Firms of Endearment

Chrysler's Last CEO

The folks who just took over Chrysler have shown that they don’t understand Detroit’s problems. That makes them prone to making some big mistakes. They made a huge, and possibly fatal mistake in appointing Bob Nardelli CEO of the beleaguered company. Of all the marquis names they could have selected, none come to mind that are less suited to reversing Chrysler’s fortunes.

I’ve thought on occasion that some spark of cosmic insight prompted Jack Welsh to choose Jeff Immelt as his successor at GE over Bob Nardelli. In many ways, Nardelli was closer in style and corporate temperament than Immelt. But Welsh made his decision as though he knew that he was going to be the last 20^th century style hierarchically defined, command and control (HC&C) CEO that GE would ever have. He seemed to intuit that a different breed of leadership would be needed in the 21^st century to keep GE hearty, well out front and as productive in producing innovative solutions as it has ever been in its long life of over 120 years.

Washington Post op-ed columnist David Ignatius called Immelt “a symbol of a new CEO style that emphasizes a company's obligations to a range of stakeholders and interests including the global environment.” Nardelli is a symbol of the old CEO style. The only stakeholders in the worldview of most 2oth century CEOs were shareholders (and upper level management).

Nardelli failed at Home Depot not because of the sinful level of compensation he took – a quarter of a billion dollars for less than a handful of years at the helm. Some say that is the case. They say shareholders forced him out because of that. But the truth is, after a brief honeymoon period when slashed costs by centralizing everything he could and precipitated a mass exodus of the talent that built Home Depot into a great company, it became harder for Nardelli to prove his worth. All the low hanging fruit was picked. He had to find new ways of producing growth an profits. He now faced the challenge of answering, “what’s next?” But he had no viable “what next plan.” The board engineered his exit.

Detroit’s biggest problem is its culture. Always has been. But it’s a bigger problem now than ever. For generations the elite of the Big Three were part of a good ‘ol boy’s country club culture. Way down the ladder, workers were those worms that labor unions lived off of that had to be tolerated because someone had to build the cars.

Meanwhile, Toyota, Honda, and BMW – all three of which are “firms of endearment” – began a couple of decades ago studying external conditions like the emergence of new global markets, and rising oil prices and environmental concerns among legislators, regulators and consumers, Detroit ignored all that and continued producing super-sized vehicles like the Hummer, Explorer and Dodge Durango. Top management was obviously oblivious to the same reality that foreign car makers worked in but read differently.

Nardelli is a confrontational kind of manager. Shaped by military training, he relishes a hierarchically defined command and control position. But folks, I gotta tell you. The days when an HC&C management style was best for a large industrial company are over. Now, it’s about working with stakeholders like employees and their unions, not about working them over. Now, it’s about realizing that design engineers don’t have all the answers. Now, it’s time that the haughty cognoscenti of Detroit run out and buy some humble pie and let the scales fall from their eyes to see a different kind of world out their than it was in the days when jet age tail fins adorned the rear fenders of cars that were too ostentatious by half.

But none of this holds any meaning for Nardelli. So, there’s a strong likelihood that he will be Chrysler’s last CEO.

DBW

 

The Largest Movement in the World (That Almost No One Saw Coming)

Sometimes something happens that almost no one sees coming. The mainstreaming of the Internet was such an event. When MIT Media Lab founder Nicholas Negroponte was asked in 1994 why he had not foreseen the coming ubiquity of the Internet. He lamely responded, "The Internet for us was like air. It was there all the time - you wouldn't notice it existed unless it was missing."

Paul Hawken’s new book, Blessed Unrest describes another and potentially even greater event in terms of humankind's future: a massive social transformation of government and business quietly taking place beyond the awareness of most people. The stealthy nature of this event is hinted in the book’s subtitle, How the Largest Movement in the World Came into Being and Why No One Saw it Coming.

Hawken takes the reader on a journey through time, starting out many centuries ago, to show how we got to where we are today in terms of how we are dealing with major societal problems, such as the beleaguered state of our natural environments.

At times a reader might wonder why Hawken pauses in the journey he takes us on to talk about life centuries ago. However, in the end he pulls together threads harvested from multiple spools of thought into a beautifully fashioned literary tapestry depicting humankind’s present situation on this planet.

The explosion of interest by companies the world over in addressing many issues we’ve become accustomed to government taking a lead in seeking solutions to is staggering. These issues include environmental problems and a host of social causes ranging from severe poverty and education to health and medical challenges in Third World nations.

Of the world’s 100 largest economic entities, 63 are countries. The other 37 are companies. The combined annual turnover of the 10 largest companies in the world exceeds the GDP of most countries. At the present pace of corporate wealth building, it will not be long before capitalistic enterprises make up the majority of economic entities.

Like politicians and – yes, marketers – denizens of the corporate enterprise universe have not ranked very high in public polls that ask people about their levels of trust and respect for those in government and business who serve them. Marketers have been ranked just a notch above used car salesmen in some polls.

In a recent Gallop poll, 7 in 10 people said they did not trust CEOs of large companies, and nearly 8 in 10 believe that top executives will take improper actions to help themselves at the expense of their companies. In less than a year following 9/11, the number of Americans who see big corporations as an actual threat to America’s future doubled to 38%.

I see a different picture of the role of business enterprise in America’s – and indeed, the future of all humankind. We talk about this picture in Firms of Endearment, of which I am co-author. It seems obvious that people are hungry for a more optimistic image of business judging by the sales record of Firms of Endearment. Released just in February, it is already in its third printing and will soon be out in both Chinese and Italian versions.

Paul Hawken’s optimism about the path being taken toward a better world by a rapidly growing body of business enterprises is similar to our own. While Firms of Endearment gets down to the nitty-gritty of specific companies that take a broader view of their role in making the world a better place, Blessed Unrest works from a different perspective. It provides a 40,000 foot view of the greatest social transformation in the theory and practice of business since Adam Smith published Wealth of Nations in 1776. The view from 40,000 feet is truly breathtaking.

As he went to work on the book, Hawken estimated that there were some 100,000 organizations including NGOs (non-governmental eleemosynary organizations) as well as entities that operate more like profit-making enterprises but with a defined social purpose. Mohamed Yunus, founder of Grameen Bank that issues micro business loans to the poor in developing nations won the 2006 Nobel Peace Prize for his successful capitalistic approach to reducing severe poverty.

Hawken’s research revealed that the number of quasi-public and business entities dedicated to “saving the planet” and elevating life quality for people everywhere runs at least to a million, and perhaps to as much as 2 million organizations.

I do not agree with everything Hawken posits in Blessed Unrest but that doesn’t detract from my opinion that this is one of the most important reads I’ve had in my hands for sometime. Without the benefit of many insights Hawken delivers to us in Blessed Unrest you will be groping toward the future through a fog of misperceptions wafting up from old, outdated paradigms.

This is a critical fact: The future cannot be predicted by what has happened in the past. We have entered a discontinuous state in which is replacing a several centuries-old obsessive focus on the individual with a more holistic focus on human survival. As I see it, in this scenario, private organizations of every description in alliances with business enterprises – not government – represent the last best hope for our survival. You’ll understand better why that is when you read Blessed Unrest.

DBW ([email protected])

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