Two companies run by their founders for the last 30 years recently had to replace their CEO’s. Both were forced to make these changes in response to a death and a dramatic decline in shareholder value. In comparing how each of these companies handled the succession planning at the very top of the business we can learn some valuable lessons.

RIM

Faced with rapidly declining share price, lower market share, aggressive competition and shareholder demands both Lazaridis and Balsillie stepped aside in January of 2012 and put their handpicked replacement Thorsten Heins in charge of turning around the fortunes of one of the biggest technology companies in Canada. (In 2007 RIM had a larger market cap than RBC.) This left many business analysts scratching their heads and trying to figure out just who was Thorsten Heins. Hired by RIM in 2007 from Siemens, Heins had three short senior operating positions in RIM’s handheld, product engineering and sales / business development divisions before being appointed as CEO.

Apple

Knowing that their founder had serious health problems, it was clear to everyone, even my son who is a shareholder, that Tim Cook would eventually take over the company when Steve Jobs stepped down from his role as CEO. So to no one’s surprize when Mr. Jobs passed away in 2011, Mr. Cook seamlessly transitioned into the role as CEO of Apple. Hired by Apple in 1998 Mr. Cook is credited with restructuring Apple’s approach to manufacturing and was promoted to the position of COO in 2007. He also was given the CEO position during Mr. Jobs’ medical leaves during the first decade of this century.

Key Learning’s

Mr. Cook had nine years with the company to make significant contributions to the business success before being promoted to COO in 2007. He also had a chance to step into the role as CEO for brief periods before taking on the role on a full time basis.  Mr. Cook’s transition to the top position was accepted both by Apple personnel and the industry analysts that watch the company, and had limited to no effect on the Top Leaders within the organization or the company’s share price.

Succession planning requires organizations to identify their top talent early in their careers and give those individuals the assignments and projects that, when delivered, will make them promotable when the opportunity arises. I bet you that the Board at Apple already is working on who will succeed Mr. Cook and RIM will begin the search for their next CEO if Thorsten cannot execute the turnaround that is required. Who do you think did the best job of planning to succeed in the future?

Mike Dick

A brief exchange on Judge Judy the other day caught my ear and set me off on an illuminating web search.

It seems that after Judy corrected a plaintiff who used the word “conversate”, she was inundated with emails pointing out that “conversate” is in the Merriam Webster dictionary and she was wrong to object to its use. 

A quick Google led to an hour or so wandering through multiple sites running the gamut from learned exchanges between linguists and grammarians about the role of back-formations in the development of language to politically-charged discussions about Ebonics as a legitimate field of study.

Some things I learned along the way:

• A back-formation occurs when a new word is formed by removing a suffix from an earlier word.  An example – “donation” entered the language in the 15th century. It wasn’t until the 19th century that the verb “donate” came into use.

• The vegetable “pea” is a back-formation of “pease” as in “Pease porridge hot; pease porridge cold”.

• “Orientate” is frowned upon in American English, but commonly used in Britain. By the way, it actually means “to face or turn to the east.

• Kids now use “versus” as a verb, as in “The Leafs are versing the Hawks tonight.”

• “Third” started life as “thurd”.

• A favourite pet peeve of mine – “axe” instead of “ask” - is a legitimate pronunciation in the American south.

• It’s great that English continues to evolve, but sometimes it looks and feels like revolution.

• I won’t conversate anytime soon, but maybe I’ll be a bit more tolerant of those who do. 

Janet Carnegie

Are you concerned about the lack of strong leadership and value demonstrated in the boardroom? Are you frustrated with under-utilized expertise sitting at the boardroom table? What about the low level of engagement and poor attendance demonstrated at meetings? You are not alone. Many boards both public and private sector are plagued with problems like these. They are all leading indicators of poor board structure, strategic plan alignment and poor operating discipline which, with a little time and organizational effort on behalf of the Board Chair and CEO or Executive Director, can be fixed easily! In a few short months your organization could reap the benefits of a supportive, strategic and engaged Board of Directors or Trustees!

Restructuring seems like a large endeavour but broken down into key activities like a current board assessment, reviews of  the composition and a number of committees, the committee terms of reference and finally, strategic plan alignment, will produce a plan to align the organization’s mission and board objectives! This type of transformation will satisfy the strategic needs of the board, owners and management of your organization. Engagement, quality of board room discussion, strategic action and finally attendance will all improve. Recently a provincially funded Higher Education institution realized that its Board was not providing the type of value that it could. Though large in numbers in both membership and committees, the board suffered poor attendance and board member engagement. Agenda scope creep, member conflict and low productivity haunted the President and Board Chair to the point that hiring a governance consultant became a necessity before it became too late. Post review and restructuring work and with a dramatic reduction in numbers (both committee and members) a transformation of the board is now underway. One that is more aligned, engaged and contributing value to the school! 

So back to you…If you see the same symptoms mentioned above, the first and most important step is to acquire an independent faciliator to start the review process! Engage your Governance committee with a challenge to renew the Board structure.

Energy Management for small business owners in Ontario…How does one optimize it to improve profitability?

How does a small business owner utilize the provincial government incentives to conserve, time shift and perhaps even generate energy in the Province of Ontario?  Well apparently it’s all here for you! Wind, solar, and even small hydro opportunities are all out there for consumers to consider for offset their electrical demand. Or so that’s how the Ontario Government (Ontario Power Authority) has presented the options to small and medium sized industrial users. I think we all understand however that it’s not exactly that straight forward and one really needs to start with the fundamentals and assess their demand in context of their individual business operations. But what questions do we to ask before we consider implementing changes? For one you need to know your demand profile - is my electrical demand continuous and not interruptible? Is there a energy conservation plan that can be applied to offset my peak high cost periods? Are there energy conversion options (multi fuel) to reduce the type of energy consumption at different periods? Can I load shift to change the pattern of use and save money? Understanding your business energy demand picture is the very first step towards improving costs and taking advantage of the incentives offered by your local utility.   

Here in Ontario the Ontario Power Authority does do a few things right though. The Authority website is a great resource to users to investigate savings opportunities. Start with its home page and scroll through all the different programs available for consumers. Next check out the Hydro One website and review their programs. Some of the programs include:

• FiT and Micro FiT
• ICI OPA Industrial Accelerator Program for grid connected Users   
• Ontario Clean Energy Benefit offered by Hydro One-One
• OPA/Hydro One Audit program incentives

Many owners think electrical demand costs cannot be optimized and that these programs really don’t fit their needs. Not only is that incorrect but many businesses, maybe some of your competitors have taken advantage of the incentives to improve their energy demand and costs. Now that’s something we need to pay attention to!

David Rankin

I recently spotted this on a tee shirt in the gym on a young man working with a trainer.  My first thought was this is the type of “rah rah” slogan used by many sales and marketing sessions to “pump up” a team or a group of would be team leaders. 

After some thought, however, I began to develop a concern that it was, perhaps, designed to build up leaders as the expense of denigrating “followers”, which began to beg the question “can leaders exist without followers?”

In a recent discussion with several like-minded people we spent some time discussing the concept of Leaders, Followers and Frankies (after the Frank of “I did it my way” fame).  I will leave the discussion of Frankies for another time.  We had no real trouble discussing leaders and the various qualities of leadership. 

We explored leadership in the context of “great leaders” and determined that for the most part great leaders fell into two categories;

1. people who were in the right place at the right time and accomplished great things; and

2. people who over a period of time generated a following of people who “believed” in the statements, tenets or beliefs of the leader.

We also concluded that for the most part leaders come and go, have their time in the sun and are replaced by others. 

The conclusion is that without followers, leaders cannot exist. Leaders must find and inspire followers in order to achieve greatness in leadership and like all leaders, followers will come and go with the leaders. 

At most times in our lives we are both leaders and followers.

John Gundy

Hearing about the variety of opinions about the cost of fighter jets for the Canadian Armed Forces, it got me thinking about the idea of using Total Cost of Ownership as a method for calculating the costs of a solution to an organization and comparing options.  (I’m not going to address the topic of defining your needs and identifying solutions that meet those needs – which seems to be at issue here as well.  Perhaps another blog on this soon…)

Before the idea of Total Cost of Ownership (TCO) became popular, businesses putting in new computer solutions didn’t understand and account for the full cost of the solution – it used to be (and still is) easy to think of the cost of a piece of technology as the amount you pay a software vendor for acquiring the product, implementing it and paying annual maintenance. These costs are clear and unambiguous, particularly when you are writing the cheques for them.

What traditionally didn’t get accounted for was a myriad of less obvious costs – the cost of your internal IT team to learn, implement and manage the new system, the costs to train and support staff who use the product, and of course additional infrastructure costs such as backup and archive, computer room footprint, power, AC and UPS (Uninterruptible Power Supply) draw. Some of these costs are fairly obscure to determine (and in fact for things like infrastructure really have to have some sort of cost allocation used).

But here’s the thing: if you don’t consider them, one day you realize that your computer room is full to capacity, or your network is working at maximum capacity or you need more storage at your hosted computer facility, and you have to make a case for why you suddenly need to spend more money.  What’s worse, it’s often on items that nobody really cares about (“No new added functionality? Why should we pay for a new UPS?”) and that fall into categories that, as a CIO, your boss expects you to be on top of – so not only do you need to ask for money, you look like you aren’t doing your job.

So – back to the F-35 jets.  What costs should be included? First, you want to include any cost that is incremental over what you have today.  You have the cost of the planes, of course.  And direct ongoing costs – maintenance, training for pilots and ground crew. You have to consider some operating costs – for example, if these planes use fuel at a faster rate that the old ones, you have to add in the extra fuel.  If you need to rebuild hangars or runways to accommodate them, you have to account for that. However, if the total number of pilots doesn’t change (i.e., they are just going to stop flying old planes and start flying the new ones), you don’t have to account for them. 

My opinion is that you have to be thoughtful but use common sense. What’s really important here is to be able to compare options on equal footing (so accounting for all the costs for each option to provide a fully implemented solution), and then once you make the decision of the solution to be implemented, make sure you know the resources you need to implement and run the solution – money, people’s time or use of organizational facilities. Oh yeah – and, as always, make sure your colleagues understand your decisions and your analysis so they aren’t surprised down the line.  Forgetting to do that is the surest way to have support for your project disappear if suddenly the price goes from $9 billion to $16 billion.

Christy DeMont

I recently bought a new car. I decided that after having driven practical (and frankly boring) cars all my life, I would buy a car that’s as much a toy as it is a vehicle. There is one aspect of it that I was warned could be a bit “tricky”. So when I picked up the car, the trunk contained 2 boxes with various parts in them. I opened the boxes and could figure out what was in one of them, but the other baffled me, and of course contained no instructions. So I dutifully watched the DVD that came with the vehicle and these parts were never shown or mentioned – not helpful. I found some YouTube videos that again ignored the parts. Finally I found a user discussion group where someone actually explained what they were for – note this was a user, not the manufacturer.

I remember putting toys together for my children one year before Christmas. The one that Santa was giving to my son had very clear instructions – do step 1 then step 2 etc. The one for my daughter had instructions that were written in design language – “attach the flange to the housing”. What does that even mean?

It is so important to keep the user in mind when communicating, whether it’s how to assemble something or any other type of message. It’s no different than understanding your audience when preparing a presentation. The message, no matter how interesting or important, will be lost if it is not delivered in a way that is meaningful for the listener or reader.

Sheila Hamilton

We all support substituting sustainable electricity sources for fossil fired fuel power plants. It makes sense for our children’s future. We chew the air in the GTA, you cannot really breathe it.

A recent article in the Globe & Mail (Gwyn Morgan, April 30^th , admittedly an energy patch guy) cites the numerous, expensive government policy initiatives in Europe and North America which have been scaled back or dropped due to ineffective results. Note this is about results, not the substitution notion. Whether in Spain or Germany, the USA or Ontario; grants, feed-in-tariffs, local content rules and other subsidies all have failed as yet to significantly drive more sustained rates of substitution, more permanent jobs and almost certainly ensured higher costs of electricity for both residential and business users.

Did governments try too hard to drive jobs as well as get their green merit badge, all at the same time, only to distort an important technology shift and perhaps in fact slow the uptake in sustainable electricity resources?  If we’re to convert to electrically powered vehicles to drastically reduce dependence on the internal combustion engine (and get back to breathable air) the price of electricity has to make that conversion feasible. We are market driven animals after all.  And we still demand the conversion to sustainable  energy sources in North America and abroad. It can be done with intelligent government policy not bandwagon thinking in developed and developing jurisdictions. As it’s a long term conversion project, the policies and programs have to make sense through periods of both economic adversity and prosperity in order to allow continuity of planning.  Not easy but doable.

John Bielby

I suggest that it is time for a change at your utility to make a meaningful electric conservation offer.  Here are 3 examples;

1. Retrofitting ALL forced air furnaces with an ECM electric motor will cost the homeowner about $600 not $6000 - and will reduce the furnaces electricity consumption by some 200%. If the homeowner leaves the circulating fan on, the savings are about doubled.
2. Replacing ALL old refrigerators pre 1995 with 20 cu ft Energy Star models at a cost of about $600 will reduce electrical consumption by over 400%.
3. For the some 600k, mostly rural Ontario homeowners, with electric baseboard heat from the Ontario Hydro era, add a ductless, – 20C, air source heat pump for about $3500 to $4000 to reduce the homeowners electrical heating consumption by a half or more .

If the utility up-fronted the capital costs, the home owner can repay the capital cost on their hydro bill from a portion of the savings. The utility, through the OEB process, can make its business good by a distribution rate increase based on the net conservation savings. Home owners save, the utility saves, OPG saves and the spiral of rate increases might slow.

We are overdue for a change at Ontario utilities – Get serious about Conservation!

 
Bob Fisher