Personal and corporate development opportunity
NewsLeader is launching Leadership Cafés in São Paulo, Rio de Janeiro, Belo Horizonte and Brasília (and almost wherever else you may need us to).
During half day meetings "in company;" or during two hour sessions in late afternoons, for open enrollment; NewsLeader will facilitate in Portuguese the discussion of leadership issues in small homogeneous teams. These sessions are focused on leadership and aim at securing your own development and enhancing your company's competitiveness.
NewsLeader can also make arrangements for similar events to be held in other Brazilian cities in Portuguese, or elsewhere in Latin America, in Spanish or English.
Feudal values boost stock price
Humility, loyalty, integrity are virtues frequently taken to be pre-capitalist in the sense that, having no exchange value, they cannot fetch a price. Yet, what if feudal virtues turned out to add value to a company's stock?
In a world leaning towards entertainment rather than information, the likes of Jack Welch, Lee Iacocca and Gianni Agnelli are bound to be better known than Darwin Smith, CEO of Kimberley-Clark. However, Smith’s tenure led to his company outperforming the stock market by almost twice than GE under Welch’s own tenure.
Indeed, under Smith, Kimberley-Clark, outperformed stars like Hewlett-Packard, 3M and Coca-Cola, let alone Chrysler or FIAT. Nonetheless, for six years running, Fortune declared the now notorious ENRON “the most creative company in America,” while Darwin Smith did not make even the specialized business press’ headlines.
Jim Collins led a five year study into almost 1500 American companies seeking to unearth what was it that leaders had in common when they succeeded in turning failing companies into great ones. The leaders themselves he called Level 5 Leaders.
Personal humility is one of the common characteristics and one of the reasons that the leaders were relatively ignored by the press. Neither Smith, nor Gillette’s Colman Mokler, nor Abbott’s George Cain sought the press. Neither did the eight other Level 5 Leaders. Further, when interviewed, those leaders would credit their collaborators more readily than themselves. When hard pressed to explain what made them so effective many of these non-celebrity business leaders would also claim that they were simply lucky.
Luck may have had some role, but it did not help their competitors as much. For instance, Abbott Laboratories outperformed the stock market permormance by twice as much as Merck or Pfizer did. Circuit City’s Alan Wurtzel helped that company outperform the stock market by almost 19 to 1; but Mr. Wurtzel claimed that luck also helped him find the right successor.
Why would humility be so important?
Perhaps because it allows for close collaborators to feel dignified by their work, for they are more likely to take credit for their own work than would, say, collaborators of FIAT’s Gianni Agnelli; too busy cruising “his car across red lights, with his chauffeur cowering in the back seat.”
Perhaps as important, the humility of the Level 5 Leaders also assures that lower-ranking collaborators will feel that their best efforts are made on behalf of something larger than themselves, even larger than their bosses. An impression that would not be borne as readily by the workers of Scott Paper under Al Dunlap, the “Rambo in pinstripes,” who pocketed $100 million for less than two years of downsizing at Scott Paper. The latter’s performance, incidentally, was surpassed by Kimberly Clark under Darwin Smith.
Besides personal humility, these Level 5 Leaders also displayed a relentless resolve. Darwin Smith worked through his radiation therapy to cure him from cancer. George Cain - himself an 18 year insider and heir of Abott Laboratories - had to wipe the company clean of the traits of nepotism that had stalled its creativity. Charles R. "Cork" Walgreen III shifted his business out of the food service sector; where it had
invented the malted milk shake and where led the market with over 500 restaurants.
Where does their resolve come from? One may only speculate, but drawing on the Jungian foundations of Jaworski’s Synchronicity, one may admit that in this larger-than-human resolve there is a well of certainty that may stem from a feeling of “oneness” in which the individual leader flows in a river of unconscious determination, larger than himself. This allows us to better understand Collin’s appreciation of “an even stoic resolve” in the determination with which these leaders followed their destiny, and instilled “discipline” within the rank and file. Discipline, in this context, does away with the need for bureaucracy and puts each person at his own helm.
Under this approach “personal humility” makes more sense; because the leader feels he is only allowing himself and others to flow with a force beyond his control, which, in Collin’s study the leaders referred to as “luck”, perhaps for lack of a better word.
In this role,
attuned with a force larger than oneself, the leader acts more as
leader; geared to serve his organization over himself; thus also helping
to understand the readiness with which Collins’ leaders credited their
collaborators for the company’s success; and the care they put into
selection their successors. The latter is in itself
litmus test for stewardness, rather than personality cult.
You may disagree with my attempt to reconcile the seemingly disparate character traits and the behaviour of the most effective corporate leaders singled out by Collins, but one thing is for sure: celebrity leaders did not lead corporate performance as high as Collin’s Level 5 Leaders did. In fact quite a few celebrity leaders even tarnished the reputation of their companies much in the same way that, in politics, a comparable style of celebrity leadership helped wreck the economies of countries like Argentina, or Ecuador.
However, Collins’ work has returned the lost lustre to leaders who, holding precisely these old-fashioned virtues, have led their companies to unparalleled success; and in the process of doing so, these leaders paved the way for their own succession.
 Jim Colins, Level 5 Leadership, Harvard Business Review; Jan 2001, Vol 79 issue 1, page 66.
Joseph Jaworski, “Synchronicity: The Inner Path of Leadership”
with an introduction by Peter Senge. Berret-Koehler publishers,
Further reading on qualities of leadership: there is an endless list of psychological qualifications for leadership, but - given Jack Welch's standing in the leadership field - it is not a waste of time to see Jack's own list, in a reproduction of his Wall Street Jounal article of last January 23rd.
Selling to the poor may well be your next market
There is a lot of waste energy hanging around us, but engineers are quick to point out that it is hard to harness waste energy and put it to useful work. The same with the poor; however ubiquitous they still are too scattered over the planet and each one has too little to spare to pay you with.
This is why marketing gurus have frowned upon the poor. However nasty that may sound, it has always been hard to argue with the diagnosis. This is why it is refreshing to read about a new initiative to reinstate the poor as King of Growth by C.K. Prahalad, professor of corporate strategy at Michigan Business School.
In “The Fortune at the Bottom of the Pyramid,” to appear in the next American Summer, Professor Prahalad adds up all the purchasing power of the poor in the largest developing countries and comes up with a potential market, of sorts, larger than the GDP’s of the largest European countries plus Japan. Such a market begins to sound interesting, perhaps not enough for a multinational to move in any of those poor markets, but enough to trigger awareness. If a company is already present in a country with many poor, could the company – multinational or not - be missing an opportunity? Perhaps.
Professor Prahalad’s adding-up of the poor is effective in raising awareness, but if you are in the cement business in Mexico it might not help to know that you are missing out on customers in Indonesia. Yet, what if you were missing out opportunities in Mexico itself? This is precisely what Cemex discovered in Guadalajara: a way to sell to the poor and make a stable profit while at it.
Cemex is the World’s third largest cement manufacturer and Mexico’s largest one. In the course of its business Cemex realized that while its large construction clients offered a profitable niche, their demand tended to be more volatile than the “build-it-yourself” one. The latter market consists mainly of poor households earning less than $5 a day; far from Cemex’s typical client. The interesting issue is that this market offered a significant growth opportunity.
Cemex moved to organize this market by building on the social capital of the poor: their inherent networking abilities and solidarity liaisons. Small teams of three to ten people were bundled into saving teams focused on home improvements. To them Cemex offered credit to buy cement as well as ancillary services: architectural and engineering advice, plus schools for construction workers and deposits for the cement and other building equipment.
A few years later Cemex brags having extended $10 million in credit to the poor and having made 36 thousand new customers. Cemex is still is adding over 1500 new customers every month. By 2005 Cemex expects to have close to 1 million customers among the “build-it-yourself” market niche. Margins are 3 percentage points lower than the average in the business, but Cemex has extended its market into a vaster and more stable market. Besides, plenty of opportunities now exist for cross-selling, which remain still untapped.
Knowledge @ Wharton also points out to other success stories such as Hindustan Unilever’s in selling soap to poor Indians. But one can also point out to high short term losses made by ill-advised incursions in those markets, like the one of Lloyds Bank in Brazil when it bought the financial house Losango.
Losango specializes in extending conventional credit to poor households to buy electricity-operated household equipment like pressing irons and beaters. Lloyds saw in Losango an easy opportunity to elbow its way into the financial services to the poor; only to find out, as unemployment increased, that bad loans were too many besides too small and too scattered to deserve the effort a foreign bank would have to deploy to clean-up its books. Central Bank guidelines - perhaps inadequate when dealing with loans to the poor - did not help either, as they called for higher-than-necessesary reserves for this type of bad loans; because poorer borrowers make better payers.
For a time “Losango” was known at Lloyds’ board of directors' meetings as “Loss and go”, as Lloyds would have gladly gotten rid of Losango, had they been able to. They were not and they finally managed to turn Losango around into a significant money maker, capable of interesting HSBC, as it bought Lloyds out of Brazil.
Think out of the box, suspend your jugdgment and your "Big Five" consultants, call on your local university's social scientists and discuss the new venture into the "poor's market" with a bold and younger executive team which the experience may shape into your company's future leaders.
As the Losango case illustrates, moving into the lower income markets is not the for faint-hearted. It requires a specific marketing strategy, one that may involve the knowledge of professionals not close to conventional decision makers. Cemex relied on the wisdom of a former socialist advisor to Chile's President Allende. In some ways you would do well in suspending your reliance on conventional advisors, too prone to tell you the new strategy will not work. The strategy also requires resolve and an unusual dose of audacity and managerial low-fat flexibility.
None of the above are likely to come easily, but perhaps selling to the poor may also prove a valuable ground to form new business leaders. Surely a company - multinational or not - can think of a couple of fast track executives eager to try their teeth on a challenge. One can think of Brazil’s intercity transportation business allocating a few heirs to develop new transportation services more attuned with the needs of the poor, or Argentina’s industry testing its proverbial inventiveness in selling food and cleansing materials to its own poor.
After all, current macroeconomic conditions in most Latin American countries leave little hope for growth as usual. Growth by mergers and acquisitions is one of the most boring alternatives, and one soon to run into anti-trust regulatory difficulties; such as Nestlé (Brazil) did, when it attempted to buy Garoto.
Cemex’s and Lloyds' way points out to an interesting growth avenue, one also likely to allow private business to grow in an even more socially responsible way; while also providing good testing grounds for future leaders.
Bourgeois, the grande dame of US art, is 92 and still working. To mark the
opening of a new show, we (The Guardian) asked artists, writers and
critics to put a question to her. Adrian Searle introduces the results
Bourgeois studied under Leger (who convinced her she was a sculptor rather
than a painter), had known Bonnard and Breton, Brancusi and Duchamp, yet
she could never be defined as belonging to a generation or a movement. Her
career has also mirrored the place of women artists in the 20th century.
To mark the opening of an exhibition of her work at the Fruitmarket
gallery in Edinburgh, I (Adrian Searle) asked a number of artists, critics
and writers to provide a question for her, on a topic of their choosing.
Some asked more than one.
Whiteread (artist): What is your favourite invention (from your own
Bourgeois: I don't watch TV. I don't use a computer, a fax or a cellphone.
I'm not driving or flying anywhere. So in the end I'd have to say it's the
radio. I listen to the radio at night.
Warner (writer): Did part of growing up in France mean contact with the
sensory rituals and atmosphere of the Church, and its beliefs in an
incarnate god? And did any of this connect with your imagination of the
was raised a Catholic. But I am not religious. In my work, I am interested
in real flesh and blood.
Teller (photographer): How important has sex been to your work?
think sex and the absence of sex is terribly important.
Wentworth (artist): You obviously like oppositions. You have spoken
sometimes about your father so I have always wondered - how is the female
artist's intelligence different from the male's? What if you were a man
and your mother had been a powerful source for your work?
can only talk from the perspective of a woman. I cannot speak for a man. I
have never been a man yet. My mother believed in me. She was a feminist.
Had I been a man, I don't know how that would have changed our
relationship. I did have a brother. Had I been a man, it would have been
very different relationship with my father. In many ways, I was the
successful son that he wanted. After all, I was his spitting image.
Berger (writer): Is there space everywhere or only in some places?
Space is something that you have to define. Otherwise it is like anxiety,
which is too vague. A fear is something specific. I like claustrophobic
spaces, because at least then you know your limits.
Is there a musical instrument whose sound is a little like that of your
The piano. Sometimes the drawings can be a simple note or sometimes they
become quite elaborate like chords.
What has recently given you "goose-pimples"?
[The thought that] my source of inspiration would disappear.
At your age, do some of the surprising works you have made now walk beside
you instead of confronting you?
am exclusively interested in what I am working on now. Once I finish a
work it leaves the house and is gone and has served it's purpose.
Dean (artist): Do you forget how old you are when you draw?
I've always said that the emotions I'm interested in exploring have no
relationship to gender and for that matter age.
Leader (psychoanalyst and writer): After all these years of work, which
ideas and materials do you find yourself drawn back to?
My themes always come and go, but they always remain constant. The
inability to make yourself loved is always at the root of the problem.
Sometimes I work to be loved, and other times I work because I don't feel
Has there been a sustained period when you were unable to work? And do you
have an idea why?
have never stopped working. There have been moments of depression that for
sure took its toll. But I also know that I could always depend on my work
to get me out of the depression.
Dumas (painter): What keeps you working?
Some people say that everything has been done in art. I say the exact
opposite. I still feel that there is a lot I want to say and I have to
Iglesias (sculptor): What is the place of fantasy in your work? As a state
of mind can it be useful?
I'm not concerned with fantasy in my work. I'm interested exclusively in
today, the here and the now.
Upritchard (artist): What is your most recent memorable dream?
don't remember my dreams. I do remember a dream of long ago where my
father was crying and a cat came and gobbled up his tears.
Ofili (painter): If you have a recurrent dream, what might be its
compose my own music. In fact, I sing all day.
Searle: What has your work taught you?
feel my work has made me a nicer person. Or at least I hope so because I'm
trying to be good.
Technology and entrepreneurial leaders: a match made only in Heaven?
That was the title of the feature article in the December issue which gave place to much insightful feedback from readers in different countries, backgrounds and bread-earning activities. You may find the full article in www.newsleader.blogspot.com.
In a nutshell, the article aimed at dispelling the deleterious belief that Latin American managerial creativity is doomed because the region's inventiveness finds no emotional foothold in a culture which is predominantly Catholic.
I argued that a traditional low self-esteem on this issue was bolstered by work such as that of Max Weber and a few historical accidents, such as the Dutch invasion of Recife, whose short life-span, left, understandably, nostalgic feelings in many Brazilians.
Without attempting to turn historical events into a parlour game I also argued that Protestantism had a mixed entrepreneurial record when it came to the USA itself; and for all the above reasons Latin American entrepreneurs had their future in their own hands and only themselves to blame for their eventual failures.
Below I reproduce -in their original languages - a selection of the letters received, and following them, with my recognition and gratitude to the seriousness of the readers' gracious efforts, I add a rejoinder of my own, in English; which I will gladly follow-up with the same commentators, of even with new ones.
Muito interessante a discussão
sobre os holandezes e o protestantismo. Quero, no entanto, fazer um comentário.
A diferença em Pernambuco
foi muito menos do fato de serem holandezes do que de ser o príncipe
Mauricio de Nassau quem era. Estava aí um dos grandes holandezes de todos
os tempos, totalmente fora do padrão - já relativamente alto - dos seus
compatriotas. Portanto, a revolução que trouxe para Recife foi a revolução
de Nassau, nem foi dos holandezes e nem dos protestantes. Note-se a
mesmice da colonia quando ele se foi, sucedidos por holandezes comuns e
Mas vale a discussão
Claudio de Moura Castro
Esta crítica al viejo Max es un poco "light", ¿no te parece? Weber fué muy especifico en aclarar sus caminos metodológicos. La aplicación de sus "tipos" de análisis a una coyuntura histórica están lejos de ser una mera operación de "inferencia"... Por otro lado él nunca dijo que la sola presencia de una pandilla de comerciantes protestantes sea condición de la aparición de formas capitalistas de producción...
y BNV Comunicación Digital Estratégica, Buenos
my opinion, the question is not related to what religion, but ethics.
Technology thrives when it is protected by patents, and when the business
enviroment is protected by a decent Judiciary. In Latin America, our
"expert" politicians decided not to recognize patents, a direct
form of theft, in order to favour a few local businessmen, which in turn
found that the risk involved in investing in technology, was replaced by a
risk free investment in political contributions. If this region is
to succeed in this globalized world, we need to have an ethical enviroment
which allows us to develop, compete, and succeed.
el texto de tecnología y emprendedores. Creo que describís una ligazón
directa entre adopción de tecnología y regulaciones y dudas de que
exista una directa entre tecnología y religión. Creo que la cuestión
weberiana allí sería si existe una relación entre religión y
regulaciones. En cierta medida, afirmás que tampoco existe esa segunda
relación al hacer notar que los estados más protestantes de la Unión
adoptaron la esclavitud y la mayor población católica se agrupó en el
Norte. Es cierto, pero la inmigración irlandesa y la italiana llegaron
con instituciones ya consolidadas y que en alguna medida reflejaban la ética
allá de qué es lo cierto, me atrapó la posibilidad de salir de la
empresa como unidad de análisis y tomar como referencia la relación
global, ecológica, entre las organizaciones y su ambiente. Creo que son
ideas provocativas que ayudan a pensar el sentido de la acción en América
Latina, tanto para las empresas como para las universidades o los
hacedores de políticas públicas.
Universidad de San Andrés
A rejoinder, by Alfredo Behrens.
Indeed, the Prince of Nassau was an exemplary figure, as Claudio de Moura Castro points out; perhaps exemplary to the point of diminishing the importance of the Prince's cultural heritage as the source of his creative influence in Brazil’s Recife when he was entrusted with the administration of a region invaded by the Protestant Dutch. Claudio may well be right in stressing the personality issue over the cultural one in oposing the niceties of the Protestant Prince with the dullness of the Protestant Ducth or even the Catholic Portuguese administration of Recife - before and after the Prince.
Nonetheless, I recollect similar nostalgic reminiscences byt Latin Americans, this time regarding the British incursions in the River Plate area. Both, the Dutch and the English, were Protestant invasions on Catholic dominions. Yet, despite the two centuries between them; despite their manifest commercial interests - as Nicolás Nobile rightly points out - and despite the British invasions not rendering a figure to the historical standing of the Prince of Nassau; both Protestant invasions brought about an undeniable cultural renewal with them.
There is something in the work ethic of Protestantism that Catholics intimately know is different, and at times, perhaps even more effective. This is why those Protestant invasions are recalled with nostalgia: because those Protestant invasions brought with them cultural feats in engineering and the arts and culture that the Catholic authorities had neglected for too long.
However, it need not always have been like that, after all, one of the most impressive start-up venture of all times – Cristopher Columbus’ own - was a Catholic venture! Which helps to show that Protestantism was not and therefore need not always be, more effective at innovation!
Nicolás is also right in stressing, more than I did, the significance of Max Weber’s opus magna. Yet, when tracing the roots of an historical trauma, I was not as interested in what Max Weber precisely wrote, but rather in the social function of his work. Under this light, what the people believe Max Weber wrote may be more relevant in legitimizing and shaping a sense of despair among Latin American entrepreneurs, even among those who toil oblivious of Max Weber.
Then, there is the real side of business, helpfully pointed out by Tony Keen: many Latin American governments have not done enough in protecting intellectual rights, a necessary condition in fostering the development of technology. Worse, many governments have created and environment which distracts honest entrepreneurial activity from investing in productivity increases.
I have no doubt about the relevance of Tony's comments; our countries do have a problem with this issue. However, I like to believe that Latin America’s travails with corruption is more political than cultural. By this I mean that the issue which should concern us is whether such “regulatory environment” is intrinsically cultural (Catholic?), in which case our societies would be doomed; or whether the issue is associated with a particular style of development, i.e. industrialization under overwhelming government protection, as I contend. In this perspective, the political arena reflects a concentration of economic power which reinforces the self-serving regulatory environment; and produces research divorced from the productive apparatus of society and poverty.
The issue of the "regulatory environment" brings us to Ernesto Gore’s interesting contribution. He seeks to bring the political and cultural issues together: Protestantism may foster a more creative intellectual environment through a more appropriate regulatory environment, which may draw on both Catholic and Protestant traditions.
Ernesto may well be right, for individual-centered Protestantism may be more adroit at stimulating personal initiative than top-down Catholicism would ever be able to. Yet, again, let us recall Christopher Columbus' maiden voayage to the New World. Protestants were among those that reamained ashore in fear of a flat Earth.
In my view, that of an agnostic; our received Catholicism reflects the powerful hierarchy of the Catholic Church, a top-down command and control bureaucracy. In fact the Catholic Church’s bureaucratic model is not very different from the XIX century military-based managerial model adopted by the most successful American businesses during much of the XXth century.
Despite the similarity in the models, we cannot hold that because of the current Catholic church's resistance to modernization that the XIX century managerial model was ineffective in producing and deploying the technological revolution that keeps us in a state of awe.
That the control model may be found stifling today does not mean that it had no use and was intrinsically wrong, or even poor. The same with the Catholic Church, who until recentely, with figures of the stature of a Teilhard de Chardin, would have wanted man to become the "spearhead of evolution;" yet now oposes research on stem cells.
So, if both the Protestant business managerial command and control model is shared by the Catholic Church's bureaucracy and Protestant business in the New World and Australasia lies on a Catholic exploratory business venture; we cannot lay back on the half-learned century-old efforts of Max Weber and sustain that there is no way to bridge the gap.
As Ernesto points out, both organizational structures draw on one another. What we need is to explain the cultural roots, if any, of the economic differences, i.e. such as those between French and English Canada, and act upon that information. We must understand the roots of the incontrovertibly superior effectiveness of the social organizations in most of the Atlantic Northern hemisphere, in developing the technologies which free people from the constraints of hunger, disease, idiocy and physical labour. That is what most of development is all about.
Perhaps we may look further into the different ways in which Protestant and Catholic social organizations deal with the individual; on how they construe their social goals and on how those affect technological development and deployment.
We may have to look for the answers in further exchanges, which I would gladly welcome. Perhaps some may wish to contribute as a guest authors.
In the meantime, let us not distract our thinking entrepreneurs: investing in productivity increases is the only way out to sustain competitiveness; and it is investing in technology that helps. That was the reasons I wrote the article in the first place.
Many thanks to all our readers.
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Earlier issues can be found at www.newsleader.blogspot.com
Earlier issues can be found at www.newsleader.blogspot.com