Monday, March 29, 2010

The Fish Stinks From the Head

That's an excellent Chinese saying that is much more elegant than what I used to say (*&^! flows downhill). I now use the Chinese adage when referring to CEOs and the effects, both positive and negative, they have on their organizations. Whatever he/she does will affect the culture, all employees, and ultimately, I believe, shareholder value. By the way, this applies to both start-ups and large companies.

A couple of examples come to mind. One friend of mine was at a company in which the investors wanted to terminate the CEO. Most CEOs (and execs of all types) "want to eat lunch in this town again" and therefore, leave quietly. Not so with this guy. He fought it and stayed. In case you're wondering, that means that the investors caved. Once that happened, it was clear that the CEO only cared about one thing: protecting his job. As a result, every executive in the organization adopted the same philosophy. Engineering didn't meet deadlines and blamed Product Management. Marketing blamed Engineering and Sales, and so on.

A much more positive example was told to me by a friend who was an investment banker at Smith Barney during the time when Jamie Dimon was Sandy Weill's second in-command. On Wall Street, employees get dinner and a free limo ride to wherever they live if they work past 8 pm. Jamie left his office at 7:45 to take the subway and saw an enormous pool of limos waiting for their charges. He walked up to the first limo, knocked on the window and asked, "who are you waiting for?" He walked up to the second limo, knocked on the window and asked, "who are you waiting for?" And so on. All of those who had reserved their limos in advance of the magical 8 pm time received memos about company policy (and probably a bit more). Jamie is a CEO who knows exactly what is going on in his organization, and it is no surprise to me that he has emerged as a hero on the Street post-financial crisis. He has always set the right example for his employees, and everyone benefits.

So, whether you are looking at investing in something/someone or considering going to work at a new company, carefully consider the "head." It will tell you much of what you need to know.


Jonathan Karon said...

Excellent point Lara. I wish I'd had more of a gut understanding of this dynamic 10 years ago -- time and again it's proven to be true and I could have saved a few skinned knees if I had paid attention over the years.

Even so, it can be hard to know what facets are important and what aren't when deciding whether that smell is fresh from the sea or rotten.

Amit Jain said...

So very True Lara. This will certainly go a long way in defining ones career.

Lara said...

Indeed, it does, Amit. Jonathan, I think this is something you only know if 1) you're lucky enough to have a mentor who explains it to you (and you believe him or her) or 2) you have experienced the good and bad for yourself.