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An Election Like No Other

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election-1It’s no secret that uncertainty has a dampening affect on economies, and election years are, by definition, a time of uncertainty. In fact, once the nation’s new leader is anointed, sluggish voting-year growth is often bolstered by a post-election “relief rally” as businesses breathe a collective sigh of relief and get on with things. But this November—with the two top presidential candidates so diametrically opposed on so many compelling issues—just might be different.

According to a recent survey by U.S. Trust, 68% of high-net-worth executives and business owners are concerned about the impact of the presidential election on their companies. In fact, depending on whether Donald Trump or Hillary Clinton becomes president—and on which candidate each business leader has bet—some American CEOs’ worries may go sky-high by Inauguration Day.

CEOs can make a positive case for either candidate: Clinton, who had a front-row seat to the action while serving as First Lady and then went on to develop her own formidable political skill set in Congress as New York’s senator and as the country’s secretary of state, may be viewed as the experienced and steady hand. Meanwhile, Trump can be seen as the no-nonsense, billionaire hero who can’t be bought and will unleash a new era of business growth by taking a Roto Rooter to sclerotic Washington, D.C.

Yet, what may be much more persuasive to many CEOs is the negative case against whichever candidate they fear more. And that decision is often based largely on fears around how the new administration might impact our economy and the business climate. (See this sidebar, for the perspectives of four top economists.)

One block of CEOs believes that the election of Clinton would ensure nothing short of disaster in the years ahead, as she continues what they see as the anti-business philosophy of President Obama, tries to wring even more taxes out of the 1 percent and scrambles for the government to fulfill all the economic promises she’s made to her growing coalition of what some describe as the “47% of Americans who pay no income tax.”

The other block is just as frightened at the prospect of Trump as the next president, with their trepidation fueled by saber rattling on trade and immigration that may translate into policies that will throw the U.S. economy into reverse. They also fear the simple uncertainty a Trump presidency would bring, because the unknown is one of the worst things for business decision-making.

FEAR-FUELED FAVORITES
Put another way: Many CEOs fear Clinton could decelerate the U.S. economy by adding taxes and regulatory burdens over the next eight years, while others fear Trump could blow up the U.S. economy almost immediately by turning it over like an apple cart. “The choice between Clinton and Trump is really a choice between the lesser of two evils,” says Robert Johnson, CEO of the American College of Financial Services. “There is a time-worn adage—‘the markets dislike uncertainty’—and Trump epitomizes uncertainty.”

Indeed, it’s a curious twist when a lifelong progressive activist who’s never held a job in business becomes the presidential choice of significant numbers of business leaders. But Clinton is the devil they know versus the one they don’t.

Johnson believes that neither candidate is “appealing” to CEOs but that many of Trump’s promises to shake things up are “very concerning and potentially disruptive to business interests.” Meanwhile, although Clinton advocates higher taxes on wealthy Americans, “she definitely has more of a track record that business people can rely on.”

CEO Lessons Learned from a Severe Cyber Attack

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cyberattackHarding had to endure a series of painful television interviews where it quickly became clear that she had no idea who the attacker or attackers were, how many of the company’s 4 million customers had been affected and what kind of security risks they faced.

‘They have been rather unkindly described as the hostage videos,” Dido told Management Today of the media coverage. “I really don’t look my best, and they do look as though I was being held prisoner in a DIY store.”

Harding’s frank admission comes as studies show CEOs aren’t taking cyber attacks seriously enough—and aren’t prepared for the public fallout when they occur.

A recent survey commissioned by security firm Tanium of 1,530 senior executive and nonexecutive directors in the U.S., UK and Japan found that more than 90% could not read a cybersecurity report and were not prepared to handle a breach.

“One thing I think I know more keenly than any other British CEO is that every single one of us is underestimating the importance of cybersecurity.”

Even more surprisingly, around 40% of respondents said they didn’t feel responsible for the repercussions of hackings.

But company leaders will be held responsible. And that’s something Harding had to find out the hard way.

“We thought we were taking it seriously, outside experts were telling us we were taking it seriously. Patently we weren’t taking it anything like seriously enough,” she told Management Today.

“One thing I think I know more keenly than any other British CEO is that every single one of us is underestimating the importance of cybersecurity.”

Harding isn’t the only executive to be recently taken off guard.

Swift CEO Gottfried Liebbrandt told the Wall Street Journal in June that his outspoken fears of a cyber attack still didn’t prepare him well enough for a series of security breaches at the funds transfer platform.

As outlined in Chief Executive, CEOs can take a number of steps to prevent cyber attacks, including continuously updating software, encrypting all data and using ad blockers.

But they’ll also have to be prepared for the worst.

And Harding, at least, has no regrets about coming clean with the public,.

‘If being open and honest with my customers is naive then it’s fine with me,” she said. ‘I’m still here, living proof that sometimes it’s OK to admit to your fallibility.”

Why the Chief Communications Officer is Pivotal to the CEO, Especially a New One

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With a real-time news cycle, constant disruption in the business environment and the rise of highly active stakeholders—empowered through digital platforms to share their opinions and organize for action—are the norm. As a result, having a strong communications function not only is advisable, it’s essential.

The Arthur W. Page Society’s report on The New CCO describes not only the forces that are transforming enterprises, but also the resulting transformation through which the chief communications officer (CCO) is taking on a far more important and strategic role.

CEOs have always been surrounded by a cadre of advisors, but in recent years they are increasingly closest to their CCO. To hear Jack Welch, the legendary former CEO of GE tell it, the CEO’s relationship with the CCO is a close and important one built on two things: truth and trust. “The CEO and the CCO have a unique relationship,” Welch said at a Page Society event last year. “Total trust. Very intimate. In it together. Buy-in on the mission. Buy-in on where the company’s going and how you’re going to get there.”

“The CEO and the CCO have a unique relationship. Total trust. Very intimate. In it together. Buy-in on the mission. Buy-in on where the company’s going and how you’re going to get there.”—Jack Welch

According to the Page Model for Enterprise Communications, the role of the CCO begins with activating corporate character—the distinct set of values, purpose, mission, culture, beliefs and actions that compose the identity of the enterprise. A strong and authentic character is essential to earning the trust of stakeholders. Around this character, the CCO works to produce meaningful engagement with stakeholders that ultimately earns their support and advocacy. The CCO has to be able to manage communications risks and opportunities with all stakeholders, including customers, employees, investors and the general public.

Whereas CEOs present company vision and culture, CCOs are responsible for the strategy of defining and activating both. In a recent survey by Korn Ferry, 67% of respondents from Fortune 500 companies stated that the most important leadership characteristic for CCOs was “having a strategic mind-set, defined as anticipating and seeing ahead to future possibilities and translating them into breakthrough strategies.”

In the common occurrence of a CEO transition, it makes sense that the CCO would play a vital role in ensuring the transition is smooth, stakeholders are kept up to speed and that the new CEO’s vision aligns with the internal corporate culture. To put it simply, the CCO is charged with protecting the reputation and legacy of the outgoing CEO, while ensuring acceptance of the new one. For this reason, they often best understand the benefits and pitfalls that may arise from the leadership change.

It may be equally important that the CCO have that same trusted relationship with stakeholders inside the organization to facilitate a seamless transition. After the merger in late 2013 between US Airways and American Airlines, our new management team was comprised roughly of half of its members from the former US Airways and half from the former American. Wearing the hat of CCO meant working hard to ensure new members of the management team were integrated and felt included.

For those on the legacy US Airways team, there was much familiarity with Doug’s leadership style and vision. But Doug was adapting to a larger and more complex business and that group needed to adapt as well. For those on the legacy American side, there was certainly more hesitancy around speaking openly without having had that history with their new CEO.

To avoid feeling like the haves/have nots, we took a lot of care to get everyone integrated very quickly. This started, and continues today, with a weekly Monday morning meeting where all our vice presidents gather in person and by phone to review the previous week’s operating statistics, revenue results, and people engagement activities. Establishing this regular cadence of updates told people very clearly that regular engagement and transparent communication matter greatly.

Doug Parker is a very approachable leader, and his direction at those Monday morning gatherings relayed something even more critical; that is, what kind of culture the new company was going to aspire to create. Here, allowing one’s vulnerabilities to show through and using humor were two of the behavior attributes that helped create a unified team of leaders very quickly after our merger.

The CCO responsibility became much more than an information facilitator; it became a private sounding board so that our new colleagues could ask questions about acceptable behaviors and potential perceptions. And that role worked both ways, from advising new colleagues who weren’t always sure what new protocols would be accepted to advising Doug when he needed to make adjustments for the betterment of the new team.

CCOs can have a highly valuable and productive partnership with their CEO, especially following a transition, by:

1. Managing internal politics to help the enterprise be prepared for a transition through sound succession planning.
2. Establishing alignment between the new CEO’s vision and the company’s culture, and creating ample opportunities for the CEO to represent both.
3. Ensuring that values and vision for the company are not only communicated, but also are activated through clear policies and actions.

To win the support of C-Suite colleagues, CCOs must be fully integrated communicators, using a combination of data analytics, cultural intelligence and behavioral economics to develop insights they can leverage to bring corporate character to life. The ability to do so ensures the success of the CCO and ultimately has a trickle-down effect that benefits the entire company.

Mastering the Monarch Succession

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CEM_SONNENFELD_GSThe ferocious Viacom board battle between Sumner Redstone and his deposed, failed successor Philippe Dauman provides drama to rival the intrigue of HBO’s series Game of Thrones, not to mention Orson Welles’ film Citizen Kane, Shakespeare’s King Lear, Shelley’s “Ozymandias” or the biblical King Saul.

Dauman, despite years of Viacom’s collapsing stock price and declines in creative programming, tried to fortify his own troubled reign. He’s charged Redstone’s daughter Shari with manipulating her 93-year-old, frail father, who controls 80% ownership of Viacom and CBS. Redstone has held the Viacom throne and CBS’s controlling enterprise, National Amusements, for roughly 50 years, routinely terminating successor candidates. The saga is a timeless theme we see often in show business and parallels the long reigns of movie moguls like Louis B. Mayer of MGM, Lew Wasserman of MCA Universal and Paramount founder Adolph Zucker, as well as others in the media, including CBS founder William Paley and publishing magnate William Randolph Hearst.

When I wrote The Hero’s Farewell, I labeled this CEO departure style as that of a “monarch.” They only exit feet first—through a palace revolt or dying in office, as commonly found in creative, personality-infused businesses, such as fashion, technology and media. Boston Consulting Group founder Bruce Henderson suffered one such palace revolt. Despite a tight autocratic rule, he faced multiple insurrections (e.g., the spinout of rival Bain & Co.) before his own ouster. Also leaving feet first, IMG founder and renowned super-agent Mark McCormack, died at 72 with no clear successor. Entrepreneurs from Ralph Lauren to Facebook’s Mark Zuckerberg and Alibaba’s Jack Ma are current examples of CEOs with the controlling votes to thwart genuine, planned succession.

These common, tragic sagas do not have to be the only scripts for such personality infused businesses. Consider these 5 exit strategies.

“Instead of clinging to a throne, a creative leader can serve a short tour of duty.”

1. Active board intervention. Michael Eisner’s terrific first decade at Walt Disney disintegrated in his second decade. Suspecting Eisner efforts to derail succession, the board appointed Senator George Mitchell as board chairman above Eisner. Ultimately, the highly regarded Bob Iger assumed the CEO position. Meanwhile, in 2015, after a decade that saw Disney’s stock triple, Iger announced his own retirement date (2018), carefully reviewing candidates for succession.

2. Incumbent humility. Time Warner’s Gerald Levin tried to extend his troubled rein by placing humble former banker Richard Parsons at his side, assuming Parsons’ lack of show biz background would ensure he was not a threat. Yet, Levin left in 2002, a year after the disastrous AOL merger, leaving Parsons in charge to stabilize things and smoothly pass the reins to the highly successful insider Jeff Bewkes.

3. Intergenerational partnership. Cable pioneer Ralph Roberts seamlessly transferred formal power to his carefully groomed son Brian, who brilliantly has built out the enterprise with NBCUniversal, as well as Xfinity.

4. Selling out. Another path often taken by monarchs, who fear anyone sitting on their throne, is selling the firm. Jim Wiatt surrendered the helm of the William Morris Agency with its 2009 takeover by Endeavor. ABC’s Leonard Goldenson did the same in 1985 when, after 30 years on top, he merged the network with Capital Cities Communications.

5. A governor’s mission. Instead of clinging to a throne, a creative leader can serve a short tour of duty, like a state governor, and then move to new ventures. Quincy Jones has soared as a musician, record exec/broadcaster (Qwest), publisher (VIBE), producer (Fresh Prince of Bel Air) and more. Chester Bowles co-founded an advertising giant, then sold his shares and stepped out as a top official for FDR. He later became governor of Connecticut, ambassador to India and Nepal under Truman, an under secretary of state for Kennedy, and finally, Nixon’s ambassador to India.

Why You Need to Establish a Design-Thinking Culture Across the Enterprise

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The shift toward applying design thinking is a response to the need for speed, innovation and breakthrough solutions to address today’s complex business challenges. Forward-thinking organizations are focused on creating design-centric cultures that foster new ideas and reshape old ones. The following are 3 critical keys to the successful scaling of design thinking.

1. Envision the future by creating shared understanding. A dichotomy exists between managers and designers. Managers are planners and have to rely on the past and the present to project the future. Designers, however, are taught to break from the past to build for the future. They are tasked with creating or recreating, which results in change and requires collaboration and buy-in throughout the process.

Employing design thinking across an organization requires managers to think like designers and designers to think like managers. It bridges that gap and encourages a healthy dialogue about what’s worked and what hasn’t. The design thinking process generates new, shared insights. Great ideas emerge based on a mashup of ideas in ways that haven’t previously been considered. Breakthroughs come from the recombination and reframing of ideas, both old and new.

“To realize its full value, design thinking must be pushed beyond Innovation Centers to everyone in the organization, with the goal of improving all aspects of the enterprise, not just product development.”

2. Invest in your talent to embed a mindset and skillset. Design thinking forces organizations to decide if “up-skilling” existing talent or hiring new talent will result in the best outcomes, both short-term and long-term. A Harvard Business Review spotlight focused on Samsung’s multi-year effort to transform their business to a global innovator. Senior managers thought the best approach would be to bring in a well-known Korean designer to lead this monumental change. Lee Kun-Hee, Samsung’s chairman, thought otherwise.

In his quest to develop in-house design capabilities across the organization, faculty members from a renowned art school were brought in to deliver custom in-house training that transformed the company’s talent into strategic thinkers who were fully invested in the mission and future direction, resulting in an increased level of tenacity to overcome resistance, influence others, implement change and drive innovation.

Lee’s vision and dedication to up-skilling existing talent helped launch its global-leading mobile division, and gave rise to its domination of the global television market.

3. Ensure alignment between organizational culture and business objectives. To empower teams to be design thinkers, senior executives must focus on aligning culture and structure with strategy. Ananthan Thandri, VP & CIO, Mentor Graphics provided more insight in The Argyle Journal.

“Taking the time to explain an organization’s goals and how employees can help it achieve these aspirations can be incredibly empowering” he said. Communicating the important values and expected behaviors, such as risk taking, openness to new ideas, rapid decision making and willingness to fail fast, all emerge from a culture of transparency and openness that starts at the top.

  • How do you kill design thinking?
  • Fear the unknown
  • Resist change
  • Squelch different thinking
  • Fear risk taking
  • Isolate strategy from execution

Design thinking allows organizations to thrive in today’s ever-changing landscape. To realize its full value, design thinking must be pushed beyond “Innovation Centers” to everyone in the organization, with the goal of improving all aspects of the enterprise, not just product development. It requires the right mindset and toolset embedded in a culture that supports risk taking, divergent thinking and freedom to collaborate.

4 Things CEOs Can Learn from Captain Chesley Burnett “Sully” Sullenberger

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plane-in-distressAs Sully opens at the box office, moviegoers are learning more about the emergency landing that Capt. Chesley “Sully” Sullenberger made on the Hudson River in January 2009 after the airliner struck a flock of geese. The miraculous landing wasn’t just a first in aviation, but a spectacular feat in control, confidence and rapid-fire decision making under extreme circumstances.

Whether they’re facing a product liability, an employee scandal, or a big drop in share price, CEOs can find great leadership lessons in how Captain Sully handled the emergency.

1. Prioritize and make the best decision, quickly. Gerry McNamara—global managing director of the CIO practice at Korn Ferry International—was on the plane that day and said in an interview with The Wall Street Journal that Sully acted with “absolute clarity.” McNamara said Sully “said what needed to be said and did what needed to be done,” an ability he said many executives lack. Since that day, McNamara said he has learned to identify real leadership; and while many executives know how to delegate or manage, few know how to lead.

“There are a hundred things [that] could be done, but they have difficulty sharing the five things that must be done and communicating them with clarity, so that people understand the mission and get behind [them],” said McNamara.

“The biggest misconception is that leadership and management are the same thing. They’re not. But we need both.”

2. Build experience and knowledge, then follow your core values. Sully said in a 2014 CBS interview that leadership “starts with core values and the willingness to actually live by them.” He said leaders need to check their ego at the door and be willing to do things to serve a cause beyond their own needs. Sully said those three minutes and thirty-eight seconds were a reflection on his entire career.

In an interview at the Americas’ SAP Users’ Group (ASUG) conference in Orlando, Fla., that all professionals need to engage in lifelong learning to constantly expand their skills. “I have been making small, regular deposits throughout my life of education, training and experience in this bank and on [that day] when we were suddenly confronted with this…the balance in that account was sufficient that I could make a sudden withdrawal” said Sully. “We never know when that moment is going to come.”

3. Remain calm and assess the situation. Yitzchok Saftlas, CEO of the Bottom Line Marketing Group, said in a post that Sully harnessed the emotional impact of the emergency to his advantage and did not let panic cloud his judgment or decision-making. “We have always practiced for emergencies that might arise. This one was so sudden and so extreme that I had to suppress my natural adrenaline rush, quickly channel it, and not allow it to distract me,” said

Sully said in the ASU interview that between the time the geese hit the plane and they were in the river, they had only 208 seconds to solve a problem that they “had never seen before.” He said aiming to have a deeper understanding of your profession can help one attain confidence, have clear priorities, and control their emotions, even in unfamiliar and foreign situations.

4. Take charge and trust in your team. CEOs know they’re only as good as their team, but it sometimes can be challenging to put complete faith in others in a time of crisis. Sully said that leaders can lead well by creating a culture of excellence and collaboration. While Sully was responsible for landing the plane in the Hudson, his crew was credited with helping keep passengers calm, then getting them safely on the wing after the plane had landed.

“The biggest misconception is that leadership and management are the same thing. They’re not. But we need both,” said Sully.

Ten Questions You Should Be Asking to Embrace Risk and Lead Confidently in a Volatile World

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Whether it’s a value-destroying crisis, a shift in industry dynamics, or a brand threat, uncertainty comes in many shapes, sizes, and impacts. Leaders who view uncertainty and risk more broadly than just compliance will anticipate better, seize opportunities, and emerge stronger. From inviting in devil’s advocates to war gaming, there are many ways to prepare—even if you don’t know exactly what’s around the corner.

10 questions

Looming threats. Big bets. Emerging trends.

To succeed in today’s world, leaders have to welcome and embrace uncertainty.

High-stakes uncertainty can take many forms. It can be a crisis around the corner, a major acquisition down the road, or an actual industry disruption.

Learn more in the 10 questions report.

Mid-Market Report

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Bring Back Community Banks

It’s become axiomatic among small- and mid-market CEOs and their advocates that the Dodd-Frank financial reforms of 2010 disproportionately hampered the community banks on which these companies so rely for capital. Meanwhile, another piece of legislation made it more difficult for startups to use credit-card financing to bootstrap their way through infancy.
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