Welcome back to another episode of the corporate Cowboys podcast we’ve been reading together the naked Corporation and how the age of transparency will revolutionize business authors of this joint are Dawn Tapscott and David decole that’s Don Tapscott David de Cole published 2002 by Free Press now we’ve read how the age of transparency
As it was perceived in 2002 would revolutionize the way business operates because businesses or business itself would become more see-through more transparent to those that it actually impacts through its processes its policies the way it lobbies the regulations that it supports or opposes that sort of thing so let’s continue
I mean if you want to start from chapter one by all means just pause this start on chapter one continue on through and meet us back here at chapter 10. so we’ll we’ll begin now reading chapter 10 titled breaching the crisis of leadership just be aware that I’ll be commentating
I’ll be providing some commentary every now and then and it looks like this is the last chapter so let’s make this a good one shall we breaching the crisis of leadership the new transparency has revealed the crisis of leadership in business today transparency demands new thinking about the nature of the corporation its
Relationship with other institutions and people and even its role in society when a change of this magnitude occurs vested interests fight it just a quick side note I’ve been harping on that concept on that on that notion of of business and business routine all throughout this book almost every
Single chapter essentially saying that for many at the top many of the big whales slow moving [ __ ] as they are for many of the big whales any change means more work right even if it’s not more work it’s just that they’ve been doing what they’ve been doing for so long
They’re necessarily stuck in a mental rut they’re inside of a box and they can’t see out they’ve dug themselves into a hole that they can’t seem to get out of without outside help or some direction right if they were maybe told to dig diagonally they could
Dig them dig them dig their way out right but any work of a different kind because you would no longer be digging down you would be digging up if that makes sense up and out it’s as if it were more work for them even though it’s something different because it’s something they’ve never
Done it just seems like more work it’s a tough point to get across it’s a tough sell when it comes to business Consulting management consulting legal Consulting right but it is what it is and where these folks stutter step and stagger other folks are Leaps and Bounds
Ahead of them in terms of innovation and creativity regardless of whether or not they got blue chip money because at the end of the day money doesn’t mean a whole lot you die whatever Legacy you leave behind isn’t operating on the same rules that you once were right they could be thinking differently
Also so continuing here when a change of this magnitude occurs vested interests fight it yeah that’s the status quo right Nicolo Machiavelli wrote quote there is nothing more dangerous to execute nor more dubious of success nor more dangerous to administer than to introduce a New Order of Things
For he who introduces it has all those who profit from the old order as his enemies and he only has and he has only lukewarm allies and all those who might profits from the new let me reread that again let me re-read that again because I [ __ ] it up the
First time even though it’s it’s such it’s such a deep theme to be to be threaded through this entire book it’s it’s the overarching concept of this book regardless of where you stand on on social media on on communication and Technology regardless of where you stand right transparency of Corporations transparency of government
Is the future whether or not the corporate world order recognizes it or not whether or not the corporate world order recognizes it there you go because I use the double negative Nicolo Machiavelli wrote there is nothing more difficult to execute nor more dubious of success nor more dangerous to administer than to
Introduce a new order of things for he who introduces it has all those who profit from the old order as his enemies and he has only lukewarm allies and all those who might profit from the new just a quick comment again it’s because what’s new is seen as speculative
Even though it’s not even though it might not be speculative it’s just that there are more enemies than there are allies sure the Allies can piece together the type of creativity and collaboration that is that is um uh esteemed that is celebrated in a ragtag team of individuals that is celebrated in being
A corporate cowboy but it’s just that it’s an uphill battle when you’ve got more enemies who are stuck to the status quo and unwilling to change unyielding to an even higher yielding change so then it just appears something different that they don’t understand and so they
Make it out to be bad they make it out to be exhausting they make it out to be onerous and and undue and unfair and unjust and they painted any number of different colors just to keep from doing it just to keep from changing they’re worse than children they’re worse than
Than authoritarians and fascists they’re worst in communists even though they’re all in the same [ __ ] bucket today those vested in the past from CEOs to corporate lawyers to PR departments are resisting many firms claim to be open and have strong ethical values but few truly operate with Candor and integrity
Some leadership initiatives already stand out in 2002 investor Warren Buffett called on firms to expense stock options and make the real costs visible to investors within a year more than 100 companies had announced their plans to do so Buffett’s challenge made a difference Buffett also encouraged companies to stop quotes giving guidance
Instead to take a page from dragonet and give investors the quote facts ma’am just the facts I don’t know why they had to put that in quotes maybe it’s a quote from Dragnet who [ __ ] cares that’s hella old that’s that’s old as [ __ ] I’m not all right uh corporate leaders
Considering corporate leaders like UK based Cooperative Bank pioneered a warts and all approach to reporting social and environmental performance a growing list of firms in various sectors is finding the leadership capacity to quote do the right thing every day I don’t know why doing the right thing
Is so hard I mean I I understand why doing the right thing is hard because doing wrong is is thrilling it’s in it’s uh it’s stimulating it’s it gives a rush I get it I totally get it you’re bold enough to break the law to skirt around International treaties
To bribe foreign heads of state yeah that shit’s alluring that shit’s intoxicating I get it I get it if you want a little bit of context go read confessions of an economic Hitman they are they are essentially the uh not the uh arch rival right but they are the counterparts
On a global scale to what is a corporate cowboy the book is called confessions of an economic Hitman by John Perkins is the author it’s a very short book I believe it’s only like 100 something pages long but it’s very insightful foreign Buffett also encouraged companies to
Yada yada yada continuing a growing list of firms in various sectors is finding the leadership capacity to quote to do the right thing every day but others struggle to find leadership for change rather than actively harness the power of the new business Integrity they wait for transparency to be forced on them
Rather than address the need for integrity in everything they do they spend their worthiness and Good Deeds many managers treat transparency as minimal compliance with the law they see business integrity and stakeholder engagement as birdism burdensome costs they see business integrity and stakeholder engagements as burdensome costs
And you’ll have to uh excuse me if I repeat a sentence or two where if I go back and again uh re-enunciate and pronounce words because this is a professional development podcast so if I’m developing professionally my oration skills my verbal speaking skills my verbal skills verbal speaking [ __ ] relax Alex my
Verbal skills uh my linguistics you just gotta bear with me and either follow along you can talk [ __ ] if you want under your breath but don’t talk too loud because then you’ll miss what I’m saying they may think continuing they may think of corporate responsibility as someone else’s job perhaps the philanthropy
Department many are skeptical even cynical about the about the claims many are skeptical even cynical about the claims touchy feely language and perceived anti-corporate motives of those who argue for openness and sustainability executives are so busy fighting fires in a brutal business environment that they can barely find
The time let alone the will resources Knowledge and Skills to lead a transition to a new model of the firm I get it I get it if you’re running around putting out fires just running out from fire to fire you don’t really have time to lead and in that sense
You’re not a leader you shouldn’t call yourself a leader you’re just a [ __ ] manager you’re managing your business so it stays afloat so it stays solvent so it doesn’t go under so it doesn’t [ __ ] go up in Flames you’re you’re just in Fire Control you’re damage control if that’s the only state that
You operate in you’re not a qualified leader admit it admit it until you turn around until you change the way you think and until you can see the Paradigm in which you work in and then want to address it you’re going to turn up you’re going to turn upward
And change your supervisors right because they’re also watching you if they’re not leading you they’re just watching you they’re also your manager they’re just managing their fires and putting out fires after fire in leadership you guys are just wallowing and an a stagnating pool of capital festering like a [ __ ] disease
All right Alex continue [ __ ] continue they may think of corporate responsibility to someone else’s job perhaps the philanthropy Department many are skeptical executives are so busy fighting fires with the shake-ups in accounting Consulting and banking traditional advisors seem ill-equipped to help well it’s because traditional advisors are also in the same hierarchical
Organization as their own clients also putting out fires so they’re advising on how on how best to pit out fires and not mitigate them if I mean if they’re in the business of mitigating fires and actually propagating Innovation actually promogulating creativity through a firm there there’d be less fires because you would have
More autonomy issues would be solved in real time with collaboration and creativity continuing how will your company muster the capacity to lead this transformation what are the leadership opportunities for each of us in each of our many stakeholder roles who will lead who will open the door [Laughter]
I got an answer to all those questions is the [ __ ] corporate Cowboys if it ain’t me it’s you the reader The Listener if it’s not me it’s us we lead ourselves we help one another to create better business opportunities to make business better always to be more professional
To always be finding to always be in search of mutual ground Mutual benefit walk away from every transaction a win-win foreign it’s the CEO Keeper of the key for the last decade there has been considerable discussion regarding the Genesis and nature of organizational leadership Peter singe who coined the concept of organizational leadership
No sorry Peter singe who coined the concept of organizational learning argued that the person at the top regardless of IQ can’t learn for the organization as a whole the LI Iacocca type leader who creates a vision and sells it down into the organization is being replaced by the model of the
Leader who draws on the collective brain power of employees and other stakeholders and motivates them to collaborate for success there is a corollary to this new model in the hundreds of firms we’ve studied leadership can start anywhere I’m going to read that again there is a corollary to this new model
The new model of business a business that is better in the hundreds of firms that have been studied leadership can start anywhere that’s the concept of being a corporate cowboy sure you might be in the middle of the pile of this hierarchical organization you might think you’re a [ __ ] nobody
Because your manager tells you that they don’t pay you to think right or we just pay you to [ __ ] report numbers we don’t pay you to think we don’t pay you to go out of your way and do creative [ __ ] right but it can start anywhere you just have
To Cowboy Up that’s the whole point I mean the the theme of the podcast is derived from the Cocaine Cowboys of the 70s 80s maybe 60s but 70s and 80s for sure into the 90s individuals from hierarchical organizations with three letters as their identifiers right three letter agencies
Who splintered off and started their own mini Empires but you know instead of Coke or pushing Capital we’re corporate Cowboys the Lee Iacocca we already did that uh there was a corollary to this new model in the hundreds of firms studied leadership can start anywhere from marketing directors I.T Executives
Public affairs managers CFOs business unit leaders plant supervisors and even corporate lawyers your boy alex however though change May begin anywhere in The Firm it must be driven from the top the CEO defines core values norms and culture no matter how inspired well-meaning or determined others may be
No one else can change the firm’s fundamentals a bank teller May develop an important new process a salesperson May devise a more open approach to working with customers an engineer May develop a new product that is more Eco efficient a regional manager May develop a strategic service that transforms a
Company’s offerings but the CEO sets the corporate character some firms are fortunate to have been founded by CEOs who established a culture of Integrity from the start the Johnson and Johnson Credo came from the company CEO and sole shareholder over the years that value system was propagated by successive leaders chosen
Partly for their values recently retired J and J CEO Ralph Larson was said to have never made a speech where he didn’t talk about corporate values we’re not perfect was a quote he would say we’re just trying to do the right thing similarly the HP way originated with
Bill Hewlett and Dave Packard the corporate character of these firms is rooted in the resilience and depth of these values in their culture CEOs lead by example whether they intend to or not they determine the quality of conversations within a firm combative or collaborative judgmental or open are controversial matters taboo do all
Interested parties participate in discussions of matters that concern them or do Secret cabals make decisions behind closed doors when someone raises a new idea is the reaction to explore it or to debunk and defeat it do people exaggerate or are they truthful and Frank do managers keep their cards close
To their chest or do they speak with Candor do people hoard knowledge or share it is the workplace infested with corporate politics or enriched with trust in a touchy situation involving values do managers ask quote what is the right thing to do or quote how do we get out of this mess
All starts with the CEO just a side comment but this was a 2002. this is this shit’s back in 2002 those questions all start with you the corporate cowboy the next subheading a world of dilemmas CEOs face a complex challenge though transparency and related values Drive business success we live in a complex
World filled with competing interests leaders constantly face dilemmas and hard choices doing the right thing can entail tough trade-offs the 2001 Novo nordis the 2001 Novo Nordisk report on its environmental and social performance is aptly titled dealing with dilemmas the report States quote we do not pretend to have all the answers rather
We believe in the value of openly and honestly presenting the facts as well as the issues that confronts us indeed there is rarely an easy answer we often find ourselves on the horns of a dilemma our activities are in areas where values and ethics are put to the test on a
Daily basis close quote with striking Candor the report elaborates dilemmas in the pharmaceutical business and the company struggles to resolve them there are a couple of points here Point first first point point one how do we improve access to health care and make our products affordable and yet continue to
Operate a profitable business second question second Point how can we continue to increase production and our use of resources and that contribute to sustainable development third point how do we protect our intellectual property rights and yet help share knowledge that can save lives and generate income for others
Fourth Point how do we stimulate diversity and equal opportunities and yet maintain a culture of shared values fifth how can we pay due respect to animal welfare and yet continue to use animals in testing in order to meet the safety requirements for pharmaceutical products six how can we use biotechnology to
Create significant advances for mankind and yet respect the Public’s anxieties about genetic engineering number eight how do we do business consistently in an unjust unequal world and yet respect the diversity within that world the next subtitle next up heading resolving dilemmas CEOs set the tone and the agenda but
Most today are still locked into the old View even when the spirit is willing to provide effective leadership for the new thinking there are still many dilemmas and tough choices we shall now take a look at some of these dilemmas with Candor comes vulnerability this is like a little mini theme here with
Candor comes vulnerability Procter Gamble CEO Alan laughley says quote I want PNG to be the most transparent company in the world so I have to set the example by being candid in my dealings with all stakeholders end quote but openness requires a willingness to be vulnerable a trait
That is not high on the personality profile of most CEOs when stakeholders lack transparency sophistication opening the kimono especially when you’re not superbly buff presents risks when lastly became CEO in 2000 the company was not performing well between January 2000 when the stock peaked at 116 dollars and March 7 PNG stock fell
52 a loss of 85 billion dollars in market capitalization on the June 2000 day Lafley was named as the new chief executive PNG stock fell another four dollars after 100 sorry after 15. after 15 days on the job the stock fell another three dollars 85 cents as lately describes it quote an
Early personal confidence Builder it’s more like a character builder but laffy’s just laugh is being a little goof laugh is being silly he remembers quote The Business Media were not kind reporters and commentators had a right to express their views and they exercised that right with enthusiasm end quote from the Cincinnati
Enquirer March 9th headline here says PNG investor confidence shot to Time Magazine on March 20 saying trouble in brand City we love we love their products but a tech craze Market we hate their stocks but in Tech let me repeat that from Time Magazine March 20 trouble in brand City we love
Their products but in a tech crazed Market we hate their stocks and from the Dow Jones wire April 27th analysts unsure when tide will turn for PNG hahaha get it tied turning for PNG because they sell tied okay for laughly the lowest point was a September 2000
Front page headline in ad age quote does p and g matter hey yo all this talk about matters talk about matter talk about what and who or what when matters is pretty it’s pretty hot in 2023 but you know whatever Lafley says he dreaded media and analyst interviews but he decided that rather
Than hide he would reframe the media encounter in each discussion he shared at least one of his biggest problems and asked for advice in early interviews he asked most of the questions seeking insights on how to overcome dilemmas rather than in a PNG office interviews took place in a retail store or
Consumer’s home quote the goal was to engage the writer in thinking about the company through our eyes he said sure there are vulnerabilities that come with being open but Candor pays off close quote Seagate CEO Bill Watkins says that when dealing with customers quote you’ve got to openly communicate your problems and
Even product weaknesses to your customers and that’s not easy he says quote the normal tendency for most companies is to take data and put a spin on it let’s not leave too many people know about that wrong let people know you have a problem tell your customers the truth you get great accountability
When you are open and you build trust close quote he explains that quote some customers overreact to bad news but for most they develop a closer relationship with you as for making yourself vulnerable he says quote I’ve had very few problems telling people the truth the problems always
Happen when I’ve tried to spin something it always falls apart on you customers will find out about problems so you might as well tell them the truth you’re way more vulnerable if you hide stuff spin or concealment is like cheating on your wife you get caught and you wonder what was I thinking
Watkins describes how he had a big problem with one of his customers that could have been swept under the rug Watkins opened up explaining to the customer that the problem was actually worse than he thought and then committing to fix it quote the customer believed me and
Decided to stick it out because he knows I don’t BS him when we fix the problem our relationship was strengthened if I tried to hide it I might have gotten away with it but I would have missed the opportunity to strengthen trust and our relationship says Watkins quote we
Strive to epitomize the open Enterprise these days it’s hard to be too open another little mini theme Here what do you do if you’re in an industry where competitors externalize costs and we’re acting with Integrity could destroy your firm a central task of leadership is to Define and redefine your organization’s
Frame of reference what seems a scary threat in one frame becomes a compelling opportunity in another consider Patagonia outdoor enthusiasts live the irony that their activities degrade the very forests lakes and mountains that they cherish true there is a world of difference between dune buggy Riders who plow up Virgin
Wilderness and meticulous hikers who never leave behind an ounce of debris but no matter how careful you are it’s nearly impossible to pass through the Backwoods Without a Trace most makers of outdoor sports equipment and clothing ignore the continuing contribution of their products to environmental pollution and degradation Yvonne sonar founder and major
Shareholder of privately held Patagonia chose a different path right from the founding days of the company in the early 1970s he invented quote clean climbing tools and levied and Earth tax one percent of all sales for environmental causes from 1985 on the company did well in the 1980s but then
Expanded too fast and faced an expense and cash crunch in 1991 when sales contracted Bankers demanded reorganization and the company laid off 20 percent of its employees a painful experience for a firm that takes pride in its supportive workplace seanard responded not by giving up on his principles and making clothes on the
Cheap but by transparently redoubling them to reframe the company’s future at arguably even greater risk and patagonia’s 1991 product catalog she wrote block quote here last fall we underwent an environmental audit to investigate the impact of the clothing we make so no one’s surprised the news is bad everything we make
Pollutes polyester is made from petroleum is polyester sorry polyester because it is made from petroleum is an obvious villain but cotton and wool are not any better to kill the bull weevil cotton is sprayed with pesticides so poisonous they generally render Cotton Fields barren cotton fabric is often treated
With formaldehyde we need to use fewer materials period we are limiting patagonia’s growth last fall you had a choice of Five ski pants now you may choose between two we have never wanted to be the largest Outdoor Clothing Store in the world only the best three and block quote three years later
Charonard LED his company into its boldest move ever it announced that henceforth it would only use organic cotton in its clothing this entailed several risks any one of which could have put the company under just a side note a dollar a dollar says a dollar says at this [ __ ]
Organic cotton uh Venture is not as organic as you think a dollar [ __ ] dollar says it there are a couple of points here Point first first point at the time the pool of organic cotton Farmers was Tiny if demand for its products jumped unexpectedly the company could be caught
Unable to serve its customers second points organic growing absence pesticides is risky and yields only one crop per season third Point Patagonia had to reorganize its outsourced supply chain in new ways which might not have worked out fourth Point organic cotton was 25 percent more costly than conventionally grown cotton
And though the company absorbed parts of the additional cost it still had to ask consumers to pay more for the natural product the industry establishment responded with Prophecies of Doom and its own spin quote conventionally grown cotton doesn’t use more pesticides than any other commodity said David Guthrie manager of cotton
Agronomy and Physiology at the national cotton Council quote historically cotton used chemicals damaging to the environment but they have long since been removed from the Arsenal Studies have shown that consumers aren’t willing to pay more than 10 percent more for organic cotton it’s limited to a small
Niche in the upscale Market where price is not a consideration end quote schonard became an advocate for organic cotton across the industry and began to educate his competitors several times a year Patagonia hosted companies like Lands End Levi Strauss L.L bean Eddie Bauer Gap Nike REI and Canadian Mountain
Equipment Co-op on organic cotton field trips its typical tour presented a scary enough picture of conventional cotton farming the land is first sterilized to kill weeds young cotton plants are fed with chemical fertilizers and sprayed with insecticides and pesticides in California Alone says the company 57 million pounds of pesticides are applied
To Cotton each year five ounces of chemicals go into the cotton for every t-shirt harvesting uses hormones and defoliants not only does residue leach into the soil and groundwater some of it goes directly into the human food chain pesticide covered cotton seeds are fed to cows and so ultimately pesticides
Make their way onto your dinner table in beef while cottonseed oil goes into food snacks meanwhile at processing plants employees who sweep excess cotton from floors routinely lose toenails and suffer rashes from the waist down Patagonia initially experienced a drop in Cotton clothing sales due to its
Price hikes but soon it’s quote niche of customers roared back thanks to diligent effort the price of organic cotton came down somewhat while production systems improved the company flourished right through the 2001-2003 recession now some of the competitors it has trained including Nike Norm Thompson Outfitters REI and Mountain Equipment Co-op have
Begun the switch to organic cotton schoenard has made a significant contribution but in late 2002 an active semi-retired 64 year old he remained a man with no Illusions even a bit despairing quote there’s no such thing as sustainable development there’s no such thing as making sustainable clothing any of that stuff we’re causing
A lot of pollution and a lot of waste that’s just the way it is and we recognize that and that’s why we kind of do our Penance you know this [ __ ] sounds sad dog this [ __ ] sounds sad as [ __ ] that’s what happens you read 64. reach
Your 60s or 70s and you start giving the [ __ ] away you start giving your money away like [ __ ] Rockefeller like Carnegie like Ford you just start giving this you can’t you can’t bear to hold on to any of this [ __ ] money burning a hole you’re literally burning a hole in your soul hilarious
The next little sub theme Here stakeholder interests may not align with yours how for example can you open and engage ngos if they have no interest in your success foreign ERS and the firm share similar interest engagement and resolution of differences is achievable but some groups in your
Stakeholder web may want your company to fail or may make impossible demands such as that McDonald’s has stopped killing cows or that shall stop selling oil effectively orchestrated engagements can change the values and motivation of all parties in 1990 Novo Nordisk began to develop its first proactive environmental strategy the basis of
Today’s quote triple bottom line thinking it invited a it invited it invited sorry I’m just pronouncing just just just working on the pronunciation it’s invited a stakeholder group including some ngos from around the world to a two-day dialogue session the quote the the guests toured the firms plants and Laboratories to see for
Example how animals were used in experimentation and how the company approached thorny issues like genetic engineering according to Lisa Kingo both the ngos and Novo changed their thinking through the process quote we learned not only about their concerns but got important insights about what we could do differently they learned about what a
Biotech company is and what dilemmas we confront end quote whereas the ngos may have initially been skeptical or hostile they internalize the challenges facing Novo they recommended a communication strategy where Novo would openly discuss its dilemmas quote the key was being open she says quote we decided in any interaction with
Stakeholders that we would be open and honest explaining the things we were doing well and also where we have problems if you try to paint a glossy picture you’ll fail to engage by being transparent we negotiated we initiated Sorry by being transparent we initiated a dialogue and gained trust they learned
As well this is a two-way process end quote this is not to suggest that firms should carelessly invite enemies into the corporate tent rather it illustrates that openness and engagements are so powerful that they can cause fundamental changes in the behavior of firms and their stakeholders to the benefit of both thank you
All right continuing here with the next little mini theme how do you resolve conflicts between your personal economic interests and those of shareholders and other stakeholders when it comes to the central issue of compensation CEOs face a dilemma due to the separation of ownership from control many have the power to determine
Or unduly influence their own compensation they have big leverage over board compensation committees shareholder resolutions are expensive to mount and have no binding power many boards still view their CEO as indispensable and by outdated myths about the competitive CEO Market close to retirement many CEOs are willing to
Take some Flack to Sock away their nest eggs they can usually find peer data to justify their expectations and after all their compensation is a pittance compared with the vast resources they command and critical decisions they make isn’t it but today the whole world is watching because of transparency The Cutting Edge
Of leadership for CEOs is their own compensation a CEO’s Compensation Plan is a litmus test of personal and corporate Integrity when earnings are in the tank employees laid off and shareholders suffering CEOs must do the right thing and greed is not a good example to set even when the company is
Doing well the first step toward fixing executive compensation is to take control away from executives CEOs that we interview tackle the Dilemma by first ensuring that their compensation is determined by an independent board committee sometimes with help from independent external advisors or the firm’s own Human Resources leadership they worked with
The committee to redefine the rules of executive compensation these CEOs put honesty accountability consideration and transparency into practice even if it hurt them personally Novo Nordisk says the driving principle for CEO compensation is competitiveness with similar International pharmaceutical companies and other major Danish companies but Novo seems to weight its averages
Low in 2002 CEO Lars ribine Sorensen received remuneration of 740 thousand dollars including a bonus of up to four months salary but no stock options presumably because of the company’s 2002 performance problems this was a three percent increase in remuneration over the company’s better performing 2001 year when he also
Received a reward of options worth one hundred thousand dollars the value of all company options he accumulated over his career was eight hundred thousand dollars and his shares were worth 375 thousand dollars three hundred three hundred seventy five thousand dollars yeah CEOs like Sorensen are a minority many
Others still set the wrong example in April 2003 The Economist said an analysis by the investor responsibility research center of the 2002 packages of 180 U.S Chief Executives none of them knew recruits from the 1500 largest s p companies finds that the median salary Rose by nine percent the median cash
Bonus by 24 and the median value of awards of restricted stock by almost 20 percent over 2001 levels the median number of share options granted Rose by 7.5 percent and both the value of options held and the median value of options exercised held steady close quote
An extreme example is the gain of 570 million dollars realized in 1997 by Disney chairman and CEO Michael Eisner from 1996 through August 2003 eisner’s cumulative pay was more than 700 million dollars during that same six year period Disney’s share price fell 23 percent Eisner it seems has been spending time
In Fantasyland to the detriment of Disney’s real world stakeholders damn it’s almost like never mind this book was published in 2002 but it still holds true [ __ ] Financial Group CEO Tony copper displays a different value system in 2002 copper reworked executive compensation with a board compensation committee and the bank’s Human Resources executive
The new mix balances short mid and long-term incentives on the basis of the individual executive’s ability to get results the change reduced the use of stock options by more than two-thirds more important it tied options very tightly two demanding performance objectives aligned with shareholder interests bmos
Stock options vest at the rates of 25 a year over a period of four years a practice that is common however the bank has added a performance features that only allows Executives to exercise options once a share price hurdle has been met most senior Executives can only exercise a portion 33 percent Illuminati
Confirmed of their options once the share price has risen fifty percent and another portion 34 once the share price has increased by 100 percent oh those are those are tight restrictions says Rose Patton the bank’s EVP of human resources and head of its office of strategic management quote in setting
These high hurdles we are encouraging Executives to hold options for the Long Haul and to realize gains only when other shareholders have also realized equally substantial gains close quote few companies so closely align executive rewards with sustained shareholder returns I mean I like that I like that why because it incentivizes
Executives to do a good job not just be blinded by the short term they want short-term uh uh returns and short-term profits and are willing to sacrifice the shareholder in the long run just so they could walk away with money in their pockets I like that that’s that’s a
That’s a good uh a good concept the next sub theme how do you Foster openness when your own management especially your lawyers fight you question mark CEOs can find themselves at odds with the corporate’s culture as described earlier sea Gates Bill Watkins wants no secrets he wants his customers to know
Everything good and bad about the company’s products and strategy but he faces opposition his own lawyers our lawyers are just scared to death of the transparency he says quote to their hassling me all the time saying I can’t do this or I can’t say that close quote
Watkins is not being critical of his legal team quotes that’s their job they think the less you say the less there is for people to use against you and I suppose they have a point but I have a business to run to and I view transparency as Central to my strategy
Close quote the same thing happens with some marketing staff who like to downplay product weaknesses and exaggerate strengths as the song goes quote accentuates the positive and eliminates the negative Watkins View quote every company has problems Quality Technical features we all have them and if everyone is hiding them they don’t
Get resolved as fast as if they were open I’ve made more mistakes than anyone in the history of storage systems because I openly admit that I can create a culture where mistakes get fixed faster everyone that’s customers marketing and product people feel comfortable bringing their problems
Forward we just don’t have time to be closed close quote nice the next sub theme in a world where you’re as good as your last quarterly report and your job May hinge on your next one how do you defend the Strategic thinking and long-term perspective required to build an open Enterprise
Damn that sounds like a [ __ ] mob you’re only as good as your last bag you’re only as good as your last envelope you’re only as good as your last quarterly reports otherwise it’s the [ __ ] chopping block CEOs have always confronted the Dilemma between long-term strategy and short-term action however as
Transparency grows business Integrity cannot be relegated to the back burner CEOs need to make choices that ensure the sustainability of their firm pngs laughly faced crisis when he took over the company in June of 2000 but the only solution was to get some fundamentals in order quote it’s my job to build a
Sustainable firm and the first order of business is to ensure that the company and everyone in it behaves with integrity I am very forgiving on business failure I’m unforgiving on Integrity failures the policy is no tolerance close quote for him this is a very practical matter Integrity is required for everything
Shorts medium and long term he took over a firm that needed a change and he understood that change is scary quote if the organization fears change this kind of new thinking won’t get the oxygen it needs to breathe core purpose and values help people overcome the fear of change
Because they clarify what will not change close quote he also needed to ensure quote trust and mutual interdependence in the company it’s imperative that people see their own successes linked with that of others inside and outside of the organization and that they trust one another to do
The right thing to fulfill the mutual responsibility close quote the third challenge was to unleash and Inspire PNG people quote command and control is long dead he says quote I’m a believer that the role of top management is to make a few strategic choices that Inspire and then unleash the
Organization to deliver close quote Integrity is the precondition to any short-term success for Lafley quote every one of our hundred thousand employees is an ambassador for the company and our values close quote this is particularly important given that he views PNG Brands as trust marks quote Our Brands stand for election
Every day a flaw in our integrity would instantly destroy trust and the brand you find the time to be a good company close quote in 2002 PNG scored number five on business ethics 100 best corporate citizens list these firms illustrate model business strategies in how they handle challenges from layoffs
And sweatshops to predatory lending and the environment they show there are better ways to handle these issues than the ruthless practices that are too often the norm according to researchers at DePaul University these firms have significantly better financial performance than others in the S P 500 Integrity is something firms need now
Just do it the next subtitle here the next subheading the new innovators leadership must come from the top for a firm to harness the power of transparency but leadership can also start from anywhere it can start somewhere in the lower ranks or even through an external party in open Enterprises leadership can simply
Mean carrying the mantle of business Integrity in everything you do just a quick comment here leadership starts with you as a corporate Cowboy you ought to move as if you lead be aware that people are watching you be aware I mean be mindful that you’re also watching people you’re taking account
Of people’s successes of people’s failures of how operations in your particular organization in your firm in in your company how those successes and failures manifest what went wrong and it could be because of a lack of communication it could be because of an incongratuity between departments maybe to uh
Different people in two different positions aren’t interacting uh appropriately or aren’t interacting as effectively as they should in order to exploit their positions and make something happen they’re just [ __ ] twiddling their thumbs or playing grab ass right these are things that you take note of as a corporate cowboy and you use them
Those are tools you can use you could you know potentially weaponize you could uh potentially immunize oh that actually came off pretty [ __ ] hard for 2023 for 2023 it came off pretty [ __ ] hard all right on a cold morning in January 2003 we traveled to New Brunswick New Jersey to
The headquarters of Johnson and Johnson to spend a day interviewing corporate executives as we entered the main lobby we saw a 10-foot high stone tablet displaying the J and J Credo the company 65 year old statements of corporate values receptionist Pat Doherty said quote please hang your coats behind our
Credo we decided to get a jump on the day’s interviews by asking her so what is this Credo anyway she became decidedly reverent describing how our Credo was the foundation of the company how everyone in the company worked and lived by our Credo how each year she completed a survey of how well
She thought the company and her boss were behaving according to the Credo and how as a receptionist she was the public face of the company and had decided it was her job to make sure guests understood The Credo and its importance to the company later in the afternoon we told Company
CEO Bill Weldon the story quote I’m not really surprised he said quote you’ll get that reaction from many people in the company he described how every few days a tough problem will arise where he’ll ask someone at jnj is this a CREDO issue Weldon says his first and foremost job
As CEO is to protect and strengthen J and J’s corporate character yo this guy sounds like a [ __ ] boss is to protect to protect and strengthen right I mean I don’t know if he’s aggressive in doing it or if he’s just proactive in doing it right I mean there
Is a difference there is a difference that’s that’s uh for another episode not for this one but really it just comes down to whether or not you bend the rules or you break them right and what I mean is Bend bending your rules to cover to cover
Others and to provide others with a benefit or if you’re out just breaking the rules of the world right and that that is uh that ultimately that comes down to whether or not you do business beneficially whether or not you conduct business for the betterment of business for business sake
Not not just for profits yeah profits are good to have but profits come with good business I mean you do bad business and actually comes with blood money that ain’t the type of profit you want that is not the type of profit you want later in the afternoon we told Bill
Company where did it go where did they go okay Weldon says his first and foremost job as CEO is to protect and strengthen J and J’s corporate character from receptionist to CEO people throughout the company Champion business Integrity as their personal responsibility as it ought to be as it ought to be
Business integrity that’s a that’s a good term that’s a good concept [ __ ] I might pull that from this book business Integrity Integrity being you’re taking account you taking responsibility of creating Better Business creating business that is sustainable and what I mean by sustainable is something that is reproductive something that is
Universalizable something you could have others practice and that you would both benefit from because if the way you’re acting a business if the way you were acting a business someone else impressed that upon you and uh you suffered for it then you ought to know that your [ __ ] business
Up your [ __ ] business up for other players and you can expect to get Clips sooner or later [ __ ] your corporate character all right considering the fight for Candor and values can come from other surprising places Johnson Johnson general counsel Roger fine is disarming he doesn’t sound like a corporate lawyer
Former jnj CEO Ralph Larson describes fine as a compulsive truth teller fine believes that quote unless corporations act out of sense of responsibility to stakeholders including Society they will forfeit their freedom to operate the forced transparency of sarbanes-oxley and other government initiatives are The Logical results of firms acting in responsibly
Quote it’s like we’re now spending 70 of our time dissipating heat rather than building the business when trust is destroyed governments have to step in and create a surrogate a process of forced transparency this is unfortunate a few murders have occurred and now everyone is being treated as a murderer damn
Why does that sound so literal close quote by the way close quote fine thanks corporate lawyers need to be the leaders not the blockers of transparency lawyers almost by definition seek control but in J J’s decentralized culture no one is in command 200 relatively autonomous companies each with its own management and governance
Structures work together quote no one is telling them how to succeed so my job is to facilitate transparency open Communications strong personal relationships and adherence to core values rather than pulling structured lovers setting rules and doing the other things that corporate lawyers typically do close quote in corporations around
The world people at various levels work hard to build open Enterprises Cisco VP of positioning Ron Ricci views transparency values and stakeholder engagement as Central to the firm’s reputation quote trust and reputation flow from Behavior you need to show people what you are and what you’ve done customers
Say quote don’t just tell me how to do it tell me how you did it close quote he argues that a corporate value system quote enables people to make decisions that are not in the guidebook close quote and this is best done through quotes cultural stories at Cisco a corporate value is frugality
Company founder John morgridge rejected the expense reports of CEO John Chambers when Chambers had upgraded an airline ticket to First Class says Richie that story keeps the value part of our DNA I don’t know it seems a little seems a little like virtue signaling regardless though we’ll continue and we
Got to take it at face Valley we don’t have all of the facts the next subheading here living and working in an open world the rise of transparency and the changing values of firms will lead each of us to rethink our relationships with corporations as well as our personal values priorities and actions
There’s a little mini theme Here leadership and work if you’re fortunate you work for a firm that has adopted an open Enterprise model dedicated to transparency stakeholders and sustainability your world is Rich with opportunities to participate in its transformation and success yeah that’s that’s if you’re fortunate that’s if your organization
Knows what the [ __ ] it’s doing and knows how to utilize Communications technology and information in order to weave a web of creativity and Innovation where everybody is pulling not only pulling their weight but pushing the company right pushing the company forward everybody is doing it equally but if
You’ve got [ __ ] Gatekeepers at the top instead of leaders uh expect to suffer expect oh man expect the degree of cut throatness to to be unrivaled all right and and the more closed off the more gatekeeping the more Cut Throat I mean and some and some some corporate Cowboys [ __ ] thrive in
That environment they love spilling blood if you were continuing if you work for a traditional opaque short-term oriented firm you face a dilemma you can tune out go through the motions you can look for another job if you think your firm has little hope of changing and you have Alternatives it
May make sense to abandon ship let’s face it open Enterprises are better places to work they are companies where people listen and where the quality of conversations is high they have an interest in knowledge development of everyone and in the sharing of knowledge necessary for Effective work involvement with a company that lacks
The new business Integrity can be dangerous many corporate directors face personal legal action or even criminal charges and would like to turn back the clock there may be conflicts of interest in your business that undermine your firm’s Integrity that can get you into trouble increasingly these firms will be vulnerable in the marketplace
Undermining your job security like many hard-working and decent people at Enron Anderson Taiko and Worldcom the brush of irresponsibility can tarnish you and your career if you conclude your company has hope there is much you can do to be a leader for change the starting point is to be
Clear about your own values and to ensure that you conduct your working life accordingly just as business Integrity pays off in the age of transparency so obviously does personal Integrity I’m telling you fam yo just a side comment I’m telling you and I’ve said this repeatedly this
Has been one of the many overarching themes to the corporate Cowboys podcast is that you take care of business and business will take care of you right I don’t want to get religious here so I will continue yes the ambitious deceitful game-playing backstabber who Clauses way up the
Corporate ladder at the expense of others and the firm has always been with us perfidy has benefited many but it is increasingly likely that bad behavior will be seen as a liability by Boards of directors and top management with trust so important to collaboration those who undermine trust are harmful
And will be isolated human nature is not somehow changing people will still have ambition however personal Integrity is fast becoming a critical asset for ambitious people and those who simply want to do their part this is not to suggest we each strip down completely personal information belongs to you and you should tightly
Control its distribution corporations have the right to have secrets called information security as individuals we have the right to something different privacy this is a human right that does not apply to firms you may provide companies with personal information but that information is still yours to be
Used only for the purposes for which it was provided measure demonstrates and popularize the impact of Integrity on everything from employee loyalty to Brand relationships and share price create an Awakening in your firm and with its external stakeholders disarm people with your candor in a transparent World The Honest
Broker has new power use it to shape the future of your company damn is this is this an anarchist book or some [ __ ] I’m kidding I’m kidding it’s a it’s a I mean that’s why I I chose to read it on the um on the podcast because I find it
To be relatively objective and there are some nuggets I mean there’s some golden nuggets here every now and then and it’s good to read them as if somebody else’s thought of them right they aren’t new thoughts these have been out there in The Ether for our consideration to act on I mean even
Though this is talking about corporations you know the government is another Corporation the next subheading leadership as a consumer you also have new power as a consumer when companies fail don’t let it stand when companies are dishonest punish them when they make promises hold them accountable damn are we talking about
Politicians or what the joking the new transparency has revealed deep conflicts of interest in many Industries professions from investment Bakers to accountants Physicians and even journalists need to get buff as a consumer you have the power to identify such conflicts and demand Integrity too bad we can’t do that with the CDC right
Now and the government as the business I mean it’s 2023 go read a book go go read it go read some headlines and read actually read between the lines read between the headlines how about that as the business environment opens up expect a Pandora’s box of conflicts to be
Revealed as a customer get active scrutiny pays the next subheading leadership as a business partner you and your company have Partners as business webs replace vertically integrated firms sure look for best price and quality but also be sure your partners behave with Integrity your company whether you produce chocolates
Running shoes Cosmetics diamonds or fence posts will be held responsible for what happens in your supply chain as Nestle Nike PNG De Beers and Home Depot learned stand up to coercion in the Supply Chain by the 800 pound gorillas at the top organize for fair supply chain practices
Abide by your commitments pay your suppliers on time and deliver what you promised be open as transparency builds trusts drops transaction costs and improves metabolism these words ring true for the business web quote Excellence is the result of Habitual Integrity close quote damn that that’s a [ __ ] that’s a [ __ ] mic
Dropper right there Excellence is the result of Habitual Integrity I like that I like that so far I mean the hey the book and I are neck and neck fam I said I said read between the headlines right and sure that sounds really vague and generalizing esoteric and [ __ ] but
Excellence is the result of Habitual Integrity I mean you got everything you need packaged in one sentence mine I mean you still gotta go look for the truth you have to use your brain more which is what I’m trying to have you do I’m trying to be thought provoking right
So if I say read between the headlines I’m letting you know that everything that is presented to you is that it’s presented everything that’s reported to you is that it just reported it’s not that you are discovering it the first time no no no no no somebody went out
And found it curated it interpreted it potentially with a bias with some type of motive or an agenda and are now presenting it to you look up the book how to lie with Statistics and then also type in Bill Gates next to it and click Google go
And you’ll see what I mean how to lie with Statistics all right considering the next sub the next subheading leadership as a shareholder okay as an investor you own the company through stocks and mutual funds your fiduciaries have the tools to be active investors and you have access to the information
Required to hold them accountable firms with the new business Integrity perform better demand that your fiduciaries get wise and invest accordingly don’t passively accept proxy voting statements if you aren’t happy with Management’s choices it is far easier to find other investors in organized protests than ever before
I don’t know about all [ __ ] bad bro I don’t know about all that organized protest what the [ __ ] are you going to protest why don’t you become a corporate Cowboy hold on well it’s saying shareholders I guess right well anybody could be a [ __ ] stakeholder as we learn through this book you could
Be a consumer you could be an employee you could be an executive and still be a shareholder okay so if you can’t be a corporate Cowboy what the [ __ ] is the protest gonna do the next subheading continuing leadership as a citizen how do the firms in your community give
Back in exchange for their license to operate many old style corporations have manipulated our world in everything from Electric Power markets and cozy government contracts to government elections and policies typically to our detriment what our communities and the world needs now are corporations who understand the link between business integrity and
Success in our communities we need to move Beyond philanthropy we need firms that understand how externalizing costs hurts not just Society but themselves that see the link between integrity and their own viability and sustainability that understand the deadly liabilities of the corporation as a fortress and
That know that firms cannot succeed in a failed world the next sub heading here forging the 21st Century Corporation I like this last subheading and is it the I think it is the last subheading forging the 21st Century Corporation fam hang on to your seats each of us has an opportunity to ensure
That our personal values are not only appropriate for ourselves but are consistent with the firms we work for or lead the companies we buy from the stocks we purchase the business partners we select and the corporations that we as Citizens license to exist oh you get that corporations are
Licensed that means they’re chartered that means that they’re allowed to exist but you know sometimes corporate likes to flex its nuts every once in a while I mean as is evident through the military-industrial complex the medical industrial complex the pharmaceutical industrial all right [ __ ] all right relax transparency brings Clarity to the
Stakeholders of the firm it’s as if we’re all emerging from a Dark Age increasingly we can see clearly and take action we can discern right from wrong worthy from unworthy there has probably never been a more exciting time to be in business nor a more dangerous one the transparency
Genie has escaped from the bottle wreaking havoc on some and bestowing sustainability and long-term success on others who embrace it the genie demands that the corporation change from paternalistic inward looking and self-indulgent to engaged stakeholder focused responsive and responsible it also calls forth a new kind of leader
The executive who has Integrity in his or her bones who leads with intent and by example who rather than hunker down in the face of transparency’s power galvanizes The Firm to harness it and who has the courage to do the right thing and the vision to build a corporate character to withstand the
Visitudes of a volatile new century transparent because keep in mind this this book was written in 2002 right so this is it’s a new century according to this book but we’re almost a quarter through the damn thing right so be mindful going into like the next quarter fam like transparency hasn’t
Changed right the benefits of transparency have not changed one bit continuing transparency calls on yesterday’s managers to be tomorrow’s leaders as we enter the age of transparency the future won’t just happen it will be created if we all get involved our values aspirations and blossoming expectations can transform
The corporation and the world for the better the end that actually concludes chapter 10 of the naked Corporation how the age of transparency will revolutionize business the authors of this joint were Don Tapscott and David T Cole this piece was published 2002 by Free Press my name is Alex I’ve been
Your host these past 10 episodes and for the entire podcast to be honest up to season 7 episode 10 this concludes this book thank you so much for joining me having allowed me to read to you and you know to practice my uh my my verbal reading skills my reading out loud
Skills my oration skills those social skills and keeping them sharp and whatnot and uh and and also to give you some commentary on on just what the uh The Credo I guess of being a corporate Cowboy is all about actually no I don’t guess that is The
Credo being a corporate Cowboy is to create Better Business to facilitate Better Business and to take care of business because as a corporate Cowboy we only got business to depend on right we aren’t born into trusts we aren’t born into wealth everybody starts off poor everybody doesn’t matter if you’re born into a
Rich family you were born not knowing [ __ ] right so just because you live in somebody’s Shadow just because you might be in the one percent or belong to the 99 [ __ ] doesn’t matter you begin with the same opportunities to improve with the same opportunity to create better what is the objective good
You have the same opportunity to conduct business in a manner where everyone benefits and you yourself can earn yourself a reputation along with everybody else as a corporate Cowboy so again thank you very much for having join me and I’ll catch you on the flip side the
Next episode as we continue on our journey I mean the grind doesn’t stop we want the struggle to be short term but this hustle is forever not some corporate Cowboy [ __ ]
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