Entertainment celebrities and
businesses alike risk losing customers and thus revenue by taking positions
publicly on political issues. Fearing a surge from political parties on the
far-right, some large businesses in the E.U. took the unusual step of coming
out against those parties, labeling them as “extremist,” prior to the E.U.
election in June, 2024. Typically, businesses there limit their political
stances to particular issues that bear on core functions. This is a prudent
policy, for human beings, being of bounded rationality, can easily translate ideological
disagreement into switching brands. Even universities can get bruised by becoming
embroiled in a domestic or international matter that is controversial. Hence
after the contentious spring semester of pro-Palestine protests at Harvard (and
other many other universities), the university’s administration enacted a
policy not to take positions on issues in which the core functions of the
university are only indirectly touched or are not affected at all. In creating
a “marketplace” for academic freedom, universities themselves are best positioned
by staying neutral. Although it is tempting for anyone (for oneself or one’s institution)
who has access to media to sway public opinion on a political issue, I contend
that the immediate self-gratification is usually outweighed by lost revenue and
the reputation of being partisan. Applying strict scrutiny to one’s foray into controversial
issues is harder to do if some vocal customers are demanding that a position be
publicly taken. The silence of other customers, who would “vote with their purse
or wallet” were an opposing position to be taken, should not be overlooked. The singer Taylor Swift and the actor Robert
De Niro provide us with two illustrations. Stepping out of their respective
domains comes at a cost in those domains, and thus should, I submit, be done
prudently and seldom.
Time magazine named the
singer Taylor Swift as its person of the year for 2023. Such a force of nature
were her stadium-filled concerts during that summer that they triggered economic
booms in the respective host cities. In Pittsburgh, Pennsylvania, for example,
hotel rooms went for as much as $2,500 downtown on the night of the concert. In terms
of American culture, the analogy of gravity waves may fit. During an interview
for television at her home (or one of her homes), Swift’s savvy business acumen
was very evident; her marketing prowess was extraordinary. She even re-released
her own songs, resulting in a huge financial windfall for what are really the
same songs merely re-sung. It is not as if she had grown a new voice. Swift
personifies American culture, whose “movers and shakers” seem “happy go lucky”
on stage yet, behind the scenes, they tend to be lazar-focused on the business
end. In short, considerable distance may exist between the societal image and
the private business practitioner, and the ethical element can get lost in the
shuffle and excitement.
Strategic planning is oriented to
enhancing the bottom-line.Leadership
affects organizational performance as well.[1]
Therefore, strategic leadership, which can be defined as the formulation and
articulation of a vision depicting a social reality and incorporating strategic
aims, can enhance a firm’s sustainable competitive advantage.[2]
Strategic leadership is an intangible core competency that can give rise to a
core capability differential involving reputation.[3]
That strategic leadership is difficult to understand and therefore to imitate
contributes to its value in no small measure. But a straightforward application
of strategic leadership may be thwarted if a tension develops in its exercise.In particular, the principles behind an
enduring leadership vision can be at odds with pressing strategic interests,
especially as these profit-interests change while the abstract vision still
holds.
[1].
J. A. Petrick and J. F. Quinn, “The Challenge of Leadership Accountability for Integrity
Capacity as a Strategic Asset,” Journal
of Business Ethics 24 (2001): 331; S. Finkelstein and D. Hambrick, Strategic Leadership: Top Executives and
Their Effects on Organizations (St. Paul, MN: West Publishing, 1996); J. Ciulla,
“Leadership Ethics: Mapping the Territory,” Business
Ethics Quarterly, 5, no. 1(1995): 5-28; K. B. Lowe, K.G. Kroeck, and N.
Sivasubramaniam: “Effectiveness Coorelates of Transformational and
Transactional Leadership: A Meta-analytic Review of the MLQ Literature,” Leadership Quarterly 7, no. 3 (1996),
385-425.
[2].
R. D. Ireland and M.A. Hitt, “Achieving and Maintaining Strategic Competitiveness
in the 21st Century: The Role of Strategic Leadership,” Academy of Management Executive 13, no. 1
(1999): 43.
[3]. Petrick and
Quinn, “The Challenge of Leadership”; J. A. Petrick et al, “Global Leadership
Skills and Reputational Capital: Intangible Resources For Sustainable Competitive
Advantage,” Academy of Management Executive 13, no. 1(1999): 58, f.n. 2.
In spite of essentially flat sales in the U.S. in February 2013 from
the same month in 2012, McDonald’s CEO, Don Thompson, said he was confident that the
people at the company had sufficient experience to “grow the business for the
long term.” Even assuming that a business can be grown as if it were a geranium plant, the claim can be critiqued both in
regard to the underlying assumption regarding “growth” and that of long-term
viability. Fusing a restaurant with a coffee shop can be said to be an over-reach that had blended the company too much, at least at the store level. The full essay is at "McDonald's in a Changing Environment."
Astonishingly, organizations can violate their own mission statement without any manager or non-supervisory employee being aware of the violation. This can happen even when the people in an organization really do take their mission seriously. At Goodwill, the mission is to end poverty, a laudable goal. It follows explicitly (i.e., according to a sign in the stores) that “every customer has an equal opportunity to purchase any item for sale.” Although the sign bases this point on the fact that the goods “come from public donation,” I submit that ending poverty by giving the poor access to relatively low-priced merchandise is hampered if some customers are permitted to fill their carts with on-sale (i.e., color of week) items when the doors open. Certainly allowing those resale-minded customers to deprive other customers of a selection of items on sale (especially clothing, which even homeless people need) is not fair.
In the wake of the Sandy Hook school shooting in Newton,
Connecticut in late 2012, General Electric announced that the
company would no longer finance consumers’ gun purchases. Russell Wilkerson, a
G.E. spokesman, wrote in an email that the new policy was being adopted “in
light of industry changes, new legislation and tragic events that have caused
widespread re-examination of policies on fire-arms.”In other words, the policy shift was not simply a reaction to Sandy Hook. Rather, the company’s executives were adapting to changes in the organization’s environment, including the industry itself. This opens up the question of whether the new policy can be classified under the rubric of corporate social responsibility (CSR). Perhaps the adaptation was simply good business, with the appearance of “CSR” adding some reputational capital through a good public-relations campaign.
Do business principles mandate treating this product like any other? Source: NBC News
In April 2013, JC Penney’s board wished the CEO, Ron
Johnson, “the best in his future endeavors.” His effort to “reinvent” the
company had been “very close to a disaster,” according to the largest
shareholder, William Ackman. During Johnson’s time at the company as its CEO,
shares fell more than fifty percent. In February 2013, Johnson admitted to
having made “big mistakes” in the turnaround. For one thing, he did not test-market the changes in product-line and pricing-points. The latter in particular
drove away enough customers for the company’s sales to decline by 25 percent.
Why did Johnson fail so miserably? The full essay is at "JC Penny Reinvented?"
Ron Johnson's short tenure as CEO of JC Penney was disastrous, according to Altman. Source: Reuters
As business practitioners grapple with the
intangible yet potentially valuable notion of ethical leadership, it is left to
scholars to assess whether those practitioners are “coloring within the lines.”
It is admittedly all too easy to draw in exogenous material that is pleasing to
the eye; it is all too easy to deem such material required for ethical
leadership rather than ballast weighing it down, unnecessarily. One
business practitioner characterizes ethical leadership as that which “inspires
the behaviors in people necessary to create competitive advantage.” As
achieving a sustainable competitive advantage is the task of strategy, inspiration
alone can be extracted as that which is particular to leadership. Strategy is
what is left once one has extracted inspiration from the characterization.
Material from this essay has been incorporated in The Essence of Leadership, which is available at Amazon.
In the "leadership vs.
management" dichotomy, "management focuses on getting work done on
time, on budget, and on target--in other words, steady execution and
control--while leadership focuses on change and innovation."
However, this contrast of implementation and innovation is a different
dichotomy. Abstractly speaking, a category mistake may be involved in this false dichotomy. Change would be occurring in the execution of an innovative vision. In the realm of change alone, formulating and selling it can be distinguished from making the change. Therefore, the “leadership vs. management” distinction does not reduce to “change vs. status quo." Material from this essay has been incorporated into The Essence of Leadership: A Cross-Cultural Foundation, which is available at Amazon.
“Theranos rose quickly from being a college dropout’s idea
to revolutionize the blood analysis industry to a hot tech bet that accrued
$700 million in funding and many famous names for its board.”[1]
Elizabeth Holmes, the company’s founder, was stripped of her position at the
company in 2018 after the SEC discovered her deep involvement with the fraud at
the company. Her “smarts, fierce determination and Steve Jobs-inspired look . .
. were critical” to her being able to perpetuate the lie that the company had a
device that could do blood tests with just a scant amount of blood, obviating
the unpleasant experience of having blood drawn by needle.[2]
Although Jack Welsh, Bill Gates, and Steve Jobs accomplished enough to warrant their
fame, I submit that companies are too prone to create “champions”—even strangely
calling them “rock stars.” In other words, even though charismatic vision is of
value to a business, neither such a leader nor his or her vision itself should
be overplayed. Business, I submit, has a marked tendency to do just that, and
often with impunity.
Singapore’s Changi may have been “the world’s
most fabulous airport” in 2011, according to Scott McCartney of the Wall Street
Journal. To be sure, the airport’s amenities were amazing. How they are were being operated, however, detracted in certain respects with the goal. “We wanted to
transform the way travel is done and create a stress-free experience,” Foo Sek
Min of the airport’s management said. This goal dovetailed with the airport
being “a key economic development element” for Singapore. Accordingly, the state-owned
company that ran the airport received “plenty of government support.” In line
with these goals was there a business model that was long-term oriented? Rather than
trying to “nickel and dime” customers so as to minimize the funding from
airlines and the government while maximizing revenue on a daily basis,
resisting such urges in order to provide a truly stress-free experience would, I contend, be more
consistent with the goals.
According to The New York Times, Amtrak’s management “knew
for years that they would have to replace large sections of deteriorating track
in Pennsylvania Station in New York City.”[1]
The management instead had engineering crews apply “short-term fixes to rows of
rotted ties, crumbling concrete and eroded steel.”[2]
Incredulously, the management was putting off replacing the tracks in part “to
give work time to a nearby passenger hall renovation.”[3]
Additionally, the management sought to minimize taking tracks out of service even
on weekends so as not to disrupt service. In 2017, three accidents at the
station finally got the management to commit to undertake an emergency repair
program that “cut back service through the summer for thousands of passengers
daily.”[4]
Even by the objective of minimizing impaired service, prioritizing a hall
renovation and putting off needed track
repairs are problematic. The deeper problem is that of seriously misjudging
utility.
When Eneco began a business
called CrowdNett in which the company would sell large home-batteries to people having solar panels, the Dutch electric utility was on the way toward
putting its electricity-production business out of business. The company would
continue, though radically transformed. The strikingly different
strategic-course correction was based on a rather unique vision of a novel
social reality in which homes generate their own energy and then some. In the
context of climate change and accumulating carbon dioxide in the atmosphere,
Eneco’s CEO had an opportunity in 2017 to lead not only organizationally, but
societally as well by promoting the radical social reality already envisioned.
Does the fact that an earnings-per-share figure has not meaningfully
improved over, say, five years justify an overhaul pushed by a hedge-fund
activist investor? Put another way, is a
steady earnings-per-share tantamount to failure? Especially for an established
company, steady numbers do not evince bad performance. An airline would only
foolishly fire a pilot for not climbing once having attained a cruising altitude.
Maintaining such an altitude during a flight is hardly a reason to turn a plane
around or set it in a radically different direction.
Dan Loeb of Third Point. Relax, Dan, Nestle is not on a nose-dive.
In a public letter in February, 2017, Mark Zuckerberg,
founder and CEO of Facebook, linked his company’s product, the online social
network, to the societal and indeed global level in claiming that “progress now
requires humanity coming together not just as cities or nations, but also as a
global community.”[1]
The New York Times took this to mean that the CEO “stepped into the raging
debate about globalization.”[2] Taking sides in a political or cultural debate can both advance and harm a
business, hence the matter of the stepping
into is worthy of analysis in its own right.
Frederick Ross Johnson, as CEO of RJR Nabisco, was known “for
the fleet of corporate jets that ferried him to celebrity golf events and other
luxurious perks he awarded himself.”[1]
The key words here being awarded himself,
for Johnson epitomized the sort of imperial CEO that made an oxymoron out of
the notion that the corporate board is to serve as an overseer of corporate
management in corporate governance. Awarded
himself should be the oxymoron, for such a conflict of interest runs
against the logic of any viable business calculus.
After Comcast’s $30 billion
takeover of NBCUniversal and Verizon’s acquisitions of the Huffington Post and
Yahoo, AT&T agreed on October 22, 2016 to buy Time Warner for $85.4
billion. The ability to produce content and deliver it to millions of viewers
“with wireless phones, broadband subscriptions and satellite TV connections was
not lost on either board.[1]
At the time, AT&T sold “wireless service in a saturated market, while Time
Warner [was] a content company whose primary assets, networks like CNN and HBO,
[faced] tougher times in a cord-cutting world.”[2]
Although AT&T’s board could be accused of empire-building wherein bigger is
better (i.e., more powerful), the stabilizing impact of combining wireless
service and content could hardly be ignored in a business-environment so full
of change and uncertainty. In other words, with the traditional television
industry facing such dire threats to its revenue-structure due to the
proliferation of high-tech substitutes, having the wherewithal to formulate and
experiment with different distribution means and even content was at the time a
fitting strategy.
In American corporate governance law, the business judgment
rule gives management expertise the benefit of the doubt over stockholder
proposals. Compared with executive skill, they look rather populist and thus
potentially irrational in nature. Nevertheless, with the rule chaffing up
against the property-rights foundation of corporate capitalism, the managerial
prerogative can be said to be dubious. Indeed, a strict private-property basis
justifies displacing the default profit-maximization mission for a given
corporation. Alternatively, stockholders may want to use their concentrated,
collective wealth for other purposes, such as to alleviate hunger. Once enough
profit has been made for the business to be sustained for another year or two,
any additional surplus would be spent on food pantries, for example, rather
than going out as dividends or being retained by the corporation. Because
managerial skill is premised on the profit-maximization goal and its associated
strategies, corporate executives intrinsically resist alternatives proposed by
stockholders. The managers face a conflict of interest in providing their
recommendation for stockholders. Even when the proposal assumes profit-maximization
but differs from a current strategy (i.e., adopted by management), a conflict
of interest exists should the management seek to provide a recommendation for
the stockholders. In this essay, I use the activism of Trian Fund Management at
DuPont to illustrate this point.
It is certainly no understatement to say that the world of publishing
will never be the same. In fact, change may
have already become the new constant in the industry by the time ebooks took
off, thanks mainly to the phenomenon known as “blogging.” I suspect this term
is already obsolete, due to the differentiation that has taken place under the
rubric, and yet we are like turtles even just in noticing the need for change
to keep up with change.How, in other
words, might blogging catch up to itself?
The term “blog” has come to cover such a vast terrain of
writing genres and purposes that additional descriptors are often necessary to
convey a blogger’s particular niche.For example, Robert Reich, a lawyer who teaches at Berkeley, draws on
his professional expertise and government experience in blogging on public
policy. He cross-posts on the Huffington Post so his ideas will reach more people.
Meanwhile, a retired grandmother undoubtedly exists out there in the
blogosphere, writing about her grandchildren—what they have been doing lately,
perhaps even a picture of what one drew in art class and a video of another
learning how to skate. Being on Facebook to keep in touch with old friends who
live far away, the grandmother might provide links to the text, pictures and
videos on her home page. Because the lawyer and grandmother are doing very
different things, the terms “blog” and “blogger” have become inadequate to the
task of distinguishing the various types of blogs. That is, the terms have
become too vague as descriptors (and even misleading).
How, for instance, might we distinguish the bloggers whose
blogs are essentially businesses from the bloggers who blog as a hobby? How can
we distinguish between essays written by professionals and scholars and diary
entries written by teenagers? I suspect that because blogging began closer to
the latter (as depicted in the motion picture, Julie and Julia), the term itself (as well as “a blog”) carries a
certain “inertia-bias” that subtly undercuts the credibility of content beyond
“what I did today.” Given the rate of change in the “industry,” I would have
expected the “comet trail” to be shorter (i.e., less residual reputation). In
short, we need some new terms to differentiate the branches now that they have
grown so far from each other; merely pointing to the tree trunk is no longer
sufficient to indicate a particular branch. A better analogy might be the
expanding space of the universe eventuating in more distance between galaxies. At
some point, two clusters (of galaxies) should be classified as in different
regions of space—space itself having expanded sufficiently—because one locater
term alone will have become too vague for either cluster to be located easily.
Generally speaking, blogging has come to reflect the
complexity and diversity that exist within our species. What Robert Reich
“blogs” about is eons away from the blogging depicted in Julie & Julia. I instinctively resist admitting to people that
I “blog” because I have seen the dismissive response. So I tend to tell people
that I write essays applying academic theory to current events in ethics,
business, and government. “They can be found at my web-site,” I demur—gilding
the lily so as to stave off any implication that I’m posting recipes on a blog.
I referred to my site as a newsletter until someone told me that more
credibility goes with the term, “a blog.” As Jack Nicholson said in one of his
films, “Never a break!”
The other area where the blogosphere has been slow to catch
up with itself—as if it were travelling close to the speed of light in slower
time—is monetization. I suspect that dirty word has suffered from the residual
tail of inertia wherein “diary” or “political pundit” is still the default for “blog.”
Who in their right mind wants to pay to read what some stranger did the day
before, or what Joe the plumber thinks about Congress (Joe ran and lost—so much
for Palin’s pig-tails). However, where Robert Reich is applying his legal or
governmental knowledge and experience, he has every right to expect his writing
to fetch a good price. I have drawn the line between essays like this one that
are only loosely analytical and others that involve academic work on my part.
At some point, the presumption that what I have spent decades learning should
be free (as if by some right) becomes insulting.
Therefore, along with the new terminology that is necessary
to distinguish between disparate sites, the
monetization spectrum from ebooks to online diaries needs to be demarcated—say, for example, in distinguishing between a scholar’s book or article in the
making, a lawyer’s critique of a court ruling or a proposed law, a novel in the
making by a new writer, a budding political pundit’s view on how government
officials are doing, and a teenager’s advice on the perfect date or how to hit
a home-run (or both!). From a monetization standpoint, these
qualitatively-different contents should not all be monetized at the same
subscription price (or amount of advertising). In fact, not all of them should
be monetized! Staying with the terms “blog” and “blogging” prevents us from
making such distinctions, which I contend are intrinsic, albeit clogged up.
Under the circumstances, I am amazed that some “bloggers” have been able to
treat their “blogs” as businesses and can rely on them to make a living. Considering
the fusion of not only books and courses, but also “radio shows” and videos
with websites (or “blogging”), pressure will only build until value meets
price.[1]
The "Crab" nebula is 6,500 light-years from Earth and 5 light-years across. The nebula is the remnants of a massive star that collapsed and exploded (i.e., a supernova). New suns and planets form out of the elements. Viewed from Earth as a "visiting star," the nebula was first recorded by Chinese astronomers in 1054 CE. Interestingly, that was the time of the Great Schism between the Roman Catholic and Eastern Orthodox Churches.
Lest it be said, “Oh, the market will do that,” the
blogosphere can be likened to a stellar nebula in which only the faint outlines
of heavenly spheres are as yet discernable to the naked eye. We might have a
nebula in search of business models not yet extant. Hence, this essay is a sort of plunger designed to push the clogging pulp through the pipes and out of
the way, so new water can flow, facilitating a new movement. What is needed of course
is brain-power, not shit, matching the thought that went into the software that gave rise to the blogosphere in
the first place.
Like global warming outstripping the ability of ecosystems in
the far North to adapt, the blogosphere is so foreign to us that our ability to
adapt to it cognitively (and strategically as entrepreneurs) has so far been outstripped; so too has our perceptual and cognitive ability to update terminology. Assuming rather simplistically that market competition will somehow squeeze out new, more discerning terms, and novel business models, each capable of connecting to a particular type of "blog" in the still-forming industry, is naive.
Instead, innovative strategic and "critical" (i.e., assumption-questioning) thinking, along with trial and error, is necessary before competition can have a chance to fine-tune or reject the
various models that have been introduced. Treating all the requisite innovation as technological is like ignoring dark matter in solving gravity equations.[2]
1. MOOCs, or
very large online courses, demonstrate just how difficult it is to create a
viable business model when the industry is so new and unlike any existing
industry. I suspect the model wherein users are charged only if for
verified-identity certificates will fail because they do not enable
college-credit. More of a difference is necessary from the content that
available without charge. Of course, the college or university whose faculty
member teaches the MOOC benefits from the publicity, and the MOOC non-profit
could perhaps support itself via advertising and/or charging the participating
universities a fee (though that might discourage participation).
2. "Blog" picture source: www.dailyblogtips.com
