Chief Executive Magazine looks back over a tumultuous and disruptive year for business. The list of things that mattered the most starts with Trump, Bezos, and Musk, not surprisingly.
The biggest news in 2018 was Meghan Markle, Dr. Blasey Ford, and child immigrants traveling by caravan, according to Ranker’s survey. By comparison, Americans could only think of one business issue that made the top 20, net neutrality.
We have to recognize reality here. When you are competing with Thomas Markle, as the football coaches say, we have to dig deeper.
In that spirit, Chief Executive Magazine asked me to put together a list of things that were a thing in business in 2018. (For our 2019 outlook, look to these pages next week).
- President Trump. America’s slugger in chief proved he could switch hit — as a Republican he opened up oil drilling and embarked on sweeping deregulation. As a Bernie Sanders populist, he was happy to browbeat chief executives to bring back jobs and threaten trade wars with our Chinese and European partners. His most controversial business stand was immigration, and more specifically, restricting H1B visas or ‘talent immigrants.’ Chief executives who stood up to him individually, like Harley Davidson’s Matthew Levatich, discovered his vengeful wrath. Taking note, Tim Cook and a group of Silicon Valley chiefs protested Trump’s immigration policies vigorously but did so en masse.
2. Jeff Bezos. The Amazon chief turned a corporate headquarters RFP into the Powerball Lottery. But to those who follow the moves of Amazon’s iconic founder closely, it was classic Bezos. Innovate a sleepy industry like headquarters facilities, disrupt a fragmented supply chain like cities needing more high paying jobs, and finally, choose a win-win outcome, not one but two finalists, New York City and the Washington D.C. metro. By the time he added a $15 minimum wage kicker, the pundits got the message. This guy knows how to play the public relations game.
3. Elon Musk. The agency that slept while Bernie Madoff finagled discovered it could move swiftly when Musk tweeted “funding secured.” There was a problem. His plan wasn’t approved by the Tesla board. Then, after an erratic New York Times interview and smoking pot in a podcast, even hardcore Muskophiles began to worry. Musk is the most important automotive executive since Henry Ford (who pays himself about what Ford made, less than $50k per year) and America didn’t want him to implode. The SEC sent a warning shot. Musk picked himself up, relinquished the chairmanship, began running Tesla again, the stock recovered, and Musk is still tweeting. We have the SEC to thank.
4. Google Women, Larry Page, and Sundar Pichai. When 30,000 of Google’s brightest walked out to protest the company’s sexual misconduct policy, people mistakenly thought it was a Silicon Valley thing. Google’s women were apoplectic when they found Alphabet CEO Larry Page paid a departing executive $90 million in severance after improper behavior. Google CEO Sundar Pichai defended the status quo by adding that the company had around 50 other sexual misconduct firings that did not receive severance. It was like telling an environmentalist Exxon Valdez wanted credit for the oil that didn’t leak.
This is a bigger issue than many realize. What happens at Google doesn’t stay at Google. The democratization of the workplace through social media rallied women. The rest of the rank and file will be protesting whatever ails them soon. Chief Executives are going to turn into Chief Mitigation Officers.
5. Facebook, Mark Zuckerberg, and Sheryl Sandberg. Ironically, their last names both mean ‘mountain’ in German, and they both have mountains to climb. The ‘Supercuts’ hairstyled chief executive blew his chance at a Senate hearing by failing to convince America that the Russian hack was an attempt by Putin’s cronies to commit schadenfreude, not electioneering. Instead, Zuckerberg tried to make the case Facebook is destined for Sainthood.
For her part, Sheryl Sandberg was flying below the radar until it was discovered she organized oppo research on George Soros, a company critic. It was her obligation as an officer, but droves of the progressively minded were outraged as Soros is a left-wing icon. Members of her “Lean In” groups distanced themselves as a result.
6. Sex and The CEO. Les Moonves, former Intel CEO Brian Krzanich, and Steve Wynn were a few of the better-known instances of CEOs engaging in shenanigans for pleasure or hire. Boards were caught flatfooted, in part due to the sensational media attention but also their own negligence by being so unaware of the goings-on. The tendency was to act too quickly, as Intel seems to have done, or too slowly, like CBS and Wynn Casinos, which waited until decades-old rumors surfaced. It was all about avoiding publicity. Which makes the CBS board’s latest move all the more surprising. It compounded the pain by litigating Moonves’ severance for lack of cooperation, not misconduct, much harder to prove and could dredge up who knows what. It suggests a courtroom battle that will drag on for years. Oh, to be a lawyer.
7. Breaking Bad: Carlos Ghosn and Papa John. The most shocking case has been the charge against Renault’s Carlos Ghosn for underreporting equity compensation in Japan. He remains in custody, and his case is still a mystery now that the French automaker gave him a lukewarm exoneration. The likely outcome will be to resist placing so much power in one person ever again. Brilliance is scalable. Morality is not.
The other case was John Schnatter, the founder and former chief executive of Papa John’s Pizza when he used the “N” word during a racial bias training. It seemed improbable for a chief executive to utter something so egregious, even a good old boy like Schnatter, and it was. He was telling an anecdote how another famous fast food founder, KFC’s Colonel Sanders, spoke when he started in the business. Papa John’s ad agency had organized the session, took offense at his remark, and quickly reported the matter to Forbes Magazine.
8. Racism and Starbucks. The retail coffee powerhouse felt the wrath of consumers when a store manager evicted two African American customers from the premises. The ruckus turned into a national boycott, with leaders from the black community ready to march in protest. Starbucks moved swiftly to quell the matter by making a donation to a related activist group and closing their stores nationwide for a day of bias training.
The incident was a warning that social media video tends to capture the reaction and not the cause of a customer mishap. Companies like Starbucks need to implement more realistic training for these kinds of sensitive issues and a help desk where their employees can escalate matters before calling the cops.
9. Nike and Colin Kaepernick. The former San Franciso 49ers quarterback became a folk hero, at least for his generation, after Nike signed him up for their ‘’believe in something even it if means sacrificing everything.” Some complained it was a sensation grabbing tactic that would hurt the company. In fact, Nike was of mixed opinion about the controversial football player and debated the issue for months according to the New York Times. It became a meme that led to an upgrade of Nike’s stock.
10. Apple and Warren Buffett. When the sage of Omaha became Apple’s second-biggest shareholder, it made news because he has never expressed love for a tech company (IBM doesn’t count). Now, with his latest move, tech is thoroughly mainstream, and the bad news is that even old-line industries isolated from Silicon Valley are in trouble. As Buffett said, “I love Apple because of the power of its brand and ecosystem.” Those factors are the new disruptors now, not algorithms.
11. California and Women Directors. Governor Jerry Brown signed the first legislation in the United States mandating California headquartered companies impanel a minimum of two female directors if the company has five directors, or three women if it has seven directors, by the close of 2021. Failure to meet this standard will result in a fine, but the real threat is bad publicity. While other states have not yet followed suit, the sunset state does tend to be a bellwether, and companies should be implementing fast acting gender plans for their boards. When the country tells the boardroom what to do it means boards are moving too slowly.
12. GE and Jeff Immelt. After announcing his resignation, Jeff Immelt was succeeded by John Flannery, a no-nonsense GE lifer who promised radical change. He delivered it by becoming the second CEO to leave in one year. The reins were passed to Larry Culp, a former CEO of Danaher, and whether he can bring back the heady days when GE was worth $600 billion (it is a tenth of that now) will be seen. One thing for sure, the board seems adrift. The battle they are losing is that old line industrial companies are going through the latter stage of disruption. GE may have figured out the right things to do, but hasn’t figured how to do them right.