(CandidProf is chained and sleepless over his computer in order to meet a Friday publication deadline, he’ll return next week.)

Tuesday Wes Ball asked if Wall Street’s demands for shot-term performance undercut leadership performance; last November I wrote and When leaders can’t practice leadership and said,

“We live in a ridiculous world where Boards, in fear of investors, give CEOs six months to turn around multi-billion dollar companies that have been drifting, if not actually plunging, downwards for years; expect them to do it no matter what the situation or economy; where the slightest miss is considered grounds for firing; and long-term is a quarter.

Even when Wall Street recognizes the need to change a deeply entrenched culture they still demand that it be done in a quarter and analysts not only want perfect visions of future direction, but also exact execution plans, preferably grounded in heavy cost-cutting (read layoffs).

So, like the politicians who once elected spend much of their time fund-raising, CEOs and the senior managers below them spend much of their time focused on immediate numbers, which they must produce quarterly by hook or, more and more frequently, by crook.”

And when it’s not immediate enough, the leaders are fired.

GE’s Jeff Immelt is fighting that attitude now

“Along with the burden of replacing the most celebrated CEO of his generation, Immelt inherited an inflated stock price—the so-called Welch premium—that fostered unrealistic expectations. Yet he has still managed to produce 14% growth in annual earnings and 13% annual revenue gains, on average, over the last five years.”

But that’s not enough.

In the holy name of “maximizing shareholder value” corporations are raped, workers brutalized and communities trashed.

What else does Wall Street do besides cripple corporate strategic efforts?

(Pssst. Come back tomorrow for a look at the fiasco of self-regulation.)

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Don’t miss my other WW: a world of choice

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By Wes Ball, author of The Alpha Factor – a revolutionary new look at what really creates market dominance and self-sustaining success. Read all of Wes’ posts here­.

Sam Walton made no bones about it.  He was not going to lose control of Wal-Mart to the stock market.  Even after they started selling stock over the counter, top management at Wal-Mart was able to maintain control over the strategic direction of the company right up to Sam’s death in 1992.

Sam was a leader.  He had a clear vision that he would not compromise.  He took risks, built a support team to “manage” the company, empowered and nurtured employees, shared profits, and built a company that is still the envy of most retailers.  It also became the Alpha in discount retailing due to that leadership.

Compare that with the life of most CEOs today: shareholders and stock analysts really run their companies, because stock price is the measurement of their success.  Their bonuses are based upon it, and their future employment is based upon it.

CEOs who have to answer to the whims of the stock market cannot be leaders, because they have already defined themselves as followers.

Is it possible for a CEO of a publicly-owned company to maintain leadership?

Certainly, but it takes an extremely charismatic, visionary, focused individual who is willing and capable of bucking stock analyst and shareholder pressure for short-term profit results and instead keep the company focused upon long-term success.

All of the Alpha companies I researched for my book, The Alpha Factor, had such leadership in their early formative years.  What killed most of those companies later on was the compromise of allowing stockholders and stock analysts (or other outsiders) to drive the strategic management of the company.

How would you protect your company from this if you had to generate significant financing?

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Post from Leadership Turn  Image credit: Liquid Scenarios

I was unable to attend the Stanford Summit this year, so I prevailed on Emanio CEO and M3 Foundation founder KG Charles-Harris to go and share a story or two about the people he met.

From KG:

At the Stanford Summit I met a Lorenzo Carver, who impressed me quite a bit.  He’s 40 years old, plays base and studied music at Berkeley as a film score major.  His working to pay for school was affecting his playing and studies and as a consequence he started a business that did well and sold it after 18 months, then started another one that tanked.

Lorenzo’s entrepreneurial zeal didn’t end and when he returned to school to study finance he put together a leveraged buyout for a company in bankruptcy and used his portion of the profits to pay for graduate school. He ended up with a MS in Accounting, plus and MBA and CPA; all received while he was working.

During those times Arthur Andersen was the premier firm, but after a short stint there Lorenzo wanted to return to his entrepreneurial roots.  His new business was advising entrepreneurs; he wrote more than 200 strategic plans for biotech and software and assisted in raising more than a billion dollars in funding for these companies.

Then came the dotcom collapse, which gave him the seeds for his present company, Liquid Scenarios.  They are now 14 people and self funded, growing from the profits they produce.  The strange thing is that, instead of coming to the conference to seek investors, he came seeking investors as customers. (Liquid Scenarios’ tagline— “Because Time is Money”)

Liquid Scenarios is based on his having developed complex algorithms for calculating funding scenarios, especially for high-growth companies.

Anyone who has spent time calculating scenarios for more than one class of stock realizes the value of this tool for real estate, venture capital, private equity, and private investors.

The problem he solves is one that faces many investors (and entrepreneurs) in disparate industries—how to calculate funding structures that reduce uncertainty.

Previously there has been no simple-to-use software that helps reduce uncertainty for investors, entrepreneurs and creditors in financing situation by enabling modeling of complex scenarios and outcomes.

After reviewing his software, it is clear that it reduces the calculations from dozens of hours and days to just a few minutes.

(Pretty cool! Check out the product demo to really understand why this is so hot. Miki)

The reason I’m excited is because I’ve been on all sides of the table, as a venture capitalist or private equity investor, investment banker and entrepreneur and I know that calculating all this is so tedious and difficult that only experts can do it.

Liquid Scenario’s tool creates equality between the people on different sides of the table and is especially useful to entrepreneurs who may not have the training to work complex spreadsheets.

But what I found most interesting was Lorenzo’s comment on the most important lesson he’s learned as a manager or entrepreneur.

“This startup is the easiest one I’ve done of twelve where half were started by me.  The difference this time is that I’ve been exceedingly careful about the people I work with—I’ve only chosen the ones that are passionate and competent.  There is no B-team this time.”

(For more of KG’s impressions click here.)

Do you “settle” when you hire or do you slog on until you find an A-team member?

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Ever notice how apropos a comment made about one thing is for something totally unrelated?

I found these quotes about baseball by baseball greats and laughed at how well they fit the current business climate.

“Finish last in your league and they call you Idiot. Finish last in medical school and they call you Doctor”. –Abe Lemons (Or CEO if it’s business school.)

“Win any way as long as you can get away with it. Nice guys finish last.” –Leo Durocher (Business really took this advice to heart, think Joe Nacchio, Ken Lay, Jeffrey Skilling, Chainsaw Al Dunlap, the list goes on and on.)

“Baseball must be a great game to survive the fools who run it.” Bill Terry (Does this mean that business will survive short-term Wall Street thinking?)

What can you add?

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Continuing last weeks conversation about change based on IBM’s The Enterprise of the Future.

Let’s start with the fact that change isn’t easy and well-managed change is even more difficult.

“CEO s rate their ability to manage change 22 percent lower than their expected need for it — a “change gap” that has nearly tripled since 2006. While the number of companies successfully managing change has increased slightly, the number reporting limited or no success has risen by 60 percent.”

The problem isn’t just change per se, but

• the speed of change;
• relentlessness of change; and
• how it’s approached.

Global competition and the need to address fast moving targets, with Wall Street/your stakeholders demanding immediate results, puts still more pressure on CEOs and the executive team.

And underlying it all, you must constantly change MAP (mindset, attitude, philosophy™)—your own, your people’s and your culture’s.

But it’s not just about managing change; it’s about creating a desire for it. It’s about creating an environment where changes are being driven by your workers, not just by you and your execs.

How do get your people to want/love/demand change?

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Post from Leadership Turn

As long-term readers know, I’ve changed both the tagline and design of Leadership Turn since I took it over last year—unfortunately, I couldn’t change the name. I say that because neither I, nor anyone I’ve discussed it with, can figure out what it’s supposed to mean. But that’s OK, the world of blog names runs the gamut and mine happens to lean to the esoteric side of the scale.

Currently, the tagline is “Leaders DO—and it’s your turn.” I came up with that when I moved the blog away from classic leadership content and more to a discussion of leadership in action—or out of it as the case may be—but I still think it’s a dumb tagline.

Being a strong believer in the “ask/hire people smarter than yourself” school of thought I asked Eric Eggertson of CommonSensePR; here are his suggestions,

• Keys to earning trust and building relationships
• Earning trust, building relationships
• Making things happen
• The road to achievement
• From inspiration to results
• Being a catalyst
• Harnessing team potential
• Seize the future
• Inspire and achieve
• Managing attitude and effort

I came up with

• Seize the initiative

Now I’m asking for your help. Please click ‘comments‘ and vote for your favorite OR offer up something else.

(Argh, I’m going to be really embarrassed if no one votes!)

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CandidProf is a Professor of Physics and Astronomy at a state university. He’ll be sharing his thoughts and experience teaching today’s students anonymously every Thursday—anonymously because that’s the only way he can write really candid posts.

Last week I wrote about what is involved to be a good teacher. What I described takes a lot out of me.  It means that for every hour that I am in lecture, there are several hours outside of lecture associated with the class.  Every now and then, someone in the state legislature points fingers at the college faculty saying that we are overpaid because we don’t teach 40 hours per week.  A full load is considered only 5 classes per semester.  Depending upon the institution, some of that requirement is met by mentoring graduate students, and some is met by research in lieu of lectures.  But, that doesn’t look like much.  It doesn’t look like much, that is, until you look what some of us put into what we do.

For us, this isn’t just a job. It is what we do.  I feel responsible for my students.  I have dozens of students who sign up for the class expecting to learn something.  I feel that I am letting them down unless I give my all.  So, that is what I do.  And, that is what makes me successful.

Teaching is leading students.  You lead them to learning.  You can’t force the knowledge and understanding into them. You have to lead them to where they can learn.

Good leaders realize that leadership doesn’t stop at the end of the work day.  Sometimes, the leader has to put in extra hours just like everyone else.  As I see it, how can you actually be leading if you are not working as hard as those you are trying to lead?

What do you think?
Is teaching too easy?
Is compensation fair? High? Low?

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Don’t miss my other WW: bad corporate culture

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By Wes Ball, author of The Alpha Factor – a revolutionary new look at what really creates market dominance and self-sustaining success. Read all of Wes’ posts here.

If you’re alive, you’ve probably been watching the drama being played out at Starbucks.  Hundreds of stores are slated to close across the country, and customers ranging from local neighbors to business owners to the mayors of cities are calling to lobby for their local store.

Starbucks management claim that they “over expanded,” and that has caught up with them as they experience the same economic downturn that is haunting everyone else.   That is certainly the case, but there is something even more significant being displayed here: the power of an Alpha company.

Alpha companies are the leaders of customer expectations in a product or service category.  They define what it means to be “good.”  Everyone else has to either emulate or overcome them to establish themselves as acceptable.  They accomplish that by driving emotional needs fulfillment ever higher to “self-satisfaction” and “significance.” 

One of the benefits of making yourself this kind of company is that you have a lot more margin for error when you really blow it.

Not since Coca-Cola nearly immolated itself with “New Coke” in the 1980s has there been such a customer response as we are seeing for Starbucks.   Customers saved Coca-Cola from disaster.  They are trying to help Starbucks in the same way.  What a testimony for leadership over management.

Cost-side management has really been the cause of the problem.  What was forgotten was that cost-side management could never have created this kind of customer response.  Only revenue-side management (which is the focus of leadership vs. management) could do this.

Luckily, Starbucks has been given a gift by its customers.  I hope that it recognizes the true cause of its decline is a cost-side focus and uses this time to re-focus upon the customer experience that defined new experiential expectations for a coffee shop.

How will you react when your local Starbucks closes?

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