Leader or Follower: What's the Future for the US Economy?

What can we expect to happen in the US after the mid-term elections on 2nd November – and what impact might this have on the Global Business Environment?

In The New York Times, (9th October), David Chen wrote, “with many Americans seized by anxiety about the country’s economic decline, candidates from both political parties have suddenly found a new villain to run against: China. In the past week or so, at least 29 candidates have unveiled advertisements suggesting that their opponents have been too sympathetic to China and, as a result, Americans have suffered”.

Polls show that not only are Americans increasingly worried that the United States will have a lesser role in the years ahead; they are more and more convinced that China will dominate. In a Pew poll conducted in April, 41 percent of Americans said China was the world’s leading economic power, slightly more than those who named the United States.

The Democrats cite studies this year from the Economic Policy Institute, a liberal research organization, that assert three million jobs have been outsourced to China since 2001 because of the growing trade imbalance. But Republicans, backed by some academics, say the number is much smaller. Indeed, Scott Kennedy, director of the Research Center for Chinese Politics and Business at Indiana University, said that most of the jobs that China had added in manufacturing through foreign investment had come from Taiwan, Hong Kong and South Korea, and not from the United States.

This is at the same time when a survey in the US showed the unemployment rate had held at 9.6%, meaning it has now topped 9.5% for 14 straight months, the longest stretch since the 1930s. These closely watched employment reports are the last updates before the November 2nd mid-term elections. On that date US voters will elect members of Congress, and there is a strong belief that voters opinion on whether the economy is recovering or sinking is likely to be a key influencing factor.

If problems with the economy and jobs weren’t enough for the current administration; a draft report by the National Oil Spill Commission appears to suggest the Obama administration was directly involved in controlling the oil spill message. More than 206m gallons (780m litres) of oil leaked into the Gulf before it was finally plugged on July 15. It has become the worst offshore oil leak in US history.

The panel, which was set up by President Barack Obama, found the White House denied an early request by government scientists to inform the public of its worst-case predictions. Carol Browner, the White House's energy and climate change director, said on August 4 "more than three-quarters of the oil is gone". The commission said her comments misrepresented the findings of a federal analysis, which had found the oil had "dissolved" and "dispersed" - but was never "gone".

After what seemed like world jubilation at the election of President Barack Obama, what is the future for politics and the economy in the US? If Fox News is right the Presidency could become a reality show in 2012. On 8th October they reported that Donald Trump may challenge Barack Obama for the presidency; "For the first time in my life, I'm actually thinking about it," Mr Trump, a self-declared Republican, told Fox News.

The businessman did not rule out the possibility of running as a representative of the Tea Party, the conservative movement that is seen as a sub-group of the Republican Part, but which some experts think could emerge as a third party. "I am a Republican but have great respect for what the Tea Party has done because they have brought to light what's going on. I mean, we have trillion-dollar deficits. The country is going bankrupt, let's face it," he added.

Mr Trump said that Barack Obama was ‘having a very hard time’ and that the US could be ‘doing much better with proper leadership’.

Trumps aspirations may not be that far fetched as US politics appears to be as much about ‘wealth’ and ‘media attention’ as anything else. Ms Nancy Pelosi, for example, the current Speaker of the House, has raised $52.3 million, since the beginning of 2009, for Democratic incumbents, candidates and the party’s Congressional campaign committee, (second only to President Obama among Democrats).

When you imagine how much money must have been raised by both parties; you can’t help asking yourself whether these funds are used in the best interests of the nation, at a time when many are still struggling with the recession; or used in the best interests of a few?

Will the mid-term elections in the US, on 2nd November, add further impetus to the US and international economic recovery; or could they be the spark that ignites another global economic crisis?

Is it Time to Develop Your Own Individual Brand?

As organisations fight their way out of the recession, the acquisition and retention of human talent is proving to be a significant competitive advantage. Yet as organisations start looking for managerial and other specialised talent to take them forward into the 21st century, how are you going to ensure that you stand out, as an individual, from the crowd of ‘look-a-like’ talented employees.

Creating a recognised individual image and ‘brand’ has normally been left to the lofty heights of the CEO’s and top entrepreneurs, yet individuals will now have to start ‘developing their image’ much earlier in their careers, maybe even as early as university, to ensure they stand out for the right reasons.

Getting yourself noticed isn’t about shouting the loudest or being the most arrogant or opinionated individual in a group – in fact this is likely to create the wrong image going forward. It’s finding a balance between expressing, sharing, and practically implementing your knowledge; and having the patience and empathy to listen to others opinion. It’s creating a ‘history’ where people want to ask your advice and opinion; and where you accept these questions with grace and without letting the attention go to your head.

Organisations aren’t only going to be looking for individual talent, but talent that is able to work effectively with other talented individuals, in strategic or operational teams - finding the optimal solutions for their organisations, without a need for personal recognition.

In creating your own unique image and brand you should consider the following factors;

1. Develop a skill and talent you enjoy (and never assume that you’ve learnt enough about the subject);

2. Develop a basic understanding of the generic principles that drive a successful business;

3. Learn advanced communication skills, like NLP, that will give you an advantage when communicating with others;

4. Never assume that you are superior to anyone and learn to be humble (people will see your skills for what they are in practice, if you have to sell yourself too hard, maybe you still have a lot to learn);

5. Be aware of your image at all times, and learn to be confident, (but never over confident);

6. Network effectively, as you want people to remember your name for the right reasons;

7. Never burn your bridges (and learn to control your emotions);

8. Learn to be a good leader and a good follower (as you’re likely to have to perform both rolls as your career develops);

9. Become someone who can be trusted and relied on;

10. And when, at last, you have developed your personal ‘brand’ and are successful, never forget the journey, the people who supported you along the way, and don’t turn your back on others starting off on the same journey.

Talent acquisition and retention will become a core strategy for many organisations that have learnt from their mistakes in their journey through the global recession. For those individuals that have ambition, being part of one of these organisations must be your goal. This won’t only be the large multi-national organisations; as all organisations, large and small, whether in a global or niche market, will focus on talent management and development to give them a superior competitive advantage.

It’s time to get yourself noticed for the right reasons, so start developing your personal image, and create those business networks that will mean your name is on employers lips when they are searching for the best in your field. That doesn’t mean being a ‘yes man’ or worse - it means being knowledgeable, reliable and an effective team player, focused on organisational success.

Can Executives Try Too Hard to be 'Liked' in Order to Succeed?

By the time of its collapse, in 2008, Lehman Brothers reportedly had one of the strongest cultures of teamwork and loyalty on Wall Street. Yet Lehman’s board of directors had become too agreeable and too loyal, happy to follow Dick Fuld even when they knew better. This loyalty led Lehman executives to an almost wilful blindness, as nobody wanted to disrupt the peace; (Joni and Beyer, 2009, p.48-49).

Yet there is a fine line between supporting your CEO and challenging the status quo. Marshall Goldsmith (2009) reminds us that “in 1978 many observers considered Ford Motor president Lee Iacocca the obvious candidate for the new CEO position that Henry Ford II would shortly vacate. Iacocca, of course, not only didn’t get the position but was fired. In explaining why he cut Iacocca loose, Ford famously remarked – sometimes you just don’t like somebody,” (p.74).

So how does CEO succession, and even just the thought of it, effect individual performance; and who is responsible for ensuring that the organisations future comes before individual aspirations that may negatively impact board performance and organisational growth.

As Goldsmith (2009) mentions, “much of what has been written about CEO succession ignores the personal drama that unfolds when it’s time to pass the torch of leadership. CEO succession isn’t an entirely rational process. In practice, succession decisions may be influenced as much by stakeholders’ gut feelings and emotions as they are by business logic. Strains in relationships between stakeholders and their heir apparent can emerge and quickly scuttle succession plans, and faulty assumptions can cause decision makers to suddenly change their minds about who should lead the company next,” (p.74).

The stakeholders that influence CEO succession, aren’t just the board of directors and the shareholders, but also include the current CEO, the peers of the potential successor, the direct reports of the potential successor, the organisation’s key customers, and influential external business analysts, (Goldsmith, 2009, 74).

In the end, the most influential decision maker on CEO succession is the board of directors; yet there is often a lack of evidence to prove that the board themselves have the knowledge, skills and experience to make the best decision for the organisations future. That the board members focus solely on the organisations future strategic and operational needs, rather than their personal likes and dislikes. There are mechanisms for boards to measure and evaluate their individual and group effectiveness, yet these business tools are seldom used appropriately (if used at all).

As Kazanjian (2000) notes, “every year the Toronto Stock Exchange requires listed companies to disclose how they stack up against a set of 14 corporate governance ‘best practice’ guidelines. Scores were encouragingly high (80 percent or more) for guidelines dealing with control of board size and participation in strategic planning. Fewer than 20 percent of the respondents had any formal process in place for assessing the effectiveness of the board and even fewer had any process for assessing the contribution of individual directors” (p.46); and it’s worth noting that the New York Stock Exchange also requires board evaluations (Nadler, 2004). “The concept of board evaluation has met with particular resistance; directors remain either unprepared or unconvinced of the benefits gained from evaluation. Potential benefits such as improved leadership and teamwork, clarity of roles and responsibilities, improved accountability, decision making and delegation, and enhanced communication and operations are countered by fears concerning operational disruption, board dysfunction, and individual humiliation and exposure” (Long, 2006, p.551).

Without effective board evaluation how can we be sure that the best decisions are being made for the future of our organisations, especially when it comes to CEO succession?

References

Goldsmith, M. (2009). How not to Lose the Top Job. Harvard Business Review, Vol. 87, Issue 1, p.72-80.

Joni, S.A. and Beyer, D. (2009). How to Pick a Good Fight. Harvard Business Review, Vol. 87, Issue 12, p.48-57.

Kazanjian, J. (2000). Assessing boards and individual directors. Ivey Business Journal, May/June, p.45-50.

Long, T. (2006). This year’s model: Influences on board and director evaluation. Corporate Governance, Vol.14, No.6, p.547-557.

Nadler, D.A. (2004). Building better boards. Harvard Business Review, May, p.102-111.

How to Lead Your Organisation Out of the Recession

In a Harvard Business Review article, March 2010, Donald Sull wrote that, “more than ever, companies need agility – the capability to consistently spot and execute on unexpected opportunities before rivals do.”

“As companies crawl out of the recession,” Sull says, “it’s not enough for leaders to ‘craft’ the perfect strategy, put their heads down, and make it happen, confident that the market will cooperate. Instead, they must set a broad strategic direction but remain open to unexpected opportunities that appear along the way. And make no mistake – for all their risks, volatile markets do produce opportunities. Shifting regulations generate unexpected sources of funding; changing consumer preferences create demand for new products or services; distressed competitors sell off assets cheaply” (p.71).

A downturn in the market often tests how well organisations have applied and implemented core business principles, relevant to their industry; and developed a strong business foundation – those principles that they may have not considered important while the ‘sun was shinning.’ Have they developed a loyal customer base and do they have the channels in place to engage with their customers directly, to find out in ‘real time’ what their expectations are; and to be able to react quickly to changing needs and expectations. Has the organisation attracted and retained the best talent – the talent that sees obstacles as opportunities, and aren’t sitting somewhere, sulking which a calculator, wondering how much their bonus will be cut this year. Has the organisation developed strong collaborative partnerships with key organisations that include their suppliers, advisors and/or custodians of outsourced functions; to ensure that they can work together, through the tough times, to find new opportunities that will benefit all involved?

One of my favourite quotes, states that;
There are three types of organisation,
Those that make things happen,
Those that watch things happen, and
Those that wonder what happened.

In a time of global crisis, organisations must make things happen for themselves – this can be achieved by initially watching the competition and/or market for unique opportunities. However, you cannot afford to ‘sit and watch’ for too long and must be alert and focused to respond quickly to any opportunity that arises for your organisation to grow, either within your existing markets, or through new markets or new products and services. This requires flexibility at all levels of the organisation, a flexible strategic leadership team who are focused on sustainable growth and adaptable to change; and a flexible organisation, that has its ear to the ground picking up customer ‘chatter’, and that have an internal communication process that can feed the relevant information to the decision makers quickly and accurately.

The business environment is unlikely to return to how it was before the recession and hence organisations need to focus on attracting and retaining the best talent for their current and future strategic initiatives. Business success cannot be taken for granted, having the right talent will ensure organisations implement the business principles they need for a solid foundation; and that leads to sustainable business growth and continuous improvement into the future.

The organisations that come out of the recession as the future leaders in their respective industries will ensure that;

1) They attract, develop and retain the best talent, from the strategic leadership to the employee base;
2) They have a culture that embraces innovation and diversification;
3) They thrive on problem solving and flexible responsiveness;
4) They embrace strong values and social responsibility; and
5) They set the standards for other organisations to follow.


References

Sull, D. (2010). Are You Ready to Rebound. Harvard Business Review, Vol. 88, Issue 2, P.70-74.