No surprise that California's continuing budget problems resulted in a significant drop in funds available through the California Small Business Loan Guarantee program. Why? Because a chunk of its trust fund was used last year to help plug the budget gap ... more gamesmanship by our elected reps in Sacramento.…
“If I am through learning, I am through.”– John Wooden
Some of you will remember – back in the day – the E. F. Hutton commercials that intoned, “When E.F. Hutton speaks, people listen.” (Some of you are probably wondering – who is E.F. Hutton in the first place?) These days, the Sage of Omaha has taken their place and has the ear of many. When I finished re-reading Warren Buffett’s Annual Letter to Shareholders, it resonated with similar messages in a number of recent articles.
From a Wall Street Journal article on March 25 discussing Conoco/Phillips’ future plans: “We asked ourselves, ‘What is growth?’” an executive said. “Growth could be viewed as just growing absolute volumes, but we felt that in this challenging environment what’s really important is to grow the value of the company.”
Or this one, from an article in the April 5 edition of Business Week about the Sears/K-Mart merger: “Simplistic analyses … ignore the fact that negative or below-market returns on invested capital are as harmful to creditors as to shareholders.”
Finally, in Warren Buffett’s shareholder letter, (more…)
“The most serious mistakes are not being made as a result of wrong answers. The truly dangerous thing is asking the wrong questions.”– Peter Drucker
I have been working recently with a young CEO-in-waiting who is eager to move into the top spot. He recognizes, however, that his struggle to “think strategically” may be keeping him back. On a tactical level, he is very efficient, discharging the assignments given to him, working his way through his daily action list and dispatching players to their intended destinations. He’s proud of his accomplishments, as he should be, but he “can’t see the lawn for the blades of grass,” and is constantly wrestling with how to develop a strategic perspective.
Ironically, many executives bear a subconscious fear about actually getting to that strategic level. After all, it’s a little harder to figure out what to do than to simply — do. It’s more demanding to establish the flight plan than to follow it. Creating the plan also demands more personal accountability, the conundrum that befuddles so many executives in the first place.
What does it mean to “think strategically?” (more…)
The sudden resignation of Ken Lewis from Bank of America highlights, yet again, the risks that family and other businesses take in failing to prepare for the inevitable succession of leadership.
A succession plan doesn’t mean you have all the work done and the perfect successor is comfortably waiting in the wings, although that would be desirable. It does mean, at a minimum, that you have an interim CEO in place who can hold down the fort while certain details are worked out and long term plans are implemented. Developing an emergency plan also gives the Board or family a chance to discuss these often thorny subjects without stockholder worries, employee hand-wringing or the emotional burden that comes with a fallen leader.
Often, this process highlight gaps within the family or board about the suitability of a particular successor. (more…)