Heera Training and Management Consultancy

eNewsletter March 2011

Dear Everyone,

Hi! And how are you all? Over the past month, I have been watching the Egyptian and the other Arab countries crisis situations with utmost interest. I am sure it has been the same for many of you.

My view of the crisis in regards President Mubarak of Egypt is a very simple one that has taken place many, many times in the history of mankind. Hosni Mubarak, a previously ‘good’ leader has outstayed his tenure and has therefore been forced out, because he has not delivered in terms of the economic and social development of Egypt. Like all leaders, he had a shelf life and the problem was he was not aware when he passed it or else he did not care that it had expired. And once you pass your shelf life, you can only go downhill. He has now paid the price, as has Egypt.

The corporate world can learn a lot from this episode. CEO’s and Presidents of companies must also realize that they are never, ever indispensable. They all have a shelf life and must know ‘when to let go’. For example, Puma was a leading sports brand from the 1930’s onwards. In the eighties and early nineties however, its market share and profits declined considerably. The reason for its demise was very simple; market conditions and consumer taste had changed, but the philosophy of Stefan Jacobsson, the CEO had not changed in tandem. In February 1993 Stefan was replaced by 30-year old Jochen Zeitz whose arrival was like a ‘breath of fresh air’ to Puma. The rest as they say is history. Puma has now regained its position as one of the leading sports shoe brands in the world. Like Stefan Jacobsson, there are many business leaders who either refuse to accept or don't recognize when it is time to move on. They only go when someone shows them the door.

Bill Gates and Jack Welch are shining examples of corporate leaders who knew when to step down. Gates handed over to Steve Ballmer in June 2008 to concentrate on his philanthropic interests. Jack Welch in turn handed over GE to Jeffrey R. Immelt in 2001. In both instances, I am most certain that as brilliant as they were, they knew that their successors could bring the organizations onto another higher level, because they had different personalities, ideas, leadership skills etc. This in a sense takes the highest form of leadership i.e. a leader knowing when to step down to make way for another for the greater good of the organization.

In the corporate world, there are some areas that can send clear signals that there could be a need for change or a change in leadership.

    • Sales growth. When sales go down or remains stagnant for a certain period of time, it means that the organization is either not offering the ‘right’ products or else has an outdated and ineffective sales system. Remember Hankyu Jaya and Mun Loong in Jalan Tuanku Abdul Rahman in Kuala Lumpur. They were the key retailers of apparel in Kuala Lumpur in the eighties, but sadly do not exist anymore.
    • Drop in terms of market share. If competitors who were behind you are now ahead, it means that they are doing the ‘right’ things. Playing catch up is always difficult. Remember Makro, the first hypermarket in Malaysia. They did very, very well initially because they were a monopoly. However when Giant, Tesco and Carre Four came, Makro found that they could not be competitive enough as they continued with their outdated business system of having member cards, compulsion to buy in bulk, not allowing children in etc.
    • Innovation. When was the last time the company developed a new product or thought about improving its own products/services? Kodak for example, was the creator of the digital camera technology. However to protect the photo film industry where they had the biggest market share, they did not bring this technology into the market until their competitors did, and by that time it was too late.

In that context, good leaders always strive to develop other leaders as they are aware that by developing new leaders, they are ensuring continuity in the culture and strategies of the organization. Importantly, they are surrounding themselves with a good team of able and qualified leaders who will assist greatly in ensuring the continued viability and profitability of the company in the future. How I wish President Mubarak had been told of this by his inner circle or possibly they did, but he did not listen!!!

Thank you very much for reading this newsletter. I do hope you have found it fruitful. May all of you have a great month in March!