What has been top of mind for corporate boards and CEO’s worldwide since 2004? It is not competitive threats, rising costs, innovation challenges, risk management, technology, debt, or even the regulatory environment. Corporate directors and CEO’s identify the need to create and sustain a leadership and talent culture that drives superior operating results as their #1 current and future challenge….and, this has been the case since 2004!Read More›
What keeps CEOs up at night? It’s not what they know, but what they don’t know.
Such is the case in which General Motors newly appointed CEO Mary Barra finds herself. According to reporting by New York Times reporter Bill Vlasic, Barra did not learn of the ignition problem that has led to the recall of over 1.6 GM vehicles until January 31st. The problem with the faulty ignition, which causes engine shutdowns, has been linked to at least 13 deaths stretching back to 2003.
Google and Apple are both highly esteemed brands. Both companies share many common traits which have contributed to their success, but there is one very big difference between the two – Google plays offense while Apple has recently settled for playing defense. Apple is struggling to maintain its position in the market, while Google is expanding its position.
While in flight today I had the opportunity to read an interview in “Fortune” with Home Depot’s CFO, Carol Tome. As a prelude to the interview, Home Depot’s CEO, Frank Blake proudly stated that he had placed Tome in charge of the company’s growth initiatives, at which time I sighed and said a silent prayer for Home Depot as it must surely be on its death bed to place a CFO in charge of growth. While there are certainly exceptions to every rule, placing a CFO in charge of corporate growth is like placing the drug addict in charge of inventory control in the pharmacy…it’s just not good business, and it won’t work.
As I delved into the meat of the interview my initial skepticism was confirmed. Tome’s “growth” moves seemed to be focused on cost-cutting, head-count reduction, slowing store expansion, etc. To be fair to Ms. Tome, I don’t know her, it was an interview, and she did throw out a few catch-phrases like increasing sales per square foot, and improving the customer experience, but disclaimers aside, the interview read like just another CFO in way over her head to me…When will CFOs learn that cost-cutting and workforce reduction are not sustainable business strategies? Anyone can take out the chain-saw, hack away for a few quarters, and look like a hero, but what happens after that?
The story usually unfolds like this: After all the slash and burn has taken place, which by the way causes a sense of uncertainty across the enterprise, and a corresponding rapid downturn in morale, what the finance savvy CFO has just done in his/her first few acts is disrupt the entire culture, increase cost centers and decrease profit centers, but boy is this operation lean and mean…
All sarcasm aside, the reality is these decisions won’t adversely impact the business in the short-run as the near term funnel will not likely be harmed. However when revenue starts to evaporate in forthcoming quarters because customers are not being serviced, new deals are not being added to the pipeline due to sales people leaving the company, and the corporate brand is losing visibility due to reduction in marketing expenditures, things start to get a little tense. You see there is no substitute for operating experience. The most brilliant CFO if void of operating experience will make similar mistakes to those mentioned above when making non-financial, operating or strategy decisions.
At this point in time you may be saying to yourself “this author really doesn’t like CFOs.” Quite to the contrary…at one point in my career I served as a CFO, and I understand better than most that CFOs play a critical role in the success of any business. In fact, one of my first recommendations to any client is hire the best CFO they can afford. One of my next recommendations is to start mentoring the CFO in the non-financial aspects of business. If your CFO has only operated in a finance silo how can he or she be expected to gain experience across competencies and business units. Consider embedding the CFO in operational roles in marketing, strategy, business development, innovation, branding etc., so that they have the opportunity to understand the essential long-term value created by initiatives that may not have an immediate impact on the balance sheet or P&L.
It is necessary to understand that most CFOs come out of a public accounting background and rarely have training or experience in sales, marketing, advertising, public relations, non-financial strategy and tactics, and usually have little experience in terms market knowledge from a competitive, production or operating perspective. Accountants are typically trained in tax or audit functions, and while fluent in GAAP, they don’t typically bring traditional business savvy to the table. They are masters of retroactive analysis as their job is to document and report on historical events.
Let it be noted that I am a strong advocate of sound financial governance and the implementation of reasonable cost containment measures. However not when applied in a vacuum irrespective of the ripple effect across the enterprise. A company can have all the cost containment in the world, but without revenue what does it matter? In C-level operating and strategy positions the executive has a broader sphere of influence, and will have many more points of critical contact both internally and externally than will the typical CFO. Therefore having experience across a broad range of skill sets and competencies is mission critical for a company’s executive operating and strategy talent.
Ponder this…if the Chairman or CEO places the CFO in charge of corporate growth without the experience necessary to pull if off, the resulting chaos isn’t really the fault of the CFO, but rather it belongs to the Chairman/CEO that set him or her up for failure. The moral of this story is simply to hire/promote the most experienced and discerning people possible into executive operating positions. This can and and sometimes does include a current or former CFO that has been properly trained and mentored, but it should never include the unprepared CFO.
93 Year Old World War II Veteran Freezes to Death In Home
Not paying your utility bills should not result in death, but it did earlier this week in Michigan. Bay City Electric Light & Power moves to the top of my "Companies that Don't Get It" list by turning off the heat of a 93 year old World War II causing him to freeze to death in his home. I can't think of a single valid reason why this should have happened...this was clearly a case of administrative process taking precedence over common sense and compassion. An apology just doesn't cut-it in this case. If the leadership team at Bay City Electric Light & Power has become so removed from its processes, and so disconnected from its customers that something like this can happen, they should resign immediately. I can think of any number of steps that could have been taken to prevent something like this. If the Bay City Electric Light & Power CEO wants to call me I'd reengineer their process at no charge...Furthermore, if you're elderly and cannot pay your utility bills send me an email, or give me a call and I'll make sure this won't happen to you...Lastly, I hope the utility company that killed this man is paying for his funeral expenses.
Innovate or Perish is a battle cry that I have long espoused to my clients. I can’t think of a better example of what can happen to those companies that fail to innovate than the rumors circulating about the Tribune Co. The Tribune Co., owner of the Chicago Tribune, Los Angeles Times, and other once revered trophy brands is hemorrhaging under the burden of huge debt obligations, insufficient cash flow, and is rumored to be filing for bankruptcy as early as this week. The emergence of better alternative news sources has been hurting the newspaper industry for years now, but when you combine the rapid emergence of new media options with the crushing blow of the recession, it may just be too much for an old media lagger to survive…
When was the last time you actually read a print version of a newspaper? Unless I have a few minutes to kill in an airport or a lobby somewhere I’ll never touch a newspaper. By the time you read something in the newspaper it’s simply old news…If you rely upon the newspaper to keep you informed, here’s a hint…you’re out of touch. However the bigger issue here is not how you choose to receive your media, but rather out of touch company leadership that doesn’t understand the importance of innovation as it relates to corporate sustainability.
If you’re a CEO reading this post ask yourself this question: How disruptive is your business model? Without a focus on disruptive innovation you are merely building your business model on a “me too” platform of mediocrity. Disruptive business models focus on creating, disintermediating, refining, reengineering or optimizing a product/service, role/function/practice, category, market, sector, or industry.
The most successful companies incorporate disruptive thinking into all of their business and management practices to gain distinctive competitive value propositions. “Me Too” companies fight to eek out market share in an attempt to survive while disruptive companies become category dominant brands insuring sustainability. So why do so many established and often well managed companies struggle with disruptive innovation? Many times it is simply because companies have been doing the same things, in the same ways, and for the same reasons for so long that they struggle with the concept of change.
As a CEO Coach many of my engagements with chief executives focus on helping them to embrace change through disruptive innovation. Why didn’t the railroads innovate? Why didn’t Folgers recognize the retail consumer demand for coffee and develop a “Starbucks” type business model? Why didn’t IBM see Dell and Gateway coming? Why have American auto-makers been relegated to inferior brands when contrasted to their European and Asian counterparts? How did the brick and mortar book stores let Amazon get the jump on them? I could go on-and-on with more examples, but the answer to these questions are quite simple…The established companies become focused on making incremental gains through process improvements and were satisfied with their business models and didn’t even see the innovators coming until it was too late. Their focus shifted from managing opportunities to managing risk, which in turn allowed them to manage themselves into brand decline…
At one end of the spectrum take a look at the companies receiving investment from venture capital and private equity firms, and on the other end of the spectrum observe virtually any category dominant brand and you’ll find companies with a disruptive focus putting the proverbial squeeze on the “me too” firms occupying space in the middle of the spectrum. With the continued rapid development of technology taking the concept of globalization and turning it into hard reality facing businesses of all sizes, it is time for executives and entrepreneurs to examine their current business models from a disruptive perspective. Ask yourself the following questions:
- When was the last time your business embraced change and did something innovative?
- When was the last time you rolled-out a new product?
- When was the last time you entered a new market?
- Are any of your executives thought leaders?
- When was the last time you sought out a strategic partner to exploit a market opportunity?
- Do you settle for just managing your employees or do you inspire them to become innovators?
- Has your business embraced social media?
- When was the last time your executive team brought in some new blood by recruiting a rock star?
- Does anyone on your executive team have a coach or mentor?
- Has anyone on your executive team attended a conference on strategy, innovation or disruption in the last year?
If you’re an executive or entrepreneur and you can’t answer yes to the majority of the questions above then your company is likely a market lagger as opposed to a market leader. If you continue to do the same things that you have always done in today’s current market environment you will see your market share erode, your brand go into decline, your talent and customers jump ship, and your potential never be realized. Remember the definition of insanity is continuing to do the same things while expecting different results. Bottom line…change, innovate, disrupt and prosper.
In our area Comcast has a virtual monopoly on communication services in that they are the only vendor that provides a true bundled solution comprised of Internet, telephone, and cable. What’s more, they are aware of their dominant position in the market and truly abuse the situation. There are good companies, bad companies, and then there’s Comcast…Comcast is probably the worst company I’ve ever done business with, and is a perfect case study in how not to operate a business enterprise. Comcast finally hit an all time low with me this morning, and in today’s post I’ll share their most ridiculous and insulting tactic yet…
Comcast and customer service are not synonymous. Over the years I have experienced excessively long hold times, and incredibly rude technicians and other employees. The following links to YouTube videos show the frustration that I and countless other subscribers feel as a result of our dealings with Comcast:
- Comcast Customer Service – Business As Usual
- Comcast’s Solution to Long Hold Times
- Comcast’s Stellar Employees
As if the above videos are enough of a testimony as to the problems at Comcast, at about 11:00am this morning I happened to glance out my window and notice a solicitor approaching my front door. Since there was no knock, or ring of my door bell, curiosity got the better of me and I went to the door to see what was left behind. While it was no great surprise that I found a very well designed piece of marketing collateral hanging on my door, what was a surprise is the text that was written on the door-stuffer…Comcast had left me a very slick, four color brochure stating the following:
“Sorry we missed you…A Comcast technician stopped by to check your service and ensure it is working to your total satisfaction. We are making the rounds to answer any questions our customers may have regarding Digital Cable TV, High Speed Internet, Comcast Digital Voice.”
My problem is that the brochure was not delivered by a Comcast technician, and they didn’t miss me…they intentionally avoided me. Since the solicitor (not technician) didn’t knock or ring my bell, they really didn’t show much of a desire to check on my satisfaction, the quality of my service, or answer any questions that I might have. They were not “sorry they missed me” as they never intended to speak with me…Does this strike you as wrong, disingenuous, or just an outright lie?
Comcast is an organization that is leadership and management challenged. They don’t seem to value their customers, and based upon my experience today, they certainly don’t value ethical business practices. Comcast is a poorly run company and proof of why monopolies are not good for the consumer. I can’t wait for my next rate hike…
Having spent much of my life working with successful companies I appreciate all that it takes to create one. Developing world class organizations is not an easy task however settling for mediocrity (or worse) doesn’t require much effort at all. Quite frankly I have developed a bit of disdain for organizations that won’t do what it takes to get things right because virtually all business issues can be resolved with focus, effort and commitment. Therefore I’ve decided to add a new category on the N2growth Blog: Rants. Within this category I’ll take the liberty of venting on topics, issues, current events and companies that just miss the mark. First up…Amtrak.
I’m not sure whether it’s a luxury or a curse but I end up doing quite a bit of traveling on behalf of my clients. In that love-hate relationship that I have with travel there are fond memories and pleasant experiences as well as equally memorable but horrific experiences. I had a relatively short trip to take last week and decided to try something different…rather than fly, drive or be driven I opted to travel by rail. Big Mistake…
OK, the scenery was gorgeous and the company was great (my wife was traveling with me), but there ends the positive sentiments with regard to my Amtrak experience. We arrived at the train station only to find it outdated, dirty and unkempt. It is my humble opinion that amenities at the train station should closely resemble those of an airport, but what we experienced was regrettably nowhere near the modern environment of an airport, rather it was a mirror of a Greyhound station. Strike number one…
We chose not to travel coach opting for business class tickets, expecting a business class experience…we were disappointed yet again as the car was old and dank. Once we found our seats and got settled I practiced my quick-draw and reached for my BlackBerry only to have the conductor inform me that I can’t use my cell phone in the car and that I would need to step out into the vestibule so as not to bother the other passengers. Hmmm…business class seats presumably occupied largely by business travelers and all prohibited from using their cell phones. Strike number two…
At this point we decided the only reasonable thing left to do was to feed our frustration. As my wife and I went in search of the dining car with our hunger and our anticipation building we walked through the door only to find out that it was “not active” which meant that you could sit in the dining car but that they wouldn’t serve any food to you. Yet another disconnect and strike number three…
I could comment on other flaws regarding what I now refer to as the “great train robbery” but I think you get the point. It is no secret that Amtrak has been in financial trouble for sometime, but as I’ve said many times cost-cutting does not constitute a viable long-term business strategy. I’m fine with temporary cost-cutting as part of a transitionary tactical plan but Amtrak seems to be forever stuck in transition land. Deferred maintenance, poor customer service, flawed business logic, no competitive value propositions and a lack of vision will not turn the Amtrak brand around.
The leadership at Amtrak should be embarrassed about their product. Rather than over promise and under deliver they need to embrace innovation and creativity to regain customer loyalty. If anyone at Amtrak wants to comment I’d be happy to give you some airtime in an attempt to let you justify how you treat your customers. However rather than have your PR firm try and spin me I would suggest that you start working on your business model…