01 July 2020

1968--A Chronology

"History never looks like history when you are living through it."

--John W. Gardner


Certain events of the past several months are being compared to 1968, a period that Newsweek described as "The Year That Changed Everything." 

For some perspective, here's a selected chronology of a tumultuous twelve months played out on network TV screens (ABC, CBS, and NBC) 52 years ago.  We were witnesses and participants in a  divisive epoch that one person described as leaving the Baby Boom generation "stuck in the 60s decade."  
January 

o January 5--Prague Spring begins.  Alexander Dubcek is chosen as the leader of the Communist Party of Czechoslovakia.

o January 14--The Green Bay Packers defeat the Oakland Raiders in Super Bowl II, 33-14, at the Miami Orange Bowl.

o January 21--Vietnam War. Battle of Khe Sanh, one of the most publicized and controversial battles of the war begins, ending on April 8.

o January 22--Rowan & Martin's Laugh-In debuts on NBC.

o January 23--North Korea seizes the USS Pueblo, claiming the ship violated the territorial waters while spying.

o January 30--Vietnam War. The Tet Offensive begins, as Viet Cong forces launch a series of surprise attacks across South Vietnam.

o January 31--Vietnam War. Viet Cong soldiers attack the U.S. Embassy, Saigon.


February

o February 1--Vietnam War. A Viet Cong officer name Nguyen Van Lem is executed by Nguyen Ngoc Loan, a South Vietnamese National Police Chief.  The event is photographed by Eddie Adams. The stunning picture makes headlines around the world and wins the Pulitzer Prize.  


Eddie Adams' iconic Vietnam War photo: What happened next - BBC News
Execution of Nguyen Van Lem. (C) Eddie Adams

o February 6-18--The 1968 Winter Olympics are held in Grenoble, France.


o February 19--NET televises the very first episode of Mister Rogers' Neighborhood.

o February 24--Vietnam War. The Tet Offensive is halted.  


March

o March 7--Vietnam War.  The First Battle of Saigon ends.

o March 12--U.S. President, Lyndon B. Johnson, barely edges out antiwar candidate Eugene J. McCarthy in the New Hampshire Democratic primary.  The close vote highlights deep divisions in the country and party over Vietnam.

o March 16--Vietnam War.  My Lai Massacre where American troops kill scores of civilians.  The story becomes public in November 1969.

o March 18--The U.S. Congress repeals the requirement for a gold reserve to back the U.S. dollar.

o March 23--Coach John Wooden's UCLA Bruins defeat the North Carolina Tar Heels coached by Dean Smith, 78-55.  It was UCLA's fourth title in five years.  They were led by All-American Lew Alcindor (Kareem Abdul-Jabar).

o March 31--U.S. President, Lyndon B. Johnson, announces he will not seek re-election.


April

o April 2--The film, A Space Odyssey, premieres in Washington, D.C.

o April 3--Martin Luther King, Jr., 39, delivers his "I've Been to the Mountaintop" speech in Memphis, Tennessee.

o April 4--Martin Luther King, Jr. is shot dead at the Lorraine Motel in Memphis, Tennessee.  Riots, lasting several days, erupt in major American cities including Washington, D.C., Chicago, Baltimore, and Kansas City.

o April 11--U.S. President, Lyndon B. Johnson, signs the Civil Rights Act of 1968.

o April 23--Several hundred students gather on the campus of Columbia University in New York City. Student protestors occupy several buildings for nearly a week over institutional expansion.

o April 23--The United Methodist Church is created by the union of the former Methodist and Evangelical United Brethren churches.


May

o May 11--The Montreal Canadians defeat the St. Louis Blues in a four-game sweep to win the Stanley Cup.

o May 14--The Beatles announce the creation of Apple Records in a New York press conference.

o May 18--Mattel's Hot Wheels toy cars are announced.

o May 30--Bobby Unser wins the Indianapolis 500.


June

o June 4--The Standard & Poor's 500 Index closes above 100 for the first time, at 100.38.

o June 5--U.S. presidential candidate Robert F. Kennedy is shot at the Ambassador Hotel in Los Angeles.  Sirhan Sirhan is arrested.

o June 6--Robert F. Kennedy dies from these injuries.  He was 42.

o June 8--James Earl Ray is arrested for the assassination of Martin Luther King, Jr.


July

o July 13--The 1968 global flu pandemic. Influenza A virus subtype H3N2 first recorded in Hong Kong and in the U.S. in September 1968.  The estimated number of deaths worldwide was one million and about 100,000 in the U.S.  Most deaths were in people 65 years and older.  The H3N2 virus continues to circulate globally and is associated with severe illness in older people. 

o July 18--The semiconductor company Intel is founded.


August

o August 5-8--The Republican National Convention in Miami Beach, Florida nominates Richard M. Nixon for U.S. president and Spiro T. Agnew for Vice President.

o August 20-21--Warsaw Pact invasion of Czechoslovakia.  The "Prague Spring" ends as 750,000 Warsaw Pact troops and 6,500 tanks with 800 aircraft invade Czechoslovakia.  That invasion was the largest military operation in Europe since the end of World War II.

o August 22-30--Police clash with anti-war demonstrators in Chicago outside the 1968 Democratic National Convention, which nominates Hubert H. Humphrey for U.S. president and Edmund S. Muskie for Vice-President.  The riots and subsequent trials are part of the activism of the Youth International Party.


September

o September 8--Arthur Ashe wins the first U.S. Open of the Open Era, also becoming the first black to capture the title.

o September 14--Detroit Tigers' pitcher, Denny McClain, becomes the first baseball player to win 30 games in a season since 1934.  He remains the last player to accomplish the feat.   


October 

o October 8--Vietnam War.  Operation Sealords gets underway as the United States and South Vietnamese forces launch a new operation in the Mekong Delta.

o October 10--1968 World Series.  The Detroit Tigers defeat the St. Louis Cardinals in the best of 7 series, 4 games to 3, after being down 3 games to 1.  The final score of game seven played in St. Louis--Tigers 4 and Cardinals 1.  Mickey Lolich (3-0) is the winning pitcher and Bob Gibson (2-1) took the loss for the Cardinals.

o October 11--NASA launches Apollo 7, the first manned Apollo mission (Wally Schirra; Donn Eisele; and Walter Cunningham).  

o October 12-27--The Games of the XIX Olympiad are held in Mexico City, Mexico.  After being awarded gold and bronze medals, respectively, in the 200-meter sprint, U.S. athletes Tommie Smith and John Carlos bow their heads and raise their hands during the playing of the National Anthem.    

o October 31--Vietnam War.  Citing progress in the Paris peace talks, U.S. President Lyndon B. Johnson announces to the nation that he has ordered a complete cessation "of all air, naval, and artillery bombardment of North Vietnam effective November 1."


November

o November 5--U.S. presidential election.  Republican candidate Richard M. Nixon defeats the Democratic candidate, Vice President Hubert H. Humphrey, and American Independent Party candidate, George C. Wallace.

o The Heidi Game--NBC cuts off the final 1:05 of an Oakland Raiders v. New York Jets football game to broadcast the pre-scheduled Heidi.  Fans are unable to see Oakland (which had been trailing 32-29) score two late touchdowns to win 43-32.  

o November 24--Four men hijack Pan Am flight 281 from JFK International Airport, New York to Havana, Cuba.


December

o December 9--Douglas Engelbart publicly demonstrates his pioneering hypertext system, NLS, in San Francisco, together with the computer mouse.

o December 11--The film, Oliver!, based on the London and Broadway musical, opens in the U.S. and goes on to win the Academy Award for Best Picture.

o December 24--Apollo program.  The manned U.S. spacecraft Apollo 8 enters orbit around the Moon.  Astronauts Frank Borman, Jim Lovell, and William A. Anders become the first humans to see the far side of the Moon and planet Earth as a whole, as well as having traveled further away from Earth than any people in history.  

APOD: 2018 December 24 - Earthrise 1: Historic Image Remastered
Earthrise, Christmas Eve, 1968, Apollo 8 Mission. (C) NASA

Anders photographs "Earthrise."  The crew reads the story of creation from the Book of Genesis.  



Sources:   

Timeline USA:  Digital Public Library; History.com; U.S. Centers for Disease Control (CDC)



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01 June 2020

Disney's Dilemma

"If they don't want to come out, nobody's gonna stop 'em."

--Yogi Berra, Baseball Hall of Fame Catcher, New York Yankees (1946-1963)


The Walt Disney Co. submitted plans to reopen four U.S. theme parks in July. (Shanghai Disneyland reopened on 11 May.)  As a result of the global coronavirus outbreak, Disney announced the closure of its parks on 12 March 2020.   

The request has been approved by the Orange County, Florida Economic Recovery Task Force, and Mayor Jerry Demings.  On 29 May Gov. Ron DeSantis signed off on the plan. 

The reopening schedule looks like this--

--The Magic Kingdom and Animal Kingdom:  11 July

--Epcot and Hollywood Studios:  15 July


Disney Springs Complete Guide - Al's Blog
Disney Springs, Lake Buena Vista, Florida.
(C) Walt Disney Co.

Disney Springs (formerly Disney Village and Downtown Disney) reopened 20 May with CDC guidelines for social distancing in place.   

What about Disneyland in Anaheim, California?  Perhaps in June as part of California's Stage 3 road to reopening.  As to resort hotels in Florida, it looks as though some could reopen 11 July along with the Disney Vacation Club, all with safety guidelines and cleaning procedures in place.  

Universal Studios will reopen on 5 June with limited capacity.  SeaWorld is opening its three Orlando parks, including Discovery Cove and Aquatica, on 11 June--one month ahead of the Disney schedule.

The proposed Disney dates, if kept, will show why predicting can be a fool's errand.  On 22 April John Hodulik, managing director of research at UBS, wrote to his clients giving a date of 1 January 2021 as "our base case" for reopening.  

Scaling down

Google returns 97 million pages when you search "scaling up" on its website. "Scaling down," which is like looking through the opposite end of a telescope, instantly returns 104 million pages.  

Over the last decade "does it scale?" became a mantra for manufacturing, start-ups, high tech, retail, and financial services. 

Now, businesses are looking to move in the opposite direction to meet reopening guidelines keeping employees and customers safe.  As there is a cost to increasing health and safety measures, can businesses function this way and be profitable?  

Reopening

The Florida Disney parks will incorporate protocols from the county, state, and federal governments.  But Disney cast members will also be learning from their sister park in China which will have been open two months to the date when guests walk through the gates at the Magic Kingdom.  


Mickey Mouse Lovers - Home | Facebook
"Welcome back!" Mickey Mouse
(C) Walt Disney Co.

From the proposal submitted the last week of May, here's what to expect in the near term when returning to the "most magical place on earth:"

1.  Disney is placing limits on attendance and controlled guest density.  Guests will be required to make a reservation for a particular day.

2.  Events that draw big crowds--such as parades and nighttime spectaculars/fireworks--will not return until later.

3.  High-touch experiences like makeovers and playgrounds will not be available from the start.

4.  Character meet-and-greets will be unavailable upon reopening, but characters will still be out in the park.

5.  Guests ages 3 and up will be required to wear face coverings.

6.  Guests and cast members will be screened for temperatures before entering the park (as they are doing at Shanghai Disneyland). 

7.  The parks are encouraging cashless transactions.

Additionally, Disney issued a COVID-19 warning on its website-- 

"By visiting Walt Disney World Resort, you voluntarily assume all risks related to exposure to COVID-19."

In its proposal, Disney did not say by how much capacity will be capped at the parks as there is a corporate policy of not officially disclosing attendance figures.  However, daily capacity will probably be calculated on the 6' distancing guideline.   

This is a monumental task as Disney cast members will be stretched to manage the parks and monitor healthy behavior at the same time. 

A shock to the system

Walt Disney Co., with total 2019 revenue of $69.5 billion, is an entertainment giant that one news headline recently described as a "Stricken Empire."  


The Walt Disney Company - Wikipedia
Walt Disney Co. Headquarters, Burbank, California
(C) Walt Disney Co. 

Just over 100,000 employees have been laid off.  To further address costs, executive pay was cut up to 50 percent and Disney took out a $5 billion line of credit to boost liquidity.  That was in addition to $8.25 billion the company secured in March.  

Dividends?  Not at this time.

Bob Iger, executive chairman and former CEO who built this $239 billion enterprise over the past 14 years, decided in February to retire as chief executive officer.  Mr. Iger said on CNBC, "I don't want to run the company anymore."  The Board of Directors selected Bob Chapek as CEO with Mr. Iger overseeing creative content at Disney through 2021.

Then in March 2020, the world stopped spinning.

One observer expressed it this way, "Disney's vastness has become a liability.  ABC/ESPN. Disney Cruise Line.  Stage shows.  Disney Stores."  Launched just five months ago Disney+, with more than 50 million subscribers, is a bright spot as many adults and children are at home. 

What's Disney's dilemma?

The Wall Street Journal noted that "much of Disney's business rests on its ability to draw people into crowded spaces including theme parks, hotels, ships, sporting events, and movie theaters. The return of such massive entertainment options at any point this year remains questionable."

Disney's dilemma, then, is having to operate profitably, at reduced capacity, with guests' social distancing.  All that inside a fixed-cost business model driven by increased volume, high density, and large-scale venues.  

At 1:15 p.m. on New Year's Eve 2019, Walt Disney World issued an alert that the Magic Kingdom, which averages 57,128 guests per day based on estimates from Theme Park Tourist website, would stop accepting new guests.  When will that happen again?   

Managing risk

The future depends on factors no one controls--COVID-19 treatments and vaccines; employment levels; airlines staying in the air; and households willing to travel.  A survey by U.S. Travel found that only 18% of adults currently feel safe about flying.  

Willingness to travel more than 300 miles from home is going to weigh heavily on the success of reopenings at Disney and other destination resorts.   


Disney World's Magic Kingdom temporarily stops admitting new ...
The main entrance to Walt Disney World in Florida.
(C) Walt Disney Co.

According to a 2017 Money Magazine study, a family of four visiting Walt Disney World may spend about $6360 on average, for flights, hotels, souvenirs, food, and park tickets during a four-night trip. 

Knowing the cost Disney management and cast members will undoubtedly be working hard to show guests there's still "magic" in the Kingdom.   


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01 May 2020

A Pandemic Polarity

"We started knowing nothing.  We know a lot now, but we still don't know everything."

--Dr. John Ioannidis, Stanford School of Medicine

Is the COVID-19 disease, and its uneven devastation, a worrying problem to be solved, or a health and economic polarity to manage?   

As of 30 April 2020, there are 3.1 million COVID-19 cases worldwide and 227,638 deaths.  Total cases in the U.S. are at 1.03 million and 60,967 deaths. (Johns Hopkins for Systems Science and Engineering; USA Facts)

Heading into May U.S. unemployment claims rose to more than 30 million as the coronavirus pandemic continued taking a financial and emotional toll on American life.

What's the status of other diseases?

Data for 2018-2019 show 35.5 million estimated cases of influenza in the U.S. with 490,561 hospitalizations and 34,157 deaths.  Flu vaccines are available and highly recommended at the beginning of each season.  (CDC.gov)

Nearly half the world's population lives at risk from malaria. In 2018 there were 405,000 deaths from this disease. The overwhelming majority are among children five years of age and younger.  And 80-90% each year are in rural Sub-Saharan Africa.  The nature of malaria, a single-cell parasite, evades the human immune system.  (Center for Strategic and International Studies; CDC.gov; and WHO.int)

Smallpox is the only human infectious disease to have been eradicated.  (World Health Assembly)

Problem or polarity?

In his book, "Polarity Management," Dr. Barry Johnson, offers criteria that are helpful in knowing how to decide:

1.  Is the difficulty on-going?  

Problems to solve have a solution that can be considered an endpoint in a process, i.e. they are solvable.

Polarities to manage don't get "solved." They're ongoing.  We're always in the process of solving them, but they don't have a clear, endpoint solution.   There's a never-ending shift in emphasis or focus from one pole (safety) to the other (work).  "Managing" is perhaps the best way to describe this arrangement.

2.  Are there two poles which are interdependent?

The solution in problems to solve can stand alone.  Polarities to manage, require a shift in emphasis between opposites such that neither can stand alone.  It's a both/and difficulty.  The pair are involved in an on-going, balancing process over an extended period of time. 

For example ...

-Team/Individual
-Planning/Action
-Doing/Being
-Clear/Flexible
-Tradition/Change

Until there's a vaccine, the wisdom required of government and business leaders is to manage the increasing tension (polarity) of a carefully reopened economy while protecting the most vulnerable in the population.  All within the framework of civil liberties.

Like Malcolm Turnbull, the former Australian prime minister said recently, "There would be nothing more tragic than if, in our efforts to preserve our health we were to lose our freedom."      

What are people thinking?

In addition to tracking progress on COVID-19 treatments and vaccines, it's also important to keep up with the public opinion trendlines as consumers are 70% of the U. S. economy.  

When does the public want business to reopen?  As of the end of April, here are what pollsters found:

o 62% of U.S. adults are worried businesses in their community will reopen too early compared to 38% who are worried they'll reopen too slowly.

o 52% of U.S. adults say the coronavirus outbreak is more of a health crisis, while 47% say it's more of an economic crisis.  The latter group is split between Republicans at 70% and Democrats at 24%.

o 45% of U.S. adults say non-elective surgeries or doctor offices should reopen immediately in their area.

o 41% of U.S. adults expect their life will be mostly back to normal in three months.

o  7% of the public agree sports venues, concerts, and large gatherings should reopen immediately.

o An overwhelming majority of the public isn't ready to fully reopen.  More than 9 in 10 U. S. adults are opposed to opening up everything.  But many would be okay to see some easing, with just under half (45%) wanting to see non-elective surgeries return immediately.

o The public is more worried about the health crisis than the economic one.  58% of U.S. adults say they're more worried about their own health versus 40% who said their economic prospects.  

But as more households see their finances strained by the contracting economy, that number could shift soon.

o Low-income workers are most worried about health risks over economic prospects.  Among workers making under $50,000, 18% said they have lost their jobs, compared to 6% of workers earning over $100,000.  Yet low-income households are more concerned with health risks right now.  Highly-paid workers are the ones most concerned about their economic prospects.

o Republicans are worried we'll reopen too slow.  Democrats worry it will be too fast.  85% of Democrats worry businesses could reopen too quicky versus 45% of Republicans.  On the other hand, 57% of Republicans worry businesses will reopen too slowly (15% of Democrats).  




Source:  FORTUNE/Survey Monkey poll was conducted among a national sample of 4,717 adults in the U.S. between April 25-28.  The model error estimate is plus or minus 3 percentage points.  Findings weighted for age, race, sex, education, and geography. 


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01 April 2020

Managing the COVID-19 Transitions



"It's not the change that gets you, it's the transition."

--Dr. William Bridges


At the beginning of recent video and conference calls those in positions of corporate leadership or direct supervision are asking their colleagues a very important question--"How are you doing?"

It's a personal inquiry indicating a level of human concern that underlies the health and strength of our relationships in spite of social distancing.   

Images posted online or in print publications are a reminder of how a younger generation is now in positions of top management or owners of companies.  They feel responsible for the health and safety of their employees during this global crisis, dealing with a threat to millions of livelihoods that is not of their own making.

Dealing with sudden adversity

Professor Marvin Minsky from MIT used to say, "We don't know how to do something unless we know how to do it more than way." 

One example of Dr. Minsky's idea is Ventec Life Systems teaming with General Motors to produce up to 10,000 critical care ventilators per month beginning in May of this year.  That's when manufacturing will be ramped up at a currently closed GM plant in Kokomo, Indiana.  This is a partnership between Ventec's technology and GM's assembly experience. 

While the medical and scientific professions seek to slow the spread and overtake the deadly virus known as COVID-19, we must concern ourselves with how to go about our life and business in new ways under safety guidelines from local, state and federal officials.  (Centers for Disease Control Guidelines)  

For now, business strategy (e.g., Ventec/GM), and public health policy are inextricably linked.

A disappearance of the known

The headlines are about infectious disease and its economic impact.  However, the underlying story is about the serious loss of what four weeks ago was taken for granted--our health; a job in a robust economy; the ability to travel at will for business or leisure; or attend a worship service.  

How about watching March Madness or the Masters Tournament on television?  Not this spring.

Most of what I learned about change--and the transitions that follow--come from the late Dr. William Bridges. The teaching was theoretical in the beginning but soon turned practical shedding light on personal experiences.  

Change, Dr. Bridges said, was external and transition internal.  He used the terms "endings" and "beginnings" not stop and start.  A "neutral zone" was inserted for processing and renewal.  And his writings remind us that everyone goes through a transition at their own speed.


Bridges Transition Model | William Bridges Associates

If the external change is losing loved ones, access to freedoms, or work itself, then the internal transitions to be addressed are the emotional and psychological responses to those extremely difficult, sometimes heartbreaking developments, that follow.  

All this in the context of a global shock to economic, social and health care systems that arrived in days, not months or years.  Who had a global pandemic in their contingency plans?  

One way to gain insight into what people are going through, especially small business owners and their workers, is to understand transition or what's going on inside in response to transformative change.  How does someone who was cutting hair days just a few days ago, but can no longer do so, pay their bills?  How does an enterprise make payroll without an income?

How fast will appropriated government funds get to the neediest persons and businesses?  

Finding ways to deal with those realities is necessary in order for individuals and families to recover and move ahead with their lives.  There's nothing easy about succeeding at that task but the right actions speak louder than words.  

Crossing a great divide

In the coming weeks and months, living under varying public policy guidelines, consider the following for personal or corporate discussions--

-What's our assessment of the current crisis, and what does it mean for our business or nonprofit? And keep asking that question. Know as much as is possible what's happening on the ground.

-What are we losing?  

-What's not over?  What should we think about holding onto?  

-How much of "normal" is likely to return and when can we know?

-In the midst of a crisis, how does one think with a clear mind?

-What are the more reliable sources of information for our business and employees?  

-How do we communicate with clarity and consistency and how frequently?  

A crisis requires moral leadership

During a period of reordering, it's our responsibility to identify and keep alive those things of greatest value such as one's faith; commitment to family; good character; a strong work ethic; and service to others.  These values are irreplaceable.   

As in all catastrophes, including outbreaks and wars, we'll get through this by showing courage and a selfless spirit, both of which are inspiringly on display in doctors, nurses, first responders, and others who serve at great risk for the benefit of all.    

Stay well.


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01 March 2020

Getting the Right People on the Right Page

"No doubt, unity is something to be desired, to be striven for, but it cannot be willed by mere declarations."

--Theodore Bikel 

When was the last time you considered getting everyone on the same imaginary page?  Have you ever thought that employing this overworked phrase can do more harm than good?  

That approach and its enforcement often remove much-needed diversity of thought. Too many of the same kinds of people, too close together, limit a groups' ability to make difficult decisions.   

There are considerations that come with unity.  One benefit is consolidating time and energy around common goals--assuming they're the right ones.  This is a potentially productive way to use limited resources to achieve the desired results.  

And this concept works best if colleagues are literally scattered with some keeping watch on the periphery.  Those on the edge play a critical role in looking out for the business.  In the center, one is less likely to know about changes that are materializing but not yet fully formed.  
Image result for image of a blank sheet of paper
The right page?
However, if everyone is huddled on the wrong page, then you run a risk of the page folding. (See J. C. Penney)

The leadership agenda

The purpose of this post is to suggest that a leader gains a great deal of momentum at the outset by understanding and communicating what's most important to the enterprise.  To accomplish that task those at the top should begin by coming to terms with what needs to be done, not necessarily what they want to do.  For example, the coronavirus may force many to adapt quickly as circumstances change beyond anyone's control.  

Thinking strategically may work best when divided into two parts.  The leader begins with a sense of purpose and direction then opens up the process having it informed and owned by the experiences of others.  

To help get there we created "The Leadership Agenda," a tool that makes a person accountable for their ideas and implementation through those around them. 

What does the agenda include?

Here are some suggestions--

o  Core idea. Why this organization?

Desired future.  And how to get there.

Priorities.  No more than three with a clear #1.

-With a person responsible for each.

Main message.  A stump speech in plain language. 

Critical issues.  Three in rank order.  

-With a person responsible for each. 

Operational assessment.  

1. What needs changing or reorienting to support the strategic direction?

2. What has run its course or is not working and needs to be abandoned?

3. What is not working and needs fixing?

4. What are we not doing that needs initiating?

Positive outcomes 

Until individuals responsible for strategic decisions are clear in their own minds as to the main goal, a crowded page tends to be counterproductive.  That picture increases the possibility of confusion and danger of going in the wrong direction.  

If execution happens it's because the right people, are on the right page, going in the right direction. (See Microsoft)

Prompts to help our thinking

To receive a free copy of "The Leadership Agenda" template send a note to:

rbredholt@strategist.com.  Put "Agenda" in the subject line.  

This simple tool requires a quiet mind and a No. 2 pencil to clarify your organization's direction.



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01 February 2020

Where Was the Board?

"The first principle is that you must not fool yourself and you are the easiest person to fool."

--Richard Feynman, Nobel Prize in Physics (1965)

There were over 1,400 CEOs who left their jobs in the period January through November 2019 according to Challenger, Gray & Christmas.  Just days ago IBM announced Chief Executive Ginni Rometty was leaving.  IBM said she was "stepping down" after eight years in that position.        

A tally of board member departures is harder to find.  

It's safe to say there's more pressure on executive leadership than governance when it comes to performance.   In baseball, owners fire the managers and trade the players.  (Just ask the Houston Astros, Boston Red Sox, and New York Mets.)  

Who evaluates governance and its performance?  

Where boards are falling short

In a survey of 772 directors, "a mere 34% of those responding agreed that the board on which they served fully understood their companies' strategy.  Only 22% said their boards were completely aware of how their firms created value, and just 16% claimed that their boards had a strong understanding of the dynamics of their firms' industries."  (McKinsey & Company, 2013)

Another McKinsey study of 604 C-suite executives and directors worldwide said that the primary source of pressure for short-term performance and underemphasis on long-term value originated in the boardroom.  (McKinsey & Company, 2014)

When things go wrong

The expectations of a director's fiduciary duty in legal terms is "loyalty (placing the organization's interests ahead of one's own) and prudence (applying proper care, skill, and diligence to decisions)."

Here are three examples where an absence of proper oversight and complex working relationships contributed to far-reaching personal and organizational misdeeds:

Case Study:  WorldCom

At one time WorldCom was the second-largest long-distance telephone company in the U.S., after AT & T.  In 1997 WorldCom merged with MCI Communications, a $37 billion deal which was the largest merger to that point.  A proposed merger between MCI and Sprint in 1999 valued at $129 billion was opposed by the U.S. Department of Justice and didn't go through.  

In that same year, with declining stock prices, WorldCom began using fraudulent accounting methods to disguise its decreasing earnings to maintain the price of WorldCom stock.  The fraud was initially estimated at $3.8 billion.  Internal auditors revealed the scandal to the company's audit committee and 11-member board of directors in 2002.  The board immediately removed the executives responsible for the scheme.  

On July 21, 2002, WorldCom filed for Chapter 11 bankruptcy protection.  

On March 15, 2005, Bernard Ebbers, former chairman, and CEO was found guilty of fraud, conspiracy and filing false documents related to the $11 billion accounting scandal. Mr.  Ebbers was sentenced to a prison term of 25 years at the age of 63.  He died February 2, 2020, at the age of 78 after being released from prison for deteriorating health.

The CFO Scott Sullivan and controller, David Meyers, entered guilty pleas to securities fraud and other charges.  

Case Study:  Wells Fargo Bank

Beginning in 2016, Wells Fargo Bank engaged in an account fraud scandal by creating millions of fraudulent checking and savings accounts on behalf of the banks' customers without their consent.

The U.S. Consumer Financial Protection Bureau fined Wells Fargo Bank $185 million as a result of the illegal activity.  Additional civil and criminal suits were nearing $2.7 billion at the end of 2018.  

Approximately 5,300 employees were fired for this cross-selling scheme.  And former CEO, John Stumpf, was barred from the banking industry by the Office of the Comptroller of the Currency and forced to pay $17.5 million in penalties for failing to prevent the creation of fake accounts at Wells Fargo.  

An independent investigation report released in 2017 caused quite a stir.  The Los Angeles Times called the report a "whitewash" for the directors.  The San Franciso Chronicle labeled it "a perfunctory ... legal cover for the directors."    

The U.S. government recently announced that Wells Fargo had agreed to pay $3 billion to settle charges that the bank engaged in fraudulent sales practices for more than a decade.  

Case Study:  Willow Creek Community Church

The nondenominational megachurch located in South Barrington, Illinois (35 miles northwest of downtown Chicago) was founded on October 12, 1975, by Bill and Lynne Hybels also Dave Holmbo.  Additionally, Rev. Hybels created the Willow Creek Association and Global Leadership Summit which have influenced pastors and lay leaders around the world.  

As of December 2018, the church reported weekend average attendance of 24,000 at eight locations in the Chicago area.  

Here's a timeline for Willow Creek's unraveling:  

-March 23, 2018, the Chicago Tribune reports detailed allegations of sexual misconduct by Pastor Hybels.  The Tribune also published that an internal review conducted by the Elders led to no findings of misconduct.  Three leaders of the Willow Creek Association's board resigned over what they believed to be an insufficient inquiry.  Rev. Hybels denied the allegations.

-April 20, 2018, Bill Hybels announces his immediate retirement as lead pastor of Willow Creek Community Church, initially slated for October of the same year.  Steve Gillen, the pastor of the North Shore campus, was named interim senior pastor.*  

-April 21, 2018, the Chicago Tribune and Christianity Today reported more misconduct allegations, not in the original investigation.

-August 5, 2018, The New York Times reported about another victim not included in previous investigations.  Co-lead pastor Steve Carter resigned that same day.

-August 8, 2018, the entire Elder Board and Co-lead pastor, Heather Larson resigned following a joint apology for mishandling the investigation.  

-In September 2018 Willow Creek Community Church and Willow Creek Association announced the formation of an Independent Advisory Group (IAG) to investigate the allegations against founder, Bill Hybels.  

A six-month independent review was conducted by four evangelical leaders--Jo Anne Lyon, general superintendent emerita, The Wesleyan Church; Gary Walter, past president, Evangelical Covenant Church; Margaret Diddams, provost, Wheaton College; and Leith Anderson, president, National Association of Evangelicals.

According to Religious News Service, the report, completed in February 2019, found the accuser's allegations against Rev. Hybels to be credible.  The IAG study also found that the Elders and Willow Creek Association leadership failed to hold him accountable. 

What can we learn?

1. There's immense pressure on leaders in business and the nonprofit sector to succeed.  However, those demands in no way justify illegal or unethical behavior.  

2. Boards impact organizational culture the most by the leadership they put in place.       

3. "Why am I here," and "What difference do I make?" are questions often asked by new board members.  All three case studies needed boards who understood their role as taking care of what belongs to others.  

4. The lessons of a bad experience can evaporate when wholesale personnel changes are made following a crisis.  WorldCom went away.  Wells Fargo Bank and Willow Creek Community Church still exist.  Who is responsible for institutionalizing lessons learned?  

5. Under the right circumstances, anyone can be fooled.  



*The Elders announced on January 30, 2020, that Rev. Steve Gillen, interim senior pastor, is leaving in March of this year.  The search for a permanent senior pastor at Willow Creek continues as the Elders released the two finalists they were considering for the role.  (www.willowcreek.org)




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