I have been writing up a storm these days – and not keeping up this blog enough.
You might want to take a look at these recent posts:
An obituary for Steve Jobs in the Globe and Mail;
A rant about bank CEO compensation in Reuters;
Thoughts about how to get companies to think more long term on my HBR blog;
Some advice for CEO’s on creating societal value on my HBR blog.
I hope you find these enjoyable.
Best,
Roger
Though I’m a Johnny-come-lately to your blog, having only just got into “Fixing the Game” I’d like to add my congratulations and the hope most strongly that the initiative you’ve taken will be the catalyst to reverse the massive harm done by the US and UK “shareholder value” fixation over the last 35 years.
You point out that what we do can be changed or undone, and set out what could be done. It helps to have a model, and especially to have some evidence of the success of alternatives.
As one who had the good fortune to spend 23 years in IBM up to 1984 I was able to observe the leadership provided by Thomas J. Watson Jr. (TJW) I was also able to contrast it with that of his successors as CEO. Crucially, TJW’s unwavering message to IBMers world-wide was about the company’s values – its Basic Beliefs — and that if we were to succeed over the long term we had to be ready to change everything about the company except those beliefs.
During TJW’s 15 year tenure from 1956 to 1971 IBM’s revenues grew from $892m. to $8.274bn., and its net income from $87m. to $1.079bn. In Fortune Magazine’s “Most admired, profitable, attractive to work for, etc.” polls the company regularly placed at or near the top. Needless to say, its customers’ watchword was “nobody ever got fired for buying IBM” and its stockholders – including thousands of its employees – prospered mightily. Fortune described TJW as “The greatest capitalist who ever lived”. Wall Street regarded IBM as the bluest of blue chips and a market bellwether. All this, needless to say, without a word on “shareholder value”, and indeed only sparing mentions of stockholders at all. Customers were all we thought about.
It may be true that the IBM of today is no longer the enterprise it once was. It has certainly seen massive changes since Lou Gerstner began his transformation, but it seems that the changes have included its once inviolable Basic Beliefs (see http://www.ibm.com/ibm/values/us/). No longer Respect for the Individual; Customer Service and Excellence, today’s values came from a global “jam” of employees. No doubt Sam Palmisano was being a thoroughly modern leader in consulting his followers, but to a traditionalist this looks a bit like asking Christians to vote on what they’d like to believe. (As one myself I intend no offence).
Notwithstanding all that, the TJW-era IBM was, and still is a great model for successful, civilised capitalism. Of course it was far from perfect, but it worked better than most for its customers, employees, suppliers, communities and investors.
The philosophy is well presented in a compact work “A Business and its Beliefs”, essentially a series of lectures TJW delivered to the Graduate Business School at Columbia University.
As tail-piece to these remarks, and in the context of “obscene executive compensation” it is interesting to note that Watson and Al Williams, then President, stopped taking their allocation of stock options (five [NB!] times their salary) in 1958 as “we don’t want to look like pigs”. Soon after, TJW, asked what he thought he should be paid as CEO wondered what the value of the CEO to the company would be compared to “the guy at the bottom of the pay scale”. He concluded: twice as much, sure; ten times, maybe; twenty times, probably not.
O tempora, o mores!
Strength to your elbow!
John McIntyre
November 2, 2011 at 1:03PM by John McIntyre