I’m David Nour of Relationship Economics and this is “Connecting the Dots.” This episode needs an excuse, use the perfect storm. Have you notice the recent trend of business executives trying to explain their company’s sudden auto failure resort to a perfect storm metaphor? Give me a break.
It’s amazing to think how many people actually buy into this nonsense. Isn’t it interesting that what a ship went through an extremely rare and unusual collision of three weather systems has become an excuse for poor judgment, lousy leadership and abuse of the facts. Not to mention the complete disregard for the most valuable asset what we call you a portfolio of relationships, the executive’s reputation capital and certainly the organization’s professional net worth. Other than these executives think we’re all idiots or they’re sure opportunistic, a manipulated tactics have drowned their sense of objectivity. Let’s look at some recent examples.
Sam Zell made his fortune in commercial real estate. Just as circulation and advertising revenues begin to decline, he decides to buy the Tribune Company, a portfolio of newspapers and broadcasters.
How about the destroyed Auto Executives in Washington, trying to convince the poor strings on the help that the only reason they’re in deep trouble is because people have stopped buying their cars. The boys in the Middle East are making amends on gas prices. There is of course a massive credit crunch and everyone is losing their jobs.
It’s useful to remember that in the gripping account of a ship wreck that popularize the notion of the perfect storm, the skipper of the Andrea Gail receive urgent and repeated warnings that he was headed into what could be a monster storm, warning that the captain and his crew chose to ignore. If they had listened, the Andrea Gail would have never left port. It’s no different from many of the executive who used the perfect storm excuse.
When Sam Zell was negotiating for Tribune there was widespread consensus that the internet was stealing leaders and advertisers from the main stream media eating away profit margins and calling into question the industry’s in equated business model. The CEO’s ego, arrogance and often other inaptitude along with the total disregard for the financial well being of countless stakeholders has often led to the perfect storm many companies find themselves in.
I supposed we can have a bid more sympathy for the auto-manufacturers who might not have understood that the reason Americans were buying record number of formed vehicles in recent years had nothing to do with the cheap credit or mortgage cash out and everything to do with the superior styling and quality of the products.
But are we really supposed to believe that when giant, century old companies had a sudden downturn in sales, the reason that we’re running out of cash in a matter of months has nothing to do with the billions upon billions of dollars they spent on reckless promises of job security and lavish health benefits for worker and retirees.
Whether it has capsized the economy, it’s not a perfect storm but a widespread failure of business leadership, a failure that’s only compounded when executives refused to take responsibility for the misjudgments.
Well, my comments may seem way too broad and too harsh. Isn’t foreside and corrective action with leadership is all about? Isn’t candor and forthright what leadership is really all about? Leadership certainly rarely involved using excuses. So what should you do the next time your face with unparallel test of your character, integrity and leadership in a certain face of a crisis?
For starters, stand up for what you believe with conviction and make your voice heard at high profile industry conferences among the various stakeholders and with credible source of industry news. With facts and compelling anecdotes to illustrate the underline and fundamental industry challenges, how the greed for personal gain may lead to long term turbulence and the instability in the company or overall market. Imagine if any of the top Wall Street Executives had done that in early 2006 when the credit mania was in full swing.
Sure, they would have infuriated almost all their peers, embarrassed and annoyed the regulators who like the people to think that they have everything under control. Loose market cap as industry analyst rush to issue sale recommendations all to the delight of journalist.
With regulators looking into this worrisome comments and with appropriate level of foresight, they would have help the system begin to collect itself with the biggest benefit going to the company that first broke from the pack. Naïve? I don’t think so.
The fact that we know and all shake our heads and say, what were they thinking? When we hear of all those leverage corporate buyouts or subplan mortgages made with that income verification that it wouldn’t have taken much to bring the world to its senses. On Wall Street, however there were no leaders willing to end this self delusion and call the credit bubble for what it really was.
Rather than tell the truth and have faith in people to do light thing, they scenically played along in a dangers game that eventually caused employees their jobs, investors their savings and customers their financing. It should hardly be a surprise that those employees, investors and customers are not eager to return the favor.
My name is David Nour with Relationship Economics and this has been another episode of “Connecting the Dots.”
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