$50Billion Disappointments & Runaway CEO Expectations
For the record I’m not angling to become some latter-day Naomi Klein but I would hate to be Tim Cook today.
His organization delivers $50 billion in revenue and remains the world’s most valuable company by many accounts, yet Apple stock is hammered on the heels of a disappointing quarter. $47 billion (about 8%) of stock market value is lost in after hours trading.
Close your eyes for a moment and try reconcile the phrases “$50 billion” and “Disappointing”
I can imagine there’s a legion of CEO’s would give any appendage to similarly disappoint their employees, board and shareholders.
Analysts, or should I say “Chicken Little’s in Expensive Suits”, opine such sage soundbytes as “There’s no question that Apple’s best days are behind it”
Perhaps it would be better if they channeled their inner Shakespeare “I come to bury Ceasar, not to praise him”
There’s no doubt Apple has reached a scale and market prominence that the YOY returns they posted a decade ago are now almost impossible. And no-one debates that the incremental refinements in their most recent products are enough to generate significant sales in a market close to saturation.
But neither can we debate that Apple sits on enough cash, and employs some of the brightest business and design minds on the planet, to be a legitimate and genuine success in the years ahead. Wearables, TV, Automotive, Healthcare are all categories that Apple can (and could) expand into to drive new growth.
What troubles me more is the short-term and short-sighted perspective of many of the supposed business experts and opinion leaders that hold forth on this topic.
The obsessive fixation on the 90-day call.
The underlying hope, wish, wet dream, presumption that YOY growth is not only attainable but somehow expected.
Equally troubling, I believe, is the behavior that this kind of shortsightedness creates.
Consider this rogues gallery and ask yourself what signals did the stock market, and us as profit-motivated individual shareholders, plant in the minds of these CEO’s.
VW have set aside 8bn pounds or $11billion to buy back 500,000 diesel cars fitted with defective emissions equipment sold in the United States. Ironic in a week when Presidents, Prime Ministers head to Paris to ratify a Climate Control Agreement.
Mitsubishi Motors have acknowledged lying about the fuel economy numberssince 2002. This deepening scandal has halved their market value in less than 2 weeks. But here’s the kicker for me — Since 2002!!! That has to get this week’s “Corporate WTF Award” for sure.
Former Enron CEO Jeff Skilling has a few years left languishing in prison for his role in one of the largest and most public corporate fraud cases in US history. His sentence has been reduced by 10 years after he agreed to pay $40 million in restitution. Ironically the judge in the case said Skilling had enough money to keep the court tied up in an appeal process for years. That’s scant comfort to the millions of folks who lost their pensions and savings when Enron imploded.
And what about poor BP CEO Tony Hayward lamenting that he “just wanted his life back” while his Deepwater Horizon oil platform was leaking 4.9 million barrels into the Gulf of Mexico? Despite the record-breaking fines levied against the organization and the huge cost in litigation, the findings of an independent report and a White House Commission ultimately held BP and its partners culpable for a series of cost-cutting decisions and an insufficient safety system. Ever wonder what motivated those cost-cutting decisions? And while you’re pondering that, consider that the same scathing White House report highlighted that that this behavior was so systemic that another spill was highly likely, perhaps even inevitable.
These sadly aren’t isolated cases.
Union Carbide and Bhopal? General Motors and defective ignition switches? Nestle and Baby Formula in Africa? Coca-Cola and groundwater in India? Toyota and defective brake pads?
These are some of the most lauded and celebrated companies in the world.
Companies filled with smart, insightful and, I daresay, morally-driven and ethically-minded folks.
Again, I’m not angling to become some latter-day Naomi Klein.
I genuinely believe that Corporations have more reach, more power and more impact on society than Governments. I genuinely hold out more faith in Corporations to create a better future for mankind than any meeting of the United Nations.
I just wonder what responsibility we have for motivating a profit-and-growth-at-all-costs mentality in the ranks of business people today.
I just wonder why a simple search for business ethics courses only returns 6 million results while a search for business growth courses returns 357 million.
I just wonder how any budding CEO juggles doing the right thing (as amorphously defined as that is) with a consumer group born in a world of universal access to information and suckled on a steady diet of instant gratification.
Perhaps there’s a certain irony that Tim Cook and a slew of his Apple products have been a significant contributor to that expectation of instant gratification.
Is that ironic or just disappointing?
What say you Dear Reader? Have we run amok with our expectations of CEO’s? Do we incent dangerous behaviours with our short-sighted and near-term business focus?