Friday, November 27, 2009


Go figure, according to the NY Times, a key figure in the Swiss banking tax evasion matter has been sentenced to 4 years in a prison. He is also applying (suing?) for a whistleblower's award of billions of dollars based on the IRS collection of taxes based on the information he gave.

He is apparently trying to sneak through a small loophole. His attorney appears to be very pleased with himself and is looking forward to arguing the matter. Should the attorney really be proud of himself for championing this effort? Go figure.

Cheers, Mike

Wednesday, November 25, 2009


In the troubled company advisory world, failed mergers and acquisitions provide a steady stream of work. Many spreadsheets are used to support acquiring a company rather than growing organically. After all, do you know how long it takes to grow organically? Way too long in this digital age.

So it is somewhat refreshing to see a management team decide that a planned acquisition just may be more than they can handle. The Koenigsegg Group in Sweden had originally planned to acquire the struggling SAAB franchise from GM. The definition of 'struggling'? SAAB has not been profitable in any year that it has been owned by GM.

Koenigsegg is a niche high end, low volume auto manufacturer. They looked at this acquisition, with the help of the Swedish government, as a way to step up in size. Fortunately for them, the pieces were slow to fall into place and finally someone there must have said, "can we really handle this?" The answer to this question apparently was 'no'. So, Koenigsegg has backed out of the purchase.

So, now what happens to SAAB? As the WSJ article says, SAAB accounts for only 1% of the sales of GM and it requires billions to be competitive. Will they make the right decision? Let's see how their new board of directors handle this one.

Cheers, Mike

Monday, November 23, 2009


On Friday and Saturday, Mike and I were the instructors for a leadership session at Villanova's Executive MBA program. Similar to the session i wrote about on October 16 that we did at the US Military Academy at West Point, we get as much or more from the session as we give to the attendees.
This was a great group in this class. I was struck by their desire to learn, to consider, to ponder, to challenge, and to grow. My favorite part of the class was when we asked a question and then facilitated debate and discussion among the attendees. Try it yourself. Instead of immediately providing your answer or solution, what if you asked more questions? What if you facilitated productive debate and discussion? What if you could then synthesize the ideas? I think you would get a better solution than your original answer. Just a thought.
It was a great two days. I was in the company of leaders striving to become even better leaders. That is invigorating! As these and other leaders continue to progress in their careers, I know our future is bright. It is easy to focus on our failed leaders since they garner the headlines. Our regular readers know that I believe we do have a leadership deficit in many organizations. But great leaders and future leaders are out there. We need their leaders to unleash their talent!
Thanks again to Villanova's EMBA program for inviting us and thanks to the class for a great weekend.
Until Next Time,

Wednesday, November 18, 2009


US News and World Report has named America's Best Leaders 2009 which is worth reading. The definition of leadership that they used was- someone who motivates people to work collectively to accomplish great things. The criteria they assessed in order to select the list were: sets direction; achieves results; and cultivates a culture of growth.
There is also a commentary written by David Gergen The National Deficit- Of Leadership in which he discusses the need for good followers as well as good leaders. I would argue that we have a global deficit of strong leaders.

Many of our readers are great leaders. The global economy is in a mess. But the opportunity in this crisis, is that you could step up and speak and act as the leader that you are inside. Others will follow. Good luck!

Monday, November 16, 2009


Every leader is faced with decisions that require her/him to weigh the risks and rewards of key decisions. Usually a leader first looks at the risk. What is the level of the risk? If it is a high risk, the leader must carefully weigh the risks, the rewards and less risky options to arrive at the correct course of action.

Last night I watched incredulously as at the 2 minute mark of the New England Patriots / Indianapolis Colts game, the Patriots' leader chose the extremely high risk move of going for a first down on fourth and two at the Patriots' 28 yard line.

The risk was that if the Patriots failed to get the first down, the Colts would only have to go 28 yards for a game winning touchdown. Such a failure would leave the Colts with a very high probability to score a touchdown. The reward was probably a win for the Patriots. But the risk was probably a loss.

This is the point in time when the leader must weigh all the options. Yes, the Patriots offense is superior to its defense this year. And yes, they have made first downs on fourth and short in their own territory other times this year. But, if they punt the ball and gain a net forty yards, the Colts have to go 70 yards for a touchdown, not 28. The odds of a touchdown by the Colts, while entirely possible with their star quarterback Peyton Manning, are much lower than from the 28.

A failure at the 28 yard line would be catastrophic disaster. It was basically a bet the ranch bet that only teams losing at that point in time would make. Unprecedented for a winning team to make such a bet and unlikely for another team to try.

So was it the leader's supreme confidence in his offense? His lack of confidence in his defense? (And his lack of a vote of confidence that they couldn't prevent a touchdown at the end of the game from 70 yards.) Or was it the unbridled arrogance of the leader?

Cheers, Mike

Tuesday, November 3, 2009


It is good to see that troubled companies are back to following the rules. CIT has actually filed for bankruptcy and the matter is following the time honored rules of Chapter 11 and not the Treasury dictated rules of auto bankruptcies past.

In the absence of a government bailout, the various stakeholders are acting in their own best interests and trying to maximize the value of the company. How novel. The appropriate debtholders and third-party lenders extended more loans on commercially reasonable terms.

CIT essentially filed a pre-packaged plan of reorganization. This means that over 50% of the number of claimants representing over 67% of the dollars in each class already agreed to the plan of reorganization. These are the required levels of support for a plan to pass in bankruptcy. The bankruptcy was necessary because CIT couldn't get 100% of the debtholders to agree to the plan.

By the way, business bankruptcies increased in October from September. Look for more filings to occur in commercial real estate and retail. As banks continue to increase profits by getting funding for free, they will be less inclined to extend and pretend such loans are good.

Cheers, Mike

Monday, November 2, 2009


This month a new book was released The Shriver Report: A Woman's Nation Changes Everything and the Time Magazine cover story is The State of the American Woman. The impetus for the press coverage about women is that it is expected that by the end of the year, for the first time in history, the majority of American workers will be women. Now this is being driven by advances of women in the workplace but unfortunately also largely by the economic downturn which has hit men harder than it hit women.

I have not yet read the Shriver Report so I will let you know my thoughts after I read it. But I have heard her in various interviews about the book. I have read the various articles and polls within Time Magazine. As you would expect there are several interesting statistics on the progress made over the last 40 years. In 1972, only 7% of students playing high school sports were girls; now the number is six times as high. Close to half of all law and medical degrees go to women, up from fewer than 10% in 1970. But there are also statistics on challenges that remain. Women are only about 10% of civil engineers and a third of physicians and surgeons. We have previously discussed on this blog that boardrooms and corner offices are still filled mainly by men. The detail in the magazine on the polls and the different answers based on demographics is worth reading. The overall conclusion is clear, the roles of men and women have changed dramatically in the last 40 years.

To me, the most interesting part of all of this has been that men and women agree on a major remaining challenge. They agree that government and businesses have failed to adjust enough to the changes in the family. Has your company changed enough? The statistics would suggest a dramatic shift in reality happened slowly over the last 40 years. Should we stop and re-evaluate top to bottom what needs to change in business to address the new reality? Last week's post was on Corporate Cultures, do they reflect the new reality of the American workforce?

Until Next Time,