So, you want to be a CEO?

It isn’t always wine, roses, and golden parachutes.  Here’s a cautionary tale from the Times Online: CEO murdered by mob of sacked Indian workers

Lalit Choudhary, 47, the head of the Delhi-based operations of Graziano Transmissioni, an Italian car parts maker, died of head wounds on Monday after being lynched by scores of employees he had dismissed…. Mr Choudhary was holding a meeting with more than 100 former staff to discuss a possible reinstatement deal when the attack occured.

Note that later news reports indicate that many attackers weren’t workers, which explains the senselessness of an attack during reinstatement negotiations. 

As you might imagine, Indian business leaders are worried and outraged (story here).  Of course, the effects on foreign investment are potentially dire.  The outrage comes from the fact that some in the Indian Government refuse to condemn the attack.  In fact, the Labor Minister sees it as a “warning for management”.  A warning to do what…get out of India?

Hat tip: Scott Berkun (here)

The downside of being a celebrity CEO, pol, etc.

It’s all fun and games being famous until you’re caught with a dead girl, live boy, or sudden weight loss.  This little “Problem/Advice” piece from the Financial Times (here) focuses on Steve Jobs’ newly-gaunt physique and its impact on Apple.

Each of the advisors — save the PR guy — have something unexpected to say.  For example, who knew that an unexpected CEO death generally means a stock price increase? 

Interesting, but grim, reading.

Hat tip: Dennis Howlett (here)

Any value in that innovation/annual report study?

While I had my doubts about the innovation and annual reports study — my post here, the study summary here — an off-line commenter pointed out some big cracks in the study’s foundation.  My correspondent’s point was straightforward (my summary below, apologies for my mangling and in-artful prose):

Annual reports and stockholder letters are so heavily vetted by lawyers, auditors, etc. that they are insight-free.  The idea that such documents could yield new information is laughable.

Ouch.  I did, however, try to consider how the authors of the study would respond to that criticism:

Ah, but your point actually supports the validity and reliability of our study.  If the such documents are so heavily vetted, then such future-looking statements should be reliable.

OK…does that really answer the criticism?  Because if the statements in the annual report are so likely to happen, do they represent differentiation in innovation or simply a better performing company?  The industry the study used — on-line banking — has a simple strategy: differentiate by creating (or “fast following”) new and better-performing features, functions, and products.  No on-line bank pursues a low-price strategy, e.g., they’re all low-price.  Therefore, any strong performer in this industry would naturally report more innovation and be looking to the future.  

Also, the lede suggests that this info would be useful to stockholders, but the piece says nothing about relative financial, market share, or stock out-performance.  The measures used are essentially industrial measures: speed of detection, deployment, adoption, implementation.  It is hard to believe that such transparent outperformance wouldn’t be fairly obvious already, and therefore quickly arbitraged away or built into the stock price well before any formal financial reports became public.

I would have been more impressed if this study had looked at an industry with a wider spectrum of possible strategies or if it had looked at relative financial or stock performance.  But then, I’m not sure that then the processed cheese product annual reports and junk mail stockholder communications would have yielded such apparent “insights”.

Using annual reports to predict innovation outcomes

Science Daily regularly comes through with some fascinating — if more than occasionally debatable — research results.  Here’s one from researchers at the University of Minnesota’s Carlson School of Management that highlights clues to innovation speed and effectiveness buried in annual reports (here).  From the story:

…CEOs who focus their attention on future events, as well as external activities, lead their firms to earlier adoption and invention of new technologies and greater and faster development of innovations. In contrast, more attention to internal operations leads to slower detection, adoption and implementation of new technologies.

Apparently it is this simple to see who is focused inward vs. outward:

By counting the number of future oriented words and phrases in letters to shareholders over this time span, they were able to predict the level of innovation by the firm up to five years later.

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