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January 30 2009 by ChiefExecutive.net


Wealth Creators

I am writing to inform you of an error in “CEO Wealth Creators … and Destroyers,” (November/December 2008). According to the authors’ own methodology, the ranking of CEOs focuses “on the performance of companies (and their CEOs) in the S&P 500 index for three years ending on Sept. 1, 2008 … CEOs whose tenure did not coincide for the full three years were not ranked” [emphasis added].

Based on this rule, Lynn Elsenhans and Sunoco should not have been included in the list. Ms. Elsenhans joined Sunoco as CEO and President on Aug. 8, 2008. She had been with the com pany for less than one month during the study period used by the authors to determine their rankings.

In light of the obvious error, I respectfully ask that you print a correction in the next issue of your magazine, as well as update the online version of the article so that Ms. Elsenhans and Sunoco are no longer included. I also request that someone from your publication call Sunoco to verify facts prior to publishing any future stories mentioning the company.

Thomas P. Golembeski
Sunoco
Philadelphia, PA 

CE regrets including Lynn Elsenhans as she has not been CEO for the three years in question but the Economic Margin analysis for Sunoco is valid. Sunoco’s EM score would not have changed had the company’s prior CEO, John G. Drosdick, been listed as he was the CEO on watch during that period

No Roses for Sarah; Thorn for CE

Roses for Palin is a pure piece of fiction, not fit for the pages of your fine publication. (November/December 2008) We need look no further than the Katie Couric interview question of what the Governor reads. So powerful was her nonresponse that it sealed the impression of an empty suit in reasonable business and political circles, writers, leaders, students and anyone capable of reading a paragraph or two.

As a simple test I’ve asked a good cross section of contacts what they read and was not surprised by their prompt reply, they were able to rattle off 10 or more publications they read frequently.

Since that interview, so many conservatives have come out critical of the governor that it begs the question, how in the world did she get elected in the first place. I doubt the Alaskan voters will be fooled twice.

On any subject, it may not show any reasonable degree of sophistication to quote Ms. Palin on matters of substance and still be viewed as in control of one’s senses, lest it be viewed as blind adulation.

I really like reading Chief Executive, but this one subtracts from your brand.

Steve Manuel
Phoenix, Arizona 

A Valuable Issue

Wanted to let you know that I hadn’t read Chief Executive in a while but just read the November/December issue from cover to cover and found it not only interesting, but useful as well.

Mary Berner
President and CEO
Readers Digest Association
Pleasantville, NY 

Wall Street Meltdown

I think it is unfortunate that a group of CEOs from our largest corporations don’t publicly announce their disgust with the unconscionable conduct of the Wall Street executives responsible for the financial meltdown that has impacted the entire world.

John H. Zenger
Chief Executive Officer
Zenger Folkman Co.
Orem, UT 

Not All Such Strategies Fail

“Failed Strategies” (September- October 2008) can be very misleading if it is not carefully analyzed. For example, the authors cite synergy as a suspect strategy.

By definition, synergy is a cooperative act between similar people, departments or organizations that together produces a positive and hopefully greater result than one acting alone. It is not necessarily 1+1= 3. In the Sears example cited, there is nothing similar nor could one expect two completely different disciplines relating to two different markets to produce any kind of multiple results.

A better example would be the synergy created with the merger of two sales organizations calling on different markets to sell complementary products.

In addition, the Green Tree example of financial engineering illustrates a bad decision, not bad engineering. Financial engineering is the kind of thing practiced by Enron.

The example cited for rollups does not indicate how successful this M&A strategy can be.

There are many well-planned and executed rollups, such as mobile phone telephone towers, financial transaction process networks and fuel distribution companies, to name a few.

Sam Walton did not employ a consolidation strategy. Federated did, but instead of worrying about assets, its goals were to open new markets and consolidate buying power. Ames, it appears, went about buying similar companies and tried to make them look and act like Ames. This is a very different and difficult consolidation strategy to implement successfully.

Acquisitions are an important part of any company’s growth strategy. They must be well thought out, carefully developed, based on careful input and communicated and supported by all members of the organization.

Robert P. Barone
President
SmartNet Associates
Bonita Springs, FL 

The Trouble with China

China is a manufacturing power house; but it also is a pirate country (“Understanding China,” September- October 2008). They have no morals or integrity. The country has not controlled their growth in an organized manner; they let their people run the operations in whatever manner to make money regardless of safety and efficiency.

I agree they do not have the technology knowledge or senior management to become truly effective by themselves. They are accomplishing this by letting foreign companies come to their country and establish their manufacturing processes and technology where in turn they will later expel those foreign companies and take it over themselves.

Look at all the fake knockoff products that are plaguing the U.S. It is hard to distinguish the real namebrand products from the fakes. And where do these products come from? China. What is China doing to correct this problem other than time-consuming, toothless oversight and a do-nothing attitude? We had products with lead paint in toys, poison in dog food and now poison in baby formula milk.

China will be a formidable competitor once, if at all, they get their act together and steal all the knowledge and technology they can. One example is Japan after World War II. They were a devastated country and the U.S. provided them with the technology and financial expertise to become a world-class manufacturing company. They then beat out the U.S. in manufacturing, quality and price. Japan grew legitimately and in an orderly way; China is doing it like pirates with no regard for human decency. The Chinese establishment can not be trusted.

Wess Schmidt
CEO
Scientific Packaging
Maywood, NJ