Lampion.com Blog

A "simple" solution to the AIG debacle

Wed, 18 Mar 2009 09:49:05 -0400

At a time of crisis, it is crucial to separate the essential from the non-essential, to have the discipline to focus on what matters. There is always a swirl of considerations and issues in any complex crisis, but to give them equal weight paralyzes actions and allows the most perilous threat to prevail. As I often say, a crisis tests the real will and values of any organization and whether it has the public permission to continue to exist.

The debacle of the AIG bonuses is the case in point. Certainly from AIG's standpoint, there are issues of employment contracts, issues of employee retention, issues of how to even legally retrieve bonuses already paid. All that. Those are not, however, the issue.

It may seem corny in its simplicity, but as big and complex (and yes, as international as a company may be), there is still something to be said for doing the right thing, especially in the national interest. While this, by itself, may seem like a quaint notion, it carries with it some practical realities and exigencies. The cost of having the public and political machinery turn its wrath on you has costs that are immeasurable. To have the public and political mood on your side can be an enormous asset. The mistake any company can make is to underestimate either.

AIG CEO Ed Liddy can take a simple, elegant step today to change this whole debate. It is a letter to all employees who receive bonuses (most of whom are still with the company). A few company lawyers will be convulsing in the background, but it starts with him saying he will return his bonus (I am assuming he got one, even though he has only been there since September), but then go on to say:

"I am asking each of you to return your bonuses as well. It is not easy to ask you to do that, because breaking a contract matters a lot. That's why I can only ask. But there is a greater "promise" at stake. The fact is our company bears a great burden in where America and the world stands today in their economies. We did not cause it all and we cannot fix it all, but confidence in the ability of government and business to work together is critical to getting it fixed. We have to start being part of the solution. If we cannot do that, we need to take the word "American" off our name -- if we don't others will do it for us. Yes, these bonuses were promised, they were an agreement, a contract. But things have changed. More than for any of us, things have changed for millions of Americans who now struggle with getting to the end of each month with enough money on the table to pay their bills.

"I want our business to make a strong statement that we understand that change. I cannot answer for you -- you need to make your own decisions, but your decision will speak clearly enough about where you stand on this. If you decide to keep your bonus, you live with that decision. It is not a life I would like to live. As well, you certainly are not the kind of person we need working at AIG in the future to be part of the solution we owe others.

"Maybe someone made a mistake in how these bonuses were set up. Maybe someone made a mistake in not realizing the changing conditions. Maybe someday someone will say I made a mistake in asking for them back. I can't live in the Land of Maybe. I can live with all of those mistakes as long as I and the people who surround me are willing to learn from mistakes and do the right thing."

What Obama could (and should?) say Tuesday

Mon, 19 Jan 2009 10:54:44 -0500

There has never been a Presidential campaign so carefully scripted and branded as that of Barack Obama. There is a fine line between inspiration and contrivance, and whether Obama has crossed that line is judged most often by where your political leanings lead you to draw that line.

Nonetheless, whether Obama's sense of theater is manufactured to obfuscate more substantive measures of his competence or it is genuinely an element of leadership he has embraced as core to his place in history, he is very good at it. And that is what matters on Tuesday.

We hardly face an abyss as a nation, but we certainly have some raw nerves exposed by an unpopular and arguably misdirected war effort, a staggering national debt, simmering resentments and doubt about the efficacy of government and the integrity of free enterprise, a crippling credit crisis that has many waking from their "American Dream" in a cold sweat, a gnawing sense that the war on terror has moved to new fronts, and a restlessness and nervousness about our standing in the world and even our sense of self. True, there are many facts that stand opposed to this near-collective funk in America today, but moods have a mind of their own.

That is why Obama's oratorical prowess may be just the right leadership quality at the right moment. You do not have to be a cynic to observe that mere words will not dig us out of our current ditch, but words have a substantive, even pivotal role, in our national psyche -- and Obama understands that.

What could he (and, in my immodest view, should he) say that uses "mere words" in a way that might matter? Equally, what does it tell all of us about the role of inspirational oratory in leadership?

"Yes we can" was the mantra of the campaign, and apart from anybody's political or ideological filters, it was a theme that appealed to something larger than the candidate and even the parochial interests of his listeners. There are a lot of reasons why Obama won so impressively -- and they go beyond the ineptness of the McCain campaign or the dismay with Bush. Obama has started to represent something beyond himself and even beyond the political pandering to which he fell early victim and then rescued himself.

I have actually listened to the cadence of that phrase (yes, Obama practices cadence like Tiger Woods practices putting), and the emphasis was on the words "yes" and "can." It was almost a note of defiance to those who doubted his campaign and what it represented to his early followers.

Obama's speech on Tuesday can and should use this theme again -- but this time it makes all the difference to place the emphasis on the word "we" -- "Yes, we can." There are a lot of other words he will need to wrap around that phrases to support and define it, but the message Tuesday can be captured in that nuanced phrase. At a very pragmatic level, he needs to temper expectations and buy himself some precious time to sort through a bewildering and unprecedented confluence of issues. Making people feel good is not enough, but the irrationality of the markets alone is evidence that confidence is a factor in all of this -- and confidence (while eventually bolstered by action and evidence) is still an emotional animal. Public confidence is as much an asset to be managed as those hundreds of billions flooding out of government coffers.

Obama can call for a new resolve by Americans to believe in what we can do as a nation. He can remind people that government alone cannot fix this crisis with some quick salve of programs. He can commission a new generation of Americans that, until now, has been a cynical observer of a process they thought was "owned" and our-of-reach to them. And, while Obama has adroitly managed the subtleties of being the first black President, he can remind us all that "we" means everybody.

The point is that there is a time for a higher order of oratory -- in politics and business. There is an important place for themes and inspiration in what we say. It lifts the spirit in a way facts never can. It causes us to think more deeply in ways that mere information falls short of doing. It serves as a much more resonant and evocative touchstone for actions to follow in ways a bullet-point strategic plan PowerPoint slide never will. It rallies the spirit and passion of people that becomes the more enduring fuel for real, sustained progress, particularly during difficult times.

A lot of business leaders are uncomfortable with this "emotional" element of leadership; as a result, they are missing a key factor in what it takes to get people to follow you. You do not have to match Obama's soaring rhetoric to inspire your people, but just sense the energy from the masses on the Great Lawn on Tuesday and imagine what it would be like for your business to have even a fraction of that passion on your side.

Good feelings can fade like echoes off the walls of the buildings around The Mall in D.C. on Tuesday. Actions must follow, and "confidence" for many people is an extrinsic not intrinsic quality -- they need to have confidence in something they eventually experience and see.

But for any organization -- one you lead that is facing perilous times, or a nation trying to find its footing again -- words that touch the heart as well as the mind do matter.

Wal-Mart eye exams

Tue, 02 Dec 2008 13:31:20 -0500

Which set of statements would have been better for Wal-Mart to issue in the wake of the trampling death of the employee in Nassau County on Black Friday?

1. "The store has been closed over a medical emergency." (first statement) "Despite all of our precautions, this tragic incident occurred." (second statement)

Or...

2. "This is a tragedy and, while we work very hard to prevent something like this, we are determined to look at every possible factor in play to ensure it never happens again."

The first statement did not even acknowledge what anyone watching cable news already knew, making Wal-Mart appear out-of-touch. The second statement clearly telegraphed that the company was much more concerned about its image and litigation defenses. The second statement at least shows some compassion and horror first over the incident.

I have worked on a lot of litigation cases. Absent the obviously stupid things you can say (Gee, we never imagined anything like this could happen..."), the notion that you can seriously compromise your case in your statement most often is over-lawyering. If anything, showing compassion early on often helps your case; taking care does not necessarily mean you are taking responsibility.

Wal-Mart has compromised their case. By claiming they took every precaution, now anything that shows they did not is a dagger into their defense.

Planes, trains and automobiles

Tue, 02 Dec 2008 12:57:26 -0500

Manage your symbolism the first time and it can at least appear natural and certainly can be iconic in a good way; do it wrong out of the gate and it becomes parody or a charade. Such was the case with the CEOs of Detroit's Big Three a few days ago choosing to board their corporate jets to plead poverty in Congress. (Actually, they probably did not even think about it, which is just as bad.) But to then make a spectacle of themselves by suggesting on the next trip they would drive in a caravan (sorry Chrysler, small "c" in "caravan") makes them look pandering and foolish. It came across as every bit contrived and disingenuous as it was.

It is critical to manage the visual semantics in a crisis. Those first images are first impression are lasting impressions.

The only thing we have to fear is "confidence" itself

Thu, 09 Oct 2008 08:11:41 -0400

I was reminded this week of something I used to hear my Dad say back 30 years ago. He was a CFO of a major international company, but he never lost sight of his street-tough common sense, nurtured on the cobblestone streets of a Depression-era Jersey City. "Numbers matter, but in any deal, 'confidence' matters a lot," he would say. "Take away 'confidence' and you just took away at least 30 percent of the value of anything."

The Dow is down 35 percent from its dizzying high of 14,000 just fifteen months ago.

We're hearing a lot about "confidence" this week. We heard a lot last week about "liquidity" -- now a household word, but still one that lacks real meaning to most people "on Main Street." Yet, "confidence" and "liquidity" are conjoined twins, inseparable without potentially fatal risk to one or the other. Despite my obvious angst with the term "bailout," the emergency measures enacted over the last few weeks were critical shots of economic adrenaline right into the chest of the global credit markets, but they are not real "liquidity." Liquidity is when you have at least as many buyers as sellers. People only buy big stuff like houses when (apart from its obvious immediate utility), they feel confident it will be worth more when they sell it and that there will be someone(s) there to buy it. Funny, the same rationale applies to bonds and securities.

So, yesterday I watched Secretary Paulson at a news conference lumbering through his explanation of the last few days, talking every bit like a macro-economist, with the words liquidity, stability, confidence and credit plugged in every few seconds, like McCain says "my friends," Obama says "McCain/Bush" and Palin says "Gee willikers." True, his audience was as much or more the banking sector than the public, but the paucity of "retail" messaging on this issue is troubling.

What was lacking -- and continues to be a giant black hole in this public debate -- was a simple explanation to American consumers about what this credit crisis means to them. There is a bizarre sense of detachment at play where the public believes this is a Wall Street crisis of its own making (well, okay, they're mostly right there...) but they don't understand their role in it. To reduce this issue to the belief that $700 billion in taxpayer money (with strong hints that it may be more) is seemingly going to the outrageous severance payments of failed Wall Street executives having their oversized egos massaged at luxury spa resorts (deep breath...) is to miss the point. To fail to explain this "bailout" (sigh, now even I'm using the word) in terms people understand and feel they have a stake in, is to further erode confidence, not restore it. As long as people think their mortgage payments and now their tax dollars are going to bloated Wall Street executives, they are genetically predisposed against putting any more of their money on the table. That, my friends, gee-willikers even, is what lack of confidence and liquidity is all about.

These injections of public funds into the private sector are like spraying your roses with chemical fertilizer to bring back the green, but neglecting to spread some organic mulch around the roots.

So, to any politician within the sound of my furious typing, you can throw all the money at this you can print and it might restore short-term liquidity to the banking and credit sector, but it will not restore real, sustained, foundational liquidity until people feel confident someone has talked with them on their terms and in their interests.

Context, meaning, resonance. My words for this deal.

Words, schmerds

Fri, 24 Oct 2008 07:46:24 -0400

How important is it to capture, shape and own the vocabulary in a crisis or major public event?

How about $700 billion worth.

The collapse of the investment banking and credit markets in the last few days holds an interesting lesson about the need to appeal to the right audiences with words that resonate. As this crisis unfolded almost by the hour, all you heard were the words "Wall Street" and "bailout" and "tax money." Run those backward like an old Beatles record and string those together, as most Americans did the first moment they heard them, and you get "Tax money is bailing out Wall Street."

What the Administration failed to do at all, and most media neglected to calm down a minute and do either, was to characterize this properly as a "rescue plan for the American economy." Those shot-full-of-holes mortgage-backed securities may have been floating over the abyss, but to keep the discussion focused on Wall Street rather than the practical and all-too-real impact on average Americans only invited the worst interpretations of what was really at stake. Polls were showing public rejection of the plan was running at 80% or worse -- some of that was truly principled and practical opposition; too much of it was basic misunderstanding based upon what they heard.

In any crisis, you need to get the words right. Calling this plan a "Wall Street bailout" only served to incite and attract all kinds of pent-up resentment and venom about those "fat-cat Wall Street executives getting their big severance payment." What was needed was a trusted, calm voice that put this crisis in terms people could understand in their daily lives (hmm, Warren Buffett, got a minute?).

If someone had simply explained the impact on use of credit cards, how the banks might start calling in mortgages whose loan value exceeded market value, and showed the stark reality if what it means for the credit marks to clam up, it would have changed the debate.

Words matter.

I know you can't see this, but...

Fri, 05 Sep 2008 12:02:59 -0400

I was attending a quarterly planning meeting of senior executives a few weeks ago -- 30 people seated in a long, narrow room with a projector in front. I was sitting near the back with the COO as each person took about a half hour to go through their PowerPoint presentation on critical issues they faced in their units. One after another, the presenters slogged through slide after slide (incidentally, I prefer the word "visual" since nothing slides anymore, but "visual" has not quite eased into the vernacular, especially when some people still call a set of "slides" a "deck" - sigh...). I don't think a single person ever said a word that wasn't somewhere jammed into a slide. Several people even jokingly called their dense visuals "eye charts." I observed person after person losing interest, looking at their watch or PDA, one nodding off to sleep. The high point was when the CFO stood up, lit up the room with his hopelessly crammed slide of financial data and actually admitted "I know you can read this, but..."

By now the COO was tapping his pen against the table in disgust. I leaned over and said "What did this meeting cost?" He did not answer at first with the obvious - the cost of renting the conference center meeting room or the projector - but I saw him casting his eyes over the group counting heads and salaries. "$25,000" he wrote on his pad and turned it toward me.

"More" I scribbled back -- the cost of having the entire management team peering at unreadable slides instead of running a business, the cost in morale and energy in coming together as a team and walking away confused and exhausted.

Frankly, I'm appalled at times with what I see (or CAN'T see) in business presentations. I love to work with clients on improving their "visuals" (thank you, I feel better) not because it satisfies any creative impulse, but because making your point visually -- powerfully, clearly and memorably -- matters to the success of your business.