Tag Archives: leadership observations

Gaming and Cheating in Business – Why Companies Always Lose When They Cut Corners

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The Short Term or the Long Term

I’m often asked by young managers whether a given decision should be made for the short-term or the long-term well-being of a company; and I always give the same answer: both. No matter what the issue is, the ultimate decision should weigh the pros, cons and consequences over both the long and short terms.

That is not to say that I think that both are equally important – on the contrary – there is no doubt that the long-term health of a company is always more important than the company’s short-term health. Always. Always. Always. And, before you argue that without short-term strength a company will not have a long term; I’ll concede that you are right… and that you just proved my point.

Short-Term Health v. Long-Term Health

While the argument for short-term health versus long-term health may rage in your office, the truth is that no decisions ever really come down to an either/or – it is not a simple dichotomy. Sound company decisions always weigh long-term health against some potential short-term gain or loss. For example: do we take the gain today knowing that we will lose something (but not everything) in the future?

A decision made in favor of a company’s short-term viability so that this same company can be around in the future is indeed a decision made for both the short and long term. I would argue, in fact, that the company’s long-term health was likely the primary deciding factor in choosing the short-term strategy. You simply cannot make short-term decisions that disregard the company’s long-term well-being and expect to be in business in the future.

Short-Term Health v. Short-Term Wealth

Is it short-term health or short-term wealth you seek? Before you tell me that the two are never mutually exclusive, let’s ask the former executives of Lehman Brothers.

Because nearly all of us are paid more on the short-term outcomes we drive for our companies rather than what we provide over the long term, it is easy to see why some companies will game and cheat to maximize short-term revenue at the sake of long-term viability.

“It is difficult to get a man to understand something, when his salary depends upon his not understanding it.”

We’ve previously shared this Upton Sinclair quote and it is as fitting in this context as it was in earlier posts. Why would middle managers even begin to try and understand the importance of a company’s long-term viability when 99% of their compensation is related to the short term? We should not be surprised, then, that many companies – and even whole industries – routinely mortgage their futures for the sake of a few dollars today. (Mortgage indeed.)




Gamers and Cheaters – Hall of Shame

While there are a number of industries that routinely cut corners to drive a few short-term dollars to their bottom lines (the banking and casual dining industries come to mind immediately), we decided to focus the remainder of this article on two specific industries that habitually game and cheat, and still don’t get it.

The first industry is known in the automotive business as “Third Party Lead Aggregators.” Basically, these companies acquire contact information from consumers who are reportedly in the market for a car, then sell these as leads to automotive dealers.

Because the aggregators sell leads at a fixed price to car dealers, though purchase the leads from their affiliates and the open market at variable prices, the push to achieve a suitable margin (in the short term) means that the aggregators must purchase a significant number of lower priced, lower quality leads to mix in with a few higher priced, higher quality leads. While this behavior results in greater short-term profits, it comes with an increase in customer churn and a reduction of long-term loyalty.

Think of it as watering down the lobster bisque. In the short term you make more money, though over the long run people stop coming to your restaurant.

What About Watering Down the Herbicide?

There’s actually an acceptable practice in business for cheating and gaming one’s customers known as the Least Noticeable Difference (LND). This is a product strategy that involves improving gross margin via minute degradations to the size or ingredient quality of a product. The key is to ensure that the quality or size is reduced just enough so that most consumers will never notice.

The other cheating industry we wish to highlight is one that seems to thrive on making LND changes (on a weekly basis). Welcome to the lawn service business. This industry is dominated by national players like TruGreen ChemLawn, Scott’s and ServiceMagic; but also populated by countless local players with such creative and fun names as Grasshopper Lawn Service and Bizzy Bee Lawn Care.

You can’t blame this group for cheating. All of their customers live in nice homes and hire someone else to cut their lawns and kill their weeds – i.e., they’re not really paying attention. Additionally, much of the work in this industry involves spraying a clear liquid on grass; the results of which are not realized for weeks. Who wouldn’t be tempted to cheat and water down the herbicide?

…

Over the last few weeks the crab grass began to spread (again) in our yard. As we seem to have to do every few months, we called our lawn service to complain. What did they do? The same thing they always do: They apologized profusely, blamed it on the “increase in rain” and promised to come out “tomorrow and treat the lawn again, for free.”

“Not good enough,” I replied. “You’re fired.”

While most of their customers are probably fooled by their reactionary customer service and gladly allow them to continue, we simply could not reward this gaming and cheating behavior any longer. The truth is they simply don’t use enough herbicide during their weekly treatments to be effective, and they know it. They’ve watered it down to maximize their margins and they’re crossing their fingers that you’ll never notice. If you do, they simply apologize and “give” you an immediate treatment for “free.” What they’re actually giving you in this one-time treatment is something they should have been giving you all along: Quality.

LNDs: No One Can Eat Just One

Used once, an LND strategy can be an effective way to make a nice short term improvement to profits. Unfortunately we generally assume (incorrectly) that we will make these changes only when most customers will likely never notice. Like crack cocaine or Lay’s Potato Chips, we sometimes become so addicted to making these LNDs that we can’t stop until it’s too late. Our customers have left us and they’re not coming back.

…

Make no mistake, we’re not naïve. We understand that there are plenty of business gamers and cheaters who are successfully pulling the wool over the eyes of their gullible customers every day – and have done so for years. Whether it’s from collusion or a lack of competition in their industry, these businesses have (so far) been able to operate in a vacuum; living high on the hog via a long series of short-term decisions.

Odds are that this cannot last; that the customers will revolt or a new competitor will enter the fray offering real value. Whatever happens, rest assured that it will indeed happen, and that by the time the gamers and cheaters realize it, it will likely be too late. (At least that’s what we hope.)

Sarah Palin is a Quitter, and Quitters Never Win

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Quitters Never Win and Winners Never Quit

Argh! I can hear my mother misquoting Vince Lombardi in my sleep: “Quitters never win, and winners never quit.” A simple saying that forced me to keep my word throughout my life – even when it cost me money.

Why is it these simple clichés can hold such importance as to guide our every decision? (This particular phrase was so particularly annoying that it’s guided my decisions both in and out of business for over thirty years.) There are certainly others, but this mother’s saying carries special weight; as much an integrity statement as an indictment of those who would give up without a fight.

‘Quitters never win and winners never quit’ could be the primary rule dictating everything from a second grader’s soccer game to a governor’s fulfillment of her term.

Palin is a Quitter

We’ve written good things about Alaska Governor Sarah Palin in the past, including a post that chronicled why she was a better leader than Barack Obama. That was September 2008 and this is now.

In demonstrating the worst leadership trait possible, Palin has decided that she cannot operate as a lame duck governor. (She had previously announced that she would not seek reelection.) Palin has decided to step down on July 26, 2009. Her current term was scheduled to end next year.

“I Want to Spend More Time with My Family”

While this is not the soon-to-be-former governor’s stated reason for quitting, her actual reason might as well be as lame as all the on again/off again retirements of star athletes. All we got from Palin was a quick Tweet: “We’ll soon attach info on decision to not seek re-election … this is in Alaska’s best interest, my family’s happy … it is good. Stay tuned.”

Well, as long as your family is happy…

Not so fast, Sarah. You are a quitter and we are disappointed. You were elected by the citizens of Alaska to serve them as their governor until 2010. Whether you were planning another term or not is irrelevant: they were counting on you to keep your word. When you chose to become the governor of Alaska, you agreed to serve the citizens of that frigid state and now you’re giving it up for personal reasons.

(Not to mention that you’ve passed on an extraordinary chance to shove through your agenda; an agenda you claimed was in opposition to the Washington elite. Who is going to carry your torch now? Who is going to keep your promises to the people of Alaska?)

Sarah Palin is not a Winner

News flash: True leaders don’t let personal reasons get in the way of their commitments to others. True leaders don’t let personal reasons get in the way of doing what is right. They keep their word and they never quit. True leaders are winners.

Palin is not, as we once thought, a true leader.

Much like Dan Quayle, Joe Biden and Admiral Stockdale, Palin lost more of her luster every time she opened her mouth. Her latest spat with David Letterman painted her as a died-in-the-wool Republican; someone willing to give up any sense of right for a chance to bash the Left. (Pun intended.) Every day since November 4, 2008 Palin has become more of a clown; a caricature of someone who once professed she was going to change the world of politics in Washington.

Sometime over the last eight months she stopped being a leader and became a punchline.


Good Riddance, Sarah P.

Likely, most Alaskans won’t care very much that you’re quitting. In fact, many will be relieved. Go away, Sarah Palin. Go back into the obscurity from where you were plucked and leave the future of the world to the leaders… we’ll try our best to hang on without you. (Note our tongues in our cheeks.)

Why We Don’t Have Leaders in the Public Sector

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Leadership Lessons from the Public Sector

There are reasons some people are lifelong public servants and others work in the real world. Whether it’s the military, public education, a state legislature or a municipal government: a job void of profit responsibility is generally void of any true accountability. Without accountability, leadership can become unnecessary and the skill set (if it ever existed) will atrophy.

As we wrote in a recent post about school administrators, the people in these roles “are generally not great leaders… They’ve never had to live by a P&L or make real personnel decisions. They spend our tax dollars like Monopoly money, and they do all of this with no real accountability.”

Examples of this abound and we never have to look very far to reinforce this belief. Occasionally, some move by one of these leadership amateurs so shocks our conscience that we feel compelled to comment… much like a recent decision by management at an Atlanta-area county office that actually made us cringe.

Layoffs Happen

Last Friday in DeKalb County (GA), workers in the planning and development office were told there were significant layoffs coming and that they would have to wait until Monday to learn their fate.




Nothing strange here, right? Layoffs are happening all over America in the private sector, so it seems natural that these would eventually reach those working in a cash-strapped county office. The differences, however, between this layoff and those that are occurring in the real world are the communication skills and compassion shown by DeKalb County’s managers.

The 100+ employees in this office were told to return any county equipment and pack up their belongings and leave… without being notified if they were included in the layoff or not. You see, their managers wanted everyone out first, and then they would tell the lucky few (19 to be exact) to return with their things and resume their duties.

WTF?

(Excuse the texting in the middle of a post, but WTF? does not mean Wednesday, Thursday, Friday; and its use is appropriate in this case.)

While leaders in the private sector are often (rightfully) accused of being less compassionate than their public sector counterparts, employee relations as practiced by DeKalb County went the way of the three-martini lunch in the real world. Thankfully, the fear of lawsuits or bad public relations helps to keep this behavior out of the for-profit companies. When it happens in the public sector, we have little recourse but to strongly denounce it.

Okay, We Denounced It

We didn’t raise this example to simply call attention to the lousy leadership provided by government entities in the Atlanta area. Rather, we believed this instance was simply another glaring illustration of how the lack of a profit motive coupled with a promotional system based on tenure (instead of ability or merit) leads to poor leadership, morale and employee effectiveness. (If you’ve ever had to get your driver license renewed, you know exactly what we mean.)

Leaders need accountability, goals and responsibilities – complete with consequences – in order to grow and deliver value to their organizations. Where we fail to provide these to our middle managers, you can argue we end up operating like a government agency.

What About the 100 People Carrying Boxes Filled with Desk Chachki?

DeKalb County CEO Burrell Ellis stepped in and said he was dissatisfied with how the process was being managed and ordered a delay of the layoffs. (We’re not sure why a county needs a CEO, but we’re glad someone with authority in the county has a little common sense.) The delay, however, will be a short one. Plans are in the works to save more jobs, but DeKalb’s planning and development office will deservedly lose more than half its current workforce… they’ll just do it with a little more dignity.

A Snow Decision is No Decision When the Decision Comes Too Late

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Leadership Lessons from Snow Days in Georgia

(My apologies as I get a little local here, but this stuff really ticks me off.)

It snowed in Georgia yesterday; this is news. Some towns, like Athens, received as much as six inches of snow. Gwinnett County, Georgia (north of Atlanta) got a little more than an inch. To anyone living in Chicago, Detroit, Philadelphia or Buffalo this wouldn’t be considered anything more than a dusting. To Georgia, this is a major event. This is big news.

As my kids played in an inch-and-a-half of the white stuff yesterday, they continued to ask if school was going to be canceled on Monday. This was 6:30 PM Sunday – and over an hour had passed since the last flake fell in our yard – of course the schools would be open. The roads were clear and the great melting had already begun. Certainly there would be school on Monday.

When we sat down to dinner at 7:30 the kids scanned the local television channels; searching for signs that the Gwinnett County Public Schools would be shuttered in the face of this massive storm.

After dinner, they were surfing the Web for any indication that they could stay up late tonight and sleep in tomorrow. No such luck: the Gwinnet County Schools had announced that they were going to brave the elements and open their doors in the morning. By 9:00 PM the situation remained unchanged. School was on and they were bound for bed. Sure, forecasters expected temperatures to drop below freezing overnight, but school was a go, and these kids were going.

Great Leaders are known for being Great Decision Makers

I hate to break it to you, but the people running our public schools (the district administrators) are generally not great leaders. More often than not they are former educators with so many college degrees that their email signatures take four lines. That’s the problem with administrators: most of them have spent their entire lives in the education system and not a minute in the real world. They’ve never had to live by a P&L or make real personnel decisions. They spend our tax dollars like Monopoly money, and they do all of this with no real accountability.




If they were truly great leaders, they wouldn’t be educators. As noble as the teaching profession is meant to be, our education system is filled with people too afraid to face the business world; too afraid to chase dreams; too afraid to take even minimal risk. A teaching degree is the safest college degree one can achieve. A degree in education is one of the few degree programs (like medicine and law) with a guaranteed title waiting for you on the other end. “In four years, I’ll be a teacher.” “In six years, I’ll be a lawyer.” “In eight years, I’ll be a doctor.”

Deciding to become an educator, like deciding to become a doctor or a lawyer, is safe. Unlike doctors and lawyers, teachers never really put much on the line after college. They move into a union job with no real chance of ever being fired; regardless of their level of incompetence. And, if they’re really incompetent, they can aspire for management.

Those who can, do. Those who can’t, teach. Those who can’t teach, become administrators.

Great Leaders consider all the Stakeholders

Okay, back to the Great Georgia Blizzard of 2009 as the local news stations are just dying to call it. When we went to bed last night, there was no chance school was to be canceled. We made our plans for today based on this knowledge and drifted off to sleep.

5:30 AM comes fast sometimes, and this morning was no different. Rushing around the house as usual, I woke my oldest son and told him to start getting ready. (His bus arrives just after six.)

After showering and shaving (though not in that order), I turned on the TV for background noise as I got dressed. While the local anchors were marveling over the white stuff as if it was an alien sighting, I heard something that shocked me.

“We repeat: Fulton County, DeKalb County and Gwinnett County Schools are closed today…” they exclaimed.

While I knew my kids would be thrilled, I wondered how this would affect families with two working parents. The businesses in and around Gwinnett County, you see, are open today. Had the bureaucrats of the Gwinnett County School District made this decision while it was still snowing more than twelve hours ago, parents could have made plans to take care of their homebound children. Now many of them will be stuck with tough a decision: do they miss work, or do they leave their kids home alone?

Great Leadership is about Looking Ahead

While we can debate all day about whether or not school should have been canceled in the wake of a storm that “dumped” a miniscule amount of snow, the real issue lies in the fact that J. Alvin Wilbanks, the Gwinnett County Schools superintendent, and his team waited to announce the school closings until well after every student and parent in the district had gone to bed. We single out Wilbanks, a lifelong educator and student who does not have any school-age children, because he is in charge. He actually holds the title of CEO for the Gwinnett County Public Schools, so like all CEOs; the buck should stop with him.

The argument from the school bureaucrats is that the roads became icy overnight; forcing the school closures in the name of safety. Noble reason, indeed; and one with which we probably agree, if not for the timing.

For us, this begs the question: In all the years Wilbanks was in school, teaching school, and administering schools, did he never learn that temperatures generally drop overnight? Was it a shock to Wilbanks’ staff to learn that water freezes when the thermometer drops below 32 degrees Fahrenheit? Did no one consider that the melting snow at 6:30 PM Sunday would turn to ice by 5:30 AM Monday? Didn’t anyone bother to check the Weather Channel?

The drop from 34 degrees last evening to 25 this morning was no surprise; it was accurately predicted. Had Wilbanks or his team bothered to look ahead and consider all of the data, the working parents of Gwinnett County would have had plenty of time to make proper arrangements for their children.

As unsafe as it might have been to run the buses this morning, it is equally unsafe to have hundreds of kids home alone today. Let’s hope for everyone’s sake that unlike the Great Georgia Blizzard of 2009, nothing newsworthy happens to the children fending for themselves in big empty houses.

Leadership Lessons from the Stimulus and Obama

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The Stimulus, Obama and Leadership

Eight Hundred Billion Dollars. $800,000,000,000.00. That’s a lot of money. When combined with the $700,000,000,000.00 squandered by or scheduled to be squandered by the Troubled Asset Relief Project (TARP), we’re talking about one and a half trillion dollars. In round numbers, $1.5 trillion looks like this: $1,500,000,000,000.00.

Hard to fathom, really. To give this amount some perspective, imagine this: $1.5 trillion is larger than the gross domestic product (GDP) of Spain. If the stimulus plus the TARP were a country, they’d be the 8th largest according to International Monetary Fund’s 2007 ranking.

So why is it so easy to spend?

While the TARP has clearly not performed as intended – to free up credit markets and salvage well-run financial institutions – at least it was directed with a specific and bipartisan purpose. Virtually everyone agreed it was the right thing to do at the time. (Today, not so much.)

It’s Not a Stimulus Package, it’s Welfare

Let’s stop kidding ourselves, okay? The package the Senate passed this weekend, even though it had more than $100 billion stripped from it, is more welfare than stimulus. It’s more government spending than economic stimulus. It’s more “more of the same” than it is “change you can believe in.”

Obama Needs to Lead

We elected Barack Obama as our 44th President so that he could lead this country through one of the economically toughest times in our history. Tough times call for tough decisions, tough love and tough leadership. Obama has so far failed on all three counts.

Tough Decisions include making the right call based on what is best for America. No one doubts that Obama’s own economic advisors – using their own economic models – show greater job creation and a shorter recession if the stimulus contained more tax cuts and less welfare. So why is Obama afraid to make the tough decisions and do what’s right? Why is the stimulus package just a conglomeration of left-wing leftovers and partisan welfare projects?

Tough Love means making those who made bad decisions live with the consequences of those decisions – even when it means they’re going to suffer. Too many Americans bet on the come that their homes would continue to skyrocket in value. They were wrong and now they’re suffering.




Too bad, we say. Obama should show strong leadership and apply the principles of tough love: you need to get yourself out of any situation you agreed to put yourself into. Sorry, but that’s what’s best for the rest of us.

Tough Leadership means standing up for what’s best for America – that’s his job – and this is going to be the hardest part. Pushing through the “Nancy Pelosi Welfare Reform Act of 2009” is not showing tough leadership and it’s not change – it’s politics as usual.

Step Up, Mr. President

President Obama, that’s not why we elected you. You are not supposed to be the Pro-Socialism Puppet as Rush Limbaugh portrays you. You are supposed to stand for something more. So why are you trying so hard to push through a spending package that will do nothing to save the economy and do everything to grow the government? Are you indebted to those who got you elected? Are you just another Chicago politician?

Leadership means leading. Leading, President Obama, is about shedding the partisanship and the obligations, and doing what you know is right. Leading sometimes means losing your friends; though I can tell you that any “friend” you lose while leading, wasn’t that good of a friend to being with.

 

Google is Just Like Everyone Else…

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Leadership Lessons from Google – When a Giant Makes a Giant Mistake

Google announced last week that they would close three offices and lay off 100 full-time recruiters. Even though these are the first Google-hired employees ever to lose their jobs in a workforce reduction, it’s not news… not in this economy. In fact, 100 employees is nothing, right?

Wrong. How big could it have been for Google if they would have announced they were not going to lay anyone off, ever? Instead of layoffs, they were going to find new jobs for these 100 people at Google?

100 employees is nothing, right?

With a ninety-billion dollar market capitalization and over 20,000 worldwide positions, Google could have easily absorbed these 100 humans in other areas of the company. They could have used the non-event of not laying off 100 employees as a chance to score a coup with the American media. They would have been the darling of the new administration: An American company; devoted to full employment despite the economic downturn.


We’re not naïve. We’re not suggesting Google not lose the 100 jobs, just not the 100 humans. Through attrition and everyday hiring, Google will surely add these positions in the next two weeks. With some on-the-job training and evening classes, these 100 recruiters could easily be ready to tackle many other jobs at the search giant. It would take a little work, but everything worthwhile does.

Google Could Have Been Someone; They Could Have Been a Contender…

Google could have been different. Google could have been the only giant American company to never, ever lay off a full-time employee. In the process, they would enjoy a more loyal workforce and great press. The positive feelings created by this move in this economy would have been worth 100 times more than Google would pay those 100 employees this year. They really could have played this to the hilt.

To be fair, Google has technically cut jobs before. In 2008 they laid off over 300 employees at their Double-Click subsidiary. This is somehow different; these were Google employees, hired as Google employees.

As my buddy Niall puts it, “in reality, Google is just like everyone else.”

Niall’s right; and it’s sad when you think about it. Google had a chance to make a statement, and instead chose to take the easy way out. Google is just like everyone else.

This begs the question: When will Google fall? If they’re not different, then they must be susceptible to the same market forces as every other business. Inevitably, they will be overtaken in their own field, and then they will be acquired. Then, the layoffs will really flow.

 

Leadership Lessons from a Dead Socialist

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Leading in the New Millennium: Pay for (Lack of) Performance

“It is difficult to get a man to understand something when his salary depends upon his not understanding it.” – Upton Sinclair

Although Sinclair’s words were uttered in 1935, they ring especially true when applied to the leadership void we face today. While Sinclair, a socialist, didn’t speak these words to decry the inattentive state of management during the Great Depression, his words speak volumes when applied to the CEOs, boards of directors, and other executives of the failed and failing businesses of this Great Recession.

We’re still a few months away from the first of many Lehman Perp Walks, though it’s important to note we believe that Sinclair’s quote can be equally applied to the senior leadership of Lehman as it could to the senior team at Enron.  

Enron and Lehman: Two Peas in a Pod

Let’s compare Ken Lay and Dick Fuld – two monosyllabic managers with their eyes on their own bank accounts and little regard for their employees or their shareholders.

Enron’s Lay claimed he had no responsibility for and little understanding of the risky and illegal ventures of his management team that bankrupted the giant company.

“It is difficult to get a man to understand something when his salary depends upon his not understanding it.”

Assuming Lay was telling the truth when he feigned ignorance regarding the schemes that brought down Enron, it’s easy to assume that he did not want to understand – he was making too much money in his ignorance.

Lehman’s Fuld claims his company and he were, in effect, victims of the housing and credit crisis. Dick Fuld made over a half a billion dollars during his 14 years as CEO of Lehman – that hardly qualifies him for victim status. Moreover, Fuld made his hundreds of millions all while allowing his company to dive into riskier investments requiring insane amounts of leverage.




When Fuld is finally brought to answer under oath for the enormous bankruptcy he orchestrated (his congressional testimony in October was a joke), he will no doubt claim he didn’t fully understand the credit default swaps and other risky investments his team was helping create.

“It is difficult to get a man to understand something when his salary depends upon his not understanding it.”

So What Must We Change?

Clearly shame and public humiliation aren’t enough to sway America’s CEOs to always act responsibly and in the best interest of the company’s shareholders. Case is point: Merrill Lynch CEO John Thain recently requested he be awarded a bonus of $10 million for 2008. Without going into Merrill’s ‘08 financials (or lack thereof), let’s just say that Thain proved, if nothing else, he has incredible nerve. (Boards of failed companies, generally, don’t even face shame or public humiliation – they just move on like carpetbaggers.)

Given the speed at which many companies are collapsing, it seems that even the alleged pay for performance packages that reward a CEO for some short term positive movement of a company’s share price are ineffective. Fuld had the gall to argue in front of congress that he delivered terrific shareholder value during the first 13 of his 14 years as CEO. Big deal, Dick, tell that to the September 2008 shareholders and employees.

Leaders as Stewards

CEOs, like US Presidents, serve at the pleasure of their constituents. Presidents serve at the pleasure of the American citizens; CEOs, allegedly, serve at the pleasure of the shareholders (the owners of the company). No matter how many years of prosperity a CEO has delivered (via shareholder value), a sudden bankruptcy that destroys a 158-year old company proves that the CEO was no steward; that personal gain (including stroking his own ego) was his primary (and possibly his only) goal.

If our business leaders fail to act as stewards, then our boards must act. If our boards fail to act, shareholders have little recourse beyond civil remedies that generally fail to change behaviors. Civil penalties for underperforming and/or incestuous boards are insufficient to stem the tide of bad leadership we’ve faced over the past decade.

Perp Walks for Boards

It’s time we criminalized the lazy, incestuous boards who fail to protect the shareholder. It’s time that more than a few directors received several years behind bars for every billion in shareholder value they failed to protect.

If you think what we’re requesting is akin to advocating the death penalty for jaywalking, you’re way off base. We asked someone who sits on three Fortune 500 boards (who spoke to us on the condition of anonymity) what made them feel they were qualified to sit on so many boards while leading another large company as CEO. Their response: “Listen, I get about $100,000 from each company for four meetings a year. I think I can handle it.”

Four meetings a year – unfortunately, that’s how far too many board members view their duties. What’s worse is that your “performance” (i.e. networking) on one board leads to appointments to other boards. Rock the boat, and you’re not asked to join the other boards.

“It is difficult to get a man to understand something when his salary depends upon his not understanding it.”

Amazing how a socialist like Sinclair can teach us so much about capitalism.

An Update to our Leadership Lessons from Brett Favre

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Brett “Cuatro” Favre and the Leadership Lesson of Humility

When you’re wrong, you’re wrong. The best thing to do is admit it. We are certainly humble enough to admit it.

At the beginning of the 2008 NFL season we predicted that the New York Jets would finish the season no better than 8-8… we were wrong. (See our August 27, 2008 post.)

The addition of Cuatro, which we predicted would not be enough to help the Jets make the playoffs, was indeed not enough to help the Jets make the playoffs. We were right on that point (and yes, we do like to gloat). The New York Jets finished the 2008 season 9-7 and fired Head Coach Eric Mangini today (read the New York Daily News story here). It seems Cuatro leaves a wake wherever he goes.




To add insult to the Jets’ injury, they missed the playoffs because the quarterback they jettisoned in favor of Favre, Chad Pennington, led last year’s 1-15 Miami Dolphins to the playoffs by defeating the Favre-led Jets. That’s karma; and in leadership, karma can be a bitch.

We also predicted that Brett Favre would throw more interceptions than touchdowns in 2008. Well, we were wrong on that point, too. Favre threw exactly 22 touchdowns and 22 interceptions – pretty crappy for a future Hall of Fame QB, but still not what we predicted. While we admit we got that one wrong, we do want to point out that Favre still led the NFL in interceptions this year – in fact, he threw 22% more INTs than the next closest QB. (Perhaps he should change his number to 22.)

The Green Bay Packers, who let pride and ego get in the way of a good decision, finished the season 6-10 – a far cry from the 13-3 they enjoyed with Favre in 2007. The leadership lessons we pointed out in our July 17, 2008 post still ring true: Brett Lorenzo Favre is more important than the team (in his mind); and get out in front of issues early, speak the truth and stay firm in your convictions (we warned the Packers not to capitulate – they did).

Interestingly, unlike last year when the Favre-led Packers were in the playoffs, both the Green Bay and Favre have plenty of time off to rethink their 2008 leadership blunders. Something tells us they learned nothing from the experience – their lack of humility keeps getting in the way.