On the Eve of 9-11

Every year, as we pass Labor Day and approach September 11th, I think of the not-so-modest proposal I offered a few years ago, for a new national way to think about those two American events. This year, the deliberately public, deliberately heinous beheadings of two journalists again bring my thoughts to “Freedom’s Labors.” Steven Sotloff and James Foley labored for freedom by plying their craft and trying to shine some light in a dark place. That form of routine heroism also deserves some explicit recognition.

So allow me to repeat this post from a few years back:

I’d like to make a proposal.

First, I propose that the Friday after Labor Day be designated a full federal postal and banking holiday, to be designated as Freedom Day.  I know that the idea for this kind of holiday, designed to commemorate the shock, losses, and resolve of 9/11, is not a new one — but I propose we take an additional step.

So I propose further that the week between Labor Day and Freedom Day receive a special designation.  I would call it “The Days of Freedom’s Labors.”  And it is that entire week that is the focus of my proposal.

The old saying goes, “a freedom isn’t free,” but after all, how much time do we spend talking about the price we pay for freedom?  So I view The Days of Freedom’s Labors as the time for a national consideration of the simple, individual work it requires to maintain a democratic society that operates under the rule of law.  That work begins with the kind of labor that Labor Day was established to commemorate in the first place: that people get up every day and go to work and keep our economy going.  But a week long consideration of freedom’s labors also provides time to reflect on the work of public servants, charities and faith-based organizations, simple basic acts of heroism, and yes, even of the work that lawyers (like me) do.  It also provides a time to celebrate how freedom arises from civil, respectful debate, and the work of an independent, active press.

But restoring meaning to Labor Day is only one of the many benefits of a week long commemoration of freedom’s labors.

The holidays would give provide a way to mark the 9/11 attacks that is meaningful, affirming and forward-looking… a way that moves away from the maudlin or from bringing too much attention to the attackers (which is all they wanted). This is also the season to mark the national tragedy that was Hurricane Katrina. Both events provide many examples of the value of individual civility, and the cost of its absence.

For companies, the national discussion centering on The Days of Freedom’s Labors could also be a touchstone for compliance efforts, perhaps providing a handy kick-off to a fall push to meet compliance targets by year’s end. And again, the touchstones of civility, mutual respect, and yes, the Golden and Silver Rules, are a natural tie-in to the best reasons for compliance.

The Days of Freedom’s Labors would also provide a useful, immediate focus for curricula at the beginning of the school year.  Rather than the usual drift through a slow ramp up of studies, celebrating The Days of Freedom’s Labors at the beginning of the academic calendar would give teachers an immediate focus to explore topics from civics and government, to ethics and diversity, to history and biography, to the rule of law.

Speaking of the beginning of the school year, few parents would not welcome another three day weekend to buy things like that exact form of binder that most pleases Johnny’s new teacher (a requirement that, in my district anyway, you never seem to hear about until after Labor Day).

Indeed, for retailers and tourist destinations alike, an extended end-of-summer holiday could even reap economic rewards.  For businesses looking for non-monetary forms of reward for their work forces, the close combination of the Labor Day and Freedom day weekends might provide some appealing opportunities.  And would it be all that bad if the weeklong commemoration of The Days of Freedom’s Labors brought our overworked country a step closer to that glorious continental institution they call vacance – the company-wide vacation.

But let me not get too far down the road of pleasing vacations and crowded stores. The point is, a week-long celebration of freedom’s labors fits our times and fits our unique national identity.  It is distinctly non-partisan. By its nature, it is an appropriate time for dissent as well as assent.  And that may be the greatest value of the Days of Freedom’s Labors: reminding all Americans that our progressive, prosperous society – where everyone gets a chance, and every vote counts – is built or abandoned in proportion not to how much we rigidly agree – but by how hard, how honestly, and how respectfully we labor for the rule of law, and institutions and businesses governed by the Golden and Silver rules.

Happy Freedom Day.

Conan’s Own Moral

Item #1:  Conan O’Brien’s final quote: “If you work really hard and you’re kind, I’m telling you, amazing things will happen.”

Item #2, even better: Since Friday night, when O’Brien said it, thousands of people have re-tweeted that quote. At a random time two days later, still another 10 re-tweets per minute.

Think the average person isn’t hungry for ethical leadership and life by the Golden and Silver Rules?  Like Coco said, don’t be so cynical.

Conan, Leno, and a Business Moral

Nice article in the Washington Post by business columnist Steven Pearlstein, asserting that NBC’s late night troubles are an analog for what’s wrong with American Business.

Among his observations:

It starts with the mind-set that puts short-term profit over long-term value creation….

Unable to come up with something new and fresh, NBC’s fallback — like so much of American business — was simply to do more of what worked, until it didn’t. …

For NBC, the decision to move Leno to an earlier time slot had nothing to do with the desires of TV viewers. Rather, it seemed like a clever solution to the problem of having promised the “Tonight Show” to O’Brien five years earlier in an effort to prevent him from jumping to a rival network. It’s a common mistake in business — letting key decisions be driven not by market demand but by the need to resolve internal conflicts. As NBC discovered, it rarely works out for the best…..

Truly great companies see themselves as part of a business ecosystem. They understand that their long-term success depends on having financially healthy suppliers and distributors, and take pains not to share gains and avoid profiting excessively at their expense. [There’s that Golden Rule thing again! – jbm]

But NBC forgot that wisdom when it decided to go for a strategy of low-budget offerings in prime time that would maintain profitability at the expense of program quality or ratings. It turned out that the new strategy posed an existential threat to the independent studios and production houses that networks still rely on to create their entertainment programming. And the smaller audiences that NBC was willing to accept for Leno’s 10 p.m. show translated into shrunken audiences for 11 p.m. news shows that generate as much as 40 percent of the revenue for local affiliates that are already reeling from the recession and competition from Internet advertising.

There are many other lessons to be drawn from NBC’s late-night debacle — on the shortcoming of industrial conglomerates (GE), on the difficulty of old dogs learning new tricks (Leno), and surely the one about sacrificing old products to launch new ones (O’Brien). You could probably construct an entire business school class around this case study in mismanagement.

The Days of Freedom’s Labors

As we approach early September, I’d like to make a proposal.

First, I propose that the Friday after Labor Day be designated a full federal postal and banking holiday, to be designated as Freedom Day.  I know that the idea for this kind of holiday, designed to commemorate the shock, losses, and resolve of 9/11, is not a new one — but I propose we take an additional step.

So I propose further that the week between Labor Day and Freedom Day receive a special designation.  I would call it “The Days of Freedom’s Labors.”  And it is that entire week that is the focus of my proposal.

The old saying goes, “a freedom isn’t free,” but after all, how much time do we spend talking about the price we pay for freedom?  So I view The Days of Freedom’s Labors as the time for a national consideration of the simple, individual work it requires to maintain a democratic society that operates under the rule of law.  That work begins with the kind of labor that Labor Day was established to commemorate in the first place: that people get up every day and go to work and keep our economy going.  But a week long consideration of freedom’s labors also provides time to reflect on the work of public servants, charities and faith-based organizations, simple basic acts of heroism, and yes, even of the work that lawyers (like me) do.  It also provides a time to celebrate how freedom arises from civil, respectful debate, and the work of an independent, active press.

But restoring meaning to Labor Day is only one of the many benefits of a week long commemoration of freedom’s labors.

The holidays would give provide a way to mark the 9/11 attacks that is meaningful, affirming and forward-looking… a way that moves away from the maudlin or from bringing too much attention to the attackers (which is all they wanted). This is also the season to mark the national tragedy that was Hurricane Katrina. Both events provide many examples of the value of individual civility, and the cost of its absence.

For companies, the national discussion centering on The Days of Freedom’s Labors could also be a touchstone for compliance efforts, perhaps providing a handy kick-off to a fall push to meet compliance targets by year’s end. And again, the touchstones of civility, mutual respect, and yes, the Golden and Silver Rules, are a natural tie-in to the best reasons for compliance.

The Days of Freedom’s Labors would also provide a useful, immediate focus for curricula at the beginning of the school year.  Rather than the usual drift through a slow ramp up of studies, celebrating The Days of Freedom’s Labors at the beginning of the academic calendar would give teachers an immediate focus to explore topics from civics and government, to ethics and diversity, to history and biography, to the rule of law.

Speaking of the beginning of the school year, few parents would not welcome another three day weekend to buy things like that exact form of binder that most pleases Johnny’s new teacher (a requirement that, in my district anyway, you never seem to hear about until after Labor Day).

Indeed, for retailers and tourist destinations alike, an extended end-of-summer holiday could even reap economic rewards.  For businesses looking for non-monetary forms of reward for their work forces, the close combination of the Labor Day and Freedom day weekends might provide some appealing opportunities.  And would it be all that bad if the weeklong commemoration of The Days of Freedom’s Labors brought our overworked country a step closer to that glorious continental institution they call vacance – the company-wide vacation.

But let me not get too far down the road of pleasing vacations and crowded stores. The point is, a week-long celebration of freedom’s labors fits our times and fits our unique national identity.  It is distinctly non-partisan. By its nature, it is an appropriate time for dissent as well as assent.  And that may be the greatest value of the Days of Freedom’s Labors: reminding all Americans that our progressive, prosperous society – where everyone gets a chance, and every vote counts – is built or abandoned in proportion not to how much we rigidly agree – but by how hard, how honestly, and how respectfully we labor for the rule of law, and institutions and businesses governed by the Golden and Silver rules.

Happy Freedom Day.

Bone at the Top

Occasionally, company leaders just do the darndest things. Things like short-term decisions that wind up wrecking a company’s reputation long-term. Things that must make the company’s efforts to build a culture of ethics internally, just seem to its employees like so much window dressing. These bone-headed decisions set a “tone at the top” you don’t want. Call them cases of a “Bone At the Top.”

I came across two of them in the news this past week.

The first is a confession from the companies that sell re-filled propane gas containers for your backyard grill, that they have been putting less gas than they used to in the same sized gas canisters. As KYW-TV (Philadelphia) reporter Jim Donovan reported:

In the past you would take your empty tank and pay to exchange it for a full one.  But starting last summer, two big propane tank exchange companies, Blue Rhino and Amerigas decided that instead of raising prices they would put less propane in the same-sized tank. “The fact of the matter, those tanks weren’t full, they were partially full,” says Attorney Eric Gibbs, adding, “so consumers didn’t realize that they were getting 15 pounds instead of 17 or 18 pounds.”

This is worse than shrinking a 50 cent candy bar — you can see that. Now, I checked today at my neighborhood Lowes, and there was a sticker on the cage of Blue Rhino tanks saying they contained 15 lbs. of propane — but for that message to hit home I would have to (1) go to the cage and look at it (when to do the exchange you instead just walk into the store), and (2) remember that when I last got a tank, months ago, it had 17 lbs in it. But I don’t do either of those things. I hand them my old, empty Blue Rhino gas tank and some money and they hand me a different tank that feels heavier. It’s supposed to be an exchange, not a down-grade.

So maybe next time I’ll take my Blue Rhino canister over to my local farm-goods store, where I keep the tank and I watch them pump it full of propane. I get what I bargained for, and Blue Rhino gets its recurring-revenue business model severed. Short-term win becomes long-term loss. This may be more evidence, as I have mused before, that short-term executive thinking is unethical. It is certainly evidence that sometimes, the most ethical and transparent thing to do is just raise your prices.

It’s also possible that, as my family’s official Griller of Meat, I take this BBQ Propane thing a little too personally.

The second case is even more of a head-shaker.

It’s now been revealed that the National Arbitration Forum (the NAF) — one of the largest alternative-dispute resolution forums — is owned in large part by an investment fund that also owns a massive nationwide debt collection agency. I’m guessing the fund leaders thought they were making a nice, pure vertical play into the consumer debt collection sector: the ability to profit by being both the “prosecutor” and the “judge.” Now NAF has been on the receiving end of some awful press (like this and this and this) and a lawsuit filed by the Minnesota Attorney General (the Journal has a link to the complaint). The AG alleges as follows:

The consumer also does not know—and the Forum hides from the public—that the Forum is financially affiliated with a New York hedge fund group that owns one of the country’s major debt collection enterprises.  Beginning in 2006 and through 2007, Accretive, LLC (a family of New York hedge funds under the control of an investment manager named  J. Michael Cline and his associates), engineered two transactions.  In the first transaction, Accretive formed several private equity funds under the name “Agora” (meaning “Forum” in Greek), which in turn invested $42 million in the National Arbitration Forum and obtained governance rights in it.  In the second transaction, three of the country’s largest debt collection law firms (Mann Bracken of Georgia, Wolpoff & Abramson of the District of Columbia, and Eskanos & Adler of California) merged into one large national law firm called Mann Bracken, LLP.  Accretive then formed and funded (partly using federal money from the U.S. Small Business Administration) a debt collection agency called Axiant, LLC, which acquired the assets and collections operations of Mann Bracken.

Through these transactions, the Accretive hedge fund group simultaneously took control of one of the country’s largest debt collectors and became affiliated with the Forum, the country’s largest debt collection arbitration company.  In 2006, the Forum processed 214,000 consumer debt collection arbitration claims, of which 125,000—or nearly 60 percent—were filed by the law firms listed above.

Catch that? The NAF bills itself as a neutral forum, but it allegedly got 60% of its consumer debt collection cases from its sister companies.

The Minnesota AG filed her suit on Tuesday, July 14.  Less than a week later, on July 20, the NAF settled, and agreed that it would never, ever again handle a consumer arbitration. Said the AG, “The company will permanently stop administering arbitrations involving consumer debt, including credit cards, consumer loans, telecommunications, utilities, health care, and consumer leases.”

A broad, long term defeat, arising from what someone thought was a clever win. Ouch.

Want to know why the government is so hot right now on regs and statutes that impose mandatory disclosure or mandatory self-reporting of allegations? Consider this: at the heart of both of these instances of a “bone at the top” was the failure to fully publicize some key fact, to speak publicly about “the whole truth.”

But also consider the compliance teams at these companies, and their affiliates, who in the face of this news have to continue to tell their teams to reveal all possible conflicts of interest and play by all the rules. Problem: A Bone at the Top drowns out Tone at the Top every time.

The Tiger Stands Defender

I had the great fun this weekend of attending my college reunions at Princeton. Among the many pleasures there was seeing one of my college friends, a woman known then (and now) for her unflinching social activism. When we were in school, she was the most vocal and active of all students about eliminating the vestiges of sexism and discrimination from campus. She was thought of as a rabblerouser, and by many, a disloyal troublemaker.

Princeton Reunions are annual for every class, and their centerpiece is the P-Rade: each class, led by the 25th Reunion, then oldest to youngest, walks down the lane between all the classes younger than itself, each in our own Orange and Black regalia.

Although Yale has always favored
The violet’s dark blue,
And the many sons of Harvard
To the crimson rose are true,
We will own the lilies slender,
Nor honor shall they lack,
While the Tiger stands defender
Of the Orange and the Black

You gotta see it.

As the years went by, and my friend came to our annual reunions year after year, the crowds’ reactions to her changed from jeers to cheers. For a while, the classes younger than ours welcomed my friend as a conquering hero. More recently, she has simply become accepted, and the younger classes don’t particularly seem to notice her.

And my friend keeps coming back to Reunions, year after year after year, wearing her Orange and Black.

So here’s a nugget from my Reunions for people who run compliance programs and people who run companies. Sometimes, the would-be reformers, the rabble-rousers, even the vocal troublemakers, are the ones who are most loyal to your organization. They have the greatest passion, and they wear it on their sleeve.

When they are on your case, think long-term. Consider: are they out to destroy you, or to improve you. If the latter, they will never be apathetic or back-bite. If you show them the door instead of giving them a seat at the Round Table, you will have lost one of your greatest defenders, and one of the most important allies any leader can have — someone on the inside who will tell you when you are full of it.

Till then with joy our songs we’ll bring,
And while a breath we draw,
We’ll all unite to shout and sing:
Long life to Old Nassau.

Another CEO for Golden Rule Management

Another vote for really, truly treating employees like teammates — for managing by the Golden and Silver Rules and thereby building a successful business — from Richard Teerlink, the retired chairman of Harley-Davidson. I recommend his recent comments, as reported by my friend Anne Ciesla Bancroft in her very substantive blog on managing workforce reductions.  Anne is an employment lawyer with Fox Rothschild.  She reports that:

During his 18 years with Harley-Davidson, Teerlink led the successful cultural transformation of the company based on the premise that “people are an organization’s only sustainable competitive advantage.”

Here here! And unlike some former leaders of major American manufacturers, I don’t think Teerlink has come to this conclusion recently.

Behavioral Econ Part II: Managing like you like it (and like them)

More thoughts on my April 25 post on behavioral economics and behavior change. This gets to the nub of what I want this blog to be (mostly) about.

Randy Cohen‘s anecdote made me think of another that appears in my no-question favorite management book: “It’s Your Ship,” by D. Michael Abrashoff. The story is about the owner of an industrial repair shop who kept his tools in a tool-issue room to avoid theft and losses. He paid the custodian of the tool-issue room $35,000 a year (this was c. 1990), and his workers spent part of their day standing in line to check tools in and out. So the owner did away with the tool issue room. No more lines. And over the next year, he spent only $2,000 to replace tools.

As Abrashoff puts it, a “lack of trust was costing him money.”

Bingo. Beware of the processes that get in the way of compliance. Beware of bureaucracy that takes the name of compliance but really has nothing to do with your company staying on the right side of law and ethics, because that busy-work only makes your team resent your legitimate compliance efforts. And beware of processes that may be contrary to your tone at the top.

There are things you’ve got to button down in tight processes, like, say FCPA compliance. Then there are areas where clearly and repeatedly communicating a vision and mission — and not contradicting them with your actions – goes a long way.  (Balance. An obvious point, right?)

And let me take this moment to give a fan’s rave to Abrashoff’s book. It’s the story of his time as captain of a US Navy destroyer, and how he used simple, commonsense trust and communication — treating his sailors as he would expect to be treated– to lead it to excellence. I’ve lead companies or business teams for more than 20 years of my career, and I’ve read a lot of management books — this is the one that, as I read it, I kept nodding my head. “Yes, that’s right!”, I kept saying. (I got real annoying to my family about it.) And there’s no diluting his approach by saying that a commercial executive can’t enforce the order and discipline that a military leader can; as Abrashoff notes, he was the ultimate middle-manager — with ranks of superiors above him and an immense bureaucracy surrounding him.

This book also carries an interesting history, to me, anyway. It was published in 2002, but demand made it disappear from book store shelves overnight in the fall of 2007, when it was mentioned on Monday Night Football as the inspirational leadership guidance for Bengals QB and Captain Carson Palmer.

Golden rule management ala Berkun

Really nice exposition of management by the Golden and Silver Rules, by consultant and author Scott Berkun.

In fact, the old Rule gets an explicit mention in #7 of Berkun’s “Top Ten Reasons Managers Become Great.

“Practice of the golden rule.  It’s funny how well known this little gem is, and rare in life people follow it. But I think anyone in power who believes in it, and treats all of their employees the same way they truly would want to be treated, or even better, treats employees as they actually want to be treated, will always be a decent, above average manager. A deeply moral person can’t help but do better than most people, as treating people with respect, honesty and trust are the 3 things I suspect most people wish they could get from their bosses.”

Other reasons he lists: great managers “Enjoy Helping People Grow” and (speaking of ethics) and “Instrinctively correct[] bad behavior within their own team.”

And thanks to my son Rob for referring Scott’s post to me.