Car wrecks always draw crowd, as every driver knows, and that’s true for the equivalent in business, too. Rubber-necking at someone else’s trouble, many executives thank their stars that they’re not caught in the pile-up; most take the opportunity to remind themselves to be extra careful to stay out of risky situations.
And yet, if you want success as an executive you’re sometimes better off being in the collision than being part of the traffic jam. The same holds true when it’s time to evaluate which of your employees you want to promote. You shouldn’t hold it against someone who has had wreck in the past (just as long as you think the right lessons have been learned from it).
Business is not spectator sport. Few people, however, understand how much it resembles NASCAR racing – where several competitors race each other, jockeying for position at insane speeds, yet calculating and reacting as calmly as if they were merely manoeuvring shopping carts around the grocery aisles.
I came by the analogy courtesy of the recent merger battle involving Compaq and Hewlett-Packard. It was spirited, increasingly bitter struggle between feisty new Hewlett-Packard CEO, Carly Fiorina, and member of the founding family. At some point, institutional investors began to sense that the fight had become too personal; that the battle was no longer about business.
In fact, there were number of different issues. The Hewlett family had small interest in terms of shares, but it was their name on the company. There were all kinds of non-commercial factors, including what name the surviving company would take, how much of the family heritage would be lost – to certain degree, if not totally. Finally, the Hewlett influence would be diluted.
Leaving all this aside, what I found telling was the response of the non-family investor community. They decided not to let the merger die, but instead to roll the dice by giving the CEO what she wanted. As newspaper article reported, even though the deal had been compromised, dimming the ultimate prospects for success, the “sporting curiosity is to find out if Ms Fiorina will succeed with the combined company, or crash and burn”.
These were brave words, but it pays to remember where they came from: bystanders with little money on the outcome. Of course, being able to say “Go ahead and crash the car” is easier if you don’t own the car.
You can see this mentality at work at the executive level as well. Many CEO, executive or manager will contrive risk-filled situation simply because things aren’t happening quickly enough to suit him. Carly Fiorina will put together deal with Hewlett-Packard because, if it works, her power, compensation and reputation will soar. If she crashes the car, well, there’s always another company out there that figures she may have learned something rare and valuable from the experience.
Thus we end up with the multiple car wreck scenario of late last year, when numerous companies bought and sold each other in an absolute frenzy. lot of commentators like to attribute the seemingly robot-like pace of acquisitions to the dot-com bubble, but it had actually burst several quarters earlier. No, what this was about was inflating company’s worth by artificial addition. As long as companies kept devouring each other, they could legitimately put off releasing complete financial data, and even make it seem that they were increasing their earnings – at least by the candy-land accounting principles then in vogue.
It works the same way down the ladder. For instance, magazine publisher may find that his magazine is stalled at 400,000 circulation. He knows, too, that his salary and bonuses are going to merely reflect the cost of living increase unless he can find another 100,000 in circulation. But perhaps that just isn’t possible. So the publisher looks around for property that he can suggest his boss buy and put him in charge of. Or else he comes up with an idea to start another spin-off title. Either way, he’s finding that extra 100,000 in circulation, just not with the magazine he began with.
And even if it fails, he will probably have the extra bump in his salary.
That’s the self-interest versus company interest quandary at work, the NASCAR effect – why some executives would rather crash than change lanes. And, as you can see, it’s not always blessing. It often governs behaviour that doesn’t directly benefit company. However, here is where things get little convoluted. If you run an aggressive company, you want team of hungry executives hunting down the profitable targets with abandon. Even if your company is more on the sedate side, you know you can’t afford to be passive – not in today’s marketplace, at any rate. So don’t be too surprised if you find that, after reflection, you decide to tolerate fender-bending among your best executives.
In our company, people know that if they get the go-ahead and avoid crack-up they will be rewarded. They also know that if they don’t bring me any projects to green- or red-light, they won’t be seeing much, if any, reward. They know if I say yes, and they crash the car, it doesn’t mean the end of their career. Unless they’ve displayed incompetence or fatal inability to drive, there will be next time.
I just hope they understand the reason why when they finally find themselves owning the car.
Mark McCormack is the founder of International Management Group. www.successsecrets.com
