Status Quo, the way to go?
A True Account...
From his office on the top floor, Jeff Paulson could see the sun setting over the skyline. It was symbolic of his life. For outsiders, Paulson owned the world. An MBA degree from one of the Ivy League bschools, an enviable track record, nice guy, happily settled down in life. But as the recently appointed CEO of a multinational tobacco corporation, he alone knew his problems. He was due to address his board in a couple of minutes…. A steely resolve gripped him as he took his steps towards his destiny. “If you do this, things will never be the same again. You will never know how things would have worked out…” Lauria’s words echoed in his mind….
In a brief period, this was the fifth company Paulson was taking charge of (or maybe sixth…no one keeps count..). He hated that. The first three at least were amicable, but the last one had been particularly ugly. After a period of two years, in one of which he made the cover of Business Week for the best CEO in town, his board had thrown him out in favor of a new superstar CEO. It hurt bad. Paulson was not the normal CEO you talk about in Principal Agent problems. He was a specimen who genuinely loved his company and its shareholders. When he was at the helm of a company, he’d never even consider looking at other options, however attractive they seemed to be. The job of the CEO was like marriage to Paulson, sacrosanct and above everything…..even himself….
US Tobacco seemed to be the perfect choice for Jeff. And they had just thrown out their CEO. If this wasn’t a symbiotic relationship, what could be? After months of pulling strings and playing the right cards, Jeff finally had the top job. He hit the books with a vengeance, looking for ways to improve the financials. Stock prices had been low, it was evident the company was undervalued. There was a huge stream of cash inflows. Jeff drew up a plan to diversify into the food business. For months, he and his dedicated team scoured for potential targets and drew up plans. It was after a board meeting on a sultry Thursday morning that the realization dawned on him. This board was not too bothered about shareholder interests. They were not even his board! Here was stonewalling at its best! Every proposal by Jeff was being shot down on the most ridiculous of grounds. Everyone from the sweeper to the chairman of the board seemed to think that change was a satanic verse! Status Quo would be the way to go…
It was then that Jeff ran to Lauria… She was married to his best friend from college, and Jeff couldn’t be happier for his friend. He adored and respected her. Now years later, he was seldom in touch with his friend, but he and Lauria caught up occasionally….. swapping stories and career advice… Lauria was the youngest vice president in the last decade in this part of the country. “Dude, I feel I am not in control of the whole thing, u know? I mean you’d think the CEO is the one who called the shots. But things are very difficult to change down there… Deep down, I know this would work…and it would be totally worth it…” He talked and talked…He never understood the vagaries of boards…They were fickle, and highly influenced by public opinion. Jeff had never been a conventional CEO. Neither funny, nor an extrovert…Jeff was more of the conservative, thinking type…Getting his point across to the other party was always a matter of concern to him… “Do your work and get on with your life!!! I’ve better things to do than crack silly jokes and indulge in orgies at stupid socializing parties….” He used to tell…Lauria disagreed, but understood him… “See Jeff, you gotta get a grip on yer life…Is this company that important to you?”
“Yes….It really is…I can feel it going somewhere meaningful, u know?”
“Ok, as I can see it… There are two options… You obviously cant go in and make sweeping changes.. There is no way that would work, with the employees and board totally comfortable with the status quo… So you could shelve your proposals for now.. Settle down, and maintain things the way they are now….”
“No way.. that’s insane… The board would think I’m not assertive enough… they wouldn’t feel my conviction in the whole idea… you get me? Everyone in the company would look at me as a new guy who wants to change things around just to get his kicks…”
“Hmmm…You are right…But the second option will be very painful to you.. Resign. That way, you maintain your views that the diversification is very important to the company, but you lose your company. You will never know how things would have worked out in the end… You don’t know in whose hands the company is finally going to end up in…do you want that?”
Jeff hated to admit it, but deep down he knew Lauria was right… The first option seemed to be the lesser of the two evils… He promised her he’d take things slow, at the same time skeptical of whether it would work… His ability to screw things up with every company he’s ever handled surprised him, puzzled him… He was not sure where he was going wrong… He was hard working, he had the best interests at heart… He wanted to do what was best for the shareholders… But why were things going wrong at every step he took? At that instant, he’d have given away his right hand to know….
Now he sat in his office, smoking away at the company’s Premiere brand cigarette…watching the sun set… Two packs down, he wondered whether this would change his life for ever.. “Yes, I have to do this…”, he kept telling himself...Now, as he walked over to address the board, tucked in his left breast pocket was his resignation letter…
“In the end, even if I lose the company I love, I can look back and tell myself that I always gave it what it wanted even if I did not believe that it was the best thing for the company…”
Was he wrong? Who are we to tell? Was he right? Maybe, maybe not… But he sure gave up his personal wishes for the company that he loved…. Maybe he was just weak…?
From his office on the top floor, Jeff Paulson could see the sun setting over the skyline. It was symbolic of his life. For outsiders, Paulson owned the world. An MBA degree from one of the Ivy League bschools, an enviable track record, nice guy, happily settled down in life. But as the recently appointed CEO of a multinational tobacco corporation, he alone knew his problems. He was due to address his board in a couple of minutes…. A steely resolve gripped him as he took his steps towards his destiny. “If you do this, things will never be the same again. You will never know how things would have worked out…” Lauria’s words echoed in his mind….
In a brief period, this was the fifth company Paulson was taking charge of (or maybe sixth…no one keeps count..). He hated that. The first three at least were amicable, but the last one had been particularly ugly. After a period of two years, in one of which he made the cover of Business Week for the best CEO in town, his board had thrown him out in favor of a new superstar CEO. It hurt bad. Paulson was not the normal CEO you talk about in Principal Agent problems. He was a specimen who genuinely loved his company and its shareholders. When he was at the helm of a company, he’d never even consider looking at other options, however attractive they seemed to be. The job of the CEO was like marriage to Paulson, sacrosanct and above everything…..even himself….
US Tobacco seemed to be the perfect choice for Jeff. And they had just thrown out their CEO. If this wasn’t a symbiotic relationship, what could be? After months of pulling strings and playing the right cards, Jeff finally had the top job. He hit the books with a vengeance, looking for ways to improve the financials. Stock prices had been low, it was evident the company was undervalued. There was a huge stream of cash inflows. Jeff drew up a plan to diversify into the food business. For months, he and his dedicated team scoured for potential targets and drew up plans. It was after a board meeting on a sultry Thursday morning that the realization dawned on him. This board was not too bothered about shareholder interests. They were not even his board! Here was stonewalling at its best! Every proposal by Jeff was being shot down on the most ridiculous of grounds. Everyone from the sweeper to the chairman of the board seemed to think that change was a satanic verse! Status Quo would be the way to go…
It was then that Jeff ran to Lauria… She was married to his best friend from college, and Jeff couldn’t be happier for his friend. He adored and respected her. Now years later, he was seldom in touch with his friend, but he and Lauria caught up occasionally….. swapping stories and career advice… Lauria was the youngest vice president in the last decade in this part of the country. “Dude, I feel I am not in control of the whole thing, u know? I mean you’d think the CEO is the one who called the shots. But things are very difficult to change down there… Deep down, I know this would work…and it would be totally worth it…” He talked and talked…He never understood the vagaries of boards…They were fickle, and highly influenced by public opinion. Jeff had never been a conventional CEO. Neither funny, nor an extrovert…Jeff was more of the conservative, thinking type…Getting his point across to the other party was always a matter of concern to him… “Do your work and get on with your life!!! I’ve better things to do than crack silly jokes and indulge in orgies at stupid socializing parties….” He used to tell…Lauria disagreed, but understood him… “See Jeff, you gotta get a grip on yer life…Is this company that important to you?”
“Yes….It really is…I can feel it going somewhere meaningful, u know?”
“Ok, as I can see it… There are two options… You obviously cant go in and make sweeping changes.. There is no way that would work, with the employees and board totally comfortable with the status quo… So you could shelve your proposals for now.. Settle down, and maintain things the way they are now….”
“No way.. that’s insane… The board would think I’m not assertive enough… they wouldn’t feel my conviction in the whole idea… you get me? Everyone in the company would look at me as a new guy who wants to change things around just to get his kicks…”
“Hmmm…You are right…But the second option will be very painful to you.. Resign. That way, you maintain your views that the diversification is very important to the company, but you lose your company. You will never know how things would have worked out in the end… You don’t know in whose hands the company is finally going to end up in…do you want that?”
Jeff hated to admit it, but deep down he knew Lauria was right… The first option seemed to be the lesser of the two evils… He promised her he’d take things slow, at the same time skeptical of whether it would work… His ability to screw things up with every company he’s ever handled surprised him, puzzled him… He was not sure where he was going wrong… He was hard working, he had the best interests at heart… He wanted to do what was best for the shareholders… But why were things going wrong at every step he took? At that instant, he’d have given away his right hand to know….
Now he sat in his office, smoking away at the company’s Premiere brand cigarette…watching the sun set… Two packs down, he wondered whether this would change his life for ever.. “Yes, I have to do this…”, he kept telling himself...Now, as he walked over to address the board, tucked in his left breast pocket was his resignation letter…
“In the end, even if I lose the company I love, I can look back and tell myself that I always gave it what it wanted even if I did not believe that it was the best thing for the company…”
Was he wrong? Who are we to tell? Was he right? Maybe, maybe not… But he sure gave up his personal wishes for the company that he loved…. Maybe he was just weak…?
Labels: Personal
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