11% doesn't warrant a ticker-tape parade!

You would think that Cadbury expects a ticker-tape parade if you read the recent story in The Globe and Mail, about it becoming the largest candy manufacturer in Canada to sell fair-trade chocolate. Wow...you want to set off the fireworks and send in the marching bands! Finally a big corporate behemoth is embracing its role as a leader in social responsibility!

At least that's what you think until you read to the bottom of the second paragraph of the story, wherein it states "In total, 11 per cent of the Cadbury products sold in Canada will be certified."

Now I'm not the greatest mathematician in the world, but doesn't this mean that for 89% of their products they cannot certify that they are fair trade? I don't enjoy being the cynic (ok, maybe a little bit)...but this isn't even close to a glass half full scenario -- bascially 9/10ths of the glass is empty here...and this warranted a press release?

I wrote about this almost exactly a year ago on a entry entitled Corporate Social Responsibility -- Statistically Speaking. In this blog entry, I wrote about how statistics can be massaged greatly by corporations to make themselves sound as they are doing significantly more than what is truly happening. Because you see these sound bites that we get don't give us the measurements/metrics and the meaning. Specifically the blog a year ago addressed some of the statistics that Starbucks was heralding regarding their "commitment" to fair-trade.

Now don't get me wrong...I believe that every move, no matter how infinitesimal is better than none at all. My issue rests with corporations giving themselves "atta-boys" and expecting others to put them on a pedestal because of 11%. I mean a company spokesperson for Cadbury even has the audacity to say "Companies should be responsible about where they source". I guess they mean only 11% of the time.

This is just marketing spin...hoping that we are stupid enough to go out and buy because of the halos on these corporations' heads....luckily I can read between the lines.

So it's Sunday morning, so I guess I'll start by making the world a better place by going out and getting my Starbucks coffee and a Dairy Milk bar!! Hmmmm.......

The Three Year CEO cycle -- for Better or Worse?

An article in The Globe and Mail is entitled "Ego and the CEO". In this article it states that a new study argues "that the biggest risk factor for fraud is a CEO with a truly oversized ego".

They needed a study to figure this out? There is no question that to lead a company or a country for that matter you need to have a healthy ego, because otherwise you wouldn't have the confidence to believe you were actually the person to lead thousands if not millions of people. However there is a fine (or maybe not so fine) line between healthy and overblown. The latter can often stem into the narcissistic arena if not into that of sociopath (more about this later).

Those who are inevitably charged with fraud most often believe that they are smarter than everyone else and that they won't be caught. They are able to quickly assess the vulnerabilities of their minions and pander to their woebegone egos to make them feel part of a special club and when these pawns realize that what is going on is fraudulent, they are either in to deep already and can't see a way out (or their boss threatens them with unspeakable outcomes if they blow the whistle) or they can justify their actions in some sort of twisted logic way.

I have often watched some of these so-called "celebrity CEOs" who come in to great fanfare, only to gut a corporation's soul. It is interesting to watch from the sidelines (although once I had the academically interesting but emotionally unfortunate opportunity to watch it close up and personal). They are "what the company needs", "they will enhance shareholder value"...blah, blah. And for a time, they seem to do just that. There is a bit of excitement (and fear) that goes along with a new CEO coming in and at the beginning it seems that their actions will be good for the company.

To be fair, these CEOs are not necessarily fraudulent, although their actions are highly questionable and the devastation that they leave in their wake is just as palpable as that resulting from fraud.

There are so many of these CEOs that have crashed and burned (along with the companies they ran) that you need to ask the question..."How do they keep on getting work". I think there are a few key points to consider:

1. Many of these CEOs are brought in by a board, may members of which may know them personally. Note to board members -- how someone is personally does not necessarily mean that they are good leaders. I am not passing any judgement here, but how can a Bob Nardelli go from being tossed out from Home Depot (with $200M severance) to leading Chrysler (which of course now is going into oblivion -- and don't say it is because it was on its path there anyway -- Nardelli was brought in as its saviour). Or Mike Zafirovski -- Nortel's answer to survival? Yeh right. Should I also mention that these two were from GE and the Jack Welch school of leadership? (don't get me started!)

2. I've also noticed a trend (not picked up by the study noted earlier) that there seems to be a three year rule. These "wunder-kinds" can keep on moving from company to company and have a grand reputation go with them, as long as they don't stay beyond three years. Because you see, if you have a big behemoth of a corporation and you rip the guts out of it, it actually takes about three and a half to four years for it actually to realize that it is in its death throes! Because I don't want to be sued for defamation of character, I won't name names here, but go back and look at those over the years who have their names in lights in Business Week, or similar magazines.

Firstly, the Boards and shareholders should keep a view to the company the CEO just left (and even those prior) to keep a view on its performance. Because I tell you, if you look back, it can often predict the future. Many of the companies that these CEOs leave end up having huge issues. Of course the CEO will indicate that this is due to the firm not being able to run without his/her (although its mostly a "his" issue) mastery at its helm. Hmmmm.....

When this CEO begins believing their own press, and stay beyond three years in a company, then their actions do catch up with them. And eventually, within the 3 1/2 to 4 year time period they walk the plank. Of course they often walk the plank weighed down by the millions of dollars which can only be seen as a reward for being incompetent -- the analogy of pirating truly fits here.

Oh...and if your CEO ends up as the CEO of the year in Report on Business -- start looking for a new job, because to date I have not been too impressed with their choices.

There is a good book which I recommend to anyone who wants to learn more about the psychopaths who lead us should read Snakes in Suits -- When Psychopaths go to Work. I found the book fascinating and scary -- because it was too easy to see how many there are actually out there!

Client/Supplier Symbiosis

I have been preaching for a long time that suppliers are critical to the success of any business. It seems like somewhat of a truism -- not difficult to comprehend -- but at the end of the day exceedingly difficult for many to "walk the talk."

It was somewhat refreshing to read the story of Sam Baio, CEO of West 49 in a recent edition of The Globe and Mail. His epiphany was borne out of a crisis when the Canadian dollar was close to par with the US currency and many shoppers were trekking across the border for the "better" deals.

Although the initial issue was reduce pricing (which he did get from suppliers), it seems that at this juncture he has moved beyond the typical supplier/client relationship -- still focused on the bottom-line, yet with steamlining systems, processes, inventory management, etc.-- hand-in-hand with the suppliers of goods.

This should not be heralded as rocket science, because its not. However it is nice to see a CEO understanding the 360 degree matrixed relationships within the business and noting how all aspects of the supply chain can severely and often irreparably harm business.

Suppliers need their customers to stay in business and customers need their suppliers to also thrive so that the goods and services are available -- inevitably to service the end consumer.

It is sad when there are too many companies out there who like to take the 2x4 to their suppliers, with nary an askance glance at the potential deadly blow that they have wielded at their profitability.

West 49 provides some of the hippest garments for the tween and teen set. It is nice to see that their trendsetting ways also are evident in their business dealings!

Bravo Mr. Baio!

Why is it wrong to support business in your own backyard?

Ok, my feelings on the whole "Buy American" thing isn't going to make me too popular. You see, philosophically, I don't see a problem with it. Monies spent by the US Federal Government, and the State and Local governments comes from where? The American taxpayer! And I can see why the American taxpayer would say "If there is no benefit coming to our local economies from awarding this contract to this company, then why should we do it?"

Of course this can go a little too far, which is buying substandard products or services, just to meet a specific government requirement - which unfortunately is often the case -- but if the quality is equivalent, even if the price is a little more, I say give it to the local supplier.

In Canada we are tip-toeing around this issue and going ..."oh, well we believe in being fair and all that...let's go out an make in an absolutely equal playing field even if our taxpayers money is helping another country's economy." Quite honestly -- Dr. Phil would be saying "How's that working for you?"
The reality it is not. Hey, I know we are part of the global economy and open trade and all that jazz, but there is an old saying "Charity begins at home." And this isn't charity -- it makes long term viable economic sense!

We had an issue with the Canadian Federal Government spending not too long ago when the government awarding the provision of mid-size trucks for the Canadian military operation in Afghanistan to a US outfit, when there were two potential locations in Canada that bid and could have easily been retrofitted to provide this requirement. Moreover, these two plants were in economically depressed areas! So why didn't this factor into the decision? Because often bureaucrats can't see the forest for the trees....I mean -- for our own Canadian military -- the Canadians who are risking their lives each and every day??

The Americans and the Canadians should make it mandatory to provide information of how awarding business will assist the local economy -- what kind of off-set, job creation etc. would occur. Not rocket science is it?

And furthermore, what about foreign aid. Again I am not opposed to spending significant monies to help poorer nations and the like -- but unfortunately a lot of this aid ends up lining the pockets of corrupt government officials in these far away lands. Yet beyond that we have our own issues here -- why can't we take better care of our own -- maybe scale back a little of the foreign aid and help the First Nations, or the many abused children in our own country. Or what about the homeless etc. etc.

So call me a heretic if you want to, but for me I think, I prefer to have my taxes go toward helping my economy and those who live in this great country...So go ahead US -- have your "Buy American" policy. I just wish Canada would have the fortitude to do the same!

The SEP Theory is Alive and Well

"An SEP is something we can't see, or don't see, or our brain doesn't let us see, because we think that it's Somebody Else's Problem...."

...from Hitchhiker's Guide to the Galaxy

I was reminded of Ford Prefect's theory again yesterday when I was watching a documentary on the CBC network last night. Called the E-Waste Dumping Ground it first aired in October of last year, but the issue has been around a long time and certainly I have mentioned it before in this blog. Basically our e-waste -- computers, cellphones and the like, end up in poor regions of China where they take apart and salvage any of the pieces within this equipment that may have value. Although those working on the salvaging are able to make money on it (note the poor peasants make meager wages, while those orchestrating this become middle-class or more entrepreneurs) -- there are significant health hazards just as lead poisoning just to mention one. Yet we pat ourselves on the back and say look how environmentally friendly we are "recycling" our outdated equipment.

Basically the SEP theory -- we don't see it so it doesn't exist or to take it a step further -- we chose not to see it because it would damage our notion of ourselves and our superior "green" status.

The SEP theory also holds in other areas. Again on the CBC a documentary ran called Canada's Ugly Secret wherein it was exposed that to keep the Thetford Asbestos mines and the commerce that comes from that going in Quebec, that Canada, exports asbestos to India for them to use in their building projects. Yes, that's right -- something that we know to be deadly -- Canada exports just so that we keep a few jobs going and make a few bucks. I guess from the government's standpoint they value the life of those in other nations less than those of Canadians.

I find these two things totally morally and ethically reprehensible but it definitively shows that what Ford Prefect theorized many years ago is true -- when it becomes somebody else's problem it ceases to exist -- in other words it becomes invisible.

Well, I guess to a certain extent that may be true -- when all those people in China and India die -- they cease to exist -- in other words they become invisible.