8000 Free Cars

According to an NPR story I heard the other day there's one perk GM refuses to give up: a company car and company-paid gas for about 8,000 white-collar employees. General Motors spent nearly $12 million on fuel for its staff.

You get to drive a new car every six months. You never have to pay for it. Gasoline is always free."

A GM spokesman defended the program, which has been around for at least 50 years. He said the perk is part of white-collar employees' overall compensation.

It doesn't eliminate all driving impacts for employees. For example, when gas hit $4 per gallon last summer an employee really felt the impact, of course it wasn't the cost, rather he complained that he had to swipe his credit card twice to fill up the tank of his big free SUV.

GM calls the perk the Product Evaluation Program. The company says it's an important tool: employees must make routine reports to an internal Web site and immediately identify problems.

Walter McManus, a former GM economist, worked at General Motors during most of the 1990s: "I'm not aware — when I was in market research or in product planning — of anyone at GM ever using the information for any sort of analysis or any product development decisions," McManus said. "No one that I knew took it seriously."

A company spokesman said killing the program now would be "extremely" disruptive, kind of like the inconvenience of having to fly on a commercial airline to go to Washington DC.

From a problem-solving and innovation perspective this Product Evaluation Program is a bad idea. If GM really thought this kind of feedback was valuable it would make more sense to give the cars to non-employees. But in today's Web 2.0 world such a program is unnecessary. We saw at the MIT EF how effective paying attention to Twitter and other web tools to get immediate feedback from customers, and interacting with them to solve problems.

The real issue with this perk, and every other exclusive perk, is it creates entitlement for a small group while festering disengagement in everyone else. The justification doesn't wash with the other 230,000 GM employees.

If employee feedback is wanted, then randomly select 8,000 employees to get the cars every few weeks. This would make more sense given the stated objective. But because the stated purpose of the perk is untrue, the practice undermines 'truth telling' in the company. 230,000 employees know the management is lying about the value of this perk. What else are they not being genuine about?

The foundation of good problem solving is truth. GM does not operate in an environment of truth -- perhaps that's why they are in trouble. The old management team doesn't get this. They have serious mindset problems.

The best thing for General Motors, and for us as tax-payers is to put in a new leader in the CEO role, who will rotate every direct executive into a significantly new job (see the article on the value of moving managers around). This breaks the mindset and will allow GM to start down the path to build Trust, Engagement, and Empowerment (TEE).

Web 2.0 at the MIT Enterprise Forum

I am not sure the question: “How To Use Web 2.0 to Promote Your Business” got answered at last night’s (March 24th) MIT Enterprise Forum Chicago at K&L Gates (formerly Bell Boyd & Lloyd) Conference Center.

But it didn’t matter. What an entertaining and informative session Bob Brill and his team[1] of volunteers put together! Congrats to all.

Howard Tullman, who runs Flashpoint Academy in the Loop, acted as Moderator. The two panelists couldn’t have been more informed and fun! They were Jason Fried, founder of 37signals.com; and Harper Reed the “amazing CTO for the awesome Threadless.com”.

Whatever Web 2.0 is, they both use it to engage with customers. The teams at both companies constantly watch traffic on the web for key words (like “threadless”) and respond to complaints and compliments alike. At one point during the Q&A they were asked about ‘creating buzz using Web 2.0’. Both Jason and Harper jumped on this. “Web 2.0 isn’t about creating buzz!” they insisted. You focus on doing a great job with your customers, that’s what Web 2.0 is about, it’s real and it works. They came back to this theme over and over again. Pay attention to what they (customers) are telling you.

After the event I buttonholed each of them independently. I asked, “Listening to you guy talk for about an hour, what I got out of it was that Web 2.0 is a set of tools you use to build relationships with customers and employees based on trust, engagement, and empowerment, is that right?” “That’s it exactly.” Said Harper. “But the real key, is trust.” Harper left and I went and found Jason, also about to leave. I asked him the same question. He said “Yes, you could put that way.” He paused. “But it is really about trust, that’s the critical thing, if they trust you, then the engagement and empowerment is easy.”

In my prior blog entry I wrote: “What we at Launchpad Partners have been saying is that if you want to have a great problem solving and innovative company, the leadership must install three key components of culture: Trust, Engagement, and Empowerment (TEE, think golf tee). Trust is king. It includes the passion for truth telling, facing hard problems head on, being honest, and acting with as much openness as the law allows. When a company achieves the full measure of TEE, then it is a problem solving, innovative powerhouse that’s on the path toward taking the leadership role in its industry.

Launchpad Partners help companies through periods of stress. Once the company is through the stress, and once it is eager to become the competitive powerhouse in its industry, we then partner with the CEO and Board to create an environment of Trust, Engagement and Empowerment. We apply certain key tipping points which germinate this environment without disrupting the day to day operation of the humming machinery we’ve just helped install.”

It is interesting that CEO's of small companies get this, while CEO's of large corporations rarely do.





[1] Richard Cross, Tim Courtney, Jack Quill, Avery Cohen, Ted Wallhaus, and Rachel Kaberon

Leadership in Business and Politics

Op-Ed Columnist for the NY Times, Thomas Friedman, wrote a piece called Secrets of a Pollster. In it he talks about the big missteps of political leaders and how they recovered from these problems. The conclusion is that to be a great leader: “You can’t be too honest in describing big problems, too bold in offering big solutions, too humble in dealing with big missteps, too forward in re-telling your story or too gutsy in speaking the previously unspeakable.”

When you think of Jim Collins’ Good to Great, this has a familiar ring. The notion of being open and truthful about problems and showing humility apply to business leaders and politicians alike.

What we at Launchpad Partners have been saying is that if you want to have a great problem solving and innovative company, the leadership must install three key components of culture: Trust, Engagement, and Empowerment (TEE, think golf tee). Trust is king. It includes the passion for truth telling, facing hard problems head on, being honest, and acting with as much openness as the law allows. When a company achieves the full measure of TEE, then it is a problem solving, innovative powerhouse that’s on the path toward taking the leadership role in its industry.
Launchpad Partners help companies through periods of stress. Once the company is through the stress, and once it is eager to become the competitive powerhouse in its industry, we then partner with the CEO and Board to create an environment of Trust, Engagement and Empowerment. We apply certain key tipping points which germinate this environment without disrupting the day to day operation of the humming machinery we’ve just helped install.

2016 Summer Olympics

Last night, the University of Chicago, Booth Graduate School of Business International Roundtable sponsored a talk on the Chicago bid for the 2016 Summer Olympics. John MacAloon led a highly interactive discussion with the people in attendance updating us on the process and progress of this initiative. The International Olympic Committee will be visiting Chicago the first week in April to review the bid proposal. Presenting to the IOC will be the mayor, other local dignitaries, John MacAloon, and Barack Obama.

On October 2nd the IOC will make their selection from among Rio de Janeiro, Tokyo, Madrid, and Chicago.

Several organizations are involved in the Olympic games in addition to the IOC. There is the US National Olympic Committee; the International Federations for each sport (28 of them); and the local organizing committee. (Some entities have their own independent status as a NOC, like Puerto Rico which is why it will never vote to become a mere state in the USA.)

What is very interesting is how our US cultural view of the Olympics, and the view the IOC would like to promote, misaligned they are. In the US, the Olympics are all about medals, advertising and revenues-vs-expenses. Not so elsewhere.
Obviously these are of interests to other countries as well but the primary purpose of the Olympics is to foster the Olympic Movement. “Olympism is a life philosophy which draws together sport, culture and education in the aim of creating a harmonious balance between body, will and mind. Originally promoted by Coubertin, this philosophy is an essential element of the Olympic Movement and the celebration of the Games. For today’s Olympic Movement, Olympism is constructed around three core values :excellence, friendship and respect.”

CEO as leader

At a recent presentation I talked about how you create superior competitive advantage through innovation and the culture that you need to install to enable a company to be truly innovative. The role of the CEO as leader is absolutely critical to building an innovative culture.
An innovative culture is one that gets the best problem solving and innovation from everyone in the company. To do that you need a culture of Trust, Engagement, and Empowerment (TEE). We talked about the steps you need to be willing to take to lead a company into this culture.
While each of the steps are simple, having the will to take them is the principle obstacle facing CEOs. So one member of the audience as the following two question. "Given several CEOs behaviors around the bailout, from flying corporate jets, to taking big bonuses, is it possible that many of the most senior executives in large companies today are the wrong people to really lead a company to put it in place a culture this truly innovative and thus will give the company the best opportunity to be the competitive powerhouse in the industry?" He added "Isn't there a role for the Board of Directors in all this?"
It is a great question. First of all, I think there are a few truly exceptional CEOs who have the ability to be true leaders in their companies. But otherwise, you look at the the perks; the enormous salaries these people seem willing to take; the arrogance and sense of entitlement that is displayed; and some of the other stuff that we've seen in the banking and insurance world lately makes you believe that perhaps many of the individuals in these positions are the wrong people to be leading these companies. It may go much deeper than that. It may be that the Boards of Directors are made up of such people and operate to the benefit of each other rather than to the benefit of the stockholders; and the employees; and the customers and suppliers and the community at large.
Stockholders should be much more critical of boards. But every stockholder has a vote irrespective of how long they've held the stock. Where large blocks of stock are traded by institutional investors who are looking for short-term lifts in stock price, their short term interest will likely conflict with the interests of long-term investors (and employees, customers, suppliers, and the community itself). But they control huge blocks of votes. Perhaps the rules around voting rights should be amended to requires stockholders to hold a stock for two years before being able to exercise a vote.

Dinner at Yoshi’s

Tonight Linda and I had a marvelous dinner with her cousin’s eldest son Josh and his fiancé April. The company was wonderful, the food was spectacular and the Dry Creek Chardonnay was the best Chardonnay we’ve had in a long time.

Dick Durbin showed up at Yoshi’s tonight। He is a good senator and a decent guy. He showed respect for our privacy and didn’t come over to schmooze with us.

Tonight’s dinner was to celebrate Josh and April’s upcoming wedding, which we will likely miss as it is in Steamboat later in the Spring. Linda would like to go, so perhaps we will make it.

Innovation CEO

Here is the slideshow from the Harvard Business School Alumni Breakfast in Chicago North Shore: Innovation CEO