Information control

http://www.economist.com/node/21543555?fsrc=rss%7Cbus

Boeing’s assembly plants are the final stage in a long and hugely complex global supply chain. It has about 1,200 “tier-one” suppliers, which provide parts directly to the planemaker from 5,400 factories in 40 countries. These in turn are fed by thousands more “tier-two” suppliers, which themselves receive parts from countless others. Beverly Wyse, who oversees production of the 737, admits that it has sometimes been a job to persuade all these suppliers to invest enough to meet future demand. To do so, Boeing has had to learn to be more open with them about its production plans, and a bit less paranoid about whether such information might reach the ears of its competitors.

Such an action is probably less difficult for a company like Boeing that doesn’t have competitors.  They have a single competitor:  Airbus.  And, as the article points out, both have queues of orders four years (Boeing) and eight years (Airbus) out.  That might seem great for Airbus, but those deals are on models that will be outdated by the time Boeing has secured additional orders (and the global oil situation may change, calling for even greater fuel-efficiency over against other qualities).

When negotiating, one needs to balance this wisdom of sharing for partnership and withholding for protection (based on the relationship).  “Bad, bad,” says the buyer, but when he goes away, then he boasts” (Proverbs 20:14).  He boasts because he got what he wanted for the value he thought it was worth.  This is one great aspect of free enterprise.  Excepting government regulatory demands, you don’t have to buy something you don’t value more than the money is costs you to buy it.  Thus, the buyer boasts because he didn’t feel cheated.  He felt he was shrewd.  The seller sold.  He may have felt cheated, but we don’t know from the proverb.  We do know that, in general, sellers don’t sell if they can afford not to when it isn’t in their interest.  And, buyers have traditionally had greater leverage in business.  The U.S. business culture is one of the most egalitarian when it comes to profit-sharing between buyers and sellers.  Most countries’ business cultures favor buyer bargaining power.

Also, regarding the flow of information, when evaluating how much to share, business leaders need to consider this question:  Are you cooperating or collaborating?  Cooperating is working together toward a common end today.  Collaborating is choosing to work together toward a common end tomorrow.  The future focus of collaboration allows for more fearless information-sharing.  Cooperating today is evidence that what is being done today is still in the other party’s interest.  But, that must not be confused (as we saw with Oracle and HP), that I should expect the same relationship tomorrow.

Knight no more

The former head of The Royal Bank of Scotland (RBS) is being stripped of his knighthood because of his failed leadership – complicit in running the bank into the ground. I gave a hearty “bravo!” to that before finding out that he holds many titles.  I wonder whether this act of public dishonor will impact his future employment opportunities or leadership decision making.

Here’s a little background (from Wikipedia article) on his rise to prominence and the results of his aggressive leadership style:

• December 2002 - Forbes (global edition) "Businessman of the Year", which described him as an original thinker with a fast-forward frame of mind who had transformed RBS from a nonentity into a global name.
• 2003 - 2006 - No.1 in Scotland on Sunday's Power 100
• December 2003 - "European Banker of the Year" in 2003
• June 2004 - Knighted in the Queen's 2004 Birthday Honours list, for services to banking (annulled in 2012 for playing a major role in the banking crisis)
• June 2004 - awarded an honorary doctor of Laws by the University of St Andrews
• July 2008 - awarded an honorary fellowship by the London Business School

….

From the time that Goodwin took over as chief executive until 2007, RBS's assets quadrupled, its cost-to-income ratio improved markedly, and its profits soared. In 2006 pre-tax profits climbed 16% to £9.2 billion with significant growth coming from its investment banking business. By 2008 RBS was the fifth-largest bank in the world by market capitalization. One of the factors in its rise was its enthusiasm for supporting leveraged buyouts. In 2008 it lent $9.3bn, more than double its nearest rival.

….

In August 2011, Goodwin moved out of the family home in Colinton after being asked to leave by his wife. The move followed media reports of an extra-marital affair with a colleague at the Royal Bank of Scotland.”

It just so happens that:  “once a year he would go on shooting trips to Spain with Santander chairman Emilio Botín.” 

In everything the prudent acts with knowledge, but a fool flaunts his folly. (Proverbs 13:16)

Poverty and disgrace come to him who ignores instruction, but whoever heeds reproof is honored. (Proverbs 13:18)

One who is wise is cautious and turns away from evil, but a fool is reckless and careless. (Proverbs 14:16)

The discerning sets his face toward wisdom, but the eyes of a fool are on the ends of the earth. (Proverbs 17:24)

Who can you trust?

The big battle will continue to rage between these industry giants.  This article explains how the settlement related to former CEO of HP’s leaving and joining Oracle as President included a clause (in one form of the draft) that required continued support by Oracle for HP’s server technology (of which HP was the only provider in the industry).  Well, Oracle acquired Sun Microsystems and wants to look to its own.  Thus, it tried to break that [shaky] contract.  Both sides are spinning the information to make them look positive in the public eye (Oracle – ripping the veil off HP’s scheme to make money with a dying technology that IBM wanted killed 20 years ago but didn’t because of a half-billion dollar payment by HP; HP – revealing the ulterior motives of Oracle to break agreement and steal its customer base and sabotage its customers running the HP technology by limiting support). 

“The one who states his case first seems right, until the other comes and examines him.” (Proverbs 18:17)

Which organization do businesses support with their investment as the partners turn competitive:  the company that keeps critical information from you about the capital intensive investments that it wants you to buy from it or the company that doesn’t want to honor its word because its bottom-line can fare better without your involvement?  Both seem untrustworthy from where I’m standing.  And, their arguments are equally strong/weak.  Hopefully forthcoming evidence elevates at least one side’s integrity.

Hiring Hints

A couple weeks back I discovered a short and helpful article by George Anders, the author of The Rare Find: Spotting Exceptional Talent Before Everyone Else while looking into an HR offering that Monster.com provides.

The key takeaways for those who hire are to:

• Reduce their “must-have” lists to a few crucial criteria (i.e. “Compromise on experience; don’t compromise on character”).
• Be “willing to embrace unconventional views of what job skills are truly needed in each specific field”
• Not be neutral in assessment:  “The best insights into candidates’ potential come from leaders whose own life experiences speak to the traits they are seeking.”
• “The process of getting to know candidates is defined far more by questions involving ‘why’ and ‘how’ -- and less about ‘what’ or ‘when.’”

The search for significance

David Weidner who covers Wall Street for MarketWatch posted this article about the recent Davos gathering, and it reveals an important truth about men, purpose, and frailty.  Weidner laments the fact that 70 of the richest people in the world gathered for a lauded purpose, but what they accomplish remains fairly invisible.  He points out that business deals are made and the networking environment is phenomenal, but the marketed purpose for the gathering is pretty much abandoned.  Sure, lots of talking takes place, but that leads only to poverty (of thought) when untethered to action.  So why do these men keep returning and participating in similar gathering?  Or, what is the true value business leaders find in such gatherings?  Weidner writes,

“There are very few truly exclusive clubs that make you feel special. Davos remains one of those clubs.” 

The answer is in self-worth and personal significance.  When men will not glorify God they must glorify something else (including their selves).  We are creatures created to praise, and we will praise Him or something in His place.  Some men are surely finding temporary pleasure in this self-worship, enjoying the event like an enthronement festival celebrating their financial godhood. 

And, Weidner explains why the intense media bias results in any news about the gathering being relatively worthless.  He comments:

All of the financial media love Davos. We’re underpaid and insecure. A junket to Switzerland, even with the grueling work of regurgitating financial baloney, most of us would take the assignment. And why not? We may not be important, but we feel important for a few days. Davos looks beautiful. Sometimes Bono shows up. It beats working. 

So, though Weidner has never heard anyone report back in private that the gathering was worth its salt, he has always heard glowing public reviews.  With finality, he writes a sarcastic response to this rhetorical question of why these egos meet:  

But if attendees really cared about any of that, they’d have done something about it.

No, Davos is a place to be seen, to feel special, to cut a deal. It’s the global system’s way of telling the citizens of the globe that everything’s working.

Obviously, the servant leader has a much different approach to life, leadership, networking, deal-making, etc.  While he needs encouragement, it cannot ultimately come from those things that are insufficient in themselves.  Because God alone is self-sufficient and inexhaustible in the overflow of his attributes that amaze/humble, sustain, and grow us, He alone is the One who can offer us the purpose we need to motivate and charge us for selfless living and effective, servant-work.  Practically speaking, such gatherings often cause the unbelieving leader more anxiety and stress, because he’s comparing his godhood to that of another.  He’s thinking about his net worth, his influence, his looks, his future, his legacy, his experience, his accolades, his education, etc.  These things direct a man’s attention to things that he feels make his worthy of praise.  The believing leader is subject to the same temptations, but he can use these for his sanctification, self-identifying with the frailty of his barns, the brevity of his days, the extent of his kingdom and the judgment for how he stewards his influence, the imminent death of his aging and failing body, his inexperience and arrogance, etc.  The godly leader can turn to the Rock “higher than I.”   He is where mental, spiritual, and emotional stability come from.  Thus, the believing leader should find his purpose in God, not stuff or people or activities, and so he can do things without that pretense of serving (when in fact the temptation is to appear with the flowing robe and benevolent blessing but inwardly rejoice in others’ perception of your apparent greatness).  He can truly serve – God and the people made in His image.

Alternatively, there is also the caution the godly leader needs:  to not disdain the position of authority he’s been given, as if it didn’t have significant purpose in God’s plans.  It does, and to pretend that the position he holds is not important can be just as dangerous as self-worship because of the position.

Must read analysis by Charles Murray of the American culture shift

This lengthy article in the Wall Street Journal by Charles Murray of AEI provides a great analysis of what’s been happening since the 1960s.  Here’s one point he identifies that flies in the face of an often taught and held social belief.

Religiosity: Whatever your personal religious views, you need to realize that about half of American philanthropy, volunteering and associational memberships is directly church-related, and that religious Americans also account for much more nonreligious social capital than their secular neighbors. In that context, it is worrisome for the culture that the U.S. as a whole has become markedly more secular since 1960, and especially worrisome that Fishtown [the generalized working class he uses to represent the statistics he’s analyzed] has become much more secular than Belmont [the representative upper class]. It runs against the prevailing narrative of secular elites versus a working class still clinging to religion, but the evidence from the General Social Survey, the most widely used database on American attitudes and values, does not leave much room for argument.

For example, suppose we define "de facto secular" as someone who either professes no religion at all or who attends a worship service no more than once a year. For the early GSS surveys conducted from 1972 to 1976, 29% of Belmont and 38% of Fishtown fell into that category. Over the next three decades, secularization did indeed grow in Belmont, from 29% in the 1970s to 40% in the GSS surveys taken from 2006 to 2010. But it grew even more in Fishtown, from 38% to 59%.

Wow, that’s an 11% increase in secularization compared to a 21% increase in secularization.  And, the working class is identified as a group 50% larger than the upper class or a group having a one-third larger share of the population than the upper class identified in the study. 

Knowing when to relinquish control

http://www.bloomberg.com/news/2012-01-23/heins-brings-decades-of-hardware-skills-to-rim-s-battle-with-apple-google.html

Balsillie and Lazaridis, who guided RIM together for two decades only to see an 88 percent drop in the stock price since 2008, said the decision to step down and appoint Heins was theirs…“He’s really excelled in every department he’s been responsible for,” Lazaridis said.

There usually comes a day when the hero becomes a king and the king becomes a counselor for the sake of the kingdom.  Succession planning and implementation is the key here.  If Heins was and had been the sure choice, then it’s unfortunate that it took the whole 88% drop over the past few years to convince Basillie and Lazaridis that the time for Heins’s succession had come.