In her book “Tearing Down the Walls,” Monica Langley describes how finance maven Jamie Dimon led an expense review session for a new management team at Primerica some years back.
Dimon’s boss, the firm’s chairman, was gung-ho to tighten down the screws on overhead. When Dimon flashed his leadoff visual, the first department under the microscope was Aviation. The management team’s eyes bulged at the huge budget for the corporate Gulfstream IV jet that carted around the chairman.
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According to the author, the boss was not amused. He wanted to know why Dimon wanted to “pick on” Aviation. Dimon coolly explained, “because Aviation starts with an A.” The chairman didn’t like it, but fought no further.
Dimon was right not to bury this bill deep in the deck. The jet wasn’t grounded, but chalk up a point for straight-shooting candor. It helped set a tone. Primerica went on to couple other expense savings with stock incentives for managers, and earnings soared.
Recently, a Fortune magazine article by Richard S. Tedlow cited an instance of having people on staff who made sure that a corporate CEO “doesn’t win an argument he ought to lose.” The CEO of a company has all the edges. Advisers may go to him with overwhelming evidence that the company is going over the cliff. The boss scowls, and next thing you know the staffer may be on the street.
Too many CEOs are liable to be stubborn gut-trusters. A boss needs to challenge subordinates relentlessly. But when it comes time to weigh in, the top honcho better be prepared to at least own up to the truth – or to lose the fight and change. Sometimes that means changing fast.
In recent years, there have been some humdingers where top management should have lost – for the company to win:
•Reward whistle-blowers. There’s value in building a culture where people will stand up to management. Rather than sweeping mistakes under the carpet, the brokerage firm Bear Stearns pays a 5 percent bounty to people who find and prove them, on the spot! Former CEO Ace Greenberg instantly signed checks for $50,000 to $60,000 to reward people who have caught big company mistakes.
•Demand the right reasons. When a top manager demands major changes, he or she is bound to encounter resistance. Some may be well-placed, especially if the new boss is a greenhorn from another industry. If you’re brought in to shake the rafters, don’t sidestep change. Just find out which posts are attached to the foundations. What a business needs is a future based on facts.
•When you lose, don’t stop thinking. Howard Schultz, the guy who made Starbucks, found a honey of a product moniker in one of their acquisitions: Frappuccino. Schultz loved the name, but not the idea of “blenders whirring away” to whip up the treat. Did Schultz block the product? He “gave in,” put his thinking cap on, and the blenders were put in metal cases to mute the hum. The Finish Line: Frappuccino has been a Starbucks blockbuster.
•What’s the other guy doing, and why – maybe – shouldn’t you do the same thing? What are our key competitors doing? Are they abandoning a business because the market is saturated or trends have changed? Are they chasing the next sure-fire success? Be careful about following the group – even when you’re the leader of the pack.
•Don’t try to outsmart an info-age consumer. Sony, which has had a stellar brand image, stumbled badly recently when it marketed music CDs with secretly built-in files. These monitors entered people’s computers, making them vulnerable to “spyware” and were hard to delete. When discovered, the public outcry was earsplitting. In a savvy response, Sony has since dropped the concept and recalled the products. Should there have been a stronger voice inside Sony telling management not to go there in the first place?
It’s hard to have your ears open when your mouth is, too. Before you say no, be in the know. Learn when and how to listen to the troops on the front lines.
Mackay’s Moral: Chiefs who’d rather fight than switch are often headed to a dead-end ditch.
Harvey Mackay is author of The New York Times best seller “Pushing the Envelope.” He can be reached through his Web site, www.mackay.com; or at Mackay Envelope Co., 2100 Elm St., Minneapolis, MN 55414.
