The great business journalist Connie Bruck's fascinating article in the New Yorker magazine about the fallen king of home mortgage lending, Countrywide Financial's Angelo Mozilo ("Angelo's Ashes," June 29, 2009), shows the disastrous effects of powerful leadership that was focused on the wrong objective. Bruck writes that in 2002, when Countrywide had a market share of almost 10 percent, and none of its competitors had more than 13 percent, Mozilo decided to strive for unprecedented dominance of his industry: He set a goal of capturing at least 30 percent market share. As the co-founder and strong leader of Countrywide, Mozilo's overriding goal became the laser-like focus of his people, even after Mozilo himself largely stepped away from the company's day-to-day operations. In their effort to achieve his highest values--rapid growth and market dominance--they sacrificed other values that should have been important, such as creating relationships with their customers that would be mutually beneficially for the long-run.Countrywide was one of the biggest pushers of high-risk mortgages that led to countless people losing their homes--and the financial system nearly collapsing.
In my upcoming book "Walk the Walk," I write about how a real leader must constantly show the one or two values that are most important for the company. Mozilo did exactly that. The problem is that they've got to be the right values. Any time a company is focused on growth and dominance as its No. 1 objective, then the other things that get in the way, such as ethics and prudence, will likely be sacrificed. If Mozilo had enshrined the security and prosperity of Countrywide's customers as his top value, the outcome might have been very different. Instead, he wanted market dominance at whatever price--and that's exactly what he wound up achieving.
Friday, July 10, 2009
Thursday, July 9, 2009
"Walk the Walk" Watch: Michelle Obama
Further evidence that Michelle Obama is a leader reminiscent Eleanor Roosevelt, promoting the interests of social justice by her own constant presence and energy rather than her words alone:
"Away from the cameras, Michelle Obama is reaching out to DC's poor and neglected," writes Eleanor Clift on the Newsweek website. "Michelle Obama has made it a practice to almost every week visit some worthy non-profit..."
"Away from the cameras, Michelle Obama is reaching out to DC's poor and neglected," writes Eleanor Clift on the Newsweek website. "Michelle Obama has made it a practice to almost every week visit some worthy non-profit..."
Wednesday, July 8, 2009
"Walk the Walk" Watch: Fast Food Chains
An article in today's Wall Street Journal looks at how national restaurant chains have been publishing misleading calorie-count figures for their menu items. ("Calorie Disclosures Fail to Weigh Whole Enchilada" by Carl Bialik). The Scripps television stations did some of its own testing and found, for example, that Taco Bell's steak taco actually had 297 calories, not 160 as the chain claimed, and that its bean burrito had 449 calories, not 330. Applebee's also looked pretty bad in the testing conducted by an independent lab.
No one is claiming that the restaurant chains are cheating: They're playing by the rules, but they're gaming the system: Carl Bialik, who's the Journal's "Numbers Guy" columnist, writes that "many chain restaurants send just one menu item to be tested for their published counts," even though it would be much more accurate to test many samples.
Personally, my guess is that those single submitted samples are probably prepared with a much lighter shmear of mayo, or similarly finessed quantities other high-cal ingredients, than typical servings in the real world. Who's going to flag whether it's a thin or thick layer of mayo, anyway?
In my view it would be so much wiser for the top executives at national restaurant chains to publish accurate calorie counts than to try to get away with intentionally misleading figures. If they walked the walk this way, it would show that they treated their customers with respect. When television stations and newspapers and bloggers exposed the deceptive practices of their rivals, these chains could claim rightly and loudly that they were honest with their patrons. Showing real concern for the health and well-being of their customers could be a way of standing apart in a business that's ruthlessly competitive on price, especially in a recessionary economy. Especially now that we've had some frightening outbreaks of health threats in the food system, often involving chain restaurants, it would be so valuable to build that relationship of trust.
In my surveys of many industries for my upcoming book, "Walk the Walk," I've found that usually only a single company in any business stands apart from the lemming-like behavior with real leadership, which simply involves living up to its words. In this case, the company that walks the walk appears to be Subway. The Journal story reports that the New York City health department surveyed 7,318 customers as they left 275 fast-food restaurants during weekday lunch hours. Although the city requires all fast-food restaurants to post calorie counts, only Subway revealed them "prominently," according to the Journal: "Nearly one-third of Subway's customers reported noticing the nutritional information, compared with fewer than 5% of customers at other chains. Among the Subway customers who spotted the numbers, more than one-third said it affected their orders--and those individuals' meals averaged 99 fewer calories."
No one is claiming that the restaurant chains are cheating: They're playing by the rules, but they're gaming the system: Carl Bialik, who's the Journal's "Numbers Guy" columnist, writes that "many chain restaurants send just one menu item to be tested for their published counts," even though it would be much more accurate to test many samples.
Personally, my guess is that those single submitted samples are probably prepared with a much lighter shmear of mayo, or similarly finessed quantities other high-cal ingredients, than typical servings in the real world. Who's going to flag whether it's a thin or thick layer of mayo, anyway?
In my view it would be so much wiser for the top executives at national restaurant chains to publish accurate calorie counts than to try to get away with intentionally misleading figures. If they walked the walk this way, it would show that they treated their customers with respect. When television stations and newspapers and bloggers exposed the deceptive practices of their rivals, these chains could claim rightly and loudly that they were honest with their patrons. Showing real concern for the health and well-being of their customers could be a way of standing apart in a business that's ruthlessly competitive on price, especially in a recessionary economy. Especially now that we've had some frightening outbreaks of health threats in the food system, often involving chain restaurants, it would be so valuable to build that relationship of trust.
In my surveys of many industries for my upcoming book, "Walk the Walk," I've found that usually only a single company in any business stands apart from the lemming-like behavior with real leadership, which simply involves living up to its words. In this case, the company that walks the walk appears to be Subway. The Journal story reports that the New York City health department surveyed 7,318 customers as they left 275 fast-food restaurants during weekday lunch hours. Although the city requires all fast-food restaurants to post calorie counts, only Subway revealed them "prominently," according to the Journal: "Nearly one-third of Subway's customers reported noticing the nutritional information, compared with fewer than 5% of customers at other chains. Among the Subway customers who spotted the numbers, more than one-third said it affected their orders--and those individuals' meals averaged 99 fewer calories."
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