August
2006
Dow Jones Humanity Index (DJHI) reaches historic low. Failure to innovate cited as the cause.
Today, corporate America reached a new low. The headline reads: Radio Shack uses email to fire employees. Although it may sound like a headline commonly-found in The Onion or Dilbert, in fact, it ran in The Chicago Tribune. And the email it references: “The work force reduction notification is currently in progress. Unfortunately, your position is one that has been eliminated.” What’s next - email divorce notices? “Sorry honey. Please wire transfer 50% of our liquid assets to my new bank account in the Caymans.”
The question I have is this: where have all the leaders gone?
In this age of what have you done for me lately, press releases such as this one can be avoided. It takes two things to fix this problem: 1) create a culture of continuous innovation (Radio Shack has grown increasingly irrelevant to consumers, thus its demise). Innovation, not only in product - but in business design - would have helped them avert layoffs (like many others who have walked down this road); and 2) develop next generation leaders who know how to lead - not only from the income statement, but from a sense of duty, stewardship, and loyalty to those that choose to follow them.
As for the issue of innovation, I’ll opine on that in another blog entry. For the moment, let us consider an alternate leadership approach that Radio Shack and others might wish to try. Under very similar circumstances - economic and geopolitical turbulence - consider what one of America’s greatest entrepreneurs did to turn things around in one of the most significant moments of uncertainty in U.S. history. Meet Adolph Ochs. The year was 1929.
Imagine. The world is coming apart at its seems. Wall Street has crashed and the Great Depression is well underway. If you think it’s tough today, imagine living then. However, in this moment of uncertainty, consider what the the legendary publisher of The New York Times - Adolph Ochs - did to prevail.
First, Ochs sent a memo to his staff that read as follows: “We must set an example of optimism. Please urge every department to go ahead as if we thought the best year in the world was ahead of us.” However, this was not blind optimism. Reason being: consider what he did next. He put his money where his mouth was.
Ochs took the profits generated during the roaring 1920s and used them to cover payroll thereby mitigating layoffs. (Considering that 15 advertisers cancelled in a single week, essentially, this translated into a “better product”. Why? Because the paper(s) he owned and managed now had the same editorial rigor with fewer ads.). And third, rather than promoting the financial news story of the day, Ochs chose - as the most significant news story of the year - the triumphant return of Rear Admiral Byrd from Antarctica.
He chose hope in the face of fear. He invested in the future. And he sent a message to his people that declared triumphantly, “Follow me. You will be okay.” Well, what newspaper do you think people became loyal to through the Great Depression? What do you think happened to The New York Times circulation numbers as the economy improved? And what do you suppose a newspaper is able to do with advertising rates when it has more readers than anyone else? You got it. Hope pays.
In the spirit of the 400 employees recently “e-fired” from Radio Shack and in honor of Adolph Ochs, I propose a new index: the Dow Jones Humanity Index (DJHI). It would be comprised of publicly-traded companies and track behavior (such as this at Radio Shack) and subsequently assign a score for “good moves” and “bad moves”. And here’s the catch: America would be allowed to vote. Hey, if it works for finding Pop Stars, why not use it to find great leaders? (Kidding). Why do we need an alternate index - a Dow Jones Humanity Index? Because, sadly, to add insult to injury, the stock market responded favorably to Radio Shack’s less than courageous act. Radio Shack traded up 1.6% on the news.