C-suite Management quality
There is an interesting article written by The Charlieton few months ago. I did hear about Horsehead Holding from one of those BRKers and learnt that Mohnish Pabari has significant interest in that company through stock ownership.
After learning the thesis, I didn't invest because I don't understand how business model of the mining businesses functions in particular of how they dealt debts for many years. Few years ago back, at a glance, Mohnish Pabari appeared to hit home run.
Today, with persistent holding of that stock, it turns out to be close to 0% return. This news article alone was shocking for the fact that Horshead's asset value changed so much within 6 months. Gladly, the judge allowed the creation of equity committee.
The author of that article of Charlieton had written quite well. I would like to discuss that 'personal belief #2' paragraph. It is totally correct that many of us cannot make a good and/or accurate judgement of the management's ability to run the company and dealt the situations associated to the company - I am not good at it either.
'Good to Great' book clearly demonstrate standard ways that management uses to turn good company to great company like:
1) Getting the right employees in the bus - Warren Buffett did that way, retaining the CEOs of the BRK's subsidiaries.
2) The Flywheel - Ron Johnson did a big change on the marketing rather than doing small change to find out the customers' behaviour. We all know what that happens to him.
'The Outsider' book is great one to see the different between good CEOs and bad CEOs. It correctly outline that very few CEOs did a huge stock buybacks. At the time, few CEOs are good capital allocators.
Both books are excellent to equip us to identify the habits of good CEOs. 'Getting the right employees in the bus' and 'The Flywheel' are not easily observable. Similarly, it is also hard to notice such CEO who do huge stockbacks and did excellent capital allocators - how we do know it is excellent capital allocation.
Nevertheless, I still keep on reading books to explore what the CEOs of any companies think.
I first heard Ricardo Semler when I was reading Strategy+Business article. I was stunned about his way of management. Intrigued with the brief summary of Semler's way of management, I went on to read 'Maverick' and 'The Seven-Day Weekend'. I was wow-ed that employees are given the power to decide on how, when, and what they do the work at Semco. Employee empowerment with no HR department is excellent way to keep labour union's power to the point that labour union cannot influence the employees to do the strike.
I next heard Liew Mun Leong, ex CEO of Capitaland when I took a few pages peak of his 'Building People: Sunday Emails From a Chairman Volume 4' book at a bookshop. On these pages, he wrote how brave and smart Singapore government change its decision to build airport at Changi instead of Paya Lebar. Because of that, I read all 4 volumes. I am totally impressed with his view of integrity and 4 Ps although I disagree with his view of defining the bubbles. The main highlights are in the following:
1) It is ok for the employees to make honest mistake and inform the management promptly rather than hide it.
2) It is better not to hire anyhow if we cannot find suitable candidate from the job shortlist and leave the job vacancy available for many months until we find the suitable one.
Not only the points put forward by 'Good to Great' and 'The Outsider' books, we should also consider how the CEOs treat the employees. Generally, if the employees are happy to do work (akin to lap dance), the performance of the company should improve positively and gradually over time.
After learning the thesis, I didn't invest because I don't understand how business model of the mining businesses functions in particular of how they dealt debts for many years. Few years ago back, at a glance, Mohnish Pabari appeared to hit home run.
Today, with persistent holding of that stock, it turns out to be close to 0% return. This news article alone was shocking for the fact that Horshead's asset value changed so much within 6 months. Gladly, the judge allowed the creation of equity committee.
The author of that article of Charlieton had written quite well. I would like to discuss that 'personal belief #2' paragraph. It is totally correct that many of us cannot make a good and/or accurate judgement of the management's ability to run the company and dealt the situations associated to the company - I am not good at it either.
'Good to Great' book clearly demonstrate standard ways that management uses to turn good company to great company like:
1) Getting the right employees in the bus - Warren Buffett did that way, retaining the CEOs of the BRK's subsidiaries.
2) The Flywheel - Ron Johnson did a big change on the marketing rather than doing small change to find out the customers' behaviour. We all know what that happens to him.
'The Outsider' book is great one to see the different between good CEOs and bad CEOs. It correctly outline that very few CEOs did a huge stock buybacks. At the time, few CEOs are good capital allocators.
Both books are excellent to equip us to identify the habits of good CEOs. 'Getting the right employees in the bus' and 'The Flywheel' are not easily observable. Similarly, it is also hard to notice such CEO who do huge stockbacks and did excellent capital allocators - how we do know it is excellent capital allocation.
Nevertheless, I still keep on reading books to explore what the CEOs of any companies think.
I first heard Ricardo Semler when I was reading Strategy+Business article. I was stunned about his way of management. Intrigued with the brief summary of Semler's way of management, I went on to read 'Maverick' and 'The Seven-Day Weekend'. I was wow-ed that employees are given the power to decide on how, when, and what they do the work at Semco. Employee empowerment with no HR department is excellent way to keep labour union's power to the point that labour union cannot influence the employees to do the strike.
I next heard Liew Mun Leong, ex CEO of Capitaland when I took a few pages peak of his 'Building People: Sunday Emails From a Chairman Volume 4' book at a bookshop. On these pages, he wrote how brave and smart Singapore government change its decision to build airport at Changi instead of Paya Lebar. Because of that, I read all 4 volumes. I am totally impressed with his view of integrity and 4 Ps although I disagree with his view of defining the bubbles. The main highlights are in the following:
1) It is ok for the employees to make honest mistake and inform the management promptly rather than hide it.
2) It is better not to hire anyhow if we cannot find suitable candidate from the job shortlist and leave the job vacancy available for many months until we find the suitable one.
Not only the points put forward by 'Good to Great' and 'The Outsider' books, we should also consider how the CEOs treat the employees. Generally, if the employees are happy to do work (akin to lap dance), the performance of the company should improve positively and gradually over time.
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