How to get fired from Merill Lynch. Show some dangerous leadership qualities?

October 28, 2007

oneal-thumb.jpgMerill Lynch directors, some hand-picked by their CEO, Stanley O’Neal, were stung into action when he held exploratory talks with a potential business partner, prior to consulting them. When a firm is in trouble, a leader may be on dangerous ground in showing what might be seen as leadership qualities

Update

With a week of the original posting, CEO O’Neal had left his post with a controversially substantial golden goodbye. The original posting referred to his discussions with Wachovia, which in the same period also was the subject of news stories about its vulnerability to a funding crisis through its own sub-prime position.

Original Post

As 2007 drew to a close, Financial Institutions around the world had become increasing anxious about their vulnerabilities during the turbulence of the sub-prime lending frenzy. Inevitably, leaders came under scrutiny. It was a good time for a corporate board to signal its competence, by taking action to deal with its short-term and longer-term problems. This seems to have been the case at Merill Lynch.

While strategic actions might be more direct than disposing of a leader? As the New York Times reported it

The board of Merrill Lynch, its frustration mounting over the brokerage’s credit losses and the decision making of its embattled chief executive E. Stanley O’Neal, has begun to actively consider whether to replace him and with whom… The board’s deliberations underscore O’Neal’s precarious position. Once credited with turning Merrill Lynch around, he is struggling to retain his job after a third-quarter loss of $2.24 billion and an $8.4 billion charge for failed credit and mortgage-related investments. He has also clashed with directors over an approach he made to rival Wachovia for a possible merger.

Journalists Landon Thomas Jr. and Jenny Anderson pointed out

On the face of it a brief conversation about a possible merger with a fellow chief executive at a rival bank is by no means a firing offense. But in O’Neal’s case, the proposal, even though he presented it as one of several options, elicited a sharply negative reaction from directors, the majority of whom were handpicked by him.

We may well conclude that that the lack of consultation was the trigger that set off the animal instinct to react to danger. The directors responded with a surge of adrenaline, and were into the fight or flight routine.

Leadership questions

It is easy to understand how the board may have reacted on learning that Mr. O’Neal had been holding discussions with potential strategic implications prior to consulting with them. It could also be argued that ‘that’s what leaders have to do, sometimes’.

Don’t know what you might have done in the circumstances if you found yourself in O’Neal’s shoes. Perhaps find a way of anticipating and protecting yourself against the accusation? My students might have come up with this idea, or more subtle ones. I suspect they might have been rather scornful of the leader’s actions. If so, would they have been too harsh in their judgments? What cannot be denied is O’ Neal’s impeccable educational achievements at Harvard, and his business ones thereafter. It’s much easier to propose well-thought-out leadership actions in the classroom, than under conditions of extreme business crisis.

Stop Press Sunday October 28th 2007

Reuters report that O’ Neal is to leave Merill Lynch. And that a consensus to that effect has been reached by the Board.


Northern Rock taken over by Manchester United: Official

October 27, 2007

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Update:

The post was intended as a light-hearted comment on the bizarre worlds of football and high-finance. Later, during the European Championships, [June 2008] the traffic attracted to the post suggested the news may have taken on the authority of a football rumour. The original post follows…

What’s the difference between Manchester United and Newcastle United? Football supporters have their own answers to the question. What about this answer? Newcastle United Football Club are not (yet) financially connected with AIG

Leaders we deserve is not a site at which you might expect to find sensationalist stories. I am in awe of the creativity of headline writers. I could never compete with the genius who produced the all-time classic Freddie Starr ate my hampster.

Recently I have been inspired by the creative headlines and blogs of the BBC’s Robert Peston. He has outscooped, outwritten, and outheadlined all other financial journalists on the Northern Rock affair. Respect. In homage to such great headline makers and writers, here is my modest contribution to the Andy Warhol headline of the hour award:

Northern Rock taken over by Manchester United: Official

It’s such a liberating feeling to write something like that.

Creative headlines have the same relationship to literal accuracy as reality shows have to a Mills and Boon romance. So what am I getting at? Here’s the case as it was reported in more sober terms. And what could be more sober than parts of the BBC not yet inspired by the Peston putzvah?

Last week, Northern Rock said it was continuing to negotiate its position with a number of “potentially interested” suitors. They include the Virgin-led consortium, also featuring US insurance company AIG, which has offered to buy a majority stake in the bank and inject “hundreds of millions of pounds” of money in exchange for taking control and rebranding the business as Virgin Money.

AIG. Remember them? That vast American financial operation whose initials are now on our TV screens every time a Manchester United player runs on to a pitch, or stands in front of an advertizing hoarding in a post-match interview. AIG is as close to Manchester United Football Club as are its American bosses the Glazer family.

In some contrast, Northern Rock is culturally committed to the North East of England, to Newcastle, and Newcastle United sport. It is a key supporter of Newcastle United Football Club.

Or as The Guardian put it recently

The last decade has seen Northern Rock donate £175m to a range of charities and community ventures in the north east of England including youth football teams in Newcastle, opera in Leeds and local homeless projects … Northern Rock is also the main sponsor of Premier League football team Newcastle United in a deal that runs until 2010.

Fantasy Football

In the world of fantasy football I see the following scenario. Cast as the evil empire, Manchester United is bent on global domination. The unsuspecting Americans have been dragged into the plans of super-villain Sir Alec (Darth Vader) Ferguson. Jedi Knight Richard Branson is an innocent pawn in the game. Aided by his puppets AIG, Northern Rock will be captured.
At a crucial time, Michael (Luke Skywalker) Owen will be brought back to Manchester and forced into playing for Manchester United.

So when these events come to pass …Just remember where you heard about them first.


Leadership dreams, visions, and nightmares

October 23, 2007

mbeki-after-world-cup.jpgThe payoff from a vision dashed is a recurring nightmare. We examine recent sporting visions, dreams and nightmares during the Rugby Union world-cup

A glimpse of dashed dreams was transmitted around the world as the beaten English rugby team trudged up to receive their runners-up medals after defeat by South Africa. As if in a nightmare, the players trudged past the line of dignitaries, which included Presidents Sarcozy of France, the host nation, Brown of England (and Scotland and Wales), and Mbiki of South Africa. Weariness seemed to have damped-down despair and elation alike. The players just about managed perfunctory handshakes.

A few minutes later and joy overcame fatigue for the South Africans as they eventually got their hands on the trophy. The defining image was that of President Mbiki hald aloft not quite as securely as man of the match Victor Mayfield in the lineouts which he dominated throughout the game. Sorry, must make that clear: It was Mayfield who dominated the lineouts, Mbiki the political gestures, during the post-match celebrations.

The vision

The build-up to the final from had been a classical example of the way sport can tap into the deepest of group emotions. A popular upsurge in interest was captured and amplified through the obsessive reporting from Paris, where there seemed to be more former international players than members of the current squad.

The broad news story was that England would be a match for the Springboks. Most of the legion of elders suggested that England could win, if they played to their very best. Most reporters translated this as meaning that the match would be very close. Close? The South Africans had beaten England seriously in the earlier stages of the tournament.

The talisman

Yes, but that was before the team began its revival. Before its talisman Jonny Wilkinson returned to fitness. Before those nail-biting victories against Australia and then France.

The pre-match story began to make sense to me. There was something very important going in England culturally. This was one of those episodes which reveal how culture defines itself, and is itself defined. A vision is articulated.

We are the champions of the world in Rugby Union. We will remain champions for the next four years by beating South Africa.

How will it be achieved? Because we have the talisman. He who will not let us down. Jonny Wilkinson. He whose very presence will strike fear into our enemies. And so on.

Specifically there was a genuinely mimetic story to be heard. [Mimetics: The controversial of cultural transmission through ‘conceptual genes’ or memes.] It is consistent with a memetic approach that the story becomes become more consistent in its re-telling.

The replication process was helped by the intense appetite for ‘news’ from any-one. Celebrity Rugby has-beens were in demand. But so was the voice of the true supporter, the camp follower from the front-line. These were the voices from people close to the action. The real heroes were in silent preparation for the mighty battle ahead.

Someone articulated the achievement of the dream in a special way. It became the orthodoxy. It went something like this.

South Africa beat us, but that was when Jonny was injured.

They know Johnny is our match-winner and fear him.

Their fear will weaken their play and their resolve.

If we are only five or six behind with twenty minutes to go, their fear will play into our hands.

Although they will try to prevent it, the result is inevitable. Our mighty forwards will control the ball, battle forward, the ball will come out to Jonny.

Jonny will kick a drop goal.

That will confirm to the opponents that their fate is sealed.

And then we will score again and win.

The story has the power of all primitive atavistic expressions of fear and motivation. It is the verbal equivalent of the Hakas performed earlier in this and every tournament for over a hundred years by the New Zealand all-blacks. I have tried to report it accurately. Note how Wilkinson, undoubtedly the focal image within the story, changes the course of the game. But he doesn’t win it.

That’s one way in which the story has its power. History doesn’t repeat itself, but it has its powerful echoes. If the story just had the team winning by Jonny dropping a goal at the last minute, the story would lose power. ‘That’s just remembering what happened last time?’ someone might object, in the spirit of the lad shouting that the Emperor has no clothes. That was then. Here’s the new story of our destiny.

One moving, one clapping?

In the vision, fate decried only one outcome. But as someone pointed out, you may not be playing a game with one side moving and the other side clapping. Indeed, we might see all such battles as a contest between two stories, each of which has won over other stories in the run-up to battle. Eventually one vision triumphs, the other loses.

But the cultural loss is softened. There is always a way to find consolation. Victory denied, is also denial of defeat. We must have been robbed.

We was robbed

Yes. In those bitter and dark hours for English fans, there was the coda of being unfairly beaten. (How else?). In this case, it was the case of the disallowed try which would have brought the score into Jonney Wilkinson territory. The effort was disallowed by a fourth official. An Australian. Need I say more?

The other vision

There was another story developing. The South African dream went beyond winning a little golden cup. The symbolism was there for all to see. The nation had also had its earlier dream come true, as Nelson Mandela celebrated their earlier win. Then the President wore the gold and green shirt, which was previously a symbol associated with the earlier apartheid regime. This time the President wore a suit. But it was very convenient that the charismatic Mandela was ‘too ill to travel’.

The story, as was the one that England had dreamed of, was rooted in the past, but was also about the future. In South Africa, there is still a long road to travel, as Mandela would put it, to achieve the goals of one nation at peace with itself. The sporting win was recruited in the service of its cultural and political dream.

One clapping, one moving

I just remembered who used to talk about sport as a creative collaboration not a competition. It was Mark Izrailovich Dvoretsky, one of the greatest chess trainers of all time. I can’t find the reference, (yet) but he warned players against too much focus on one’s own strategy. Chess is not a game with ‘one player moving, and the other clapping’ he liked to say. That’s another quote in search of a definitive reference, as well as another example of chess as a source of strategic insights.


A Brief history of leadership

October 21, 2007

glass_spiral_staircase.jpgLeaders and leadership continue to capture the public imagination. But there have been few attempts to trace the history of leadership to its earliest manifestations. What can be learned from the hard-wired behaviors of insects, the territorialism of reptiles, the disciplinary schooling of horses, and the social capitalism of chimpanzees?

This post [under development] is based on a presentation to Manchester Business School Alumni in October 2007. You can access the presentation entitled A brief history of leadership here, [accessed via my slideshare powerpoints. Be patient. It does load, in about 15 seconds from my PC! ].

The lecture sets out the case for learning about today’s leadership dilemmas by reference to animal behaviors. This is in some ways a well-trodden path since Desmond Morris reminded us of our kinship with other animals as a naked ape.

The approach has to beware the pitfalls of anthropomorphism (attributing human behaviors to other animals). These challenges have been examined by John Stodart Kennedy as the new anthropomorphism.

These scholars have continued the debate on instinctive behaviors that followed the work of pioneering ethologists such as Nikolaas Tinbergen and Konrad Lorenz.

Drawing on these sources, the lecture argues that our modern concepts of leadership draw on residual ancient forms. Furthermore, our shared concepts and folk-memories contribute to universal archetypes.

It is suggested that as humans, through consciousness and learning, we become and create ‘the leaders we deserve’

Other points of interest: By re-evaluating the role of instinct in behaviors that are considered to exhibit leadership qualities, we approach the ancient question of whether leaders are born or made.

To go more deeply

In preparing the lecture, I drew heavily on the work of Richard Dawkins, and particularly The Ancestor’s Tale.

Anyone with strong creationist beliefs will probably have problems with the Darwinist treatment.


A Bad Week for Weakened Leaders: But how far is Paris from Agincourt?

October 19, 2007

agincourt.jpg
It’s been a bad week for British leaders. A spate of sackings and resignations has occurred. The battered leaders met their nemesis after humiliating performances in sport, business and politics. But hope persists at the prospects for a great victory in the Rugby World Cup

There are so many stories. Too many for me to cover all of them in detail.

Some were easier to predict than others. Sammy Lee acquired his job at the start of the season, as manager of Bolton Wanderers FC, when the much-admired Sam Allardyce was head-hunted for Newcastle United. He stepped up from Big Sam’s shadow. But from the start he was dubbed little Sam, a painful reminder of his erstwhile stature and status. Bolton has had a dreadful start to the season. In a little league table of Premiership managers facing the sack, I had him placed second (just below Martin Jols of Tottenham). Sorry Martin. Hang in there.

Then there were the casualties from the World Cup of Rugby Football. I didn’t have a list of these. But I certainly would not have placed Graham Henry of the New Zealand All Blacks anywhere near the top. My list of managers most likely to take an early bath would have been headed by England’s Brian Ashton, about whom more later. Henry’s team had been confirming their status as the tournament favourites until the quarter finals. Until then they had outstripped opponents so thoroughly that they had hardly become match tight. They lost a tight game, playing below their potential. Exit New Zealand. Exit Henry.

Wales, Ireland and Scotland failed to make it through the first stage of the tournaments. Out went Gareth Jenkins of Wales, and Eddie O’ Sullivan, of Ireland. Only Scotland’s much-rated Frank Hadden survived.

England’s football coach Steve McClaren also seems to be surviving on borrowed time, after defeat to Russia leaves England’s qualification from the European Cup in doubt. In his case, there is a mathematical probability that England will reach the knockout stage of the European competition. This, as much as somewhat improved performances by the team, is staying the hand of the English Football Association. They had already botched the appointment of McClaren after a hasty effort and failed effort to secure Big Sam (sorry, Big Phil) Scolari during last year’s World Cup.

[Will Big Steve survive in his present coaching job longer than Big Martin Jols of Tottenham?].

In Politics

In Politics the increasingly nasty tussles between Gordon Brown and David Cameron continue in Parliamentary exchanges. Ironically, the more immediate victim of that contest was Ming Campbell of the Liberal Democrats. In a decision that caught the press unawares, Ming has his retirement announced for him by two leading Lib Dem king-makers and king -unmakers. (‘Did you wield the knife’ one reporter shouted audibly during the televised announcement. No, he resigned. Ming spoke the next day, saying he had decided that he would not be able to deflect the media from obsessing about his age, thus hindering all attempts to get across the political messages he wanted to convey.

These petty-paced political moves are arguably no more than the uncomfortable outcroppings of democracy. As I write, I learn of the real carnage within presumably an assassination attempt on Benazir Bhutto as she re-entered Pakistan after a decade of exile.

In Business

In the aftermath of the celebrated Northern Rock affair, the bank’s leaders appeared before the commons select committee that had already interviewed the leaders of the Bank of England, The treasury, and The Financial Services Authority.

Under typically robust questioning, Adam Applegarth and Matt Ridley denied that they had ‘done anything wrong’ but indicated that they would accept the judgement of their shareholders, if they were eventually forced to resign.

In the course of the questioning, it was also revealed that all the bank’s senior directors had offered to resign in the immediate aftermath of the run, but had been asked to stay on to sort out its problems.

I think they are safe for the moment, on the same grounds as Big Steve McClaren has a temporary stay of execution. [Stop press, a few hours after I posted this, Dr Ridley accepted the inevitable and resigned].

In a somewhat different story, ITV faces calls for the dismissal of various culprits in their money-making scheme based on rigged phone-in contests. The enormity of this story can be seen when it emerges that Mr Ant and Mr Dec are under threat. That’s like Santa up for shop-lifting in the Christmas Sales.

England Rugby, The World Cup and Brian Ashton

King-makers popped up to endorse Steve McClaren, and to praise and bury Ming Campbell. They even popped up to endorse coach Brian Ashton, after England’s heart-stopping Rugby Union victory over France. It could be seen as one of those endorsements which increasingly indicate that the coach is in big trouble. The denial serves to signal the presence of trouble, not its absence. This was a slightly different kind of announcement, I think. It was made on the wave of national support for the England team.

Here we have an example of the rapid swings for and against a leader. Less than a month ago, Mr Ashton was seen as credible a leader as Sir Menzies Campbell. The performances of his teams had been bitterly criticized. Now, on the eve of the 2007 final, he now stands one game short of receiving the kind of accolades showered on his predecessor Clive Woodward after his team became World Champions, four years ago. Outside of England, the suspicion is that England are serious underdogs to a South African team that beat them comprehensively in the run up to the finals. This is not a time for logic. How far is from Paris to Agincourt?


Royal Mail: In praise of wild cats

October 19, 2007

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The very term wildcat strike implies a dangerous untamed force is stalking the land.. How different from our own cherished and domesticated pussy cats. But wildcat strikes may be a necessary force for inevitable change

The vocabulary of conflict

The vocabulary of conflict can be revealing of our deeply held beliefs and fears. In the Royal Mail dispute, reports differentiated between official and unofficial action. Official action is granted some legitimacy. The unofficial actions quickly led to the language of wildcat strikes.

The terminology an unauthorized work stoppage while a labour contract is still in effect. In practice, the strikers often insist that the labour contract conditions have been broken by ‘management’, or ‘The government’ , (Or even, sometimes, by their own Union leaders) leaving them with no other redress for the injustice. but to strike Each side claims the legal high-ground

The interventionist view

The Guardian reported the interventionist view:
Gregor Gall, a professor of industrial relations at Hertfordshire University, said there was a “pressing need” for government intervention because of the entrenched positions of both sides in the dispute. He told BBC Radio 4’s Today programme: “If the service is to be resumed to its normal state, then I think the government, as the single shareholder, does need to step in, and not just call for an end to the strike but actually work towards resolving the issues.” Professor Gall said the prime minister should instruct Royal Mail managers to give some ground in an attempt to find a compromise.

According to The Daily Telegraph [12th October 2007]

An unlikely coalition of Left-wing Labour MPs, Conservatives, unions and academics is now urging John Hutton, the Business and Enterprise Secretary, to intervene

However, the Prime Minister made the Government’s position clear.

He was reported as saying there was

“No justification [for the unofficial actions, and that the dispute] … should be brought to an end on the terms that have been offered as soon as possible”.

Wildcattery

OK. I am not an instinctive admirer of wildcat actions. I have tended to express frustration at the laborious mechanisms of conflict resolution which seem often to lumber towards lose-lose outcomes. I have already expressed these sorts of views in earlier posts.

So why the headline in praise of them? Has something rekindled in me an armchair faith in the revolutionary power of action direct, which I had misplaced somewhere since the days of 1968?

No. Not so much that. Nor even interest in a chance to test events against theories of emergent leadership, or leaderless groups.

It is more a suspicion that when the Government, The Parliamentary Opposition, the Trade Union Council (TUC), and commentators of all political hues apparently share the same broad disapproval, there may just be something worth thinking more deeply about.

In this country there is usually some independent spirit around to state the opposing case, often from what is seen as an off-centre position. However, until some more authentic eccentric speaketh, I will attempt to make the case.

Unofficial action is rather double-edged for Union leaders. It serves to illustrate the determination and commitment of their members. But it is never totally under their control.

If leadership is defined as the exercise of influence towards goals, wildcattery raises uncomfortable questions about whose goals.

In this instance, the unofficial actions seem to have had a galvanizing effect on the negotiators. If this is the case, however unappealing it may be, the threat of wildcat action may have served its purpose, and may have moved things on, giving additional momentum within the negotiations.

It may also offer an indication of hidden dimensions that bring closure to a dispute. Postal Workers were described in as engaging in Spanish practices, by Royal Mail leader Adam Crozier. What might he have meant?

And how intentionally provocative were the actions from management which were alleged to have triggered the wildcat actions on Merseyside and in parts of Greater London? The issue seems to be a reaction against ‘imposed changes’. In the past such ‘they started it’ arguments are rarely clear-cut. The substantive issue is the wish of the posties to start work at 5.30 am, and their managers seeking to implement a 6 am start, with more flexible work allocation to ‘fill-in’ towards the end of a shift.

In any event, today [17 October, 2007] talks are continuing.

The websites of the Royal Mail and the CWU make no mention of unofficial actions, although the BBC reports that there was still some wildcattery persisting around Liverpool and Yorkshire.


Ralph Stogdill at Ohio State

October 16, 2007

ghana-learning-examination-services-school-exams-gce-image-2.jpg

Sic Transit Gloria Theoria

Ralph Stogdill at Ohio State
helped weaken the status of ‘trait’
But then we grew weary
of State sponsored theory
which suffered a similar fate

Proposed examination question on Leadership 101

Discuss the role of Stogdill in the decline of interest in trait theories of leadership.

Image acknowledgement

British Council