I read two articles yesterday. They both focus on how the long-term thinking of Jeff Bezos and  Marc Benioff inform their decision making and are well worth your reading.

Bezos is famous for ignoring Wall Street for Amazon’s first two decades.

When it comes to making the most important and the most long-term decisions, Bezos has a simple rule that’s quite useful: “Focus [your vision] on the things that won’t change.”

At Amazon, this means that everything is built around their value of customer obsession.

Benioff has a different approach to making decisions, but still based on the long-term vision he embedded in Salesforce’s culture from the day of founding.

I came back with a clear vision of what the future of the internet was going to be in regards to software-as-a-service and cloud computing. I also had a much deeper sense of my spiritual self. So I said, “When I start a company, I will integrate culture with service.”

When I started Salesforce, on March 8, 1999, I said we’re going to put one percent of our equity, product and time into a foundation and create a culture of service within our company. We’ll be creating new technology, the cloud; we’ll be creating a new business model, subscription services; and we’ll create a culture built on philanthropy.

Last month Warren Buffett, Jamie Dimon and a legion of executives came out publicly against Wall Street’s short-term focus.

The emphasis on quarterly earnings, and the importance of beating estimates, is warping American business and the economy, argue almost 200 CEOs who belong to the Business Roundtable, a lobbying organization. Short-term thinking leads corporations to choke back on hiring, and to starve research and development of the spending the fuels long-term growth. The pressure of quarterly earnings is one reason fewer companies are interested in going pubic, preferring the slower growth that comes with being private than the scrutiny that comes with being listed.

Wall Street’s short-term thinking never got a toe-hold at either Salesforce or Amazon, but the reasons it didn’t created significantly different cultures.

While Benioff’s obsession culminates in giving back, Bezos’ obsession comes at a substantial cost to Amazon warehouse workers, the environment and even society.

Image credit: Scott Ellis

It’s amazing to me, but looking back over the last decade of writing I find posts that still impress, with information that is as useful now as when it was written. Golden Oldies is a collection of what I consider some of the best posts during that time.

I wrote this back in 2007. When I first started working I learned that a quarter was three months and  that the companies I worked for, and later with, did everything based on that quarter. I thought it was stupid, because very little of real significance can be accomplished in just three months. Over the years I saw how much damage Wall Street’s short-term attitude did to companies, people and the economy. I certainly don’t claim any expertise, but recognition of that damage has really come to the fore, first BlackRock CEO Larry Fink and now Hillary Clinton. Read other Golden Oldies here.

Although I haven’t read The Taboos of Leadership, it supposedly “reveals the rarely discussed realities of leadership–the secrets that leaders just cannot admit to publicly for fear of losing power, self-respect, or even their jobs.” However, the author, Dr. Anthony F. Smith, makes a cogent observation when he says in an essay,

Well, unfortunately, there are no magic pills to becoming a Leader, just like there are no magic pills to losing weight, getting fit, making a million dollars, or shaving 10 strokes off your handicap in golf. Simply stated, becoming a Leader occurs when one exercises the arduous process of effective Leadership, day after day, week after week, and year after year….

What I have observed in my years of studying leaders, is that very few have all the gifts and talents themselves; what many of the great ones do have, is a self awareness of what talents they do have, and the self confidence and security to surround themselves with others who can compliment them, and compensate for their own lack of skills.

I have no idea whether Dr. Smith has all the answers, but he sure defines the biggest problem (red) and (unfortunately) the least likely solution (blue) in the second paragraph.

I don’t believe that any person has all the talents, skills, gifts, abilities, etc., to successfully lead across the board in today’s ultra complex world and even if they do have the awareness and self confidence fewer and fewer have the external security to hire the right people to compensate—by external, I mean enough secure time to create a team that can DO it.

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.

Under these circumstances, the real practice of leadership becomes a very iffy proposition.

Years ago, Neil Senturia, CEO of Black Bird Ventures posted his thoughts about CEOs, hiring and culture.

“Building a team is the key to creating a successful start up—picking the people who will fit into the culture. The CEO’s most important job is hiring well and being the visionary and model for the culture that you want in your company. There are great players but what wins Super Bowls are great teams.’

While everyone talks about building teams, the importance of teams, etc., bosses continue to hire skill sets without enough thought or rationalizing as to whether the candidates possessing them fit the culture.

It often takes the threat of a team revolt to force them to pass on candidates with great skills who obviously don’t fit.

Culture is high enough on the radar now that most entrepreneurs know that the wrong hire can derail their culture, but they still have a problem passing on badly needed skills.

It still takes guts to make the correct decision for the long-term in a world that runs on short-term.

It’s never an easy choice, but it is one that will pay off for years to come.

I wrote Don’t Hire Turkeys! Use Your Culture as an Attraction, Screening, and Retention Tool and Turkey-Proof Your Company 15 years ago and it’s just as true today as it was then.

Your culture is the sieve through which all people should pass—without contortions or rationalizations—preferably aligned with and passionate about it, but at the very least synergistic.

The keynotes of a culture are:

• Consciously developed – Cultures happen with or without thought. Those that just happen are the easiest to twist and manipulate.
• Flexible – Just as trees bend in strong winds and buildings are designed to sway in an earthquake, so you want to build your culture to withstand pivots, economic storms and the winds of change.
• Scalable – To grow as the company grows requires a deep understanding of the values that are cultural bedrock vs. trim and accessories.
• Sustainable – Although originally stemming from the CEO, at some point the culture must become the property of the employees if they’re going to support it.

None of this predicts what the culture will actually be, that’s a function of the CEO’s values and MAP (mindset, attitude, philosophy)™.

The important point here is to hire with your eyes wide open, so you don’t end up with a round peg trashing your square hole.

A Friday series exploring Startups and the people who make them go. Read all If the Shoe Fits posts here

One question I constantly hear from entrepreneurs is “How do I get into an accelerator?”

My response is along the lines of, “Don’t!” And then give them all the reasons I believe that, in most cases, it’s a bad idea.

Few believe me, so I am hoping this TechCrunch post from Ashwin Ramasamy will convince them/you or at least make you think twice.

So a top accelerator [Y Combinator] states that it is a new form of funding. That begets a question “What are they not?”

If the goal of an accelerator is to get a startup funded, then the irony is telling. The goal of a startup is to grow rapidly from an idea to a sustainable business that solves a problem at scale while making money or building usage base. Funding does help in the “grow” part and/or the “rapidly” part. However many startups don’t grow. Here’s where accelerators could and should play a role and most don’t.

I’m on the advisory board of ZOOMPesa, a Toronto, Canada startup, and was very negative when the founder said we had been invited to join an accelerator called MaRS, assuming it was similar to the accelerators here.

Wow; was I wrong!

MaRS is a non-profit, NGO that provides resources beyond anything I’ve seen.

By supporting entrepreneurs and their new ventures, adapting their products & services to larger organizations, and working to make systems more receptive to innovation, MaRS performs a key role in generating positive economic and societal impact, helping improve our daily lives and allowing us to compete as a city, province and nation.

As far as I know, US accelerators have a (typically American) short-term focus of three months, while MaRS is in for the long haul.

• It recognizes that a startup has little chance of becoming a full-blown enterprise, even if it receives seed funding (only around 27% do).
• MaRS mentors have solid backgrounds in various areas, including law and finance, and are available to do more than pass out advice; that’s in addition to the mentors assigned permanently to each startup to provide coaching and a sounding board as needed, as opposed to the “hazy cloud of mentors” that US accelerators offer.

Read the post and compare it to the MaRS website to see the overall differences.

US accelerators seem to deal mostly with startups that are pumping out consumer-focused apps; not exactly things that will bring great benefits to society.

Sadly, I know of no US accelerators comparable to MaRS—if you do please enlighten me.

I ask you, why not here?

Image credit: HikingArtist

A McKinsey study on the value of corporate social responsibility found “…highly innovative Fortune 1000 companies derive greater financial returns from their corporate-responsibility activities than their less innovative counterparts do,” and suggested three actions to improve CSR ROI,

• Don’t hide market motives.
• Serve stakeholders’ true needs
• Test your progress.

DuPont’s success suggests a more far-reaching approach, i.e., embed sustainability deep within your corporate culture and that an “energy culture” is a great place to start.

“Upwards of 40 percent of industry’s energy efficiency improvement opportunities can be realized through low or no-cost projects rooted in corporate culture change”

They must know something since dollar savings to date are not millions, or even hundreds of millions, but billions.

“The key to this model is the formation of multi-disciplinary, cross-functional site teams, with insight from operators, maintenance, mechanics, core process experts, energy experts, engineers and management.”

These are initial steps that follow Richard Branson’s “doing well by doing good” approach.

Two of the biggest stumbling blocks on this path are Wall Street, with its short-term, i.e., quarterly, focus and the current definition of “stakeholder.”

Typically, stakeholders are viewed as investors, management, customers and workers; progressive companies have added the local communities where they do business and a few have tiptoed further.

Whereas Richard Branson points out in Screw Business As Usual every living thing and the planet itself are stakeholders.

Sadly, rather than being in the lead, the majority of US corporations are staying focused on short-term results and narrow definition of stakeholder.

But the winners in the future will be those companies, large or small, whose thinking is longest and definition is broadest.

I hope you are one of them.

~~~~~~~~~~~~~~~~~~~~~~~~~~

Kung Hei Fat Choy
(Wishing you an abundance of wealth and prosperity!)
Happy Year of the Dragon

Flickr image credit: Bengt Nyman

It doesn’t seem that the financial crisis is really changing things all that much.

The exodus of Wall Street bankers is mostly smoke and mirrors, not change, as many of the so-called disgraced leave for banks that didn’t accept bailout money, taking their clients and attitudes with them.

“Banks paid out some $18 billion in bonuses last year, down 44 percent compared with a year earlier, and many workers viewed them as paltry payouts… Sensing a shifting tide, talented bankers who fear a dimmer future at banks that have taken taxpayer money are migrating to brash boutique firms like Aladdin, which are intent on proving their critics wrong by chasing fast profits and growth in hopes of one day rising up as challengers to the old guard.”

Wall Street forces companies to focus on short-term profits, often at the expense of long-term corporate success and innovation, primarily  to add more zeros to their own paychecks.

State politicians solve their budget shortfalls by trashing those least likely to vote and completely incapable of donating to their campaigns—the poor, elderly and children.

According to Arizona’s Linda J. Blessing “There’s no question that we’re getting short-term savings that will result in greater long-term human and financial costs,” expressing the concerns of officials and community agencies around the country. “There are no good options, just less bad options.” Ohio’s proposed budget “will dramatically decrease our ability to investigate reports of abuse and neglect,” with some counties losing 75 percent of their investigators The Illinois governor’s budget proposal would scale back home visits to ill-equipped first-time mothers, who are given advice over 18 months that experts say is repaid many times over in reduced child abuse and better school preparation.”

Politicians implement short-term fixes at the cost of long-term social solutions, because (a) they have little negative impact on their re-election and (b) they won’t be around to deal with the mess anyway.

I have an acquaintance who isn’t wealthy, probably midway between middle and upper-middle class. She constantly talks about how she and her husband do everything they can to avoid taxes and would never vote in favor of them no matter what.

During the same conversations she gripes that the unincorporated county where she lives doesn’t plow the road near her house quickly enough when it snows; the ambulance didn’t arrive fast enough when her husband had trouble breathing; her grandchildren’s schools keep reducing enrichment programs and the classes are too large.

Their attitudes aren’t all that unusual.

Does anyone else see a dichotomy here?

Your comments—priceless

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