In 2007 we decided to start a reading book club for our leadership team to expose our team leaders to new management ideas.  When the time comes to select a new book to read, team leaders bring a list of preferred books and then we vote on a book at our weekly team leader meeting.  We assign ourselves 1-2 chapters to read per week and we must also come prepared to discuss how issues we read about are affecting our company or if the techniques discussed would benefit our firm.  With our latest book we decided to begin writing a summary for each chapter we read.  The responsibility of writing the summary will be rotated on a weekly basis to a different team leader.  The book we are currently reading is Execution - The Discipline of Getting Things Done by Larry Bossidy and Ram Charan.

The second chapter, The Execution Difference, opens with more of the story of “Joe”, the loser CEO.  He is characterized as a “typical” leader that does not know how to execute.  I would characterize him more as a typical “Business Specialist” - a person with credentials in sales, marketing, administration but no background in the business at hand. If you follow the story, he also was stuck with or selected poor lieutenants to implement his grand visions for the company, as they had no background in the actual business of the company.  Joe and his team handed down targets and were surprised that the peons below didn’t meet their goals, no matter how much “chewing out” was applied. Of course it didn’t help that they had no understanding of the actual operation of their company. I think the most appalling point about this story is that the authors think that this type of leader is “typical” and did all the right things from a management point of view.  If  Joe was a “good manager”, what does that say about management?

The next parable of CEO incompetence is Richard Thoman, then CEO of Xerox, starting in April of 1999 after starting as president in 1997. This guy was completely insane to create the twin goals of completely restructuring administration and sales in the company at the same time. He alienated the customers and the employees. He was fired in May 2000. Alas, don’t fret for poor Mr. Thoman, according to Xerox’s 10-K, he still gets $800,000 per year after screwing up the company for only three years. I want to be so incompetent.

The next candidate for loser CEO is Richard McGinn, CEO of Lucent Technologies from 1996 until October 2000.  His problems are characterized as a failure to execute. However, it appears to be more of the same - a marketing guy trying to run a high-tech research and development company (Western Electric and Bell Labs spun off from (the old) AT&T). Cluelessness about the company led to bad decisions and things went bad… yadda, yadda, yadda. I discovered that Mr. McGinn also used $45 million in company funds to build a golf course near its headquarters. Apparently, this did get executed. Shortly after Mr. McGinn was shown the door, Lucent had to restate its earnings lower by $700 million; it appears that, in order to show progress on Mr. McGinn’s audacious sales goals, some people booked sales that weren’t.  Fear not for Mr. McGinn, he pocketed a cool $12.5 million in severance for screwing up the company for four years. Once again, I want to be this incompetent.

For the success parable, the authors discuss Mr. Dick Brown of EDS.

Dick Brown was brought in as CEO for EDS in 1999 after a stint at Cable & Wireless where he “turned the company around”. Prior to C&W he was CEO of Compuserve. Investigation reveals that Mr. Brown took C&W on a buying spree and made something like 60 deals in his short tenure there (1997-1999) He did focus the company on emerging communications technology and was able to impress business reporters. He left unexpectedly and quickly in 1999 for EDS.

There are far too many examples of Mr. Browns execution prowess for me to list here. He streamlined, re-focused, and “infused the company with and energy and focus it hadn’t experienced in years.” Online I found another fawning review of Mr. Brown’s leadership in a Fast Company archive article from 2001.  Based on our book and the Fast Company article, I’m quite sure that Mr. Brown was God’s gift to management execution. Our book was published in 2002. Mr. Brown was fired from EDS in 2003 after months of bad news concerning “innovative” leasing arrangements for hundreds of millions of dollars. It was interesting to note that Mr. Brown was the force behind the Super Bowl “herding cats” commercial (one of my personal favorites - I remember the commercial but until I looked this up I couldn’t tell you what company it was for - so much for brand association) The Fast Company article revealed the Jeff Heller, then the Vice Chairman of the Board hated the “cats” commercial. He was made COO at EDS after Mr. Brown’s departure. Again, do not cry for Mr. Brown. In addition to having his retirement vested and stock options on 344,000 shares granted, he was also given $12.4 million in severance pay. Just like the non-execution guys. In this case, I want to be as competent and then screw up just like Mr. Brown.

These parables of corporate CEO incompetence and execution brilliance are used as a tales of how important it is to “execute”.  The authors extend the ordinary definition of the word into a business … (wait for it)… paradigm which incorporates the following concepts:

1. Business goals should be set cooperatively between upper management (the strategery guys) and the managers and personnel in charge of implementing them. This avoids unrealistic goals and increases personnel buy-in. The whole team has to answer the following questions:
   • What is the goal?
   • Why is it important?
   • How can we make it happen?
   • When can we make it happen?
   • What tools/personnel/procedures do we need to make it happen?
2. Each goal should have milestones and have dependencies clearly elaborated. Each step (again) should be set within a frank discussion between management and personnel about the issues to make the step and who is responsible.
3. As milestones are approached, they should be evaluated and the goal re-evaluated to see if other issues need to be addressed to keep on target or re-evaluated completely.
4. A reward system must be in place to reward performance toward the milestones and tasks. This includes support performance by others internal to the organization (for example across business units so that internal competition doesn’t hurt the company’s goals.)
5. Managers need to be proactive in helping or replacing individuals that cannot meet milestones or goals.

It is easy (especially for me) to be cynical about this book, knowing in hindsight that one of their proudest success stories (the others, if you read ahead, is Jack Welsh of GE and Larry Bossidy of Allied Signal and then Honeywell) turned out a lot like their failure stories. We don’t know who Joe is or what company he worked for but, based on my research, it might be Inprise/Borland - the CEO and CFO resigned suddenly at the same time in 1999 amid problems that sounded a lot like Joe’s.  Cynical or not, the execution ideas, which I have reduced to the five “core” bullet points above, are really valuable. Much of the praise for Mr. Brown’s work is really commonsense streamlining of operations and allocation of resources. Mr. Brown tried to refocus the company on its customers rather than his division’s desires. He tried to break down internal barriers that were inhibiting business. Unfortunately he also made some bad financial decisions that placed EDS in a financial bind. So, execution or not, bad decisions make a mess of a company.

The other lesson I took form this chapter is that CEO’s get rewarded regardless of performance - in fact, when you think about it, the best thing to do for personal gain as a CEO is to screw up quickly and get a big severance - then you’re rich and you have all the time in the world. I’m sure this was not an intended lesson.

Postscript: Were are they now?

Lucent merged/was bought by Alcatel, the French telecom. The combined firm still struggles.

Xerox is on a roll after years of struggling with debt and bad decisions in diversification (Thanks, Mr. Thoman). The current CEO, Anne Mulcahy, is the recent the subject of an interview in Costco Connection. She comes from 16 years in sales and then a stint as VP of Human Resources, similar to the group above. However, she’s been doing the job since 2000 and is still employed. Perhaps we can get her take on execution - it might be more useful. I recommend that you read the interview.

EDS is now a part of HP. They never did get it all together.

I did not find that any of the CEO’s mentioned were working anywhere. Of course, if you got that kind of lump sum and payments, would you look for a new job? But, hey, I’m a cynic.

Warning: include(/home/respons6/public_html/wp-content/plugins/yarpp-templates/) [function.include]: failed to open stream: Success in /home/respons6/public_html/wp-content/plugins/yet-another-related-posts-plugin/magic.php on line 283

Warning: include() [function.include]: Failed opening '/home/respons6/public_html/wp-content/plugins/yarpp-templates/' for inclusion (include_path='.:/usr/lib/php:/usr/local/lib/php') in /home/respons6/public_html/wp-content/plugins/yet-another-related-posts-plugin/magic.php on line 283

Related posts brought to you by Yet Another Related Posts Plugin.

Warning: include(/home/respons6/public_html/wp-content/plugins/yarpp-templates/) [function.include]: failed to open stream: Success in /home/respons6/public_html/wp-content/plugins/yet-another-related-posts-plugin/magic.php on line 283

Warning: include() [function.include]: Failed opening '/home/respons6/public_html/wp-content/plugins/yarpp-templates/' for inclusion (include_path='.:/usr/lib/php:/usr/local/lib/php') in /home/respons6/public_html/wp-content/plugins/yet-another-related-posts-plugin/magic.php on line 283

Related posts brought to you by Yet Another Related Posts Plugin.