Reading in the press over recent daysof the firing of Olympus CEO Michael Woodford after just two weeks in the role reinforced my view that executive life can be hellish (see my earlier post Executive life – nasty, brutish and short?). In the case of Woodford, this is clearly something of an extreme situation (now involving the FBI). However, executive tenure certainly doesn’t get much more bestial than this.
Lloyds CEO Antonio Horto-Osorio leave of absence, reportedly suffering from exhaustion & stress since his recent appointment in March this year, was a different matter and one that brought back painful memories. Back in my early career and flush with the success that I had running my first two businesses (as a distributor of high end Japanese products), I took on a third role which involved crossing the divide and working for a Japanese company in consumer electronics. At first success continued apace and then I fell foul of circumstances, the sin of hubris and a lack of political skills, before the stress took its toll.
In the UK we kept revenues growing ever upwards supported by continuing brand building investment to which our Japanese parent company had committed. Unfortunately, success in the intensely competitive US market eluded them, the losses there mounted and my investment was sacrificed. Now, to be honest, there were aspects of the role that I had neglected (or didn’t recognise as important, believing that my rudimentary personal toolkit could meet all situations). I increased my already long hours still further until I was notching up 90 hour / 7 day weeks whilst trying to fight what were intensely political battles with head-on pugnacity (believing that logic and rationality would prevail). Late one evening, when I had crawled home exhausted yet again, I was interrupted by a call from head office in Tokyo demanding that I immediately attend to a problem that had arisen. I cannot remember the exact words I used but the gentle art of politics certainly eluded me that night. I can remember the phone went down and I turned to the scotch. I suffered what I can only describe as a breakdown and couldn’t work for weeks; something had to give and shortly after returning to the office I was fired.
Once the disbelief and anger phases had passed (God knows what I was like to my family during these weeks) the fog of tiredness and frustration lifted and I took stock. Along with undoubted strengths, I realised there were some significant weaknesses that I had to overcome. I had clearly moved up too far, too fast and still had much to learn in the arts of management and business. I started the job search full of enthusiasm seeking positions in other industries, confident that the skills and experience I had were transferable. The next period was one of the happiest I had experienced for many years; the research and the job hunt were full time (but flexible) and I revelled in the time I had for exercise It took me six months to find the right role, a level down (as marketing director) in the UK arm of a very large US industrial corporation where my experience was welcomed.
As soon as I joined my new company, I set about the process of filling the gaps in my skill set that I had identified. My love of reading and learning made the task of acquiring these skills fun rather than a chore. Having moved into the company as an outsider I also found my task easier as, when applying some new piece of knowledge or technique, no-one realised I was feeling my way along and accepted me as the expert. We were at the time a World #3 behind GE & Philips and relatively new to the UK market, whereas competition was long established, powerful and traditional but carrying the baggage of old mindsets and flawed strategies. By a combination of detailed analysis, careful positioning and concentration on a tightly focused distribution strategy we were able to grow rapidly, doubling share in our major market.
A few years later I was promoted to run the UK operation and success continued for a couple of more years whilst we concentrated on the quality of our internal systems and processes. However, by this time we were finding it increasingly difficult to compete with competition who were driving down the costs of production, feeding through into ever lower market pricing. The business was already global with 90% of our UK production exported to the rest of the World and 85% of the ranges we sold in the UK being imported from our overseas factories. Whilst our UK production facilities were new and efficient, many of the overseas facilities we had to rely upon were old, unproductive and located in European countries with impossible labour laws (something we have imported since!). Slowly and inexorably, our profits in the UK declined as I had to suffer far higher prices on our imports than competition. I found myself under increasing attack for failing to overcome this structural problem.
Now having been educated to a very high standard by my employers (by the best US business schools) I was not short of an analysis of the situation; nor a prognosis. Faced with the news that I was to face the company president on an forthcoming UK visit, I set about a robust analysis of the situation facing the entire company. For those of you who are interested, my model was Michael Porter’s Five Forces and what emerged was the fact, clear as day, that our global industry was doomed to low profitability (for reasons too complex to go into here). Unless our ultimate parent company (a US telops giant) was prepared to invest heavily in new and fewer production facilities across the Globe, we were doomed. On the day of my meeting, the US president sat quietly and asked pertinent questions, whilst my boss (the European president) turned puce and kept attempting to move me onto what I was going to do to meet the UK budget that year. At the end, big US boss thanked me for the presentation and asked me to send him my full analysis. Well, my name in Europe was shit from then on and I was accused of ‘intellectual arrogance’ and ‘executive burnout’. What happened? Profits continued to decline and 18 months later the US parent put the whole $2bn business on the blocks. By then I had been ‘forgiven’ and moved to European headquarters in Switzerland. When the sale finally went through, I lasted 10 days before ‘being let go’ by the new owners. Joy returned to my life.
So, whilst my burnout with the Japanese was real, as were my shortcomings (and the ulcers) the next outcome was far from the diagnosis my colleagues made at the time (rarely had I been so clear sighted). The situation had elements of pure farce akin to the tragedy being played out across Europe today. The entire senior European management frantically attempted to prove that the situation could be turned around if only everyone pushed harder. Moral; when you’re in an existential crisis, face facts, learn afresh and do the right things (even if they are unpopular); don’t just keep repeating the same things and expecting a different outcome.
This period of my career had been a rich learning experience. From the Japanese I learnt the skill of attention to detail plus the need to recognise and manage stress. From then on I attempted to minimise my own stress and trained my team to do likewise. From the Americans I discovered a great commitment to learning and development from the very top and owe them for a fabulous management education. But the great pity was that offsetting these ideals and learning were the layers of middle executives serving out their time, defending their turf and resisting change at all costs. What a waste of investment, training, careers and shareholder return. More soon.