@GeoffTWilson

/0 Comments/in , /by

We bring light as leaders through deliberate and constant focus on doing so. I invite you to share examples below.

Here we sit in the middle of the holiday season.

I’m here–with the freedom of conscience, thought, and expression afforded some of us in this world–reflecting on the past year and its many lessons. As I do so, I am pondering what this season of giving means to all of us who count ourselves as leaders, particularly the subset of us who strive to be enlightened leaders.

To wit: I’ve been struck over the past year with the conviction that the word “enlightened” really is the key. Anyone can occupy a position of power. Some are there due to merit, some due to happenstance, and some simply through the laziness of those who place them there. Some–those who count position and power as the ultimate ends–cast a cloud of darkness on those they lead.

The gist is this: We can “be” in a leadership position without “being” a leader. The choices we make determine whether we fulfill the role.

Bringing enlightenment–whether it be in strategic, personal, financial, fiduciary, or operational matters–is the ineluctable, essential imperative in this age of reaction, speed, spin, and selfishness. Too many lives and livelihoods ride on the backs of leaders these days–in the old days it was the bureaucracy and the rules–for leaders not to put their focus on the highest and best aspirations.

But, if you are reading this, you know that platforms like LinkedIn posts, personal blogs, and other media are sometimes used to point out what ought not be done.

I’m not going there with this one. I’m going to abide by the old saying that goes:

It’s better to light a candle than to curse the darkness.

And, so I thought I’d reflect for a minute, in the midst of Chanukkah and on the verge of Christmas, on what it means to “light a candle” as a leader. And, then, to ask you to share as well.

Both Chanukkah and Christmas celebrate the lighting of miraculous lights in their own way. Perhaps as leaders you, dear reader, and I might aspire to something short of that, but to something enduring nonetheless. So…

5 ways to light a candle as a leader

(Hundreds of others exist…Please share yours below)

1. Perform – Deliver the numbers, the project, the deal, the plan. Yes, setting a standard of performance is the first and foremost kindling of the light of leadership. Results, as they say, matter. Capability matters. Establishing a bar of performance…a standard or an expectation that others can see and understand; actually will set you apart as a leader in this day of spin and historical revision. Nobody really wants to follow a phony or a fraud.

2. Believe – Have confidence in those around you, and show it. At the root of inspirational leadership is faith the leader shows in those he or she leads. Stretch them. Challenge them. Coach them. But most of all, prove that you believe in them. Listening to them is a good start.

3. Build – Be the one who leaves something of value when you go. Focus not merely on the number of stones you lay this day, week, month, or year; but also on the ultimate edifice you are constructing. If you can’t envision the edifice, then neither can those you lead…So, stop. Even the most forthright stonemason wants to know what he’s building. Think about what you are building. This goes for the business or organization you are driving today: Earnings growth? Yes, but also longer term value! It also goes for the people you lead: Sure, they are in it for the money, but where are their careers going under your leadership? Unless your social contract is explicitly transactional (which is perfectly fine as long as it’s explicit and mutual)…Build!

4. Share – Give a piece of yourself to those you lead. The act of sharing doesn’t have to be intense or strenuous, but it ought to be sincere. Share how you’ve succeeded. Reflect on a failure or challenge. Note how you’ve been inspired by others. Share something of value to those around you that is about you but not shared for your benefit (that includes wallowing in the negative…rarely a good thing). 96% of people seek personal meaning in the relationships they have. Consider that.

5. Thank – Admit you can’t do it alone. Take the time to say thank you…yes, even for effort and not outcome. It’s true that people work for a paycheck; but none of us wants a team full of paycheck players…They rarely win.

I can think of so many others that have meant so much to me; but I’ll leave it at that. Now, it’s your turn…

I don’t always leave a call to action at the bottom of my posts. In this case, I’d very much like to hear from readers on how leaders have lit the way in readers’ professional or personal lives. If you feel so compelled, please share something ever so briefly in the comments section below.

Do it in the spirit of the season; and perhaps to enhance the endurance of enlightened leadership everywhere.

Please share…

Happy Holidays, Merry Christmas, Happy Chanukkah, Season’s Greetings, and God bless!

Geoff Wilson is a strategy executive focused on the articulation of practical strategic principles for leadership and performance. If you follow people on Twitter, you might consider following him: @GeoffTWilson

View this and other posts at the Wilson Growth Partners, LLC Blog.

Strategic Implications of Clark Griswold’s Turkey

/0 Comments/in , /by

Clark Griswold’s turkey was an object of art on the outside, and a hollow mess on the inside. So are some strategic plans. Have the courage to call them what they are.

‘Tis the season. So, I figure…why not take advantage of it?

Remember that finely-crafted 1989 cinematic masterpiece, National Lampoon’s Christmas Vacation?

It provided us with such insightful and penetrating quotations as Clark Griswold’s “Hallelujah! Holy S#*@! Where’s the Tylenol?” It also gave us that indelible image of Randy Quaid as cousin Eddie poolside with his t-shirt tucked into a leopard print Speedo.

And, who can forget Eddie, the RV, and the storm sewer?

On a more serious note, the movie has a couple of meaningful lessons for leaders.

Yes, there’s the “Jelly of the Month Club” fiasco and the classic (and useful) quote by Clark’s boss about how things sometimes “look good on paper, but lose their luster when you see how it affects real folks.”

That’s a good one for all of us to ponder as we tweak our spreadsheets this Christmas season. But…

…I’m taking on the turkey.

Remember the turkey? It was beautiful…stunning even. Ask anyone who has labored near an oven, basting a roast turkey for hours on end, and they can tell you how difficult it is to achieve the golden brown visual perfection that is the Griswold’s turkey. See for yourself:

But then, the test.

Clark puts the knife and fork to it. And, well, click here if you don’t know the story.

It’s the letdown of letdowns–a finely tuned visual feast followed by the disgust of a dry, empty, cracked, steaming hole of a broken promise.

What are the leadership implications?

For those of us who are the cooks–the ones charged with compiling and crafting strategies, plans, visions, and ideas–the siren song of great visuals with no substance constantly beckons. We have the tools to create a symphony of perfectly prepared sights, sounds, and steam. We also have the pressure to perform and incentives to placate those we answer to, whether they are managers, executives, boards, or shareholders.

For those of us who are the carvers–those charged with reviewing such plans and possibly eating the cooking–such placating visuals can be blinding, especially if they confirm our desires.

In working with more than 30 large organizations and countless small ones as employee, consultant, investor, and executive, I have had the opportunity to witness and test countless executives’ abilities to cook up a plan, if you will.

A majority of the time, the cooking survives the knife and fork. It is grounded in facts, shaped to the reality of markets and constituencies, and staged thoughtfully. It is represented by people who know what they believe and can articulate it carefully.

But, every now and then, I’ve run across Griswold’s turkey. And, it’s not always obvious. Careful use of numbers, mindful (or at least artful) omission of realities, and tight stage management of the presentation all combine to create a golden brown shell of a vision or plan that anyone would want, supported by a scaffold of…nothing.

In those cases, two things became apparent (but, again, not always obvious..keep that in mind):

First, for the executives who knew that the plan was a, well, turkey; the immense focus of their time was on parrying the knife and fork. They delay, obfuscate, rotate the turkey five different ways, or just keep saying “it’s still in the oven.” They waste time. They aren’t all bad people, but they do tend to lack the courage to call it what it is. In some cases which one could consider unethical, they avoid examination of the underlying realities because they are playing a timing game due to misaligned incentives.

Second, for those who had to eat the cooking (that is, live with the choices of the first group)–the shareholders, boards, and true fiduciaries–the surprise of the broken promise leads to needs for hard decisions. They finally put their knife into the plan to carve it and eat it; and it turns into a dry, cracked shell. When the carvers finally do take action, people are fired and in the worst of cases investigated. Boards are turned over. Divisions or entire companies are sold or shut down. Shareholders, employees, communities, vendors and customers all lose.

I’m not necessarily talking about fraud, mind you, I’m talking about window dressing on a brick wall. For example: Griswold’s turkey could be the metaphor for the vast majority of companies founded and funded during the dot com era. They had beautiful plans with no reasonable path to profit. These were not (typically) fraudulent. They were, however, absolutely built on the back of willful blindness to reality peppered with really difficult incentive issues related to agency and timing.

What are we to do?

Step 1: Admit when you are looking at Griswold’s turkey. If the plan looks nice on the outside, but is a steaming mess of emptiness on the inside, be willing to call it out no matter where you sit. Have courage.

Step 2: Go to the knife and fork every now and then. For those of us who review strategic plans and are charged with poking around, be willing to poke with more than a finger. Ask the penetrating questions about the numbers, the dynamics, and the actions underlying the shiny shell of the plan. Learn to spot the obfuscation or honest ignorance that comes with Griswold’s turkey. Really think about the responses you get to your questions.

Step 3: Be careful as an executive or board member not to inadvertently provide incentive for others to bring you Griswold’s turkey by being soft, lazy, or simply too busy to inquire. Management claims to pursue a local market strategy but can’t name the markets, segments, or tailored approaches? Hmmmm… Maybe you’ve been too easy to fool or too comfortable with current performance.

Step 4: Be willing to slow down, start over or exit. So many instances of the Griswold’s turkey come from the need to show progress or a plan in the face of intense time pressure and expectations. It’s easier to polish up a PowerPoint and parry every question with “I’ll come back to you on that” than it is to know what you believe. If you are on the team, be willing to say when a plan isn’t ready. If you are reviewing the team, be willing to order them to go back to the clean sheet. If you are making strategic decisions, be willing to know when it’s time to stop cooking–to change leadership or exit.

These steps represent a critical aspect of leadership and a key learned skill: Calling a golden brown shell surrounding a hollow hot mess exactly what it is.

These particular turkeys are, as mentioned earlier, the letdown of letdowns. They are a visual tease. They lead to the disgust of a broken promise.

Learn to spot them, have the courage to avoid them, and role model the discipline to prevent them.

Hallelujah! Holy S#*@! Where’s the Tylenol?

Merry Christmas!

Bill Gross: Debt Binge Worthy of Future Scorn

/0 Comments/in , , /by

Bill Gross says future generations will view the global debt run-up of the past 6 years like we now view smoking on airplanes…misguided or just plain stupid.

Janus’ Bill Gross released an investment outlook today that is a painfully good read.

Your Link

His thesis:  That future generations are going to look at this one and say “How could they do that?” when it comes to running up debts the way we have in the past several years.

For those scoring at home, the U.S. National Debt stands above $18 Trillion as of today.  That, of course, looks trifling in the face of the U.S.’s $115 Trillion in unfunded liabilities.  Regardless of what you call them, they are promises to pay; and they are big ones.

An always interesting link is the U.S. Debt Clock.  Try it out; but keep a bucket handy.

The U.S., of course, isn’t alone; and that is what makes Gross’ read so interesting.  There may be no place left to hide soon.

In his outlook, Gross lodges multiple protests.  He states that while debt fueled recoveries from debt caused recessions are possible, they must have three preconditions to be so…

1. A non-fatal structural starting point (that is, countries can’t be insolvent at the start…)

2. Alignment of monetary and fiscal policies (especially that fiscal policy should take advantage of loose money to invest in accretive infrastructure)

3. Willing participation by private investors (they have to stay in the market even as yields are driven down and asset prices up beyond any realistic point of further appreciation).

It’s clear that all preconditions are/were not present in all countries pursuing the “borrow or monetize your way to freedom” strategy.  At the end of the day, fiscal, monetary, and investment indicators have to point toward kickstarting consumption and investment in the real economy.  It’s not clear to Gross (or me) that this has happened. If anything, Gross points to massive inconsistencies in political and market sentiments.

This is a fantastic read.  One that is well worth your time.

The implication?  Well, I posted last week about lower energy prices being a wake up call for business leaders to re-set scenarios for the future.  In this case, Gross is essentially saying that financial investors might do well to get out of markets sooner rather than later.  His quote:

Markets are reaching the point of low return and diminishing liquidity. Investors may want to begin to take some chips off the table: raise asset quality, reduce duration, and prepare for at least a halt of asset appreciation engineered upon a false central bank premise of artificial yields, QE and the trickling down of faux wealth to the working class.

Ouch.  That’s the implication.  Bursting of high valuations by investors fleeing to quality and going short could very much signal a period of deflation; then who knows what…?

Photo credit: Lendingmemo

Activist Investors and How to Handle Them

/1 Comment/in , , /by

Activist investors may become more active–spurring management to focus and accelerate.

 

Fortune’s Paul Hodgson filed this article yesterday about how activist investors are becoming even more active.

It’s a good read that summarizes the influence of activist hedge funds and the like; and how that influence is growing into the Fortune 500-sized company space.

Hodgson’s point of view is that we should look for more activism because, well, it works.  Success breeds success.

His defining quote is at the end of the article:

Boards are crumbling in front of the [activists] because the value released by changes they are forcing through is making it more likely that other shareholders will support them.

It really is that simple. If an activist like Carl Icahn can campaign for eBay to sell PayPal, and subsequently “unlock” trapped value, then so be it.

Recently, there has been a spate of debate and discussion about how activists can create incentive misalignment.  In a letter to the editor of the Wall Street Journal yesterday, reader Jonathan Kaufelt laments the lack of incentive alignment in the Dow Chemical Board of Directors case.  You may recall that there has been an ongoing discussion of whether activist investor Daniel Loeb’s scheme to pay his director nominees for near term stock appreciation is conducive to good governance.

A reasonable person could say that such incentive structures are problematic more for their mis-allocation (not all directors hold the incentives) than for their mis-alignment. There might be a temporal conflict with fiduciary duty, but it’s not clear that the conflict is one that other shareholders would mind (which would be the point of Hodgson’s Fortune article).

In other words, the activists may be amplifying existing incentives to boost near term stock performance; but might not be an issue to those who own the company.  This gets into a more existential view of value creation and “long term” investing where the question is whether a shareholder’s objective ought to be to maximize value of holdings today (the “activist” vision) or to create an investment vehicle for all time (the “investor” vision).

On those things, reasonable people can disagree.  In the case of a public company, it’s reasonable to say that all shareholders ought to be ready to vote with their feet–or sell orders as the case may be.

Another view–my view–is that activists, by stirring the pot, actually serve a purpose that should normally be served by right functioning boards in the first place:  They sharpen management’s focus on value creation vs. sleepy backslapping boondoggles.

For CEOs and boards, the best prevention program for the pains of activism is–wait for it–to act like an activist.  Ironically, activists often create the pressure of scrutiny where it should have already been.

I welcome your thoughts…

Energy Shocks Put a Premium on Foresight

/0 Comments/in , , , /by

The current sea change in energy markets brings the need for foresight to the front stage.

 

Foresight feeds the foundation of strategy.  The ability to read and react to the likely future defines organizations and executives.

On November 25th, energy expert Daniel Yergin (writer of The Prize among many other interesting books and articles) appeared on CNBC to outline the impact of revolutionary changes in U.S. oil and gas production.  Here’s the Link. Video here.

The upshot?  The U.S. is becoming a bellwether energy producer…so much so that Russia and OPEC are losing sleep over how to handle the ocean of oil and gas that is slated to come from the U.S. in the next few years.

Subsequent to Yergen’s commentary–on Thanksgiving day–OPEC chose not to alter its production schedule.  This was a move to maintain share at the expense of price. The decision sent oil prices plummeting more than 10 percent on Friday.  Here is CNBC’s report on that.

So, what?  

These issues impact you, your organization, your city, state, and country.  Pick an affinity that you have–any affinity–and this news matters.

Imagine first a future where energy stays cheap. Imagine that the economics of the petrochemical supply chain are severely impacted by low prices.  Maybe the dynamics crush upstream commodity producers.  Maybe they enhance smart specialty producers who benefit from consumer spend and lower commodity costs.  However, lower energy prices directly impact players who depend on energy production, particularly in specific geographies. Laborers in geographies that lie on the high end of the cost curve might not enjoy this news; neither will suppliers to those work-forces–the ones that provide uniforms, tools, meals, and services like laundry and transportation. The more localized the impact, the worse it could be.

But every shock means opportunity.  So, meanwhile…

Imagine second a future where consumer and corporate disposable income is unlocked from the dungeon of costly energy.  Where an average family receives a dividend that amounts to real cash to spend, just because the world has become more efficient at extracting (and, yes, using) energy.   Imagine that the average manufacturer can also contemplate reinvestment of such gains.

Those two imaginary impacts of lower energy prices are strikingly significant to all companies, whether they play in the petrochemical space or not.   Now is the time to contemplate change (yes, 2011 was the time, but still, get on board now).

What does this mean for your end products?  How about for your capital projects? What about for your procurement targets and programs? Perhaps more importantly, what does this mean for your job?

The market-wide impact of energy costs is practically instantaneous.  In 2008, we saw a tremendous reallocation of production in the automotive industry due to sustained spikes in oil prices.  SUV and truck plants were closed, not just idled, as reality set in.  Demand for efficient vehicles spiked as well, spurred by some (perhaps spurious) legislation in that era.  Such corporate moves dwarf in relation to moves that consumers make as energy costs crowd out other spend categories.

What will this sort of change mean for your company or your career?  How do you sense and predict what different end states of the world look like, and how each one impacts your capital and expense allocation?

Think about the the future, and develop options for it.  Options are the foundation of strategy, and foresight feeds them.

What do you think?