The last week has seen the the burning embers from the banking inferno well and truly ignited again.
Some of the stories coming out of Lehman Brothers is bewildering to most of us. Even more perplexing is the bankers bonus debacle, us Entrepreneurs cannot understand how Directors can be legally compensated obscene sums of money for incurring not just losses but insolvently .
After all Directors of private companies [ read Entrepreneurs] are subjected to the most draconian actions if we fail in our goal to build a successful Enterprise. Frankly its a minefield of regulation and accountability , ignorance of the rules is no excuse and there are many rules. As an Entrepreneur it is all too easy to fail, great ideas and innovation require superhuman effort to deliver against.
Not so in corporate world though where arguably as a business leader you have many more advantages.
It is here that the culture of rewarding failure is practically unlimited.
The US is particularly accomplished at rewarding abject failure. In fact virtually every senior corporate leader of a failed institution walks away with millions of dollars. Many move on to other senior corporate jobs or board positions. Take Robert Nardelli as an example. After not getting the top job at GE in 2001, Nardelli became the CEO of Home Depot where he made a series of strategic missteps and displayed an arrogance that alienated employees and customers. After being ousted from that job (with millions of dollars) he was hired by Cerberus to turn around Chrysler — another failure which ultimately resulted in its acquisition by Fiat. And while thousands of Chrysler employees and dealers lost their jobs and their incomes, again Nardelli walked away with his fortune intact and enhanced.
Have the courage to succeed as an Entrepreneur and do not fear failure. But also understand the privileges that come with the opportunity to build your own enterprise and respect them.
Well said !
Quite bravely said as well, despite 'fat cats' and their bonuses dominating the media recently, there seems to be far too much tolerance for these peoples mistakes.
As you say, being an entrepeneur has its own rewards, but failing in what you set out to do does not earn you any of them.
It is shameful that the businesses engaged in employing the kind of people who blunder from one stratgeic failure to another continue to reward failure and the reputations of the people involved remain intact.
I know what would happen to my reputation if I failed in my current business, if anything that acts upon me in such a way that I seek to excel in what I do and give everything my best shot.
Quite how rewarding people for failure motivates those who come after them to perform I have no idea. Shame on them.
Posted by: Guise Bule | 03/14/2010 at 03:48 PM
This is one of the great paradoxes in economic man's / woman's life.
Like the 'paradox of thrift' or the 'paradox of scale'.
The 'paradox of participation' is what I'll call this one:
Those that help shape the rules of the market system somehow are not measured by the same yardstick. This is the classic 'Moral Hazard' scenario and I agree, part of the problem is not aligning Enterprise Performance with Divisional Performance with Business Unit Performance with Team Performance with Individual Performance. This has to be an unbroken chain joined from the bottom up, starting at the individual and ending at the enterprise level and then linking back again. A virtual chain of Value Creation, Value Management and Value Measurement.
At the end of the day, if the enterprise is insolvent, it does not matter that business unit X or Y or Z achieved a magnificent result (read here RBS), the entire enterprise is still at risk.
Refer to my comments is:
http://themarketsoul.wordpress.com/2010/03/10/what-do-you-do/
Posted by: Rohan Badenhorst | 03/14/2010 at 10:13 PM