Dan Bigman

Dan Bigman
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Dan Bigman is Editor and Chief Content Officer of Chief Executive Group, publishers of Chief Executive, Corporate Board Member, ChiefExecutive.net and Boardmember.com. Previously he was Managing Editor at Forbes and the founding business editor of NYTimes.com.

Remembering Clayton Christensen

Christensen, one of the most influential business thinkers of the last fifty years, died at 67. We were lucky to spend time with him last year.

Muilenburg Out As Boeing CEO. Now What?

It was, in retrospect, probably inevitable. Boeing announced Monday morning that its embattled chief executive Dennis A. Muilenburg had resigned, replaced by the company’s current chairman of the board, David L. Calhoun, who will become chief executive officer and president, effective January 13, 2020. The move comes amid the worst period in the company’s history, one in which Muilenburg’s ambitious goals of explosive global growth were eclipsed by two air disasters involving the 737 Max aircraft. The company’s fastest-growing product line became an inescapable anchor amid investigations into how the company had handled the design, manufacturing, rollout and aftermath of the crashes. Last week the company faced further public humiliation, this time on the space/military side of the business as their Starliner spacecraft failed to make it to the correct orbit during a crucial test, leading to the mission being aborted early. It proved to be too much for the board. "On behalf of the entire Board of Directors, I am pleased that Dave has agreed to lead Boeing at this critical juncture," Lawrence W. Kellner, the new Chairman of the Board, said in a company statement.  He added, "Dave has deep industry experience and a proven track record of strong leadership, and he recognizes the challenges we must confront. The Board and I look forward to working with him and the rest of the Boeing team to ensure that today marks a new way forward for our company." It’s a very different route from the one Muilenburg laid out when he hosted Chief Executive for our Smart Manufacturing Summit back in 2017. At that time, he was riding high and saw a nearly unlimited future for Boeing’s growth, fueled by the rise of a travel-hungry Asian middle class. “I expect to see changes in the technology of travel itself,” he told us at the time. “It’s difficult to predict how fast the technology will evolve, but you can bet that with the amount of capital investment it will happen. We’ll see revolutions in propulsion technology, electrically powered airplanes and maybe flying taxis. “High-speed transportation will become more economical and offer the capability to go anywhere in the world in one to two hours on supersonic, hypersonic aircraft. That business model still needs some work, but the technology is moving fast enough that that will happen. We anticipate that a low-earth-orbit space travel business ecosystem will develop as access to space becomes more affordable. Also, low-gravity manufacturing in space will eventually become practical, and there will be a transportation network to do low earth orbit. I’ve always been a fan of deep space exploration—that will happen too. Before 2030 we’ll put the first person on Mars—and he or she will get there on a Boeing rocket.” It was ambitious, exciting—and, at the time, seemed absolutely possible as Muilenburg, with his engineer-cool and energetic leadership, climbed the apex of American manufacturing, rallying more than 150,000 employees to his vision. The scope of what he wanted to achieve was daunting—we dubbed it "Muilenburg's Moonshot" on the cover of the magazine—but the ambition was electric, especially as the nation slowly shook off the malaise of the Great Recession. The contrast between that imagined trajectory and the current state in which Boeing finds itself only exacerbates the tragedy. Even for those who criticize Muilenburg's handling of the crisis, there's nothing to cheer here today. Under Calhoun, the company will need to refocus on earth-bound issues: Fixing or scrapping the 737 Max program, rebuilding confidence among customers, regulators, employees and the flying public—and managing a difficult leadership transition in the midst of crisis. The company will need to do all that and more than to get back on track—it will need to continue to improve to stay relevant. As Muilenburg told us back in 2017, “To compete in this environment, we cannot continue to just improve incrementally. Incremental productivity improvements of 1 percent to 4 percent a year will not allow us to compete in the future. We are focused on step-function improvements that are measured in 20 percent, 50 percent, 70 percent to 90 percent increments in some of our key value chains inside of our factories.” A tall order for anyone, especially a company—and a leader—in this situation. Muilenburg tried. Now it’s someone else’s turn. Can they do better? Maybe. But it's hardly inevitable.

Poll of US Big-Company CEOs Finds Support For Removing Trump From...

The results, from a poll at a Yale event for CEOs in New York, are quite different than the most recent polling of broader public opinion in the country.

What’s China Really Thinking?

Robert Kuhn, a reformed investment banker with personal relationships at the highest levels of China’s leadership, shares his thoughts on what CEOs need to know now.

Verne Harnish: Listen To Scale

Engaging customers has always been a critical CEO skill, but to win in the age of Amazon, Verne Harnish, bestselling author of Scaling Up and Mastering the Rockefeller Habits, says it’s become downright existential. Here’s what he means, and how to do it right.

Dear Sen. Warren: Respond to Her Letter to CEOs

[caption id="attachment_69754" align="aligncenter" width="696"] U.S. Senator Elizabeth Warren (D-MA) REUTERS/Brian Snyder[/caption] We all knew this was coming. In response to The Business Roundtable's recent "Statement on the Purpose of a Corporation," presidential hopeful Sen. Elizabeth Warren fired off letters to the BRT's biggest names this week asking them "for information about the tangible actions you intend to take to implement the principles" that they outlined in the note. How best to demonstrate their intentions are true? By signing up for her "Accountable Capitalism Act," of course. If you haven't seen her plan, it's out-there enough to garner headlines even amid all the other Washington chaos, demanding, among other things, that large American companies obtain "charters" from the federal government to operate, turn 40 percent of their board seats over to worker representatives and require shareholder approval for all political expenditures. In the interest of fairness, we've republished her letter below. So now that you've heard from her, we'd like her to hear from you—the tens of thousands of other American CEOs who don't receive letters from presidential hopefuls (except when those hopefuls are looking for a contribution, of course). What's your take on Sen. Warren's proposal? What do you say in response? We'd love to hear from you—and will publish the best submissions on Chief Executive. Drop us a line at contact@chiefexecutive.net
Sen. Warren's Letter to Business Roundtable CEOs October 3, 2019 Jamie Dimon Chairman and Chief Executive Officer JPMorgan Chase & Co. 270 Park Avenue New York, NY 10017 Dear Mr. Dimon: I write in regard to the Business Roundtable's (BRT) new Statement on the Purpose of a Corporation issued on August 19, 2019. 1 This new statement marked a potentially significant change. It reversed the Business Roundtable's troubling position, held since 1997, that "corporations exist principally to serve shareholders,"2 3 instead acknowledging that "each of [y]our stakeholders is essential" and committing to "deliver value to all of them, for the future success of our companies, our communities and our country."4 You signed the pledge to follow these principles on behalf of JPMorgan Chase. I write for information about the tangible actions you intend to take to implement the principles, including whether, to make good on your commitment, you will implement the steps laid out in the Accountable Capitalism Act I plan to reintroduce in the coming weeks. For most of our country's history, as corporations succeeded, corporate profits and wages for working families all rose together. In the early 1980s, less than half of the corporate profits from America's biggest companies went to shareholders, but now, as a result of decisions to boost share prices at the expense of workers, consumers, and other stakeholders, more than 90 percent of profits go to shareholders, representing a shift of trillions of dollars.5 6 In 2015 alone, American companies paid about $1 trillion back to investors in the form of buybacks and dividends, even as wages and other investments stayed flat or decreased.7 While corporate profits soared and more money flowed upwards, American workers were left behind, producing more wealth for their employers while these companies refused to invest in them. I am pleased that the Business Roundtable has acknowledged the harm that this trend inflicts on the economy and that you, on behalf of JPMorgan Chase, have pledged to take steps to reverse it. But commitments are hollow if they are not accompanied by tangible action that provides real benefits to workers and other stakeholders. The Accountable Capitalism Act, which I will reintroduce in the coming weeks, operationalizes the commitments you made to balance the interests of shareholders with other stakeholders, such as employees, customers, and community members. This approach is derived from the thriving benefit corporation model that 35 states and the District of Columbia have adopted - and that companies like Patagonia and Kickstarter have embraced - with beneficial results.8 9 My Accountable Capitalism Act would: Require very large American corporations to obtain a federal charter. Directors of these new companies, known as "United States corporations," would be obligated to consider the interests of all corporate stakeholders. This is consistent with your commitment to, "delivering value to [your] customers," "dealing fairly with [your] suppliers," and "supporting the communities in which [you] work." Require that worker representatives comprise 40 percent of board directors to ensure that workers have a meaningful say in substantial decisions made by corporations. Worker representation on corporate boards is associated with higher income equality, less offshoring, more capital investment, greater innovation, and stronger shareholder returns. 10 
11 12 13 14 15 In the five largest European countries with worker representation on private company boards, wages and benefits outpaced those in the United States in recent years, 16 17 18 19 and this co-determination model has helped reduce income inequality while still producing strong growth and reducing outsourcing.20 My bill would build on these successful approaches and give American workers a seat at the table deciding how American corporations are run. These tangible actions could allow you to fulfill your commitment to "investing in [your] employees" in ways that actually have substantial input from those employees. Restrict sales of company shares by the directors and officers. These protections eliminate the perverse incentives that let cororate executives boost their own pay and funnel money to shareholders through financial engineering tricks that ultimately do not benefit the company at-large and the workers who have been left behind. Because their compensation often includes stock, corporate managers have huge incentives to promote shareholder returns above all else, one reason why the average CEO of a big company makes more than 360 times more than their average worker. Require United States corporations to obtain shareholder and board approval for all political expenditures. In order to ensure that businesses truly take stakeholder interests into account, my legislation would require large corporations to obtain broad support across shareholders, management, and workers before making any political expenditures. For too long, corporate executives have been spending on elections without restraint. If each of 
ur stakeholders are truly essential, then corporations should not be able to make political contributions in the name of the business without the input of workers. This requirement would help operationalize your commitment to "[generate] long-term value for shareholders" and to "transparency and effective engagement with shareholders." If you, and the other 181 corporate executives who signed the BRT's new Statement on the Purpose of a Corporation, plan to live up to the promises you made, I expect that you will endorse and wholeheartedly support the reforms laid out in the Accountable Capitalism Act to meet the principles you endorse. I have attached a copy of the bill. In order to better understand whether you intend to make good on your commitment, I ask that you respond in writing about whether you support the Accountable Capitalism Act and answer the following questions no later than Friday, October 25, 2019.
  1. The Statement on the Purpose ofa Corporation that you signed stated that you share a fundamental commitment to all ofyour stakeholders and made a number of commitments, stating that you "commit to deliver value to all of them, for the future success of [your] companies, our communities and our country."21
  • You have committed to "[d]elivering value to [your] customers" and that you "will further the tradition of American companies leading the way in meeting or exceeding customer expectations."22 Please describe concrete steps that your company is taking to meet these commitments and any changes in company plans, policies, or procedures that have resulted from this commitment.
  • You have committed to "[i]nvesting in [your] employees," starting with "compensating them fairly and providing important benefits" and "supporting them through training and education that help develop new skills for a rapidly changing world."23 Please describe concrete steps that your company is taking to meet these commitments and any changes in company plans, policies, or procedures that have resulted from this commitment.
  • You have committed to "dealing fairly and ethically with [your suppliers]" and "serving as good partners to the other companies, large and small, that help [you] meet [your] missions."24 Please describe concrete steps that your company is taking to meet these commitments and any changes in company plans, policies, or procedures that have resulted from this commitment.
You have committed to "supporting the communities in which [you] work" and stated that you "respect the people in [your] communities and protect the 
environment by embracing sustainable practices across [your] businesses."25 Please describe concrete steps that your company is taking to meet these commitments and any changes in company plans, policies, or procedures that have resulted from this commitment.
  1. You have committed to "generating long-term value for shareholders, who provide the capital that allows companies to invest, grow and innovate" and stated that you are "committed to transparency and effective engagement with shareholders."26 Please describe concrete steps that your company is taking to meet these commitments and any changes in company plans, policies, or procedures that have resulted from this commitment.
Sincerely, Elizabeth Warren United States Senator
Footnotes: 1 Business Roundtable, "Business Roundtable Redefines the Purpose of a Corporation to Promote 'An Economy That Serves All Americans," August 19, 2019, https://www.businessroundtable.org/business-roundtable-redefines- the-purpose-of-a-corporation-to-promote-an-economy-that-serves-al l-americans. 2 !d. 3 Business Roundtable, "Statement on Corporate Governance," September 1997, http://www.ralphgomory.com/wp- content/uploads/2018/05/Business-Roundtable-1997.pdf.
4 Business Roundtable, "Business Roundtable Redefines the Purpose of a Corporation to Promote 'An Economy That Serves All Americans," August 19, 2019, https://www.businessroundtable.org/business-roundtable-redefines- the-purpose-of-a-corporation-to-promote-an-economy-that-serves-all-americans. 5 Brookings Institute, "Stock buybacks: From retain-and-reinvest to downsize-and-distribute," William Lazonick, April 2015, https://www.brookings.edu/wp-content/uploads/20 16/06/lazonick.pdf.
6 The Hill, "Congress can tum the Republican tax cuts into new middle-class jobs," Opinion, William Lazonick, February 7, 2018, https://thehill.com/opinion/finance/372760-congress-can-tum-the-republican-tax-cuts-into-new- middl e-c lass-jobs. 7 "Makers and Takers", Rana Foroohar, Crown Business, New York~ 2017, p. 71 8 Patagonia, "Annual Benefit Corporation Report Fiscal Year 2018," Accessed September 21,2019, https://www.patagonia.com/static/on/demandware.static/-/Library-Sites-PatagoniaShared/default/dw08dOf6ed!PDF- US/20 l8-B-CorpRepo.rt-050919.pdf.
9 Kickstarter, "Kickstarter PBC 2017 Benefit Statement," Accessed September 21, 2019, https://d3mlfyygrfdi2i.cloudfront.net/181119 PBC Report PDF Master.pdf.
10 Social Europe, "Europe Needs a Pay Rise and Europeans Want Good Jobs," Steve Coulter, April 18, 2018, https://www.socialeurope.eu/europe-needs-a-pay-rise-and-europeans-want-good-jobs. Growth in labor compensation across all occupations in the five largest European nations with codetermination for private companies (France, Germany, Netherlands, Norway, and Sweden) between 2010 and 2017 averaged 7.3 percent after inflation
  • Handelsblatt, "Expansion ins Ausland sichert Jobs in der Heimat," http://handelsblatt.com/unternehmen/mittelstand/wachstumsmaerkte/globalisierung-in-dax-konzernen- expansion-ins-ausland-sichert-jobs-in-der-heimat/14696124.htm1. The largest German firms habitually increase both domestic employment and employment abroad. 
I2 Journal of Financial Economics, "Does Good Corporate Governance Include Employee Representation? Evidence from German Corporate boards," Larry Fauver and Michael Fuerst, December 2006. http://citeseerx.ist.psu.edu/viewdoc/download?doi=l0.1.1.689.9934&rep=repl&type=pdf.
IJ Eurostat, "Business profit share and investment rate higher in the EU than in the USA," Denis Leythienne and Tatjana Smokova, April 2009, https://ec.europa.eu/eurostat/documents/3433488/5280941 /KS-SF-09-028- EN.PDF/84273e80-a461-479a-958b-37216b 1bde30?version= 1.0. Non-financial firms in the European Union, where co-determination is common, invest at a rate that is 39 percent greater than at comparable American returns. 
I4 Mittbestimmungs-Portal, "Weo Arbeitnehmer Mitbestimmen, Wird Mehr Investiert," Bockler Impuls, June 27, 2016, https://www .mitbestimmung.de/html/wo-arbeitnehmer-mitbestimmen-wird-mehr-5004.htm1.
Is Cambridge Journal of Economics, "Co-determination and innovation," Komelius Kraft, Jorg Stank, and Ralf Dewenter, January 2011, pp. 145-172, https://academic.oup.com/cje/article-abstract/35/1/145/1730110. 
I6 ETUI, "Board-level Representation," Accessed October 2, 2019, http://www.worker-participation.eu/National- lndustrial-Relations/Across-Europe/Board-level-Representation2.
17 Eurostat, "EU population up to almost 512 million at 1 January 2017," July 10,2017, https://ec.europa.eu/eurostat/documents/2995521 /8102195/3-1 0072017-AP-EN.pdf/a61ce lea-l efd-41 df-86a2- bb495daabdab. 
IS Social Europe, "Europe Needs a Pay Rise and Europeans Want Good Jobs," Steve Coulter, April18, 2018, https://www.socialeurope.eu/europe-needs-a-pay-rise-and-europeans-want-good-jobs. Growth in labor compensation across all occupations in the five largest European nations with codetermination for private companies (France, Germany, Netherlands, Norway, and Sweden) between 2010 and 2017 averaged 7.3 percent after inflation. 19 Bureau of Labor Statistics, "Employment Cost Index," July 2019, https://www.bls.gov/web/eci/ecconstnaics.txt. 
20 While offshoring was a major factor in the net loss of American manufacturing jobs since 2000, German firms have increased both their domestic and international employment while maintaining positive innovation and shareholder returns. 
21 Jd 22 ld 23 Jd 24 Jd
       

Biden Tops Trump Decisively In Straw Poll of Big-Company CEOs, Who...

Joe Biden topped Donald Trump in a straw poll of voting preferences among 72 prominent CEOs taken yesterday in Washington, with Sen. Elizabeth Warren a distant third.

Bad News? Four Points Of Optimism About The Economy

We've reached 10 years of economic expansion and yet, many CEOs seem to be anxious. The biggest worry rhymes with Smariffs, but that’s hardly the only concern. Amid this darkening mood, Chief Executive Editor-in-Chief Dan Bigman shares a few reasons to be optimistic.

SEC Pushes Back On Power of Proxy Advisors

In a move seen to be the first in a series of steps to curtail the power of proxy advisory firms, the SEC today reiterated its stance that providing advice on voting is “solicitation” under federal law and will be governed by stringent anti-fraud rules.

Early Facebook Investor Roger McNamee: FTC Settlement Not Enough

Silicon Valley investor Roger McNamee, one of the earliest investors in Facebook, weighs in on the FTC's $5 billion fine for Facebook and the multiple investigations into potential anti-trust violations by the largest companies in technology.
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