Monday, June 19, 2006

Management by Pathology

TRD101: Management by Pathology

by Michael Maynard

June 19, 2006

To be a successful management consultant and interim senior manager, you have to have a pretty high opinion of yourself and your capabilities. Over the course of 20 years, my partners and I developed a running joke. The good news about consulting is that you see a lot of companies. The bad news is that you see A LOT of companies. Approximately 10% of the time, you’re being hired because the company is doing well and management wants the company to keep doing well and to do better. Those consulting assignments are fun.

The other 90% of the time, you know that you’re being hired because of bad managerial decisions and you’re there to get the company out of trouble. To take on the troubled company’s assignment, you implicitly assume that you’re better than the existing management. And 99% of that 90% of the time, the assumption is accurate.

Of course, every company’s management has its typical proportional share of idiots, petty tyrants, arrogant SOB’s and fools. Really troubled corporations have more than their share of morons, psychopaths and mental defective in management because who else would work in this cuckoo’s nest. Scott Adams’ “Dilbert” comic strip has done a valuable service in accurately describing the inner workings of most corporations. While Murphy’s Law applies to the rest of bad managers, from my experience, I’ve noticed that the really bad ones fall into certain abnormal personality types.

Self-Promoter: The Self- Promoter loves to get his/her name in the media and the amount of publicity they get is in inverse proportion to their ability. One of my clients had a very good and stable mailing list business. The company’s mailing list business could be expanded by drawing upon their existing competency and provide this product for other niche markets. No, that wasn’t sexy enough for this Self-Promoter, who wanted to be known as the next high-tech managerial legend. He drained the money from the existing business, which started to slip, and used it to create a number of internal “start-up” companies that would expand the company so much and rapidly that he was already planning for the stock exchange listing. The parent company had no experience in any of these start-up areas and no managerial expertise in starting up new companies. At the same time, the SP kept giving talks to industry groups, colleges, trade shows, wherever the press would show up.

The press bought into the idea that he was one of the top high tech executives in the world. The company did go public and the stock valuation was high due to speculation and expectations. Two years later, none of the start up succeeded, the core business declined and the stock was being traded for pennies.

Schmoozer: The Schmoozer is great on the golf course with clients or in front of a group of financial analysts because he oozes insincere charm and flattery. .He’s made it along the way because everyone thinks he’s a great guy. He/she can hide his lack of detailed knowledge once he reaches mid-level management level because he doesn’t have to do anything or make any decisions, just shuffle papers. As long as The Schmoozer scripted or isn’t pressed for details on how his business is doing, he’s great. When it comes times to make a decision on an important operating issue, he’s off working on his putting stroke instead. In the Fortune 100, the Smoozers are usually well-connected politically.

I worked for a Schmoozer. I was one of the first hires for what was going to be the next Digital Equipment or Wang Laboratories. My role was “minister without portfolio” which meant I worked on marketing issues one day, manufacturing issues the next and accounting operations the next. I had great fun and it was this experience that led me to become a consultant. I had been in a number of meetings with the Schmoozer over 2 years about strategic issues and developing the company’s financing business plan. He stopped me in the hall after one of the financing business meetings and asked why I, who he thought worked for one of the company’s vendors, was in this meeting. His secretary had to intercede toe explain who I was and that he helped hire me 2 years prior, or else he was all set to fire me.

Sharpie: No, not the Terrell Owens type of Sharpie, but the type who is always looking for a shortcut or a way to get ahead, whether legally or illegally, and always at someone else’s expense.

A former multi-millionaire “friend” asked my company to do an analysis of a company he was trying to acquire through receipt of a US government backed loan. What he wanted was my partners and I to produce a glowing report to the agency as the final step to obtain the loan. What the agency got as a thorough analysis of a good little company with nice, hard working people in it, but even with a dramatic turnaround could not support repayment of the loan. At the agency’s suggestion, we then checked into his other financing that would back the loan, and found some curious transactions involving non-existent offshore banks.

When we delivered to the report to the agency, my so-called friend went linear, accusing me of stabbing him in the back. What he wanted was for us to do something illegal, which involved fines and jail time, for filing a knowingly inaccurate (a/k/a lying) report to a federal government agency for use in securing a loan.

There were other and legal alternatives to acquiring this company, which could have done pretty well, though would never be a spectacular success. These alternatives involved investing his own money and securing any loan with personal assets. No, he had a scam going and didn’t really didn’t need to have one.

Whackball: Not just your typical managerial moron, psychopath or mental defective, the whackball’s personality is erratic and toxic which makes life hell for his employees. I’ve worked for two whackballs.

The first was a really a salesman, and his demeanor or skills weren’t compatible for being a senior manager. Out of the blue, for no reason at all, he would scream at any of his reports for non-existent transgressions, like not giving him a monthly report he wanted. Explaining to him that it was only mid-month and the report wasn’t produced to the end of the month only made the screaming worse. Then twenty minutes later, he would come up to you in private, put his arm around you and tell you what a great job you were doing. I, like his other managers, tried to stay as far out of his way as possible. To fortify myself for another day of his craziness, I used to drink a six-pack of Tab and eat three large candy bars on my way to work. I was making myself so wired that anything this guy would do would just bounce off the buzz armor.

The second was a software engineer who had started a software development consulting company. He called for help because there was a pattern of half of his employees leaving every three months. For the uninitiated, software engineers are a mutant species. Three generations of software engineers absorbing radiation from hours on end programming right in front of computers have altered their genetic structure. The mutants have bulging eyes, pale complexions, long curved necks and fingers, ability to stay up for days on end, and devoid of social skills.

This software entrepreneur viewed himself as the second coming of Bill Gates and couldn’t understand why those who left didn’t want to be help him develop the new Microsoft. Bill Gates has billions of dollars, so people will tolerate him being completely narcissistic. If you don’t have billions of dollars, then having staff meetings at 3 AM, calling people at home at all hours about how miserable you are, and then ignoring them for days when together in person doesn't endear yourself to anyone. He tried the 3 AM telephone call with me once. I left the phone off the hook and he was still talking when I awoke 3 hours later.

What all five of these personality types have in common is that because of their pathology, they put their own needs ahead of those of the company they are encharged to lead and steward. Individually, these managerial types can cause damage, but the employees find ways to work around them. It’s when you get two or more of them together is when there is real trouble.

Various people have asked me how an Enron can happen. Enron had the combination of the Schmoozer President, Ken Lay, and the Sharpie, Jeff Skilling. They were a perversely symbiotic pair, Lay needed Skilling to run the company, and Skilling needed Lay to present the smooth public presence to provide cover for what Skilling was doing. There’s no way that Ken Lay could come up with Raptors subsidiaries or deevloping derivative markets for the weather and network bandwidth. The culture the two created facilitated middle-level managers to come up with schemes to reallocate electricity from California and then sell the electricity back to the state at much higher prices.

What Lay liked was all the attention his company was getting and his picture on the cover of Business Week and Fortune. Even the recent trial didn’t completely settle the question of how much he really knew. As President of Enron, he was supposed to know and should have known. As a Smchoozer, more interested in sleeping in the White House Lincoln Room, he attended the board meetings (which leaves the question of why the members of the Enron board were not tried for negligence and conspiracy) and as long as the company kept growing rapidly, he left Skilling to his own devices.

For Skilling, ex-large management consulting firm employee, Lay’s noninvolvement allowed him to really be running the company. Someone as driven as Skilling to prove that he could create the largest company in the world, any means that would facilitate that goal, was fine. He and the CEO, Andrew Fastow, probably had great fun cooking up all these innovative schemes, until they got caught, by someone who asked why the numbers on the financial statements didn’t add up, a question Lay should have asked many times before.

Put two pathological executives together and what happens is an outlaw company (Microsoft gets spared this time). Employees lose their jobs and pensions, and individual investors lose their life savings. All because one wanted to be famous and the other wanted to be an industry giant. A sad end for two very sad people and all those they defrauded.

TRD101 knows this: Failed companies just don’t happen, it takes a combination of pathological managers' efforts. Enron wasn’t the first example of this, but it may remain the largest and most pathological failure ever. Enron was breathtaking in how quickly and how extensively the pathologies of two men caused this company to rise and collapse, falling heavily down upon all innocents unlucky to have had any involvement with it.

And that is The Real Deal 101 for today, like it or not.

Send your comments and questions or to be added to or removed from TRD101's distribution list to:

You can read TRD101's work and participate in a group discussion at: and enter TRD101, where it asks for blog search. Please feel free to forward this column to your friends, romans and countrymen, as appropriate, and have them contact me if they have comments or want to receive columns via e-mail in the future.

© Copyright Michael Maynard, TRD101, June 2006.

Friday, June 09, 2006

Secrets and Lies

TRD101: Secrets and Lies

by Michael Maynard

June 9, 2006

I love those conservatives who insist that the United States Constitution should be interpreted strictly with the intent of the Founding Fathers, or that each amendment should be interpreted exactly word by word. Usually these types insist that the Second Amendment means being able to carrying a gun. It does, but there is the first clause, which they conveniently overlook, about having a gun in order to keep a well regulated militia being necessary to the security of a free state. Remember the time in which this was drafted, they had just won independence from the British, so the fear that the British or other countries might invade was very present in their minds. Reading the Federalist Papers is a wonderful experience because you get a real sense of how much Jefferson, Hamilton, and the others had thought about these issues, but also how they would work in a newly democratic society.

For you gun lovers out there, I’m sorry, you are not part of a well regulated militia, unless you consider yourself a one-man vigilante squad ( or an illegal vigilante squad operating on the Mexican border). Even if, I would concede to you that in certain circumstances, like living in an area of high crime, it is prudent to carry a gun in order to protect yourself, then please explain to me why you need to be able to carry a concealed weapon into a church, hospital or amusement park? I’d be concerned that post-traumatic syndrome of having a bad experience with a clown might trigger you to believe you need to defend yourself.

It was an agrarian economy then and the need for a rifle to scare away a wolf attacking the chickens or the cows is more like their intent. Like the Minutemen and the other colonial forces, they needed to assemble quickly to protect against the French invading from the north That’s not the same as needing to carry a snub-nose 38 in your belt in order to pray, unless you’re Muslim these days.

Then there is that darn pesky Fourth Amendment, the one that the “strict constructionists” use to state there is no guaranteed right to privacy.

You have the right to be secure in your person, houses, papers and effects, against unreasonable searches and seizures. This shall not be violated and no warrants shall issue, but upon probable cause, supported by Oath of Affirmation, and particularly describing the place to be searched, and the persons or things to be seized.

I think it’s reasonable that the right to be secure in your person, house, papers and effects against unreasonable searches and seizures could be interpreted as a right to protect your private business and affairs, i.e., a right to privacy, from unwarranted government action. Of course, the founding fathers could not project 200-plus years out and foresee the telephone, the wireless telephone, and the Internet. But aren’t your phone calls like having a face to face conversation, so you’re guaranteed the right to be secure in your person? Isn’t an e-mail message an electronic piece of paper or personal effect? I could also start quoting from the 14th Amendment, but you get the point. It was clear that the Founding Fathers were concerned that an imperial government, like the one they just fought against so long and valiantly, would trample all over the rights of individuals for the sake of protecting the government’s own interests to rule as the government so pleased.

The Bush Administration, with its view of the “Unitary Esecutive Theory”, in essence, that the President of the United States, especially in a time of war, can choose to follow or not follow the laws set by the other two branches of government. This theory, originally develop by Samuel Alito in the Reagan Administration’s Department of Justice, is that the President is the CEO of all departments under the executive branch and can run them as he sees fit. The President can overrule laws developed by Congress and signed by previous Presidents and the rulings of the judicial branch, including the Supreme Court. Bush uses this power in combination with “signing statements” on legislation awaiting his signature. These signing statements, in effect, state “I don’t care what your legislation says and what I just signed,, this is how I interpret the law as it affects the Executive Branch and this is what I’m going to do, even if it’s the opposite of what you passed and I signed.”

The Vice President had his right-hand man, David Addington, go through every line of legislation for perceived intrusion or infringement on the Bush White House’s perception of the powers of the Executive Branch. There is a very interesting profile on Dick Cheney in the June 2006 edition of Vanity Fair. Cheney developed a hatred for Congress and belief that it was stepping on the powers of the President while he was still a Congressman. He is a member of the Federal Government who hates how the Federal Government, as designed in the Constitution, is supposed to operate. It is increasingly clear that the Bush Administration came into office with a hidden agenda which included invading Iraq, outsourcing many functions of the government to contractors, and expanding the powers of the Executive Branch. While this is horrible to state, the Bush Administration has skillfully used 9-11-2001 to implement this hidden agenda.

The Boston Globe reported on April 30, that Bush had claimed the authority to disobey more than 750 laws. Who does he think he is? CEO of Enron? There are none of those 750 laws he claims to be able to disobey more important than the claim his Administration can listen in on phone calls and read e-mails of private citizens, without a warrant or probable cause. Often, Congress didn’t know that Bush had changed the laws he had just signed until after Congress tried to have them enforced. The claim that all this information is needed to be able to “analyze patterns of potential terrorist cell activity” is a lie. This “intelligence gathering” already been used to listen in on the cell phone conversations of TV and newspaper reporters that the Bush Administration suspects (meaning nearly all White House reporters) is receiving leaked information from government whistle-blowers. The White House has refused to turn over information regarding the scope of this NSA domestic spying program stating that to do so would compromise national security. If you think that the NSA was not listening in to the phone calls or reading the e-mails of private citizens, especially those of perceived enemies of this Administration, you’re naive.

We are close, very close, to having a totalitarian Executive Branch, supported by a capitulating Surpeme Court and Congress. Congressional oversight committees request for information are ignored or denied on national security grounds. The Supreme Court just ruled that a federal employee who discloses information about government wrong doing, i.e. a whistle blower, can be fired with impunity. We’ve gone though this widespread Executive Branch paranoia before, just not as widespread and in some respect, not as serious. Even the Nixon Administration didn’t view itself as the sole power of government.

The Bush Administration has set itself up to be unaccountable for any secretive law breaking, or lies told us, Congress, and the rest of the world. Without congressional oversight or challenge by the Supreme Court, we don’t know what we don’t know until later when we find out after some wrongdoing or disaster has been done.

Secrets and lies. Secrets and lies. All of the deliberation, forethought and work of Washington, Hamilton, Jefferson and the other drafters of the Constitution are being undone by the work of men who hate the government offices they have been chosen to serve and protect. They believe because of their position, they are above the laws.This is a far cry from the gentlemen-politician that our Founding Fathers believed would best serve the interests of the citizens of this country.

TRD101 knows this: Lies and secrets, secrets and lies are the work of those with something to hide. Lies and secrets, secrets and lies, are the defense of those who cannot laws abide.

And that is The Real Deal 101 for today, like it or not.

Send your comments and questions or to be added to or removed from TRD101's distribution list to:

You can read TRD101's work and participate in a group discussion at: and enter TRD101, where it asks for which blog you want. Please feel free to forward this column to your friends, romans and countrymen, as appropriate, and have them contact me if they have comments or want to receive columns via e-mail in the future.

© Copyright Michael Maynard, TRD101, June 2006.