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Archive for July, 2008

Will Green Pay Enough To Stay Keen?

Thursday, July 31st, 2008

How real is green biz? We read about it all the time. Pundits debate the talk vs. the walk; CEOs worry about the “carbox” effect; and investors try to understand the impact.

Google “green business” and you get over 3 million hits and green was the primary subject at the Davos World Economic Forum this year.

“No doubt green is a central theme in Davos this year, where more than 2,500 participants from 88 countries are meeting to discuss key global issues. Some 20 sessions —many of them private—are dedicated to environmental issues. … “Evolution is not a response,” cautions Simon Mulcahy, head of information technology industries at the World Economic Forum. “Big behavioral changes need to happen now and technology is a fundamental game-changer.”

Green tech, also called clean tech, was a major subject at the Stanford Summit, too, and its increasing visibility and potential is taking a significant chunk of dollars invested.

How good will the returns be? Emanio CEO KG Charles-Harris, who attended the Summit for me, has a personal slant on the subject.

“When I co-founded HURD (the private investment vehicle of Norway’s Fred. Olsen family in alternative technologies) in Scandinavia in 1996, this was an unusual area to invest in.

Our strategy was to focus on what we perceived to become major constraints in the coming decades; clean air, clean water, cheap renewable energy and cheap protein.

Most people we interacted with, especially in the US, were incredulous that this was something we believed would provide a strong ROI. We persisted in our strategic focus and during the years I was there we had an IRR of more than a thousand percent each year.

At the time it was a well kept secret. Now, however, investing in clean tech and renewable energy is becoming so mainstream that the days of unusually high returns are over.”

Are they? As green tech goes mainstream and the market matures will the returns remain significant?

If not, will the innovators and their backers walk away from the problems?

Image credit: jsyvrsn

Is Wall Street killing our future?

Thursday, July 31st, 2008

(CandidProf is chained and sleepless over his computer in order to meet a Friday publication deadline, he’ll return next week.)

house_of_cards.jpgTuesday Wes Ball asked if Wall Street’s demands for shot-term performance undercut leadership performance; last November I wrote and When leaders can’t practice leadership and said,

“We live in a ridiculous world where Boards, in fear of investors, give CEOs six months to turn around multi-billion dollar companies that have been drifting, if not actually plunging, downwards for years; expect them to do it no matter what the situation or economy; where the slightest miss is considered grounds for firing; and long-term is a quarter.

Even when Wall Street recognizes the need to change a deeply entrenched culture they still demand that it be done in a quarter and analysts not only want perfect visions of future direction, but also exact execution plans, preferably grounded in heavy cost-cutting (read layoffs).

So, like the politicians who once elected spend much of their time fund-raising, CEOs and the senior managers below them spend much of their time focused on immediate numbers, which they must produce quarterly by hook or, more and more frequently, by crook.”

And when it’s not immediate enough, the leaders are fired.

GE’s Jeff Immelt is fighting that attitude now

“Along with the burden of replacing the most celebrated CEO of his generation, Immelt inherited an inflated stock price—the so-called Welch premium—that fostered unrealistic expectations. Yet he has still managed to produce 14% growth in annual earnings and 13% annual revenue gains, on average, over the last five years.”

But that’s not enough.

In the holy name of “maximizing shareholder value” corporations are raped, workers brutalized and communities trashed.

What else does Wall Street do besides cripple corporate strategic efforts?

(Pssst. Come back tomorrow for a look at the fiasco of self-regulation.)

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Image credit: awestlan  CC license

Wordless Wednesday: a world of choice

Wednesday, July 30th, 2008

Image credit: emsago and spekulator CC license

This

or this

Check out my other WW: Wall Street self-regulation

Wordless Wednesday: Wall Street self-regulation

Wednesday, July 30th, 2008

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Don’t miss my other WW: a world of choice

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Is Wall Street the Enemy of Leadership?

Tuesday, July 29th, 2008

By Wes Ball, author of The Alpha Factor – a revolutionary new look at what really creates market dominance and self-sustaining success. Read all of Wes’ posts here­.

Sam Walton made no bones about it.  He was not going to lose control of Wal-Mart to the stock market.  Even after they started selling stock over the counter, top management at Wal-Mart was able to maintain control over the strategic direction of the company right up to Sam’s death in 1992.

Sam was a leader.  He had a clear vision that he would not compromise.  He took risks, built a support team to “manage” the company, empowered and nurtured employees, shared profits, and built a company that is still the envy of most retailers.  It also became the Alpha in discount retailing due to that leadership.wall_street_broadway.jpg

Compare that with the life of most CEOs today: shareholders and stock analysts really run their companies, because stock price is the measurement of their success.  Their bonuses are based upon it, and their future employment is based upon it.

CEOs who have to answer to the whims of the stock market cannot be leaders, because they have already defined themselves as followers.

Is it possible for a CEO of a publicly-owned company to maintain leadership?

Certainly, but it takes an extremely charismatic, visionary, focused individual who is willing and capable of bucking stock analyst and shareholder pressure for short-term profit results and instead keep the company focused upon long-term success.

All of the Alpha companies I researched for my book, The Alpha Factor, had such leadership in their early formative years.  What killed most of those companies later on was the compromise of allowing stockholders and stock analysts (or other outsiders) to drive the strategic management of the company.

How would you protect your company from this if you had to generate significant financing?

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Image credit: jakoblyng  CC license

More from the Stanford Summit

Tuesday, July 29th, 2008

My second day here at the Stanford Summit confirmed my initial impressions from the cocktail party last Thursday. I have found that the age trend I noted in my earlier post has strengthened after interacting with a much larger cross section of attendees.

The cocktail party last week was for the AO 250, i.e., the companies selected as the 250 hottest emerging technology companies in the world for 2008.

At the conference I interacted with CEOs and venture capitalists from about 700 companies—a significant number of them with graying hair, confirming my initial impression.

After a day filled with excellent presentations and speakers and then chatting with various participants during the evening reception, I was truly impressed by the savvy and innovative ideas being brought to life by the “old timers.”

One of the most fascinating is Wyndstorm, lead by 54 year Marian Sabety. That very innovative technology companies are founded and led by women is an anomaly. That the woman is mature is even more unusual.

In Wyndstorm’s case, Marian is a long time innovator who has brought to the market a solution to the web advertising crisis.

Understanding that at the present moment only 7% of advertising budgets are spent online, advertising agencies and corporate chieftains are desperately searching for proven solutions that reach core and targeted audiences in an interactive environment.

Wyndstorm’s social frames pull targeted customers from other sites they frequent directly into an interactive, virtual place where the marketer controls the content, reinforcing image, brand and messaging on a one to one, razor targeted basis. Very impressive.

I believe that the graying of the executive suite in startups has everything to do with the need for execution, reliability and monetization in addition to innovation of technology. Companies need people who are not new to the game to succeed in this market.

Younger people may have many ideas, but they lack the experience to execute in a manner that allows ideas to be monetized rapidly in a variety of economic situations and enables the industry to execute from a strategic perspective.

Thinking about it, even the Google guys needed to bring in seasoned executives to grow the company from an idea to industry power player.

KG Charles-Harris is CEO of Emanio and a special contributor to MAPping Company Success.

Impressions from the Stanford Summit

Monday, July 28th, 2008

In attending the AO 250 cocktail party last night, I was struck by something that differed significantly from the first ones I attended after moving to the US and getting involved with Garage Technology Ventures. Guy Kawasaki was a powerful force (he still is), as were the exuberance of youth in driving new technology and investment dollars.

This time around the surroundings were less lavish, as could be expected since we have all learned that spending money is not the same thing as making money. However, a significant difference was also the graying of the participants at the party.

Other than many of the people working at AlwaysOn (the conference co-host), most of the participants were over 35 years of age. Gone were the 22 year old CEOs that were the mainstay of the late 1990s and early 2000s. Now, the CEOs and management teams seemed seasoned and focused on clear drivers of value creation.

Not that I have anything against young CEOs; today they are creating significant value for investors—Facebook is just one example. However, the management teams are different today in that they are very business savvy, rather than having lofty concepts, ideals or delusions about how to create value.

Now, perhaps it is my perspective that has changed.  I’m 10 years older than the last time I participated in events like this and during that time I have been active in the investment banking, entrepreneur and venture capital arena in Europe and the US and consequently have matured slightly. At present, I’m running my fourth startup; Emanio is actually a restart from a European company I co-founded and brought from Scandinavia to the US in 2000.

Along the way I’ve learned a few lessons, especially during the past 5 years during which I not only raised money, but also did acquisitions in a difficult market. Doing this while bootstrapping the company (building it up without any outside investors) has taught me these lessons through considerable pain. Bootstrapping is definitely not for the faint of heart—everything takes longer and is more difficult than when one is well funded—but it does force one to possess a certain discipline.

Having become one myself, it warmed my heart to interact with all these entrepreneurs, as well as with Tony Perkins, Marc Sternberg and the others at AlwaysOn, and sharing in their stories. It was truly inspirational.

Come back for more of KG’s impressions tomorrow.

KG Charles-Harris is CEO of Emanio and a special contributor to MAPping Company Success.

Portrait OF a leader BY a leader

Monday, July 28th, 2008

Post from Leadership Turn  Image credit: Liquid Scenarios

I was unable to attend the Stanford Summit this year, so I prevailed on Emanio CEO and M3 Foundation founder KG Charles-Harris to go and share a story or two about the people he met.

From KG:

At the Stanford Summit I met a Lorenzo Carver, who impressed me quite a bit.  He’s 40 years old, plays base and studied music at Berkeley as a film score major.  His working to pay for school was affecting his playing and studies and as a consequence he started a business that did well and sold it after 18 months, then started another one that tanked.

Lorenzo’s entrepreneurial zeal didn’t end and when he returned to school to study finance he put together a leveraged buyout for a company in bankruptcy and used his portion of the profits to pay for graduate school. He ended up with a MS in Accounting, plus and MBA and CPA; all received while he was working.

During those times Arthur Andersen was the premier firm, but after a short stint there Lorenzo wanted to return to his entrepreneurial roots.  His new business was advising entrepreneurs; he wrote more than 200 strategic plans for biotech and software and assisted in raising more than a billion dollars in funding for these companies.

liquid_scenarios.jpgThen came the dotcom collapse, which gave him the seeds for his present company, Liquid Scenarios.  They are now 14 people and self funded, growing from the profits they produce.  The strange thing is that, instead of coming to the conference to seek investors, he came seeking investors as customers. (Liquid Scenarios’ tagline— “Because Time is Money”)

Liquid Scenarios is based on his having developed complex algorithms for calculating funding scenarios, especially for high-growth companies.

Anyone who has spent time calculating scenarios for more than one class of stock realizes the value of this tool for real estate, venture capital, private equity, and private investors.

The problem he solves is one that faces many investors (and entrepreneurs) in disparate industries—how to calculate funding structures that reduce uncertainty.

Previously there has been no simple-to-use software that helps reduce uncertainty for investors, entrepreneurs and creditors in financing situation by enabling modeling of complex scenarios and outcomes.

After reviewing his software, it is clear that it reduces the calculations from dozens of hours and days to just a few minutes.

(Pretty cool! Check out the product demo to really understand why this is so hot. Miki)

The reason I’m excited is because I’ve been on all sides of the table, as a venture capitalist or private equity investor, investment banker and entrepreneur and I know that calculating all this is so tedious and difficult that only experts can do it.

Liquid Scenario’s tool creates equality between the people on different sides of the table and is especially useful to entrepreneurs who may not have the training to work complex spreadsheets.

But what I found most interesting was Lorenzo’s comment on the most important lesson he’s learned as a manager or entrepreneur.

“This startup is the easiest one I’ve done of twelve where half were started by me.  The difference this time is that I’ve been exceedingly careful about the people I work with—I’ve only chosen the ones that are passionate and competent.  There is no B-team this time.”

(For more of KG’s impressions click here.)

Do you “settle” when you hire or do you slog on until you find an A-team member?

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Quotable quotes: baseball on business

Sunday, July 27th, 2008

Post from Leadership Turn  Image credit: komiya  CC license

shea_stadium_new_york.jpgEver notice how apropos a comment made about one thing is for something totally unrelated?

I found these quotes about baseball by baseball greats and laughed at how well they fit the current business climate.

“Finish last in your league and they call you Idiot. Finish last in medical school and they call you Doctor”.Abe Lemons (Or CEO if it’s business school.)

“Win any way as long as you can get away with it. Nice guys finish last.”Leo Durocher (Business really took this advice to heart, think Joe Nacchio, Ken Lay, Jeffrey Skilling, Chainsaw Al Dunlap, the list goes on and on.)

“Baseball must be a great game to survive the fools who run it.” Bill Terry (Does this mean that business will survive short-term Wall Street thinking?)

What can you add?

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Leading factors: stimulating "change hunger"

Saturday, July 26th, 2008

Post from Leadership Turn Image credit: nookiez  CC license

future_business_world.jpgContinuing last weeks conversation about change based on IBM’s The Enterprise of the Future.

Let’s start with the fact that change isn’t easy and well-managed change is even more difficult.

“CEO s rate their ability to manage change 22 percent lower than their expected need for it — a “change gap” that has nearly tripled since 2006. While the number of companies successfully managing change has increased slightly, the number reporting limited or no success has risen by 60 percent.”

The problem isn’t just change per se, but

Global competition and the need to address fast moving targets, with Wall Street/your stakeholders demanding immediate results, puts still more pressure on CEOs and the executive team.

And underlying it all, you must constantly change MAP (mindset, attitude, philosophy™)—your own, your people’s and your culture’s.

But it’s not just about managing change; it’s about creating a desire for it. It’s about creating an environment where changes are being driven by your workers, not just by you and your execs.

How do get your people to want/love/demand change?

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About Miki View Miki Saxon's profile on LinkedIn

About Ryan ryanrpew

About Marc marc-dorneles-cpcu-b8b43425

About KG View KG Charles-Harris' profile on LinkedIn

About Ajo View Ajo Fod's profile on LinkedIn

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