Friends of Rockhurst

While the Chiefs were making news yesterday about their coaching situation, coincidentally a former Chief came to speak to our Executive Fellows class. A couple of months ago I had the pleasure of being introduced to Dennis Watley, former Executive Vice President of the Chiefs. Mr. Watley not only agreed to come in a talk to our class, but is interested in sharing his experience and expertise with our undergraduate students as well.

Anyway, Watley told our group how he worked his way from a bookkeeping job to an executive job with his first employer, National Steel. Among his stories, were these gems:

• Watley learned the business through sales--and he learned by the seat of his pants. In telling us about his most important mentors, he shared a story about one of them, Bob Marlow. One of Watley's sale prospects, a steel user, had refused to buy steel after several visits and in the final visit had basically kicked Dennis out of his office telling him not to come back. Several weeks later Marlow, Watley's boss, joined him on his sales route. When Watley did not stop at the shop where he had been unwelcome, Marlow asked why. "He's a jerk and has told me he won't do business with me." Marlow insisted they go anyway. The client was suddenly nice and became one of Watley's best clients. Turns out that client was simply testing Watley to see if he was serious about selling -- seeing if he would persist . . . those are the people he wanted have buying relationships with.
• Watley told us about the different between buyers and shoppers. In his business of steel, he had to appeal to buyers -- who tend to know what they want. Early on, Watley would try to sell and actually lost some orders when after a buyer made an order the young salesman tried to sell more stuff.
• Finally, he talked about hiring and to be hopeful that if you hire a stupid person they don't have a lot of energy. Of course he knows to look for a Rockhurst graduates to avoid this problem.

Didn't have time to talk a lot about his work with the Chiefs -- but he did remind us that if we think things look bad right now for the team, they were even bleaker in 1988 when he came on board to be V.P. of Sales and marketing . . . when he started they had a season ticket base of only 23,000. I am thankful for the many friends of Rockhurst who like Dennis who are willing to come in and share their experiences and wisdom.

A New Year and Change

How aligned are the stars . . . Monday we celebrated MLK as we prepare to inaugurate the first African-American president on Tuesday . . . Wednesday begins the new semester. Okay, the last is pretty routine but it seems like a long winter break and I trust students are anxious and ready to crack those textbooks again.

One thing on change -- the theme of the Obama campaign. Restlessness with the economy will give this president a lot of latitude to effect changes and one of them is apparently to create more bipartisanship. In vague, general terms bipartisanship is a universal good (like peace); but in practice it will be interesting to see if Obama has more luck than George Bush. For some bipartisanship means compromise, but often in practice it means that people with philosophical differences should agree against their principles. In its worst form, bipartisanship represents squelching debate and skepticism on important issues.

Good luck to President Obama and looking to see if he can achieve bipartisanship while allowing honest debate. And good luck to students -- get ready to hit the books tomorrow!

Corporate Ethics

Another day and another corruption scandal -- this time the Mayor of Baltimore. I bring this up for two reasons.

First, it was reported somewhere that Ms. Dixon primarily ran on an ethics platform. Now in politics that hardly makes her an exception of someone in conflict with their campaign rhetoric, but it does parallel the challenges faced in the business arena where corporate social responsibility has become such a big issue for most corporate executives. Reading most company websites you will be regaled with the "proactive" steps being taken by the company to address ethical practices, global warming, and any number of other social concerns. In fact, some CEOs take on personas more in line with political saviors than businesspeople. Yet, the cynic is not far away as these executives and their companies fall short of their stated ideals. It makes me wonder if all the focus on CSR has really made things better in corporate America . . . here is an article that examines this idea.

Secondly, there is a difference between the goals of politicians and those of company executives -- or there should be. While both have responsibilities for a number of stakeholders, the latter still must adhere to some clear measurables related to earning profit, attracting customers, etc. These common aims are often explicit. Political action is related to common goods -- while these may be explicitly such as remedies to poverty, they seldom have clear measures or clear actions. In fact, seeking a common good always involves compromise and will harm some interests (redistribution is one action against poverty with both intended and unintended consequences).

Perhaps Sheila Dixon will survive these corruption charges; if she was executive of company and caught stealing she would be fired. Of course, if she were an executive she would probably get a golden parachute of a few million dollars upon being fired! Rockhurst graduates will have, I trust, an appreciation for the responsibilities that come with both political and corporate power.

Can this man get RESPECT?

They say truth is stranger than fiction . . . and such is the Illinois senatorial soap opera. The irony is stark as the new phase unfolds with the politics of race coming into play even as we have just elected the first African-American president. To recap, the defamed governor, Rod Blogovich (defamed because he has been indicted by FBI who allegedly caught the governor red-handed trying to sell the open seat), has just named a career Illinois politician named Roland Burris to take the now vacant Obama senate seat. The pick has created at least two schools of thought in the democratic party:

• Those that don't want to honor the pick nor seat Mr. Burris in the senate. This list is long of state officials and democractic senate leaders who see Blagovich too tainted to make any credible pick, regardless of the credentials of Mr. Burris or anyone else. Senate majority leader Harry Reid has said the senate will not seat anyone chosen by Blagovich. Even Reverend Al Sharpton is reluctant to endorse Mr. Burris, stating, "As much as I would like there to be a black in the Senate, we should not turn around and impose any kind of racial litmus test." Those in this camp see two options: conduct an open election or impeach the governor and let the lieutenant governor appoint the next senator.


• A number of black leaders who see the justice of replacing President-elect Obama with another African-American. Bobby Rush, a former black Chicago congressman evoked past times of discrimination and stated clearly that an all white senate was unjust. The 71-year old Mr. Burris is qualified in no less important way than he was black.

My question: Can Mr. Burris be really given a fair chance if he is indeed seated as the Illinois senator? Qualification is a subjective concept. By all accounts Mr. Burris is qualified and is not tainted by the Blagovich scandal. My guess is that Burris cannot win in this situation (in terms of respect). Consider a few recent examples:

• George Bush squeaks out a disputed victory in 2000. Whether he won fair and square is irrelevant -- perception was that the process was not fair. Sure his Iraq policy was controversial, but some never saw him as legitimate.


• Sarah Palin is selected as V.P. in 2008. While a good argument could be made that her experience was credible, her pick was tainted somewhat by the perception of a flawed process. Many people believe that she was a hasty, unvetted choice by McCain and conclusions were drawn about her based on this perception. Even a number of republicans bought into the idea of an inadequate candidate (some vowing to vote for Obama who had less executive experience but who had been vetted in a reputable process).

Roland Norris was appointed on Tuesday and already we hear reports about him that are unflattering. David Broder of the Washington Post basically gives Burris at best a backhanded compliment, calling him a nice man who hit his political ceiling long ago. Chicago writer Steve Chapman is more blunt calling Norris an "empty suit." You see justice is embedded in processes not results. Bringing blacks into the senate is a worthy goal, but ensuring the integrity of the process is more important. That is what makes Obama's feat so compelling--he did it within the bounds of a fair process, absorbing the flack of political fire and benefitting from some political luck (all a part of the process), but gaining no apparent assistance from powers purporting to serve just ends by subverting fair processes.

I trust 2009 will continue the interesting theater.

Overreaching

I am enjoying the post Christmas holiday -- a chance to catch up on cleaning, organizing, and reading. One interesting thing I am reading about is the Caroline Kennedy bid for Hillary Clinton's vacant senate seat. This has raised the eyebrows of not only partisans who would likely oppose her Democratic party affiliation in any case, but of democratic politicians who might agree with her.

First question is why the gumption by Ms. Kennedy to even venture? Actually, is is quite predictable and happens all the time. In business terms is is simply extending the brand. Many companies attach their popular brand identity to new products or ideas all the time in hopes of taking advantage of that brand's equity. Did you know that Dial not only has its leading bar soap product but sells a deodorant (at least used to) by the same name? Dole became famous for its pineapples . . . or was it bananas or peaches or . . . In extending brands they also run the risk of diluting them.

In politics the branding is fundamental. It is Hillary Clinton, not Hillary Rodham. It is Caroline Kennedy not Caroline Schlossburg (or something like that). The appeal and name recognition is a politicians gold. But like any product or company brands, political brands can overreach. People associate Dial as being a soap not a deodorant. Consumers can be attracted by known brands -- the Kennedy magic would seem to be a case in point. Paradoxically, they are pretty savvy in rejecting these known brands when they overreach into areas they lack competence.

Since John and Bobby Kennedy forged the brand in the 1960s (sowed by their father well before then), the Kennedy family and name has remained intriguing (see this Emery piece that lays out the brand dilution well). But it doesn't mean that people will always buy it. Ted, while loved in his home state, has only marginal national standing (including a failed run for the presidency). Other third generation Kennedies have fizzled when trying move beyond local politics. And I suspect Caroline will have a hard time making traction. People will want to give her a chance, but they also know she lacks some basic qualifications. Despite the rash of political dynasties in the making the American way is still one of merit.

Woe to be Rich

It is a bear to be rich these days. Take Harvard University, which reported losses of $9 Billion to its lofty endowment just in the third quarter. This amount is greater than the sum of the endowment funds for all but the most affluent universities. Running the Harvard endowment (i.e., managing the funds)was one of the most prestigious jobs in finance. Looks like Harvard was playing the risk reward game and got stung like many other common folk.

This week we learn of Bernard Madoff who has now made lots of rich people very mad. Amazingly, he was able to garner over $50 billion of investments from a number of well heeled investors only to use it for big Ponzi scheme. Many of these investors now are on the hook to lose most if not all of their investment. Interestingly, Mr. Madoff is the ultimate charmer, getting all kinds of people to trust him enough to put millions of their dollars in his hands. You can read about Madoff's ruse here. Seems that many people get sucked into presitious opportunities and are shamed to investigate lest they come off as a mere miser. I think it is called snob appeal.

Perhaps, the investors in Madoff's scheme need their own government bailout . . . consider that many of the victims of the scheme are charities and foundations. Madoff built his reputation in part on linking with charities. Many are now the victim of "friendly fire."

Ethics, Ethics . . .

Of course the big news today is the sitting governor of Illinois being arrested for trying to "sell" Barack Obama's now vacated Senate seat. This on the heels of senator Ted Stevens being convicted of corruption and Charles Rangel of New York not far behind. At least the voters of Louisiana voted out William Jefferson--the congressman who happened to have $90,000 just sitting around (Alaska did the same to Stevens). But this is not the story on ethics I want to explore. These "gentlemen" did not have ethical lapses as much as they simply engaged in criminal activity (fraud, conspiracy, and corruption is not an "ethical lapse").

John Thain, the most recent CEO of Merrill Lynch -- swallowed up by Bank of America at the height of this Fall's financial meltdown, reportedly asked for a bonus of $10 million. I am sure the consensus among the punditry and people at large is that Thain getting a bonus is outrageous considering that the value of the stock has gone from about $60 to $15 over the course of his tenure. Is it ethical for Thain to even think he deserves a bonus?

Well, actually maybe. Here is one pundit who says Thain deserves it because he saved the company (and thousands of jobs in the process). In fact, some reporting back in September chronicled how well Thain actually performed in saving a company that was in serious trouble when he took over a year ago. Compared to some of his counterparts at Bear Stearns and Lehman (Mr. Fuld make a nice comparison), Thain was very good in a very tough situation. Thain has evidently accepted the Board's decision not to grant a bonus, but the decision may be more one of public relations than actual lack of merit.

Fraud and corruption are not hard to evaluate or condemn . . . the ethics of compensation and many other business decisions are prone to debates more difficult to evaluate.