Leaders & Laggards – July 2017

Leadership Leader

National_Life Mehran 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.

assadi He’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.

Nooyi Now, 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.

Pepsico That 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

Ells Steve 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.

HiRes Crap 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.

June 2017 Leaders & Laggards

Leader

Benno Dorer, CEO of The Clorox Company                              

Clorox Benno Dorer is a Rockstar. He was recently recognized as the highest-rated CEO by Glassdoor in its 2017 Employees’ Choice Awards, surpassing Elon Musk and Mark Zuckerberg in the top 10 list.

Now, let’s get something straight here. I’m neither for nor against glassdoor.com, but at least theirs is based on relevant, first-hand input, not like some of the myriad “great places to work,” and Fortune’s “here are our favorite companies” listings. Glassdoor is a website where current and past employees get to rate their employer, including specific ratings and comments for the CEO. For the record, I always take at least a cursory look at glassdoor.com ratings when speaking with a new or potential client.

A fairly valid grading system, and Dorer clocked in at 99%. NINETY NINE percent!! I’m impressed at anything above 80, so this is rarefied air indeed. And he blew right past all the Fortune favorites and greatest places reviewers hoping to snag a client—he scored well above Zuckerberg, Musk, Bezos, et al.

And before now, who had even heard of this guy, specifically by name??

By the way, lest you fall for the myth that popular (read “nice”) leaders must be milquetoast business managers, know that Clorox stock has increased in value by almost 40% since Benno took over in late 2014. That’s just two and a half years, for the mathematically challenged among us.

Dorer Dorer is the real deal. When notified of the award, he said the title was humbling and “gratifying in a sense that I take it as a vote of confidence from our employees in the direction we’re taking the company.” While we’re quoting the guy, he also said:

  • “A good leader is someone who ‘has a point of view, has a vision of what can be accomplished and enrolls others in that vision and helps get barriers out of the way.’”
  • “Diversity and inclusion is something that is good for employees and also good for business.”
  • “As leaders, employees expect us to make the tough calls, and empower them make tough calls themselves. Employees want us to be decisive.”
  • “We measure employee engagement and… my own pay is determined by that engagement level…”
    (Re-read that last one—his pay is determined (in part) by employee engagement levels!)
  • “What I care about is results, versus how many hours you put in.”

Now, read this last quote, because it sums up everything Dorer does to exude successful leadership in a nutshell, “I leave it up to my people on how they accomplish what it is we want to accomplish. So, try to empower people to do what they can do best–I try to stay out of their way–and create a real supportive environment.”

To do that, senior leaders must be confident; not just in themselves, but in their vision, direction, veracity of strategy, and ability to discern results and outcomes quickly. In other words, they must be confident to lead.

And Benno Dorer clearly does that solidifying his position as this month’s Leadership leader.

Milquetoast

Sally Smith, CEO of Buffalo Wild Wings

When investors get antsy, senior executives get defensive. That’s not necessarily a negative leadership response, if that leads to action that makes the company better.

It is a poor leadership response if they start blamestorming for their failure to respond to changes in the market.

Enter Buffalo Wild Wings. Along with many other restaurants of their genre, BWW has been suffering from declining profits over the last few years. Why? According to the CEO, Sally Smith, it’s the Millennials’ fault.

No, really. Apparently “millennial consumers are more attracted than their elders to cooking at home…”

Note: I unscientifically polled 100% of the millennials in my household and found no evidence to support Sally’s claim.

Granted, she also whined that shopping mall traffic was down – a blinding flash of the obvious – and added declining viewership of sporting events as a contributing factor to BWW’s woes, but why did she think excusing her management team’s failure to adapt to a changing market was going to appease the shareholders?

Sally Hey, Sally, here’s a reality check: the BWW customer experience has been in decline for the last half decade in some pretty important categories (food quality, service, cleanliness, and menu variety to name a few). You can cherry-pick statistics all you want, but that doesn’t mean BWW didn’t rank in the bottom quartile in every surveyed metric in the 2016 Nation’s Restaurant News Consumer Survey for casual dining restaurants.

Being dead last in the Overall Guest Experience category – including the bottom 10% of food quality and service – doesn’t exactly build confidence that senior leadership is paying attention to what it takes to get people to eat in your restaurant.

I’ll concede that BWW’s latest foray into food delivery service and a fast-food version of their restaurant (B-Dubs Express) shows they’re paying some attention to changing preferences, but that’s reactionary, not visionary. And that kind of leadership is definitely not going to convince people to come out to eat bad food, drink and watch sports on the big screens… not even us Boomers.

Sally Smith’s classic failure to accept responsibility for her leadership team’s lack of vision nearly made her this month’s Laggard, but she lost out to the competition (see below). So congrats, Sally, you’re the Triangle Performance Leadership Milquetoast for June 2017.

Laggard

Cheescake Cheesecake Factory CEO, David Overton

Look, Davie here is also the founder, so he’s not going anywhere, but he could damned sure use a lesson in accountability. When revising downward his quarterly analyst’s forecast, he blamed the weather—yes, the WEATHER—for the decline in sales.

May not be as bad as Buffalo Wild Wings’ millennial crap, but it’s awfully close.

Yes, this is the same Cheesecake Factory you’re thinking of, with the two-ton sandwiches, 250-item menu, and restaurants so dimly lit you could catch lunchtime zzz’s after the carb overload. A meal there makes anyone feel like Mr. Creosote — the “better get a bucket…” guy from Monte Python’s Meaning of Life. I’d include a youtube link for that part, but I’d catch too much flack, so you can look it up yourselves.

THAT Cheesecake Factory.

And Overton is seriously claiming that weather in the East and Northeast reduced patio useage to the point it effected year over year sales. Yeah… right. I was born at night, but not LAST night.

Sure, Dave, maybe weather was bad. Maybe somewhat fewer gluttons dined on your outdoor patios. Or maybe, just maybe, your leadership needs a tuneup. Consider:

  • Over the past six months, the industry has gained 8.7%, while Cheesecake has lost 14.8%. Surely yours wasn’t the only patio effected.
  • The failure of your March value menu insert, ~10 items below $15, highlights the inability to drive incremental traffic.
  • The weak summer box office is problematic, given Cheesecakes’ proximity to movie theaters.
  • Increasing Costs: Cheesecake Factory was planning to open eight new restaurants in 2017 and is anticipating a 5+% increase in labor costs. Wage inflation has continued this year.

By the way, something else to consider… Though the Macaroni and Cheese Burger, Topped with Creamy Fried Macaroni, Cheese Balls and Cheddar Cheese Sauce SOUNDS simply decadent (almost 1,500 calories), that fare may be headed the way of the dodo bird.

Stock fell 10% overnight upon the “weather” announcement, so it seems investors were calling “bullshit” as well. The stock is near 52-week lows, and still 15% below that fateful announcement date.

cheesecake2 Incoming Chief Financial Officer Matthew Clark (he’s not the “regular” CFO until July 7) said despite the climate impact, the company still expects same-store sales growth of 2%. Good luck with that, Matt, and best wishes on the new job. Hopefully, you’ll do better than Winnie the Pooh’s “The rain, rain, rain came down, down, down…”

As it is, your boss, David Overton, used the weather as a reason to avoid personal accountability for strategies and decisions that should be reconsidered. As such, he wins our Leadership Laggard for June.

Leaders & Laggards – May 2017

Leader

Ford jr Bill Ford, Executive Chairman Ford Motor Company

Gutsy decision to oust current CEO Mark Fields, a 25-year Ford veteran, in favor of Jim Hackett, a Ford outsider and most recently the CEO of Steelcase. Hackett had most recently been running Ford’s Smart Mobility initiative.

In all fairness, Fields had a tough act to follow; he followed Allen Mulally’s rock star tenure as Ford’s CEO. Mulally, another industry outsider, was personally responsible for averting Ford’s bankruptcy and refusing a government bailout — the only legacy automaker to do so. A CEO of our times, to be sure.

The bigger difference between them however may actually have been Mulally’s leadership ability, where he demonstrated transparency, a culture of positive leadership and the real benefits from working together, no easy culture shift for a behemoth like Ford. None of those traits personified Fields, more known for his combative approach than any easy-going personality. Fields is the guy who said that employees worrying about their pensions would be “a great motivator.” Cultures are hard to manage, and clearly Fields failed at driving Ford’s.

ford

Late to the game

Fields, as CEO, said repeatedly that Ford didn’t want to be the first company to offer self-driving cars. Conversely Bill Ford felt otherwise, saying “I don’t want to be slow. We need to be quick in everything we do.”
Fields was playing catch-up, using the backs of employees to fund the effort; he announced earlier this year a plan to cut 3 billion in costs and as many as 1400 white-collar jobs. I can imagine the discussion… “Let’s get innovative!” says Fields. “Great—how do we pay for it?” says senior staff. “Let’s whack a couple thousand surplus employees—that’s a good start,” says Fields. A decidedly un-innovative approach; CEOs have been whacking folks to save a few bucks since time immemorial. It ain’t new.

The auto industry is being disrupted by companies like Tesla, Uber, and even Google and Apple with their self-driving efforts. Add to that the completely predictable decline in US auto sales, and you start painting a pretty good example of a lack of vision.

acket Conversely, Jim Hackett is Ford’s go-to guy for the future. “This is a time of unprecedented change,” Bill Ford said during a conference call. “And time of great change, in my mind, requires a transformational leader. And thankfully we have that in Jim.”

Thankfully, indeed. Hackett knows what it’s like to lead 100-year-old company; he views change is critical to the company’s survival; and he has a history of giving fans what they want. Exactly what is needed at Ford today.

Bottom line, if automakers are going to stay around, they need to get off their collective butts, invest in new technology, and make some things happen. Investments today will allow survival in the future. But you must have the courage to see the future, set a vision, then pursue that vision violently.

I may wish you would have fired Mark Fields a year earlier, Bill Ford, but you’ve taken a step in the right direction. Tough job, but it does make you our Leadership Leader for May.

Milquetoast

John Skipper, President ESPN

It seems everyone on our leader-laggard list this month is whacking people left and right. ESPN recently laid off (that’s fired) about 100 people (10% of the total workforce), most of them on-screen personalities from various shows and reporting efforts. Executives claim it’s a simple branding reposition and not a mandate from parent company Disney.

skipper “These decisions impact talented people who have done great work for our company. I would like to thank all of them for their efforts and their many contributions to ESPN.”  — John Skipper

“Dynamic change demands an increased focus on versatility and value, and as a result, we have been engaged in the challenging process of determining the talent—anchors, analysts, reporters, writers and those who handle play-by-play—necessary to meet those demands,” Skipper wrote to employees.

What a load of crap. The reasons are always simple for layoffs. Someone made some mistakes along the way, and the answer to those mistakes is short-term money-saving via reduce payroll. ESPN claims to have outlined a new strategy for the network, including an increased focus on its ESPN app with the multiscreen approach around big events, more live news video, and enhanced video and audio streaming. They also plan to bolster ESPN’s online presence

Look, ESPN has been hemorrhaging subscribers for several years now (roughly 12 million in six years), a natural result of fewer people attached to cable televisions as a revenue source. Considering ESPN pays billions of dollars to various leagues to be able to broadcast these events, they simply didn’t prepare for the sudden decline in revenue. It seems the only people that didn’t realize fewer people are using cable, ergo fewer people are paying for televised events, was ESPN. I knew it, you knew it, my neighbors knew it.

espn ESPN, however, apparently did not know it. And their negligence in planning directly caused about 100 people to lose their job, many of those were solid, valuable, high performing employees. And here’s the thing; do the math — ESPN pays billions to sports leagues for the right to broadcast. How much of a dent does the salary for 100 employees actually make? This is the same network that signed a nine year $24 billion deal with the NBA. You’ve gotta whack a whole lot more than 100 analysts, reporters and announcers to cover coin like that.

Now, let me throw a wrinkle into this: ESPN is not our Leadership Milquetoast this month because they laid off hundred people. No, they are our milquetoast because they still haven’t fixed their business model, and this layoff is a distraction that further postpones any real and meaningful shift in strategy. Just do something is a juvenile response to a valid business need, and confuses activity with meaningful change.

It’s that ridiculous activity — instead of impactful business change — that brings ESPN and John Skipper into our spotlight, pulling down our dubious Leadership Milquetoast position for May.

Laggard

cornell Brian Cornell, CEO Target Corporation (NYSE: TGT)

What the hell are you doing, Brian?? TGT stock has been on a vicious two-year decline, currently trading at a five year low, a market-cap reduction of almost $13 billion. Waiting until just after the nick of time to exit the Canadian market, that was a $5B+ write-down. Same store sales and total revenue have fallen for four consecutive quarters.

All of this after Cornell announced a two-year turnaround plan in 2015, committing to cut costs, prioritize merchandise categories, increase grocery and online sales and open more small-format stores.

Oops… seems he now needs a turnaround plan for the turnaround plan.

At a time when innovation and strategy need to be at the forefront, Cornell whacked Casey Carl, Target’s Chief Strategy and Innovation Officer. It seems Carl, a 20-year Target veteran, was a bit too innovative and strategic. Now, the strategy is to copy Wal-Mart — remodeling existing stores, investing billions in lower prices, and hoping really hard that online sales increase (that last one wasn’t Wal-Mart’s, just Target’s).

target Speaking of online… did I mention that Jason Goldberger, originally president of target.com, was pushed out of the chief digital officer role? Those duties transferred to the incumbent CIO. Now, I like CIOs as much as the next guy, but unsure how much that role aligns with the intense marketing and online savvy necessary for Target to catch up to Wal-Mart with its digital strategy.

And while we’re discussing whacking folks… don’t forget the departure of the Chief Marketing Officer, Chief Legal Officer, Chief Human Resources Officer, Chief Stores Officer and the head of the grocery division; since Cornell’s ascension, only 2 of the 11 executive leadership team remain. Lots of things can cause such a leadership turnover, but most of them are bad, and all point to the CEO.

This will obviously be a test of patience for Target’s Board of Directors. Unlike Ford, this month’s Leadership Leader, the Target board has demonstrated a penchant for moving way too slowly on CEO decisions. Their undeserved patience helps vault Brian Cornell into our Leadership Laggard for May.

Leaders & Laggards – April 2017

Leadership Laggard

United_logo Damn, United. Just last month, we upgraded your abysmal 2015-2016 shenanigans to an “almost.” And this is how you repay us? With that colossally bone-headed move?

Assuming our readers haven’t been living under a rock, or in Tibet, or someplace where no signal of any kind could penetrate the local ether, United Airlines screwed up. In a nutshell, they tried to remove a passenger after confirming his boarding, and surprise! The passenger didn’t want to get off the plane. United gate agents must have decided that “no doesn’t mean no,” so they called the gestapo airport security, who apparently decided “Hey, let’s just drag him off…?!”

And the whole thing was recorded. Not much wriggle room for any sort of spin story-telling. In fact, I won’t insult you by showing—for the 2 millionth time—that video. Just picture it in your head.

It’s received so much publicity, we weren’t even going to address it here. Sort of like the “that’s just too easy” line of thinking. But then we realized… the lesson here isn’t about some gate agent’s poor judgement, or even the idiot security dude’s MMA moves on an elderly doctor. I won’t even raise the ire of many reading this by reminding that that same elderly doc should have disembarked when ordered to do so and fought his fight later.

Nope, this fiasco is all about—and only about—leadership. In this case, failed leadership. For example:

  1. Someone screwed up way back when. Allowing the aircraft to fully board before saying “Hey, wait a minute, we’ve got to get these four crew members on board.” Mistake #1, and the lack of a process, or lack of a followed process, is a leadership issue.
  2. Someone decided those four United employees were worth removing paying passengers from an already-boarded aircraft. That sort of decision-making comes from the belief they will be supported by leadership. That’s mistake #2, and another leadership issue.
  3. Apparently, a gate agent decided, after three passengers disembarked, that the hold-out passenger warranted calling security, undoubtably knowing something bad might happen. Again, fully expecting to be supported by leadership in that decision and causing mistake #3.
  4. Seriously, either that one security guy has serious issues, or he was trained so poorly he thought standing on another seat to remove a seated passenger with his lates MMA moves was the next step in the checklist. Either way, a leadership misstep that provided the impetus for mistake #4.
  5. The only truly unforced error during the entire situation: Munoz’s comments. First, supporting employees in the face of that video without further investigation, then with the horrendous “reaccomodating” remark, then finally with a too-late sincere-sounding apology.

united ceo Look, I get it. Munoz was left a pile of dung from Smisek’s departure. I really do get it. He likely has invested hundreds of hours, if not more, in trying to improve relationships with various categories of employees, agents being just one of them. I get all that. But as CEO of a customer-facing organization, you don’t get to make knee-jerk statements. Ever. When you unwisely do so, it’s on you.

As the other Kevin’s mom likes to say, “You kind of brought that on yourself.”

Oscar Munoz is April’s Leadership Laggard. And the vote wasn’t even close…

Update: Wells Fargo

Then:

wellsfargo CEO John Stumph blamed the creation of over two million fraudulent bank and credit card accounts on individual rogue employees – more than 5,300 of them who were summarily fired.

Claiming that “there was no incentive to do bad things,” Stumph defended the head of community banking, Carrie Tolstedt, as the “standard-bearer of our culture” and justified her $125 million retirement payout.

Turns out he also exercised 1.5 million stock options (worth just $83 million) the month before the company was hit with $185 million in fines for the deceptive practices.

Now:

Stumph is now the ex-CEO, Tolstedt got fired instead of retired, three other senior executives were fired for cause, eight remaining senior executives forfeited their 2016 bonuses, and Wells Fargo’s reputation stopped its free-fall.

Unsurprisingly, it turns out Mr. Stumph wasn’t paying very close attention to the community banking business unit or its Senior EVP. Last week, Wells Fargo released the report of its directors’ investigation into the cross-selling practices, laying the blame squarely on Stumph’s blind spot when it came to Tolstedt, Tolstedt’s controlling management style that actively discouraged dissention, a couple of dishonest regional VPs, and lax corporate oversight.

The extremely decentralized organizational structure favored the business units and led to the creation of fiefdoms in the company with “substantial deference” to the feudal lords and ladies. Without effective checks and balances, Community Banking was able to mask the signs – like high attrition and under-funding of new accounts – that something was seriously amiss. Changes in the reporting chain and new corporate control functions introduced by the Board should realign accountability and responsibility.

The Board allowed itself to be misled about the extent of the problem, but they get credit for bolstering their oversight responsibilities, creating an Office of Ethics, Oversight and Integrity (albeit, just after the nick of time), and for setting aside funds to make it right by the customers rather than forcing arbitration. And, while it’s not all about the money, the $180 million they clawed back from ex-senior executives and withheld from current members of the Operating Committee will almost cover their fines.

As tempting as it may be for some to paint the new CEO, 29-year Wells Fargo veteran Tim Sloan, with the same brush as Stumph, but Sloan hasn’t shied away from accepting responsibility for himself and the rest of the senior leadership team, he’s engaging with Wells Fargo employees in an effort to regain their trust, and so far he’s re-hired back about a thousand of the 5,300 employees that were fired.

The Wells Fargo scandal was a direct result of failed leadership, but leading is a journey, not a destination. They’re not out of the woods yet, but we’re definitely seeing signs that the Wells Fargo senior leadership is serious about rebuilding lost trust with their customers and shareholders. We wish them well at the annual stockholders meeting next week.

Net Result: While John Stumph’s place on the Laggards list is secure, Tim Sloan and the current Wells Fargo senior executive team are looking more like Leadership Leaders every day.

Update: Chevron

Then:

chevron CEO John Watson commented on the oil pricing impact with a Captain Obvious remark: “…we maybe have gotten a little sloppy in the past few years.” I think, given the 200K+ headcount slashing that occurred in the industry, “sloppy” may not have been the word I would have used.

Now:

He mentioned several things they should have been doing already. The good news is that they certainly seem to be doing those things now. Watson outlined his plan by saying they needed to focus on five things:

  • First, finish project under construction which reduces spend and brings on new revenue.
  • Second, reduce capital expenditures and focus on work that’s profitable lower prices.
  • Third, lowering operating expenses by getting more efficient at everything.
  • Fourth, complete planned asset sales.
  • And finally, do all of this while operating safely and reliably.

watson Frankly, in all fairness to Watson and Chevron, they knocked this outta the park. In 2016, Capex reduced by over $11B; 2017 spend will be another $2.5B less, and those projects have a two-year horizon for cash flow. Revenue is up $8B, and earnings up almost $1B; Opex and SG&A down over $2.5B. They maintain over $7B in cash, the stock price has more than recovered from the 2015 decline, and they continue to outperform every competitor.

And if simply brilliant financial and operating results aren’t enough, there’s this: John Watson says the reason he has stayed with Chevron for 36+ years, is “every time I said, ‘Well, gee, I wish I could do something else,’ I was moved on to some other part of the company.”

“If you have to leave a company to get a new challenge, I think that’s a really sad statement,” Watson says. “I think it’s a missed opportunity for some companies to not try to retain their workforce and keep them stimulated over time.”

True words—we would do well to replicate that thinking in other organizations.

Sort of a “Heckuva job, Brownie,” only this time for real. Way to go, John… good on ya. You’ve led Chevron from a 2015 Milquetoast to a 2017 Leadership Leader.

Leaders & Laggards – March 2017

Leaders & Laggards Revisited Update #1

We’ve been publishing our Leaders & Laggards coming up on two years, give or take. It’s been fun, if not sometimes a bit of effort. And I can’t say we always agree with who wins what, though generally we find common ground. Especially on the Laggards—they frequently make it pretty damned easy.

leader update We thought it might be time for an update, so that’s what we’re going to do for the next few months: give you a clear Leader or Laggard (just one), then spend the rest of the space updating you on how a couple of those nefarious prior laggards are doing now, presumably after having some time to see the error in their ways and appropriately repent. Or not. So, without further ado… 

(more…)

Leaders & Laggards – January 2017

Leadership Leader

Muhtar Kent, CEO of The Coca-Cola Company

You didn’t have to do anything amazing in the last month or two to be our Leadership Leader for January. You just needed to demonstrate clear, personal leadership… and Muhtar Kent has been demonstrating it for years. He’s about to turn over the CEO reins of Coca-Cola, and we thought it appropriate to use him as reinforcement to what you leaders have been beat over the head with for years.

Coca-Cola logo Disclaimer: my wife really likes Coke.

Kent, who was with Coke from 1978 to 1999 and returned in 2005 to take the helm in 2008, gets what being a leader is all about. And he understands that leadership development isn’t about unhappy participants sitting in a training room checking their iPhones. And it’s not about this unnamed group of sleepy yahoos, either.

Kent has described leadership development as a combination of “head knowledge and heart knowledge,” and the company’s development program is the kind that works – a group of high potentials who learn how to be a part of a leadership team, taken out of their comfort zone, exposed to pieces of the enterprise they didn’t know existed, and given company-related challenges to address during a six-week program. A contiguous six-week program.

Say what?? Six non-stop weeks away from work, away from most emails and calls. Not a half-day here and there over the course of a couple of years, but 30+ days without being at the office.

How is that even possible? It’s a simple matter of priorities, and leader development seems to be quite the priority at Coca-Cola with Muhtar Kent.

Coca-Cola‘s moved up 30+ places on the Fortune 500 since Kent became CEO (a place it hasn’t seen since 1997), and Coca-Cola currently sits at #15 on Fortune’s World’s Most Admired Companies list. Not surprisingly, Kent believes that the leadership culture gives the company a sustainable, long-term advantage.

Muhtar Kent Having started in the company driving around Turkey selling Coke, Kent says that “leadership is all about creating value in whatever you do—and whatever role you are in—and leaving something better than you found it.” No magic sauce, no fancy programs, just people-oriented leadership.

“Ultimately, leaders are judged by what they leave behind.” – Muhtar Kent, CEO, Coca-Cola Company

Congrats, Muhtar, you’ve left behind a culture that appreciates the critical contribution that leadership makes to a company’s success. We salute you as this month’s Triangle Performance Leadership Leader.

Leadership Milquetoast

Steve Ells, Founder and CEO, Chipotle

Chipotle… Foodie’s version of Tex-Mex, or petulant adolescent?

cmg_logo_circle A refresher for those living under or near a rock: A highly publicized E.coli outbreak sent Chipotle’s results in a tailspin around October 2015, followed by a norovirus problem in December of that same year. In total, six illness outbreaks. Since then, the stock has dropped nearly 50 percent.

Chipotle HAS done some good things to rebound: implementing cutting-edge food safety protocols, increasing third-party audits, and — supposedly — pushing hiring levels to ensure good customer service during these labor-intensive changes.

Ells What they haven’t done, is simply step up and say “we screwed up, we’re sorry, and we’ll do better.” Chipotle’s founder and CEO Steve Ells has apologized, a couple of times (though only grudgingly for the norovirus fiasco), but what hasn’t occurred is accepting full accountability for making some serious mistakes. It’s not enough to say “I’m sorry.” Accountability means you also say “we made mistakes.” Real mistakes, and we’re trying to get better.

Mistakes happen; think Tylenol’s tampering, Toyota’s accelerators, Jet Blue’s cancelled flights.

The problem is how companies—executives—deal with mistakes, not the mistakes per se. And in this, Ells has screwed up royally. Since the E-coli debacle, here’s what he has blamed for Chipotle’s crappy financial performance:

  1. Ells tried to saddle Monty Moran, Co-CEO for a time, for “not keeping it simple.”
  2. The E-coli disaster caused customer service to slip. Wait, what??
  3. Sick employees caused the outbreaks.
  4. Higher wages.
  5. The CDC caused it.
  6. Sales promotions (necessary because of the snafu).
  7. Media attention caused it.
  8. Their tomato supplier.
  9. British unfamiliarity with Mexican foods (seriously),
  10. Their guacamole is too expensive (the most recent, and my personal favorite).

There are more, but you get the drift.

Here’s the real deal: Chipotle and Ells (sound like the show Rizzoli and Isles) have done many of the things necessary to fix their food safety problems. But they need to fix their customer problem, and that’s not just about food safety. If Ells could get that through his burrito beans, he’d be better off. Without accepting full, unqualified accountability, it’s a missed opportunity.

Until then, he—and Chipotle—are our Leadership Milquetoast.

Leadership Laggard

Terry Lundgren, CEO, Macy’s Inc.

Macy’s department store is laying off 10,000 employees in its continued effort to close 100+ stores.

Layoffs are almost always attributable to poor leadership. In fact, they are so ubiquitous that merely laying off employees — no matter how tragic — hardly rises to the occasion of being awarded our leadership laggard.

However, in this case Macy’s CEO Terry Lundgren managed to dodge his way into dubious honors.

It’s one thing to say that our business model needs tweaking. Or that our direction may need to shift based on demographics, spending patterns, buyer preferences, yada yada yada. It’s another thing altogether, Mr. Lundgren, to say ”I’m sorry, there’s nothing I could do about it.” And that’s exactly what he did.

Lundgren Seems Mr. Lundgren would have us believe that all of retail suffered this most recent holiday season, and that Macy’s was simply one of many impacted by this terrible economic event.

Oops. It just ain’t so.

You see, retail sales are up by almost 4% in 2016 over 2015. And in fact, several retailers did quite well, posting respectable increases in sales during 2016 and the most recent holiday season.

Online sales continue to increase, this year by another 12%. Newsflash: this is not new. Brick-and-mortar stores have had plenty of notice that they must shift their model to address this changing buyer. Just because you failed to do so, doesn’t mean you get to blame your failure on the economy as a whole.

So, while layoffs are certainly nothing new, and retail has always been a cyclical, precarious environment, the fact remains that nationwide sales increased, many stores succeeded (think Amazon, Walmart, Target, etc.), and Macy’s continued decline is a tragedy of their own making.

Cartoon Humor Concept Illustration of Pants on Fire Saying or Proverb Look, I’m no saint. I’ve had to lay off people, sometimes a lot of people, and that represents failure on my part and the part of my fellow leaders. Again, as I mentioned earlier, layoffs are generally the direct result of poor or misguided leadership. That’s bad enough, but a travesty occurs when that same leadership decides to dance a jig around exactly who or what is responsible for that decline in sales.

And to Terry Lundgren, regarding his “not my fault” stance, I say liar, liar pants on fire.

And bestow upon him this month’s Leadership Laggard.

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