Wednesday, August 31, 2011

Lessons for CEO's Who Want to be Liked

Will Wilkinson has noticed that life isn't fair... for billionaire CEO's who aren't named Steve Jobs.
As I was watching my social media streams froth with praise for the man in the black turtleneck, it occurred to me that, as lovely as I find Apple's gizmos, Mr Jobs's wealth, like that of other billionaire barons of the information age, was built in no small part upon an intellectual-property regime that I and many others believe to retard progress while concentrating massive rewards upon a privileged few, generating unfair and unproductive inequality.... I endorse [the] point that charity very often does rather less to improve quality of life than selling people ever better products at ever lower prices. But this line of reasoning hasn't convinced very many of us that, say, Charles and David Koch's vast wealth is proof of their successful service to humankind.
There are some obvious retorts:

First, people don't detest Charles and David Koch, or direct wild anti-Semitic conspiracy theories against George Soros, because they're rich, because they ran companies, or for any reason other than how they're trying to use their fortunes to influence legislators and elections. If you could retroactively change the recipients of their contributions, such that the Koch brothers gave to Soros' causes and vice versa, the effect would be to flip the sentiments of those who love and hate them.

Second, while charitable contributions might help a corporation or CEO deal with public relations problems, or even to rehabilitate their public image, for the most part people neither know nor care about a particular corporation's charitable activities. You're more likely to get a strong reaction to corporate "charity work" if it is revealed that what corporation is portraying as charity turns out to be a thinly veiled measure to expand its markets and market share, to advance its lobbying goals, or some other form of self-interested behavior.

Third, few pay attention to the CEO's of the world. Most people don't know or care who runs any given company. When does that change? When there's a scandal or problem that results in media attention. Why does Steve Jobs get good press, while peole like Ken Lay, Jeffrey Skilling, Conrad Black, Bernie Ebbers, Dennis Kozlowski, and Bernie Madoff get bad press? In no small part because Jobs hasn't looted his company, committed massive financial fraud or other crimes, and ended up being criminal prosecuted, convicted and/or jailed.

Wilkinson also forgets how the public perception of Jobs has changed over the years. Jobs wasn't a nationally beloved figure when he was forced out of Apple, and both he and his company were viewed with skepticism when he returned. For that matter, Wilkinson forgets how the public perception of Bill Gates has changed over the years. Gates received considerable praise and acclaim during the rise of Microsoft, and even through the era when, under his leadership, Microsoft stopped innovating in favor of producing products that mirrored the functionality of other people's innovations, then using anti-competitive tactics such as bundling in order to crush their competitors in the marketplace. Although the Bill and Melinda Gates Foundation has helped establish Gates as a philanthropist, and it does appear that Gates wants the public to appreciate his genius, it's never been clear to me that Gates has <em>personally</em> cared whether the perception is that he's a benevolent genius or an evil genius. As a family man, though, he had to start thinking about the impact of his reputation on his family and, frankly, you or I would feel the pinch from a $100 donation far more significantly than Gates has felt the pinch of his $billion+ contributions.

The number one lesson for CEO's is probably to stay out of the public eye. Run your company adequately, avoid major scandals, and retire with your billions. But let's say that you are running a large company, look at Steve Jobs and turn green with envy. What can you do?

1. Start By Doing Your Job

When you look at your stock market valuation and say, "My job as CEO is to bring new value to this company," do your thoughts immediately turn to, "So how do I rent-seek from local, state and the federal government, get massive subsidies, talk up my stock to investment houses, leverage any monopolistic advantage my company enjoys, and otherwise game the system," or do your thoughts turn to, "How do I innovate, create new products and services, improve existing products and services, and increase value to the consumer?" With due respect to the modern idea that a CEO's primary job is to pimp the stock, the public will like you better if you build wealth through innovation.

Don't play the "whocouldaknowed" game. "Whocouldaknowed that if we neglected quality for twenty years, we would go from being the world's number one manufacturer to being bankrupt?" "Whocouldaknowed that 10-20% annual inflation in housing values reflected a bubble?" Since you ask, when that question is applied to your industry, you could have known. Unless we're talking earthquakes and tsunamis, in which case it's your job to be prepared, it's your job to know. You don't think you're paid enough to understand your industry and the competition? C'mon.

2. Present Yourself in a Positive Manner

Don't wait for the press to come to you. You need to go to the press, on your terms. Work with public relations professionals to create buzz and excitement about your company, its products and services. Even when creating that buzz, try to under-promise. Then when you step before the cameras to unveil the genius of yourself and your company, do your best to over-deliver.

If you deliberately take actions that you know are going to alienate millions of people, stop and think about whether you're going to be happy only being liked by some percentage of the remaining population. If the answer is "no," consider putting off your actions until after you leave your company, or finding a different means to your desired end.

3. Perhaps You Need an Alter-Ego

Let's face it. If you're a successful CEO you're probably not the nicest, warmest person in the world. You may be a world-class jerk. That's not the face you want to show to the public. Look for an archetype that works for your industry. Kindly grandfather, cool uncle, something that will resonate with the public. That's the face you need to consistently present to the public. You can't do the cool uncle with wire rimmed glasses and a black turtleneck who doesn't visit very often but, when he does, always brings the coolest presents - that's been done. But you get the concept, right?

4. Perhaps You Need... A Funny Suit, or Clown Make-Up?

Perhaps due you your appearance, personality, industry, or other factors you need to take the alter ego thing a step further. You can't make a silk purse of of a sow's ear - or maybe you tried to convince your customers that you in fact had created "sow's ear silk" and that's why you have a public relations problem. Perhaps you want to benefit your company by having a Steve Jobs-type public perception of the corporation's leadership and, despite being a warm, telegenic person, you recognize that your tenure won't be long enough for the company to truly benefit from making you its public face.

Quickly: Who is the CEO of KFC? Who is the CEO of McDonalds? Who is the CEO of Wendy's? The average consumer is probably thinking, "Colonel Sanders, Ronald McDonald and Dave Thomas," never mind that two are deceased and the third is a fiction. Dave Thomas didn't become the public face of the company until a number of years after he resigned from leading the company. Harland Sanders was never in the military and didn't start wearing his trademark outfit until he was 55. If you can create an effective fictional face for the company, even if it's a fictionalized version of "you", you may find that your public image persists far beyond your tenure with your company.

5. Don't Claim Accidental Successes as Great Personal Achievements

You're the CEO and are stepping forward as the public face of your company, so you get to claim credit for your company's work. But if your company has not done anything noteworthy, an increase in profits due to government subsidies, war, natural disasters, and the like isn't something the public is apt to see as a great accomplishment. Ask yourself, do you actually contribute anything to your company? You may tell yourself that nobody else can do your job, but the odds are overwhelming that it's not true - and even if it's true right now, it won't remain true. Had somebody other than you been CEO of the company, what would be different? If the answer is "nothing", you're nothing special.

6. Be Special

If you want the world to think that you're special, prove that you are special. Let's take a look at Steve Jobs: He started a computer company out of a garage that helped bring about the era of the personal computer, spearheaded the development of a GUI-based operating system that led to a transformation in the way people interact with technology, when forced out of his company started NeXT and acquired Pixar, sticking with the former until he returned to Apple and (in the face of considerable skepticism) rolled the technology into a next-generation operating system and sticking with the latter through its transition from an unsuccessful computer hardware company to a highly successful animation studio, then produced innovations in the manner in which people buy music, in the music player, and ultimately in the cellular phone and tablet computer technology, with the rest of the market playing catch-up and producing copycat devices. You... did what, again?

7. Stop Letting the Bean Counters Define Your Business Model

Steve Jobs has a wonderful list of successes, but he also has a long list of expensive failures, both in terms of product releases and business decisions. Apple gave up market share with the Apple II because he didn't want to market it to small businesses, but the Apple III was a colossal failure. Outsourcing the development of key portions of its GUI OS to Microsoft, without a non-compete? Major fail. Apple computers were bigger and boxier than a lot of competing products because of a fixation on design - with a well-designed computer having no need for a fan. Do you recall the first Apple "portable" computer? The Lisa. The Newton. Not bouncing back from the Newton and letting other companies create then dominate the PDA market. But when you look back on a lot of Apple's discontinued products or failures - those that occurred under Jobs, not those attributable to John Sculley - you often see the kernel of what is to come. Cutting edge stuff that's hitting the market too early, or at too high of a price point, but which ultimately becomes commonplace.

Do you want to lead your company into making the mistakes of a Sculley, focusing on limiting the experimentation and innovation of somebody like Jobs and ultimately forcing him out of the company? Do you want to be like Bill Hewlett and David Packard, whose investment in HP Labs made the company an innovated and market leader, or a Carly Fiorina who presided over what appears to be an era of outsourcing, R&D cuts and reduced quality control in the name of short-term profits? Do you want to be like Dell, so focused on cost-accouting and increase margins that you don't even realize that you're giving away the core of your business? Maybe your company can't afford to make mistakes on the same scale as Steve Jobs, but don't expect to be as famous or to have successes on the same scale if you eschew quality and innovation in favor of risk-avoidance and short-term profit.

8. Recognize When It's Time to Give Up

Sad to say, some industries and industry practices simply aren't compatible with your having a great public image as CEO. For example, if your company makes its fortune by chopping the tops off of mountains to extract coal, leaving behind a poisoned, scarred landscape, odds are you're better off keeping your head down. "That's not fair", you say? "Steve Jobs hasn't made much noise about it, but under his leadership Apple has taken advantage of tax breaks, funneled revenues through overseas shell companies to avoid taxes, used cheap labor in Chinese factories, and appears to have concerned himself with environmental issues only to the extent that there's a P.R. advantage"? Who said life was fair?

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