One of the pleasures of having adult children living in other parts of the country is the excuse to travel. My oldest daughter and son-in-law live in San Diego where we visited them recently. Since they live in San Diego they do get a few visitors and one of her favorite places to take them is the Seal Beach in La Jolla. Along with the beach, she has always loved animals.
It seems that the city fathers of La Jolla decided to build a breakwater some years ago. Their purpose was to create a sheltered beach near the very popular beach that fronts La Jolla. The sheltered beach would create a nice sandy beach and calm sea pool for young children close beside the natural beach where their parents would be. Very family friendly and Californian in its conception.
But there were unanticipated problems. The seals took over. No children there now, just seals and some daring adults. It seems seals can be pretty territorial, as the occasional human who trespasses is in danger of being bitten. Picture the middle of a busy beach in front of an upscale Southern California city, with a breakwater sheltered beach that supports a large and thriving population of seals and other wildlife. Occasionally the sea lions move in and chase the seals away, but the sea lions really prefer the rocks further down the coast. The day I was there, the seals were surrounded by innumerable tourists gawking at them, snapping their pictures. An elderly gentlemen disturbed their ease and chanced bite marks on his ankles by walking among them on his way to go snorkling. Two scuba divers followed the old guy, again chancing the seals displeasure.
Not only are the seals there, but birds and more birds. The ubiquitous sea gulls are there of course. But there are pelicans and many other species, oblivious to the humans that surround them. In fact, two sea gulls were within four feet of me when they decided to participate in the Circle of Life. In all it was a picturesque morning. Saturday morning at the Southern California beach. Human beings, animals and birds crowded together on prime beach front. A beautiful picture of live and let live, as well as witness to the beginning of new life.
And then I came home. One of our projects is just finishing. The project was a pipeline through the Wyoming prairie and it suffered major budget and schedule problems due to wildlife restrictions. Productivity issues associated with wildlife restrictions cost not thousands of dollars but millions. Bear in mind that the construction contractor was on a construction corridor 100 feet wide surrounded by trackless prairie for upwards of 100 miles in every direction. It seems that animals and birds in Wyoming are much much more sensitive than they are in Southern California. So much for the image of the prairie and its rugged nature.
At the risk of belaboring the point, there is a raptor mating pair that nests every summer within 100 yards of my house; in suburban Denver with constant traffic on busy streets within a few hundred feet. There is a family of coyotes, as well as foxes, that live within the same general area. In the early morning, an occasional deer can be seen trotting along the creek. Cottontails swarm everywhere.
And yet on a pipeline right of way, the sight of a raptor nest brings an immediate halt for at least 1/2 a mile. In large parts of the West, construction is not allowed for months on end because it will disturb the deer or elk. Sometimes the nature of the cultural and business environment in which we operate seems to me surreal.
I think every responsible person wants to exercise stewardship in the way we live in our physical world. There is no question that we have sometimes been shortsighted in the way we use the physical world in the past. Yet the scene of the California beach calls the rituals that we perpetuate in the wilds of Wyoming to account. There is much science and study validating the need for those rituals. But who pays the scientists who study the wildlife on Wyoming range? Would those scientists have a job if they found no need for the wildlife restrictions in which we engage on that range? They are hammers in search of nails. Like all other hammers, they find them everywhere they look.
Is our society arrogant? Do we suffer from what the greeks called hubris? Do we believe that whatever burden we place on the productive members of our society is ok? If we ask our businessmen to dig holes and then fill them in, that burden will have no harmful effect?
China and India rise in the east, awakened giants flexing their new muscles. Russia returns to the arena eager to regain its pride. Everywhere, new and old competitors build for a new future and seek their place in the sun. Accustomed to our economic strength, we debate how many angels can dance on the heads of pins.
Monday, October 20, 2008
Tuesday, October 14, 2008
What a Difference a Client Makes!
Two of our people received a note of gratitude by email from their client today. Rare enough as an event, it made its way through the company grapevine. I am always grateful for these expressions of thanks from clients. I am so proud of this company, the people in it and the projects that we do. It makes me feel so good when some of our people are recognized by a client for doing well. Believe me, the muted praise is a much rarer bird than its cousin, the disgruntled complaint.
But this note of gratitude was especially sweet. It was some 15 months ago that I spent more than a few hours in uncomfortable meetings with a very angry client project manager over the failings of these same people. It is seldom that things work out this way, but irony abounds in this instance.
Two projects, just eighteen months apart, for the same client. Two projects, similar facilities, and with the same construction contractor. On the project just finishing, our client expresses gratitude for the excellence of the job done and for the level of service given. On the previous project, that same client made it clear that he thought us to be buffoons, if not worse.
So what happened? Did they learn their craft on that first project and then put that learning to good use on the second? As these folks have long years at their craft, I don't believe that to be the case. While we all continue learning if we are worth our salt, I am more than sure that the quality of the work product and attitude of service were very similar.
In all honesty, the biggest difference on the two projects was the client. The client organization was represented by one individual on the first project and by a different individual on the second project. Both of the client's people were competent and experienced individuals. But there was a human connection, a relationship if you will, on the second project that did not exist on the first project.
To those of us who have experience in the project world, or just in life, this is not all that surprising. We are social animals and form connections with each other. It is how we feel about each other that allow us to work well with each other, or not so well. If you think well of those you are working with, you believe and trust them.
When the people you are working with inevitably make mistakes, you overlook them and understand what they were trying to do. You give them grace. When you are expecting those you work with to make mistakes, you will of course find those mistakes and think the worst of them for fulfilling your expectations. You give them judgement.
This is a world of business, for both ourselves and our clients There are large sums of money at stake. There is the safety of many people depending on the work that we do. We have responsibilities to many stakeholders to be diligent and faithful in the discharge of our work. There are contracts that spell out those responsibilities. There are professional codes of conduct that speak to those responsibilities. We can not, not do we wish to, evade the responsibilities that we have taken up, both ourselves and our clients.
Yet there is more to life than fulfilling contracts and upholding professional standards. The first project, where there was no relationship, was a bitter and vindictive place to work. As they always do, people chose sides and joined the battle. There was anger and many tense meetings. And that anger and tension was not only at the level of the folks doing the work. At every level in both our own, the construction contractor, and the client organization, unpleasantness reigned over that project.
On the second project, life was a lot more worth living.
But this note of gratitude was especially sweet. It was some 15 months ago that I spent more than a few hours in uncomfortable meetings with a very angry client project manager over the failings of these same people. It is seldom that things work out this way, but irony abounds in this instance.
Two projects, just eighteen months apart, for the same client. Two projects, similar facilities, and with the same construction contractor. On the project just finishing, our client expresses gratitude for the excellence of the job done and for the level of service given. On the previous project, that same client made it clear that he thought us to be buffoons, if not worse.
So what happened? Did they learn their craft on that first project and then put that learning to good use on the second? As these folks have long years at their craft, I don't believe that to be the case. While we all continue learning if we are worth our salt, I am more than sure that the quality of the work product and attitude of service were very similar.
In all honesty, the biggest difference on the two projects was the client. The client organization was represented by one individual on the first project and by a different individual on the second project. Both of the client's people were competent and experienced individuals. But there was a human connection, a relationship if you will, on the second project that did not exist on the first project.
To those of us who have experience in the project world, or just in life, this is not all that surprising. We are social animals and form connections with each other. It is how we feel about each other that allow us to work well with each other, or not so well. If you think well of those you are working with, you believe and trust them.
When the people you are working with inevitably make mistakes, you overlook them and understand what they were trying to do. You give them grace. When you are expecting those you work with to make mistakes, you will of course find those mistakes and think the worst of them for fulfilling your expectations. You give them judgement.
This is a world of business, for both ourselves and our clients There are large sums of money at stake. There is the safety of many people depending on the work that we do. We have responsibilities to many stakeholders to be diligent and faithful in the discharge of our work. There are contracts that spell out those responsibilities. There are professional codes of conduct that speak to those responsibilities. We can not, not do we wish to, evade the responsibilities that we have taken up, both ourselves and our clients.
Yet there is more to life than fulfilling contracts and upholding professional standards. The first project, where there was no relationship, was a bitter and vindictive place to work. As they always do, people chose sides and joined the battle. There was anger and many tense meetings. And that anger and tension was not only at the level of the folks doing the work. At every level in both our own, the construction contractor, and the client organization, unpleasantness reigned over that project.
On the second project, life was a lot more worth living.
Monday, October 13, 2008
Market Realities
The selling wave in the stock market has swept all before it. Like the tsunami that swept Malaysia a few years back, it has left destruction in its wake. To the extent that it influences the close US Presidential election, its effect will be large but uncertain.
But those who have lived through it will probably never view the stock market the same. The inevitability of positive stock market returns shown us by internet based retirement calculators and smooth financial planners is gone from our minds. Instead we have seen a savage beast that can turn on us and rip our guts out, leaving us bleeding and hurt.
Of course all those retirement planners and investment counselors warned us that the market was volatile and that we could lose all we invested. But then they turned around and asked us whether we wish to invest for a 7% return per year, or 10%. Indeed, they sounded similar to the clerk at McDonald's asking if we wished to super size our Combo Meal. Accustomed to the mind numbing disclaimers invented by lawyers, we assumed the warnings about possible losses of our investments in the stock market were merely the same drek we see when we purchase new software.
It has been nearly two generations since we have seen a real bear market in the United States. By bear market, I mean a stock market that goes down by 50% or more. It is a scary thought. Is this a market like the 1930's or the late 1960's-70's? I don't know. By the time you read this, we could all be breathing a sigh of relief as the market soars back above 10,000. Or we could be shaking in our boots as the Dow resumes its dive. Maybe it will do both.
I started following the stock market at an early age. I can remember charting stocks on graph paper, by hand, on the kitchen table. I couldn't invest because I didn't have any money. But I traded on paper and in my mind. With paychecks from my first job out of college, I bought some stock in a CB radio manufacturer. I bought at $ 0.75 a share and watched as it rose to $ 24 a share. I then rode it all the way down to bankruptcy, finding out the difference between trading on paper and trading with money. I would have said that I learned the difference, but I am afraid there is a good chance I would ride it all the way down again. So the word "learned" is probably not the right one. Much later, I bought Enron at $ 12 per share because it couldn't go any lower. We all know how that turned out.
The financial future for many of us looks differently than it looked a short time in the past. Whether the market rises back as swiftly as it fell, or continues to drop, we have been surprised. Something totally unexpected has happened, and many of us are groping for a plan of action. What do we do?
At a time like this we seek wisdom. We seek a model of action to guide us in how we should react to such events. Those who came before us were no wiser, or no simpler, than ourselves. But since they came before us, we can learn from their lives and seek to emulate their example, or avoid their mistakes. As you will not be surprised to learn, the American Civil War provides an example to me about what can happen when one is caught by surprise and at a severe disadvantage.
In the early spring of 1863, Robert E. Lee's Army of Northern Virginia reigned supreme. They had defeated their opponent repeatedly, the Union Army of the Potomoc under various generals having fallen prey to Lee's genius. A new general was given command of the Union Army by the name of Joe Hooker. Young and charismatic, he laughed at the elderly Lee and declared that God had better have mercy on Lee, for he would have none.
Putting in place a brilliant plan of action, Hooker surprised Lee, exulting in his mastery over his opponent. Many would say that Hooker's plan was genius; with the first part of it executed perfectly. Caught between the jaws of a trap and outnumbered 3-1, Lee was surprised and in a bad way. Many investors are in a similar position today. Realizing that he was in a very serious position, Lee devised an audacious response. And importantly, he acted on it.
Two days later, Hooker has been surprised and his army shocked by Lee's counterpunch. Reeling from an attack he had not expected, he faced his situation. His plan was now in ruins, but he still vastly outnumbered Lee and had a very strong position. But he needed to act. However it seemed that Joe was in shock from the unraveling of his plans and was unable to make a decision. While Lee improvised and attacked, Hooker daydreamed and was unable to concentrate on what he needed to do. His officers waited in vain for orders while Lee's smaller force struck again and again.
Known today as Chancellorsville, it was nearly the end of Lee's career. Instead it became what many regard as his greatest victory. Joe Hooker put together a great plan and put it into action. But when reality kicked back, he fumbled and failed to act. Today Robert E. Lee's reputation as a leader of true greatness is secure, while Joe Hooker has given his name as a euphemism for the world's oldest profession.
It didn't have to be that way. But they both were given a catastrophic surprise that changed all their plans. How they reacted when reality kicked back is how we remember them.
But those who have lived through it will probably never view the stock market the same. The inevitability of positive stock market returns shown us by internet based retirement calculators and smooth financial planners is gone from our minds. Instead we have seen a savage beast that can turn on us and rip our guts out, leaving us bleeding and hurt.
Of course all those retirement planners and investment counselors warned us that the market was volatile and that we could lose all we invested. But then they turned around and asked us whether we wish to invest for a 7% return per year, or 10%. Indeed, they sounded similar to the clerk at McDonald's asking if we wished to super size our Combo Meal. Accustomed to the mind numbing disclaimers invented by lawyers, we assumed the warnings about possible losses of our investments in the stock market were merely the same drek we see when we purchase new software.
It has been nearly two generations since we have seen a real bear market in the United States. By bear market, I mean a stock market that goes down by 50% or more. It is a scary thought. Is this a market like the 1930's or the late 1960's-70's? I don't know. By the time you read this, we could all be breathing a sigh of relief as the market soars back above 10,000. Or we could be shaking in our boots as the Dow resumes its dive. Maybe it will do both.
I started following the stock market at an early age. I can remember charting stocks on graph paper, by hand, on the kitchen table. I couldn't invest because I didn't have any money. But I traded on paper and in my mind. With paychecks from my first job out of college, I bought some stock in a CB radio manufacturer. I bought at $ 0.75 a share and watched as it rose to $ 24 a share. I then rode it all the way down to bankruptcy, finding out the difference between trading on paper and trading with money. I would have said that I learned the difference, but I am afraid there is a good chance I would ride it all the way down again. So the word "learned" is probably not the right one. Much later, I bought Enron at $ 12 per share because it couldn't go any lower. We all know how that turned out.
The financial future for many of us looks differently than it looked a short time in the past. Whether the market rises back as swiftly as it fell, or continues to drop, we have been surprised. Something totally unexpected has happened, and many of us are groping for a plan of action. What do we do?
At a time like this we seek wisdom. We seek a model of action to guide us in how we should react to such events. Those who came before us were no wiser, or no simpler, than ourselves. But since they came before us, we can learn from their lives and seek to emulate their example, or avoid their mistakes. As you will not be surprised to learn, the American Civil War provides an example to me about what can happen when one is caught by surprise and at a severe disadvantage.
In the early spring of 1863, Robert E. Lee's Army of Northern Virginia reigned supreme. They had defeated their opponent repeatedly, the Union Army of the Potomoc under various generals having fallen prey to Lee's genius. A new general was given command of the Union Army by the name of Joe Hooker. Young and charismatic, he laughed at the elderly Lee and declared that God had better have mercy on Lee, for he would have none.
Putting in place a brilliant plan of action, Hooker surprised Lee, exulting in his mastery over his opponent. Many would say that Hooker's plan was genius; with the first part of it executed perfectly. Caught between the jaws of a trap and outnumbered 3-1, Lee was surprised and in a bad way. Many investors are in a similar position today. Realizing that he was in a very serious position, Lee devised an audacious response. And importantly, he acted on it.
Two days later, Hooker has been surprised and his army shocked by Lee's counterpunch. Reeling from an attack he had not expected, he faced his situation. His plan was now in ruins, but he still vastly outnumbered Lee and had a very strong position. But he needed to act. However it seemed that Joe was in shock from the unraveling of his plans and was unable to make a decision. While Lee improvised and attacked, Hooker daydreamed and was unable to concentrate on what he needed to do. His officers waited in vain for orders while Lee's smaller force struck again and again.
Known today as Chancellorsville, it was nearly the end of Lee's career. Instead it became what many regard as his greatest victory. Joe Hooker put together a great plan and put it into action. But when reality kicked back, he fumbled and failed to act. Today Robert E. Lee's reputation as a leader of true greatness is secure, while Joe Hooker has given his name as a euphemism for the world's oldest profession.
It didn't have to be that way. But they both were given a catastrophic surprise that changed all their plans. How they reacted when reality kicked back is how we remember them.
Wednesday, October 1, 2008
Greedy CEO's and Leadership
Greedy CEO's are in the news. The words greed and CEO are pretty tightly linked. If you watch tv or read newspapers, I am sure that you understand. Type the words "greed" and "CEO" into Google and you get 1,080,000 hits. That 's a lot of hits. Type in the words "Britney" and "nutcase" and you only get 116,000 hits. As a former CEO, I feel both defensive and hurt when I think about it. But I can't really disagree with what is being said. There are a lot of stories in the newspapers that are pretty outrageous.
I think that the outrage is pretty widespread. Corporate America has a lot to answer for. Both sides of the current political campaign keep talking about CEO greed. The financial aid package over our sub-prime mortgage fiasco is hostage to the need to punish CEO's. While the idea of congressmen berating CEO's for greed and immoral behavior is both comic and outrageous, we expect more from our business leaders than we do from our politicians.
Here in Denver we are periodically treated to pictures of former CEO Joe Nacchio walking in and out of courtrooms with what appears to be a smirk on his face. For those of you who may not be familiar with Joe, he was the CEO of our local telecom. In a familiar story, he pocketed hundreds of millions in pay, options and bonuses while his company did a swan dive. Joe was quotable when he was on top and insufferably smug. When his company went on the rocks, he was indicted for insider trading. He was somewhat tenuously convicted. He is now appealing and widely expected to win on appeal.
Joe Nacchio is our evil CEO in Denver, but he is just one of dozens, or even hundreds, around the country. A lot of people were hurt by Joe, and his counterparts at many other companies have done the same and worse. Fat cat CEO's presiding over failing companies have left a legacy of distrust and suspicion that have poisoned us all.
There exists a school of thought that says, "Business is business". We negotiate contracts with each other. We hire each other through formalized procedures that try to completely define our responsibilities to each other. That school of thought would say that if it isn't in the contract or the Law, it doesn't exist. That school of thought would say that if the contract or law doesn't specifically prohibit something, it is OK to do it. I would expect that in reality, everything Joe did was legal or in accord with his employment contract.
But I think that very few of us want to live in a world where "Business is business", with other obligations non-existent. The evident passion of those talking about greedy CEO's shows evidence, strong evidence, for the truth of that. And that is not to say that we want to be socialists or communists or live in communes. Those alternatives have been tried and found wanting. We do want to live in a free market country and are comfortable with business. Our market, and our businesspeople, have given us a standard of living that is the envy of the world. The material prosperity created by our business people have allowed opportunity for the broad mass of us to pursue leisure and personal growth undreamt of anywhere else in time or space.
And yet we are unhappy with them. To judge by the political debate, passionately unhappy. Why?
Because we are human beings. We are not the idealized robots, ruled by logic and seeking to maximize our income, used by economists in their models of the economy. We are the same people who hunted mammoths and built wooden ships to find new lands. We naturally come together in social groups to better our lives or protect our families. Today we call those social groups, companies. Rather than hunt mammoths, they engage in business. Whether we hunt mammoths or engage in business, we need leaders. Without them, we get trampled by the mammoth, or we go bankrupt.
But leadership is a special calling. In all times and places, leadership has its rewards. Even more, leadership brings with it, power. Successful groups delegate power to their leaders. Decisions have to be made, and decisions without the power to enforce them are not decisions; instead we call them the minutes of committee meetings. But when we allow another power over our life, we do so willingly only if we trust them. And we trust them only if we feel they deserve our trust.
When one of the hunters slips and the mammoth rounds on him, we expect the leader of the group to be concerned about saving the one who slipped rather than his own escape. It was expected that the captain of the ship would go down with his ship when disaster struck. We expect our leaders to look into the future and see the opportunities and dangers coming down the road toward us. If they use that knowledge for their own gain rather than for the good of those they lead, we feel betrayed.
We used to call that honorable behavior. We don't use the word "honor" much anymore. Actually, I think that it is officially a politically incorrect word. But honor is what is missing in the behavior of our business leadership, our CEO's. But then, where would they have learned it? We don't talk about honor. I don't recall it being evaluated in performance reviews. People are promoted into the executive suite because they are "accountable" and have good "metrics". Why should we have any reason to expect it?
I think that the outrage is pretty widespread. Corporate America has a lot to answer for. Both sides of the current political campaign keep talking about CEO greed. The financial aid package over our sub-prime mortgage fiasco is hostage to the need to punish CEO's. While the idea of congressmen berating CEO's for greed and immoral behavior is both comic and outrageous, we expect more from our business leaders than we do from our politicians.
Here in Denver we are periodically treated to pictures of former CEO Joe Nacchio walking in and out of courtrooms with what appears to be a smirk on his face. For those of you who may not be familiar with Joe, he was the CEO of our local telecom. In a familiar story, he pocketed hundreds of millions in pay, options and bonuses while his company did a swan dive. Joe was quotable when he was on top and insufferably smug. When his company went on the rocks, he was indicted for insider trading. He was somewhat tenuously convicted. He is now appealing and widely expected to win on appeal.
Joe Nacchio is our evil CEO in Denver, but he is just one of dozens, or even hundreds, around the country. A lot of people were hurt by Joe, and his counterparts at many other companies have done the same and worse. Fat cat CEO's presiding over failing companies have left a legacy of distrust and suspicion that have poisoned us all.
There exists a school of thought that says, "Business is business". We negotiate contracts with each other. We hire each other through formalized procedures that try to completely define our responsibilities to each other. That school of thought would say that if it isn't in the contract or the Law, it doesn't exist. That school of thought would say that if the contract or law doesn't specifically prohibit something, it is OK to do it. I would expect that in reality, everything Joe did was legal or in accord with his employment contract.
But I think that very few of us want to live in a world where "Business is business", with other obligations non-existent. The evident passion of those talking about greedy CEO's shows evidence, strong evidence, for the truth of that. And that is not to say that we want to be socialists or communists or live in communes. Those alternatives have been tried and found wanting. We do want to live in a free market country and are comfortable with business. Our market, and our businesspeople, have given us a standard of living that is the envy of the world. The material prosperity created by our business people have allowed opportunity for the broad mass of us to pursue leisure and personal growth undreamt of anywhere else in time or space.
And yet we are unhappy with them. To judge by the political debate, passionately unhappy. Why?
Because we are human beings. We are not the idealized robots, ruled by logic and seeking to maximize our income, used by economists in their models of the economy. We are the same people who hunted mammoths and built wooden ships to find new lands. We naturally come together in social groups to better our lives or protect our families. Today we call those social groups, companies. Rather than hunt mammoths, they engage in business. Whether we hunt mammoths or engage in business, we need leaders. Without them, we get trampled by the mammoth, or we go bankrupt.
But leadership is a special calling. In all times and places, leadership has its rewards. Even more, leadership brings with it, power. Successful groups delegate power to their leaders. Decisions have to be made, and decisions without the power to enforce them are not decisions; instead we call them the minutes of committee meetings. But when we allow another power over our life, we do so willingly only if we trust them. And we trust them only if we feel they deserve our trust.
When one of the hunters slips and the mammoth rounds on him, we expect the leader of the group to be concerned about saving the one who slipped rather than his own escape. It was expected that the captain of the ship would go down with his ship when disaster struck. We expect our leaders to look into the future and see the opportunities and dangers coming down the road toward us. If they use that knowledge for their own gain rather than for the good of those they lead, we feel betrayed.
We used to call that honorable behavior. We don't use the word "honor" much anymore. Actually, I think that it is officially a politically incorrect word. But honor is what is missing in the behavior of our business leadership, our CEO's. But then, where would they have learned it? We don't talk about honor. I don't recall it being evaluated in performance reviews. People are promoted into the executive suite because they are "accountable" and have good "metrics". Why should we have any reason to expect it?
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