I’m tired of people making excuses for weak leadership, mismanagement, and essentially no corporate governance. We, as managers, can’t make excuses for ourselves. Instead, we have to admit our mistakes, learn from them, and move on. If we can’t hold ourselves accountable, we deserve what happens to us and to free market capitalism.
Competition tells all managers and companies what they’re worth and how they’re doing. Failure to face that reality results in corporate failure, sooner or later. We’ve seen several glaring examples of that lately.
The news of the day: Sun rejects IBM’s $9 plus per share offer to acquire the floundering server company, IBM withdraws its offer, Sun’s stock plunges 25 percent. Mismanagement of the once high-flying company has left Sun in an incredibly weak negotiating position. Having failed to turn the company around, CEO Jonathan Schwartz has been shopping the company for months. IBM is its only suitor, and yet Sun plays hardball in negotiations. Where’s the leverage? Who taught these people how to negotiate?
But haven’t we seen this storyline before? Just last year, under mind-boggling mismanagement by hapless CEO Jerry Yang and the board, Yahoo went through a similar dance with Microsoft. The result: no deal. The cost to shareholders: $25 billion. At least Yahoo’s board finally recognized its mistake and brought in Carol Bartz to clean up the mess. They deserve some credit for that.
And that brings us to Detroit. You can slice and dice the big three automaker’s woes a thousand ways and still miss the obvious. The market weighed in on Detroit’s cars decades ago; the value proposition simply wasn’t there. Incremental changes in quality and other factors notwithstanding, folks prefer the competition, and there’s plenty of that. As for the flawed business model - you simply can’t spend more to make weaker products indefinitely - it had to fail.
These are all examples of weak leadership, incompetent management, and embarassing corporate governance. And we continue to make excuses; endlessly debating why this stuff happens and what to do about it. Well, it doesn’t just happen. Shareholders vote-in directors to pay incompetent managers fortunes to take their companies down the tubes. That’s what happens.
As managers and directors we must hold ourselves to a higher standard if we wish to maintain some semblance of leadership in a global economy. If we act like monopolies in highly competitive global markets, the only thing we’ll have a monopoly on is failure. As Dartmouth professor Syd Finkelstein noted, it’s time we learn to govern ourselves. If we don’t take responsibility for our own actions, then we deserve whatever the government decides to shove down our throats.
No more excuses.
