies.
“‘We're going to have to ante up in a significant way to even be in this game,’ Mr. Ballmer said.
“Microsoft spent most of this year trying to strike a deal with Yahoo -- first trying to buy the whole company and then trying to buy its Internet-search business -- but that quest ended when Yahoo rejected Microsoft's offers...
“Mr. Ballmer Thursday said that Microsoft didn't want to buy Yahoo ‘at the wrong price’ and noted that the inability to reach an agreement in the spring made it impossible to start a regulatory review of any deal before a new U.S. president took office. He also said that buying Yahoo would have created ‘huge integration overhead’ to merge the two companies.
“Without Yahoo, he said, Microsoft will have more flexibility to try to attack Google Inc. with new technologies and acquisitions in Internet search. ‘I'm not going to say it's not a big bet. It is. I'm not going to say it's not risky. It is,’ he said.”
(“Microsoft Makes Case for Online Push --- Ballmer Plans to Bulk Up Technology, Marketing And Pursue Acquisitions.” Robert A. Guth and Jessica E. Vascellaro. Wall Street Journal: July 25, 2008. pg. B.7)
"NOW I SEE WHY we didn't buy Yahoo; it would have been too costly and burdensome!"
Whether in hindsight or in foresight, watch out for the hidden challenges of buying into salvation through acquisition.
You bet your life! Learning is for those who value clearer vision.
Loose Firm
“In its early days, Chris Wallace's company didn't always have enough work to keep its staff fully occupied designing interactive Web sites for clients. But it didn't want to lose any talent. So he and his co-founders decided to tell employees they could pursue their own interests in their downtime, doing just about whatever they wanted, on the clock.
“An unexpected side benefit emerged. Employees spent some of their spare time writing music and building photography and video skills. When the company needed ideas to pitch to potential clients, it tapped into employees' personal projects. Mr. Wallace says he has had meetings with potential clients where 40% of the work he showed them was done by employees in their downtime…
“These days, downtime is less frequent. But management's philosophy is the same: As long as employees get their work done, they're free to pursue outside projects from their cubicles. The company continues to lean on employees' personal projects to help win new clients and expand the work it does with existing clients.
“The model works, Mr. Wallace says, because of the company's small size and collegial atmosphere. Most people in SuperGroup's Atlanta headquarters know what their colleagues are working on in their personal lives. Twice a week, the whole staff gathers to discuss both company business and personal projects. ‘A larger organization wouldn't have that intimate knowledge,’ says Mr. Wallace.”
(“Small Business Link: Tapping the Creativity of Downtime; Web-Design Firm Uses Projects Employees Pursue in Their Spare Time at Work to Help Win New Business.” by Simona Covel. Wall Street Journal: July 24, 2008. pg. B.5)
GRIP SAND TIGHTLY in your fist, and it will run out quickly.
Hold a bird in your hand just firmly enough to allow it to live, and perhaps it will sing.
We may be our work, and our work may be who we are. Why not magnify the whole, lightly in touch?
The Heart of the Matter
“Roche Holding AG's $44 billion bid to gain full ownership of Genentech Inc. took the staunchly independent biotechnology company by surprise and risks upsetting the highly successful -- but delicate -- relationship the partners have developed over two decades...
“Genentech employees expressed concern about the proposed takeover's impact on Genentech's culture and identity…
“Roche's chief executive, Severin Schwan, said repeatedly in a conference call… that Roche wants Genentech's drug researchers to keep working as an independent group.
“‘We will do everything to preserve the unique and science-driven culture of Genentech, something which made Genentech so successful and something we want to build on,’ he said in a separate interview.
“The danger, though, is that the big Swiss company will instead prove stifling to Genentech's scientists and other employees. When big drug makers have taken over biotech companies in the past, key scientists have often defected to start-ups or other opportunities...
“Michael Ross, a Ph.D. biochemist from the California Institute of Technology and Harvard who was an early Genentech employee, left six months after Roche acquired its initial stake in 1990.
“Dr. Ross… said Roche would be foolish to tamper with ‘a unique culture, a Valley culture that has aspects of Google and the old Hewlett-Packard.’ But, if Roche doesn't touch Genentech governance or culture, the deal ‘could be smart,’ Dr. Ross said…
“When Roche first bought control of Genentech in 1990, it allowed the company to keep working as an independent unit that decided which research to pursue and how to spend its money. Both companies have always maintained that this arms-length relationship is crucial to Genentech's success.
“Mr. Schwan said Roche would offer Genentech employees ‘attractive and competitive’ packages to try to keep them. But he said that ‘protecting their culture and providing an environment where they feel respected’ would be more important in retaining them.”
(“Roche Bid Blindsided Genentech; Top Executives to Meet Today to Discuss Swiss Drug Giant's $89-a-Share Offer for Rest of Biotech Firm.” Jeanne Whalen, Dana Cimilluca and Marilyn Chase. Wall Street Journal: July 22, 2008. pg. B.1)
MORE THAN MONEY, more than title... heart, soul, humanity, self-determination, and relationships of trust drive our world.
While mainstream pharmaceutical firms have tried to scientificize and bureaucratize innovation, deft CEOs understand that connection, touch and feel are the prime tools of delicate success.
Outsourcing Management
“Accenture… a leader in management consulting and technology outsourcing, profits handsomely by helping big corporations change continually to meet the demands of their markets…
“Like their brethren at McKinsey, Accenture's nearly 15,000 management consultants help businesses and governments implement strategic plans to improve such things as customer relationships, finance and performance management.
“It also takes on an outsourcing role for companies to help them lower costs, assuming responsibility for such functions as human resources, finance and information technology. Like EDS, it also handles IT-infrastructure outsourcing…
“CEO William Green has said clients are looking to enter new markets, lower costs, manage increased levels of risk and ‘tackle the headwinds’ of the economy. ‘That is the stuff that makes our business go,’ he said during the company's third-quarter conference call...
“The trends don't appear to be slackening. In late June, Accenture once again raised its outlook for revenue growth in the fiscal year ending Aug. 31, to the upper end of its previously announced 9%-12% guidance in local currency, and its forecast for diluted EPS to $2.63 to $2.65, from its previous range of $2.55 to $2.60.
“CEO Green said in the conference call that ‘we feel better looking at '09 than we felt this time last year when we were looking at '08.’ …
“[Tim] Fidler of Ariel Investments says that consulting is sometimes one of the first things to be cut during a recession, ‘Accenture projects are typically mission-critical to an organization.’
“And unlike its competitors, the same Accenture professionals who are selling projects to customers later help with actual work on the project. That's one reason, Fidler says, that Accenture's win rates are so high.”
(“The King of Cost Cutting.” Robin Goldwyn Blumenthal. Barron’s: July 21, 2008. pg. 21)
IF MANAGEMENT CAN'T handle strategic planning, customer relationships, finance, performance management, HR, IT -- the "mission-critical" responsibilities that "makes our business go" -- then what are they doing... ?
If they are not driving strategy, tactics or implementation, then what are they doing?
With such high-priced hand-holding so rampant, are shareholders paying twice... for managers who ought to be in touch, and for consultants who are not?
What are they doing?
Opportunity in Weakness
“Across the U.S. banking industry, a chasm is opening between the strong and the weak.
“More than a month after scooping up Bear Stearns Cos., J.P. Morgan Chase & Co. posted a smaller-than-expected 53% decline in quarterly profit, helped by underlying revenue strength in the New York company's main businesses. The results helped spur a rally by beleaguered bank stocks, even though the future looks as treacherous as ever.
“Like Wells Fargo & Co., the San Francisco-based bank that lifted the stock market with surprisingly decent second-quarter results Wednesday, J.P. Morgan's net income of $2 billion, or 54 cents a share, showed that some battered U.S. banks remain resilient enough to capitalize on the havoc rippling through the industry as the economy struggles.
“‘There's a pretty big significant differentiation between the people who like their balance sheets and the people who don't -- and we're all going to be living with our balance sheets for a while,’ said James Rohr, chairman and chief executive of PNC Financial Services Group Inc. …
“The Pittsburgh bank's profit rose 19% to $505 million, or $1.45 a share, from $423 million, or $1.22 a share in last year's second quarter. PNC largely stuck to its roots as many regional-bank rivals chased go-go growth during the housing boom, a decision that will haunt them for years.
“J.P. Morgan, the biggest U.S. bank by stock-market value, is benefiting from its emphasis on cost-cutting and a strategy of squeezing additional revenue from existing operations. Executives at both banks made it clear Thursday that they will accelerate efforts to snatch market share from badly wounded rivals.
“‘This is a tremendous time of opportunity for our company given the weakness we're seeing broadly,’ said Michael Cavanagh, chief financial officer of J.P. Morgan.”
(“Banking's Winners, Sinners Part Ways; J.P. Morgan, PNC Results Show Resilience; Comerica Net Reflects Toll on Regional Firms.” Robin Sidel. Wall Street Journal: July 18, 2008. pg. C.1)
ALWAYS REMEMBER who you are and what you represent. Remember what you stand for, what you will not stand for, and what you will not fall for.
As the balance sheet reflects the priorities and principles of a firm's management, so too our personal sense of balance is centered and grounded in our values and integrity.
Good clear values, and solid integrity allow us to keep our balance and to prosper in times of weakness.
Remember your roots.
