Business Blog: Hoover’s Business Insight Zone

We’d all like to have an easy formula for what makes a good leader. “Hard” skills, or “soft” ones? Big vision, or an eye for details? Sending the company in bold new directions, or making the trains run on time? Et cetera.

Yet we can’t even agree on how to assess the past performance of CEOs whose tenures are matters of historical record. Since I also study history, this doesn’t surprise me — smart historians can’t agree on President Polk, much less leaders closer to the present.

A business case in point: Carly Fiorina. When she became HP’s CEO in 1999, she was hailed for bringing a new vision to a staid company. She masterminded the gigantic acquisition of Compaq. Yet she left in ignominy in 2005 . . . which hasn’t kept her from rebounding as an author and speaker.

It also hasn’t kept a diversity of opinion from flourishing in her wake. Consider three examples:

1. Tom Peters: Enough, for God’s Sake, of the Hurd Mentality

I am not taking away from Mr Hurd’s operating performance, which probably exceeds Fiorina’s. But if we are primarily celebrating HP’s megabulk, as the heavy in computerworld, and its fashion consciousness as engine of soaring PC margins and profits, then we are celebrating Carly Fiorina.

2. InfoWeek in 2006: Hewlett-Packard’s Taskmaster: Heir to the chairmanship, Mark Hurd stays focused on growth and efficiency.

Though much remains to be done, Hurd has effected a remarkable turnaround already, largely through a relentless focus on improving operations and raising morale. When Carly Fiorina was CEO, it was unclear whether HP would survive intact without being diced into smaller companies. Hurd has untangled Fiorina’s matrix management structure to give salespeople more responsibility and clearer lines of reporting. He’s shunned the press interviews and celebrity hobnobbing Fiorina thrived on–no trips to Davos or on-stage appearances with Gwen Stefani.

3. Michael S. Malone: Carly Fiorina’s HP Legacy

One is hard-pressed to think of anything [Fiorina] did during her time at either Lucent or HP that wasn’t designed to burnish her own image — at the sacrifice of anyone who got in her way. Indeed, that’s exactly what she’s doing now with her self-exculpatory book: blaming the victims — that is, everyone but herself — for her failings as a manager.

What do you think? Where does the weight of the evidence lie?

My wife jokes that at my “advanced” age of 35 I’m becoming more of a curmudgeon. I carry on the joke by starting more sentences with “Back in my day . . .” in the voice of Abraham Simpson.

But I don’t want to be a curmudgeon — at least not a consistent one — when I’m reviewing trends in the marketplace. Why? Becuase (1) negativity tends to warp the brain in bad directions, and (2) it’s too easy to end up writing a piece in the genre of “The Curmudgeon Speaks!” . . . like this one from PCMag’s Lance Ulanoff:

MySpace, Second Life, and Twitter Are Doomed

The title gives you the idea of the column. Setting aside Ulanoff’s comments on MySpace (which is overhyped but still mega-popular) and Second Life (which is overhyped and . . . well, no, just overhyped), let’s read what he has to say about Twitter at the end of his piece.

Twitter’s demise will certainly come before we hit 2011. It’s the perfect example of Internet flash paper, and I suspect it will shine as brightly and briefly as this favorite magician’s gimmick. I’m singling out the site, which revolves entirely around people’s random notes about what they’re doing and thinking at any given moment, because of a recent John C. Dvorak column. He somewhat insanely says that these random postings should be saved for posterity. Dvorak is too smart to believe this, so I’ll assume his entire column was tongue-in-cheek. No one is going to save these random posts about nothing. Twitter is popular now because the Web cognoscenti are using it. This bunch of eggheads prides itself on irony and witticism. They treat the site like some sort of ongoing haiku contest. Well, folks, I have a haiku for you:

Goodbye, bubble, and
So long, overhyped nonsense
Till the next “Big Thing.”

While the snark may add some humor for Ulanoff’s readers, it conveys very little about Twitter — what it is, how it’s used, why it’s popular, and so on.

Contrast that to this thoughtful post from Jeremiah Owyang’s blog.

Web Strategy: What the Web Strategist should know about Twitter

Owyang also knows that Twitter is used by the Web cognoscenti (he is one), but he goes on to explain its utility — and its intended audience — for his readers.

Opportunities: Why Twitter?
A tool embraced by the early adopter, Twitter can benefit from: thought leadership, connection to the influencers, additional message reach, access to mobile communicators, real-time communication, but more importantly, the opportunity to build relationships through conversations. Who it’s good for? Media companies, social media savvy brands, those who may already have a blogging strategy, those with frequent updates. High communication individuals may prefer this tool.

Limitations and Challenges: It’s not for everyone
Twitter is not for everyone, here’s a few considerations: due to a high degree of micro information the user will need to self-parse information. Although there is no formal data, I suspect that the audience use is early adopter social media folks, influencers, and an average age of 30-45. Although Obvious (parent company) has recently received funding the product infrastructure is still doing through growth pains, and error messages are common. Twitter, while still in it’s early stages, the full value has not been realized.

Now, Ulanoff is writing a magazine column, complete with space constraints, while Owyang is writing on his own blog. More to the point, Ulanoff’s comments are tacked onto the end of a piece that’s really a rant about MySpace and Second Life, whereas Owyang’s post is purpose-written about Twitter. But going off of attitude alone, which one of these things is more useful for someone who knows nothing about Twitter? Owyang wins by a mile.

Maybe you don’t need Twitter. Okay. Maybe Ulanoff doesn’t need it. Okay. Maybe Twitter will be dead by 2011 and nothing but a footnote in the history of the Internet. Okay. But Twitter is where many influential netizens hang out and share their thoughts, whether Ulanoff likes it or not — and whether he even cares to understand it or not.

Once upon a time, the early adopters hung out on Usenet and used “car phones.” Once upon a time, early adopters used Compuserve. The fact that these services have gone the way of the world doesn’t mean they lacked utility for their users then.

And the fact that a journo can cop an attitude about the new new thing and compose a rant about it doesn’t mean that the rant will be of use to the audience.

So, please, hold my feet to the fire: let me know if my burgeoning (?) curmudgeonly tendencies get in the way of providing useful analysis.

So much so that I’m willing to call it a rule: if a company doesn’t have a good CEO succession plan in place, it’s simply not a good company — period. (I’m looking at you, Citigroup board of directors — what were you thinking?)

Carol Hymowitz has more in her latest “In the Lead” column:

Too Many Companies
Lack Succession Plans,
Wasting Time, Talent

“Succession planning isn’t an event, it is a process that is best managed over three, five, even 10 years,” because it involves building a pipeline of talent, says Joseph Bower, a Harvard Business School professor and author of “The CEO Within: Why Inside Outsiders Are the Key to Succession Planning.” Yet, “a lot of CEOs are focused mostly on getting through the next quarter, and they ignore the hard work of grooming future leaders,” he adds.

Our previous coverage:

• Merrill flunks the CEO succession test.
• CEO succession — successes and failures.
• CEO succession — it doesn’t have to be like this.

Industries always learn from the mistakes of failures gone before. (This is another version of the old military axiom that you always prepare for the war you last fought.) Here’s hoping that companies across many industries will learn from the gross failures of Merrill and Citigroup and set up adequate succession plans for themselves.

Not really . . . but wouldn’t it be cool if they did?

More on the writers’ strike:

• Hollywood’s future = creativity in the hands of the creators?
• Hollywood writers aim well-targeted blows at media conglomerates.
• The writers’ strike: two views.
• Joss Whedon on the writers’ strike.

~~~

Recalling my post from a couple of weeks ago, I was talking about the up-and-coming generation of “millennials” with my sister over the Thanksgiving holiday. Both she and I are still under 40, but she already had a horror story to tell from her experience as a public-school educator. Here it is, not verbatim but in the closest paraphrase I can manage.

At my sister’s school, the teachers work in teams — not in the classroom, but to handle administrative duties and to better track the performance of the students they share. Each team has its own leader, a sort of first- among- equals who distributes the work. One newly minted teacher, a “millennial” fresh out of college, was assigned to a group led by a veteran teacher. The veteran teacher related this conversation to my sister:

Veteran: “I need you to take care of Project X.”

Novice: “Uh, you don’t tell me what to do. You ask me what to do, and then I’ll decide whether I’m going to do it or not.”

Veteran: [Rolls eyes.] “Okaaaay. Would you please take care of Project X . . .”

After a year, the veteran teacher got involved with an outside project that ate into her time, so she offered the novice the chance to lead their team. The novice accepted, which meant that she was now the team’s liaison with the school’s principal. Which led to the following conversation:

Principal: “I need you to take care of Project X.”

Novice: “You don’t tell me what to do. You ask me what to do, and then I’ll decide whether I’m going to do it or not.”

Principal: “Excuse me?”

Novice: “It’s a generational thing. We don’t like to be told what to do. You ask me what to do, and then I’ll decide whether to do it.”

Principal: “I’m the principal of this school. That means I’m your boss. And I’m telling you what to do. You can either do it, or you can look for another job.”

Novice: [Stunned silence.]

While I’m sympathetic to the millennials’ desire to achieve work-life balance and to avoid enslavement to an organizational hierarchy, I suspect that many, many of them are running into these sorts of reality-based brick walls in their working lives now.

The comments on my earlier post tend to agree, but then again they may all be from old fogies like me. So, an appeal to the millennials out there: is this characterization accurate, or is it too much of a caricature?

A couple of weeks ago The New Yorker ran one of its patented character profiles* on Sam Zell, the real estate tycoon who is in the process of buying Tribune Company.

Rough Rider
Where will Sam Zell take the struggling Tribune Company?
by Connie Bruck

Having read the piece, I’m having second thoughts about my own reflexive dismissal of the deal. Yes, the newspaper business is heading further into the toilet by the week. But dang, Zell sure knows how to make money.

He also makes many a meal out of his flamboyant personality, to the point that you could think of him as a Richard Branson of real estate. But this penchant for iconoclasm has also helped Zell to excel in the business world.

Annotated excerpts follow. Read more

Probably not well enough, is the upshot of this interesting New York Times article about mistakes, which references Carol Dweck’s breakthrough book Mindset as well as Paul Schoemaker’s Harvard Business Review article “The Wisdom of Deliberate Mistakes.” Some running commentary follows — your comments are most welcome.

The Many Errors in Thinking About Mistakes

. . . We grow up with a mixed message: making mistakes is a necessary learning tool, but we should avoid them. Read more

1 comment

According to this feature from the New York Times — which focuses on the widening gap in services between coach and higher-cost airline tickets — Delta is making a priority out of better care for its coach passengers:

Class Conflict

. . . The airlines do acknowledge that while their finances have improved, they must do a better job of convincing the average traveler that they understand that these savings have come at a cost to the customer experience. . . .

Some passengers seem to feel that the airlines should just acknowledge that the flying experience is no longer a glamorous or, at times, even tolerable one — especially back in coach — and that it’s something passengers are going to have to accept. . . .

But I note that Delta still hasn’t responded to the temperate but pointed criticism of Jeremiah Owyang, who called them out last week for faults in their service. (We talked about Jeremiah’s post last week.) Yes, it’s been a busy traveling time, but surely there’s some VP or flack within Delta who could have spared five minutes to drop him a line by now. Right? Right?

This isn’t about demonizing Delta per se; my uncle worked there for 30+ years and loved it. But at this point I’ve become fascinated to see how long it takes them to respond to this highly publicized complaint — if, indeed, they ever do.

Generally I like Kevin Kelleher’s work, and that includes the first four-fifths of this piece on the proposed combination of Sirius and XM Satellite Radio:

XM/Sirius: The Wedding March Goes On

It was starting to look like the merger that time forgot. . . .

Kelleher gives a nice overview of how the two satellite radio companies have proposed a tiered subscription system to calm the worries of Kevin Martin and other FCC commissioners.

But then Kelleher takes an unusual — and apparently wrongheaded — turn:

Of course, if XM and Sirius were really interested in giving consumers the best offering, they wouldn’t combine at all. They’d also end all their exclusive relationships with MLB, the NFL and personalities like Oprah Winfrey and Bob Dylan, provide the kind of flexible pricing they are offering now only under duress — and let consumers choose.

That would be a true market-driven approach. This slowly brokered merger is the best we’re going to see. But if it helps push the cable companies to be more flexible, it would be worth the wait.

I say “apparently” wrongheaded because I’m still not sure I understand exactly what Kelleher is getting at. Sirius and XM have lined up exclusive programming just like all other broadcasters, whether we’re talking about ESPN (e.g. exclusive rights to Monday Night Football), NPR (exclusive rights to Car Talk etc.), or ABC (Grey’s Anatomy and so on). It’s not clear to me why the satellite radio providers should do anything different, and Kelleher doesn’t supply the links in the chain of his reasoning.

My own take is that this deal is somewhat like what I said about the Whole Foods acquisition of Wild Oats, which the FTC ridiculously opposed: two niche purveyors combine forces not to monopolize a niche, but to beef up so they can take on broad-range competitors in the larger market.

Whole Foods isn’t just competing with high-end or organic-only stores, but with Wal-Mart, Safeway, and every other grocery retailer that offers high-end and organic foods. XM and Sirius aren’t going to weild a pricing crowbar against satellite radio consumers, but try to use their combined strength to compete with the massively larger purveyors of terrestrial radio, plus Apple, Microsoft, and every other seller of networkable audio devices.

Maybe Kelleher will clarify what he meant in his post, but so far I have a hard time buying his position.

Charlie Stross, über-smart science fiction writer of instant classics like Accelerando, offers some intemperate but highly germane thoughts about one possible future for the PC business:

. . . For too long, the software and CPU giants had been treating the PC market as a cash cow, with a natural floor on the price of the product; the [One Laptop Per Child Project's] XO-1 proved that they were overcharging grossly. Intel’s reaction was the Classmate reference design, their own purported rival to the XO-1; the Asus Eee is what you get when a large far eastern OEM thinks “hang on, can we commoditize this and sell it in bulk?” Microsoft, incidentally, failed to make it onto the Eee bandwagon because they wanted $40 for a Windows XP license — on a machine that starts at $250 for the stripped-down version. Mine runs Linux perfectly well, thank you, and comes with the basic stuff you need to be productive; OpenOffice, Thunderbird for email, Firefox as a web browser, and some other gadgets (like Skype and a webcam).

The Eee isn’t an order of magnitude cheaper than a normal laptop but it is close to an order of magnitude cheaper than previous ultra-lightweight subnotebooks. And I think I’m going to use it as a pointer to a future trend in the computer business, at the low end. The Eee is about 8 times as powerful as that 1998 Omnibook, at a quarter the price. That’s an improvement of half an order of magnitude in one direction and close to a full order in the other. And it’s a tipping point, I think, showing that the price points that have defined the goal posts for the personal computer business aren’t set in stone.

The dirty little fact everybody in the consumer computer trade have been trying to ignore — Dell, HP, Microsoft, Intel, AMD, Apple, all of them — is that the computer biz is overdue for commoditization. There is no intrinsic reason why a kilogram of plastic and metal with a couple of silicon chips in it should sell for more than its weight in silver. . . .

Very much worth a read, on two levels: 1. The specifics of potential PC commoditization. 2. To remind us that existing ways of doing business aren’t set in stone. We humans have these neurological quirks that get us down; one of them is that we tend to take the status quo as a given until something comes along to upset it, or unless we specifically think our way around it. Asus is doing that now with the Eee subnotebook; Johnathan Goodwin would do that to the stick-in-the-mud ways of the automotive industry (not just moribund Detroit, but all major car makers).

It usually seems like things must be the way they are only until someone — an inventor, a company, an organization, whoever — helps us to remove the scales from our eyes.