Don't sack the CEO !

What would you say to a job that was one of the riskier jobs in the world – the chances of being sacked is high, and its very unlikely that you would survive 10 years. Not appealing, is it ? Welcome to the job titled the CEO.

In the UK, the FTSE 100 is the index that covers the top 100 listed companies. As the decade ended, only 16 of the CEOs who were there in 2000, were still there in 2010.

Heading that list is an illustrious name, Sir Martin Sorrell, the Chief of WPP, the global advertising agency. 25 years as CEO; he was the founder of the agency and still its head. And there are a few legends – Sir Terry Leahy, the boss of Tesco, Sir John Rose, the chief of Rolls Royce and only one lady – Marjorie Scardino, the head of Pearsons. But otherwise, most CEOs who were there in 2000 have got the boot.

The job of a Chief Executive, is obviously a crucial one in any company. The leader must stay for a reasonably long term, to be able to provide a meaningful direction for the company. Often the contribution of a CEO can only be seen in the longish term. An ideal tenure would be for 8 years or so.

But the capitalist system, as we have evolved it, is incredibly short term focused. Next quarter is all that seems to matter. Boards and shareholders expect instant performance from the CEOs, preferably in two quarters. If by three quarters the share price hasn’t doubled, then sack the CEO. The same story repeats with the new guy.

There must be something wrong with expectations if 84% of the CEOs fail to last the desired term. Sure, results are important, but how can the corporate sector be termed as successful if three quarters of the leaders aren’t considered to be doing their job.

Ok, the inference is a bit misleading. Some of the CEOs retired. Some of them might have done their stint, even if it didn’t coincide with the neat chronological span of the decade. And why 10 years - why not 7 or 8 ? But still, you get the drift.

There’s something that can be learnt from the survivors. More than half the survivors were founders. But even after they no longer owned the company and had very small holdings, they were still valuable to the company. And the professionals, all had long stints in the company before they became CEOs. Glamorous CEOs brought from the outside, have rarely survived long enough. There’s one company that has recently taken a fashion to only considering outsiders, on the presumption that every insider is a fossilized dinosaur. It might want to, sort of, look around it.

Its all a completely different story is Asia, usually. You have to carry the senile old man, kicking and protesting out of the door. That's almost as bad as the other extreme in the Anglo Saxon world. For once, a middle path seems most appealing.

A really dumb idea

It’s the end of the year and the holiday mood needs a light irreverent post. Its not a holiday around here, but since the rest of the world has caught holiday fever, we have “embraced” it as well.

Airlines are notorious for doing fairly dumb things – I think the rarified air in which they fly does some things to the brain cells. I had blogged about Ryanair’s idea of charging to use the toilets. But what All Nippon Airways (ANA) did in October takes the cake.

In October they ran an experiment. This was apparently an idea to reduce carbon emissions.

If you were to board an All Nippon Airways flight, this would be your experience.

As you queued up to board the flight, you would be met by a pleasant airline lady in uniform. Sayonara. Would you please go to the loo before you board the plane ? Its just over there. I’ll show you the way !!

In a brain dead piece of PR, ANA gave the following justification. The average human bladder capacity is apparently 15 oz. Apparently that totals to an extra weight of 63.7 kg (precisely calculated) for a planeload of 150 passengers. Carrying that extra weight means that much more CO2 emissions. ANA has estimated that it would save 5 tonnes of CO2 emissions per month by doing this. So this is a very green initiative and so must be tom tommed.

Can you even comprehend a company seriously trying something like this. ANA is not a tinpot airline. Its one of the top carriers in Asia and a global airline. And they go and do something as dumb as this.

Readers are invited to share their suggestions on how ANA could be even more green. We can then capsule this post with all the comments and send it to them.

Being an expat

What’s it like being a foreigner ? An expat living outside his or her home country ? I am an expat myself- an Indian living in China. Many readers of this blog are expats themselves. Most of us are expats because our jobs, or the jobs of our spouses, took us away from our native land.

The Economist has a beautiful article on “being foreign”. A superb and stimulating article I strongly recommend. My favourite “newspaper” is The Economist – the magazine calls itself a newspaper, in a quaint British tradition. OK, OK, I am nerdy; anybody who publicly admits to The Economist being his favourite magazine has to be the most “uncool” character in the world.

The article is so good that I offer it for your reading pleasure with no comment. What is your take ?

I’ll post my own view of being an expat later this week.

The fastest train in the world

China is a very competitive country. It likes to make a competition of everything it can win ! So its not surprising that last week it unveiled the “fastest train in the world”.

The train in question is the bullet train between Guangzhou and Wuhan. Guangzhou is where I live – the southern China city, known earlier as Canton and close to Hong Kong. You can be forgiven for not knowing anything about Wuhan. It’s a city in central China, mostly unknown to the rest of the world. Why is the fastest train in the world going there ? Well, its not going just there; the train is meant to be between Guangzhou and Beijing – Wuhan is about the midway point and this is the first phase of the line.

The train claims an average speed of 350 kmph. The earlier train journey between Guangzhou and Wuhan took some 10 hours. Now it takes 3.

This is all part of the massive investments in infrastructure that China is making. I had argued here that one of the obvious things India has to learn from China is the importance of infrastructure. China has further stepped up the infrastructure investment as part of the stimulus package. While most other countries have focused their stimulus on the short term – tax breaks, cash for clunkers, doles, etc, China has mostly focused on even more spending in infrastructure. Trains like the Guangzhou Wuhan link are going to spring up all over China over the next 5 years.

The Indian railways was, and is, one of the great organizations of the country. For a long time, it was the biggest railway network in the world. No longer. It has been rapidly overtaken by China and is going to be left far behind. For decades, Indian Railways has been starved of investments in tracks, high speed links, new trains. Instead the money has been wasted on subsidies, bloated lower level staff, and the like. Laloo Prasad brought efficiency and profitability back to the Railways and was sacked for his efforts as he had the temerity to stand against the Congress in the Lok Sabha elections.

Imagine if India replicated the Chinese achievements in the Railways. Madras to Bangalore would be an hour’s journey. Bombay to Delhi would be a 4 hour journey. Madras to Delhi, 6 hours. Bangalore to Bombay three and a half hours. The Bhopal Shatabdi, the fastest train in India has an average speed of 90 kmph. The Guangzhou Wuhan train’s average speed is 350 kmph.

I'm not able to post a photo of the Wuhan station, thanks to my Net Nanny, but just gaze at the photo here. Jaw dropping. We should bring Mamta and the entire Railway Ministry to China and make them travel on this train. Not the Railway Board – they know all this and in any case, they are one of the most efficient company Boards in the country. Maybe, just maybe, our netas and babus will realize the art of the possible, even in a poor country. Just let the top class Railway Board run it without interference. In 10 years, you and I will also have the privilege of commuting from Madras to Bangalore in an hour.

That will be the day.

Zaijian, Ni hao (Goodbye & Hello)

It is customary at this time of the year to look back and reminisce about the year gone by. This year, its also the end of the decade – the “noughties” as they are curiously called. The media, traditional and new, is dominated by the recounting of events of the past decade –the horror of September 11, the tsunami, the Sichuan earthquake, the wars in Iraq and Afghanistan, the wonder of the Beijing Olympics, the rise of China, the global financial crisis, and so on.

But take a step back, and by far, the greatest event of the decade gone by has been the unbelievable development of the Internet. Just picture the dawn of the new millennium. Google had just been started and most people still did not know of that term. Blogging was virtually unknown – the word blog itself had just been coined in mid 1999. More recent phenomena such as Twitter, Facebook and the like were not even on the horizon. Even e mail was not ubiquitous. Dinosaurs like AOL and Alta Vista ruled the world.

10 years on and the on line world has dramatically changed. If even a tech savvy Rip van Winkle has gone to sleep in December of 1999 and woken up today, he would be completely lost. Such has been the pace of change. That Chotu’s great grandmother can see and talk to her great grandson who is thousands of miles away, for free, is a miracle of immense proportions.

What amazes me is that as a society we have embraced this change so well. Disruptive change of this nature usually comes with cataclysmic implications on society. Large numbers of people are very slow to accept such changes – when the first railways were introduced in Britain long long ago, most people would not travel on it as they feared the health consequences of high speed travel (20 kmph. But today the online world is rapidly changing every month and even Chotu’s GGM adopts it gleefully.

What does the next decade hold for us online ? Only one thing is for sure – everybody who predicts what the change will be is going to be wrong. But at the end of the coming decade, we are surely going to marvel at the immense changes that have taken place. And probably reflect back on how unthinkably backward 2009 was !

We will, no doubt, plunge headlong into the changing online world. But change as it may, one thing I shall pray remains the same. The lovely community that we have come together as bloggers, le embrouille blogueur, Adesh, Zoobie, AJCL (still sticking to your old name), Savitha, Sri, The Thoughtful Train, Gils, Sandhya, Preeti, Reflections, Deepa, Dave, Priya, Rads (please come back) and all ye yeomen, I hope remains the same warm well knit online community. And perhaps some of the lovely people who comment here and are very much part of our wonderful community – Dada, Kiwibloke, J, Satish, Hansjoerg, Durga, VA, LG, Sabareesan, Mahesh, Kotla, Aashish, Exkalibur, et all, may become bloggers themselves.

Raising a toast to the wonderful friends who inhabit this space.

Happy New Year.

THE WIDENING RANGE OF REVENUE SOURCES IN NEWS ENTERPRISES

It is obvious that both the offline and online news providers are in the midst of substantial transformation and that the traditional means of funding operations are no longer as viable as in the past. This is disturbing to the industry because it has enjoyed several decades of unusual financially wealth and few in the organizations know how to find and generate new sources of revenue.

The financial uncertainty facing the industry is not unusual, however. We tend to forget that news has historically been unable to pay for itself and was subsidized by other activities. In the past newspapers and other news organizations engaged in a far larger range of commercial activities than then they do today and publishers had to be highly entrepreneurial and seek income from a wide variety of sources in order to survive.

The initial gathering and distribution of news was paid for by emperors, monarchs, and other rulers who needed information for state purposes. Later, wealthy international merchants hired correspondents to gather and relay news that might affect their businesses. When news became a commercial product, newspaper publishers subsidized the operations with profits from printing books, magazines, pamphlets, and advertising sheets, income for editors from shipping and postal employment, profits from operating book shops and travel agencies, and subsidies from communities and political and social organizations.

Today, however, news organizations are struggling to maintain themselves and develop digital operations by primarily focusing on the two revenue streams they have known in recent decades: subscriptions and advertising. Many people are being disappointed because those are failing to provide sufficient financial resources to sustain their operations.

The need to seek income from multiple sources is clear, but runs somewhat counter to the values of twentieth-century professional journalism, which denigrates commercial activity and thus engenders organizational resistance to new business initiatives. Continuing staff reductions and other budgetary cutbacks are eroding some internal opposition, but are rightfully leading to questions about how far one goes down the commercial road before news gives up its independence.

In both the online and offline news worlds, a wide variety of revenue generating activities are appearing—some based on traditional subscriber/single copy sales and advertising sales—but many others moving into new areas of monetization.

Many news organizations are increasing the range of advertising services provided to sell and create ads for their own media products, but also to provide clients services that can be used in competing products as well. New types of advertising offerings are being created to link across platforms, sponsorships of online and mobile news headlines are developing, video advertising is being offered online, and special “deals of the day” advertising spots are being offered.

Some organizations are increasing their product lines producing paid premium products and niche content for professional groups and persons with special interests; some are providing business service listings for a fee; others are creating a variety of non-news products; still others are operating additional business units creating paid events, running cafés, book and magazine shops, and providing training and education activities.

Sales of other products and services are being increasingly embraced through e-commerce (linking published reviews films, performances, and recordings to sites where customers can buy tickets, DVDs, CDs, etc.), creating and selling lists and databases of local businesses and consumers, producing special reports and books, selling photographs and photography services, and even selling items such as computers and appliances.

A growing number of news organizations are seekings subsidies though reader memberships and donations and grants from community and national foundations.

These are healthy developments because they increase the opportunities to create revenue that can fund news activities. Obviously, the abilities and willingness of different news enterprises to engage in the range activities vary widely, but the fact that they are appearing show that news organizations are beginning to adjust to the new environment and becoming more entrepreneurial than they have been for many decades.

What is needed now is not knee-jerk opposition to these efforts from news personnel, but thoughtful development of realistic principles and processes to minimize any negative effects of these new initiatives on news content so that trust and credibility are not diminished.

Holidays is a cultural thing

Today is Christmas day – virtually everywhere in the world, today is a holiday. And here I am , at my desk, pretending to be working. For its not a holiday in atheist China. Despite the best efforts of companies to tempt the Chinese into “Christmas shopping”, the day remains stubbornly irrelevant here.

I have a stream of people walking up to my desk today. They are all asking me to approve carrying forward their leave entitlements which they have not used up. Everybody knows that they will not use them up next year as well and will ask to carry it over again. This charade goes on every year. Much as I rail against them for not planning their leave properly, its not going to change. For the Chinese (and Indians) don’t like to go on holiday. They like to work.

Contrast this with Europe. In August, most of Europe, at least France, completely shuts down. And between Christmas and New Year, not a soul is seen anywhere near the office. So here we are, working in a global business, where the lights have gone out of the offices everywhere in the world, bar the solitary illumination seen in China.

It's not that one is wrong and the other is right. It just shows the cultural differences between Europe and Asia. Europeans prize their holidays highly. To them its 46 weeks of slogging to earn the 6 weeks off. Asians start to feel uncomfortable at the very thought of taking anything more than 2 weeks off. And a second holiday during the year will prompt snide remarks of being on perpetual holiday.

But this is time for holiday cheer. Whether you are at your desk in China or stuck on the Eurostar between the UK and France, here’s wishing you a Merry Christmas and the compliments of the season. Maybe you are having a white Christmas, as seems to be the case in most of the Northern Hemisphere. Or, you may be in Bondi beach in beach clothes soaking in the sun. Or you might be the classic NRI, on the once in two years trip “back home”. To you, may I quote from an unknown author - Let the spirit of love gently fill our hearts and homes. In this loveliest of seasons may you find many reasons for happiness.

Amen.