POD announcement--NBC

An Interview with Sid Hopkins

Pete Canalichio interviews Mary Remoue

2010

Here we are a month into 2010 and many of us have already broken our New Year’s resolutions. You know what I am talking about, the ones we made in late December or early January when we promised we would get to the gym at least three times per week. We told ourselves we would eat more fruits and vegetables and stay away from processed foods – the kind with all that high fructose corn syrup, saturated fat and carbohydrate content. And we really would have kept those promises to ourselves, but it has been so damn cold outside and there were all those college bowl and NFL playoff games on TV that had to be watched. Everyone knows that when you are watching football, you’ve got to have the right kind of munchies to eat and plenty of beer to wash them down. Right? Oh well, maybe we can get back on track when the weather is warmer…

When you’re in your 20s or 30s, you can get away with making excuses about being young and not having to worry about all that healthy lifestyle stuff until later. But for many of us in our 40s and beyond, later is now and if we are really honest with ourselves, we’ve run out of time for excuses and we’ve seen too many of our family, friends, or friends of friends suffer from an “early” case of cancer, heart attack or stroke. Many are left incapacitated, or worse. Western medicine makes it pretty easy for us to be slackers. The obesity standards get a little more tolerant each year and so do the testing tables for cholesterol, blood sugar and blood pressure. Before, there was either “normal” or “obese”; now you become “overweight” before you become “obese.” The same thing goes with those testing tables. We now have normal, high normal and high. And when your test results finally do come back high because you are 20–30 lbs. overweight, you have a host of medicines to regulate you back to normal.

There’s just one problem with all of that. The added weight, lack of exercise and improper diet affect a whole lot more than your cholesterol, blood sugar and blood pressure. And those pills that help get you back on track have a tremendous number of potential side effects. They may help you keep your heart healthier, but what about what they are doing to your other organs?

Unfortunately, there’s no free lunch. We intrinsically know that, don’t we? Still, it is easier to make excuses until we get a small scare, like when a friend of a friend or a distant relative dies way too early. Hopefully then we start to make a permanent change to our diet and exercise. If not, we may persist in our bad habits until things hit a little closer to home. Maybe we lose a loved one or suffer a “minor” heart attack, as if there were such a thing.

This year I was due for my first colonoscopy. You see, my dad died of colon cancer. They say he didn’t die early, so I didn’t have to get my test early. Of course, I disagree and wish he were still on this earth to offer me advice and to keep my mom company. But that is another story. In any case, I have made it a point throughout my entire life to tell my doctors that my dad died from colon cancer and I’ve been awaiting the day when I would have to have one of them examine my colon to ensure it was free of polyps—or God forbid, something worse. For most of us, the prep for a colonoscopy is much more uncomfortable than the examination itself. For those of you who have yet to have one, I won’t go into detail as to why, just in case it may dissuade you from having the recommended test. And for those of you who have had the pleasure, there really isn’t much more to say, is there? Fortunately for me, my test came back clean and I am good to go until the next time. And despite a broken healthcare system in this country, my insurance covered the colonoscopy. I guess it must be financially beneficial for insurance companies to pay for us to get our colons examined.

In addition to cancer, my dad suffered from heart disease. He had a triple bypass in his 60s, which enabled him to live another 10 years. As a result, I have been wary of high cholesterol my whole life and have wondered if my arteries were clogging despite all my best efforts to keep them clear. Without warning, my cholesterol started creeping up about fifteen years ago. By the time it hit 200, the normal range went to 220, so I was ok. I committed to eating healthier and exercising more. Nevertheless, it crept up to 225. I got pretty worried until I found out that my cholesterol wasn’t considered high. It was only “high normal” so I was ok, sort of. I discussed a plan with my doctor and we both agreed if my cholesterol didn’t go down on my next test, I would begin taking a drug called a statin to reduce it.

Instead of going down, my next test came in at 247 and I had to begin taking the drug. After three months my cholesterol went down from high to high normal. While I felt better about my cholesterol, I was worried about what the drug was doing to my liver. I realized during this period when my cholesterol was creeping up that my weight had crept up as well. I had gained 20 lbs. Could 20 lbs. make that much difference? I guess so. Last year I got serious about losing weight and managed to shed the 20 lbs. Not surprisingly, my cholesterol is back under 200. While my doctor and I were pleased with my results, he prescribed a calcium scan to determine whether any build-up had accumulated in my arteries.

Given my dad’s track record, I was a bit worried. To check for calcium, they use an MRI machine. As I lay motionless inside that big circular magnet getting my arteries checked, I wondered if the weight, lack of exercise, bad food and bad genes had finally caught up with me. Before I knew it the technician said the test was over and I would hear from my doctor in two days with the results. I had 0 percent build-up. My arteries were clear, the best I could have hoped for. I had dodged another bullet, for now. Surprisingly, my medical insurance did not cover this test. Go figure. What if my arteries had become blocked, but I couldn’t afford to take the calcium scan to find out? It seems a bit counterintuitive. In any case, I am thankful that I am going into the second half of my life in relatively good shape and at an optimum weight. If I stick to a healthy lifestyle, I might even live a few years more than my dad.

If you are still reading this blog, you are probably wondering why I chose to title it the way I did and what the relevance is. If you are like me, you have seen a host of managers make the same kinds of poor decisions with their companies that many of us have made with our bodies. Weak management is pervasive. Very few managers are choosing to invest in their employees or to take a long-term approach to decision making. Like our bad habits with regard to eating and exercising, managers have cut corners in the workplace and lowered their standards. As a result, our global economy has stopped working properly, just like our bodies. Our financial system is in intensive care and our real estate market needs a defibrillator to revive it.

I remember not too long ago visiting my doctor for a routine test. Instead of the nurse asking me to stand on the scale to get weighed, she asked me what my weight was. I can only assume that the scale in the office was broken. How many of you would have answered the nurse honestly about your weight if you were in my shoes? How different is it to be asked by a lending institution to provide a “stated income” when applying for a home loan? No wonder our economy is in a state of emergency! Instead of improving our practices when the results of our “business tests” were out of the normal range, we looked the other way—or worse yet, we chose not to have our practices tested at all.

For those who have followed good business practices over the last 20 years or longer, I say, “Well done.” For the rest of us, let us learn from this economic crisis and resolve to manage our companies with an unwavering commitment toward long-term health and prosperity. And like our own bodies, maybe our companies will live longer than some of the giants of industry who ignored the warning signs for too long and died an untimely death.

Five strategies to increase the value of your brand

An increase in brand value can help drive revenue growth through higher consumer demand, improve gross margin by commanding a premium on prices and reduce business costs through improved supplier agreements. One method of valuing a brand is to take the market value of a company (total shares of stock outstanding multiplied by the company stock price) and subtract the value of its assets (found on the balance sheet). Using this methodology, Coca-Cola ranks as one of the world’s most valuable brands. Consumers choose Coca-Cola billions of times per day because of its authenticity, refreshment, originality, consistency and taste. The more The Coca-Cola Company can improve consumer demand for its brands, the more consumers will consume their products. For Coca-Cola, more consumption translates into more revenue and more profit.

So here are my five strategies to improve your brand:

• Improve your understanding of what your brand means. Taking our first example, there are a variety of reasons why people choose to drink Coke. Many people drink Coke because of the way they are perceived by others. It has a certain “coolness” factor. Others drink Coke because they know they will gain social acceptance. Some drink Coke for the increase in energy it gives them. Still others drink Coke for its refreshment and great taste. By keeping abreast of how consumers perceive their brands, Coke continuously meets their consumers’ expectations. This enables the Coca-Cola brand to maintain tremendous brand value.
• Innovate your products to meet your consumers’ unknown needs. When Nintendo launched the Wii, they revolutionized the way people play video games. Nintendo created a product consumers hadn’t even dreamt of. In so doing, Nintendo not only delighted avid video game players they also converted millions who never played video games into Wii players. With games like Wii Sport and Wii Fit that enhance both skills and fitness, Nintendo eliminated the inactive aspect of video games – one of its biggest negative perceptions – and, in turn, permitted consumers hours of guiltless entertainment. Talk about a brand value builder!
• Stay solution focused. Product engineers and marketers are notorious for creating all kinds of new features for existing products. If the features, however, don’t provide a specific benefit that the consumer needs, or are not intuitive, those features may end up hurting the brand. Remember how hard it used to be to program a VCR? Conversely, a feature that meets a need can provide tremendous value to a brand. When the makers of Sharpie finally developed a retractable Sharpie (the feature) that could be operated with one hand and not dry out (the benefits), they delighted millions of brand loyalists enhancing their already high brand scores.
• Pay attention to the details. There is nothing more exciting for consumers than when they buy a product that exceeds their expectations. That is why I love driving my Acura MDX. It is an SUV that drives like a car and offers so much more. The instrument panel is simple to read and easy on the eyes making driving safe and enjoyable. The four-wheel drive keeps me moving in all types of terrain. The blue-tooth audio provides perfect communication clarity. The vehicle seats seven comfortably or the rear two rows of seats can be folded down to haul as much stuff as a pickup truck. I could go on and on about my MDX, but more than anything it is the attention to detail put into each of these features that makes me thrilled to be an Acura owner.
• Be consistent and reliable. In thousands of restaurants all around the world, people consume McDonald’s burgers and fries millions of times a day. The fries they eat in the morning taste just like those they eat at night. The Big Mac they buy in Beijing is delivered to them in the same amount of time as the one they buy in Baton Rouge. The menu board, the restrooms and the seating area look the same in every restaurant. For this consumers reward McDonald’s with their patronage more than any other fast food restaurant. And, while McDonald’s food usually does not rank first in taste, they consistently rank first in market share and revenue. When consumers can trust that their brand experience will be the same every time, they will value that brand more and more over time.
• Stay passionate – Ok, I lied. There are six strategies for building brand value. The last strategy is to let your passion shine through in everything you do. Consumers love brands whose owners are as passionate as they are. That “never rest on your laurels” attitude translates into exciting and superior products that continue to wow and delight consumers. One of the reasons people love the Apple brand so much is because of the passion expressed by Apple employees. Despite being the little guy, Apple enjoys going toe-to-toe with Microsoft. As a consequence Mac users revel in the controversy. As a result, there is no other computer or mobile technology brand as loved as Apple.

Jury Acquits Bear Stearns Hedge Fund Managers

In a stunning blow to the prosecution, jurors took only nine hours to acquit two former Wall Street fund managers in the only major criminal case to emerge from the mortgage meltdown and financial crisis. According to the Los Angeles Times (November 11, 2009) Ralph Cioffi and Matthew Tannin, former mortgage-bond hedge fund managers at Bearn Stearns, were found not guilty of securities fraud. Federal prosecutors who had hoped to pin Cioffi and Tannin as the perpetrators in the downfall of Bear Stearns (now owned by JP Morgan Chase) and set a precedent against other Wall Street bankers were left shaking their heads at both the jurors’ decision and the pace in which it came.

At the heart of the case were the defendants' e-mails, including one in which Tannin said the subprime market "looks pretty damn ugly." Tannin went further to say, "There is simply no way for us to make money -- ever." The prosecution, which hung their case on incriminating emails like these, also showed the jurors emails written days after where both men informed their management that the hedge fund, in fact, could survive. Nevertheless, jurors said the evidence wasn't strong enough and that Cioffi and Tannin were doing everything they could to keep the hedge fund above water. Juror Aram Hong noted, "Just because you're the captain of a ship and it gets hit doesn't mean you should be blamed."

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With the acquittal of Cioffi and Tannin, federal prosecutors must now determine what if anything they can do to salvage the remainder of their Wall Street cases. Without corroborating data or witnesses to support e-mail evidence, similar cases if tried would likely be found without merit. The fact is America’s investment banking firms were built on strict discipline, sound judgment and prudent risk management. It is these principles that enabled institutions like Bear Stearns and Lehman Brothers to grow and be profitable for more than eighty years. There is no evidence to suggest that fund managers en mass began ignoring their firms’ established trading guidelines or purposefully strayed beyond the boundaries of proper funds management. The truth is that no one could predict the 2008 implosion in the financial markets, nor is any one person responsible for its occurrence. Often times events that occur cannot be foreseen or remedied with our current set of tools or knowledge. When I flew for the US Navy, we used to say that our flight procedures were written in blood. This was because people often died from aircraft malfunctions before proper emergency procedures could be written. I learned one harrowing night after I nearly lost my airplane and crew from an engine fire that I could not extinguish – after properly implementing the existing emergency procedures – exactly what "written in blood" meant. It turns out one of my aircraft’s four engines suffered a catastrophic oil loss which ignited a fire in its turbine section. Fortunately, my crew and I survived the emergency and a new procedure was written for this particular malfunction.

As we consider the financial crisis of 2008, the bigger story emerging might be just how damaging this acquittal could be to the Obama administration. With attempts to pin the blame for the financial crisis on failed Bush policies and scores of "rogue" Wall Street traders, the jurors’ decision that selective e-mail evidence not only was inconclusive, but arguably supportive to the defense, makes the Obama case against Bush’s policies hollow and without merit. With Democratic Party loses for governor in Virginia and New Jersey, the Obama administration can hardly absorb another political setback as it enters the 2010 mid-term elections.

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With this acquittal of Cioffi and Tannin, perhaps we should stop placing blame for the financial meltdown and subsequent recession on the prior administration or on Wall Street and begin to focus our limited resources on finding ways to emerge from this crisis smarter and stronger. Having proper safety procedures in place to preclude banks and insurance companies from taking on too much risky debt is a great place to start.

Maurice Greenberg, the former CEO of American Insurance Group...

Former AIG head begins anew with C.V. Starr:

According to the NY Times (October 27, 2009), Maurice Greenberg, the former CEO of American Insurance Group (AIG) has been quietly hiring employees from AIG to fill posts at his new insurance company, C.V. Starr. Greenberg, who built AIG over the past four decades into the world's largest insurance company with $1 trillion in assets, was ousted in 2005 over an accounting scandal brought about by a complaint issued by Eliot Spitzer, former NY Attorney General. Greenberg maintained his innocence throughout the investigation and all criminal charges were subsequently dropped. Since then Greenberg has been battling AIG over stock in which they both laid claim. AIG in the meantime suffered staggering losses from the trading of complex derivatives by its financial products unit and was on the verge of insolvency last year when the federal government decided to step in and save it. With the demise of AIG Greenberg lost nearly all of his life's savings.

This past summer Greenberg finally won his suit against AIG and reclaimed the rights to $4.3 billion in retirement funds. Instead of using his money to live out his golden years, Greenberg who is 84 has been redirecting the funds to recreate another AIG. With the Treasury recently setting employee compensation limits on companies which have received bailout money, Greenberg is now in an even stronger position to lure away AIG's best talent to help run C.V. Starr. As the largest investor in AIG, the government (and taxpayers) stand to lose billions if AIG fails to recover. Greenberg, who is AIG's second largest shareholder, is similarly exposed. For this reason, it doesn't make sense for Greenberg to want to hurt his former employer.

One can't help but admire the resiliency of Greenberg to start over at such a late age. What motivates an eighty-four-year-old billionaire to do such a thing? Clearly it is not the money. There are arguably other driving factors. Perhaps Greenberg feels like he has something to prove to those who claimed he was responsible for the demise of AIG. No longer at the helm, Greenberg cannot direct AIG back to profitability. Moreover with the government calling the shots on how AIG should be run, Greenberg would likely feel suffocated by the oversight if given the opportunity. With C.V. Starr, Greenberg can demonstrate to those who doubted and accused him that he still has what it takes and had he been at the helm last year, AIG would have weathered the storm. And why shouldn't we expect Greenberg to hire his former employees? Who in the business world doesn't invoke this strategy whenever they are able? Going with loyal proven performers just makes good business sense, especially when they can be picked up at bargain prices.

Greenberg may be building C.V. Starr to silence his critics, but I don't think so. I believe Greenberg is building C.V. Starr because that is what he was born to do. Greenberg knows insurance undoubtedly better than anyone else on the planet. Nothing energizes him more than to discover new ways to unlock value by mitigating the risk of others. Had he not been ousted from AIG, he arguably would be there today fulfilling his life's calling. Recreating AIG through C.V. Starr is not an option for Greenberg. Rather, it is simply part of his life's work. Incidentally, C.V. Starr is named after AIG's founder, Cornelius Vander Starr who hand-picked Greenberg in 1968 as his successor.

Pete Canalichio