Hey CEOs – Think like an activist investor

Article originally published in the Philadelphia Business Journal on April 16, 2015

The CEOs of many public companies raise their guard when they receive a phone call from an activist investor wanting to discuss how a company can improve its performance and shareholder return. This is not necessarily the right reaction.

Activists invest in underperforming companies and push for improved shareholder return through cost reduction, a change in business strategy, a leadership change or the pursuit of strategic options. If shareholder return cannot be improved through other means, the activist might push for outright sale of the company or one or more of its operating units.
If unsuccessful in convincing the CEO and board to implement their proposals to increase shareholder return, an activist may pursue one or more board seats, and threaten a proxy fight to seat their own director slate. All outside directors have a fiduciary duty to be independent, even if nominated by an activist and seated through a proxy fight. These directors need to make their own independent decisions based on what is best for the shareholders after board deliberation, not what is best for the activist who nominated them.

Some activists are interested only in making a quick return, with no interest in the potential of a company to generate much higher returns for its shareholders over the long term. This adds to the pressure of companies to sacrifice the long term in favor of shorter-term quarterly results. The interests of short-term oriented activists may not be in the best interests of most of the company’s shareholders. Other activists are in it for the long term as are many shareholders, and their proposals need to be heard and if valid, seriously considered.

Dealing with activists who are adversarial is a distraction to the CEO and to the board, and takes time and focus away from the business. A proxy fight impacts the CEO’s reputation as well as that of the board. So, how do you lessen the likelihood that your company becomes an activist target?

Strengthening Your Leadership Culture While Delivering Feedback For Improvement

As a leader, one will occasionally have the need to deliver feedback that is critical of a team member or even the entire team. In doing so, two outcomes are most likely. One outcome has the capacity to hurt morale for the entire team. The other actually builds on the message and strengthens both the team member’s contribution to the entire team as well as the overall result from the team itself. Although criticism is negative, conveying its message properly should become a positive experience in an effective leadership culture.

As the leader, you are also the team’s coach. Ultimately leaders and coaches want to build up their teams. They do not want to browbeat them and create an angry, finger-pointing environment. Their hope is to change behavior in a positive way that enhances how the individual contributes to the success of the team in the future. When a weak link gets stronger, it strengthens the entire team.

For best results, it is of paramount importance to understand how an associate or team will hear your feedback. Look at it through their eyes. Therefore, what language and tone might you use to turn this into a positive coaching experience. Recognize that the person in question most probably feels as if they are trying as hard as they can, even though they are less effective than they should be. They may even feel, rightly or wrongly so, that other factors have contributed to the experience.

Here are some valuable tips for delivering feedback:

– Be unemotional when you deliver negative feedback. If you are emotional, take time to collect yourself and then deliver the message.

– If possible, confront the person in private where it’s just one-on-one. Never cast blame publicly.

– Keep the feedback focused on the specific act in question. Rarely use terms like “you never do this” or “you always do that” which tend to generalize or trivialize your message.

– If the entire team needs to hear the feedback, cast the blame publicly but in a way that is broader so everyone shares in the negative message, as well as the positive solution. Together, discuss how to improve and get everyone ultimately to own the solution.

– Before criticizing, try to gather as much information as possible from the person in question. In other words, get them talking about what happened and why they made the decision they did. They may have made the wrong decision, but they might also have been right (and you might learn something!), under the circumstances.

– Without casting blame publicly, turn the experience into a training exercise so that everyone can learn from the feedback.

True, there are times when negative feedback must be personal, especially when there is the need to coach individual improvement – anything from poor listening skills, a lapse in manners, speaking loudly and more. But most of the time, one person’s error or misjudgment can actually serve as an opportunity for a positive, teachable moment that can help everyone feel good about themselves and their contribution towards helping the team move forward.

Stan Silverman is a writer, speaker and advisor on effective leadership. He is the Leadership Catalyst at Tier 1 Group, a firm of strategists and advisors for preeminent growth. Silverman is vice chairman of the board of Drexel University, a director of Ben Franklin Technology Partners of Southeastern Pennsylvania and former president and CEO of PQ Corporation. Follow: @StanSilverman. Connect: Stan@SilvermanLeadership.com. Website: www.SilvermanLeadership.com

How to evaluate the boss: CEOs should be measured by more than financials

Article originally published in the Philadelphia Business Journal on April 6, 2015

When boards evaluate the annual performance of their CEOs, the areas assessed are most often focused on those metrics that drive shareholder value, such as growth in revenues, cash flow and earnings, as well as annual and multi-year operational and strategic goals. Goals are established by the board and their CEO at the beginning of the year, and at the end of the year, results are measured against those established goals.

Evaluated less often are leadership traits of the CEO. Unlike performance against numerical goals, these are more subjective and harder to assess, but very important to the long-term success of the company. The assessment of the following traits should be part of every CEO performance review:

Establishes a clear vision and mission for the organization

If you don’t know where you are going, you can’t get there, and without a clear vision and mission, the long-term goals of operating and staff units down through the organization will not be aligned. The process of establishing a clear vision and mission is just as important. CEOs should be evaluated on the extent to which they involve their senior leadership team, so the team develops a sense of ownership and commitment to the vision and mission, and they know what roles they play in achieving them. Just as important, the senior leadership team can communicate this role down through their respective units.

Continue reading on The Business Journals.

Building a strong Philadelphia tech community is the passion of this leader

Leaders emerge in transformational situations, and play an important role by enabling that transformation to take place. Such a leader is Christopher Wink, co-founder and editor of Technical.ly / Philly, an online news and events organization covering the burgeoning entrepreneurial tech community in the Philadelphia region.

Technical.ly / Philly differentiates itself by filling a void. Wink and Technical.ly co-founder Brian Kirk saw that the tech entrepreneurial community in Philadelphia was disconnected. There was no vehicle to enable people who had similar interests to learn about each other, so they launched Technical.ly to pull together the disparate areas of the tech community to make it stronger. Technical.ly does this through reporting on the news and people within the community. Wink and Kirk also saw a void in Brooklyn, Delaware, Baltimore and Washington D.C. and they have expanded their firm to cover the tech community in these locations.

The lifeblood of any firm within the entrepreneurial tech community is its ability to source intellectual property from other firms, and use it to build its products or develop its services. Technical.ly helps nurture this capability by helping firms connect with each other, exposing them to the capabilities of other tech firms within the community and what they are developing. Synergies emerge, and this strengthens the tech community and helps it move forward.

In April of each year, Technical.ly / Philly convenes Philly Tech Week to give people who identify with the tech community a chance to meet and discuss issues important to them. More than 100 events will take place this year from April 17-25. Technical.ly organizes more than 15 of the large anchor events during the week, including the large outdoor event on April 15 at Dilworth Park. Technical.ly partners with other firms on another 20 events, while some 70 other events are run by various technical and entrepreneurial groups within the Philly tech community. In the five years since Philly Tech Week was launched, attendance has grown from just over 1,000 to an expected 24,000 this year. Wink stated, “Philly Tech Week events each year represent a time capsule of the state of the tech community in Philadelphia.”

When asked about the entrepreneurial business model that is being created in Philadelphia and throughout the U.S., Wink said, “The 20th century economic development model was to grab big firms and court them away with tax incentives. The new economic development model is a lot of churn and burn volatility – one or two person companies, maybe they will succeed, maybe they won’t. Three kids in a basement … [working on an app] – three years later they have 10 people working for them.” Wink does not like for Philadelphians to dwell on where we rank on the lists of “best cities.” He stated that “our goal should be a better version of ourselves.”

I asked Wink about the mindset of entrepreneurs who are serial starters – those who move on to start new companies. He stated, “The day [when it’s time to move on from] …Technical.ly / Philly … we say, ‘Hey, we did great work, we are proud of what we did.’ When someone says they are stepping away from their business, instead of saying, ‘I’m sorry,’ say, ‘Cool, what’s next?’ Many people are labeled by their view of whether the glass is half full or half empty. I ask, ‘What did you learn about the glass, let’s get another one.’” This is the positive, proactive attitude of successful people who see an abundance and not a scarcity of opportunities and possibilities, and who are out to change the world.

Steven Tang, president and CEO of University City Science Center, stated, “Chris is a vital asset to our innovation and entrepreneurship community. His vision and strategy for Technical.ly / Philly has strengthened our start-up community since its inception. This is symmetrical beauty that Technical.ly / Philly, a start-up company in its own right, has covered and magnified Philadelphia’s start-up community. It’s the ultimate ‘pay it forward’ success!”

At the end of my interview with Wink, I asked what matters to him, and why. He paused, and after much introspective thought said, “My life is easier because of the people before me, and the lives of people before me were made a lot easier because of the people before them. I am part of a Philadelphia community, a journalism community, a technology community. I want to make the communities that I am a part of better, and have fun while doing it. I want to make a difference.”

Wink is a passionate driving force for tech entrepreneurship in Philadelphia. He is fulfilling what is important to him – and he is making a difference.

Stanley W. Silverman is a writer, speaker and advisor on effective leadership. He is the Leadership Catalyst at Tier 1 Group, a firm of strategists and advisors for preeminent growth. Silverman is vice chairman of the board of Drexel University, a director of Ben Franklin Technology Partners of Southeastern Pennsylvania and former president and CEO of PQ Corporation. Follow: @StanSilverman. Connect: Stan@SilvermanLeadership.com.

How to get the ultimate competitive advantage

Article originally published in the Philadelphia Business Journal on March 24, 2015

Recently I had a great customer experience at the Apple store on Walnut Street in Philadelphia – one that I would rate as the gold standard for any business that wants to create a competitive advantage.

I had purchased an iPhone 6 for my wife online, and wanted to buy her a protective case for her new phone. When I entered the store, I was greeted by Apple specialist Carol Rabuck, who after personally showing me available phone case choices, asked if I would be interested in trying Apple Pay to purchase the case. She set up my own iPhone 6 to do so.

After Rabuck showed me how to enable a number of features on my iPhone, I left the store with a feeling that I was treated with patience and respect, and that she was genuinely interested in helping me. Whenever I call Apple for tech support, my customer experience is the same as my experience with Rabuck. I get to speak to someone on the phone at Apple who cares, understands the issue I am calling about and effectively addresses it in a timely manner. This is a much more satisfying experience than when I call for tech support help for my PC laptop.

The leadership at Apple recognizes that their products and service are customer service intensive. In addition to being in the core business of providing personal computers and mobile communication devices, Apple is also in the core business of providing a great customer experience. Their goal is preeminence. They get it right. Other companies in customer service intensive businesses do not.

Continue reading on The Business Journals.

The extraordinary story of an entrepreneur out to make a difference

Article originally published in the Philadelphia Business Journal on March 16, 2015

On rare occasions, one meets an individual whose passion is driven by wanting to make a real difference in this world, and is on a journey to do so.
Last March, I meet such an individual on my trip to Silicon Valley with Donna De Carolis, the founding dean of Drexel University’s Close School of Entrepreneurship, her staff and 16 of her students. One of those students was entrepreneur Collin Cavote, at the time a Drexel junior, and founder and CEO of Biome, a firm whose mission is to improve the quality of the air that we breathe.

Biome is developing a modular biowall consisting of various types of plants that can be hung in homes and offices. In addition to the esthetics that a biowall provides, plants absorb carbon dioxide and give off oxygen, refreshing the environment. Research by NASA has indicated that plants also serve as purifiers by absorbing toxins in the air.

To uncover the root of his passion, I asked Cavote, “What matters to you, and why?” He paused for a moment and then shared his journey. A number of years ago, Cavote left Temple University and “went off the grid” to explore minimalist living. He states, “I was studying business, … [but] I really didn’t see people creating legitimate value. Society was using up resources, creating a high social and environmental cost. I didn’t want to contribute to that.”

Continue reading on The Business Journals.

5 questions to ask when hiring a CEO

Article originally published in the Philadelphia Business Journal on March 9, 2015

As a former CEO and as a current director and trustee on a number of boards, I am asked to interview candidates for senior leadership positions at for-profit and nonprofit organizations. By the time I am asked to interview a candidate, they have gone through the vetting process regarding their skills, experience and the results they have achieved during their careers. Therefore, I focus on five questions that reveal a lot about an individual’s value system and leadership style, which based on my experience indicates a lot about whether the candidate will be effective and successful.

If you are the interviewer of a candidate for a senior leadership position, ask these questions. If you are the candidate being interviewed, decide how you would respond to them.

  • What does tone at the top mean to you, and what tone will you set for your organization?
  • What is the corporate or institutional culture you will nurture within your area of responsibility?
  • When hiring direct reports, what attributes do you look for, and how will you search for and select the very best people to work for you?
  • How would you describe your leadership style?
  • How will you lead, motivate and inspire every employee within your organization to achieve great results?

Tone at the top

Continue reading on The Business Journals.

Silverman: A lesson in the power of networking

Article originally published in the Philadelphia Business Journal on March 2, 2015

The power of networking came into sharp focus for me a few weeks ago when I was able to introduce a student of the Pennoni Honors College of Drexel University to a C-suite executive at eBay. I was able to assist this student only through a chain of events that started a year ago. One break in this chain and the introduction would not have occurred.

After speaking with a group of Pennoni Honors College students at a “lunch and learn” event on how to develop into effective leaders as their careers progress, one of the students introduced herself and shared her goal to work in Silicon Valley in the area of communications and marketing after graduation. She asked me if I knew anyone who might be able to help her achieve her goal. I immediately thought of an executive (and Drexel alum) at eBay who I met last March on my trip to Silicon Valley with Donna De Carolis, founding dean of the Close School of Entrepreneurship, her staff and 16 of her students. Had I not gone on that trip, the introduction would not have occurred.

On that trip to Silicon Valley, I witnessed the drive and energy of De Carolis, her staff and Drexel’s Close School students, and met numerous entrepreneurs starting new businesses and pushing the boundaries of what was thought to be possible. Had I not gone on that trip, I would not have been inspired to start writing a column on effective leadership in the Philadelphia Business Journal, which was at the time a new endeavor for this board member and former CEO.

Continue reading on The Business Journals.

Comcast’s hard journey to customer service success

Article originally published in the Philadelphia Business Journal on February 23, 2015

Recently I wrote an article on Comcast’s customer service in which I referenced the American Customer Satisfaction Index survey data published quarterly by the Ross School of Business at the University of Michigan. That survey data indicated that Internet service providers and subscription TV providers were the lowest-ranked industry in customer satisfaction. There is much room for improvement for companies within this industry.

Companies that provide Internet and subscription TV service are very customer service intensive and their reputations are earned by the customer experience they deliver. My definition of a great customer experience is the ability for a customer to call in to the company, promptly get to the right individual to order new service, cancel their account, receive help operating their remote or fix a billing problem, and have a pleasant experience doing so. When requesting a service call, delivering a great customer experience is to fulfill the customer’s expectation that the service technician will arrive on time, know how to fix the problem and fix it in a timely manner.

Providing a great customer experience – whether it be by a company’s own or contract employees – takes the right people, the right culture and the right training. In addition, the right infrastructure and processes need to be in place so customers don’t get passed around until the right individual is found to handle their issue.

Continue reading on The Business Journals.

Little League Scandal serves as teachable moment in ethics

Article originally published in the Philadelphia Business Journal on February 17, 2015

Last week, the U.S. Little League championship team Jackie Robinson West from Chicago was stripped of its title because it was found that the adult leaders of the team stacked its roster with players from outside its geography, a violation of Little League rules. Their opponent who lost the U.S. championship game, Mountain Ridge Little League, from Las Vegas, was then awarded the U.S. title.

Stephen Keener, president and CEO of Little League International, stated, “We had to do this, we had no choice. We have to maintain the integrity of the Little League program. We have over 7,000 Little League programs around the world that are looking at us to provide leadership and uphold the standards of our program. So as painful as this is, it is a necessary outcome from what we finally have been able to confirm. … We just feel horribly for the kids that are involved in this. … They were kids just out playing baseball … It’s going to be hard on these kids … that’s the part that breaks our hearts.”

Community activist Rev. Michael Pfleger said in a Philly.com article, “We are asking a law group to look into this, to investigate, because we are hearing from folks all over the country that the [geographic boundary] standards Jackie Robinson West is being held to … [are not the standards to which other teams are being held] …” Rev. Jesse Jackson has accused Little League Baseball of racism for stripping the title from JRW, the first all-African-American team to win the championship. Certainly, those supporting JRW will conduct their own investigation to determine if geographic boundary rules were violated, and determine if Little League Baseball has held other teams to the same standard.

If Little League geographic boundary rules were violated which favored one team over another, action must be taken. Just think how patently unfair it would be to the other teams if the team which violated the rules was not disqualified, even if the violation was not caused by the kids, but by the adults managing the team. If a team does violate the boundary rules and is not disqualified, what precedent does it set?

Continue reading on The Business Journals.

In Selecting Your Next Leaders, Here Are 4 Things More Important Than A Great Resume

Perhaps the most important thing every leader must do is to select and prepare his or her successor, or at least to create a leadership culture where budding leaders have the best opportunity to flourish.

However, even in a thriving leadership culture, sometimes it becomes necessary to look outside the organization for its next leader. When that is the case, often the board and its search firm scour resumes to find that one person with a blue chip line of experience together with a storied body of successful experience in just those areas most important to the organization. But don’t stop there. Although experience and expertise are important, we believe there are four characteristics that are even more valuable:

Honesty – a natural inclination to do the honest thing, in both positive and negative situations.

A Listener – someone who automatically listens first and even has the skill to draw out the positions of others in the organization before voicing his/her own.

Optimism – not a Pollyanna, but a person who approaches life from a positive perspective and reflects a positive outlook and environment.

Respect – for people and their ideas, no matter what their status is.

For best results, create your short list based on resumes and then make your final selection based on these 4 qualities.

Stan Silverman is a writer, speaker and advisor on effective leadership. He is the Leadership Catalyst at Tier 1 Group, a firm of strategists and advisors for preeminent growth. Silverman is vice chairman of the board of Drexel University, a director of Ben Franklin Technology Partners of Southeastern Pennsylvania and former president and CEO of PQ Corporation. Follow: @StanSilverman. Connect: Stan@SilvermanLeadership.com. Website: www.SilvermanLeadership.com

As A Leader, Are You Communicating Your Expectations To Your Employees?

Years ago, as the new CEO of my company, I set out to tour our divisions once our business strategy and plan had been finalized. I wanted to present it so everyone would be on the same page. After a presentation to one division in particular, I had an opportunity to sit down with their divisional management team to chat.

After a number of their questions relating to where I saw product growth from their division together with an appeal for the allocation of capital resources to support that growth, it soon became apparent that there was a major disconnect here. This division’s product line was in a highly mature category where cash generation from them was our corporate goal and it was critical to supplying capital to other high growth areas of the company. Once I explained that to them, they actually seemed relieved – they knew what was expected of them. I pointed out the change in tenor of our conversation to which they remarked, “no one had ever taken the time to explain their place in the business plan.” “We were stressing over growth when the company just needed us to provide as much cash as possible.” Once they understood their assigned mission and the role they played, they could focus on their part in making it a success.

Don’t make your employees guess what their role is and what your expectations are of them when communicating the company’s plan. To maximize results as a leader, everyone must understand their roles. To accomplish this:

1) take time to present your big picture plan directly

2) clarify everyone’s role in achieving the plan

3) reinforce their worth and value in achieving organizational success.

This will help create a sense of ownership in your employees, and increase the probability of achieving the plan.