Bezos the Behemoth

He’s done it. In addition to all his other claims to fame – including being among the richest and most successful people on the planet – Jeff Bezos has catapulted his company, Amazon, to the top slot among the “Best-Managed Companies of 2019.”

Amazon was so anointed not by some fly-by-night fraudster, but by the Wall Street Journal, an establishment publication if ever there was one. Moreover, in order to legitimize its rankings, the Journal employed “a team of researchers at Claremont Graduate University’s Drucker Institute.” Named after the venerable management guru, Peter Drucker, the Drucker Institute, via the Journal, bestowed on Bezos, Amazon’s already legendary founder and CEO, an ostensibly well-deserved badge of honor for his exceptional leadership and management.

To determine the rankings, which were designed to “reveal how effectively a company is managed,” five criteria were invoked: customer satisfaction, employee engagement and development, innovation, social responsibility, and financial strength. Readers of the Wall Street Journal were not told how exactly these five criteria were weighted, but we were informed that Amazon shot to the top of the list by “earning an off-the-charts ranking in innovation.”

Hard to tell, in other words, how well Amazon did – or did not do – on other measures such as, to take a random – or not so random – example, employee engagement and development. Just so happens, though, that just as the Journal was trumpeting its “Management Top 250” report, there was another report, this one just a teeny-weeny bit less favorable to Amazon. This one, in fact, exceedingly critical of Amazon, specifically regarding its treatment of those in the lower ranks of its employ.   

Suffice to say here that an article just published in the Atlantic, written by Will Evans, is titled, “Ruthless Quotas at Amazon are Maiming Employees.” (The story was also featured on Public Television.) As the piece documents, Amazon’s ruthless drive for speed in addition to innovation led has to the rate of serious injuries in its fulfillment centers nationwide being “more than double the national average for the warehousing industry.”   

Which returns us to the previously mentioned rankings, those rankings proudly touted explicitly by the Journal, and implicitly by the Drucker Institute. The Journal writes that Drucker defined “effectiveness” as “doing the right things well.” What it does not go on to explore is what is, what constitutes, “right.”

Is speed – particularly same day delivery of a package – necessarily a right? Is innovation – even an “off-the-charts ranking in innovation” – necessarily a right? And, even if they are, do these rights transcend in importance other rights, such as the well-being, physical and mental, of those of who people Amazon’s ranks, at every level? You tell me.

Bezos has become so big a behemoth that his “leadership principles” are gospel. Principle number one? “Customer obsession.” Leaders, the behemoth insists, start with the customer and work backwards. For Bezos it’s paid off – and then some. As the article about Amazon by Scott Shane in today’s New York Times reminds us – this one’s titled “Prime Mover: How Amazon Wove Itself into the Life of an American City” – for several years now Amazon has been ranked by consumers either one or two among all American companies.

Which raises the question, which is the chicken and which the egg? Must we stop demanding instant gratification? Or is it up to Bezos to educate us? To tell us that because instant gratification extracts a price – a pound of flesh from Amazon’s warehouse workers – he is no longer able, that is, willing, to deliver our sweater, our book or our blender in less than a day? That we might, in other words, have to exercise the patience of saints – wait two.   

Sacha Baron Cohen Calls Out the Silicon Six

I do not normally link my blog to anything else. But to every rule usually there should be some exceptions.

Since yesterday I posted a blog about Margrethe Vestager – Silicon Valley’s “biggest foe” – and since an hour later I received from a former student a link to Sacha Baron Cohen’s scathing critique of the tech industry, I am hereby violating my own general rule. I would not be providing the link did I not think that Cohen, along with Vestager, has a strong case to make. For reasons relating to the general welfare, time to cut some leaders of some big tech companies down to better size.

https://www.thedailybeast.com/sacha-baron-cohen-uses-adl-speech-to-tear-apart-mark-zuckerberg-and-facebook

A Good Leader

Americans are obsessed with leaders. Even if we hate them, we focus on them, fixate on them to the point where no one else and nothing else seems much to matter. This disposition is fueled obviously by the leadership industry, which supports our obsession and feeds off our fixation.

Leader-centrism is, however, problematic in more ways than one. It is intellectually misleading. It is practically misguided. And it is morally dispiriting. It is moral dispiriting because so few of our political leaders provide shining examples – and so few of our corporate leaders shed beacons of light. In fact, though on one level some are highly successful, on another level many of America’s most visible leaders – from Bezos to Musk to Trump – are famously if not fatally flawed. The irony, then, is that for all our fixation on those at the top, those at the top tend deeply to disappoint.

Polls prove the point. For example, more than 81% of Americans think that members of Congress behave unethically some if not most of the time. And more than 77% of Americans think the same of leaders of technology companies. Moreover, in some number of cases, yesterday’s most admired leaders have become today’s most reviled leaders. I am thinking especially of founders of America’s most fabled technology companies, who five minutes ago were being valorized and who five minutes later are being demonized.  Facebook’s Mark Zuckerberg and Sheryl Sandberg are arguably the most striking cases in point. He once a wunderkind, she once a feminist icon, both now seriously suspect, suspected of being as greedy for power as for money.

Ironically but perhaps not surprisingly, then, it is to Europe I turn to locate a good leader. Ironically but perhaps not surprisingly, then, it is to a regulator I turn to locate a good leader. To locate a leader who is, simultaneously, effective and ethical.  

I refer to Margrethe Vestager, who about five years ago went from being a Danish lawmaker to head of the European Commission’s antitrust division. In this role she has morphed from political unknown to powerful muckraker. In this role her name has become inextricably linked to that of Silicon Valley. In this role she has had the singular talent and startling temerity to become big tech’s biggest nightmare.

So far, Vestager has managed to fine Google more than $9 billion for breaking antitrust laws, and obliged Apple to pay more than $14 billion for tax evasion. More to the point, in a world in which politicians along with ordinary people have been reduced to standing by and doing nothing while big tech intrudes on the common good, invades our personal space, and distorts the national discourse, Vestager has figured out how to use the power of her post to contain and even to clamp down on companies that have, by general consensus, become much, much too big for their britches.  

Relentlessly changing technologies are every leader’s promise – and every leader’s peril. Harnessing them completely is impossible – but ignoring them entirely is not an option. Moreover, the corporate behemoths who control Western technologies – notably Alphabet (Google), Amazon, Apple, and Facebook – have been generally impervious to anyone who dared to try to take them on. Except for Margrethe Vestager.

Vestager just expanded her portfolio, one that already covers digital policy across 28 European nations. And she just signed on for another five-year-term, signaling that she will be even more active and aggressive in her second term than she was in her first. Which is precisely why as much as anyone else in the technological space, she’s a leader worth watching. It’s possible the goodness that she has evidenced so far – being simultaneously effective and ethical – will become greatness.

The Latest on Leadership

  • Wisconsin is an example of a state in which government in deadlock has become the new normal. It is also an emblem of a country in which government in deadlock has become the new normal.  Why? Because everyone thinks they should to lead; no one thinks they should follow. Ergo…  conciliation and compromise are out the window.
  • Worldwide, including in the U.S., the number of women in positions of leadership remains remarkably low. Mothering remains the paramount reason. But, solutions to the problem continue elusive. A surprising recent finding on paid leave confirms the complexity. Instead of paid leave for mothers boosting their earnings, the largest American study of its kind just found the opposite. A decade after new mothers took paid leave they worked and earned less than new mothers who did not.
  • A solution to the paucity of women in leadership roles could be job-sharing. Until now, job-sharing has always been associated with sharing jobs at lower levels – not at higher ones. Leadership and job-sharing were considered mutually exclusive and, generally, they still are. However, there is evidence that job-sharing is climbing the corporate ladder. In a tight labor market where talent and diversity are highly valued, employers are increasingly willing to consider job sharing among those in the managerial ranks.     
  • In the last three weeks, Chile has been transformed from a bastion of apparently successful capitalism – note the modifier, “apparently” – into a dystopian nightmare. Protests have been as massive as destructive and, despite repeated government concessions and capitulations, they have continued. In the last day followers got leaders to call a referendum on a new constitution. But, in the absence of any individual or institution that commands widespread respect, it is not clear that leaders giving followers what they say they want will still the roiling waters.      
  • The State Department Foreign Service Officers who testified publicly before Congress this week have seemed, alas, like nothing so much as a throwback. A throwback to a time when civility was common currency and professionalism prevailed.  As the author of a book titled, Professionalizing Leadership, let me linger on professionalism as a notion – indeed as an ideal. Frank Bruni, writing this week for the New York Times, described William Taylor, America’s top diplomat in Ukraine, as a consummate professional. Taylor has a half-century career that is “entirely about the public good.” And he is a “creature of duty and discipline and earnestly accrued knowledge.” Bruni goes on to extol the virtues of being a “true professional” – and then he adds that Donald Trump has never had the “epiphany that the presidency is, in fact, a profession.” Here’s where Bruni misses the mark. He is right to write that Trump has no conception of the presidency as a profession. But the fault, dear Frank, is not his, but ours. It is we the American people who voted for a chief executive who was the diametric opposite of a professional. Candidate Trump was as president Trump – a rank amateur clearly and completely devoid of the virtues we associate with professional experience and expertise.

Measure of a Leader

Let’s see now – which is worse? A corporate leader who is responsible for having a consensual relationship with an employee? Or a corporate leader who is responsible for ignoring warnings his product is dangerously unsafe?

On the surface it would seem the former. For after McDonald’s CEO Steve Easterbrook admitted he had a relationship with an employee, he immediately said he had made a “mistake.” He then went on to explain that “given the values of the company,” he agreed with the board it was “time for [him] to move on.”  

Conversely, while Boeing’s CEO Dennis Muilenburg claimed he considered stepping down in the aftermath of two fatal crashes of Boeing’s 737 Max jets, he remains in place. To be sure, the board did strip him of his responsibilities as chairman. But chief executive officer? Last I looked, five minutes ago, Muilenburg continues to hold the title.

Back to my original question: Which of the two leaders is worse? Let’s assume that Easterbrook’s relationship with his employee was – heaven forefend – sexual. What we have here then is two consenting adults of admittedly unequal status involved in an affair.

What we have, however, at Boeing is this. Two separate 737 Max crashes – one in Indonesia in October of last year, one in Ethiopia in March of this year – in which 346 people died.  Died.

It’s not as if Muilenburg had no idea Boeing had a problem. He did. He knew. He knew because (at the least) he was copied on an e-mail sent four months before the crash in Indonesia in which a Boeing production manager warned in no uncertain terms that the plane was being rushed into production. He went so far as to write, “For the first time in my life, I’m sorry to say that I’m hesitant about putting my family on a Boeing plane.” In other words, a note on which Muilenburg was copied – and to which he admitted he replied – was an exceedingly stark caution about the risk associated with this particular plane. But, not only was it not grounded before the first crash, it was not even grounded after. Only after the second deadly accident was the 737 Max finally pulled from Boeing’s rotation.   

Which then is worse? Sex or death?

Must be the former. For Easterbrook is gone while Muilenburg is not.    

Scorched Earth Leaders

“Scorched earth” usually refers to a military policy intent on destroying everything to preclude the enemy from seizing or using anything. But as the image it conjures implies – nothing but rubble and ruin left – for those left behind the cost is high. What they knew is no more. In its wake is nothing but destruction, decay, death.  

While “scorched earth” originally has a military connotation, now the term is used more broadly. It refers to the deliberate decision to detonate – not always literally, sometimes figuratively – whatever others might deem of value. Which has led me to coin the term, “scorched earth leader.” A scorched earth leader is any leader who prefers to blow up everyone and everything – literally or figuratively – to surrendering even a smidgeon of power.

It’s astonishing when you think of it – leaders so crazily narcissistic that they opt to destroy the lives of their followers rather than suffer a blow to their ego. Adolph Hitler is an infamous example. By the summer of 1944 it was well known not only to the Allies but to the Nazis that Germany’s chances of winning the war were diminishing to the point of vanishing. Still, Hitler refused even to consider surrender, preferring to see Germany go up in flames until finally he did himself in.

More contemporaneously, also infamously, is Zimbabwe’s President Robert Mugabe, who clung to power for nearly 40 years as his country declined by every measure on account of his wretchedly inept and corrupt governance. Nor did he even in old age exit of his own volition. Just two years ago, in the rough equivalent of a palace coup, Mugabe was finally forced out.

And how about Syria’s President Bashar al-Assad?! As I write he is as securely situated at the top of his country’s political hierarchy as at any time since the political protests that were associated with the Arab Spring, in 2011. In the eight years since then, Assad has consistently refused even to consider compromise, preferring instead to see the Syrian people suffer as acutely as any in this century. Large swaths of their country have been destroyed. And these are the casualties of the civil war: Approximately a half a million Syrians dead. Approximately 3 million Syrians fled from their homeland to other countries including Lebanon, Jordan, and Turkey. And approximately 6. 5 million Syrians displaced within their own country. Still Assad stands – a scorched earth leader if ever there was one.    

It’s a phenomenon so awful it seems almost alien. How is it that followers allow, sometimes even enable scorched earth leaders? Why do we put up with those who would do us in?

Of course, we Americans have no such concerns. We would never elect a president who would burn the house down before gracefully bowing out.  

Followers Not Following

For at least the last 8 years I have talked and written about leaders and followers and the trajectory of history. Put briefly: leaders in liberal democracies are getting weaker, more feckless; while followers in liberal democracies are getting stronger, more restless.

When I say this to a group, someone in the audience invariably asks, “Where does all this end?” “If followers continue to have more power and leaders less, what does this suggest for good governance?” I reply honestly, which is to admit that I don’t rightly know. I do though add that to look closely and carefully at the world in which we live is to get a few clues. Here just seven – all in the last few days.

  • In Chile were days of violent demonstrations by students protesting an increase in subway fares. In response, Chilean President Sebastian Pinera announced the raise would be repealed.   
  • Hong Kong, already the site of some 20 weeks of persistent protests, had another round. Despite being banned by the authorities from demonstrating, many thousands of black-clad activists again took to the streets, proving one more time their refusal to retreat.
  • Some estimates were that more than a million people marched yesterday in London, in opposition to Prime Minister Boris Johnson, agitating instead for a second referendum on Britain’s decision to exit the European Union.
  • In Lebanon tens of thousands of people took to the streets to protest tax increases and government corruption. Within days cracks began to appear in the governing coalition – one of the coalition parties has already pulled out.  
  • After a group of Catalan separatists received long prison sentences, peaceful marches, a general strike, and violent unrest “convulsed” Catalonia’s capital city, Barcelona, in northeastern Spain.   
  • Demonstrations in Ecuador against President Lenin Moreno’s proposed cuts to fuel subsidies were so violent and wide-ranging that he was forced temporarily to relocate his government outside the capital, Quito. In short order, Moreno, like his Chilean counterpart, Pinera, reversed his decision.
  • In Chicago, the U.S.’s third largest school system, some 32,000 teachers and support staff went on strike, cancelling classes for about 320,000 students. At this writing negotiations are still taking place, though a strike-ending agreement has not yet been reached.     

Leader in the Crossfire

Though he has some competition, he doesn’t have much. Howard Schultz, founder and for decades chairman and chief executive officer of Starbucks, ranks high not just as one of America’s most successful businessmen ever, but as one of its best-intentioned. Above all, though he was not always as good as his word, from the start Schultz put great stock in being an employer who treated his employees carefully and considerately. In being a capitalist with a capacious heart.

In his book, Onward, Schultz returns frequently to this theme. He remembers his father being dismissed from his job after a workplace accident with no health-care coverage and no severance. He further recalls his father never finding “fulfillment or meaning in his work.” It made Schultz vow that if he ever was a “business leader,” he would do things differently. He would “build the kind of company” his father “never got to work for.” He would “create a unique community inside the company.” He would give his workers tasks “infused” with precisely the purpose and meaning of which his father was deprived.

Nor was Schultz content to confine his reformism to the private sector. Early this year he declared he was considering taking on Donald Trump in the 2020 presidential election, running himself as a centrist, independent candidate. While his foray into politics remained an embryonic effort, it was an indicator of Schultz’s interest in being a well-intentioned leader not only within Starbucks but without.

It is, then, not only an irony, but a sign of the times, that Schultz of all people has got caught in the crossfire of the unrest in Hong Kong – several Starbucks’ storefronts deliberately defaced in recent protests. To say he’s not the only one is to understate it. The recent brouhaha in which the National Basketball Association got ensnared is a vivid example of Chinese President Xi Jinping’s iron grip, which can seem now as if it’s tightening around us all. But Schultz – who has always presented himself as a leader with a conscience – is a special case. A case in which there is an obvious conflict between what presumably are his professional interests, Starbucks making more money than it already is, and his personal conscience, siding with democrats rather than autocrats.

In 2017, before Xi’s control was as complete as it is now, Schultz publicly declared his company would become less dependent on the U. S. market and more on the Chinese market: “China will become a much more important component of the financial results of Starbucks,” he confidently proclaimed. He was right, of course. Toward the end of 2019 are some 170 Starbucks outlets in Hong Kong – and some 4,000 in China. Moreover, by 2022 plans are to have at least 2,000 more. You do the math.

What’s a leader to do? On the one hand, a company to run with humongous numbers of customers in a country that is a tyranny. On the other hand, a conscience to consider that is being tested at every turn of the screw.

Leaders and Followers – A Class Analysis (IV)

This is the fourth in a series of four blogs, each of which falls under the heading of “Leaders and Followers – A Class Analysis.”

IV.  Leaders – Bourgeoisie and Bosses, Owners and Employers

Adam Neumann, the eventually enormously wealthy founder of WeWork, loved buying houses. Houses as homes that he and his family could live in and relish whenever they pleased. To this end, he borrowed hundreds of millions of dollars, snapping up fabulous properties in Manhattan, Westchester, the Hamptons, and California. When the ax fell – when Neumann was forced to resign as WeWork’s chief executive because of his erratic behavior and drug use – he was eyeing buying more houses, the next in Hawaii.

By every account, in his hay day, Neumann was a charismatic leader whose combination of personality and business savvy made him singularly successful. WeWork expanded at breakneck speed, its performance so spectacular that as recently as January of this year its market value was estimated at $47 billion. But, after it was known that Neumann had personal problems, and after he botched an attempt to take the company public, he was pressured by his directors and investors to step aside as chief executive.

Neumann is not the only CEO recently to have been pushed from his perch. In the last few weeks alone has been a spate of involuntary retirements. These include Devin Weng at eBay; Kevin Burns at Juul; John Flint at HSBC; Denis Muilenburg at Boeing, who was stripped of his role as chairman though not of his responsibilities as CEO; and Herbert Diess of Volkswagen, who is still CEO but who, after being charged with stock market manipulation, is reputed to be hanging on by only a thread.     

Even the most spectacularly successful corporate leaders in recent American history – founders of tech companies such as Facebook, Google, and Amazon who managed also to grow them into virtually impregnable business behemoths – appear far more vulnerable now than they did just a few years ago.  Uber’s Travis Kalanick is out and Tesla’s Elon Musk, after admitting to excessive use of pills, is on somewhat thin ice. The point in any case is this: in recent years the tide against big tech companies – all big tech companies – has started to turn. For example, Facebook has been implicated in swinging the 2016 presidential election to Donald Trump. Google has been fined in multiple countries for its monopolistic practices. And issues such as privacy and kowtowing to Chinese authorities are bedeviling each of these companies effectively constantly. Each is being held to account by politicians and regulators as never before – though the most successful among them continue to remain as powerful as preeminent.

The rate of CEO turnover was higher in 2018 than at any time since the 2008 financial crisis. Additionally, though it’s too early to tell what will happen in 2020, we can say for certain that in 2018 more members of the House of Representatives chose not to run again than at any time in the last quarter century. In other words, leaders in both business and government are both less secure than they were and, to all appearances, less happy than they were. The rewards of leading are less than they were a generation ago, despite what in the corporate sector remain sky high incomes.

The temper of the times is in any case already reflected in one of the key issues of the 2020 presidential campaign, taxing the wealthy. “As the 2020 election approaches, a new crop of Democratic candidates has opened a much larger field of play on this issue, cheered by voters who tell pollsters the economy is stacked against the working class and in favor of the rich. Those candidates are looking beyond the income tax – which many of them would [in any case] increase for the rich – and offering plans to tax wealth, investments and a variety of other hallmarks of the economic top 1 percent.”* For example, Elizabeth Warren is proposing a tax on the 75,000 wealthiest American households, as well as an array of increased investment and payroll taxes specifically aimed at high earners.

The humungous wealth gap between those at the top – including in the United States – and those in the middle and at the bottom rankles to the point of restiveness. Which explains why the tensions that underpin the Communist Manifesto continue to linger, deep into the 21st century. No question that employees are becoming more restive. No question that employers are becoming more vulnerable. This is not, of course, to suggest that the system, here American capitalism, is under threat. It is, however, to suggest that the class struggle, the contest between competing groups, that Marx and Engels so brilliantly depicted a century and a half ago, remains relevant today as it did then. Arguably not as relevant but, nevertheless, relevant.

The leadership industry does not conceive of leaders as bourgeoisie or bosses, or as owners or employers. Nor for that matter are followers thought of as proletariats, workers, or employees. Further, leaders particularly are defined hundreds of different ways, some of which include people without any of the usual resources, such as power, authority, and money. I though am arguing here as I always do – for using plain English. In plain English leaders usually are thought of as people who have control, such as owner and employers. And, in plain English followers usually are thought of as people who have little or no control, such as workers and employees. It is in keeping with these commonsensical conceptions that seeing leaders and followers as engaged in a permanent struggle, even a class struggle, seems reasonable and defensible – as opposed to unreasonable and indefensible.

———————————————  

*”Finding Solutions,” New York Times, September 19, 2019.

Leaders and Followers – A Class Analysis (III)

This is the third in a series of four blogs – all to be posted during this week – each of which falls under the heading of “Leaders and Followers – A Class Analysis.”

III.  Followers – Proletariats, Workers, Employees

About a month ago some 50,000 General Motors workers went on strike for the first time in twelve years. The effects of the strike are becoming punishing, particularly in the Midwest where the stoppage is having a significant impact. This raises the question, why walk out now?

It is conventional wisdom that American unions have become weak. Since the 1960s they suffered repeated blows to the head, including globalization and changing technologies such as automation and digitalization. Each of these hits threatened their members’ livelihoods becoming, therefore, ironically, existential threats to precisely those organizations formed to protect them.

Moreover, recently, the specifics of union workers’ complaints have been exacerbated by the same free-floating angers and anxieties that plague Americans more generally. I refer, for example, to deadening wage stagnation even as corporate profits have soared, and to the drumbeat of income inequity, a relentless reminder that the inordinately rich are getting still richer while even the middle-class struggles now to pay for increasingly expensive staples such as housing and education.  

This combination – the emasculation of the American labor movement along with the more general American malaise – explains why now the auto workers’ strike. It explains why early in this decade the “Fight for $15” movement was born, leading within a few years to huge rallies and fast-food walkouts across the country. It explains why last year 8,000 Marriott workers went similarly on strike. It explains why earlier this year 31,000 supermarket workers also went out on strike. It explains why in the last year even tens of thousands of teachers went on strike. It explains why some 80,000 Kaiser Permanente worker are threatening right about now to go on strike. It explains why last year nearly a half a million workers took part in strikes and work stoppages – the most in over a decade. It explains why a recent Gallup poll found that public approval for unions has climbed to 64 percent, up from 48 percent a decade ago, and near its highest level in a half century. And, it also explains why non-unionized workers have started to join hands! To cite one example from a recent New York Times article titled “Uniting Workers, Without a Union,” last fall some 20,000 Google workers left their desks to protest the company’s handling of complaints related to sexual harassment.

Still, I want to be careful. I do not want to exaggerate the significance of what’s happening. The United Auto Workers union has shrunk from its all-time high of 1.5 million members to less than half a million. And only about ten and a half percent of the nation’s workforce is currently unionized, at or near an all-time low. Moreover, the auto strike continues as I write, so how it comes out in the end remains uncertain.

Nevertheless, attention should be paid. This is a struggle between those who have much, much more and those who have much, much, less. Of course, the divide between them is not as enormous as it was in the middle of the 19th century. To an extent American capitalism has compensated for deficiencies resulting from inequities. In fact, it was precisely in consequence of the hay day of the union movement that the gaping gap between capitalists and proletariats was modified.

But to tamp down a struggle between two groups is not to snuff it out. The class conflict to which the Communist Manifesto famously referred lives on. Moreover, unless employees get some satisfaction from their employers, it is likely, in the third decade of the 21st century, to be exacerbated. What does this have to do with leadership and followership? Everything.