Leadership In Adversity

Greed, for lack of a better word, is good
Greed is right
Greed works
Greed clarifies, cuts through, and captures the essence of the evolutionary spirit
Greed, in all of its forms; greed for life, for money, for love, knowledge has marked the upward surge of mankind
And greed; you mark my words; will not only save Teldar Paper, but that other malfunctioning corporation called the USA

The above was said by Gordon Gekko played by Michael Douglas to shareholders of Teldar Paper in a very famous scene in the movie “Wall Street” (1987). We have become Gordon Gekko as a global economic society and are suffering the consequences. Life preservers are being thrown out in the form of articles, books, congressional hearings and the media about leadership, who’s to blame, and how to fix the mess. From the Presidents of nations to the entrepreneurs running a one-man shop, true leadership in adversity needs to be sealed with a KISS (Keep It Simple Stupid).

Greed Is Not Good

Whenever there is an approaching hurricane, the local price of building material, gas, and other necessities go up 10X. There are countless articles about all the unfair business practices after Hurricane Katrina where a number of companies were fined for this behavior. In the short run, companies that exploit a natural tragedy may profit financially, but in the long-term negative consequences are significant. Credit card companies are notorious for this behavior, with limited laws to protect the customer. The very high interest rates charged and the changes in customer  fees with no warning are all in the defense of competitiveness. This short-term gain and long term pain is not consistent with good leadership. There will be more damage to the company and the people due to poor self-regulation which leads to federal oversight. It is amazing how many leaders forget the very idea of why they are in business: provide a reliable product to better the lives of people at a fair price.

Walk The Talk

Today the papers, TV and radio are full of companies reducing their labor forces, freezing/lowering salaries, cutting back on spending, except for what is vital to run the enterprise. If a company or an individual is required to cut back, modify behavior, or hold to the promises that were made, then so also should the leadership. This raises the issue of ethics associated with leaders who expect and retain exorbitant compensation packages and astronomical bonuses. First, you should not take it, and if you did, give it back. Never make a promise you can’t deliver. If some unusual circumstances do come up, you may have to break the promise; but in most cases, you should have the moral duty to be true to your word. A leader has an obligation to tell the truth and be honest with their stakeholders that directly affect the enterprise. 

Know What You Are Selling

One of the primary reasons for the current economic conditions that started in the USA and infected the globe was the exuberance of investors to buy and sell financial products whose complexity they didn’t fully understand. It is unimaginable that “experts” were involved in thousands of transactions with so much at stake. And, at the same time, these experts were ignorant about what they were buying or selling. Due to the fact that huge amounts of money was being made, no one questioned the deals or had the fortitude to raise the issues to investors, board members, or the public. Product knowledge is no small detail for doing business. It is a responsibility you owe to your customers, board members, and your investors. 

Protect Your Assets

We all know the Golden Rule, “Do unto others as you would wish them do unto you”. People are your assets whether they are your employees, vendors, customers, or investors. That’s what makes or breaks a business. When a leader can foresee that a decision is likely to do harm and he makes it anyway, he is being irresponsible. The continuing pursuit to be No.1 can give a myopic view of what is really important; respect for others. Look at what the sub-prime mortgage lenders did; they manipulated people into borrowing money that had a high probability of default, were enriching themselves at the expense of others. It affected people that work for the mortgage company, the borrower (customer), the people at the banking institutions that had to buy back the defaulted loans, and worst of all the tax payers who are bailing out the financial institutions. A good leader recognizes that avoiding harm to people and company is responsible business policy.

I Made A Mistake

How many times have you heard the words transparency, accountability, and oversight in the past 12 months from people that were not in leadership positions. Classic obfuscation was seen during the dot com bust. Enron (Ken Lay), WorldCom (Bernie Ebers), Tyco (Dennis Kozlowski) are examples of never admitting, “I made a mistake” due to blind greed and arrogance. All three were sentenced to jail, unfortunately Ken Lay died of a heart attack during his trial. Now we are going through the same cycle, except this time it is the financial sectors and on a much grander scale. If something goes wrong on “your watch” it is you who is responsible to fix the problem. When a business leader makes a mistake that has an adverse effect on the enterprise, they must apologize to the investors and do what is necessary to rectify the situation. This is part of the business culture in Japan and other Asian nations, from which leaders in America can learn.

Passion is what drives any business. It is also what causes it to fail when it transforms into an obsession. As Peter Drucker stated, “it is not enough to do things right; we must also do the right things.”