CEO Corner

The Simple, Painful Lesson of KB Home’s Kathy Griffin Disaster

Chief Executive Magazine -

Kathy Griffin, Kathy Griffin, Kathy Griffin.

Yes, Jeff Mezger should have known better. In case you’ve possibly missed it, the high-performance CEO of KB Home had his bonus cut by his board and his reputation blasted after he unleashed on neighbor Kathy Griffin’s boyfriend.

When he woke this morning, his face was splashed across The Journal, his epithet–laden rant was ringing the advertising till at HuffPo nonstop. His voice was ugly, mean, raw — and apparently out of character. No matter. It will do lasting damage. The 62% jump in stock price KB experienced in the last year under his leadership? An asterisk, at best, despite besting rivals like Lennar and DR Horton by orders of magnitude. His bonus, potentially a million or more? Slashed.

So what’s the lesson here? Other than not living next to Kathy Griffin and her boyfriend (who come across as fairly unhip and unforgiving for Hollywood types, especially when Griffin’s most recent claim to fame is being photographed with a decapitated head of the President) it’s this: don’t do it.

Whatever the cause, whoever is at fault, Mezger loses. In this digital age, that one eruption will trail him. Kathy Griffin. It’ll be the first thing that comes up when he’s Googled, likely for years. Kathy Griffin. And no one will remember anything but the headline (ie, CNN Money: “CEO’s bonus cut 25% for his anti-gay, sexist tirade at Kathy Griffin”) Kathy Griffin will follow his family. Kathy Griffin will be in his obituary. Kathy Griffin. Kathy Griffin. Kathy Griffin.

Oy.

Which takes us to the takeaway: Well before the rise of social media, and just at the dawn of the Internet, an old editor told me simply, “before you say anything or write anything, just imagine how it will look on the front page of The Wall Street Journal.”

To make that useful advice easier and more memorable, let’s just shrink it down to two words: Kathy Griffin.

In this day and age, we’re all public figures — especially CEOs — even if we don’t feel like it. Yes we all should strive to be calm and respectful of everyone, at all times. No, none of us are, never have been, never will be. The difference now is that with just a single slip, we can be transformed and categorized by our absolute worst moment. Everyone makes mistakes, but today your mistakes — whether a shouting match with your annoying neighbor or a bona fide professional transgression (see Kalanick, Travis) — travel the world in a millisecond and live forever after in the ether.

So the next time you’re about to snap, to unleash that anger, take a deep breath and repeat after me: Kathy Griffin, Kathy Griffin, Kathy Griffin, Kathy Griffin.

That should do it.

The post The Simple, Painful Lesson of KB Home’s Kathy Griffin Disaster appeared first on ChiefExecutive.net | Chief Executive magazine.

Is Content Killing Traditional Marketing?

Chief Executive Magazine -

In an online world driven by content, some business organizations are beginning to set aside traditional marketing strategies and replacing them with content strategies focused on owned media that helps drive customer loyalty and revenue.

A new book, “Killing Marketing: How Innovative Businesses Are Turning Marketing Cost Into Profit” by the Content Marketing Institute’s Robert Rose and Joe Pulizzi focuses on just how organizations can start transforming marketing strategy into a standalone profit center.

Rose, chief content strategist with the Content Marketing Institute, sat down with Chief Executive to talk about why CEOs should be paying attention to content marketing strategy, and what it takes to get these kinds of programs up and running.

Q: For CEOs who may be uninitiated in the content marketing/owned media world, what are some good first steps for getting this new model rolling?
A: The key is to get your team thinking about content as a thematic destination (or product if you prefer) rather than as a campaign. Most businesses are creating content in an ad-hoc manner, simply looking at it as an alternative for direct marketing materials or advertising. But content is, and always will be, more expensive to create and distribute than ads.

Thus, it must provide more value than simply an impression or even a visitor. We have to build the asset that’s actually worth investing in—which is an audience. That’s where we can start to monetize content in more ways than simply an impression or a visitor.

So, even just thinking about creating content in a different way—as building toward something that looks and feels like somebody would want to subscribe to it is a great first step. Whether that’s called a blog, or a resource center, or a university or a print magazine matters not nearly as much as looking at it as a product vs. a campaign.

Q: How easy is it to augment traditional marketing strategies with content-based strategies?
A: It’s not easy. That’s the double-edged sword here. The biggest mistake CEOs make is blessing a “content program” that is simply just random acts of content spread out over multiple channels and meant to augment the existing direct marketing strategy.

You will see some early benefit from doing that—and it can be a way to at least get going if you have nothing going on at all. But for most, where content is mostly a frustration of measurement and reason “why”, then my advice would be to not look at it as a simple augmentation of traditional marketing—but as a new kind of development that has the potential to add value to all of the traditional marketing strategies.

A great example of this is looking at traditional advertising. One of the biggest benefits of having an owned media audience is to be able to leverage that database, upload it to social media platforms and get a better media buy effectiveness rate on your social media ad spend. But the critical thing there is to have the owned media audience to begin with.

Q: How should CEOs fill the roles within a marketing team necessary to get this off the ground?
A: It can be a challenge no doubt. The skill sets are changing, and the demand for talent these days is high. We have typical team structures and roles and job descriptions if anybody is interested in reaching out.

We recommend taking an honest look at the team, the skill sets and the planned investment. Then look at building an organization that can service multiple parts of the business with content. Once you understand the gap in the current team (because many of the team will have these existing skills) then put together a talent acquisition strategy that makes sense.

Q: Looking into your crystal ball, what will be driving the conversation on content marketing and owned media a few years from now?
A: I think it will be how we compete with the places where we used to place our advertising. As advertising begins to diminish in effectiveness, media companies will begin to look at subscription and other business models in order to stay alive. They will offer “native” and other types of products to businesses to monetize that audience.

Our challenge will be where to put our marketing dollars—into our own media programs, or into content that appears natively on others. This balance will become the 20/20 version of the classic “marketing mix” question. The other thing that will rank high—and perhaps not related as much to the owned media question—will be the role of technology.

Marketers continue to chase technology as a magic salve to their production, distribution and measurement problem. That will only be exacerbated in the coming years with AR and VR, the Internet of Things, and artificial intelligence. Bright and shiny object syndrome is only about to get brighter and shinier. It will be the smart marketers who stick to their knitting and not get lost in the machine.

The post Is Content Killing Traditional Marketing? appeared first on ChiefExecutive.net | Chief Executive magazine.

Meet the ‘New-Collar’ Workers in Manufacturing

Chief Executive Magazine -

White-collar workers use their heads, blue-collar workers use their hands.

Although this simplistic division of the workforce was first used in the 1940s, the notion of manufacturing workers as the ones getting their hands dirty stretches right back to the industrial revolution.

Even the Latin origins of the word manufacturing—manu factus—made by hand—refers to the physical nature of the work. And it was the dirt and soot associated with assembly lines and machine rooms that made blue shirts more practical than white.

However, while collar color once made sense as a neat division of the workforce, it is a concept now hopelessly out of date. Modern manufacturing no longer thinks in terms of white or blue collar—the workers it needs now are “new-collar”.

“Modern manufacturing no longer thinks in terms of white or blue collar—the workers it needs now are “new-collar.”

Blue becomes new
To understand why, you need look no further than Takashi Yoshida, who makes turbine rotors for Mitsubishi Hitachi Power Systems, a joint venture of Mitsubishi Heavy Industries and Hitachi.

Takashi has been making rotors for nuclear and thermal power plants for more than a quarter of a century. As a lathe operator, he would classically be regarded as a blue-collar worker.

Yet his work requires levels of accuracy and skill that would challenge even a brain surgeon. Rotors must be manufactured to within 5 microns of the required size—that’s 5 thousandths of a millimeter.

Takashi is a perfect example of the highly skilled professional that modern manufacturing increasingly depends on. Neither white-collar nor blue-collar—they are the new-collar workforce.

Transformation and growth
Technology and globalization have transformed manufacturing. Traditional assembly jobs that required little skill or education have been automated as robots and heavy machinery take on the most repetitive and labor-intensive work.

The notion that automation will create, rather than eliminate, production jobs seems counterintuitive. Ever since the spinning jenny began replacing weavers, people have worried that machines meant an ever-diminishing number of jobs.

But someone has to build those increasingly automated machines, supply the parts for them and constantly improve them.

And manufacturing has an extraordinary ability to keep reinventing itself to meet the world’s ever-growing appetite for more and better products.

Even mature industries like steel are carving out high-tech niches—hundreds of different compositions of the metal designed for an ever-growing number of new products.

Which is why employment opportunities in manufacturing are actually growing. In 2017, worldwide manufacturing business conditions showed the largest improvement for more than five years with producers commonly reporting the need to expand capacity in line with rising demand.

Attracting more talent is becoming one of the top priorities for the manufacturing sector. Some of the most sought after professionals are highly skilled machinists and craft workers.

New collar, new image
There is a mistaken belief that manufacturing, as a sector, is in decline and, as a result, people may be quick to pass over it as a career option. There is also the challenge of moving on from the old image of a white-collar/blue-collar divide.

Not only are huge swaths of manufacturing thriving, but in many factories you would be hard pressed to tell who is working on the ‘shop floor’ and who is the plant manager. In the 21st century manufacturing plant, everyone is solving problems, everyone is highly skilled. Everyone, in short, is new-collar.

One CEO who has been outspoken on the subject is IBM CEO Ginni Rometty, who has been calling for government and business leaders not to think in terms of white-collar or blue-collar jobs, but new-collar jobs instead. IBM plans to hire 25,000 new-collar employees by 2020. Rometty said she believed that these were jobs that may not require a traditional college degree. New-collar workers may have degrees or they may have gained the necessary skills through vocational training.

Skilling up
It is vital that the new-collar worker concept is not just one associated with the tech industry. Manufacturing already has significant skills shortages. The baby-boomer generation make up around 20% of the current workforce and they are fast approaching retirement. This will increase the need for skilled workers even more.

To address this, young people need to understand the opportunities manufacturing offers and companies need to find new ways to ensure the necessary skills are being taught to prepare people for industry.

That new-collar jobs are safer, more intellectually demanding and better paid than the blue-collar jobs that came before them should make a career in modern manufacturing more appealing than ever.

Digital thinking
Innovation, new technology and automation will continue to transform manufacturing—it is a sector forever on the move.

The current period has been called the Fourth Industrial Revolution. The First Industrial Revolution used water and steam power to mechanize production. The Second used electric power to create mass production. The Third used electronics and information technology to automate production. Now a Fourth Industrial Revolution is building on the Third, the digital revolution that has been occurring since the middle of the last century. It is characterized by a fusion of technologies that is blurring the lines between the physical, digital, and biological spheres.

This means that while established jobs may change, new ones are always emerging. They are there for those willing to acquire the skills and knowledge needed. The opportunities are there to be harnessed. That’s why the future really does belong to the new-collar worker.

This article originally appeared on SPECTRA, the online media powered by Mitsubishi Heavy Industries Group.

The post Meet the ‘New-Collar’ Workers in Manufacturing appeared first on ChiefExecutive.net | Chief Executive magazine.

Charles Knight’s Legacy Lives on at Emerson

Chief Executive Magazine -

Editor Emeritus J.P. Donlon remembers Chuck Knight personally. Here, he discusses the leader’s career high points.

The recent passing of Charles (Chuck) Knight (on Sept. 12) marks another end to a style of leader businesses will not likely see again for some time. In 1987, Chuck was named Chief Executive magazine’s second Chief Executive of the Year by his peers in a process that is now in its 32nd year. When he was named CEO of Emerson Electric (now simply Emerson) at age 37 in 1973, he became the youngest person to lead a billion-dollar company. He retired nearly three decades later and had helped convert Emerson into a company that had more than $15 billion in annual revenue.

During Mr. Knight’s 27-year tenure, one of the longest in business history, Emerson achieved its unprecedented record of earnings and dividends growth. He led a company with a dozen divisions to more than 60 businesses. International sales grew from 12% of the total to nearly 40%. He retired in 2000 after 27 years as CEO, remaining chairman until 2004.

Like General Electric’s Jack Welch, with whom he was sometimes compared, Knight was not only long-tenured, but closely identified with a rigorous systems approach to running his company. Among other accomplishments, he was renowned for sustaining Emerson’s remarkable record–43 straight years of earnings increases. At the time, no other New York Stock Exchange company could make that boast. He had a tough act to follow. His predecessor had compiled a record of 16 unbroken years of earnings-per-share gains. Many questioned whether he could maintain the streak.

“In an era of tough global competition, Knight’s performance is amazing.”

In 1987, Emerson Electric was a $5 billion St. Louis-based manufacturer of electrical and electronic products. Twice nominated by Chief Executive readers as a finalist, Knight emerged the unanimous choice of that year’s panel of judges to be the 1987 Chief Executive of the Year. The reason, as summed up by GM’s Roger Smith, a panel member and the previous year’s award recipient, was that in an era of tough global competition, “Knight’s performance is amazing.”

Without much fanfare Emerson, had racked up 29 consecutive years of increased earnings per share (from 1956 to 1986 the growth rate averaged 12.1%), and 30 consecutive years of increased dividends per share—and this with an average return of stockholder’s equity (17.1% to 20% over the last 10 years) well above the S&P average.

But profits alone didn’t assure Knight his laurels. “Consider the kinds of tough, unglamorous businesses he’s operating,” observed Robert W. Lear, a veteran selection committee judge, and former CEO of F&M Schaeffer. “Even good managers would have had to endure downswings due to the economy of foreign competition.” Knight, unlike Lee Iacocca or Jack Welch, was not a household name, but his peers couldn’t help being impressed by his sustained record of performance. In other words, the judges turned not to a celebrity leader, but to a professional’s professional.

Knight himself ascribed his success at Emerson to its “management process,” a system of continuous—some might say relentless—planning, communication and control. The hallmark of this process was the pursuit of what the company called, “best cost”—not the lowest cost but the lowest cost in a total solution systems environment, something which is fairly standard today.

As CEO of Emerson, he was demanding—it was not unusual to have all day Saturday meetings and to be called at home for another drilling. He saw this as a means to meet Emerson’s brand promise: to bring together technology and engineering to create solutions for the benefit of its customers. It didn’t hurt that, at 6’2”, he was tall, with good looks. The former Cornell University football tight end had an intense personality, but was personable and socially charming.

But even admirers sometimes pointed out certain weaknesses. Consistency and financial strength count for a great deal on Wall Street. But Knight’s Emerson paid a price for this consistency: In later years, it wasn’t much of a growth company. It made compressors and washing machine motors. During those 43 years, reluctant to migrate from things electric to things electronic, Emerson almost entirely missed the explosive growth in such fields as semiconductors and telephony. The faster growth occurred near the beginning of his tenure.

Also, having emerged from his father’s management consultancy, Lester B. Knight Associates, before joining Emerson, Knight was said to have indulged the use of consultants. Bain & Co., for example, had embedded itself in Emerson’s management process beyond the original scope of its mandate; perhaps partly as a result of Knight’s close personal relationship with Bain founder, Bill Bain.

Knight’s mentee David Farr succeeded his legendary boss in 2000 after a grueling competition worthy of Jack Welch’s horserace that selected Jeff Immelt in 2001. Although not as prolific as GE, Knight’s system produced other top business leaders such as vice chairman Al Suter and Emerson president Jim Hardimon, who would later be tapped to become president and ultimately CEO of Textron.

The post Charles Knight’s Legacy Lives on at Emerson appeared first on ChiefExecutive.net | Chief Executive magazine.

CEOs, Boards Must Prioritize Cybersecurity and Risk

Chief Executive Magazine -

Much of my time is spent advising CEOs and boards of directors on board composition, and I’m always amazed how so many boards are simply having the wrong conversation. The primary focus and responsibility of a board is governance, and broken down to its essence, governance is all about risk awareness and mitigation.

Sure, boards can (and should) talk about strategy, director independence, board culture, board diversity, board succession, board education, board attendance and the like—all important issues. Committee structures, public policy, procedure refinement, media relations, constituency management, capital allocation and deployment are all great and worthy topics. However, these issues as important as they are, rarely do they pose immediate extinction level threats.

The hot topics at board meetings these days are very heavily skewed toward what I refer to as the double Ds of diversity and digital. Again, worthy topics which clearly need to be addressed, but neither of these issues pose an immediate threat of putting an enterprise out of business in the near-term.

“A data breach will immediately cause a free fall in stock price, taint the brand, call into question the competency of board and C-level leadership, and will result in a guaranteed class action law suit.”

Most boards simply have easy, expected, and often pedestrian conversations – they don’t have the necessary and hard conversations. Average boards do easy well. Great boards do hard well. I often tell boards they can either do hard, or hard will do them. The former is a much better alternative than the latter.

So, what skill gaps are most prevalent in the board room? Almost universally, the glaring blind spot for boards are in the arenas of cybersecurity and risk. These are the two very large elephants in the room, these are the hard issue, these are the issues that can put even the most successful company out of business.

What’s the big deal around cyber risk you ask? For starters, a data breach will immediately cause a free fall in stock price, taint the brand, call into question the competency of board and C-level leadership, and will result in a guaranteed class action law suit. Those are just the obvious outcomes of data breach. Further fall-out from a breach could result in content or IP being held for ransom, confidential and embarrassing information being leaked to the media, systems being shut down, employees or customers being harmed due to exposure of personal information, physical (site security) vulnerabilities being exposed or exploited and the list goes on.

When it comes to physical risk, if the phrases, corporate negligence, wrongful death and corporate manslaughter don’t put the fear of God into you then I’m not sure what will.

Boards should not be lulled into a false sense of security because the company has hired a chief information security officer or a chief risk officer. This is a step in the right direction, but the best boards are expanding to have director seats representing cyber security and risk, as well as forming formal committees to oversee governance issues related matters with regard to cyber and risk.

The reality is when it comes to cybersecurity and risk, it’s not a matter of if, but when and how catastrophic? Boards that do not take the prudent and proper steps in these two areas will leave the company exposed and will pay a very heavy price down the road.

The post CEOs, Boards Must Prioritize Cybersecurity and Risk appeared first on ChiefExecutive.net | Chief Executive magazine.

How We Fixed Our Toxic Culture: The ‘Culture Fix Playbook’

Chief Executive Magazine -

Mary Berner stepped into her role as CEO of Cumulus Media when it was in free fall—and she was tasked with reviving it. Two years later, the company has turned the corner thanks to a relentless focus on improving the culture and motivating employees. Here’s how Mary and the leadership team cut employee turnover in half and made the people of Cumulus a true FORCE to be reckoned with.

The well-worn quote that “culture eats strategy for breakfast” has been proven time and again. And in highly challenged businesses, a positive culture is the breakfast of champions—the high-octane fuel that makes success possible and, without it, failure is almost inevitable. But why do very few business turnaround plans include culture as a defined strategy?

When I took on the challenge of turning around Cumulus Media in October 2015, it was a company in free fall: four straight years of declines in radio listenership, four straight years of revenue declines, three straight years of EBITDA declines, and underperforming acquisitions which had saddled the company with an untenable debt load. We also had lousy systems, crumbling infrastructure and unhappy employees who told us in surveys that the ‘dysfunctional,’ ‘toxic’ and ‘lousy’ culture was the primary reason for the company’s poor performance.

It was clear from the start that Cumulus would not be saved by any of the traditional turnaround quick fixes. The company had already made meaningful cost reductions. With our heavy debt, any transformational M&A was also off the table. The market was not going to help—we started the turnaround just as headwinds in the radio industry started to pick up speed. Fixing Cumulus meant significantly improving basic business performance. The big unknown was whether our demoralized employees would step up to the plate.

With almost 6,000 employees spread across radio stations in 90 markets, there had been almost no investment in rank-and-file employees, and turnover hovered around 50%. The company hadn’t given raises in over 10 years and some working conditions were almost unbelievable. I got a call a few days into my tenure complaining about the snakes that had fallen through the rotting ceiling in one of our offices. In contrast, top management received large and highly visible perks—travel on a private plane, hefty expense accounts and lavish offices.

“CULTURE CHANGE
STARTS AT THE TOP.”

I knew that a disengaged workforce and high employee turnover made reversing the company’s downward spiral extremely difficult. So, I turned to a Culture Fix Playbook I had honed over time, and began to implement six must-do strategies.

1. Define it. You can’t improve your culture without first doing a brutally honest assessment of who you are and then defining who you want to be. Culture change starts at the top, so the leadership team agreed on the few words that described the culture we needed to build to execute our ambitious operational turnaround. FORCE (FOcused, Responsible, Collaborative, and Empowered) became the underpinning of our cultural values framework.

2. Plan it. Your culture plan should be in writing, with key initiatives spelled out and accompanied by targets, deliverables, milestones and key performance indicators. At Cumulus, we live the plan, and measuring cultural progress is a weekly leadership team agenda item.

3. Communicate it. Every employee needs to know five things: where we are, where we are going, why it matters, what’s my role, and what’s in it for me. Every leader needs a direct pipeline to employees. Nothing beats showing up. I have visited almost all of our 90 markets, meeting every employee in small group meetings during which I asked for feedback about our company, the local market and our culture agenda. After each trip, I summarized the themes for follow-up with our leadership team. Word quickly spread that, yes, your feedback is being heard.

4. Amplify it. You must continually take visible actions that amplify your culture change agenda. The more you amplify the faster you will change your culture. To show that every employee’s contribution is critical, we gave out the first merit increase in over a decade—funded in part by selling the corporate plane. All senior leaders and I email or call employees on their service anniversary dates to personally thank them for their contributions. We created the 48-hour rule to address the “pervasive, frustrating and time-sucking black-hole of unresponsiveness from corporate”.

5. Live it. Every employee should be held responsible for walking the talk of cultural values, but it won’t happen unless every leader leads by example. Those who don’t must be shown the door. Any exceptions—even for culture-crusher leaders who are otherwise performing—sends a message that your words about culture are hollow. Employees are given the opportunity to grade each member of the management team and me on our performance in leading the culture change.

6. Refresh it. Cultural change plans must be continually refreshed. Seeing what a positive impact our service anniversary “thank you” notes and calls had, we now welcome new employees with a personal call from a senior leader.

We have been at this for less than two years, but by all measures, our culture has made a 180-degree turn. Employee turnover is down to 24%. Ninety-two percent of our employees say they are proud to work at Cumulus and 91% believe that Cumulus is changing for the better.

Additionally, last month, we announced to shareholders that we had unambiguously turned a corner. Having delivered seven straight quarters of ratings share growth, and six months of across-the-board revenue share gains, Cumulus Media grew both revenue and EBITDA for the first time in three years.

What hasn’t changed is that we are still a resource-starved, over-leveraged company operating in a difficult market. However, as a direct result of our culture fix we showed our employees that we support and value them and they, in turn, are giving us their best effort.

Now, we have a cultural competitive edge sharpened by engaged employees who fiercely believe they are a FORCE to be reckoned with.

The post How We Fixed Our Toxic Culture: The ‘Culture Fix Playbook’ appeared first on ChiefExecutive.net | Chief Executive magazine.

How We Fixed Our Toxic Culture: The “Culture Fix Playbook”

Chief Executive Magazine -

Mary Berner stepped into her role as CEO of Cumulus Media when it was in free fall—and she was tasked with reviving it. Two years later, the company has turned the corner thanks to a relentless focus on improving the culture and motivating employees. Here’s how Mary and the leadership team cut employee turnover in half and made the people of Cumulus a true FORCE to be reckoned with.

The well-worn quote that “culture eats strategy for breakfast” has been proven time and again. And in highly challenged businesses, a positive culture is the breakfast of champions—the high-octane fuel that makes success possible and, without it, failure is almost inevitable. But why do very few business turnaround plans include culture as a defined strategy?

When I took on the challenge of turning around Cumulus Media in October 2015, it was a company in free fall: four straight years of declines in radio listenership, four straight years of revenue declines, three straight years of EBITDA declines, and underperforming acquisitions which had saddled the company with an untenable debt load. We also had lousy systems, crumbling infrastructure and unhappy employees who told us in surveys that the ‘dysfunctional,’ ‘toxic’ and ‘lousy’ culture was the primary reason for the company’s poor performance.

It was clear from the start that Cumulus would not be saved by any of the traditional turnaround quick fixes. The company had already made meaningful cost reductions. With our heavy debt, any transformational M&A was also off the table. The market was not going to help—we started the turnaround just as headwinds in the radio industry started to pick up speed. Fixing Cumulus meant significantly improving basic business performance. The big unknown was whether our demoralized employees would step up to the plate.

With almost 6,000 employees spread across radio stations in 90 markets, there had been almost no investment in rank-and-file employees, and turnover hovered around 50%. The company hadn’t given raises in over 10 years and some working conditions were almost unbelievable. I got a call a few days into my tenure complaining about the snakes that had fallen through the rotting ceiling in one of our offices. In contrast, top management received large and highly visible perks—travel on a private plane, hefty expense accounts and lavish offices.

“CULTURE CHANGE
STARTS AT THE TOP.”

I knew that a disengaged workforce and high employee turnover made reversing the company’s downward spiral extremely difficult. So, I turned to a Culture Fix Playbook I had honed over time, and began to implement six must-do strategies.

1. Define it. You can’t improve your culture without first doing a brutally honest assessment of who you are and then defining who you want to be. Culture change starts at the top, so the leadership team agreed on the few words that described the culture we needed to build to execute our ambitious operational turnaround. FORCE (FOcused, Responsible, Collaborative, and Empowered) became the underpinning of our cultural values framework.

2. Plan it. Your culture plan should be in writing, with key initiatives spelled out and accompanied by targets, deliverables, milestones and key performance indicators. At Cumulus, we live the plan, and measuring cultural progress is a weekly leadership team agenda item.

3. Communicate it. Every employee needs to know five things: where we are, where we are going, why it matters, what’s my role, and what’s in it for me. Every leader needs a direct pipeline to employees. Nothing beats showing up. I have visited almost all of our 90 markets, meeting every employee in small group meetings during which I asked for feedback about our company, the local market and our culture agenda. After each trip, I summarized the themes for follow-up with our leadership team. Word quickly spread that, yes, your feedback is being heard.

4. Amplify it. You must continually take visible actions that amplify your culture change agenda. The more you amplify the faster you will change your culture. To show that every employee’s contribution is critical, we gave out the first merit increase in over a decade—funded in part by selling the corporate plane. All senior leaders and I email or call employees on their service anniversary dates to personally thank them for their contributions. We created the 48-hour rule to address the “pervasive, frustrating and time-sucking black-hole of unresponsiveness from corporate”.

5. Live it. Every employee should be held responsible for walking the talk of cultural values, but it won’t happen unless every leader leads by example. Those who don’t must be shown the door. Any exceptions—even for culture-crusher leaders who are otherwise performing—sends a message that your words about culture are hollow. Employees are given the opportunity to grade each member of the management team and me on our performance in leading the culture change.

6. Refresh it. Cultural change plans must be continually refreshed. Seeing what a positive impact our service anniversary “thank you” notes and calls had, we now welcome new employees with a personal call from a senior leader.

We have been at this for less than two years, but by all measures, our culture has made a 180-degree turn. Employee turnover is down to 24%. Ninety-two percent of our employees say they are proud to work at Cumulus and 91% believe that Cumulus is changing for the better.

Additionally, last month, we announced to shareholders that we had unambiguously turned a corner. Having delivered seven straight quarters of ratings share growth, and six months of across-the-board revenue share gains, Cumulus Media grew both revenue and EBITDA for the first time in three years.

What hasn’t changed is that we are still a resource-starved, over-leveraged company operating in a difficult market. However, as a direct result of our culture fix we showed our employees that we support and value them and they, in turn, are giving us their best effort.

Now, we have a cultural competitive edge sharpened by engaged employees who fiercely believe they are a FORCE to be reckoned with.

The post How We Fixed Our Toxic Culture: The “Culture Fix Playbook” appeared first on ChiefExecutive.net | Chief Executive magazine.

Why Intel Is Working Double Time on its Diversity Goals

Chief Executive Magazine -

Intel CEO Brian Krzanich (L) and TechCrunch moderator Darrell Etherington speak onstage during TechCrunch Disrupt SF 2017.

Global chip maker Intel reached the halfway mark last month in its plan to achieve full representation of women and underrepresented minorities in its U.S. workforce by 2020 through funding, training, hiring and retention. Intel has invested $300 million in its Diversity in Technology Initiative, which the tech giant launched in 2015 in response to the industry’s wide gaps in workforce diversity.

But now, in response to the racially fueled violence in Charlottesville, Va., Intel is working double time on that front after CEO Brian Krzanich announced he wants to fulfill that goal two years ahead of schedule.

The announcement came just one day after Krzanich resigned in protest from President Trump’s American Manufacturing Council on Aug. 14 to “call attention to the serious harm our divided political climate is causing to critical issues.”

Krzanich published the announcement along with Intel’s mid-year diversity report detailing the company’s progress. In his comments, Krzanich pushed his company to move up its deadline to underscore the importance of diversity and inclusion.

“intel has demonstrated a willingness to test different strategies and use data to understand what’s working and what’s not.”

“While these events have been painful to see, I ask each of you to join me in turning this tragedy into action, letting it serve as a reminder of how important it is for each of us to treat others with respect and to contribute to a diverse and inclusive workplace every day,” Krzanich wrote.

Overall, the report indicates that Intel has made great strides in closing its diversity gap. In December 2014, Intel needed 2,300 women and minority employees to achieve full representation. Now, the company needs to hire just 801 employees to fill the gap—a 65% improvement.

“Intel stands out because it has shown real improvement. Its leaders demonstrate a commitment to diversity and inclusion efforts, and it has demonstrated a willingness to test different strategies and use data to understand what’s working and what’s not,” says Carissa Romero, partner in the consulting firm Paradigm, which works with companies to promote inclusion in their organizations.

The report also acknowledges that representation challenges remain at Intel. The company showed some progress (0.3%) in increasing female representation since 2016, but flat or declining year-over-year trends among minorities, including African-Americans and Hispanics. White and Asian males continue to represent more than 90% of mid to senior technical roles.

The technology sector has long suffered from a lack of diversity, and research shows that when innovation and creativity are important, diversity gives organizations an advantage. “The tech industry has a lot of room for improvement when it comes to becoming more diverse and inclusive. Because the tech industry is focused on innovation, diversity is particularly important,” Romero says.

One thing that Intel has done well is that it has taken a data-driven approach to reaching its goals, including by looking at data across the employee life cycle, Romero says. She points to Pinterest and Airbnb as other tech companies that have demonstrated success by taking a data-driven approach to diversity. By analyzing its hiring-funnel data, Airbnb’s data science team doubled the ratio of women on its team. And by setting specific goals, Pinterest’s engineering team increased the diversity of its referral pool.

“(Intel’s) focus on the importance of retention, and its efforts to design strategies to increase retention, will be equally important as its focus on hiring to achieving its goals,” she says.

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Gen. David Petraeus on How to Disagree With the Boss

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General Petraeus (on left) is interviewed by Jeff Cunningham.

In my interview with America’s most decorated war hero, General David Petraeus, now a partner of private equity firm KKR, we discussed his time in the Oval Office and the importance of sticking with principles, even when the recipient doesn’t want to hear it.

The first lesson a senior executive learns is there aren’t many good ways to disagree with the CEO.

For General Petraeus, his entire career prepared him for the moment President Obama asked him to take over the command of U.S. Forces in Afghanistan. The mission was impossible, as a handful of failed predecessors could attest. The strategy was to manage an orderly drawdown of our troops, while leaving behind a stable country in a land run by warlords and militias. It would require the determination of a Spartan warrior with the humanitarian instincts of a Peace Corps volunteer.

“What does an executive do when facing a determined boss or a board that has already made up its mind on a key decision?”

Petraeus graciously accepted the Commander in Chief’s assignment, but not without a warning. He needed to be sure Obama understood what kind of battlefield commander he was getting, and he wanted to spell this out even it made things awkward. It was the only way Petraeus felt he would always be able to give the President unvarnished advice.

For any business executive involved in a crisis, you know the impact of shading the facts or understating challenges, it always ends badly. That was the circumstance Petraeus wanted to avoid.

Here are General Petraeus’ comments from our interview:

“When President Obama first asked me to take on the assignment in Afghanistan, we sat together in the Oval Office to discuss the challenges. I felt very strongly it was important — if he was choosing me to do the job — to know who he was getting.”

So I said in the clearest terms, “Mr. President, you should understand that I will provide my best professional military advice based first on the facts on the ground — and then by the mission you’ve given us, informed by the issues with which you have to deal uniquely.”

To the President, it may have sounded like the kind of thing a General says to a President. But to Petraeus, it was a marker that he would use later to defend his position at a time the President became engaged in the politics of war, as the election of 2012 drew near.

As the war’s unpopularity grew, the President was under pressure by party stalwarts to change things up. He pushed the timetable and level of troop withdrawals and then asked Petraeus if he agreed.

What does an executive do when facing a determined boss or a board that has already made up its mind on a key decision? Do you stand your ground when you know they are wrong or do you capitulate to the powerful, as have legions of executives from Enron to Lehman Brothers?

General Petraeus had carefully studied the facts, as only a Princeton Ph.D. can do, and came to his position without the undue influence of politics. I asked him, how then do you challenge the Commander in Chief?

You do it, as the expression goes, carefully.

In their subsequent Oval Office meeting, when Obama suggested the accelerated drawdown, he waited for the General’s agreement.

Petraeus responded by first listening to the points the President made, including the politics.

Then came the General’s turn to respond, and he said, “I’ll be aware of those matters, but my advice will always be determined by facts on the ground, as I said earlier. 

And If those facts are unchanged (as they are today), so my advice, too, is unchanged. That was an interesting, tense moment.”

Leadership when viewed from close up is a series of bold decisions, often in the face of diverse opinions. If your decision making is guided by a careful study of the facts and you make that clear up front, you are likely to achieve a fair number of victories, including on the battlefield.

For the complete interview, click on the image below:

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GE’s New CEO Is Committed to Furthering Immelt’s Digital Transformation Plan

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Jeff Immelt congratulates John Flannery on his appointment as the new CEO of GE

Filling Jeff Immelt’s shoes is no easier than when Immelt had to fill Jack Welch’s. But John Flannery is already making his own mark in GE history. And right now he is making his mark in digital.

“We have fully embraced the digital industrial transformation, and we believe in its potential to change the world,” TheStreet reported. “For our customers, digital is bringing new levels of innovation and productivity, and they are seeing real, tangible outcomes.”

In fact, Flannery recently appointed two new digital officers to the company: A new chief technology officer and a new cybersecurity officer, both promoted internally.

Flannery took over as CEO at General Electric (GE) on Aug. 1, replacing Immelt, whose departure was announced in June. Immelt will remain as chairman until the end of the year, when Flannery will assume that role, as well.

Flannery’s promotion was reportedly part of a clear succession plan, and he is certainly a familiar face at GE. He started at GE Capital in 1987, right out of the University of Pennsylvania’s Wharton School, and has been with GE ever since. His career has taken him through finance, mergers and acquisitions, and healthcare at the company, as well as leadership roles in the US, Latin America and Asia. Prior to taking over as CEO, he was president and CEO of the $18.3 billion GE Health Care business.

“CEO transitions are inherently risky endeavors, but the succession process at GE appears to have systematically included the best practices available to maximize the odds of John Flannery’s success as the next CEO,” says Deborah Rubin, senior partner and co-head of Board & CEO Services at RHR International.

Jeffrey Immelt did a lot to transform GE during his 16 years at the helm, but Flannery still faces challenges in his new job. In particular, the company’s stock performance has lagged behind the indexes and GE’s competitors. Many observers are looking to Flannery to improve that situation—and investors who have been waiting for a change may not be especially patient.

At the same time, Flannery brings some important strengths to the table. He is certainly familiar with GE. He has international experience and turnaround experience. And at GE Healthcare, he drove important and innovative digital technology initiatives—an area that is seen as a critical part of GE’s future success.

John Flannery is No. 14 on CEO1000 Tracker, Chief Executive and RHR International’s list of CEOs of top 1,000 public/private companies.

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How One Company Positioned Itself for the Ultimate Exit Strategy

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Being bought out by a large company is the exit strategy nonpareil for a growing number of startups today. Negotiated well, buyers typically give sellers a significant equity for their efforts and the founders often get to stick around to run their company under a big corporate umbrella without the stress of ownership.

But successfully positioning a small company isn’t as easy as pioneering an idea or product in the right niche and performing well enough in the marketplace for a big corporation like yours to recognize it needs to buy up the niche company before someone else does.

Ask Mark Ramadan, co-founder of Sir Kensington’s, a small maker of condiments that earlier this year was targeted for acquisition by consumer-packaged-goods titan Unilever. The Dutch giant was searching for niche and growing food brands to supplement mature processed-foods line ranging from Hellmann’s Mayonnaise to Ben & Jerry’s Ice Cream, and the foodie-fueled success of Sir Kensington’s ketchup, mustard and vegan mayonnaise caught Unilever’s eye.

“We’re excited about benefiting from their 100 years of knowledge while remaining independent,” Ramadan told Chief Executive. Unilever executives said “you know what you’re doing, and we’re here to help amplify that and not mess it up.”

“too-easy capital is encouraging an environment of entrepreneurs who have just taken for granted that the money will always be there.”

But the deal was far from serendipitous. Ramadan said he and co-founder Scott Norton had been working strategically toward such an outcome for much of Sir Kensington’s seven years in existence.

Ramadan shared the key aspects of how Sir Kensington’s got itself ready for just such an opportunity. Seeing the preparation through the acquiree’s eyes could help potential buyers like yourself better understand what they’re getting and how to value the deal.

1. Being who you are. Early on, Ramadan said, it was clear that Sir Kensington’s was going to grow because it identified an opportunity and mission in better-for-you food and pursued it single-mindedly.

“We learned that we needed to be very clear to ourselves, our team and the outside world who you are,” Ramadan said. “We’re not just what we make, but we have a mission, values, and a purpose starting with ‘why?’ Why are we showing up to work every day? In our case, it’s not to chase a fad or a trend or make money but to … contribute to our customers’ lives and those of our partners and employees.”

2. Shoestringing as much as possible. Ramadan believes that the too-easy capital being showered on many food startups these days “is encouraging an environment of entrepreneurs who have just taken for granted that the money will always be there. Clearly that is not the case, and at the end of the day you need a strong, real, profitable, growing business.

“There’s no harm in using capital to get a jump start. But you want to use it wisely and have the intent of turning the business into a strong, independent company—and as quickly as you possibly can.”

3. Prioiritizing the team. Not only is Sir Kensington’s about the mission, Ramadan said, but also “who you do it with”—the “team” in the broadest definition, to include suppliers and coo-packers and others as well as employees.

“Do they believe in you, in your chances? Will they let things slide if you need help with payment terms” Are they really attached to the brand and your mission? Then you’ve got something special. Employees and others either stick with you or they don’t.”

4. Identifying a cultural fit. Though Unilever is a giant company, it had proven its ability to allow a quirky founding culture to continue unmolested after acquisition by buying Ben & Jerry’s several years ago—and basically leaving it alone.

“They’ve been able to maintain an activist mind set,” Ramadan said of Ben & Jerry’s progressive political bent, a key part of the brand since Ben Cohen and Jerry Greenfield founded the company in 1978 in Burlington, Vt. “There are good track records of acquisitions by big food companies, and not-so-good ones. Unilever had an excellent track record.”

5. Remaining part of the team. Unilever’s desire to keep on Sir Kensington’s original management “was a big part of why we did the deal in the first place,” Ramadan said. “We were only at the beginning of what we wanted to build, and we didn’t want to leave the business. We’re excited about having more resources and scale, and we’re staying. We get to keep doing what we’re doing and reach more people.”

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Understanding the Impact of Autonomous Vehicles

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German Chancellor Angela Merkel and Dieter Zetsche, Chairman of Daimler AG, look at a Smart Vision EQ Fortwo autonomous electric concept car at the 2017 IAA Frankfurt Auto Show last week.

ASU/Thunderbird professor and Chief Executive contributor Jeff Cunningham brings CEOs up to speed on autonomous vehicle technology—and why it could be a game-changer for their organizations. This is part 2 of 2, click here to read part one.

The advent of autonomous vehicles and driverless cars should give chief executives a rich set of opportunities to think about, but there will be many questions and no easy answers.

If your staff commutes each day, what happens with that extra hour or two? Does it belong to the employee? Does the company subsidize the car service, like Facebook and Google do in Silicon Valley? For Google, it may make sense to provide for its 72,000 employees, but what if you’re Walmart with over 2 million people who need to get to work? It changes the calculus a bit.

Does the workday itself change? Do employees even need to come to the office more than occasionally? And what about services like dropping off children at school, are they something people will want the company to take on? When an employee is laid off or fired, are they corporate orphans, living far from a dense city and unable to access those services? Will that turn company provided autonomous transport into an entitlement like healthcare?

“Autonomy will be the perfect solution for companies that see far ahead, understand technology and make preliminary and smart investments.”

What about the real estate impact? Do you even need a large, flashy headquarters anymore if everyone is ride sharing to multiple locations? The chief executives I know spend less than 25% of their time at headquarters. Why waste all that space on empty offices?

Any company that relies on distribution has to consider the changes as a 100-year storm. Just imagine UPS or Amazon finding out their costs of transport go down by 40 percent, part savings on drivers (assuming Unions will cooperate) and part the maintenance free electric engines. But what of long distance carriers, railroads and airline freight shippers? Do they simply shrink like the proverbial buggy whip business?

Certain jobs will take a big hit, as well. For instance, truck driver is the №1 job in America, including in two of our most populous states, California and Texas. Those are scheduled to disappear early in the era of autonomy.

Perhaps the biggest hurdle, however, is us. We will have to learn like the first time an aircraft pilot turned on the autopilot, to trust a computer to guide us through rush hour traffic at 70 mph.

There will be a litany of disruption in everything that is transported or whose business model is linked to auto usage such as car dealerships, garage mechanics, auto parts, gas stations, accident insurers, revenue from tolls and parking, rest stops and real estate relying on rush hours or short distance commuting, even policing. Police officers spend 40 percent of their day on traffic-related matters.

Parking fines will be an anachronism (New York stands to lose over half a billion a year from parking tickets). Parking lots will shut down, freeing up quite a bit of real estate, and sudden increases in capacity tend to have a negative effect on the value of inventory. In other words, more disruption for people, balance sheets, and the economy.

Autonomy will be the perfect solution for companies that see far ahead, understand technology and make preliminary and smart investments. But it will be the perfect storm for those who hang on to the status quo and wait for the changes to come to them.

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CSX: An Industry Veteran Takes Over

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Hunter Harrison has moved quickly at CSX since he became the CEO of Jacksonville, Florida railroad in March. In just three months, trains were running faster, with improved on-time rates. In a July call with analysts, the company reported efficiency gains of $90 million for the second quarter and earnings of $510 million, an increase of $65 million over last year.

His move was encouraged by a CSX activist investor.

Harrison—who resigned from Canadian Pacific Railway in January to pursue the CSX job—is well known in the industry for increasing efficiency and strengthening the bottom line at a number of railroads over the years. With that history, investors had high expectations for the new CEO: The company’s stock rose significantly, and at the company’s annual meeting in June, investors agreed to an $84 million reimbursement payment to cover compensation Harrison forfeited when leaving Canadian Pacific.

Nevertheless, the company’s stock dropped 5% following the July earnings call. In part, that may have been a matter of Harrison running into the challenges that come with a strong reputation and high investor expectations. On the call, he said that his tenure would be relatively brief: “I’m a short-timer” and an “interim person” at CSX, he said—hardly words of comfort to investors who warmly welcomed his arrival a few months ago.

“The CSX story points out the upsides and risks associated with hiring an external industry expert as CEO,” says Jeff Kirschner, a partner with RHR International. “By investing in a short-term fix instead of planning long-term for CEO succession by developing internal candidates, the company has achieved incremental improvement. It still must address investors’ questions about the future.”

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After the Apology: What’s Next for Equifax CEO Richard Smith?

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Even a perfect apology doesn’t vaccinate a company against fallout from corporate misbehavior. Two weeks after Equifax chairman and CEO Richard F. Smith apologized for a data breach that compromised the private financial information of 143 million people, the stock has plummeted 30%, two executives have been forced out, Congress is investigating, regulators are swarming, class action suits have been filed, and millions of consumers are up in arms.

Wait. Wasn’t a good corporate apology supposed to prevent such dire outcomes? Didn’t the company quickly apologize? Didn’t Smith issue a contrite video apology and then publish an apology in USA Today?

Not even the most immaculate apology (and Smith’s apology was far from ideal) can protect an organization from the consequences of its mistakes. What an apology can do is help the organization repair the relationships it damaged, avoid unnecessary costs, and build the good will that allows the firm to learn from its mistakes and move on. Even perfect apologies have very real limits:

It’s not about what you do. It’s what you do about what you do. Equifax discovered the data breach on July 29th. The company alerted the public on September 7th. The six-week delay was bad enough, but then the company rolled out some slapdash mitigation tools that just made anxious consumers even more anxious. Nor did it help Equifax that in the days after it discovered the breach, three senior executives sold $2 million of stock. The company’s response to the breach became as much of a grievance as the data breach itself.

“The company’s response to the breach became as much of a grievance as the data breach itself.”

You can’t talk your way out of an event you acted your way into. Apologies are a critical part of corporate recovery, but words alone are not enough. The offending corporation must combine the apology with meaningful action. Sometimes that means financial restitution, contributions to charity, payment of big fines, executive resignations, and, in extreme cases, prison sentences.

An effective apology means that all parties get to move on. But not necessarily together. It allows the parties to put the hurt behind them and explore ways to move forward. Sometimes they can move forward together, but that’s not always possible. Sometimes the offense is so glaring that the parties decide to move forward in different directions. So far, chief information officer David Webb and chief security officer Susan Mauldin have retired, effective immediately. In the next few weeks, look for other Equifax executives, including the CEO himself, to announce they are also moving forward.

An apology is not cost-free. It’s just less expensive than the alternatives. Although mistakes are inevitable, a well-timed apology can defuse resentment, heal the parties, reduce litigation, and restore the relationship to a new footing so it sometimes emerges stronger than it was before. Such apologies are always expensive. Equifax skimped on the roll-out of its apology response and will now incur even more expense. The evidence is compelling: however costly, effective corporate apology is less expensive than the alternatives of deny and defend.

John Kador is the author of Effective Apology: Mending Fences, Building Bridges, and Restoring Trust (Berrett-Koehler).

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Why CEOs Shouldn’t Ignore Autonomous Vehicles

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ASU/Thunderbird professor and Chief Executive contributor Jeff Cunningham brings CEOs up to speed on autonomous vehicle technology—and why it could be a game-changer for their organizations. This is part 1 of 2.

Autonomous vehicles — essentially driverless cars — have the potential to turn commuting from what is largely a waste of time to a productive stretch, as well as improve the environment and reduce traffic congestion. But they also could put many of us out of work.

According to the U.S. Census, 130 million of us spend an hour every day commuting to work, mostly by car. That’s 130 million hours, sitting in traffic, amounting to 15,000 years of largely wasted human capital — every day. Even if you ask people who take public transport what work they do while commuting, they say listen to podcasts. Okay.

Yet autonomous vehicles have the potential to allow us to reclaim many of those hours. Imagine, for example, that you are a working mom. You open up your autonomous vehicle app and request a ride to work. (Your employer subsidizes the cost of the service.) Five minutes later, a luxury Mercedes van pulls up. Your children pile in with you until the first stop, when they transfer to a second autonomous vehicle that takes them to school. By this time, you have solved that nagging math problem your son didn’t quite get done last night.

“Chief executives who haven’t thought about the reality of driverless cars because they aren’t widely deployed are making the same mistake a previous generation made when they scoffed at the idea of ubiquitous Wi-fi.”

Now you relax, put on your headphones, and listen to Chopin. Twenty minutes later, you receive a text asking you to join a conference call. The computer screen by your chair is flashing a Powerpoint presentation. (Alas, in this particular future, we haven’t gotten rid of those.)

After the call ends, three of your coworkers climb aboard, and you resume a meeting that began yesterday. It continues until you arrive at the office. Before you leave the van, you hand in a laundry bag and a shopping list so that by the evening, the laundry is done, and the grocery bags are full. The van lets you out at the office. You take a cup of java to go.

Ask yourself, have you spent an hour commuting, or have you just had the most efficient work hour of the day?

The Autonomous Future Has Arrived

Autonomy will change the nature of where, how and when we work, and will also force us to rethink about how we spend our time. It will change the value of resources like the cost of living close to the office. Along the way, it is going to disrupt and create new industries, affect real estate values, and improve the environment.

But for our purposes, in terms of speed of adoption, it’s not coming, it’s happening now. Chief executives who haven’t thought about the reality of driverless cars because they aren’t widely deployed are making the same mistake a previous generation made when they scoffed at the idea of ubiquitous Wi-fi.

According to Internet of Things Journal, a recent study concluded the world market for automotive semiconductors will grow from $30.3 billion in 2015 to $41 billion in 2020. The markets for self-driving auto sensors and cameras are also expected to grow exponentially in just a few years.

The Government Is Here To Help

There are no rich skeptics in Silicon Valley. This mantra is especially true of newer technologies like autonomy. Just ask anyone who invested $10,000 in Uber’s seed round when it was valued at $10 million — and who has seen their investment grow to over $50 million. Those who scoffed are kicking themselves. Or taking taxis.

Savvy companies that get the importance of being a first mover are taking a home brew approach and developing their own proprietary technology, like Mercedes, Uber, Google (Waymo), and Tesla. Others have cut billion-dollar deals to catch up, like General Motors’ recent acquisition of startup Vogt.

It’s happening in commercial transport, too. Uber recently launched a driverless truck division, Otto, garnering national headlines. The company completed its first test drive using driverless technologies, driving autonomously for 120 miles in Colorado with a trailer full of Budweiser.

As we said, of national importance.

Now, the government is getting in on the act.

In May 2017, New York Governor Andrew Cuomo announced the state would start testing autonomous cars on public roads, following similar decisions in Nevada, Florida, California, and Michigan. Then, on September 6, the U.S. House of Representatives unanimously passed the Safely Ensuring Lives Future Deployment in Vehicle Evolution (SELF-DRIVE) Act, which permits an increase in autonomous vehicles to 100,000 within two years from 2,500 today.

Two years from now in government time is tomorrow. Why are they moving so quickly?

First, given their dependence on technology, not human drivers, autonomous vehicles are presumed to be safer. In 2016, according to National Safety Council estimates, 40,000 Americans were killed in car accidents and there are over 100 casualties treated in an emergency room for each death, at a cost of $33 billion in 2012. Fewer accidents, injuries, and deaths would affect costs and change longevity rates — and, consequently, the insurance and healthcare industries.

Still, self-driving vehicles aren’t accident-free, not yet anyway. Artificial intelligence will eventually allow the removal of “safety drivers,” but not immediately. (If you can hail an Uber self-driving car — in Pittsburgh today, and shortly from Waymo and Cruise — you’ll notice they have “safety drivers” sitting in the front seat.)

Second, the government hears the call of energy conservation and climate change. Through ride sharing, we can expect to see as much as a 75 percent reduction in automobile traffic by adopting the Uber concept, and according to the Centre for Integrated Energy Research, up to a 45 percent savings in energy consumption.

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How Financial Literacy Classes are Giving Gas South a Competitive Edge

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A financial literacy class at Gas South

Kevin Greiner is worried that his employees are worried—about their personal finances. So the CEO of Gas South has sprung for employees of the Atlanta-based natural-gas utility to take courses on financial literacy that are being provided by a corporate neighbor, SunTrust Bank.

Research by Atlanta-based SunTrust shows that the average American worker spends 28 hours each month stressing over his or her personal finances, which costs companies about $5,000 per year per employee in lost productivity.

“That means they’re not exactly doing all this worrying on Saturday morning,” Greiner told Chief Executive. “When our employees are worrying about their own finances, they’re unable to serve our customers as effectively as they could.”

“When our employees are worrying about their own finances, they’re unable to serve our customers as effectively as they could.”

Already piloted at more than 40 other Atlanta-area companies, including Home Depot and Delta Airlines, SunTrust’s financial-wellness course is called Momentum onUp—SunTrust’s marketing platform these days is the “onUp Movement,” aimed at giving its customers “financial confidence.” Momentum onUp is a series of classes and online exercises meant to inspire employees to embrace the challenge of understanding and controlling their personal finances, then educating them about how to do it, and equipping them with a range of tools to get a handle on their situations.

First, SunTrust trained 16,000 of its 24,000 employees in Momentum onUp. “And we moved the needle in some very significant ways as far as financial wellness is concerned,” Brian Ford, who heads Momentum onUp, told Chief Executive. “We reduced turnover and increased productivity.”

Ford said that he’s able to get consideration of Momentum onUp on the personal agendas of many CEOs. GasSouth’s Greiner was one CEO who understood viscerally the importance of what SunTrust is trying to accomplish, Ford said.

“We let CEOs like him know what we’re doing, and their eyes light up about it because they know, for example, that their 401(k) programs have low employee-participation rates, and they know the panic that ensues with employees if the company misses a pay day because of some technical glitch. They say, ‘This is an issue in our company.’”

Greiner explained that becoming a “No. 1 place to work” is a major goal for Gas South and that providing “a service around building financial confidence” could help the company achieve its goal.

“You hear about 80% of Americans saying they experience a great deal of financial stress in their lives, and there’s no reason to think  our employee base is any different from that,” Greiner said. And indeed, at Gas South, he says, “There are signs that people are taking loans from their 401(k)s, which gives you an indicator that folks are experiencing unexpected financial challenges and have to dip into their retirement to take care of that. We thought that this is something we ought to offer our employees to help with managing their money.”

Gas South covered the modest cost of launching Momentum onUp at its headquarters and provides up to $200 in financial incentives to each of its 220 employees for finishing the course. Greiner said  he expects 100% participation in Momentum onUp by next spring.

“The feedback has been overwhelmingly positive, and the financial incentive further attracts people,” he said.

Ford said that one reason CEOs are attracted to Momentum onUp is that, while SunTrust teaches the course, as a brand it recedes into the background and helps each company present the materials with its own branding and even its own course name if it chooses.

“CEOs are seeing this as a new way to differentiate themselves and to build trust,” Ford said.

Claiming that “financial wellness” is a rising employee benefit akin to how companies now routinely pay for “physical wellness” benefits, Ford said CEOs are struck by the common-sense appeal of Momentum onUp compared with programs that provide workout benefits or healthy-eating incentives.

“An employee doesn’t know if he’s going to die of a heart attack in three years, but they do know they’re fighting with their spouses and they’re ill-prepared for retirement and their kids are going to college,” Ford said. “So financial wellness is much more on the mind of the employee, but it’s under-served in the workplace.”

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How I Fixed Our Toxic Culture

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The well-worn quote that “culture eats strategy for breakfast” has been proven time and again. And in highly challenged businesses, a positive culture is the breakfast of champions—the high-octane fuel that makes success possible and, without it, failure is almost inevitable. But why do very few business turnaround plans include culture as a defined strategy?

When I took on the challenge of turning around Cumulus Media in October 2015, it was a company in free fall: four straight years of declines in radio listenership, four straight years of revenue declines, three straight years of EBITDA declines, and underperforming acquisitions which had saddled the company with an untenable debt load. We also had lousy systems, crumbling infrastructure and unhappy employees who told us in surveys that the ‘dysfunctional,’ ‘toxic’ and ‘lousy’ culture was the primary reason for the company’s poor performance.

It was clear from the start that Cumulus would not be saved by any of the traditional turnaround quick fixes. The company had already made meaningful cost reductions. With our heavy debt, any transformational M&A was also off the table. The market was not going to help—we started the turnaround just as headwinds in the radio industry started to pick up speed. Fixing Cumulus meant significantly improving basic business performance. The big unknown was whether our demoralized employees would step up to the plate.

With almost 6,000 employees spread across radio stations in 90 markets, there had been almost no investment in rank-and-file employees, and turnover hovered around 50%. The company hadn’t given raises in over 10 years and some working conditions were almost unbelievable. I got a call a few days into my tenure complaining about the snakes that had fallen through the rotting ceiling in one of our offices. In contrast, top management received large and highly visible perks—travel on a private plane, hefty expense accounts and lavish offices.

“Culture change starts at the top.”

I knew that a disengaged workforce and high employee turnover made reversing the company’s downward spiral extremely difficult. So, I turned to a Culture Fix Playbook I had honed over time, and began to implement six must-do strategies.

1. Define it. You can’t improve your culture without first doing a brutally honest assessment of who you are and then defining who you want to be. Culture change starts at the top, so the leadership team agreed on the few words that described the culture we needed to build to execute our ambitious operational turnaround. FORCE (FOcused, Responsible, Collaborative, and Empowered) became the underpinning of our cultural values framework.

2. Plan it. Your culture plan should be in writing, with key initiatives spelled out and accompanied by targets, deliverables, milestones and key performance indicators. At Cumulus, we live the plan, and measuring cultural progress is a weekly leadership team agenda item.

3. Communicate it. Every employee needs to know five things: where we are, where we are going, why it matters, what’s my role, and what’s in it for me. Every leader needs a direct pipeline to employees. Nothing beats showing up. I have visited almost all of our 90 markets, meeting every employee in small group meetings during which I asked for feedback about our company, the local market and our culture agenda. After each trip, I summarized the themes for follow-up with our leadership team. Word quickly spread that, yes, your feedback is being heard.

4. Amplify it. You must continually take visible actions that amplify your culture change agenda. The more you amplify the faster you will change your culture. To show that every employee’s contribution is critical, we gave out the first merit increase in over a decade—funded in part by selling the corporate plane. All senior leaders and I email or call employees on their service anniversary dates to personally thank them for their contributions. We created the 48-hour rule to address the “pervasive, frustrating and time-sucking black-hole of unresponsiveness from corporate”.

5. Live it. Every employee should be held responsible for walking the talk of cultural values, but it won’t happen unless every leader leads by example. Those who don’t must be shown the door. Any exceptions—even for culture-crusher leaders who are otherwise performing—sends a message that your words about culture are hollow. Employees are given the opportunity to grade each member of the management team and me on our performance in leading the culture change.

6. Refresh it. Cultural change plans must be continually refreshed. Seeing what a positive impact our service anniversary “thank you” notes and calls had, we now welcome new employees with a personal call from a senior leader.

We have been at this for less than two years, but by all measures, our culture has made a 180-degree turn. Employee turnover is down to 24%. Ninety-two percent of our employees say they are proud to work at Cumulus and 91% believe that Cumulus is changing for the better.

Additionally, last month, we announced to shareholders that we had unambiguously turned a corner. Having delivered seven straight quarters of ratings share growth, and six months of across-the-board revenue share gains, Cumulus Media grew both revenue and EBITDA for the first time in three years.

What hasn’t changed is that we are still a resource-starved, over-leveraged company operating in a difficult market. However, as a direct result of our culture fix we showed our employees that we support and value them and they, in turn, are giving us their best effort.

Now, we have a cultural competitive edge sharpened by engaged employees who fiercely believe they are a FORCE to be reckoned with.

The post How I Fixed Our Toxic Culture appeared first on ChiefExecutive.net | Chief Executive magazine.

Speeding Change by Slowing Down

Chief Executive Magazine -

I have always believed that the fastest path to the future is found through increasing velocity of change. I don’t believe I’ll get much push-back on that statement, but I’m rather certain I’ll encounter some resistance with my next one: Increasing velocity of change is best accomplished by slowing down.

Most CEOs feel as if they’re in a race to change the future, and they would be correct. By nature, being a CEO is a forward-looking endeavor. In fact, this is so much the case that virtually every aspect of being a chief executive is focused on the future. But what if I told you most CEOs are looking in the wrong direction? What if the fastest path to the future is found looking backward and not forward?

“The truth of the matter is that change always begins with a harsh critique of the past and the present.”

I was recently asked, what would I do differently as a leader if I could turn back time? Oddly enough, this wasn’t a difficult question for me to answer—I live here. I ask myself similar questions every day; what did I learn today? what should I have done differently? Over the years, I have learned that brutal honesty regarding self-reflection is the key to unlocking better performance in the future.

However, most CEOs left to their own devices will often pursue the wrong path to the future. The truth of the matter is that change always begins with a harsh critique of the past and the present. The best CEOs live in this world—they are purpose driven and not ego driven. They know that it’s not about who’s right, but what’s right. They understand that beating their competition to the future is directly tied to their personal, professional, organizational and global levels of awareness. Intellectual acuity is nice, but intellectual honesty is essential.

So, when I was asked the question, what would I do differently? the following is how I answered:

  • I’d surrender faster and replace myself sooner.
  • I’d control less and influence more.
  • I’d spend more time as student and less time as teacher.
  • I’d develop talent earlier and faster.
  • I’d free people from boxes, not place them in boxes.

I eventually did all these things, but I clearly held onto the CEO role for too long. Controlling leaders operate in a world of addition and subtraction, while the calculus of a leader understands that surrender is built on exponential multiplication. Here’s the thing: the purpose of leadership is not to shine the spotlight on yourself, but to unlock the potential of others so they can shine the spotlight on countless more. Control is about power—not leadership. Surrender allows leaders to get out of their own way and focus on adding value to those whom they serve.

What if you could turn back time? You can. You can turn back time anytime you choose to do so. The question is, do you have the patience and the courage it takes to step back as a springboard for leaping forward?

The post Speeding Change by Slowing Down appeared first on ChiefExecutive.net | Chief Executive magazine.

Kroger CEO Rodney McMullen is Focused on Helping Humanity

Chief Executive Magazine -

Rodney McMullen, CEO, Kroger Rodney McMullen, CEO, Kroger

The grocery industry hasn’t had it easy since Amazon got into the game. And price wars, which are a constant problem in the grocery sector, are bearing down heavily on Kroger right now. In fact, the chain’s stock price fell after its most recent earnings call, primarily because of its long-term outlook, despite improved second-quarter sales.

Kroger Chief Executive Rodney McMullen recently said the company would not be able to make its earnings-per-share growth projection of at least 8% and still make what he feels are the right decisions for the long term, according to the Wall Street Journal. He noted that Kroger will be investing in online ordering capabilities, which will dip into profits.

The 134-year-old food chain, which has approximately 2,800 stores nationwide, continues to innovate, however. In October, it will launch the first of a series of “comfort food” restaurants in Union, Ky. Called Kitchen 1883, everything will be made from scratch.

With dining becoming faster and more packaged every day, Kroger is banking on customers looking for a little taste of home outside the home.

“Of the top 1,000 public/private companies, 18, or slightly under 2%,
are in the grocery business,
and all are in the top 500.”

The company is also on a mission to end hunger and food waste with its Zero Hunger Zero Waste program. Through the Kroger Foundation, the chain has donated $10 million and plans to give out 3 billion balanced meals by 2025 and achieve zero waste by 2020.

Kroger has been named to the Dow Jones Sustainability Index for the fifth consecutive year.

Rodney McMullen, CEO of Kroger, No. 20 of the Top 1,000 Public/Private Companies

Chairman (Since Jan 2015) and CEO (Since Jan 2014), Kroger

Previous Position: President and COO

Company start date: 1978

First Position at Company: Stock clerk in a local Kroger grocery store

Age: 55

Education: Bachelors and Masters degree in Accounting from University of Kentucky

The post Kroger CEO Rodney McMullen is Focused on Helping Humanity appeared first on ChiefExecutive.net | Chief Executive magazine.

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