Tag Archives: executive leadership

Unconscious Corporate Leadership: Short-term results-oriented mindset and strategy with negative consequences

By James D. Roumeliotis

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When you are the top executive of a corporation, you are supposedly quite conscious of your business activities. You are also the chief strategic planner and implementer. The path you take the company through can be one the consumer and public in large will either admire and respect or despise and hold in contempt. Good news! A business can do good for the consumer and the ecological footprint while growing the business and increasing profits methodically. A savvy businessperson and executive know how to do this. A disgraceful and incompetent one either has no clue, does not care, or both.

Small to medium sized businesses owned by a person or a family, often since decades, keep seriously in consideration their business and its reputation as their personal honor. They think long term. Unfortunately, at many big companies, such as publicly traded automobile manufacturers, emphasis is mainly on satisfying shareholders through quarterly share prices…whether organically or artificially. Most of the time it’s the latter growth. That’s tremendous pressure on everyone at the helm.

Despicable companies: Prime examples that make you cringe

  • The Boeing brand reputation bruise following its sprint to launch the 737 Max 8 & 9 commercial passenger jets despite its safety and design flaws.

Following two air fatalities in a short period of time along with constant denials and lack of responsibility by Boeing,  the aircraft manufacturer with pedigree finally admitted its shortcomings of its newest passenger jet.  The company should have known better. They rushed to launch the 737 Max due to competitive pressures. Armchair public people think it was a software problem. It was beyond that. It is a structural problem that affects flight dynamics. Both the center of gravity and the mass moment of inertia (in engineering lingo) are too far forward. This causes the nose to dive. The MCAS is just a make-shift for the problem. A single reliable measurement and display of Angle of Attack (AOA) sensor rather than typically two was an additional negligence on the part of the design. Last but not least, the lack of training and written Airplane Flight Manual (AFM) instructions, along with an unproven useless hazardous algorithm, compounded the risks.

This pragmatic author’s take on this one is; Boycott this jet indefinitely. First and foremost for your safety and second, to make a bold statement that the way the whole matter was handled is despicable for the brand whose paramount responsibility is passenger and crew safety.

Unfortunately, many organizations fall victim to ineptness that Boeing did.

  • Why do you think a company which hires and contracts missionaries changed its name from Blackwater to XE, and then Academi? According to source Wikipedia, “Academi is an American private military company founded in 1997 by former Navy SEAL officer Erik Prince as Blackwater, renamed as Xe Services in 2009 and now known as Academi since 2011 after the company was acquired by a group of private investors. The company received widespread notoriety in 2007, when a group of its employees were convicted of killing 14 Iraqi civilians in Nisour Square, Baghdad for which four guards were convicted in a U.S. court.” Quite the business to aspire to operating. Imagine the amount of exposure to liabilities. How well does Erik Prince, its founder and strategist sleep at night? Not caring a whit as long as he is increasing his wealth, that’s what matters to a sociopath.
  • Monsanto, the company everyone loves to hate (except for its enablers). For some decades, the crop chemical company produced and profited from the chemicals that caused destruction, wiping out millions of species by spreading poisonous agrichemicals, destroying our fragile ecosystems, poisoning our soils and entire web of life, undermining every aspect of our lives for financial profit. It also made users vulnerable to the lethal cancerous ingredients. Monsanto is better known as the company which introduced the GMO on your plate, as well as for the popular weed killer herbicide The Monsanto Bayer merger is a great brand strategy for Monsanto. Destructive conglomerates marry each other. However, “Bayer [does] significantly better public-relations work than Monsanto, but that’s it,” contends Antonius Michelmann, CEO of the Coalition against BAYER-Dangers. “Both, Monsanto and Bayer are poisoning and immediately endangering animals, plants and human life. Both care just about profits and nothing else.” Much said!
  • Johnson & Johnson (J&J), the drug giant, known for its baby products, was accused of deceptive marketing conspiracy, by the State of Oklahoma, to drive up sales of its powerful opioid Duragesic painkillers. The state is claiming that J&J worked to aggressively promote opioids to people who did not need the drugs so as to compete with Purdue Pharma. J&J deliberately ignored warnings about addiction and death.

According to Anti-Media, a non-partisan, anti-establishment news publisher and crowd-curated media aggregator, compiled a list with the 10 worst food companies, with genetically modified faux food. The top five (quoted from the source) are:

#1 ConAgra: Their family of brands include Hunt’s, Marie Callender’s, Orville Redenbacher and many others. The compony was found guilty of “health code violations and bacterial contaminations at its food processing facilities, which have endangered consumers and in some cases been linked to deaths.” They’ve also concealed the use of GMOs in their products and practice unethical factory-farm sourcing.

#2 General Mills: Trisodium Phosphate (also known as TSP) is an additive and flavor enhancer found in thousands of frozen and processed foods, including kids’ cereals. It also happens to be an ingredient that was used in industrial cleaners

#3 Kraft Foods: Their Mac N’ Cheese has a golden looking tone to it thanks to  the artificial coloring agent Yellow No. 6 which it uses. However, it has been linked to hyperactivity, asthma, skin conditions and unsurprisingly even cancer. In 2013, following intense pressure, the toxic food company finally removed the artificial coloring. Kraft also hides the presence of GMOs in their foods

#4 Heinz: It merged with Kraft Foods in 2013 (bought by Warren Buffett’s Berkshire Hathaway and the private equity firm 3G Capital). Both brands instantly became partners in food crime for the sake of cost cutting and higher profits yet at the health detriment of their customers at the kitchen table. What Brazilian 3G Capital has purchased (past and present), it turned into disasters with its aggressive at-any-cost cutting. Speaks volumes of the people pulling the reins at the very top. It doesn’t take a psychotropic individual or anyone with an MBA to simply cost cut to increase profit. Anyone can do that. However, it take a contriver with humility and with a long-term view to increase sales and profit more cleverly.

#5 Campbell’s Soup Company: The brand has been sued for hiding the presence of GMOs and for labeling foods as low-sodium when they contain as much salt as regular products. The average cup of Campbell’s soup contains a staggering 850mg of sodium. Unless that’s your only major meal of the day, consuming it means you’re risking heart attacks, diabetes and high blood pressure. Just as importantly, if not more so, is the fact that for many decades, Campbell’s has lined its epoxy-resin cans with the toxic chemical, bisphenol A (BPA). “BPA has been linked in lab studies to breast and prostate cancer, infertility, early puberty in girls, type-2 diabetes, obesity, and attention deficit hyperactivity disorder,” according to Breastcancerfund.org. Only recently did the company finally bow to pressure and phase BPA out of its production.

Other repulsive processed food and beverage culprits on the list (in chronological order), which shouldn’t be raising any eyebrows, include Coca Cola, Nestlé, Kellogg’s, PepsiCo and Hershey’s.

The only method the above brands are responding to their sliding market share, revenues and much more is by utilizing their available cash to purchase health food and functional beverage young companies. These ships are too big to change course despite their plethora of resources.

Seems it is a prerequisite for success that an established food company ought to actively lie to their customers to retain and perhaps grow their business. That worked in the short term.

Here is something off the beaten path compared to the above businesses but with a huge eye sore in terms of their business practices. True story. An American tourist from NY, during his stay on a popular seaside oyster bar on the Greek island of Mykonos in May 2019, paid 836 Euros (about 938 USD) for Calamari (fried squid), a bottled waters, and a couple of beers. Following this outcome, the tourist trap had a slew of complaints and dreadful reviews on Tripadvisor.
Read at this link: https://www.tripadvisor.com/ShowUserReviews-g659660-d129913…

However, the unmoved owner justified his reasons with audacity. The business will surely not remain open for much longer, thanks to short-sightedness. At this day and age…most notably due to the powerful influence of social media, this business practice will not survive for too long.

How to focus on conscious leadership

Typically, private and family remodeling business in various industries put their name on and behind the business. With privately held companies, they are in no pressure to dumb down the products to calm down investor impatience. Instead, companies such as British company Dyson with its dynamic team of engineers do what companies, private or public, should always be doing: innovating with practical new products and refining existing ones.

It is very common in popular culture to see business owners as greedy, selfish, revenues and profit at any cost with no regard for employees or customers. However, this usually applies to public companies who simply bow to their shareholder expectations. A business should be viewed as a sacred obligation to employees, customers, suppliers and everyone who is directly or indirectly impacted the business and its executives. The internal culture is one which ensures the customers are given superb value and great customer service, and by going to great lengths to ensure employees are well taken care of. In addition, treating all vendors, suppliers, service companies, etc. with respect. While our business directly impacts the lives of several hundred people it indirectly impacts the livelihood of several thousand. Therefore, it is critical that  high standards are maintained as the cost of negligence or failure is too high. Money can be earned doing things with conscience…it may take longer but the impact will remain positive and sustainable.

Sadly, the fabric of today’s corporate world is dominated by considerations on shareholder returns at the detriment to innovation, goodwill, reputation, customer service and quality products. The conscious captains of industries are the heroes. Few and far between.

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How to Blemish Your Brand and Lose Market Share Due to Short-foresightedness: The Trouble with Major Food Brands

By James D. Roumeliotis

Nestle

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Yours truly, who took the audacious dive into the functional food and beverage business as a start-up and has presently taken it into the early stage phase, is having a field day reading about the challenges and frequent plethora of lawsuits brought about by consumers who have had enough of the deceit of the major food and beverage brands.

Once upon a time, during previous generations, renowned household brands such as Kraft, Kellogg’s, Pepsi Co. and General Mills, among many others, who once dominated the supermarket shelves along with loyalty.  Today, through their complacency and/or (as public companies) continuous pressure for quarterly sales and profit results mount, as well as through their cunning practices, we notice a backlash from food shoppers – most notably the more health conscious and finicky Millennials.

What Gives in the New Normal?

Today, consumers are more health conscious. This justifies the constant and extensive growth and popularity of the organic, non-GMO, clean label, plant based, farm-to-table and gluten-free product offerings. A large percentage of food producers of products in those categories are the small and nimble new kids on the block. They have hit hard on the established brands who are scrambling to adjust to this new reality.

Despite their vast resources and capital at their disposal, as large ships, they are not able to swiftly make the necessary reformulations or to introduce a healthier fare. As a result, the pressure from the unceasing decline of their revenues and market share are leaving them with no choice but to react, rather than be proactive.  Their path to least resistance is to acquire small health food and functional beverage brands in large numbers to compensate for their short-foresightedness.

The Permanent Health Craze

Hasty and reactive decisions, conniving strategy and foolish leadership have come back to bite them – serves them right. Use of inexpensive and toxic ingredients to engineer taste profiles and in some cases, make the products addictive, some of which include refined grains, MSG, artificial colors and flavors, high fructose corn syrup, Carrageenan and the other artificial and unfavorable which most of us have a difficult time pronouncing. Add to this GMO corn, soy and…well you get it.  More expensive and healthier options can be used but their fiscal paranoia signifies to them this will hurt their bottom line. The big brands avoid raising prices to compensate for more expensive natural ingredients despite research showing that consumers are willing to pay more for healthier choices.

Lawsuits Galore

The cause of distrust among consumers can be rationalized due to corporations misleading the public as a whole, since most of those public food producers are, first and foremost, accountable to heir shareholders. Deliberate misleading information by food producers in regard to nutritional benefits is akin to the nickel-and-diming by airlines, hotels and banks. But unlike the latter list, when it pertains to food, it is considered more critical as our health is at stake.

As a result, in the last few years, there have been frequent class action lawsuits against food and beverage companies. Everything from Non-GMO claims and the use of a better-for-you sounding ingredient such as “evaporated cane juice” rather than using the simple term “sugar” (one and the same). Such negligence and deceptive practices have made the established food brands vulnerable.

According to a Forbes August 2017 article by John O’Brien, titled “Food Companies Beware: Class Action Attorneys Aren’t Slowing Down”, it describes that  “Plaintiffs attorneys who target food and beverage companies with class action lawsuits are showing no signs of slowing down, according to analysis from international law firm Perkins Coie that also shows California’s lawyers are the most active.” Some of those lawsuits include consumers claiming they were misled into buying the product due to mislabeling.

Here is a small sample list of the shameful established food and beverage brands (click for the link to lawsuit article) with seemingly dysfunctional and old school strategies. They have become a favorite punch bag from the likes of this author along with numerous consumer groups and their hired attorneys.

Why Brand Image and Loyalty Matter

A “Brand” is a promise of something that will be delivered by a business. This promise comes in a form of quality, an experience and a certain expectation in the mind of the consumer. It includes the Unique Selling Proposition (USP). Marketing, on the other hand, is about spreading compelling messages to your target audience while branding is a combination of words and action. Marketing is extroverted and communicates quickly, while branding is introverted and a slow process if it’s to produce any real impact. Effective marketing activities are vital in developing a brand. When combined successfully, branding and marketing create and promote value, trust, loyalty and confidence in a company’s image, products and services.

According to an Edelman’s Trust Barometer, it was revealed that 77% of respondents refused to buy products from companies they distrusted. More disturbing is that 72% said they had criticized a distrusted company to a friend or colleague.

When customers are treated with honesty and delighted by a particular brand experience, they begin to bond emotionally with the brand. They become brand loyalists and advocates – buying the brand more often and recommending it to others. This behavior serves to build the brand’s reputation. This approach is priceless –even though it may take longer to take positive effect.

Brand reputation quote from Benjamin Franklin

Customers first, employees second — investors/shareholders third

In the ivory towers of public corporations, the CEO and board of directors have been programmed to put their stakeholders best interests above all else. Their mission is to do what it reasonably takes to deliver quarterly results ─ in other words, to focus on the short term rather than sow the seeds and do what is most beneficial for the future direction of the company ─ despite any short-term pains. Savvy and considerate top management know better that customers and employees are the two key drivers of corporate success.  The main principle is that if employees have a positive attitude, are passionate, well trained and competent, results will be reflected through positive customer experiences resulting in brand loyalty. Ultimately, the shareholders will reap the benefits through stock performance and generous dividend distributions.

Large well-established companies have several advantages over smaller ones mainly due to their imposing size, their brand recognition as well as for their plethora of cash and human capital. However, despite their deep pockets and plethora of resources, they are risk adverse, bureaucratic in their decision-making process and to some extent, disengaged from their customers. Moreover, if they are a public company, their initial allegiance is to their shareholders.

Start-ups and smaller businesses, on the other hand, have less money and resources at their disposal to grow or even compete in the unapologetic and competitive landscape. Yet, the small business is agile, nimble and creative and possess several advantages such as a clean slate, rather than the baggage many large corporations have been carrying over the years, as well as perceived as more trusting by consumers, further engaged with their customers, and a refreshing alternative to the established brands – provided the products offer unique and attractive characteristics.

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Business Vitality: Preventing Adversities Before They Occur

by James D. Roumeliotis

Businessman with telescope

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“Panic” and “chaos” are not what one should undergo in business. Unfortunately, many entrepreneurs are caught off guard more often than necessary when operating their business. In his book “The E-Myth Revisited”, dynamic author Michael Gerber states that a business person ought to work “on” his/her business, rather than “in” his/her business.

Start-ups have a leg-up if they launch and persevere on the “right track.” The appropriate definition of these two words together imply following a proper course of action. The analogy which can be applied to a business well-being is our own personal state of formidable health comprising of a healthy diet, frequent exercise and undergoing an annual physical. The objective is to be proactive, rather than reactive.

Remaining diligent and active as opposed to reactive

Entrepreneurs may be quite well versed with the products and/or services offered, but not necessarily with running their business including a bucket list of daily administrative tasks. Most notably, sales, marketing and finance/accounting undertakings. This is where honest consideration should be given in either bringing in a partner to complement the entrepreneur’s weaknesses or an external adviser and/or mentor to guide him/her. A sounding board should not be dismissed as prohibitive, thus solely for larger organizations. Seeking professional help is an important way to avoid or plan for business challenges.

Moreover, when drafting a business plan as the road-map, include a SWOT (Strengths, Weaknesses, Opportunities & Threats) matrix and “what if” scenarios — which will reveal and prepare one in avoiding the pitfalls of running a business, as well as coping with various challenges which can arise. In addition, consider plotting a business model as a prelude to the business plan. It makes you think through your business plan, which in turn communicates the business model. Both should synchronize. Make certain a short term (less than 12 months), medium term (13-30 month), as well as a long-term plan (30-60 month) have been conceived.

Savvy business people – whether new or seasoned entrepreneurs or CEOs of large corporations possess:

  • Insight and foresight;
  • Strategies and execution competence;
  • Alternative plans with an exit strategy in case situations turn awry;
  • The perception to take “calculated” risks rather than dive into the abyss;
  • Openness to third party advice;
  • Focus and consistency to achieve their goals and objectives;
  • The ability to see opportunity before their competition does and act upon it in a timely manner.

Negligence with current enterprises

Growing pains in any organization require a formidable administration to keep the business operating efficiently which includes customer front & center, profitability and more than adequate cash flow. Telltale signs of weak organizations can be traced to inept leadership. The following points highlight the deficiencies:

  • Poor customer service – slow or no customer inquiry replies – abysmal handling of sales and service complaints. Service is portrayed as a reward, not a right or benefit.
  • No Unique Selling/Value Proposition. Companies need to define and articulate their unique value proposition and deliver on it consistently. Create the platform for sustainable and competitive advantage.
  • Operational deficiencies – various ailments and no structure
  • Absence of or very little communication amongst staff and management. Divisions aren’t well-coordinated and do not function as a team.
  • No transparency. There is hardly any openness from management.
  • Unethical practices – short-term selfish objectives in search of market share. Top executives should promote social norms and principles as moral agents.
  • Lack of proper execution of decisions and with new products/services.
  • Productivity incentives should be implemented to boost results and employee morale. People must be given a reason to work hard and be efficient.
  • Creativity is practically non-existent. An absence of innovation and employee empowerment will hurt progress and stifle new ideas.
  • No clear vision/strategy – there needs to be a strategic vision that reflects a truly unmet need and has the commitment of a dedicated CEO. That means that there is a well-defined target audience with a distinct value position that is differentiated, meaningful, and deliverable.
  • A weak sales force along with an unattractive compensation plan.
  • Favoring nepotism and bias – promoting family members over other qualified employees often leads to resentment or, worse, prompts valuable non-family employees to leave the company.
  • Poor hiring practices – should hire for attitude and train for skills.
  • Slow/delayed decision-making process – too many layers – overwhelming bureaucratic structure.
  • High turnover, which leads to poor employee morale, reduced intellectual capital, lower service levels, higher operational costs and decreased productivity.
  • Management in a state of denial about their organization’s shortcomings – remaining with the dysfunctional status quo.
  • No channel strategy. Some companies focus on building a product, but don’t think through how to get it into the hands of customers. Even if your product is great, unless you can sell directly, you may be dead in the water without strong channel partners.
  • The hidden game – corporate politics – power plays by a handful of individuals for their own benefit to the detriment of their colleagues and the company.
  • Misrepresentation of brand(s) – too much hype – empty promises – not delivering on expectations – leads to dissatisfied clients who will alienate the brand.
  • Weak financial controls – cash flow dilemmas – over leveraged/under-capitalized (high debt-to-capital ratio) – not reinvesting a certain percentage of profits for future growth.
  • Absence of sound marketing program(s) and/or brand strategy. A brand is defined by how it behaves, from the products it builds to how it treats its customers, to the suppliers with whom it works.
  • Growing too fast and not staying on course as the company grows.
  • Lack or very little employee training & development.
  • Deficient in control systems – reactive rather than pro-active.
  • Lack of continuous improvements or complacent.

The way to solve an organizational problem is to swiftly confront the structural issues with a moral sense of purpose and ethics. It must also have preventive systems in place in anticipation of issues which may arise.

For its clients to receive stellar service, the enterprise must have its house in order. Besides structure and an efficient operation, employees should be trained and empowered to do their jobs efficiently.

Companies that disrespect their employees and shut-out clients get willfully isolated and have a short life span through an erosion of market share and significant loss of revenue. Thus, a company’s goal should place emphasis on serving its people properly and fairly. Higher morale generates higher profits – though occasionally other priorities hinder that objective, for example, self-serving behavior by certain executives.

Superman Businessman

Operational prevention: Implementation of systems and risk management

To preventing operational problems before they even occur requires anticipating them through operational intelligence. The purpose of risk management is to identify potential problems before they occur. To do so entails early and in-depth risk analysis through the collaboration and involvement of all parties involved in running the business. It’s where brainstorming occurs about potential problems regarding the product(s), service(s), market(s) etc. to search for and foresee issues, as well as create solutions in advance – eluding the element of surprise at some point in time. Risk management is comprised of: 1) Identifying, outlining and analyzing potential risks; 2) A course of action in handling the identified risks, as well as the implementation of risk control/elimination plans when/where necessary.

Business leadership should contemplate allowing constant flexibility to adjust strategy when necessary if the initial one isn’t effective.

There should be continuous checks and balances – especially with regards to internal financial controls through various procedures implemented to reduce errors or possible embezzlement by staff. Trust but verify ought to be the organization’s mantra and actual implementation.

Perhaps you can consider a risk analysis software such as a SAS platform whose practical use offers best practices to help the company establish a risk-aware culture through various enterprise risk models and forecasting. We note examples of aircraft pilots who diligently prepare prior to a flight – or ship captains making their plans prior to voyages at sea.

When all is said and done – avoiding pitfalls

Companies with inept leadership usually fail in the first or second year, but even established companies can stumble badly when they outgrow the capabilities of the founding team. According to statistics, as the latest available numbers from the two U.S. government statistical agencies responsible for providing data about new businesses illustrate, The Census Bureau and the Bureau of Labor Statistics, five years after new establishments were founded (1995, 2000 and 2005 respectively), 50%, 49 and 47 percent of them (correspondingly) were still in operation.

To be a successful and sustaining entrepreneur requires vision, strategy, execution and constant diligence – along with plenty of sacrifice. A new generation of young entrepreneurs think the road is smooth and a fast track to easy wealth. Obstacles and sacrifice are part of the deal. Harnessing opportunity and overcoming challenges on a daily basis to top the competition is constant work. These conditions are true no matter what the sector of business engagement or company size.

Enterprises spanning a wide array of industries, have earned distinction as “well-” or “best-” managed” by demonstrating business excellence through a meticulous and independent process that evaluates their management abilities and practices – by focusing on innovation, continuous training, brainstorming and caring for their employees’ well-being – as well as investing in meeting the needs of their clients.

Well-run companies thrive no matter what and learn from their mistakes – making certain they don’t repeat them. However, never give failures a second thought. There are no dress rehearsals in business either.

Onwards and upwards!

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The Short-sighted and Passive Business Leader: Reform or Descend

By James D. Roumeliotis

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Blindfolded Executive 

How often do we hear of CEOs who have been discharged for lack of performance? Contrast this with those whose Boards have kept them on the job despite controversy and/or inept leadership. The latter decision seems troubling. Consider Steve Ballmer of Microsoft and Mike Duke of Walmart amongst others.

It is my belief that the key issue here is organizational structure. Far too often, successful groups grow and get out of control. No organization should be too large. When it grows in size, inevitably it becomes overburdened and self-protecting. Incompetence is a guaranteed result.

The prime decision maker of the organization exercises a variety of leadership styles. Leadership is linked to personality. ‒ there is the empty, well compensated, well-tailored, neat and polite dapper boss; the absolutely lost and ineffective one; the barking, intimidating, eager for respect boss;  then you have the hypocritical and/or bipolar type ‒ one day treats you well, whereas, the next day treats you with utter disrespect. For the most part, there is the worship me and exceedingly charismatic kind in vast numbers who mostly got there because of that particular trait along with shrewd politicking each step on the way up.
What most, as described above, do have in common is incompetence. Despite all the act and ego stroking, in the end, they do what it takes to remain in their dynamic position.

Short term results at the expense of long term consequences

Shareholders and the Boards focus on quarterly earnings growth results. As a result, we often witness severely dysfunctional decision making with public corporate leadership. This includes irresponsible behavior, as well as lack of depth and vision. HP’s Board is a case in point. It has been notoriously dysfunctional in the ways it has governed itself which resulted in a spate of upheavals over the last few years.

There is tremendous pressure to perform in a short period of time. There are no silver bullets for quick results. Seeds need to be planted for the future and for the good of the organization.  Panacea creates decision making blunders which abound. At times it’s error in judgment and neglect. Every business sector is riddled with poor senior management. Here is a sample of some companies whose inept and/or negligent decision making have made headlines in unflattering ways.

–       KODAK: In 1975, engineers at the company introduced the first digital camera to its executives. Rather than embracing it, fearing it would cannibalize its lucrative film sector, the top brass asked that the digital camera be kept under wraps indefinitely.

–       WALMART: The company leadership has a long record of unethical behavior, from brutally exploiting workers to discriminating against women to bribing Mexican officials.

–       MICROSOFT: Its CEO has remained long enough in his position to wipe out shareholder value by falling asleep at the wheel rather than vigorously pursuing web and mobile based businesses which companies such as Google and Apple, amongst others, have remained ahead of the game.

–       JOHNSON & JOHNSON: Its former CEO who was employed at the company for 40 years resigned amid a series of missteps over the last few years of his tenure which damaged his and his company’s once sterling reputations. This included recalls of numerous over-the-counter well established drugs, including the largest recall of children’s non-prescription drugs, as well as medical devices. In addition, it was warned by the FDA about false claims it issued about its popular mouthwash, while another U.S. Federal agency, the Securities and Exchange Commission, charged the company with bribing doctors in several countries to prescribe its drugs and medical devices.

–       ABERCROMBIE & FITCH: CEO Michael Jeffries’s snarl and insensitive remark that the brand’s apparel are solely targeted to the hip, slim, attractive and affluent “All American” teenager, offended many. As expected, it set off a storm of controversy. For someone concerned about his company’s image, the self-inflicted incident has damaged his and his company’s reputation. Even A&F’s investors are not pleased with the discriminatory statement which has negatively affected revenues and the stock price.

Organizational leadership is bestowed with the authority and accountability for creating value for customers, employees and its owners or shareholders. In spite of this, a significant weakness in running an organization is pushing for short-term profitability at the expense of solid planning. It’s my notion that the leader of many large multinational corporations, competence is not the primary value but rather the connections, politics, and clever tactics. Such “benefits” can usually compensate for incompetence.

The best-managed companies are constant achievers in their respective industries. They exude managerial excellence and financial performance is a reflection of capable management.

Typically, small businesses with inept ownership usually fail in the first year or two, but even companies in their growth stage can stumble badly when they outgrow the capabilities of the founding team. Research by the U.S. Bureau of Labor Statistics demonstrates that nearly 6 out of 10 businesses shut down within the first 4 years of operation.

Enterprises spanning a wide array of industries, have earned distinction as “well-” or “best-” managed” by demonstrating business excellence through a meticulous and independent process that evaluates their management abilities and practices – by focusing on innovation, continuous training, brainstorming and caring for their employees’ well-being – as well as investing in meeting the needs of their clients.

Businessman with telescope

Identifying the shortcomings of incompetents

Regrettably, there are not many business leaders who make the cut. This includes those who also possess credentials from Ivy League educational institutions and/or oodles of charisma. A President or CEO grooming school doesn’t presently exist. Contrary to what many may think, there are no natural born leaders. In the past two decades, the average tenure of a CEO has halved. This is adequate proof how demanding the job is.

Our experiences and conditions shape who we are as people and as leaders. Leadership, like management, is not a science but a practice. The difference between the two, according to the late management guru Peter Drucker, is “Management is doing things right; leadership is doing the right things.”

Telltale signs of poor leadership in an organization include:

  • in a state of denial about shortcomings – persisting with a dysfunctional status quo;
  • slow/delayed decision-making process;
  • lack of foresight for innovation;
  • short-term selfish driven decisions with no regard for long-term consequences;
  • no clear vision/strategy;
  • passive-aggressive;
  • unethical practices including apathy and lack of scruples;
  • irrational thinking/decision making;
  • an absence of or very little communication amongst staff and management. Chaos reigns amongst various internal departments which don’t function as a team;
  • narcissistic;
  • shielded from the lower ranking staff and the customer as he/she spends most, if not all of the time, behind the desk and perpetual committee meetings;
  • inflexible;
  • lack of transparency ‒ there is hardly any openness from management.

Anatomy of a competent boss: in search of sustainable leadership

A prime responsibility of leadership is the capability to constantly be one step ahead of their game, to envision what lies ahead, and in the process, be well prepared to lead the organization to great heights.

Effective leaders focus on long-term growth not short term decisions to increase or stabilize the company’s stock price. Furthermore, they should be open to ideas from lower level management not exclusively from their inner circle of “yes” men/women.

The following skills may appear as a list intended for a job description. However, they should be deemed a prerequisite for a leadership role regardless of the size or type of organization.

–       Bonds emotionally

–       Communicates well

–       Possesses character

–       Accountability

–       Humility, not ego

–       Foresight but with an open mind for feedback

–       Passionate

–       Can handle criticism

–       Tenacious

–       Articulate

–       Regard for people

–       Able and willing to delegate

–       Team player

–       Sales and marketing savvy

–       A disciplined and flexible individual who is not only open to change but a driver of change

Examples of highly effective business leaders who possess many of the above characteristics include Sir Richard Branson (Virgin Group), Megg Whitman (HP), Howard Schultz (Starbucks), Jeff Bezos (Amazon), Brad Smith (Intuit), Indra Nooyi (Pepsi), and Carlos Ghosn (Nissan), amongst others.

Public vs Private leadership ‒ and the authentic luxury enterprise

There is no doubt that the pressures and priorities of heading a private company differ as opposed to a publicly traded company. Different industry sectors may also require certain competencies.

Kellie McSorley, founder of SILK Search, the London-based boutique headhunting firm specialising in senior executive appointments in the luxury industry, explains the differences with the type of top executives sought in various sectors this way:

“For example, our Private Equity clients look for certain qualities in a person generally around urgency and result orientation whereas a Public company may place more value on other characteristics and competencies such as process, procedure and thought leadership. With Private companies there is a level of sensitivity and emotional attachment to the brand that any new hire absolutely has to understand, respect and harness, in order to succeed.”

Authentic luxury brands, on the other hand, operate by their own distinct rules as they do what it takes to retain their aura of exclusivity and cachet by focusing on production limits, premium quality and catering to UHNW patrons ‒ the antithesis of mainstream brands and products. For instance, Hermès has no need to deal with pressures of shareholders and stock analysts that are prevalent with corporate brands such as the LVMH luxury group. Instead, Hermès’ family stakeholders choose to keep the current business ethos along with their complete independence.

As for what the luxury sector desires in its future CEO, Ms. McSorley states this succinctly as follows:

“Historically C-Suite recruitment in Luxury was much more based on who you are, but now it is definitely about what you have done. Brands are looking for people with results, across industries, people that have proven themselves as key collaborators, innovators, people that can manage change.”

She further adds:

“We are noticing luxury brands really looking into other industries for both talent and inspiration. When you talk about digital, brands are looking to Google or pure play companies. In retail they are looking to hospitality for knowledge of customer service. Luxury fashion brands are also speaking about Apple when it comes to best in class service and customer engagement.”

Woman - Business Leader

In the final analysis

In large corporations, the Boards should be held more accountable by paying closer attention to the behavior and actions in the C-suite ‒ thus reacting before things go awry.

The top executive’s job is to operate a business that adds value by means of the goods and services it provides to customers.

The way to solve an organizational problem is to confront the structural issues with a moral sense of purpose and ethics. Higher morale generates higher profits – though occasionally other priorities undermine that objective, for example, self-serving behavior by certain executives or chasing short-term selfish objectives in search of rapid market share, profits and self-interests before people. Monsanto’s executive conduct would make for a marvelous case study in this regard.

According to marketing maven Seth Godin, “It’s the flameouts and the scams that get all the publicity, but it’s the long-term commitment that pays off.”

In the end, what you manage and how you manage it is what you get.

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