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Qualities of a CEO

November 24, 2015

CEOs are often associated with large, publicly-held companies.  However, every business and not-for-profit organization [NFP] has a CEO, although they do not always have that title.  The CEO is the person at the top that is ultimately responsible for the execution of the organization.  Here are some of the qualities the CEO needs.  Some of these qualities are organizational rather than personal but an effective CEO needs to establish, oversee and preside over all of these regardless of who is responsible on a day-to-day basis.

  • Oversight, maintenance and “ownership” of the business model – Being clear about the organization’s mission and purpose and keeping it on tract to attain those purposes
  • Strategic initiatives – Making sure the organization doesn’t remain stagnant and stuck in a rut
  • Visionary ideas for future – Searching for ways to break out of the present mode and to match them with what is achievable without disturbing the present model
  • Close eye on financial performance – Not just daily key performance indicators [KPIs] and current profit and loss, but cash flow, adequacy of capital for current infrastructure and expansion and growth, banking relationships and credit lines and loan covenants, and the balance sheet.  Actual results should be compared to budgets and projections and variances explained
  • Leadership – You cannot be a leader without people following you.  The CEO needs personal influence, integrity, mentorship qualities, a strong work ethic, unbreakable ethics, and the ability to create teams, obtain a consensus and bring people together
  • Personnel management – Staff people and team members need to be treated individually assigning, mentoring, training and nurturing each so they maximize their strengths while being shielded from activities they do not perform well so overall the organization functions with people working great at each level
  • Organizational agility – The CEO needs to create an atmosphere of personnel empowerment without the fear of people being blasted for mistakes and errors of judgment [if it occurs too often then there needs to be a re-evaluation of that person].  Included here is a culture of seeking out and a quick evaluation of innovation along with the ability to adopt and adapt quickly to new processes
  • Customer centricity – it is always about the customer and their satisfaction.  The CEO should never lose sight of this.  This is what causes the revenues to flow in
  • Products sold – The products and services delivered need to have consistent quality delivered with a reliability that makes the organization a preferred source, regardless of the pricing
  • Competitive pressures – The competition needs to be scrutinized looking for changes they make and also for disruptive actions by those not presently considered to be competitors
  • Brand and culture management – The CEO is the CCL [Chief Cheer Leader] and needs to lead the organization’s branding and culture.  The CEO also needs to oversee the publicity, public relations actions and marketing social media claims and direction and to make sure they are coordinated and on target with the overall mission of the organization.  It is the CEO;s responsibility to assure that everyone in the organization adheres to the branding message and company culture
  • Risk management – Protocols need to be put in place to assure that unnecessary or excessive risks are not occurring.  The CEO needs a direct line to those entrusted with this responsibility.  Once the processes are in place there needs to be a no short cut policy
  • A strong system – Every organization has a system though not necessarily a good one. It is the charge of the CEO to make sure the system is strong, facilitates the operations in an effective and efficient manner, is alert to reacting and eliminating bottlenecks, is easy to train, learn and follow and has the right checklists so the goals of the organization will be accomplished with as low cost as possible
  • Project management – Resources need to be properly and timely allocated with the right people assigned to what they do best.  Due dates need to be communicated and closely monitored with the CEO able to receive updates as one of the daily KPIs.
  • Inventory management – This fits under project and financial management and a strong system, but also includes the flow of work, not letting unfinished projects get stale or have financial and/or space resources tied up in nonproductive or under-performing inventory
  • Supply chain – The CEO needs assurances of the continued viability of the supply chain if a product based organization or continuing flow of the right type of personnel if a service based organization.  The daily departmental activities can be delegated but the overall responsibility is the CEOs
  • Invest in future – An effective CEO needs a willingness to invest in the future.  This means committing resources to and following through on thoughtfully planned projects
  • Buy-in – While in many situations the CEO is a “dictator,” serious buy-in is needed from every stakeholder.  Just because the boss tells someone to do something doesn’t mean it will get done.  In some respect, each person working in an organization is their own boss deciding what they will do and when based on their sense of priorities and what they believe is important.  An effective leader gets buy-in to the advantage of the organization and its systems and processes
  • Change agent– Businesses are not concrete structures devoid of the need for alteration, change or growth.  Many times the genesis for change comes from factors outside the organization or industry.  The CEO needs to be a change agent using inquisitiveness and a wandering eye for what’s new or outside the box taking ideas from other sources.  This can be easily accomplished by trend-searching which can be done by perusing best-selling and business book sections in book stores and the extensive magazines for sale there.  Noticing a crop of magazines on a specific and new topic can alert anyone with an open mind that perhaps a trend has or is developing.  Most may not be applicable, but I can assure you from personal experience that I spotted many nascent trends from paying attention to a growing volume of magazines or lead stories from quick browses at magazine racks
  • MBWA – You cannot learn what is going on sitting in your office.  An effective CEO needs to Manage by Wandering Around.  See what your people are doing in their offices, production floors and shipping areas.  Visit key customers and suppliers – some can be impromptu when you are just passing by after another visit is the area.  GOYA – Get Off Your Ass!
  • Ability to listen – No one knows everything and even if someone is brilliant in some areas, it doesn’t mean that they cannot learn from others.  Listening is a little used trait.  Listen, pay attention and elicit comments, and especially complaints.  That is how the CEO will learn
  • Transparency – Working in secrecy does not work, unless it is a top secret new project and then discretion is needed not to alarm people that find out through leaks.  Openness is important, allays fears, thwarts and stifles rumors, and creates trust and security in the leadership and organization
  • Respect for the Board – In larger organizations while CEOs are the boss, they answer to a Board of Directors who determine the overall policies.  For many smaller and almost all entrepreneurial businesses this is not the case and the CEO also wears the hat of the Chairman of the Board.  As such, it is suggested that the CEO have a quarterly “Board” meeting where they present a report and summary of the company’s activities.  This “forces” the CEO to take a step back and reflect and account for their actions and company performance.  Invited to the meeting could be outsiders such as key personnel, the company’s attorney, accountant, business coach or other advisors whose judgment and opinion they respect.  Note that this entire process including the preparation can take about a day – I think this is a valuable way for the CEO/Owner to spend their time, even if the only person at the meeting is the CEO.  It brings a reflected look to someone that doesn’t really feel they need to answer to anyone

The CEO is the boss and the head person in an organization.  It is usually not an honorary position, but one that carries a great responsibility to maintain the organization’s viability on a current as well as continuing and sustainable basis.  If you are a CEO or if you oversee or are hiring a CEO, review these quality features and determine which of these are applicable to you or your organization.

Over 50 Book for those Starting Out or who are in Mid-Career

November 19, 2015

My friend, Robert L. Dilenschneider, wrote a book to help people over 50 jump start their career.  This book is named incorrectly – it should be called a Primer for Succeeding and Getting Ahead at Work and Business.

50 Plus! / Critical Career Decisions for the Rest of Your Life addresses the reader assuming he or she is over age 50, but that direction should be ignored; and that is the only thing in the book that should be ignored.  Bob’s advice covers every facet of how one should act at work or business regardless of where they are in their career.

Chapters deal with:

  • The new rules.  Every period has new rules and we need to know today’s.  Bob points out that some are perennial with many nuances
  • The lay of the land.  The economy, politics, demographics, lifetime jobs with one company and the speed of information have changed making how we grasp, understand and look at things more important than ever.  This chapter provides a digest with explanations of the hot button areas we can all learn something from
  • The real deal on image.  Whatever you know can be enhanced by reading this chapter which includes an incisive father and son interview on how to present yourself
  • Time to change.  Whether you have a job or business there are tell tale hints of when there should be a change.  Bob identifies many of them and indicates strategies to use for your advantage
  • Get a Job.  This covers the job hunting process but the tactics mentioned can be applied to those securely in their position or in their own business.  This chapter is “everyone’s” personal development guide and gives many ideas on how to land a meeting with a prospective employer or customer
  • On Your Own.  This covers ways to start or get into a business with useful information how to prepare for any circumstance
  • Becoming a consultant.  A how-to guide to get business and more
  • A PR Primer.  Bob is a master of public relations and CEO strategies.  He shares many of his insider methods
  • Bridging the Generation Gap.  Things are different and ever-changing.  Many of the younger generation are the early adapters creating a gap.  This chapter explains how to stay current
  • Getting Back in the Game.  No matter what your age may be, you could have setbacks.  Here is a how-to-get-back-on-track organizer.  There are many other tips here (just as there are in every chapter) on how to conduct yourself in myriad situations

Each chapter is bifurcated into multiple mini-chapters oozing with guidelines for almost any situation you will encounter.  These situations present themselves in business and also throughout your personal activities.  The chapters are thoughtful treatises and some include interviews with recognized leaders adding their counsel.

Bob wrote previous books on the beginning and mid-term of your career, but this trumps them for every age.   Regardless of the status of your career, this is a book with gems you can immediately put to good and profitable use.  Read this book – you will like it and will benefit from it.

IRA Required Minimum Distribution Kit

November 17, 2015

Lots of people call me that need to start their IRA required minimum distributions (“RMD.”)  I also get calls by those that already started, have multiple accounts and from people that want to know if there are instructions they can leave to their beneficiaries.  Here is a “kit” you can use to calculate the amount and timing of your first payment and two letters you can also use.  Reference this as a guide and double-check everything with your financial advisor.

IRA Required Minimum Distribution Starting Date Table

Sample 1 Sample 2 Fill in your #
Date of birth June 1, 1945 Dec 1, 1945
Date attained age 70 June 1, 2015 Dec 1, 2015
Date attained age 70½ Dec 1, 2015 June 1, 2016
Required beginning date April 1, 2016 April 1, 2017
Attained age during the calendar year age 70 ½  was attained (used for life expectancy purposes) Age 70 Age 71
Life expectancy to use if first distribution is made in year attained age 70 1/2 27.4 26.5
Life expectancy to use if first distribution is made by April 1 in year after attained age 70 1/2 26.5 25.6
IRA valuation date for first payment if payment made in year attained age 70 1/2 Dec 31, 2014 Dec 31, 2015
IRA valuation date first payment if payment made by Apr 1 in year after attained age 70 1/2 Dec 31, 2015 Dec 31, 2016
Date second payment must be made by Second payment must be made by December 31 of the year after IRA owner attained age 70 ½ regardless of which choice is made for first distribution.  So it is  possible for two RMDs in that year
Thereafter one payment must be made each calendar year

Uniform Distribution Table

(Based upon the age of the IRA owner on their birthday in the year of the distribution)

(This table is not applicable where a spouse more than ten years younger is the designated beneficiary.)





70 27.4 93 9.6
71 26.5 94 9.1
72 25.6 95 8.6
73 24.7 96 8.1
74 23.8 97 7.6
75 22.9 98 7.1
76 22.0 99 6.7
77 21.2 100 6.3
78 20.3 101 5.9
79 19.5 102 5.5
80 18.7 103 5.2
81 17.9 104 4.9
82 17.1 105 4.5
83 16.3 106 4.2
84 15.5 107 3.9
85 14.8 108 3.7
86 14.1 109 3.4
87 13.4 110 3.1
88 12.7 111 2.9
89 12.0 112 2.6
90 11.4 113 2.4
91 10.8 114 2.1
92 10.2 115 and older 1.9

Sample Letter When There is Multiple IRA Accounts and Required Minimum Distribution Will Come Out of Another Account

Insert name and address of IRA Owner at top of letter

Account #____________________


Name of IRA Custodian_____________________________


City_____________________ State________ Zip________

Dear Sir or Madam:

Thank you for advising me of my required minimum distribution amount for the year _______.

Please be advised that I will take or have taken distributions from my other retirement accounts to satisfy the minimum distribution requirement.




Sample Letter to IRA Beneficiaries

Insert name and address of IRA Owner at top of letter

Warning letter to seek professional assistance


You have been named as a beneficiary of my IRA.

You should seek personal guidance BEFORE you request

or accept any distribution from the account.

You should not change the names on the account; and should not take, deposit or receive ANY distributions before getting advice.  Doing the wrong thing could make the entire IRA taxable in the year of my death instead of allowing the distributions to be taxed over either your life expectancy or my remaining life expectancy, depending on when I died.  Also, receiving any distribution can ruin your chances to have tax planning done for you or your family such as making a qualified disclaimer and considering the IRA for asset protection.

I hope you make the most of this inheritance.

Good luck!

With love,


Investment Decisions Based on Changing Models

November 12, 2015

My previous blog discussed changing business models and illustrated this in part by using market values.  Some people called me wondering if this was a way to assess whether that should be used to make investment decisions.  It is definitely not an investment criterion.  The blog was intended to show the new way business is being conducted and the disruption to long established industries, not to tell you what is a good or bad investment.

I don’t have to reach back too far to remind readers about what happened in the late 1990s with the “dot com” bubble bursting.  Just to reiterate, the NASDAQ index reached its peak on March 10, 2000, closing at 5408, and then fell to 1108 on October 10, 2002.  Even today, it is still lower than its year 2000 high.

I’ve written some blogs on investment criteria but I feel it needs another look and a reminder.  Major criteria for investing in a company should be the sustainability of the business with current profits or potential for future profits.  Basically, the price of a stock is nothing more than the current value of its expected returns which can only be in the form of dividends or a rising stock price.

Some internal things that drive value are the profits earned and the company’s ability and willingness to distribute them to its shareholders in the form of dividends or share buy backs.  Retained profits that are used to grow the company need to evidence this at some point with added profits that should also provide a return greater than the investors could have realized if those funds were distributed rather than used by the company.

In analyzing a company you might want to invest in, you would need to review its product lines, margins, growth potential, customer base, company brand and franchise, market share and whether it is growing.  Analyze whether or not it can grow, sales and profits per employee, number of units sold, order size, new markets company can enter, new products, its competition, its potential for being disrupted, its debt structure and exposure to interest rates, what countries it does business in.   Pay attention to how those currencies perform in relation to the U.S. dollar and their inflation rates, and the trends of each of these items and much more.  You also need to understand how profits are generated.  I don’t want to be cynical, but you would also need to know that the information provided to the public is honest because we have just seen how this can destroy the value of a company.  Now, here is the killer… even if you had all of the right skills, you would not be able to obtain much of this information.  This is the type of information I review when I do due diligence for a company a client wants to acquire.  Buying stock is nothing more than buying a company.  If you don’t believe this, ask Warren Buffett and his partner Charles Munger who have always maintained this.

There are other risk factors – too many to mention here, but you can access them in most company’s Form 10K filed annually with the SEC.  Go to  to search for your company.

There is a takeaway to today’s blog.  If you want to own stock, do not buy individual companies; buy them in a mutual fund or index fund tailored to your investment goals.  And, don’t try to make that killing or out-smart everyone else.  However, you can still lose – just look at the roller coaster NASDAQ values mentioned above.  Invest with care, caution, with goals and don’t be stupid.

Every Aspect of Your Business is About to Change

November 10, 2015

This title is the cover story of the Nov 1, 2015, issue of Fortune written by Geoff Colvin.  The article is mind-opening and expanding and should be required reading for everyone running a business.

The article begins “Imagine…a new world in which labor, information, and money move easily, cheaply, and almost instantly.  Psst– it’s here.”

Many examples are provided with various metrics.  The point is not exactly what the numbers are, but the trends that they represent.  General Motors has a $1.85 market value for every $1.00 of physical assets and $240,000 of market value per employee while Tesla has $11.00 of market value for every $1.00 of physical assets and $2.9 million market value per employee.  Visa is the champion with $101 market value per $1.00 of physical assets.  Facebook has $53, Twitter $31, Apple $30 and Johnson & Johnson (JNJ) $20.  For comparison Berkshire Hathaway has $2.3 per $1 and GM $1.85 of physical assets.  Apple, JNJ, Tesla and GM sell products while the others do not.

Apple provides a model of what to expect.  They sell products and have brick and mortar stores. Yet, while they are considered a manufacturer they really do not make anything – they outsource their production.  Their strength in getting their products to customers is with coordinating their global supply chains with systems and rigid procedures, quality controls, tight time scheduling and focused management and oversight.  That is the new model.

What is not measured and counted is the intellectual capital the new model companies have.  This includes software, patents, copyrights, brands, other knowledge, customer capital, supplier relationships and human capital, i.e. the people that work for the company. I once heard Bill Gates say that if a certain 30 people left Microsoft, there would be no company.  Mr. Colvin puts the number today at 100.  Either way, a very small number of employees appear to create substantial value of today’s new model companies.

Some dramatic illustrations of industry disruption caused by this new model is the travel agency industry where user friendly hotel and airline booking sites caused 18,000 travel agencies to close; selling eyeglasses, men’s grooming products, books, gift items, electronics and myriad other products caused many traditional retailers to close or hastily adapt to on-line selling.  Skype services that brought in $2 billion revenues in 2013 to Microsoft wiped out $37 billion of revenues of traditional telecom firms.  The market value of Uber is $51 billion while the market value of every NYC taxi medallion is $13 billion.  Buying habits have changed along with the selling models. On-line selling and Internet based services are no longer the trail blazers – it is the current model, with many other changes indicated and anticipated.

Businesses are dynamic with constant changes and their existence and rationale are subject to many factors, which the model described here is one of.  As suggested, it is an important one.  The article is well worth your time as are the related articles and side bars in the issue.  A link to this article is: here.

Ask yourself, “Is your company ready?”  If not, get started!

Just Because An Idea Is Old Doesn’t Mean It Is Outdated

November 5, 2015

Last week I wrote about moving forward since The Future is Not the Past. Today I want to say that there are many old ideas that are still good and should not be discarded just because they are old. Here are some financial and investment examples:

  • Bond ladders are a method of buying individual bonds for short to long term periods with staggered due dates. It provides regular maturities where the funds can be used, reinvested or invested elsewhere. This is not a new idea but still is effective. Because of low rates, active management of bond portfolios is presented as the better way to invest, which I don’t agree with for most investors
  • Diversification within a stock portfolio is a method of spreading risk among categories and types of stocks. In the “old” days there were limited ways to do this. Today there are hundreds of choices. I suggest sticking to a limited number of choices especially with wide spread availability of index funds
  • Cash flow from investments has always been the goal of asset accumulation; and it still should be. Today many investment managers stress asset growth and lessen the importance of cash flow. One reason is because with the low interest environment most investment manager’s fees wipe out the yield. I contend that it should always be about the cash flow – that is what you will spend or reinvest
  • Bank certificate of deposits are still the best way to invest funds up to five year periods. Rates stink, but CDs offer the best way to do it. I do not think intermediate term bonds are a better alternative, although that is what the “smart” guys are recommending
  • Annuities are great or not good depending upon who you listen to. Annuities are an old product that keeps getting “new” enhancements; but one thing to consider is to look at fixed annuities as an alternative to bank CDs or bonds for periods up to ten years as part of your ladder
  • Tax planning is still valid, just that it has become more sophisticated. The old ways of saving taxes by coming up with myriad “unreimbursed” expenses or using “manufactured” tax shelters doesn’t work, but sound planning still provides benefits. There is also great value to integrating tax and investment planning
  • An old idea is that large home mortgages are not good while current thinking is that large mortgages are good tax shelters. You cannot get richer paying interest unless you can invest the excess funds for a higher return. Any guaranteed higher returns are marginal at best while nonguaranteed returns can be pretty risky. Why assume a risk that you do not need to? If you want to get wealthier, pay down your debt including your mortgage and then invest the liberated cash flow in accordance with your investment plan
  • Investment policy statements are an old idea that takes effort to define clearly what your goals are and how to attain them. There are no short cuts to goal setting and the IPS creates the right protocol to get it done

In the right situation, old things still work. Don’t jump to something new because it is not old. Consider what you do with an open mind and with the understanding of what it takes to profit or lose with that decision. Just because a technique is old doesn’t mean it is outdated.

Alan Mulally’s Team-Building Plan

November 2, 2015

Last week, I heard Alan Mulally, retried CEO of Ford, give a presentation of how he turned down federal funds and proceeded to turn around Ford during and after the 2008/2009 financial meltdown.  He was open and engaging and willingly shared his insights.  He only used one slide in his 80 minute program which I am sharing here.  This is his team-building blueprint that helped Ford overcome a $17 billion projected loss when he took over.  There are ideas below that every manager and leader can adopt.

Skilled and Motivated Team

Working Together Principles and Practices

  • People first
  • Everyone is included
  • Compelling vision, comprehensive strategy, relentless implementation
  • Clear performance goals
  • One plan
  • Facts and data
  • Everyone knows the plan, the status and areas that need special attention
  • Propose a plan, “find a way” attitude
  • Respect, listen, help and appreciate each other
  • Emotional resilience…trust the process
  • Have fun… enjoy the journey and each other

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