Seems like everyone knows that Starbucks shut its U.S. stores last night for several hours to retrain employees/barristers. Even my college-aged son e-mailed me to make sure I knew. The news traveled far and wide. One of the reasons I have been following the Starbucks Saga is that it’s a casebook study of reputation recovery and redemption. The CEO and founder returns as savior and instills a sense of urgency with a shot of humility. In my new book on reputation recovery, CEO Schultz is a text book case for following one of my recommended steps (Step #4) — Resetting the Company Clock. As I write in chapter four,

Instilling a sense of urgency often requires getting the senior team to focus more on what has to happen next and less on what went wrong in the first place. Internal politics and finger pointing distracts leadership from attending to those critical moments when moving toward recovery is essential. Wallowing in regret and recriminations is simply not helpful and keeps the company from moving forward. Even if the company is not frozen in time by recent calamities, business as usual is unacceptable. The pace of getting things done has to be accelerated. A good solution is shock therapy in the form of an overwhelmingly heavy dose of undeniable reality. One CEO, for example, summoned his senior team and displayed charts of its rapidly falling market share. To stun the team further into accepting the facts, he showed slides of competitors with quotes mocking the company. The shock value alone accelerated the team’s drive to rescue the company from their downward spiral.

By shutting down the stores and getting employees to focus on what the chain’s core competency used to be and now needs to be going forward, the CEO has essentially built a burning platform — acknowledge the flames of doom or else we all die. Return Starbucks back to what it once was or else lose out to complacency and sameness. Indeed, all the publicity surrounding the store closings for Expresso Excellence training dramatically underscores that Schultz means business. As someone said in my local Park Slope blog wrote, let’s see how the coffee tastes this morning on Seventh Avenue. To test Starbucks’ sincerity, I went to the Starbucks’ web site to see how they were communicating –if at all – their return to their roots and rebuilding trust. Right there on the home page are links to Schultz’s transformation agenda. Nos. 7 and 8 are clearly posted and I found these words in Communications #8 about last night’s training.

Tomorrow evening, we will come together in an unprecedented event in our company’s storied history.  We will close all of our U.S. company-operated stores to teach, educate and share our love of coffee, and the art of espresso.  And in doing so, we will begin to elevate the Starbucks Experience for our customers.  We are passionate about our coffee. And we will revisit our standards of quality that are the foundation for the trust that our customers have in our coffee and in all of us.But, as I think about it, there is another perhaps equally important reason why we have scheduled this training.  It’s to celebrate who we are. We are Starbucks.  We should be incredibly proud of what we have built. We are the worldwide leader of specialty coffee.  And, believe me when I tell you, we are just getting started.  We will overcome the difficult and humbling challenges we face, and will be stronger for it.  You have my word on that.

Schultz follows my book’s third step to reputation repair and protecting its brand for the long-term — Communicate Tirelessly. I will be watching and ordering a latte today.

Great communications quote in one of the Wharton Knowledge newsletters that I get. “You can never err on the side of communication as a leader,” said Carter Roberts, president and CEO of the US World Wildlife Fund (WWF).  “In the absence of communication, you will be surprised by the incredible things they assume about you…. It’s great to have a vision, but where I see people fall down” is when they fail to “communicate that vision in every way, shape and form, every second of the day.” 

Communications is an integral part of leadership today. We see it being played out right now in the political arena. Obama is a gifted communicator. Hillary, on the other hand, had to communicate her emotional side in order to change the storyline about herself that might have cost her New Hampshire. When people ask me why communications is so important, I remind them how they felt on September 11th waiting for President Bush to speak about the horrific tragedy. Despite what people may think about him today, his words on 9.11 were critical to reassuring to Americans and helped steady this nation’s sense of loss. The wrong words would have been devastating. Unfortunately we saw what happens when leadership communications does fail — when the levees broke in New Orleans and the White House communicated too late about the destruction of homes and human lives. Without a doubt, communications can build or erode leadership reputation as much as any crisis.

A good quote for the day.

Weber Shandwick just released some new research on the executive conference business. The Global Strategic Media Group at Weber Shandwick audited the CEOs and top executives of the world’s 50 most admired companies to see where they were speaking and how the conference world had changed over the past three years.

The “Five-Star Conference” study found that executive participation in top-tier, or Five-Star, events is soaring. Since 2005, there has been an extraordinary five-fold (525 percent*) increase among elite C-level executives at five star speaking forums. For elite CEOs during the same time period, there has been an increase of 35 percent in participation at these distinguished events. Strikingly, the rising importance of these events as a vital communications tool is underscored by a 50 percent rise in the number of top-tier global conferences from 2005 to 2007.

The research also identifies the top events for CEOs (#1 WEF) and C-suite executives (Fortune Innovation/iMeme).

I am pleased to see the CEO/executive conference business heating up again. A few years ago, many of the business publications abandoned this service offering due to the expense and difficulty proving the return on investment. In my humble opinion, it’s a great way to push CEOs to think outside the box and find something important to say. It requires putting one’s thinking cap on and on that subject, I am in favor.

*Small sample size

Have been meaning to mention that I attended a luncheon a few weeks ago where Bill Holstein spoke about the relationship between CEOs and the media. Bill is an award-winning editor and journalist who regularly writes about CEOs and board members. You have probably seen his name mentioned in The New York Times, Fortune, BusinessWeek and so on. Bill just wrote a book for Harvard Business School Press titled Manage the Media (Don’t Let the Media Manage You). It is part of a new series of HBS books called Memo to the CEO. These books provide leaders with advice on a wide variety of topics pertinent to top executives.  The premise of the book is that CEOs are not managing the media well and instead are having their reputations shellacked. Bill’s advice is to manage the relationships with the media for the long-term, not just when you need it. He advises proactively working with shareholder groups, using social media, architecting messages and never underestimating the importance of communications. Instead of living in a “gotcha” media environment, take control or your reputation will suffer.

Bill had a few unconventional ideas. He suggested that all CEOs in training spend one year training in the communications department to learn how to articulate their messages better and understand the media. His hope of course would be that rising stars would see joining the corporate communications department as an opportunity and not as punishment or a career detour. Not sure this will happen soon. His second suggestion had to do with his belief that many reporters do not really understand what CEOs do. He suggested an Adopt A Reporter program where CEOs educate reporters on the overwhelming complexity of the corner office. I thought that these ideas did a good job of challenging the status quo. 

Was reading Portfolio.com and they have their top 10 list of smartest CEO moves for 2007. Could not help but mention their #9 CEO listing. The founder of Rockmount Ranch Wear is 106 and has been CEO for 61 years. And still goes to work every day. What a blessed event. He must have the longest tenure for any CEO. Talk about an enduring reputation. Since we study CEO turnover and we know that one departs just about every five days….he definitely wins the trophy.

I went to their web site and thought this cool mention about Jack Weil, founder, was worth sharing.

ROCKMOUNT is a 3 generation business started by Jack A. Weil, president, who works daily at age 99 100 101 102, 103 104 105 now 106! A true pioneer, he introduced the first western shirts with snaps and also made the first commercially produced bolo ties. Many of his innovations are standards in the industry. Western fashion is worn all over the world.

An article in the Economist (December 1, 2007) writes about embattled British prime minister Gordon Brown: “Yet governments can reach a tipping point after which they find it impossible to govern. People neither like nor trust politicians, but usually suspend their disbelief when a new lot takes over. Once it seems clear that a prime minister is unlikely to improve things, and may not even be around for long, that suspension is over: the civil service starts leaking; cabinet ministers start briefing; the press looks for bad-news stories; and government becomes defensive and unfocused.”

Sounds to me alot like a CEO’s first year…research has shown that by about nine months, employees have a second sense that things will either work or not work with their new chief executive.  Proof again that those first three to six months for leaders can make or break their reputations. First impressions are very costly. No time to waste.

We just released our new findings on Global 500 CEO Departures. Just as it was released this week, I see the news that Motorola’s CEO Ed Zander stepped down. As I have noted many times, being CEO today is a treacherous job. The shelf life is short and reputations quickly tarnished. Here are some of the key findings.

• Over 10 percent of the world’s largest companies lost their CEOs in the first three quarters of 2007. This departure rate amounts to a CEO departure among the world’s largest-revenue producing companies nearly every 5 days.

Global CEO Turnover by Region: First Three Quarters 2006 vs. 2007
	2006		2007
Region	Total (#)	Percent (%)	Total (#)	Percent (%)
North America	16	8.7%	12	6.7%
Europe	17	9.3%	24	12.6%
Asia Pacific	19	15.5%	20	16.4%
Latin America	0	0%	1	10.0%
Total	52	10.4%	57	11.4%

2007 saw more chief executives exit during the first quarter than the following two quarters (26 vs. 15 vs. 16, respectively) and when compared to the first quarter of 2006 (26 vs. 16, respectively).   

Overall, 28 percent of chief executives who left office in the first three quarters of 2007 exited involuntarily. European CEOs were more likely to be pressured to leave their jobs than their regional counterparts.  While only two European CEOs were forced out of office by the end of the third quarter in 2006, nine European CEOs exited involuntarily during the same time period in 2007 – a 350 percent increase.  

Ousted Global CEOs By Region: First Three Quarters 2006 vs. 2007
	2006		2007
	Total (#)	Percent (%)	Total (#)	Percent (%)
North America	3	18.8%	3	25.0%
Europe	2	11.8%	9	37.5%
Asia Pacific	8	42.1%	4	20.0%
Latin America	0	0%	0	0%
Total	13	25.0%	16	28.0%

For the first three quarters of 2006 and 2007, insider executives continued to outnumber outsider executives when new CEOs were selected to lead the world’s largest companies.  Interestingly, 2007 had an even greater proportion of insider CEO successions than seen in 2006 (70 vs. 64 percent, respectively).

Found a memorable quote that appeared in The New York Times at the same time I read the article on the next generation of CEOs (posted yesterday). The article was about how lessons from Shakespeare can prove invaluable for leaders today. There’s even a nice quote from JPMorgan Chase’s CEO Jamie Dimon about the insights provided by Mr. Shakespeare.

A few years ago, I attended a Wharton Leadership Forum in Philadelphia and Ken Adelman re-enacted scenes from Shakespeare. He and his wife regularly teach Shakespearean lessons to executives through their smartly named company Movers and Shakespeares. I was so impressed that I never forgot how impressed I was with King Lear’s insights into power and duplicity.

The article also had a quote from a Shakespearean actor that resonated with me. “CEOs are the modern kings and queens of the global world,” said Kevin Coleman. The continuing interest in CEOs remains steadfast for just this reason. CEOs are the world’s royalty. He said it better.

The New York Times today has a front page article in the business section today on the next wave of CEOs. The article “C.E.O. Evolution Phase 3″ was apparently written as a direct result of recent high profile CEO departures at major financial services companies suffering huge losses from the subprime mortgage fallout. The article’s sub-title was “After Empire Builders and Repair Experts, the Team Captain.”

I can’t help but think that this story has already been written. There seems to have been a general theme in the news media that we went from celebrity CEOs and empire builders to post-Enron custodial turnaround CEOs.  Don’t get me wrong but the Team Captain is not a new leadership theme. Our research at Weber Shandwick on Safeguarding Reputation and the research I have been conducting on CEOs for years has always found that bench strength is critical to building CEO and company reputations. I am now going to wait for the next article in the top-tier media on the Eco-CEO such as GE’s Immelt and others. It cannot be far away.

Since I do collect CEO quotes, there were a few that I highlighted to put on our reputationRX site:

“It’s someone who can assemble a team that functions as smoothly as a jazz sextet.” (USC’s Warren Bennis)

“Both felt the need to make sure the top hundred people know that they’re in this together, that their fates are correlated.” (Referring to P&G’s CEO Lafley and Boeing’s CEO McNerney.)

“The academic research says if you want to predict what the future financial performance over the next one to three years will be, you need to know the top team.” (Wharton’s Michael Useem)

There are so many variations on explaining the next generation of CEOs…what happened to the Tech CEO or the Consensus CEO. Is there room for an Organic CEO or Shy CEO or Spiritual CEO? What about the Safety CEO? In light of recent product recalls, privacy issues and environmental disasters, can the Safety CEO be far from view? I don’ think so. I can even name a few.

Déja vu today reading about CEO Stan O’Neil at Merrill Lynch whose job is in jeopardy due to spectacular losses and proposing a merger with Wachovia without board consent. The article hinted at how the Merrill culture rose up and rejected O’Neil. O’Neil ran the Merrill ship in a very transaction-oriented manner whereas the renown “Mother Merrill” culture was famously relationship-oriented. This description brought back memories of what was said about CEO Carly Fiorina’s ouster at HP. She too was said to have been rejected by the ingrained and long-standing HP Way.  As I have heard some CEOs say, culture is the agenda. Don’t ever kid yourself. Changing cultures is like playing with fire.