InformationWeek Issue Jan. 27, 2003. CEO Visions 2003: Looking Beyond the Storm www.Informationweek.com. Who is paying federal taxes?. To be in the top 25% of all tax payers you need to earn:. $52,965. To be in the top 50% of all tax payers you need to earn:. $26,415.
CEO Visions 2003: Looking Beyond the Storm
To be in the top 25% of all tax payers you need to earn:
To be in the top 50% of all tax payers you need to earn:
Percentiles Share of AGI % of Fed. Taxes Paid
Top 1% 19.5% 36.2%
Top 5% 34.0% 55.5%
Top 10% 44.9% 66.5%
Top 25% 66.5% 83.5%
Top 50% 86.8% 96.0%
Bottom 50% 13.2% 4.0%
A Systematic Approach
Section II: Company
To understand the important of establishing a
well understood vision as the starting point in
directing, posturing and running a business.
1. Leadership is a key factor in establishing an
effective vision for an organization.
2. While accomplishing this can represent a major challenge, it can be a critically important thing to do to assure the long term success of the organization.
The primary job of a CEO is deal with the long-term viability of the business.
Leaders combine vision with communication that leads to a shared purpose.
A leader sets the vision which is different from being a visionary.
vision, leadership and a hunger to
P. R. Vagelos
Chairman and CEO
His vision was for GE to become the most competitive enterprise on earth.
His wanted to create a small company spirit in a big company body, to build an organization out of an old line industrial company that would be high spirited, more adaptable, and more agile than companies one-fiftieth the size.
He wanted GE to be a company where people dared to try new things—where people felt assured in knowing that only the limits of creativity and drive, their own standards of personal excellence, would be the ceiling on how far and how fast they move.
To be the world leader in providing software applications over a network and hardware designed and priced to serve those needs.
Ellison suggests that the software industry as we know it today will vanish and be replaced by a service industry.
Empower people through great
software, anyplace, any time and
on any device.
Organizations are frequently brought to crisis by
conflicts over basic issues of mission, values, and
Without these basic agreements in place, no
organization is truly viable at least over a long term.
Mission, vision and values are the glue that holds an organization together.
They describe what you're trying to do, how you want to go about it, and where you're headed.
Knowing these things helps to keep your organization on track.
These crucial factors provide a yardstick to measure present performance and plans against aspirations.
VALUES manifest in everything you do as a group, not only your public
programs, but also how you operate. One organization may identify
access as a primary value. When they plan programs, they think
foremost about how to remove the barriers and encourage the widest
possible participation. Another group might value product quality
above all else. When they assign budget priorities, they opt
for expenditures that improve quality above all others.
Articulating values provides everyone with guiding lights, ways of
choosing among competing priorities and guidelines about how people
will work together.
Lou Gerstner caused a stir two months after
becoming IBM’s CEO when he declared at his major
significant press conference that the last
thing IBM needed was to proclaim a grand vision.
Changing IBM's culture was Gerstner's most challenging
Early in his tenure, he told employees, “We've lost $16
billion in the last three years; Fortune magazine says we're a
dinosaur. Don't you think we ought to change? It's pretty
obvious what we're doing isn't working."
Gerstner constantly asked managers, "What are your
customers telling you?
Do you understand your market?
Have you segmented your market?"
He ran IBM like the customer that he used to be.
He believed that five years were required to transform
an enormous, far-flung organization like IBM.
If a company has restructured where do they turn for business performance and financial improvement?
Job experience can easily count more than intuition.
A broad grounding in a particular industry is a prerequisite to successful direction setting.
Visionaries can draw a conceptual roadmap to some imagined future.
The most important thing that I have learned is that the time for a business to go from chump to champ to chump used to be two to three decades and now it is five to seven years.
Former CEO of MCI
1. Achieve Strategic Synergy.
2. Put the Onus on the Owners.
3. Leverage Learning.
4. Extend Externally.
5. Chuck the Organization Chart.
6. Indulge in Information.
7. Make a Bee-line for Benefits.
Grand, abstract visions can be too inspirational. The company may wind up making more poetry than products.
Gerard H. Langeler
President, Mentor Graphics
The Vision to Action
Robert McDermott, USAA Jack Welch, General Electric
David Whitwam, Whirlpool Jeff Bezos, Amazon.com
Peter Lewis, Progressive Corp. Charles Schwab, Schwab & Co.
Michael Dell, Dell Computer Sam Walton, Wal-Mart Stores
Fred Smith, Federal Express Meg Whitman, eBay
Louis Gertsner, IBM Akio Morita, Sony
Lee Kuan Yew, Singapore, Inc.
Robert F. McDermott, Former USAA CEO
An Events Oriented Organization
Key Points Security Quality Asset
of Life Management
Supporting Insurance Consumer Financial
Systems Products Services Services
USAA’s ultimate goal is to manage its customer relationships and not its individual products.
How does this relate to information systems?
So integrated that members lose something if they go elsewhere.
1. Customer Convenient
2. Operator Efficient
3. Cost Effective
1. Provides quality service.
2. Attracts, trains, retains and motivates employees.
3. Aggressively and successfully uses information technology.
4. Provides products and services to address the changing
needs of its customers.
5. Maintains one of the lowest operating expense ratios in
6. Achieves financial results that warrant excellent to superior
7. Makes business, organizational and management changes
on a timely basis.
8. Had an outstanding CEO in General McDermott.
1991 - $6.5 billion in global sales
2001 - $10.3 billion in global sales.
1991 - $353 million in operating profit
2001 - $306 million in operating profit
2002 was a better year.
Room Air Conditioners
* Manufactured for Sears
Whirlpool CorporationHow We Must Work, Think, Plan and Manage to Reach Our Objectives
Quality of Processes and Products
Measurement and Results
1. Stick to its large appliance knitting within the
North American market and fight for increased
market share with the hope that economic factors
would improve its market conditions.
2. Diversify within the North American market.
3. Pursue a global strategy as a conservative player
in multiple global markets.
4. Pursue an aggressive global strategy with the
objective of leading the redefining of the world-
wide large appliance industry.
To shape and lead the major home appliance industry globally, becoming one of the world’s great companies while creating value for shareholders, employees, customers, suppliers, government leaders and communities.
Whirlpool, in its chosen lines of business, will grow with new opportunities and be the leader in an ever-changing global market. We will be driven by our commitment to continuous quality improvement and to exceeding all of our customers’ expectations. We will gain competitive advantage through this, and by building on our existing strengths and developing new competencies. We will be market driven, efficient and profitable. Our success will make Whirlpool a company that worldwide customers, employees and other stakeholders can depend on.
The market of tomorrow will be huge, filled with tough savvy customers with a wide range of preferences and choices. We must fulfill their needs and meet their expectations in quality and service. We must surprise them.
David R. Whitwam
1. Product Technology.
3. Information Systems
Has tried for years to dislodge Whirlpool as No. 1 in the US.
GE spent $100 million to develop a new washer.
Plastic washer basket versus traditional porcelain.
Lost a major battle to win Sears’ washer business.
Gained two percentage points in market share in 2000. (2% is $400 million in a $20 billion market.)
Offered significant purchase rebates.
Operating profits were 12% (low for GE).
President of GE: “Being in this business is painful.”
Sony was born in 1946 when Morita, the oldest son of a rice wine brewer, joined former Japanese navy colleague Masaru Ibuka, a fellow engineer, to start a business repairing radios on a borrowed $500. A significant number of firsts: - Japan’s first transistors in 1954.
- Japan’s first transistor radio in 1955. - First Japanese company to be listed on the NYSE.
- First Japanese company to build a U.S. factory. Morita told engineers to make Walkmans despite the lack of market research. “We don’t believe in market research for a new product unknown to the public. So we never do any.”
Approach emphasis: innovation in design, manufacturing and marketing.
Although no nation's history can ever be reduced to the story of one man, Lee Kuan Yew had such a paramount role in making modem Singapore that an understanding of that country, its society and its business environment cannot be complete without an attempt at understanding Lee himself.
Newspapers serve our democratic society by vigilantly protecting the people’s right to know. Newspapers are the leaders in providing news, editorial comment, information and advertising.
Newspaper Association of America
Increasingly, companies are using
vision statements to explain who they
are, where they are going and why
customers and employees should
follow them there.
To continue to be the world’s best way to pay and be paid for consumers and businesses.
Absolutely, positively overnight!
To make the maximum computing power available to a broad user audience through open technologies.
To be an industry leader, you need vision.
But that’s just the beginning.
You also need the people, products, and relationships to take your vision to market and turn it into a compelling reality.
To provide the best service and lowest fares to the short haul, frequent-flying, point-to-point, non-interlining traveler.
When you have a vision and someone comes to you with some convoluted idea, you should be able to hold it up to the vision and ask: Does it fit? Does it fly? If not, don’t bother with it.
The ingredient that catapulted Southwest to the top of the industry is simple, elegant and well publicized.
Discipline, focus and execution.
Throughout its existence, Southwest has consistently adhered to a clearly defined purpose and a well thought out strategy for accomplishing it.
Do it, try it, fix it!
“I concentrated all along on building the finest retailing company that we possibly could. Period.”
“Creating a huge personal fortune was never a goal of mine.”
Walton built incrementally, step by step from a single store until a rural discount store model popped out as a natural evolutionary step.
If you are not serving the customer or supporting the folks that do then we don’t need you.
2. A charismatic leader is not required for a visionary company.
3. There are no standard core values to be a visionary company.
4. A visionary company is not built on frequent change but a
focus over time on its core ideology.
5. Visionary companies may appear conservative to outsiders but they are not afraid to make bold commitments and/or establish ambitious goals.
6. Only those people who fit well with the core ideology and the demanding standards of a visionary company will find it a great place to work.
7. Visionary companies make some of their best moves by experimentation, trail and error, opportunism and accidentally.
8. Great visionary companies seldom go outside to hire a new CEO.
9. Visionary companies focus primarily on beating themselves.
10. Visionary companies believe they can accomplish major objectives simultaneously without making major negative trade-offs.
11. Visionary companies attained their successful status not so much because they made visionary pronouncements (although they frequently did) but by pursuing a never-ending process of emphasizing the above factors.
Visionary does not mean soft and undisciplined.
Because the visionary companies have such clarity about who they are, what they are about and what they are trying to achieve, they tend to not have much room for people unwilling or unsuited to their demanding standards.
Which results in:
A Great Company
Take a measure of the people at the top of a business and you will get a clearer sense of that company’s past accomplishments and future prospects than from its balance sheet, profitability, cash flow, market share and market capitalization.
People matter most and accounting cannot quantify their value.
The drama of a business lies in the people who make things happen.
Andris Istvan Grof
Walked out of Communist Hungary when he was 20 years old in 1956 and arrived in the US in 1965 with no money and no English capability.
Earned a degree in Chemical Engineering from NYU and a PhD from Cal, Berkeley in 1963.
An intellectual and a visionary who says he doesn’t know the next big thing that will happen in his industry who has achieved phenomenal success but is always afraid.
Worries about fighting complacency and emphasizes measuring failure.
“As a manager, fear is your ally because it gets you out of your comfort zone.”
“Don’t eliminate the fear of what is going to happen if you don’t move.”
A good manager will train people to deal with fear by example, by discussion, by cognitive processes.
It was very difficult to decide to get out of the memory business because we had created the business in the first place. This meant reducing the company in terms of people by one third and closing eight facilities (also 1/3).
These kind of decisions are easier if you can take an outsider’s perspective of the situation. When in doubt, talk to customers who are unhappy with what you are doing.
Current concerns: Intel has become a very big business. It is a world wide business with a phenomenal track record. It grew very rapidly and transformed.
A lot of hard work went into reinventing the PC the right way—finding new uses and finding them any where in the world.
Maintaining the engine of reinvention, of new customers and new uses and keeping that engine going is a major concern.
Which attitude would you support on this subject?
1. There is little hard evidence that companies
with vision statements perform better than
2. At the current rate of change in the business
environment, companies need a clear,
consistent sense of where they are going.