Leaders & Laggards for 2017

When we reviewed the 2017 Leaders and Laggards “Naughty & Nice” list last month, we thought we’d see how our winners and losers are poised to make a splash in 2018.

These three represent the best… and the worst:

Leadership Leader

Our leadership Leader for 2017 is Charles Butt, CEO of HEB groceries, headquartered in San Antonio Texas. He easily took the Leadership Leader mantle in October, after donating both personal funds and corporate support to Hurricane Harvey recovery efforts. But that’s just the tip of the iceberg.

HEB is #12 on Forbes Largest Private Companies list, and #1 in Texas, with $23B in revenue and over 100K employees at 330 locations in the U.S. and Mexico. Founded in 1905 by Charles’ grandmother Florence, the company was named after his father Howard E. Butt, one of the Butt brothers. I freely admit to having an occasional chuckle at the sound of that last sentence. As my wife is fond of saying, you’re only young once but you can be immature forever. Moving on…

The sheer size, success and longevity could be enough to make a leadership leader, but it’s the process taken that has our attention. This massive growth is entirely organic—they don’t go around buying up other grocers in that insatiable quest to be bigger. They simply plant seeds and water them. Locally.

And here are some of those leadership “seeds:”

  • HEB gives 5% of the organization’s pretax profits to charity.
  • Charles is a Glass Door Top 20, with a 97% CEO approval rating.
    • 85% would recommend HEB as a place to work—validated by their Net Promoter Score (NPS) of 55+, impressive for anyone who follows those things.
    • The company culture and career advancement are most frequently named as reasons for that loyalty.
    • Jeff Thomas is a great example. Hired as a bagger 41 years ago, he’s held 22+ positions and moved nine times. He’s currently SVP/GM of the Central Texas region, leading 20K+ employees. From teenage bagger to leading 20,000 people. The pic on the right is Jeff, congratulating three sisters; two retiring with 50+ years of HEB service, and one sticking around since she just has 43 years. Seems they do something right to avoid typical retail retention challenges.
  • Charles recently provided a $100M investment to create a new institute dedicated to training school principals and superintendents, focusing on leadership styles to boost student performance and talent development.

Charles’ right hand, COO Craig Boyan: “[HEB’s] success stems from its investment in its employees…” “It’s our goal to pay as much as we can, not as little as we can. It’s hard for some to understand… that those who invest more in their largest cost item — people — can be those that win.”

Whole Foods founder John Mackey clearly admires Charles, saying that “HEB is one of the best-run companies I’ve ever seen.” Not grocer; not retailer. Best run company.

Besides, any CEO that has a company that has a mascot—a real mascot—has to be freakin’ amazing. It wasn’t a difficult decision, making Charles Butt and his HEB Triangle’s Leadership Leader of the Year.

 

Leadership Milquetoast

Oscar Munoz, United Airlines’ CEO, had a tough 2017. Much of it he brought on himself.

We had almost given up on United as a perennial Laggard, when Oscar Munoz started pulling them out of the gutter. His actions were so un-United-like that in February 2017 we declared him “Almost a Leader.”

After his horrendous April response to United’s man-handling of a passenger, he fell to Laggard status.

By September, with United still not being able to stay out of its own way, Munoz climbed back to the Milquetoast category with a common sense approach to adhering to self-imposed rules.

As 2017 came to an end, the only thing we were sure of is that he’s absolutely tone deaf when it comes to his customers and United’s investors.

For instance, during the third quarter earnings report, Munoz scared the crap out of analysts when he acknowledged the hole the airline had dug for itself. He said his management team was working on a plan for success. Really? Just now formulating a plan? That might be just after the nick of time. We weren’t alone in that assessment; United’s stock plunged more than ten percent that day.

When the flight attendants’ union joined the #metoo campaign, Munoz declared his support and said United needed to have a policy about sexual misbehavior. You think? That’s certainly not leading-edge thinking. He publicly joined the better-late-than-never club on preventing idiotic behavior.

And then there was December’s bump of a first-class passenger, innocently of course, so that a Texas congresswoman could sit up front. He said – she said aside, the airline’s response (blaming the passenger) certainly didn’t reflect the airline’s publicly declared “we care about our customers” mantra.

Come on, Oscar. We’re rooting for you, especially if you can get your airline to give a snot about its passengers. We see how hard you’re working to convince your employees that you’re a people person, but the rest of us are people, too. And we’re the people that pay your peoples’ wages.

Hollow promises are the hallmark of a milquetoast leader, and we’ve decided that Oscar Munoz has been the milquetoastiest of Triangle’s Leadership Milquetoasts in 2017

Leadership Laggard

As much as we thought Steve Ells, former CEO of Chipotle and July’s Leadership Laggard winner, displayed poor leadership in 2017 during the continued outbreaks of various maladies at his restaurants, he didn’t make the Worst of the Worst cut. Maybe because he knew when to step down… better late than never.

Instead, we picked a CEO we haven’t mentioned since September of 2016, “Fast Eddie” Lampert of Sears Holding Corp (SHC) infamy. The announcement that more than 100 Sears and Kmart stores are going to close in 2018 was the straw that broke the camel’s back.

We predicted a bankruptcy ‘I told you so’ moment if he didn’t change his ways, and his performance during 2017 didn’t disappoint – us, anyway. Fast Eddie loaned the company another $600 million to stay afloat in 2017, while Sears and Kmart closed another 358 stores (with 63 more closing this month).

Damn. What am I missing? Can someone tell me what Lampert’s game plan is?

Lampert, the hedge fund manager who engineered the merger of Sears and Kmart in 2005, has managed to lose the company more than $10 billion in the last six years. Lost SHC, that is, since his hedge fund controls Seritage Growth Properties, the REIT that Lampert spun off to own and manage the properties Sears and Kmart now lease. And with every closing, Seritage gets to lease the property to someone willing to pay more than Sears and Kmart are paying under the current structure.

Oh, and then there’s the Sears Hometown and Outlet Stores, a slimmed-down version of Sears primarily focused on selling home appliances, lawn and garden equipment, tools, and hardware. They seem to be doing better than the SHC big box stores, so Lampert bought another 95+K shares last month, after buying almost 220K shares in November 2017. Between him and his holding company, they control the majority of shares of the only profitable endeavor SHC has going.

Not to paint a grisly picture, but Fast Eddie kind of reminds me of an assassin bug (you can look it up). The bug impales its prey and sucks it dry, then attaches the entire corpse to its back. Never again let it be said “you can’t get blood out of a turnip” … the SHC board and investors seem perfectly willing to tolerate Lampert draining the lifeblood out of a company that survived two world wars and the Great Depression.

For being worse than the worst of all our 2017 Laggards, we have to declare Edward “Fast Eddie” Lampert Our Leadership Laggard of the Year.

Leaders & Laggards | October 2017

Leadership Leader

Our leadership Leader for this month is Charles Butt, CEO of H-E-B groceries, headquartered in San Antonio Texas. Intensely private, alas, we have no photograph we could use.

H-E-B is one of the largest privately held companies in the country, and certainly the largest grocery store in Texas and northern Mexico. With almost 100,000 employees and revenues exceeding $20 billion, their size is nothing to be trifled with. H-E-B was on Amazon’s radar before they made the decision to pursue whole foods. They’re ranked #3 in the nation for grocery stores, and #12 among all retailers.

All of that, however, is not what made them this month’s leader. No, it’s all the other stuff…

First, something close to home. Charles Butt but made a personal donation of $5 million to the JJ Watts Foundation for Houston Flood Relief, and the H-E-B Corporation provided monetary, material and volunteer support to victims of hurricane Harvey since the storm began. Charles Butt and his family donated an additional $1 million, in memory of their late patriarch, Howard E Butt, Jr., to help people recovering from the storm’s damage. H-E-B employees felt it was a badge of honor to be at work during hurricane Harvey.

The H-E-B mobile app frequently trends as one of the most popular on both Apple’s Store as well as Google Play. Think about that—a grocer, focusing almost entirely on just Texas and Mexico, is trending nationwide with their mobile app. Take that, Amazon!

They know how to hire at H-E-B as well. And before you chuckle too hard, realize most organizations do not. Not really, anyway. Their hiring practices were singled out by researchers from Harvard Business School for “looking beyond the degree” in their hiring practices. Take a look at their career page, and you’ll notice some differences from many others, particularly retail. Discussions around development, career paths, and expectations… all integral to their obvious success.

And don’t forget the hoochies! Apparently H-E-B also carries (or somehow causes) hoochies.

So, hoochies notwithstanding, Charles Butt and his H-E-B stores are an easy winner for October’s Leadership Leader.

Leadership Milquetoast 

We like some of what we see CEO Brian Cornell doing for Target to keep it from going the way of other defunct or dying box stores. How’s that for equivocation?

Cornell is leading Target through a $7B investment in remodeling old stores, opening new small-format stores in high-traffic urban areas, (thankfully) fixing a supply chain notorious for leaving shelves bare, and upgrading its e-commerce platform. His style is data-driven and hands-on, his outlook for Target is upbeat, and investors seem to be responding.

But not everything thing Cornell has done as CEO is puppies and rainbows. Target’s investors enjoyed his first year, rode through a bumpy second year, and suffered during his third year mainly because it’s been a “follow the leader” strategy that will never get Target to the front of the pack.

Target has not kept up with the Joneses – or Amazon and Walmart in this case – and is pumping money into neglected areas to catch back up. That strategy will work out well if everyone will just stop moving forward.

Take e-commerce, for example. Target is trying to introduce on a wider scale next-day delivery for a price, and same-day deliver for a premium. That means for those with plenty of money, you don’t have to wait or worry when you run out of diapers and toothpaste. Sorry, we’re not impressed.

Investment in existing stores and the supply system? It’s about time. And the small-format stores are likely to be very popular in the right locations, but Target will pay a premium for the footprint and stocking each store differently to meet local demands. We’re not that fond of trying to be everything to everybody.

Still, we like Cornell’s focus on listening to what the customers say – personal visits to customers’ homes is a nice touch, we like his enthusiasm, and we like keeping the shelves stocked. Cornell knows Target has to evolve to be competitive and is leading in the right direction.

But as we’ve all been taught, evolution is a very slow process. We’re looking for innovation here, not imitation. Until we see something different, Brian Cornell gets lumped in with the other mediocre CEOs as this month’s Leadership Milquetoast.

Leadership Laggard

We’ve written about this before, but indecision kills… and Roger Goodell is killing us.

Warning: if you disagree because of your politics, you’ve missed the point. 

In his carefully worded memo to NFL franchise Chief Executives and Club Presidents this month, NFL Commissioner Roger Goodell nimbly danced around the current NFL players’ protest issue(s), but he offered absolutely nothing as a way forward. He did offer his opinions, but you know what they say about opinions being like assholes…

My opinion is that he should make a decision befitting the leader of an $80B organization. Goodell has been making over $34M a year to lead the 32-franchise league, worth an average of $2.5B each, but he’s failed to do anything with his indecisiveness over the last year except make things worse. And it seems like each week, another owner steps in it.

His “I think they should stand during the National Anthem, but it’s okay if they don’t” stand is weak. We don’t care which – they have to stand, or they don’t – but until Goodell leads the franchise executives (who are also making bucket-loads of money) in charting a new course, the NFL will continue floundering like a rowboat in heavy seas.

The players have something to say – hell, we all do – and Goodell doesn’t want them to do it during the National Anthem. What alternative has he given them, besides the “to protest, or not to protest” option? That’s all the commissioner and franchise owners could come up with?

Come on, Roger… LEAD THEM! Get your wishy-washy, politically correct opinion out of the middle of the road and get this league headed in the right direction again. Until then, welcome to the club; you’re this month’s Leadership Laggard.

Leaders & Laggards September 2017

Leadership Leader

A Triangle Throwback – way, waaay back.

We’ve decided to showcase Marcus Aurelius, Emperor of Rome and General Plunderer, as this month’s Leader.

Not because he was a “good guy,” though he was considered the last of the Five Good Emperors, a time period thought to be ruled by absolute power, under the guidance of virtue and wisdom. Sorta like telling an employee you can fire them for any reason, but you won’t because you’re just not that kind of jerk…

No, we selected Marcus because of his personal leadership style and philosophy. First, he was good at leading an army. These were not the days when leading an army happened in monitor-laden control room thousands of miles away. Leadership during Marcus’ time was a little more hands-on than that. He defeated multiple armies that threatened his empire, many of them at the same time. Most powerful man in the world, but heralded as a noble leader with moral character. A good all-around Joe.

His death in 180 A.D. commonly marks the beginning of the end—the Fall of the Roman Empire.

And more importantly, at least for our discussion today, were his personal writings where he recorded his private notes and thoughts on many things, including human behavior, influence and leadership. The writings have been combined into a loose publication called Meditations. Bluntly, these works are fairly badass in the “quotable” department. For example, these three are our favorites:

“…how we learn; by looking at each thing, both the parts and whole. Keeping in mind that none of them interpret how we perceive it.”

Today’s translation: Perception is reality for those who perceive. Facts are facts, data are data; what we do with them and what they mean depends on our perceptions. And don’t forget—others are doing the same thing!

“…you’ve made enough mistakes yourself. You’re just like them.”

Today’s translation. You’re not all that. Humility is a good thing. Ego can cripple a senior leader; remember that just because you are called to make big, bad, difficult decisions, you are no better or worse than anyone else. Bigger titles don’t equate to more self-worth.

“When you lose your temper or even feel irritated: [remember] that human life is very short. Before long all of us will be laid out side by side.”

Today’s translation: In the big scheme, this isn’t. Most things aren’t a big deal. Bad decisions can be remade, and calmness is a virtue for leaders. It’s not the end of the world. As Bill from my men’s group is fond of saying, “The death rate among humans is 100%.”

Something we preach at Triangle Performance is evidenced in this article:

People are still people; human behavior is a constant.

Marcus was a leader; a pretty damned good one, especially for the times. If you would like to read some more on his Meditations writings, see Marcus Aurelius’ 10 Rules for an Exceptional Leader.

All in all, a no brainer for our Leadership Leader for the month, though saying “for the month” may be a bit disingenuous…

Leadership Milquetoast

Leadership Milquetoast

Our love-hate relationship with United Airlines continues. We probably look like some lame politician during an election cycle, flip-flopping every month or so. Like a politician, then, we’ll just say we aren’t flip-flopping, we’re just “modifying our position.”

To wit: United Airlines CEO Oscar Muñoz appeared on CNBC and said something quite moving about leadership, specifically about rules. He confessed that United had lots of rules. Many of those undoubtedly idiotic. Then, in a bizarre twist that made me think an alien had taken over his body, he actually said, “They don’t have to be rules.”

What?? You mean that self-imposed rules created by a manager to deal with a one-off situation don’t automatically morph into statutory law of the land?? How can this be?

So, let’s be fair. The comment was a stellar one, had it been either spoken by someone not trying all that’s holy to rebuild brand credibility, or had it been accompanied by a believable commitment to change the blindingly asinine way that rules at United are enforced today.  Given either of those scenarios, the words may have been like music.

Instead, the comments are met with suspicion, given there was no promise to change, and that Munoz is trying to make up for a year that nightmares are made of. Instead of music, they grate like fingers on a chalkboard. At a minimum, those comments are met with some reasonable skepticism.

He didn’t help himself as he moved forward: Muñoz then said that instead of being called rules, “…they can [just] be policies or procedures that can be adapted for the moment.”

Our Triangle Bullshit Translator deciphered that sentence; it’s code-word for “we’ll do whatever we want, when we want, based on the particular whims of the United employee in that moment.”

Why doesn’t that make me feel better?

So, here we are. To be fair, Oscar Muñoz did say a couple of things that are sound, forward-thinking leadership concepts.

  1. We shouldn’t have so many rules that stifle the customer experience, and
  2. The rules that we do have should be measured based on the situation at hand.

These are good things, and would make an ordinary company in competition for our Leadership Leader.

Alas, it’s United, a two-time Leadership Laggard, and we must take a more “wait and see” approach before hastily rewarding one-time stellar behavior. So, we’ll settle for something in between.

For almost doing the right thing, Oscar, you and United are September’s Leadership Milquetoast. You’re welcome.

Leadership Laggard

We are really unhappy with Equifax.

To make a long story short, their response to the potential compromise of personally identifiable information (mostly just names, dates of birth and social security numbers) for up to 143 million people – nearly half the population of the U.S. – has sucked so far. Now ex-Chairman and ex-CEO Rick Smith called it “a disappointing event,” and he’s sorry for the “concern and frustration” it’s causing.

Yeah well, not quite good enough for us, especially considering there was a patch for the vulnerability available two months before the breach, they didn’t notice the data was being compromised for two and a half months, and they didn’t tell anyone about it for six weeks. Not even the three executives who cashed in $2 million worth of stock two days after the breach was discovered… that was pure coincidence.

But it was damned sure irresponsible to keep the news under wraps “while they investigated.” Did they learn nothing from Yahoo? Or eBay? Or the Office of Personnel Management (OPM)? Apparently not.

Every step of their response has been because of a public outcry. “Minor” mistakes like confusing the hell out of customers when they want to know what to do; asking for credit cards to monitor your credit that they endangered themselves; forcing people who want their credit monitored to be bound by arbitration instead of participating in a class action lawsuit, etc. While Smith grovels, Equifax’s response to the outcry is, “Oops; we didn’t think about that.” And then they react.

Way to get ahead of the game, folks. Your head-in-the-sand approach is a textbook example of how to handle a crisis. That’s just what well-led people do… NOT.

Back to the story: Equifax eventually set up a hokey looking website that will tell you if “your information may have been impacted.” Unfortunately, you have to trust them with your data again, and they’re not going to give you a definitive answer anyway. It doesn’t take a rocket surgeon to know we all may have been impacted, since almost half the country was.

Did I mention that they only have your information because the big banks and credit card companies gave it to them? That’s right, you didn’t ask them to protect your information, anyway. They got my whole family’s information from OPM, who compromised the data from my security clearance application (another story for another time).

Good news, though: Assuming you trust them, you can sign up – with Equifax, of course – for free credit monitoring. I might be a little more confident using one of the other big agencies who haven’t compromised all the data it will take to steal your identity… that we know of.

And you can use Equifax to freeze your credit, if you can get their sign-up link to work.

A quick check on their site confirms that 100% of us here at Triangle AND our families “may have been impacted.” For some reason, Smith’s disappointment doesn’t make us feel better about it. I expect more from one of 2017’s most admired CEOs in the Atlanta area… and maybe a recount.

Smith promised changes, but he doesn’t tell us what. Maybe he’ll tell Congress when he testifies next month. We were curious how much toothpaste he could get back in the tube before then, but it turns out we’ll have to look to someone else for answers. On September 26th, Smith finally took his first step towards accountability during the fiasco: he retired.

The genie’s still out of the bottle, though. For their mishandling of the entire preventable incident, we’re naming Richard Smith and the whole Equifax cybersecurity team as this month’s Leadership Laggards. Thanks for nothin’.

Leaders & Laggards – August 2017

Leadership Leader

Seems like I’ve been reading a lot over the last few years about activist investors shaking up a company’s leadership – sometimes successfully and sometimes not. Some recent examples include Proctor & Gamble, Nestlé, Samsung (this month’s Leadership Laggard), insurance giant American International Group (AIG), railroad CSX Corp., Buffalo Wild Wings (June’s Leadership Milquetoast) and Avon. Sometimes just the threat of a proxy war can influence leadership to accommodate the investor’s desired change a company’s direction.

Not so with Automatic Data Processing (ADP) CEO, Carlos Rodriguez. You can argue that ADP could use some fresh ideas, but you can’t deny Rodriguez has the cajones to stand up to Bill Ackman, the latest activist challenge to his leadership.

There’s definitely some “he-said, he-said” going on, and I have neither the time nor the inclination to sort out the alternative facts, but Rodriguez was definitely not going to kowtow to an investor who’s stake in ADP is still in stock options.

A couple of things we believe here at Triangle: no one gets their own facts, and you can make numbers support any position you want to take. 58% of statistics are made up, anyway.

Billionaire hedge-fund manager Ackman wanted ADP to reduce “corporate bloat” (who doesn’t, except the bloat), accelerate investment in back-end improvements and product migrations, and increase sales force productivity. I’m fine with those suggestions, although they’re hardly fresh ideas.

Rodriguez countered that Ackman’s analysis was based on cherry-picked data from 2009 and pointed out ADP has out-performed the S&P 500’s returns and eclipsed (like the solar one last week) those of Ackman’s hedge fund over the last half decade. After ADP refused Ackman’s request to extend the deadline for his board member nomination earlier this month, ADP’s board rejected all of Ackman’s nominees (including Ackman himself). The board explained that the nominees would bring no “additive skills or experience to ADP’s board.”

Rodriguez has been with ADP for almost 20 years and has a track record of successful performance and effective leadership. Ackman, who’s recent investments include Chipotle (last month’s Laggard), J.C Penny’s, Target, and Valeant Pharmaceuticals, has been an ADP investor for barely a month. But, I don’t have to pick a side.

Recognizing a CEO who bucked the trend and stood up to a bully investor, we congratulate Carlos Rodriguez for being named Triangle Performance’s August Leadership Leader.

Leadership Milquetoast

Google CEO Sundar Pichai missed an incredible opportunity—our very definition of a Milquetoast—when he summarily fired James Damore for penning Google’s Ideological Echo Chamber.

Lots of aspersions have been cast on Damore, many pretending that he said things he clearly and openly dismissed in the memo itself. Damore didn’t say that women are biologically unfit for tech, or that diversity is bad, or that sexism doesn’t exist.

I’ve read Google’s code of conduct; to say this guy violated it is a stretch in reasonableness, and requires interpretations not in evidence.

Pichai said “It is contrary to our basic values and our Code of Conduct, which expects “each Googler to do their utmost to create a workplace culture that is free of harassment, intimidation, bias and unlawful discrimination.”

With this broad interpretation, they can hide behind most anything as a code of conduct violation. The manifesto did not harass, intimidate, show bias (except to use bias as a clear foundation of error), and was not unlawful discrimination. At most, it hurt someone’s feelings. Get over it.

And don’t forget–Google sucks (that’s the technical term) at diversity already. They needed the catalyst for conversation this could have created. Instead, they got bupkus.

If the guy is completely and absolutely wrong, then there is zero reason why Google shouldn’t have positive diversity representation, meaning their significant lack of representation today (or really any meaningful progress at all) must be willful and intentional.

 

“Once you eliminate the impossible, whatever remains,
no matter how improbable, must be the truth.”

–Arthur Conan Doyle

It’s not a free speech issue per se, since companies aren’t required to allow constitutional free speech (that’s between government and citizens), but it certainly smacks of retaliation for disagreeing with a position. At a bare minimum, it has created a seriously chilling effect on open dialog around diversity and inclusion.

Google–and virtually every other tech company–should get their own house in order before bullying others to suppress opinions. We need diversity—real diversity—in organizations today. I see it as a business necessity for future success. But Pichai, that’s a really dumb way to go about it.

Talk about a missed opportunity. These sorts of conversations–in the open–are what real diversity and inclusion efforts are missing. Google will never have another chance to have an open dialog around these topics (with those who may have different thoughts). No one will ever dissent again publicly. They blew that big time.

That was an unforced error, Sundar Pichai, and it makes you this month’s Leadership Milquetoast.

Leadership Laggard

We wanted to honor Samsung’s board of directors with this month’s Laggard award, but we couldn’t figure out who’s really running the 60+ company conglomerate that makes up the Samsung Group. Certainly not the Chairman, Lee Kun-hee, who hasn’t been seen publicly since suffering a heart attack in 2014.

So, we settled for spotlighting his son, Jae-Yong Lee, aka Jay Y. Lee, and one of two Vice Chairmen of Samsung Electronics who was sentenced last week to five years in prison for bribery, embezzlement and hiding assets overseas.

Remember ousted South Korean president Park Geun-hye? Lee and some of his colleagues have been accused of bribing Park and a “friend” to the tune of $17M in donations to organizations affiliated with the friend and an $800,000 horse for the friend’s daughter to ride. Lee needed government support to merge a few companies in the Samsung Group to strengthen his family’s control. Apparently, the move wasn’t particularly popular with non-family investors.

So, why are we picking on Lee, since he wasn’t alone in the scheme? Because he expected to be treated like the heir apparent when he didn’t know squat about leading or running the business. He was a figurehead who clearly wasn’t busy enough to stay out of trouble. He said it best himself at his trial: “There was no line of approval involving me. I had no knowledge to make decisions, nor the competence.”

Hardly something to brag about from a Vice Chairman of the world’s biggest smartphone and memory chip maker. We’re not worried about Samsung, though; there are some talented guys (excluding Lee) at the top of the electronics giant. Under the leadership of the three co-CEOs who didn’t go to jail, Samsung Electronics posted record net income, released the Galaxy S8, the Note 8, and stock prices reached an all-time high in the six months since Lee was imprisoned.

Think what they might be able to achieve with him behind bars for five years!

Leadership isn’t about titles and control; that’s dictatorship. For his refusal to take responsibility and his clear lack of leadership, we’re pleased to name Jay Y. Lee this month’s coveted Leadership Laggard.

Leaders & Laggards – July 2017

Leadership Leader

National_LifeMehran Assadi, CEO of National Life Group

Mehran Assadi is an island in shark-infested waters.

Assadi leads National Life Group, the fastest growing life insurance company in the country over the last decade with, according to Scott Mautz’s article in Inc., employee engagement levels and agent retention four times the industry average.

Read that again… Retention four times the industry average. How much is that worth? Damn.

How does he do it? Simple. He says “people first.”

“Wait,” you say. “That’s nothing new, Kevin.” Yeah, well, what is new is that he means it. He lives it. And he leads from that singular position.

Assadi steadfastly insists that their culture is bigger than individuals, and bigger than him; it is tangible and shows up at the top line, bottom line, and every measure in between. He claims their culture is the secret sauce to their success. It’s not perfection—it’s learning as they go, and they are getting better every day.

Now, keep in mind that this guy is working with a 150+ year-old company here. This isn’t some upstart start-up trying to make it big. It’s an established organization in an industry not exactly known for brilliant innovation or trend-setting in the culture department.

assadiHe’s a big believer in servant leadership, insisting that leadership is a privilege, not a right or entitlement. There’s some cutting-edge thinking, Lou, and uncommon insight for a financial services CEO. Further, he insists people care for–and know—themselves.

To quote Assadi, “When you find your ‘why,’ you find your way.”

Six years ago, he started a once-a-year process of collecting feedback for their top 200 leaders, from at least 20 people each, on how they were faring as a servant leader. Not coincidentally, the same year they started doing this, sales began increasing every year–by double digits.

Go figure.If all that’s not enough, he shows the LOVE. In fact, L.O.V.E. at National Life Group has come to mean “Live Our Values Everyday”.

Nice touch, Mehran, and a big reason you are July’s Leadership Leader.

Leadership Milquetoast

PepsiCo Inc.’s longtime honcho Indra Nooyi is sort of shooting herself in the foot.

NooyiNow, before anyone leaps prematurely, I’ve been a fan of hers for some time. She’s been solid, a progressive and people-centric CEO, and kicked serious butt in financial performance. There are precious few women in that Fortune 100 role (7, at last count), and she’s had the chair long enough to damn sure prove her mettle. In corporate performance, at least. In succession planning? Not so much…

You know, the better you perform, the more that is expected. And it’s logical for expectations for Nooyi to be high. And her recent announcement/non-announcement of a promotion was clearly not her best work.

Congratulations go out to Ramon Laguarta, currently grand poobah at PepsiCo’s Europe and sub-Saharan Africa business, as he transitions to the company’s President role. The gig includes global operations, corporate strategy, public policy and government affairs, not a small swath of responsibilities.

Then, she simply dropped the ball, announcing that Mr. Laguarta shouldn’t be presumed her successor. “There is no heir apparent,” she said. “When the time comes for succession, whenever it is, I think the wonderful thing is our board is going to have so many people to choose from.”

Yeah, well, I’m calling bullshit. This is a lousy way to plan for succession, and she should know it; she already lost a couple of key CEO-contenders. During Nooyi’s 11-year ride, two viable successors have been promoted into that No. 2 role, and subsequently left the company.

Look, Nooyi’s only 62, so there’s no dramatic rush for succession. But you can’t promote the best, tell them to sit still, and tell the world “this means nothing, long-term,” and expect them to stick around quietly with their thumbs up their derriere waiting for your eventual career plans to be revealed. Talent management—succession planning—simply doesn’t work that way. You don’t have to promise them the job, but to take special effort to say “he’s not the guy” is a bit much, and counterproductive.

PepsicoThat President job has been vacant since the 2014 departure of Zein Abdalla, someone clearly identified as “shortlisted to become chief executive.” He kept the role for two years before his abrupt, unscheduled retirement, which occurred shortly after Nooyi lost Brian Cornell to Target (another identified successor). Before Abdalla, John Compton stayed as Pepsico President for less than a year, before assuming the CEO of Flying J Oil Corp.

Houston, we have a problem. Nooyi has to develop a process for developing and promoting within a non-guaranteed succession plan, that motivates potential successors to stick around, not bolt for the door.Saying, “he ain’t the guy,” is likely not the way to do that. You’re better than that, Indra Nooyi, and this strange non-succession succession plan makes you this month’s Leadership Milquetoast. 

Leadership Laggard

EllsSteve Ells, Chipotle’s CEO is in hot water—again—for contaminated food. This time, 135 or so sick customers, with at least two contracting the norovirus. This marks the 7th – SEVENTH – incidence of norovirus disease contracted at Chipotle since October 2015.

The SEVENTH!

That’s not even counting their other woes, like poor financial performance (apparently caused by guacamole. Seriously), and their massive data breach just a few months ago.

HiResCrap like this, folks, does not occur in a vacuum. Generally, when leadership is poor, it shows in multiple areas, not just operational performance. I believe we can safely say that Chipotle leadership is poor.

This piece is short; we covered much of this when Steve was our Milquetoast in January, but thanks to 135 more sick people, he’s “done graduated” to our Leadership Laggard for July… Congrats, Steve.