We’re Being Duped…Again.

By Mike Myatt, Chief Strategy Officer, N2growth

We’re being duped again…This rush to pass the Bailout plan is nothing short of self-serving fear mongering on the part of the people who caused this problem in the first place. Don’t you find it interesting that Congress convened at 7:30am this morning hoping to rush the vote on the Bailout plan before the American people could weigh-in? If the Democrats believe so strongly in this plan, then why don’t they just pass the bill? The Democrats have enough votes to carry this, they simply won’t do it without support from the Republicans. The Democrats want to be able to say this Bailout was a bipartisan act, and are looking for some Republican cover. Shame on the Republicans if they do this. This Bailout is bad for America, and stands for everything that’s wrong with big government politics.   

While I’ve spent a great deal of time lately discussing various topics surrounding the current financial crisis and Presidential politics, I feel that I’d be remiss if I failed to do so. Not only do both of the aforementioned topics have a direct impact on business, but the spin and rhetoric is so far out of control that I fear it is becoming more and more difficult for the average Americans to distinguish fact from fiction. The simple truth is that sound-bites, opinions, and theory rarely reflects the history and facts underpinning our current debacle. In today’s post I’ll share more of my thoughts on the subject at hand, as well as providing some great video footage in support of my positions.

If you think Nancy Pelosi, Harry Reid, Chris Dodd, and Barney Frank care about anything other than covering their own backsides, then you haven’t really thought this through. Let’s say for a moment that you don’t buy-in to what I’m espousing in this post, do you really trust these four individuals to solve the crisis they were responsible for creating, and do it all in just a matter of days? 

I hope the Republicans will show the backbone and character necessary to stand-up and kill this bill, but sadly, this probably won’t happen. What I can urge you to do is to call and e-mail your Representatives and Senators and let them know that you will most certainly not re-elect anyone who supports this madness.   

Bailout or Train Wreck?

By Mike Myatt, Chief Strategy Officer, N2growth

Beware the Bailout...Will today’s meetings in Congress produce a Bailout, or will the end result be just another cobbled together train wreck in the making? Is the Bailout a prudent step forward for our nation, or is it just another band-aid solution forestalling the inevitable? So, will Congress agree to a deal today? If so, will it be the right deal? Will it work? If not, what will be the market ramifications? In today’s post I’ll provide you with my thoughts on the aforementioned questions, as well as put forth some economic observations and alternatives for your consideration…

Call me a die-hard free market capitalist, but I’m not in favor of a bailout. From my perspective nationalizing Wall St. simply rewards the wrong behavior, provides no assurance of an acceptable outcome, and unilaterally transfers all the financial risk to the taxpayers.  The following thoughts and observations will provide you with the underlying reasoning behind my thoughts:

  • Will Congress agree to a deal in the near term? I think so; and if not today, likely by the time the Asian markets open on Monday. There is tremendous pressure for Congress to make a move to stabilize the markets, and I believe they will do so in the near term. Even though the current polls show that only 25% of American’s are in favor of the bailout, I believe most Americans anxiously await some form of swift resolution. Since we all know that polls are a key driver of decisioning in Washington, it is likely that some spin will enter the equation with the bailout being sold as something that it is not. The truth is that most of the really bright financial minds that I talk with see the bailout as a bad move. There is still a possibility that Republicans will dig in their heels in opposition, but this will likely only result in short-term delays rather than killing the bailout.
  • What will happen if Congress doesn’t agree to a bailout in the near term? The market thinks the bailout is a done deal and has already factored in a price gain reflecting this. As mentioned above, I think the odds of Congress not stepping-in are unlikely. That being said, if they don’t, the capital and credit markets will have a severe negative reaction, and a bit of main street panic will ensue. There is a strong likelihood that a recession or worse could follow.  However, this is where I differ from the politicians…my contention is that the aforementioned scenario is not necessarily a bad thing. Markets need to correct themselves in order to purge themselves of corruption, bleed out inefficiencies, regain their balance, and move forward in a healthy fashion again. Would there be pain and suffering that follows letting the markets correct themselves? Absolutely, but this is the natural order of things. Markets and economies ebb and flow. They do not just run in an upward direction in perpetuity. To think that they should is fantasy. To think that the government should step-in and bail them out when they don’t is socialism. Both positions constitute flawed thinking.   
  • What will the bailout look like? I don’t think it will differ greatly from the original plan submitted. While the plan will most likely call for a $700 Billion dollar bailout, it is highly probable that it will mushroom up to $1.5 Trillion dollars with near term adjustments that will most certainly follow the initial adoption. Sizing aside, there simply isn’t time to get consensus on sweeping changes and still meet the markets expected timing for a resolution. It will likely contain a few watered down oversight provisions, and a few points of clarification, which will in turn give Congress a few sound bites to leverage about how they’re looking out for taxpayer interests. However, from a meaningful perspective, it will still be woefully inadequate in terms of managing the risk associated with a bailout. 
  • Will a bailout work? There is an argument to be made that previous bailouts (i.e. Roosevelt’s New Deal, the 1979 bailout of Chrysler, and the Resolution Trust Corporation) have had prior success. This gives hope that the bailout being currently contemplated may work as well. While this sounds good in theory, times have changed, and the stakes are much higher in our current situation. While I think the proposed bailout may provide some temporary market relief, at the end of the day, my belief is that all we will have done is to compound the problem and forestall the inevitable. The Government is framing this as an investment with upside, but it is actually a mandate with tremendous downside risk. There are absolutely no assurances this will work. I believe that assumption that capital and credit markets will ease post bailout is a flawed assumption. I think lenders and investors will still remain on the sidelines, more banks will fail, the stock market will remain highly volatile, and the collapse we’re trying so hard to avoid will still occur. We’re just buying time…
  • Are there better alternatives? I think so…In principle, I’m much more of a believer in workouts than I am bailouts. The difference between the two are substantial. In a workout, the parties directly involved solve their own problems…some successfully, and others not successfully. In a bailout, third parties (that’s you) step in and underwrite the mistakes of others. Bailouts transfer risk, and workouts mitigate risk. The other point of distinction is that the end game isn’t simply to implement a bailout. What is truly needed is a comprehensive economic reform. The systems, regulations, and oversight (or lack thereof) that allowed this to happen must be reformed. In the absence of true economic reform, I again submit that we are just forestalling the inevitable. 
  • Do you have any examples of other alternative solutions to the bailout that would make a real difference? Here a just two examples of alternate mechanisms that would more than sufficiently increase liquidity without taxpayer involvement: Impose a small percentage fee to be levied against the exchanges on all securities trades. This would raise hundreds of billions of dollars in the near term. This solution has been successfully implemented in a number of other exchanges around the world. It would allow Wall St. to pay for their own mistakes. My second suggestion is to eliminate the capital gains tax. If we coupled the implementation of exchange fees with the elimination capital gains taxes we would generate more liquidity into the system than the bailout, all without transferring risk to the taxpayer. If the bailout were to move forward, and the taxpayers become a conscripted class of investors, I would at least like to see a tighter bailout plan that actually treats us like investors. What is the exit plan, and how will the capital be returned? What type of return on ivestment will we receive, and over what period of time? Surely we should expect some form of return to augment the risk we are assuming.

All the pontificating aside, batten down the hatches. Things are going to get worse before they get better. More banks will fail, more business will fold, more mortgages will be foreclosed on, and more bankruptcies will be filed. The good news is that this too shall pass. The economic problems will eventually correct themselves and we will regain our course. In the meantime, while others are panicking, failing, and making the wrong decisions, you don’t have to. Cut out waste, hire good talent (there is more of it wandering around these days), keep investing in your marketing and sales initiatives, and don’t allow yourself to get caught-up in the chaos.

Rogue CEOs & Board Accountability

By Mike Myatt, Chief Strategy Officer, N2growth

Accountability should be more than fine print...Rogue CEOs…given the recent failure of banks and financial institutions previously thought to be untouchable, there has been a tremendous amount of justifiable venom being spewed at the CEOs of these firms. Their ignorance, and in some cases their arrogance, allowed these rogue CEOs to operate outside of normal business rules, conduct self-serving agendas, and partake in self-dealing transactions all while receiving outrageous compensation. Before I go any further, let me state that I believe we should understand that the overwhelming majority of CEOs operate within the bounds of reason and ethics consistently placing stakeholder interests ahead of their own. The real question we should be asking is where were the boards of directors during this period of mismanagement? You see it is the board who is responsible for holding the chief executive accountable. Even where you have a CEO who is inclined to misbehave, an actively engaged board of directors simply won’t allow it to happen. In todays post I’ll examine the role of the board of directors in keeping CEOs accountable… 

Before I proceed further, and for contextual purposes, I believe it’s important to actually define the role of the board of directors. While there are certainly a variety of opinions as to the roles and obligations of a company’s board of directors, from my perspective they can all be boiled down into four simple responsibilities:

  1. Shareholder Accountability: A board member’s primary responsibility is to act in good faith as a fiduciary in representing the long-term best interests of shareholders. A board’s actions and decisions must be able to pass the litmus test of public scrutiny (legally, morally, and ethically), rise above personal agendas, and always place shareholder interests above all else;
  2. Corporate Governance: A board must insure that the corporation’s charter and by-laws are adhered to. Moreover a board must use its best efforts to hold executives accountable for insuring that corporate actions fall within other legal, financial, regulatory, and compliance boundaries. Ignorance and apathy are not the traits of a good board. Great board members are proactive, involved, supportive, consultative, experienced, and savvy. They know the rules, play between the lines, and do the right things. 
  3. CEO Oversight: It is the board’s job to select the CEO, provide the CEO with support and guidance, and to hold the CEO accountable. Good boards exercise great care and prudence in profiling CEO candidates, recruiting the right CEO for the job, providing the CEO with a clear job description, successfully onboarding the CEO, and holding the CEO accountable for meeting a set of clearly defined expectations. Good boards do not attempt to micro-manage a CEO, rather they understand their highest value in being a value added resource for the CEO focused on helping the CEO become successful. 
  4. External Visibility: A key responsibility of the board is to serve as an external champion of the corporate brand. Board members should have a clear understanding of the corporate vision and mission, and where prudent, evangelize the message for the benefit of the corporation. Whether this requires providing networking assistance, investor relations support, or engaging the media, a highly regarded and active board can add substantial value to the enterprise.

In the text that follows I’ll offer several points that will help a board evaluate whether or not they have the right CEO for the job:

  • Tenure: In a previous post entitled “CEO Term Limits” (a must read for board members) I stated that there is no such thing as a standard shelf-life for a CEO. No rules of thumb apply when evaluating whether a CEO has outworn his/her usefulness purely from a chronological perspective. I’ve witnessed CEO’s where the company has outgrown their skill sets, and/or abilities within a year of hire (a bad hire…), and I’ve also observed many instances of CEOs that have successfully guided companies for 20 years. The question is not how long a CEO serves, but rather what he or she does while serving. Whether age 32, or age 72, a board must ask themselves, is our CEO doing the job, and perhaps the better question is, are they the best CEO for the job?
  • Performance: The topic of performance is a multi-faceted issue. A CEO’s performance should be benchmarked against a variety of key performance indicators which are clearly spelled out in the chief executive’s employment agreement. When evaluating performance, a board must evaluate whether a lack of performance exists across all areas or in a single area, whether the lack of performance is a short-term aberration vs. the likelihood of it being a burgeoning problem, and whether the CEO can be coached through the performance gap, or whether the lack of performance is an irreconcilable issue.
  • Ethics Violations: The character of the CEO is often synonymous with the brand of the enterprise. Once a chief executive has violated the public trust, or made a gross or negligent error in judgment which could taint the corporate brand, a board should move swiftly to restore the integrity of the corporation. Many things can be spun, justified, rationalized, or managed, but a lack of ethical behavior on the part of the chief executive is not one of them. Let me also be clear that a good employment contract will make null and void any favorable severance packages where malfeasance, misfeasance, gross negligence, or fraud on the part of the CEO is present.
  • Loss of Confidence: Once the board, the employees, the capital markets, the press, or other key constituencies have lost confidence in the CEO, the board must replace the CEO. A CEO cannot lead, motivate, or inspire without the trust and confidence of those they serve.
  • Lack of Development: The corporate enterprise and the business world in general, are dynamic, fluid, and evolving environments. Therefore great chief executives cannot be static in their personal or professional development, or in their strategic and tactical approach to doing business. A CEO that does not exhibit the ability to change, innovate, and grow with the world around them is someone who will likely need to be replaced.

In the final analysis, the board’s decision as to whether a CEO should be replaced is a decision that should be made within the framework of managing risk and opportunity. The board must weigh the transitioning a CEO against the financial costs, the impact of the business disruption and lack of continuity that can come with replacing the CEO, the market reaction to a change in leadership, and whether the decision is ultimately motivated by right thinking. Lastly, and perhaps most importantly, the title of “Director” should not be synonymous with “Crony.”  Any board member not willing to uphold the aforementioned duties and responsibilities should be replaced in a New York second.

CEO Profile – Bill McDermott

By Mike Myatt, Chief Strategy Officer, N2growth

Bill McDermott is a CEO who understands leadership. As a CEO Coach I have had the benefit of hearing many a chief executive describe what “leadership” means to them, but rarely have I heard a CEO describe executive leadership as articulately as Bill does in the following interview. Bill’s life story is both an inspiration and a testimony to the benefits of a sound work ethic. As a teenager already holding down three jobs, he took on a fourth job working at a Deli (which he later purchased from the owner while still in his teens), worked his way through college, and got his start in sales at Xerox. Before he left Xeorx he had climbed to the position of Division President and was a corporate officer. After leaving Xerox, he did a stint as the President of Gartner, and served as an EVP with Siebel Systems…all of this before his 42nd Birthday. I invite you to listen to what Bill McDermott has to say about leadership…

Don’t Panic…Plan.

By Mike Myatt, Chief Strategy Officer, N2growth

Don't Panic...Just Make Good Decisions.I have been flooded by e-mails today asking for my thoughts on yesterday’s financial news. Lehman goes BK, Merrill Lynch is bought by Bank of America, the Dow closes down more than 500 points, AIG is on the brink of failure, so what’s next? My message is this; don’t panic…plan. Those of you who are frequent readers of this blog know that I predicted these financial events all the way back in 2006, provided subsequent updates and warnings in 2007, and have offered cautionary remarks this year as well. By way of background I invite you to read: “A Capital Markets Overview“ (November 2006), “Financial Market Update” (July 2007), and a piece that it explains why we are where we are, “Secondary Markets 101” (March 2008). Because I’m asking you to re-read three previous posts, today’s piece will be extremely short…

I’ll cut right to the chase…Yes, we are in trouble. Yes, there are very real casualties (just ask the plethora of former Lehman employees who now find themselves out of work), and regrettably there will be even more casualties in the months ahead. Ever the optimist, there is a bright side to everything. Free market economies must correct themselves when they are out of balance. This is the only way they can move forward in a healthy fashion. What I’m trying to say is that as bad as things get, the tough times are the pre-cursor of a recovery. While we may see volatile markets ahead, it is only through cleansing our financial system of bad debt that our markets can regain integrity, and the economy will begin to recover. There are no band-aid solutions, and we will see thousands of additional bank failures, a continued tightening in credit and capital markets, and higher unemployment rates before we see the brighter days ahead.

Remember that there is always a price to be paid when greed takes precedence over logic and prudence. This is true on both business and personal levels. My advice is this…Don’t panic, simply plan your way through these tough times by making solid decisions and choices in both your personal and professional life.   

CEO Job Searches

By Mike Myatt, Chief Strategy Officer, N2growth

CEO jobs are competitve...plan now and finish the race firstCEO job searches are extremely competitive in today’s market. Other than running for political office, there is no interview process that will subject you to such a rigorous vetting process. I was recently interviewed for the September issue of ”CareerSmart Advisor” in which I was asked to articulate what it takes to successfully secure a CEO position. In the text that follows I have provided a copy of the questions I was asked, as well as my answers, in hope that this information will assist you in preparing for your next job search…

As a CEO Coach I spend a great deal of time in career planning and management for my clients. While most of my activity centers around maximizing opportunities in their current role, I’m also frequently engaged in CEO succession and transition engagements. The following Q&A was part of a recent interview in which I provided some insight on CEO job searches: 

CareerSmart: What is the first thing a CEO should do when he/she loses a job? Is this truly a time for self-reflection and a re-assessment of the career?

Mike Myatt: Since the average CEO tenure has fallen to an all-time low (currently averaging less than 4 years), for most CEOs it is not a question of if they will be terminated, but rather a question of when. I advise my clients to frame their career strategy upon meeting certain key objectives, and to either work to extend engagements, or transition engagements prior to being released by the board. The time for self-reflection and self-assessment is prior to being released by the board.

CareerSmart: How long should a CEO take to collect his/her thoughts after being released before beginning the job search?

Mike Myatt: If a CEO is managing their personal brand properly, and meeting/exceeding performance expectations in their current role, it is likely they won’t have to conduct a job search. The next position will come to them. Good CEOs with strong personal brands consistently receive solicitations for new opportunities. If you’re a CEO who isn’t being consistently wooed by other suitors, then your personal brand needs work, and your career isn’t being properly managed.

CareerSmart: How should a CEO get his marketing materials in order? What should be done with his/her resume? Should the CEO enlist the help of outside sources to update such documents, or can a CEO typically do this on their own?

Mike Myatt: CEOs need more than a resume. CEOs should have a current press kit (both traditional and online versions) which includes a professional bio, resume, copies of articles, press releases, key accomplishments, etc. The press kit should be in play long before the CEO leaves or is terminated from their current position. Even CEOs who possess the skill sets to prepare a press kit realize it is typically not the highest and best use of their time, and most will turn to personal branding experts to accomplish these sorts of tasks.

CareerSmart: What are some steps executives need to take to build their brand, and bring that brand to the marketplace? Does this go beyond just creating a new resume?

Mike Myatt: This goes far beyond just producing a resume…Today’s CEOs need to proactively manage their reputation and personal brand such that they are extremely visible both inside and outside their industry. They need to work the media, speak, author, show up prominently in the search engines, take advantage of social media, etc.

CareerSmart: When CEOs lose their jobs, they are sometimes hesitant to broadcast that fact; even when the separation from their job was not their fault. Why is it so important for them to instead let people know that they are looking for a new opportunity? What are some effective networking techniques they should utilize? Are there particular groups they should join?

Mike Myatt: As mentioned above, if they wait until the inevitable happens to secure their next opportunity, then shame on them…CEOs should never use job boards and employment sites as this will taint the value of their personal brand. That being said, CEOs should leverage a top CEO coach who can help guide them to the next position in a well managed and confidential fashion. It has been said that “an attorney who represents him/herself has a fool for a client” and the same thing is true for a CEO who tries to engineer his or her own soft landing.

CareerSmart: What kind of research should a CEO do when considering a new position? How important is it to conduct research to get a better sense of trends within industries and companies?

Mike Myatt: CEOs should always be abreast of current industry and employment trends. This is best handled by having an ongoing career management strategy in place, a component of which is business and market intelligence.

CareerSmart: What should CEOs do to freshen-up their interviewing skills? What is important for a CEO to know about this process, especially if he/she hasn’t interviewed for a position in many years? What has changed? What hasn’t changed? What should his preparation include?

Mike Myatt: Interviews shouldn’t be considered as anything other than a chance to communicate the CEOs unique value propositions in a manner that conveys value alignment, as well as how the CEO will add credibility, influence, leverage, leadership, and impact to the new opportunity. CEOs with strong personal brands are very adept at communicating their unique value propositions across constituencies and mediums.

CareerSmart: If the job search begins to take longer than a CEO expects, what can he/she do to keep their focus and motivation?

Mike Myatt: Again, where possible, the CEO should never have the appearance of being unemployed. They should position themselves in a positive light by taking a sabbatical, taking an interim consulting assignment, taking a position as an entrepreneur in residence, getting involved in a high profile “cause”, increasing their board work, etc. Never appear that you need a position…

CareerSmart: What other advice would you offer CEOs who are suddenly faced with a job loss? What do they need to know that will help them best manage their circumstances?

Mike Myatt: In all sincerity, the best thing a CEO can do is to retain a top CEO coach. A CEO not having a coach is akin to a professional athlete not having an agent. Only mismanaged athletes find themselves put on waivers…well managed athletes engineer trades prior to being released.

Bottom line…While congratulations may be in order if you’ve made it to the C-suite, don’t just rest on your laurels as it is likely that you’ll find yourself in play at some point in the future. Prepare for your eventual departure and next engagement so that you won’t unexpectedly find yourself on the outside looking in.

How Not To Advertise…

By Mike Myatt, Chief Strategy Officer, N2growth

While I’ve seen some great TV spots over the years, Microsoft has created the perfect case study in how not to advertise with its latest commercial. If you think a large advertising budget coupled with a celebrity endorsement will move mountains, then I suggest you watch this video by Microsoft. This ad is one of the worst I’ve seen, and is the perfect reason to fire an ad agency…

While much could be said about this ad, the following check list sums-up my evaluation:

  • Cool – no
  • Funny – gong
  • Value Proposition – absent
  • Emotional Appeal – zero
  • Relevant – not
  • Memorable – only in a bad way
  • Creative – hardly
  • Brand Promise – invisible
  • Message – awful
  • Engaging – nope
  • Positioning – indiscernible
  • Target Audience – not a clue
  • Intent – confusing
  • Call to Action – none 

Even Jerry Seinfeld and a $300 million dollar ad budget can’t rescue Microsoft from this inept effort. They only feelings I’m left with when I watch this are regret for the marketing executive that approved the ad, and hope that the agency who produced the ad will be fired. Bottom line…celebrity endorsements and big budgets are no substitutes for a well crafted ad.

First Time CEOs

By Mike Myatt, Chief Strategy Officer, N2growth

Don't just roll the dice as a new CEO...Today’s Myatt on Monday’s question was posed by a new CEO who asked: “Do you have any tips for first-time chief executives of a start-up company that would allow for a faster and more effective transition?” Virtually all of the advice and counsel I provide to CEOs is just as applicable to first-time CEOs as it is to tenured executives. Moreover, while start-up and early stage companies certainly have unique issues, great executive leadership is really not life-cycle centric. While I could suggest you buy a copy of my book, or read other posts contained on this blog (not bad suggestions by the way), I thought it might be interesting to see how other CEOs would answer the question. In the text that follows, I have provided a variety of answers to today’s question, which have been put forth by a number of different C-level executives and directors… 

“Take a very critical look at your product, how competitors will respond, and why customers are going to give you a chance. The high tech landscape is littered with companies that had great ideas and were even first to market, only to be crushed. Netscape is a great example, along with countless PC companies, dotcoms, and yes even wireless companies. Patents in theory are great, in reality they are easy to get around and expensive to defend, so you can’t hang your hat on that. The bottom line is that founders are rightfully proud of their product, company and strategy; and this often blinds them to the competitive threats in the market place and the challenges of entering/penetrating the market and gaining market share. The best question to ask is why.”
CEO of a Service Company

“Retain a CEO Coach…someone who’s been there before and knows how to avoid the land mines that you would undoubtedly uncover if left to your own devices”
CEO of a Technology Company 

“All that matters when you are starting is funding. Period. If you don’t have the money backing you, the best laid plans in the first 100 days, or rallying your troops to support your efforts won’t matter. Number one priority should be an excellent member of the team who is LOCKED into the venture community that has done this before.”
   ~ CEO of a Technology Company

“Build a customer value analysis spreadsheet or table that succinctly quantifies the value to a potential customer. If you can demonstrate an overwhelming or compelling customer benefit (e.g. X months payback, Y percent IRR [internal rate of return] etc.), then investors will be intrigued. It’s not the technology; it’s the value it creates for customers, and your ability to defend your unique intellectual property, through patents and trade secrets, that should be emphasized.”
Senior Executive of an Energy Company

“I cannot overemphasize the importance of having a skilled and trusted finance professional on your team from day one. I would recommend that you not even make the first phone call to a VC or Angel without this person in place (either a full time or trusted contractor/CFO for hire type). Second, you must get referenceable customer traction (installs and most importantly revenue, however little) as soon as possible. Third, from day one, make sure you build a workable/trusted alliance with the founders and that they are in agreement that you ’are‘ the CEO both outside and inside the company.”
CEO of a Software Company

“You need to take some fast actions on low-hanging fruit to show the organization and team that you are quick on your feet and a decisive leader. They (your new team) all know the low-hanging fruit, pick some. And as the CEO, you are responsible for the Corporate Culture, so make it clear early on what type of culture you are driving.”
CEO of a Telecom Company

“Talk to everyone in the organization and in the industry as soon as possible; deliver bad information immediately (and don’t try to ’spin‘ it); and remember to breathe!”
CEO of a Consumer Services Company

“1. If you haven’t already, draft a ‘first 100-day’ plan.
2. Start-ups and early stage companies are fun to run; but you need to move quickly….constantly work at creating a higher sense of urgency — even when you think things can’t possibly move any faster.”
President of a Media Company

In the start-up operation, it is very important that you do the ‘SWOT’ analysis (Strength, Weakness, Opportunities and Threat). Moreover, a pilot run based on a predetermined period would unfold all the problems related to your start-up operations. Isolate them, and find solutions and alternative methods to address the same and move forward. The key is to have a positive cash-flow at the end of the first year.”
President of an Apparel Company

“Surround yourself with trustworthy people as quickly as possible. With so many decisions to make in a short amount of time, you will often have to move forward without having all of the information you would want. This works best when you can tap into people who have relevant, specialized expertise and are not afraid to challenge your thinking, while at the same time have demonstrated a commitment to making the overall business successful (not just about themselves). Then you will be more likely to make fewer critical mistakes.”
Senior Executive of a Biotech Firm

“Understand the culture and the current people who play in that culture. I found that some have hidden agendas that will undermine what you were brought in to accomplish.”
Senior Executive in the Food and Beverage Industry

“You need to be a good listener. Hear what your people have to say about what is working and what is not. Make them feel that they are part of the change process and you will have their buy-in along the way. Create an action agenda that outlines clearly where the company is going and what needs to get done along the way to achieve the desired results and continue to keep people updated on the company’s progress.”
Senior Executive of a Pharma Company

“Make sure you have a clear understanding of the priorities of your Board of Directors, both individually and collectively, and establish good frequent dialog with them. No matter how brilliant your action plans and strategies, you must be in alignment with your board’s expectations and priorities to be successful as CEO.”
Managing Partner, Private Equity Firm

“Take some private time. Don’t let the job define you.”
Senior Executive of a Telecom Company

“One sure way to win respect and loyalty is to find out what the key priority of the team was that was dismissed by the former CEO. If there is any kind of consensus that the company was being held back in an area by your predecessor, you can look like a hero; show that you listen to and value your subordinates’ ideas, and there is a good chance that they are right and the company will pick up in performance.”
CEO of a Marketing Company

“Leadership is the key attribute for ensuring success as a CEO; and leadership, in my opinion, is very much driven by one’s ability to manage expectations of the numerous constituencies a CEO must deal with — employees, board members, investors, strategic partners, community, industry associations, etc. To accomplish this requires clear and precise communications with all, combined with the ability to adjust your/their expectations as critical information is obtained, assessed and addressed.”
~Senior Executive of a Financial Services Firm

“My advice would be to develop your personal networks while in the CEO position, to have a support system outside the company, and to develop a net in the event that the position does not work out to your expectations.”
~Director of a Phara Company

“It is all about expectations! Or, more to the point, the difference between expectations and reality. Try as we might to control the reality of our surrounds, it is far easier to control (or at least moderate) the expectations.”         ~ CEO of an IT Consultancy

“If possible, a few days before you actually start, have the HR person or CFO hold a short meeting of all your direct reports to be; the person controlling the meeting asks, ‘What do we want to know about John/Jane Doe?’ The second question asked is, ‘What do we want him/ her to know about us as a group?’ The third question is, ‘What do we want him/her to do for the company?’ The fourth question is, ‘What do we want him/her to do for us as a group?’ The responses are noted and presented to you when you first take the chair. It can be quite surprising what comes out of these questions asked when you are not there and may never know (at least for sure) who asked what, unless the one raising the question tells you.  The one critical point is that when you reconvene the group to give them your answers, to be done within 72 hours of your start, you are totally honest and candid, as you will be measured against your initial statements. This does not mean that actions cannot be flexed from the initial statement but do them with recognition of what you said and give comment as to why, so all can understand; it helps the trust factor significantly. Obviously the objective is to shorten the learning period in a structured way, and for me it has always proven beneficial.”
CEO of a Manufacturing Company

“1. Meet with your board members individually (typically over lunch or dinner).
2. Find a very good mentor.
3. Stay calm, stay cool, stay collected.”
CEO of a Bank

“It is all about making money! Nothing more, nothing less. You’re in because they made a bet that you will make them more money than the other guy. You’re out because you did not make very much money for them. Don’t ever forget that.”
CEO of a Professional Services Business

“What is success as a CEO? It’s simply this: Living life without fear in your gut (living with peace) and looking back and being proud of yourself for the positive impact you made on people, both high and low in rank. You see, it’s all about your attitude and how people see you. What’s inside can be contagious.”
CEO of a Manufacturing Company

“Do not hesitate to make a decision. Hesitation or being indecisive will become rampant in the organization. Do not be shy about laughing at yourself in front of others. Never compromise your personal ethics and beliefs. Finally, know when it is time to go home. It is a job.”
President of a Manufacturing Company

Due Diligence – Not Optional…

By Mike Myatt, Chief Strategy Officer, N2growth

It pays to do your homeworkAs much as you wish it might be so, due diligence is really not an optional consideration. Have you ever made a decision based upon what you thought was a thorough understanding of all pertinent information only to find out after the fact that you didn’t know as much as you thought you did? It’s not much fun to find yourself on the wrong side of the information gap…Incorrect data, omissions, information that is biased or skewed, misrepresentations, misunderstandings, or any number of other scenarios that lead to the creation of information gaps can be very costly in today’s business environment. In today’s post I’ll discuss the critical nature due diligence…

Quality information enables good decisioning. While at face value this would appear to be a rational statement, the problem lies in the fact that it is also a relative statement…Over the years I’ve witnessed business people that make critical decisions based on nothing more than gut feel or instinct. I’ve observed others that rely on the use of detailed internal checklists and/or processes to validate their assessments, and I’ve known others who won’t make a critical decision unless they hire third party professionals to conduct due diligence on their behalf. Regardless of your method (or lack thereof) managing information and decisioning risk has never been more important than it is today.

With the constant pressure to compress transaction timeframes in an effort to remain competitive, many firms are actually doing less due diligence on larger transactions involving more potential risk…While this may sound ridiculous, the sad truth is that it is a scenario which is all too common. Hedge funds, venture capital and private equity firms, asset managers, investment banks, or corporations involved in anything from early stage investments to real estate transactions to mergers and acquisitions have intense pressure to get deals closed quickly in a market that has never been more complex to navigate. 

While you by no means should ignore due diligence, you also cannot allow yourself to fall prey to being paralyzed by analysis paralysis. To balance the main topic of this post with the transactional realities present in today’s market you should also read a previous post entitled “Timing Is Everything.”  

Let’s put aside the obvious reason for thorough due diligence (making a good deal), firms that don’t have rock solid due diligence capabilities may find themselves in arbitration, litigation or under the scrutiny of regulators as a result of poor decisions. Public companies dealing with Sarbanes-Oxley should be terrified of not crossing every “t” and dotting every “i”…

Bottom line…No amount of due diligence can protect you against flawed decisions or a bad deal, but if a thorough due diligence effort can manage or transfer risk in the majority of situations it is well worth the time, effort and cost to do it properly. If you short cut the process you’ll likely find yourself being held accountable for that decision someday…

CEO Profile: Steve Ballmer

By Mike Myatt, Chief Strategy Officer, N2growth

Steve BallmerI was recently asked if I would share my insights on some of today’s high-profile CEOs. I assume that the thought underpinning the inquiry was that since the majority of my working life is spent coaching and mentoring CEOs, or evaluating and assessing CEO performance for boards of directors and investors, that I might be able to provide some insights on their performance. I thought this might be an interesting exercise, so today’s post will be the inaugural piece in a new category entitled CEO Profiles. I’m going to attempt to provide a balanced scorecard approach in reviewing the performance of the lucky CEOs profiled so that there will be actionable takeaways from each assessment. You are invited to send me the names of CEOs that you’d like to see profiled, and if they’re not a current or past client I’ll add them to the queue.  Today’s Profile…Steve Ballmer, CEO Microsoft.

When it comes to CEOs, Steve Ballmer may be one of the more controversial chief executives of the last several years. There isn’t a lot of middle ground with Steve…you are either a big fan, or not. On the plus side, Steve has been running things at Microsoft during a time period when technology has been changing and evolving faster than ever before, and the company has continued to operate profitably under his leadership. On the negative side, Steve’s tenure has run coterminously with Google’s unprecedented rise, the failed Yahoo acquisition (and many other missed M&A opportunities), a plodding mobile effort, and many other sub-par initiatives. So, this begs the question, is Steve a winner because of Microsoft, or is Microsoft a winner because of Steve?

Steve Ballmer is a living dichotomy, which perplexes many people smarter than me. As perhaps is the case with most people, Steve’s most admirable qualities (his passion and company loyalty) may be the root cause of some of his greatest failings as a chief executive. His passion and loyalty while sometimes inspiring and motivating, have also at times led to blatant acts of arrogance and impulsivity resulting in PR disasters.  To get a better feel for Steve I offer the following two videos for your review. The first video demonstrates the completely contagious passion and confidence that Steve brings to the table as a leader. By contrast, the second video shows the impulsivity, arrogance, and lack of decisioning skills that has continued to plague his career:

Following is my scorecard evaluation of Steve Ballmer rating him on a scale of 1 to 10, with 10 representing the highest mark:

  1. Talent Management- 7.5: Steve is well know for his nose for talent. He is a prolific recruiter, and has been involved in most all of the key hires Microsoft has made. He is a motivator and a believer in developing a positive culture. My only knock on Steve in this area is that he doesn’t always seem to recognize where Microsoft’s considerable talent should be deployed to generate the best return.
  2. Brand Champion – 5:  This is a tough one for Steve…If I were solely grading his ability to evangelize the corporate brand to Wall Street I would score him much higher. However his constant PR gaffs, his abrasiveness, and his impulsivity don’t make him the ideal corporate spokesperson. 
  3. Innovation – 3: Unlike another Steve (Jobs), Ballmer is a lagger and not a leader when it comes to innovation. Worse than his own lack of innovative vision, is the fact that the company as a whole has embraced a “big is better” mentality, such that they’re sold on the concept that their size and history will always insulate them from changing market dynamics…
  4. Leadership/Decisioning – 5: Steve has leadership skills and ability, but they are often misdirected in their application. History is full of examples of inspirational leaders who were ineffective. Getting someone to follow you is just a small part of the battle; knowing where to lead them is more important.
  5. Intelligence – 8: Is Steve a bright guy? Sure he is…Is he the smartest CEO around? Far from it…You don’t accomplish what Steve has accomplished by not being intelligent. That being said, raw intelligence and savvy business acumen are not always one in the same. The raw tools are there, but the refinement, discipline, and polish are clearly missing.
  6. Strategic Vision – 5: I give Steve credit for recognizing he has some huge problems facing him, but I don’t give him much credit for how he is addressing them. Microsoft’s vision is being constantly eroded by other companies who embrace social relevance, innovation, and velocity as key business drivers. The Microsoft strategy and tactics are outdated, and misdirected. The fact is that you cannot play effective offense or defense with a poor game plan.

I don’t believe Steve Ballmer will remain CEO of Microsoft for much longer…The company needs a fresh perspective, and a new focus, which Steve cannot offer.

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