When a Director is not a Director

Sometimes I get the impression that there are tons of Directors out there. Certainly in the hi tech much hyped areas. Sometimes there is simply an hyperinflation of business cards with ‘Director’ on them. And it’s only too disappointing to realize that you have spent too much time engaging with one person, who, at the end, does not seem to be the person that you should be talking to. But so it happened anyway because his / her title in his business card said that he was the Director you needed to talk to.

In addition to waisting time, you will most probably lose face in your own organization, because you have not achieved at the level that you had to. And you may hinder the relationship with your customer, because you may create the feeling that your company (represented by you) is not delivering appropriately. But because his business card has ‘Director’ in it, you don’t question that he is the appropriate person to talk to. It’s not that you have not created links with his personal assistant, or his reports, or his peers in his same organization or in another one, or even his manager. You already know that you have to talk to all those types of people to be able to influence that ‘Director’. It’s in the manuals. But when you finally succeed in having a meeting with that ‘Director’, you get the feeling that it has been almost a waste of time. And it’s not that you don’t put enough passion in your efforts to break in. You try alternative approaches, you put extra effort to know better the worries of that person. But still no real gain. Until you start internally questioning him about the viability of his objectives, and the soundness of his decisions. And little by little, you address your concerns with him. Sometimes he is an open minded person, who considers that questioning of yours. But sometimes you hit a wall of rejection to your questions and inquiries. This is the point where you realize that this may not be the proper person you should have talked to.

‘Directors’ are only Directors if they are ready to question and challenge their own organization and strategy, their own objectives and their own decisions. A Director needs to be a challenger, not a waiter. Not for the sake of torpedoing his own organization of course, but to make it more successful. A ‘Director’ is not a Director if he is not ready to amend his path, and to defend a different course.

So, next time that you meet a ‘Director’, don’t try to serve him. Understand him, but question him. Then you will know from his reaction if he is a true Director, and you will be able to set an adequate strategy to partner with him.

Sony and Ericsson, finally time to review their JV?

We have had rumours in the past that Sony would buy Ericsson’s stake in the mobile phone venture.

The WSJ has recently talked again about that possibility.

The origin of this move should be seen in a will by Sony of providing a more sound marketing strategy, and / or in a will by Ericsson to exit a shrinking business, where the later is seen as having less to do than the former one.

I don’t expect though that this move will help Sony much in increasing their shrinking marketshare, with one of the highest churn rates in the UK.

On one hand, they will not be able to compete against Apple, because the success of Apple is based on the asymmetry that they have created between products (CE) and services (music, …), unless Sony makes a similar move with their gaming business.

And on another hand, it makes little sense for them to compete against Google. Because the costs are high and increasing (royalties for patents paid to Google, cf. Samsung will pay royalties to Microsoft for Android, or Amazon to pay royalties to Microsoft for using Android in the Kindle Fire tablet?), and because there seems to be very little room for product differentiation (see the wars that have been going on between Apple and Samsung in Europe and in Australia).

Even more, Android OEM’s are increasingly wary of continuing the partnership with Google, because of the recent purchase of Motorola’s mobile arm. Mix this with (a) the growing importance of the new OSs created in Asia (e.g. Alibaba, China Mobile), and (b) the fact that RIM is could be acquired by other players, as well as WebOS, both trends can offer other possibilities to the existing Andoid’s OEMs.

The issues about the aparent lack of direction and in branding may be solved somehow, but the breakup of the 50-50 JV may not give the needed competitive edge to Sony.

All this is also perceived by the market, with Sony’s shares having fallen 3.7% on October 7th.

Although the WSJ makes a point in that “the strength of the Japanese yen against the euro is another incentive for Sony to reach a deal now”.

Regards,

Carlos.

When emerging companies compete in the Western world

There are lots of literature about how to make business in China. Lots. Not just about how to grab the opportunities there, but also about how to manage the risks.

For example, in one of its blogs, The Economists has recently pointed out what Starwood Hotels & Resorts plans not to be seen as an American company, but as a global one, with an established on-the-ground presence in China:

In Economist Education’s “Market entry strategies for emerging markets” course, a recurring theme is that one of the most effective ways to enter any emerging market is to establish an on-the-ground presence that reflects a deep understanding and respect of the local culture.

Take Starwood Hotels & Resorts, for example. The company just announced an extended push into the Chinese emerging market, and as part of that strategic initiative, will move its top executives to Shanghai for a month. According to Starwood CEO, Frits van Paasschen, “Starwood is no longer an American company that happens to run some hotels overseas…Today, we’re a global company that happens to be based in New York.”

Pending the outcome of this one-month experiment, Starwood execs may experiment with similar programs in other fast-growing emerging markets, such as Brazil, India and the United Arab Emirates.

But when will the increasing numbers of companies from developing regions recognize that they have to take a similar approach to make business in the Western world? Last week, The Economist again pointed out very correctly I believe about a Chinese champion company that:

[It] appears to want to have it both ways: remaining a culturally Chinese company, perhaps even family-run, while competing with publicly traded Western giants. This is unlikely to work.

This is one of my biggest areas of interest, i.e. how to find the right match in the Western and emerging businesses simultaneously, and why.

Regards,

Carlos.

Separating the sheep from the goats

I have been many times involved in analyzing how companies were performing.

This is generally done using financial ratios.

Sometimes, in some cases, other factors have to be examined.

E.g. in the case of the Telecommunications industry. Some vendors – ALU, NSN, … — merge or perform alliances. Some other vendors – probably the biggest case having been Nortel Networks – are integrated into others. As to the telecom providers, they buy others in the developing economies (see last year’s overtake of Vivo by Telefonica), and they, just until a few years ago, start some alliances in the mature markets in order to manage parts of what they sense to be increasingly less strategic assets: their networks; e.g. recently the Everything Everywhere JV in the UK.

These moves are important. But to who, and to what extent? The sales managers are obviously impacted because their contacts in their clients’ organizations can gain or lose weight, importance; and the sales guys’ results depends on their contacts, a lot.

When launching a new business, this can matter too. E.g. as the telecom operators try to find synergies with their competitors to manage part of their networks, or even outsource those assets, understanding reorganizations are important to try to understand when or where to expect a surge of potential business for the increasingly service-oriented telecom vendors.

But we need to separate the sheep from the goats. What are the reorganizations that really obey to some business needs, and which ones are fake and hide a loss of course?

The Economist found a historical example in the figure of Mao:

Mao was quite willing to avoid tedious or uncomfortable meetings, particularly when he was likely to be criticised. But maybe that helped him avoid getting bogged down. From the Anti-Rightist Movement of the late 1950s to the Great Leap Forward, a failed agricultural and industrial experiment in the early 1960s, to the Cultural Revolution in the late 1960s, Mao was never short of a plan.

Under Mao, China didn’t drift, it careened. The propellant came from the top. Policies were poor, execution dreadful and leadership misdirected, but each initiative seemed to create a centripetal force, as everyone looked toward Beijing to see how to march forward (or avoid being trampled). The business equivalent of this is restructuring, the broader the better. Perhaps for the struggling executive, this is the single most important lesson: if you can’t do anything right, do a lot. The more you have going on, the longer it will take for its disastrous consequences to become clear. And think very big: for all his flaws, Mao was inspiring.

Lots of examples come to my mind that I would be tempted to align with Mao’s ‘inspiring’ helm. I will not name them. But it would certainly be interesting to benchmark the companies per industry, and per chairman, in order to analyze their leaderships.

Regards,

Carlos.

Apple’s latest announcements impact the markets

The market did not react well to the fact that, at Apple’s latest key note, the company did not present any new device. And Apple fell $5.40 (1.57%) on Monday, to $338.04.

It’s true. But the markets react to short term announcements, more than to long term strategic moves of companies. And despite this, the analysts did like Apple’s latest move into the cloud and social networking.

It’s a move that Google and Amazon have already made somehow, but a different one that cares much more about the end user experience. And one that is bolder towards the content owners. Probably this boldness, along with a real clarification about the needed new relationship to those content owners, had also something to do about Monday’s share decrease.

Still, this move by Apple is in line with the company’s wall gardens approach. An approach that, although it has proved very successful so far, also opens new possibilities for Google, who follows a open strategy. Something that may also have had an impact into Monday’s share evolution.

Another possible explanation to the company share decrease early this week may be that Apple had to finally give up about their plans to integrate the SIM in the iPhone 5, a move that, according to Gigaom, was planned for the Californian company to gain independence from the telecom operators, a move that those operators have reacted very strongly against.

By the way, given the cash management problems of Apple, and given the importance that Apple has given to its relationship with Twitter, I would not be very surprised that Job’s company shows at some point in time some interest in participating in the social networking company.

Enjoy,

Carlos.

“Stay hungry, stay foolish”, but most of all, learn from what you do

I recently found this heartbreaking video by Steve Jobs in TED web site (www.TED.com).

It was about a lecture by Mr. Jobs in a graduation day at Stanford University, a lecture that he based on three personal stories: the lessons he got from the fact that he never graduated from college, his rise and fall in Apple, and his cancer disease.

I have read several critics to this lecture, all in TED and in YouTube. All these critics tried to find out if Mr. Jobs’ case could be applied to them or not. E.g. is it meaningful going to college? At what extent can you follow up on your own judgment? Can you always have the courage to follow your heart and intuition?

To be honest, I personally believe that all these critics completely got it wrong. It is not about trying to apply someone’s (successful) case such as Mr. Jobs’ to your own. No. What all of this is about is that, whatever happens to you, the clever thing to do is to learn from all your experiences, and to “connect the dots”, so there can be some sense to all of them taken as a bundle:

- What you thought is more important in your life (e.g. college), is not that important, everything is relative. If you don’t go to college, it can be a serious blow, but it does not necessarily need to be that big deal. Don’t try to simplify this lesson by trying to decide if college is important or not for you, this is not the point

- No one likes to be fired from his/her job. But, if it happens, it will be easier to mentally survive and to start up again if you do what you love. Mr. Jobs doesn’t mention that it’s not always that easy to do what you want instead of what you ought to, but the principle is right, and you will be much happier

- Sursum corda, Mr. Jobs’ diagnosis with cancer acts as a remainder that you will enjoy life much more if you do what you like and “have the courage to follow your heart and intuition” (even if, again, it’s not always that easy to do what you want instead of what you ought to)

The full video by Mr. Jobs follows:

Enjoy,

Carlos.

The Day that Nortel Died

As an ex-Nortel employee, last week I received from a very good old friend of mine from Canada an e-mail with a YouTube video that I already knew about.

It’s a version of Don McLean’s American Pie, adapted to the the dismemberment of Nortel Networks, the Canadian network equipment manufacturer.

Originally, the song is a recounting of “The Day the Music Died” — the 1959 plane crash that killed Buddy Holly, Ritchie Valens, The Big Bopper (Jiles Perry Richardson, Jr.), and the pilot, Roger Peterson (see the entry in the Wikipedia).

And as such it certainly is not the first adaptation of McLean’s song to a company crash, e.g. Lauren Weinstein crafted “The Day Bell System Died” about the breakup of AT&T in 1983.

I have to say that, each time that I listen to that adaptation, it makes me almost cry, SO proud that we ALL the ex-Nortel employees were about OUR company, the sense that we all had being that it truly was OUR company, and we talked and worked accordingly.

I have always been taught that the dominance and the coherency of the culture of the company was an essential dimension of that company’s excellence. That those ‘excellent companies’ produced visible external behavioral patterns on their employees, consistently with the companies’ business objectives, with those patterns supposedly being a guarantee of the consistent functioning of the firms.

And, as such, our company was indeed recognized by most head hunters and recruiting firms as a true example of a culture-driven company, one that was one of the best Management schools for employees, and we were proud of it.

But, in the case of Nortel, it certainly was not enough. Sadly.

I enclose here for you that video. It’s deeply touching and epic (at least for me). Enjoy.

Carlos.