Corporate ADD and the leader
by Miki SaxonPost from Leadership Turn Image credit: spekulator
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.
There is a growing phenomenon among upper-level executives in American corporations that we could easily call, “Corporate ADD.”
Even stretching down to upper-middle management levels, there is a growing problem with having too much to think about too quickly with too little information, but too much pressure to get it done and done right.
Every time I talk with mid- to upper-level execs, I hear the same thing. They can’t get anything done, because there are too many meetings talking about too may things that have to be solved immediately, and the pressure upon them to turn around impossible problems increases almost daily.
This is exacerbated by the stock market for the CEO, who finds himself putting out investor relations and stock analyst fires more than he does even the panicked internal fires that are driving his staff crazy.
Is it any wonder that there are fewer visionary “leaders” heading up companies?
Who in their right mind would step into such a role, if he were a visionary?
Do you have any answers?
Your comments—priceless
June 24th, 2008 at 5:58 am
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This has always concerned, amused and upset me. A firm can produce rather good results on many levels (Revenue, Profit, ROI, etc)…but if they do not hit the targets that the ‘analysts’ predict, they are considered to be ‘under performing’.
The analysts are not held accountable for the targets they seek; they are just (at best) good guesses based on past performance and market relativity. If you’ve read the Halo Effect by Phil Rosenzweig, there is a chapter that discusses how a team of analysts lambasted K-Mart, when they actually saw a vast improvement in Inventory Turnover and revenue stream. Yet, it was not up to what others in the market were doing (Read: Walmart) so they were labeled as ‘doing poorly’.
Don’t misunderstand, K-Mart had their share of problems…but the point is that the Management Team(s) in charge of turnaround were succeeding; just not to the levels that shareholders wanted.
I pity the CEOs of public (and highly visible) corporations. They cannot be having half the fun that CEOs of privately held firms are…from a ‘creativity and morlae’ standpoint.
June 24th, 2008 at 11:07 am
Defmall:
I, too, truly agonize for CEOs of publicly-held companies. Many of these CEOs would readily admit that they start and end each day with an eye on what their stock price has done and what it might do the next day, based upon what stock analysts are saying.
The saddest part of this is not that there is a focus upon the ever changing value of the company that is based upon emotional factors rather than any real analysis of future potential, but rather that the objectives of the shareholders who are driving so much of this has nothing to do with the real well-being of the company. Rather they are gamblers who want to push corporate management to make their bet a good one, even if it kills the company in the long run.
Look at the pain suffered at GE recently, when their stock price plummeted due to a simple and probably unpredictable miss in guessing outcomes for a specific time period. The results had nothing whatsoever to do with the ultimate strength of the company or the value of their CEO, Jeffery Immelt. But the stock suffered and Mr. Immelt was lambasted by both the market and Jack Welsh, his old mentor.
Thanks for your comment. Come back next Tuesday, as we continue looking at the problems of CEOs.
June 24th, 2008 at 11:21 am
I lived in San Francisco when the Haas family tool Levi private. The senior Haas stated that they did it in order to focus on long term, which couldn’t be done as a public company. the cynics (like my boss) said that they did it so they could take it public a couple of years later and reap more millions, but Haas meant what he said and Levi is still private. Haas was right, the downs the company has faced since then would have destroyed it if it had been public.
June 24th, 2008 at 11:33 am
Think about this:
A CEO sees that the best way to make his company (or rather the company for which he has been made responsible) grow to employ twice the number of persons, increase the income of those persons regularly, create more opportunities for more suppliers to do the same for their businesses, and to generate dramatically more “good” for the world around them would be to slow down growth for a year or two and re-focus efforts in a new direction.
The CEO of a high-visibility publicly-held company would probably lose his job, becuase the stock price would drop in anticipation of the “pain” the company was about to experience. The CEO of a privately-held company (assuming a supportive board) might not only keep his job, but also be hailed as a hero.
As I work with larger corporations using The Alpha Factor (see my book), this is the greatest hurdle for them. To make a change that risks any slowdown that extends beyond one division or product line often puts the management team at risk. They would often rather pass on creating significant, sustainable growth in sales and profit, becuase they would not be around to enjoy it anyway.
It takes a courageous and self-confident CEO to drive such corporate-wide change. That’s why most of the implementation of The Alpha model that I see happens in one division first and then is extended to others slowly and methodically.
June 24th, 2008 at 12:12 pm
Somebody should do a study on the number of companies whose demise can be traced to analyst comments. It would make for very interesting, not to mention enlightening, reading.
June 24th, 2008 at 12:19 pm
It might be too depressing to bear. As I have said before, I fear that the stock market has become the greatest enemy to American business because of this very phenomenon.