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Powerful Women Dealing with Weak Cultures – Part 2

Categories: Women Leaders , Company Culture , Ethics

In last week's blog post, I wrote about Ginni Rometty, Fortune Magazine’s most powerful business leader, and how she is trying to transform IBM. This week I will write about Janet Yellen, Chair of the Board of Governors of the Federal Reserve System, and touch on her organizational challenge that is almost too large and complex for one human being.

Janet Yellen

Most of you probably missed this - the Federal Reserve Bank (“The Fed”) celebrated its 100th birthday this week. Without boring you too much, you should know that The Fed is a large, relatively independent organization responsible for supervising and regulating the U.S. banking system, member banks’ foreign activities, and foreign banks’ activities in the U.S. They also now have responsibility for “supervising” how banks are following all the new laws passed by Congress that dealt with abuses contributing to the financial meltdown in 2008-2009.

And, it is this last responsibility that concerns me most.

New Bank Regulations. Congress passed a series of very complex laws and ordered banks to comply with these new regulations. Our country has a history of passing laws that often punish the innocent and fail to reach or impact the guilty and, in my opinion, these new laws are perfect examples. The impact of these new regulations on small and mid-sized banks, the banks that did nothing to contribute to the meltdown, is ridiculous – just ask your local banker.

And what is the impact on large banks and investment houses like Goldman-Sachs? Virtually zero. Why? Because The Fed’s work culture and passive employee personalities are ill-suited for the direct, aggressive cultures and personalities of the large banks they need to regulate.

A Passive-Aggressive Culture Challenge. The job of most federal regulators is to study paperwork. If we were to review the best personality profile for one who is especially good at this they would likely be passive, introverted, patient, and detail-oriented. And because of the prevalence of these personalities at The Fed, its culture is similar. However, the personalities of the financially successful bankers are nearly the complete opposite – they are aggressive and dominating, extroverted, impatient for action, and likely lower on the detail scale. Any of us can see now who will win the battle of these two cultures.

The Secret Recordings of Carmen Segarra. The Fed in New York tried to deal with this and following a report by David Beim, started to hire regulators who were more aggressive to deal with the larger bank personalities. Carmen Segarra was one of these hires and her case shows what can happen when an outsider with an opposite personality is thrown into a passive culture. (You can either read a brief summary of her story at ProPublica or listen to a podcast of her story and her actual tape recordings at This American Life.)

Segarra was just what The Fed needed - a smart, aggressive, extroverted, impatient lawyer committed to the mission of making sure large banks avoided excessive risks and conflicts of interest. Not too long into her job she found that her supervisors at The Fed were more concerned with how her personality was disrupting The Fed’s cultural status-quo than how she was helping them regulate the large banks.

Carmen Segarra

Supervisors started ordering Segarra to behave in ways she thought were undermining the intentions of the new regulatory directives given to The Fed by Congress. So, she started secretly recording meetings. After she refused to soften her stance on the point that Goldman-Sachs had no real conflict of interest policy, she was terminated. It is unlikely she was fired for that reason; it was more likely related to how she was disrupting the quiet culture at The Fed.

When I listened to the one-hour podcast noted above I could hear how weak the most senior regulator at Goldman-Sachs was – I was astonished. Even I would have been more aggressive than this guy!

What does this all tell me? While the new regulations are hand-cuffing our small and mid-sized bankers, the wolves at the large banks are still running the hen-house. And, Janet Yellen, who is a skilled economist and highly regarded professional, has her hands full trying to change The Fed’s passive regulatory culture.  

November 21, 2014 21:03
 

Powerful Women Dealing with Weak Cultures – Part 1

Categories: Women Leaders , Company Culture

Entrenched organizational culture is the biggest challenge two of Fortune magazine’s most powerful women leaders, Ginni Rometty of IBM and Janet Yellen of the Federal Reserve Bank, are dealing with. And when I read about their corporate cultures and problems, one seems to have a better chance of success than the other. Let me start with Ginni Rometty.

Ginni Rometty

Ginni Rometty, who was named Fortune’s most powerful woman business leader this year, certainly has her hands full. Rometty, 58, is the ninth CEO of IBM, where she started as a systems engineer 33 years ago. IBM is a huge bureaucracy with many layers built over 103 years – it now has 431,000 employees operating in 170 countries. The problem Rometty now faces is how to get the company to evolve with the times and move forward successfully without fighting change, instead of staying stuck in the past and losing customers to competitors.

Rometty knows IBM has to change internally or it will slowly die. And, while she is very aware that everything she does is scrutinized by employees, shareholders, competitors, and bloggers like Bob Cringely, she seems to have all the qualities needed to achieve substantive change, even if she does not please everyone.

In the Fortune article examples of Rometty’s effective communication and collaboration styles are described. They also share three of “Ginni’s Rules”: 1. Don’t protect the past; 2. Never be defined by your products; and 3. Always transform yourself.

Using regular webcasts and a new training program called “Think Academy”, she is now in touch with and getting input from thousands of employees across the globe. John Kelly at IBM was quoted as saying, “She has this unique ability to make you comfortable in the change while still being uncomfortable. It’s really hard to explain.” Rometty’s vision for IBM’s reinvention is to concentrate globally on big data, cloud services, and engagement (mobile and social networking technologies).

Rometty has used her collaborative skills to partner with Apple, a former competitor, to cross-sell each other’s business services. Tim Cook, the CEO of Apple, says this of Rometty: “I think she is wicked smart…she has an incredible ability to partner and can make tough decisions and do so decisively. And she sees things as they really are.”

It sounds to me with Rometty’s leadership skills, IBM has a fighting chance to innovate and change – something most large bureaucracies cannot do, and they usually shrink and die.

This brings me next to Janet Yellon, Chair of the Board of Governors of the Federal Reserve System. Honestly, her challenge is almost too large and complex for one human being. I will briefly explore the organizational abyss that is the Federal Reserve Bank next, in Part 2. 

November 13, 2014 22:08
 

Women in Business – Four Short Stories

Category: Women Leaders

Last week I watched the PBS special Women in Business and read the October 6th issue of Fortune magazine, which featured the 50 Most Powerful Women. Today I thought I would introduce you to four business women who caught my interest.

Dr. Ann Marie Sastry

Anne Marie Sastry. Hidden within the Fortune pages is the intriguing story of a former engineering professor at the University of Michigan, Dr. Anne Marie Sastry. Dr. Sastry has started a company that invented a new kind of battery that may revolutionize the electric car industry. The company is called Sakti3 and its battery would allow electric cars to travel 300 miles on a single charge and cost much less than current batteries. It will be interesting to see how Dr. Sastry figures out how to scale the product and deal with Elon Musk, the inventor-entrepreneur behind Tesla.

Barbara Banke. If you drink wine you have probably heard of Jackson Family Wines, the largest producer of premium wines in the United States. Its Kendall-Jackson Vintner Reserve Chardonnay is the best-selling chardonnay in the country. Barbara Banke is the CEO and is leading its strategy to expand its vineyard holdings up into Oregon. One of their strategic concerns is whether or not American wine drinkers will embrace wines made from non-California grapes. The Fortune story of how Banke got involved in the business and how she is leading the research behind how the tastes of millennials are impacting the wine industry is very interesting.

The Honest Company cleaning products

Jessica Alba. Have you heard of The Honest Company? It is a $150 million e-commerce business founded and led by actress Jessica Alba. Here is what she wrote in Inc Magazine about why she started the business: “I founded The Honest Company on this idea: Everything that touches you and your family--everything in your home--needs to be nontoxic, needs to be effective and beautiful to look at, and needs to be affordable. I really wanted it to have an e-commerce model. What are the things that all parents need? Diapers and wipes, for sure. And then a mix of cleaning and personal care products. Wouldn't it be great if you could pick five things and get them delivered through a monthly subscription?”

Sharon Anderson Wright. Here in the east we have not seen Wright’s business, Half Price Books. But it is a very popular chain of book/audio stores that has carved out a niche over 30 years. Wright took over the disorganized business from her mother and has grown it into a $240 million business today with over 120 locations in 16 states. The business story in Fortune is worth reading because it tells of how a business got started in a simple, low cost fashion, and then grew under a second-generation leader, Sharon Wright.

Next week I am going to write about the challenges that two powerful women leaders, Ginni Rometty of IBM and Janet Yellen of the Federal Reserve Bank, are having with their own organizations’ cultures.

November 07, 2014 13:39
 

The Business of Halloween

Category: General
Jack-o'-lantern

I have always enjoyed Halloween. So this week, I thought I would explore the business of Halloween.

Halloween History. Some historians believe Halloween’s origin goes back nearly 2000 years to when a holiday known as Samhain was celebrated on November 1st. It was a celebration of harvest and summer’s end. On the eve before this holiday people believed that the ghosts of the departed came to visit and so they left food and drink out to distract roaming ghosts. By the 8th century the Christian church changed Samhain to All Saints Day and then All Hallows’ Day. And the day before became All Hallows’ Eve, later Halloween.

Many of our current traditions go back hundreds of years. For example, costumes or “mumming and guising” were used in the 1500s when people went house-to-house trading songs and recitations for food. Even Jack-o’-lanterns, which were traditionally carried to scare away evil spirits, have been around for centuries.

Literature like Frankenstein (Mary Shelley, 1818) and Dracula (Bram Stoker, 1897) helped Halloween gain popularity during the 1800s. Then later in the 1900s as films were released, the popularity exploded.

Industry Size. According to the National Retail Federation, the Halloween industry now generates about $7 billion in sales yearly. Of that amount, costumes represent about $2.5 billion and candy about $2.0 billion. And, I’m sure to the chagrin of my colleague David, 22 million Americans will dress-up their pets and buy $400 million in pet costumes, the fastest growing segment. Halloween is now the smallest of the seven holidays measured:

  1. Christmas/Hanukkah ($602 Billion)
  2. Mother’s Day ($21B)
  3. Valentine’s Day ($18B)
  4. Easter ($17B)
  5. Father’s Day ($13B)
  6. Super Bowl ($12B)
  7. Halloween ($7B)

Movies. Many Americans enjoy horror movies, although I have to admit I do not really like or watch the newer movies that are quite gory. I am happy to say that my all-time favorite movie, Jaws, is the second highest grossing horror film of all time and the top film after adjusting for inflation. According to Business Insider, here are the top ten highest grossing horror films adjusted for inflation:

  1. "Jaws" (1975): $1 billion
  2. "The Exorcist (1973): $830.8 million
  3. "The Sixth Sense" (1999): $463.5 million
  4. "Psycho" (1960): $343.5 million
  5. "The Amityville Horror" (1979): $277 million
  6. "Jaws 2" (1978): $267.4 million
  7. "What Lies Beneath" (2000): $232.2 million
  8. "The Blair Witch Project" (1999): $222.7 million
  9. "Poltergeist" (1982): $209.8 million
  10. "Interview with the Vampire" (1994): $202.3 million

Over the years costumes sales have been greatly impacted by movies and pop-culture. For example, popular costumes last year were characters from the show Duck Dynasty and singer Miley Cyrus. But still, the most popular costumes all-time are witches, vampires, ghosts, Frankenstein, and cats.

Have fun on Friday and forget about the business of Halloween. 

October 28, 2014 15:24
 

The Narratives of Columbus Day and Political Ads

Category: General

I believe people respond best to narratives, not statistics, and that is important for leaders to remember. Effective narratives often include stories and have a message that pushes people to act. Statistics by themselves, while interesting to people like me, rarely push us into action.

Christopher Columbus' Voyages Across te Atlantic

Columbus Day. I still wonder why Columbus Day is a federal holiday and not recognized by many businesses and organizations like ours. Heck, Columbus never actually set foot in what is now the United States yet we have a holiday for him. According to Wikipedia this is how Columbus Day was created, “In April 1934, as a result of lobbying by the Knights of Columbus and New York City Italian leader Generoso Pope, Congress and President Franklin Delano Roosevelt made October 12 a federal holiday under the name Columbus Day.”

Roosevelt knew we could not have a holiday that recognized one minority group because then we would need a holiday for every group and that would never end. But choosing Columbus, which had a great narrative most everyone could support, would work.

While Italian-Americans certainly developed a great “narrative” story about Columbus at that time, current knowledge undermines that narrative. For example, you don’t have to be a historian to know that America existed long before 1492. For example, we know Cahokia, a 10,000 inhabitant settlement, existed across the Mississippi River from St. Louis over 500 years before Columbus.

Also, as was published in Simon Winchester’s Atlantic, Leif Eriksson likely travelled to the Atlantic Provinces and perhaps New England shortly after 1000 AD. In 1964, President Lyndon Johnson even signed a proclamation that declared October 9 to be Leif Eriksson Day in honor of the Viking explorer, his crew and the country’s Nordic-American heritage. Winchester also notes that Irish-Scottish missionaries allegedly travelled to the Maritime Provinces in the 550s.

I doubt this holiday or its name will ever be changed unless a more compelling October narrative emerges. Maybe we should “discover” one.

Political Ads. As always, there are hundreds of political ads running on television this month. There has been a great deal of research into what makes an effective political ad and that is likely why we see a wide use of narratives – stories about the good or bad things candidates have done. Successful candidates use different stories to reach different demographics.

And, wise candidates, use statistics as part of the narrative. For example, this morning for the first time I saw a very clever narrative ad using a young girl competing in a spelling bee. She was asked to spell “Shaheen.” She asked familiar questions of the judges – “Can you give me the definition? Can you use it in a sentence?” To which the adult judges could provide opposing or negative information about Senator Shaheen including the statistic, “Shaheen voted with Obama 99% of the time.”

I like to always challenge myself to create effective narratives. So next time you are trying to inspire a group of people to take action, think about your narrative.

October 15, 2014 19:39
 
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 ABOUT STEVE WOOD

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Steve Wood is the President and Chief Executive Officer (CEO) of Leddy Group and Work Opportunities Unlimited Inc. (WOU). In addition, Steve provides strategic planning and organizational development consulting services to clients.

 

Prior to joining the company, Steve spent 17 years in the banking industry where he was promoted to Senior Vice President and Senior Commercial Loan Officer.
 

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