Archive

Posts Tagged ‘management’

Disagreements at the top

March 16, 2012 1 comment

This week the news reported the departure from their companies of two executives – both long-standing.

Greg Smith’s departure from Goldman Sachs, after 12 years, has been reported globally. This is not surprising – as everybody loves to hate bankers, and investment banks. The claim that Goldman Sachs viewed clients as “muppets” is a delicious image, and so it’s not surprising to see a journalistic feeding frenzy following Smith’s resignation letter, published in the New York Times on 14 March 2012.

The real question however is whether Smith’s departure matters. I think that it depends on what clients do, and I suspect that the answer will be very little or perhaps nothing. Obviously Goldman Sachs’s aim is to make money. In a testosterone fueled environment, bravado, where clients are called muppets and phrases such as “hunt elephants” (referring to getting customers to spend more with you) shouldn’t be a surprise. If anything, the discussion will raise again (for a few more weeks) the issue of banker remuneration. It may even have a salutary effect by making firms such as Goldman Sachs emphasise that ethical behaviour in business must be the norm, and that the 1980s dogma that “greed is good” is not an asset post the 2008/9 financial crisis. As Goldman Sachs has said in response:

In our view, we will only be successful if our clients are successful. This fundamental truth lies at the heart of how we conduct ourselves.

In fact, as the Economist suggests, the real muppet may be Smith himself, for not realising that clients aren’t stupid, and that if they weren’t getting value from the firm they’d move elsewhere. I suspect that the real reason for Smith’s resignation was sour grapes. Perhaps somebody got a bigger bonus. Whatever the reason, it’s unlikely he’ll find similar work with other banks – as no company will want to employ somebody who is quite so vocal in their condemnation of their former employer.

The more interesting departure however, from a strategic perspective, was that of Richard Brasher, the UK boss of the supermarket Tesco. Brasher was the most high profile departure since new CEO, Philip Clarke, replaced Sir Terry Leahy. Leahy retired from Tesco at the end of February 2011 and since then a number of other senior executives have left or are leaving the firm. These include

  • David Potts, head of the Asian operations who will retire, aged 55, from Tesco in June;
  • Andy Higginson, head of Tesco bank and former group finance and strategy director – also aged 55;
  • David Reid, Tesco’s chairman – who was replaced by Sir Richard Broadbent in November 2011;
  • Lucy Neville-Rolfe, Tesco’s director of corporate and legal affairs, who will retire from Tesco in January 2013. Lucy Neville-Rolfe’s role is being split into two – neither of which will be a board post;
  • Richard Jones, Head of Clothing who has moved to the private Irish supermarket, Dunnes, taking the same role;
  • Laura Wade-Gery, CEO of Tesco.com and Tesco Direct, and head of non-Food, who has moved to a board-level position with Marks & Spencer.
The news stories reporting Brasher’s departure mentioned Tesco’s poor winter sales implying that this was the reason for the change. Philip Clarke will take over Brasher’s role, combining the job of UK CEO with that group Chief Executive. Some reports suggested that deep disagreements existed between the two over strategy for the UK – which issued its first profit warning for 20 years. Tesco has not denied this. Although originally Clarke said that there was no rift between the two, he changed his tune after the announcement of Brasher’s departure, saying

You can’t have two captains in a team

However it’s not just Brasher that seems to be finding a problem. The number of senior executives – especially long-standing executives – leaving Tesco suggests profound disagreements at the top.

David Reid was expected to retire and Tesco had been looking to appoint a new chairman to replace him. Potts, Higginson and Neville-Rolfe are also reported to be retiring. Their departures, so close together, suggests an unhappiness with Clarke’s management of Tesco as generally companies try and prevent large-scale boardroom changes to ensure continuity.

When a board is split over strategy and cannot agree, continuity is not possible. Management is all about consensus and agreement on the path that should be followed.  If this is not possible  there has to be change, with one side or the other leaving. The alternative is chaos, resulting in the company losing share and profitability as the focus moves to internal dispute, rather than market growth. This appears to be the situation at Tesco – forcing Philip Clarke to assert his authority. It was either his head or Brasher’s. As Clarke said: there can only be one captain.

 

Note: After writing the above article I came across a great Harvard Business Review blog looking in depth at Goldman Sachs culture and how it may have changed over the years since Greg Smith started (and why). Worth reading for any Goldman Sachs watchers:

http://blogs.hbr.org/fox/2012/03/greg-smiths-resignation-op-ed.html

Management Partrnerships

August 11, 2007 Leave a comment
Last year I wrote a blog entry on leadership. That entry was based on an idea expressed by Rabbi Mendel Lew, and given in one of his weekly synagogue sermons. Today Rabbi Lew gave another sermon which I think has implications for management.

The topic was a strange verse in the Book of Genesis just prior to the creation of Adam’s wife, Eve. Genesis chapter 2 verse 18 is generally translated from the original Hebrew as follows: God said, ‘It is not good for man to be alone. I will make a compatible helper for him’. Two verses later (verse 20) the same idea comes up. The man named every livestock animal and bird of the sky, as well as all the wild beasts. But the man did not find a helper who was compatible for him. The Hebrew words “ezer kenegdo” are translated as compatible helper or similar variations (e.g. a suitable helper) but a more literal translation would actually be a helper against him or a helper who contradicts him / argues with him. (For linguists – ezer means “helper”, while kenegdo means “against him”)

So what does this have to do with management. The second verse quoted gives the clue – in that Adam was not actually on his own, as implied in the first verse. Adam had companions – dogs, cats, livestock, etc. However none could advise him or work with him. They were all subordinate to, and dominated by, him.

There are two types of managers

  1. those who seek to dominate those around them
  2. those who listen to, work with, and respect the opinions of those around them.
The first sort generates “yes men” and “yes women” who dare not question the wisdom and leadership of the manager. The problem with this sort of manager is that if they are wrong they will have nobody to tell them so. They will have helpers – but nobody to tell them when they are wrong, or even to discuss issues objectively. Nobody will risk contradicting such managers – and if such a manager did ask for the opinions of those around them, the answers received would be crafted to correspond to what people thought he/she wanted to hear. Essentially the helpers are a bit like a sheepdog rounding up sheep for the shepherd – very useful, but only so long as everything is straightforward and there are no problems. The moment problems occur, the manager – like the shepherd – will be alone. Essentially this type of manager has nobody to share ideas with: he/she has no peers to listen to, to respect and to view as equals.

For true management and leadership success this is not enough. You also need to hear contradictory opinions and take into account the views of those who disagree with you – who are against you. From the differing opinions you can then develop a balanced viewpoint – and end up making better, more profitable decisions.

In a recent blog entry (Thinking Hats) I suggested that prior to making a decision you look at the problem from six different perspectives, with the sixth being a synthesis of the other five. The same applies to management: to manage successfully you need to consider the opinions and attitudes of those around you. You need an ezer kenegdo whose opinions are seen as equal to your own, so that you can balance your and your peers’ views when making decisions.

However this only goes as far as the planning stage. When it comes to action, you need to think as one – and act as one. There should be no scope for different people to pull in contradictory directions. Successful managers should take on board diverse viewpoints, and then come up with rational strategic or tactical decisions that bring people together; that unify the various perspectives; and that lead to coherent actions that fulfill agreed business aims and objectives.

Looking Forward – but don’t ignore what is behind you!

March 9, 2007 2 comments
I left school many years ago, but I still remember some of the lessons taught by Jeremy Rosen, who was, at that time, my headmaster. I’m still in contact with him – and both of us now have gray hair! In a recent newsletter he writes:

There’s a Russian proverb that goes, ‘He who looks to the past is in danger of losing an eye. But he who ignores the past is in danger of losing two eyes.’

Jeremy Rosen states that he doesn’t know if this is really a Russian proverb – he heard it from Lord Bullock, the historian, biographer of Hitler and Stalin, who was speaking at the Van Leer Institute in Jerusalem many years ago. However the origin is less important in this case than what is being said.

Too often, people make decisions based on insufficient information – they ignore the past, creating excuses saying that the past is a closed book – and base their decisions on the perceived problems of the present, tearing up all that has gone before in an effort to create a desirable future. Others take the opposite view – and dwell in the past, refusing to realize that it is the future that shapes our fortunes, not what has gone before.

In marketing and business the same rules apply. Some are “Risk seekers” – always anticipating a bright future, irrespective of warnings, and ignoring the past. Others are “Risk adverse” scared about what the future may bring – and essentially living in the past. In reality, businesses need to balance both approaches. They need to build for the future, and should grasp emerging opportunities with both hands. However this should be based on knowledge of the risks involved, and this can only come from prior experience and knowledge. Even brand new innovations are built on past knowledge.

There are organizations that seem to focus on past (or should that be passed) glories. They stress how they did this or that – and how they became the market leader through their past actions. However if they fail to see how the present has changed then they will inevitably lose this leadership position. There are numerous companies that have fallen because of this. One of the best examples is J Sainsbury – the UK supermarket giant, currently in the midst of a bidding battle. Sainsburys used to be the largest UK supermarket, but it lost direction, and with it share – it is now no longer the market leader. Sainsbury saw itself as the market leader, but failed to recognize the innovations and different approach of competitors such as Tesco and Asda (owned by Walmart). Essentially, Sainsbury was looking at the past and reveling in it, but in reality was ignoring the past and the lessons it held on success. Sainsbury had grown by being innovative – it was the first UK supermarket, building a major presence by giving customers what they wanted. However by not keeping both eyes open on what was happening in its market, it lost its market position.

A key business skill is being able to anticipate the future (using techniques such as scenario planning). This depends on using drivers and trends from the past to anticipate what could happen in the future. We need to look to the past and learn from it. However our aim should be to build a better future. This cannot come by ignoring what has gone before. Instead we should aim to understand why something happened, so that we can learn from it and not repeat the same mistakes. As George Santayana said in 1905: “Those who cannot remember the past are condemned to repeat it.”

There is a widely known Zen story that shows this in another way:

“When the spiritual teacher and his disciples began their evening meditation, the cat who lived in the monastery made such noise that it distracted them. So the teacher ordered that the cat be tied up during the evening practice. Years later, when the teacher died, the cat continued to be tied up during the meditation session. And when the cat eventually died, another cat was brought to the monastery and tied up. Centuries later, learned descendants of the spiritual teacher wrote scholarly treatises about the religious significance of tying up a cat for meditation practice.”