Ram Charan, management guru and wise counselor wrote the following in one of his books:

“Exceptional business leaders do what no computer can do. They scan the external environment, and out of all the things that are going on in the world, they are able to identify the significant patterns and trends.”

Ultimately that is the job of the CEO and senior team. Too often companies are focused everywhere but nowhere. Companies that can see themselves five years out within the context of the economic and sociopolitical environment have the competitive edge. Reputations are built on those companies that anticipate the emerging weak signals. For example, how did former CEO Lou Gerstner anticipate the importance of business services? How did Lord John Browne identify global warming concerns? How did CEO Jeff Immelt see that green is green? How did CEO Jeff Bezos see the largest book store living on line?

CEOs have to demand news and information about growing trends and patterns, small and large. It has to be a daily job.

Time to mention our mini-analysis on Interim CEOs. I had noticed that there was an emerging class of CEOs — Interim or Acting CEOs. After reviewing the number of Interim CEOs in publicly-held companies (there were two in privately-held companies) since 2003 and their financial performance, the following information was released this week. You can find the full data on the Weber Shandwick web site.

The number of Interim CEOs has grown markedly in recent years. Last year, there were nine Interim CEOs in place at major companies, a more than four-fold increase from 2003. Notably, more than two-thirds (69 percent) of the 13 identified publicly traded companies led by Interim CEOs since 2003 dramatically outperformed an index of peer companies by a median of 10.8 percent.

Despite the perception that these CEOs are primarily transient caretakers, our analysis reveals that these executives’ performances may be vastly underestimated.

Other interesting findings on this newly emerging leadership group are:

****On average, an Interim CEO’s tenure was 159 days or 5.3 months, ranging from 59 to 300 days.
****During the service of the nine outperforming Interim CEOs, their company’s stock gained a median of 18 percent.
****Among all Interim CEO-led companies examined over the past three years, the median company outperformed an index of peer companies by a significant 8.1 percent.

CEOs continue to depart at a rapid pace as corporate boards take more active roles in overseeing executive performance. As CEO tenures increasingly shorten and former CEOs depart unexpectedly, boards frequently find that successor CEOs are not identified or properly groomed for the chief executive position. Interim CEOs represent a smart solution until boards can find qualified successors or gain confidence in the Interim CEO’s leadership ability.

Interim CEOs generally may deliver superior stock market returns because the market is rewarding the board’s decision to change leadership. Shareholders may experience relief that the company’s strategic direction is finally in new hands and that the short-term CEO will make the necessary tough decisions.

Last week I also recall that an Interim CFO was named. Perhaps at Allied Healthcare. Seems to be catching on.

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Priceless. The support from Warren Buffett for GM’s CEO Rick Wagoner is symbolically displayed in Fortune. Buffet is standing next to the Cadillac DTS he bought as “one vote for the guy.” All came about when Buffett sent Wagoner a note praising the auto CEO’s appearance on Face the Nation. This single act is one way of boosting Wagoner’s reputation. Priceless.

Priceless. Warren Buffet’s support of the Bill and Melinda Gates Foundation. Good news all around. Makes the world seem like it is going in the right direction when you hear about good deeds like this. I was also pleased to read that Buffett’s largesse would go to the Foundation as long as one of the Gates’ was still there. How nice to think that if Bill Gates had to return to Microsoft or something happened to him that Buffett had confidence in the female side of the equation. Pumps up Buffett’s already admirable reputation in my book. Again, priceless.

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Saw that Starbucks has a Rumor Response effort. On June 7, 2006 they posted a statement about a false rumor that must be circulating. The rumor is that founder of Starbucks’ Howard Schultz and/or the Starbucks Fund allegedly support the Israeli Army. As noted in the Starbuck’s statement: “Starbucks is a non-political organization and does not support individual political causes.” Also interesting that their Press Room has as its heading, Press Room and Rumor Response. They are dead serious about communicating who they are.

The statement is short as it should be. Contact information is provided.

The need to issue a statement about false rumors is critical today because rumors can severely harm business and reputation.

Thought I would point this out since several other Fortune 500 companies have to similarly protect their reputations from false rumors and myths. Companies used to not fight back but we are seeing them increasingly stand up for themselves these days. As they should.

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Heard about some new automotive-advertisements coming to our TV sets. CEOs will have the starring roles. Have to wonder why now? I can’t say that Detroit chiefs are known for grabbing the spotlight. Yes, there was Lee Iacocca but times have changed.

Bill Ford of Ford Motor Company is continuing his advertising series on safety and innovation that began in October 2005. Yet this time Ford will be talking about our dependence on oil and what Ford Motor is doing about our so-called “addiction.” Ford will be discussing his company’s efforts to improve fuel efficiency in an attempt to improve “the company’s environmental reputation.” More on these ads at mlive.com

His counterpart in Germany, DaimlerChrysler Chairman Dieter Zetsche, will also be featured in advertisements next month. The ads will reportedly convey the distinctiveness of U.S. Chrysler vehicles embedded with a little of that prestigious German technology we all lust after. Apparently, the article on detnews.com where I read about the launch says that Zetsche will be subtly reminding people that the fusion of American-German cultures is what distinguishes his line of cars from main line Detroit manufacturers.

CEOs appearing in ads more or less started with Iacocca. We then went through several years of dot.com advertisements where CEOs were as important as the products and business models they were hyping. Lately, most advertisements where CEOs are featured exist for the sole purpose of announcing a merger, begging shareholders to renounce a hostile suitor or showing a new face because the previous one is tainted.

Since CEO-starring ads have declined over the past several years as CEOs averted people’s eyes due to Enron, WorldCom and Adelphi, these new CEO-starring ads might have the advantage of standing out and showcasing commitment.

Being a CEO-junkie as I am, I have to hand it to these boys for agreeing to be in these ads. I am sure it is the last thing they planned on doing this year. Someone had to convince them that they had no choice as public opinion increasingly sours as gas prices hike up. We have to give each CEO an applause for doing what must go against their grain. For that reason, I will listen to what they have to say.

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It is worth reading The New York Times’ public editor’s progress report on the paper’s recovery of its integrity as the three year anniversary of fabricator Jayson Blair approaches in July. Public editor Byron Calame surveyed current Times members and spoke to others to query whether this kind of fraud could ever happen again. Consensus seems to be “maybe” although it would be a whole lot harder now. Like many companies recovering from crisis or damaged reputation, the NYTimes has made some right moves:

*Hired an internal and external task force to investigate what happened and where they went wrong
*Hired a Standards editor to check all anonyomous sourcing…similar to a Risk or Compliance Officer that many companies have hired
*Hiring of a public editor for readers to complain to when facts are just plain wrong (can you imagine if all companies had someone to write to or complain to who really listened?)
*Developed a database of errors to highlight staffers who abuse the written word (many companies also begin the benchmarking process during this period)

All of these are steps are notable and necessary. However the most important change at The New York Times came when leadership changed hands. As the public editor notes, new executive editor Bill Keller is accessible, open to criticism and does not play favorites.

When you review the literature on companies that recover reputation, changing the culture is always the agenda and the only agenda. For most CEOs, culture-change is the hardest part of the restoration process and the one they feel most ill-equipped to manage. When you read Fannie Mae’s CEO Daniel Mudd’s remarks about its $11 billion scandal and the changes it has made over the past two years, culture is at the center of its transformation. As Mudd remarked to the U.S. Senate Committee on Banking, Housing and Urban Affairs: “I have heard your comments today, and I have heard many more in private. The days of arrogant, defiant, ‘my way’ Fannie Mae had to end. We have begun to build a Fannie Mae that listens better, welcomes accountability, works with our regulators and with Congress, and serves the maket by putting our mission to serve housing first.”

Recovery starts and ends with company culture. The New York Times Blair fiasco would never have happened if its culture was in working order.

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This week I was talking to a friend of mine, Rob Duboff. Rob is CEO and founder of HawkPartners, a marketing and communications strategy company. He is very knowledgeable about leadership trends and offhandedly mentioned that what the world needed today was a CEO Preservation Society. I could not agree more.

With CEOs exiting their jobs at an increasingly rapid rate (approximately two to three per day), we need to figure out how to keep CEOs longer and make the job appealing to the next generation. We also need a way to preserve their good counsel. After having been CEOs, they should be in great demand for advising newcomer CEOs on what works and doesn’t work. In my opinion, it should not matter why they exited their jobs as much as what they can impart to rising stars.

Years ago when I was at Fortune, the magazine had an annual feature titled the Business Hall of Fame. CEOs would be honored at a yearly event and featured proudly in the magazine. One wonders if a similar venture could ever work today. Most CEOs fall off their pedestal for one reason or another and the politics surrounding such membership would doom an event from the start.

Thoughts to consider.

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The Pew Research Center released new survey findings today that show that the reputation of the U.S. continues to decline. The Iraq war is one of the major factors impacting world opinion. The decline in America’s reputation is particularly acute in Spain, India, Russia, Indonesia and Turkey. Imagine this…in Turkey, only 12 percent have a favorable view of the U.S. Could it get any worse?

The survey is conducted in 15 nations and also investigated which international news stories people had heard about. Over 90 percent of people in each country has heard about the Avian flu. That is an astounding figure — nearly everyone! Now compare that high figure to the survey’s other finding that a mere 28 percent of people in Indonesia and 23 percent in India have heard about the Abu Ghraib/Guantanamo prison abuses. And think about this — only 76 percent of U.S. citizens have heard about the prison abuses compared to nearly 90% in Germany, France, Spain and Japan. What is wrong with this picture?

What really startled me was the Pew finding that global warming is not of major concern in the U.S. and China. Only about 20 percent of U.S. and Chinese citizens report that global warming is of great concern to them compared to approximately 66 percent of Japanese and Indian citizens. Considering all the advertising and messaging in the U.S. over gas emissions, carbon footprints and Al Gore’s new movie, An Inconvenient Truth, global warming is not penetrating the American mindset. The global climate change message is not having the impact that it should. Seems to me that it is time to change direction. What will it take?

Many questions that I do not know the answers to.

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Found myself reading an article today about Intel in the Mercury News. The title was “Intel at Its Best in the Eye of the Storm” by Dean Takahsahi. He was making the point that some companies do best when their backs are against the wall. The idea that some companies are great comeback brands is compelling.

Intel, according to the writer, is a comeback brand. Now that competitor AMD is winning share and reputational equity, Intel’s management can’t help but see the storm clouds gathering. Intel’s comeback will be stepping on the accelerator and moving quickly to its next destination. Some companies call this dark phase “instilling a sense of urgency” or “a burning platform.” Whatever it takes to ignite the power internally and focus everyone on success. We have seen it before. Think Apple, P&G, Microsoft and others who have faced tough competition and unfavorable public opinion only to find themselves back on top.

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Today’s New York Times covered Hillary Clinton’s strategy to recast her ill-conceived 1994 universal health coverage plan within a framework of Lessons Learned. Knowing that a presidential bid may well be in her future, the New York senator wisely put her own personal “spin” [I hate that word but it works here] on Hillary-gate. “A lot of people know that I was involved in health care back in ‘93 and ‘94, and I still have scars to show for it.” She also added, “We were trying to do something that was very hard to do, and we made a lot of mistakes.” As Times reporters’ Toner and Kornblut noted, Hillary is trying to show that she learned well from past experiences.

The Senator’s recovery strategy is smart. Hillary is couching her acknowledgement of the health care plan disaster within the context of the times. As in business, boards want to hire CEOs and top executives who have failed at some point in their careers. Failure is how executives learn to succeed and lead others. What company wants someone at the helm who has never suffered a setback and been forced to eat humble pie? Who wants another Chainsaw Al Dunlap in the corner office? Companies as well as governments need executives who learn to fail, not those who fail to learn.

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