Bank of America Corp. directors are hitting a new hurdle as they hunt for the giant bank's next CEO: Obama administration pay czar Kenneth Feinberg.

William Demchak, senior vice chairman at PNC Financial Services Group Inc., spurned a feeler last week from a recruiter for the Charlotte, N.C., bank, according to a person familiar with the situation. Mr. Feinberg's required approval of the compensation package for whomever succeeds Kenneth D. Lewis was a major factor in the decision, this person said. Mr. Demchak also didn't see the bank's situation as fixable given the government's heavy influence over the company…

…Mr. Feinberg's role as overseer of seven companies that received huge government aid gives him enormous influence in the succession process at Bank of America. Once directors make a decision and negotiate contract terms with their chosen CEO, the compensation package must be submitted to Mr. Feinberg for approval.

Mr. Feinberg declined to comment.

via online.wsj.com

Yes, the design of incentive plans across the financial services industry clearly played a significant role in shaping behaviors that led to our recent financial collapse. Yes, responsible parties should focus on how these plans are constructed, so as to align incentives with intended outcomes for the enterprise.

But no, it is not a good idea for compensation to be controlled by a czar of the federal government.

The appropriate responsible parties should be found in the Board of Directors, who in turn should be accountable to shareholders to ensure that compensation systems are constructed wisely and with maximum transparency. 

In circumstances where the Government has provided extraordinary assistance, it should have rights equivalent to those of a major shareholder (whether or not it is in literal fact). The board must be able to justify its and management's decisions regarding compensation (among other matters as or more important). If it cannot do so, the remedy is its removal.

Compensation, with its politically charged links to populist anger, has taken way too prominent a place in our discussion of causes and remedies to the crisis. The very idea of a pay czar is a bad one on the face of it. Should we also appoint czars for the dozens of other categories of decisions that businesses must make everyday? How about one for responding to disruptive new technologies? They can kill companies. How about one for pricing? That worked well in the 70's. How about one for setting production levels. Too much or too little inventory can kill a company. There's a name for that I think…

DVR, Once TV’s Mortal Foe, Helps Ratings

By BILL CARTER

In what may seem a media business version of the Stockholm syndrome, television network executives have fallen in love with a former tormentor: the digital video recorder.

The reason is not simply that more households own DVRs — 33 percent compared with 28 percent at this point in 2008 — helping some marginal shows become hits. It is also that more people seem content to sit through the commercials than networks once thought.

These factors combined mean DVR ratings now add significantly to live ratings and thus to ad revenue.

“The DVR was going to kill television,” said Andy Donchin, director of media investment for the ad agency Carat. “It hasn’t.”

via www.nytimes.com

There's a lesson to be learned here: Disruptive technologies, as DVRs are to the traditional TV ecosystem business model, are most often better embraced and harnessed, rather than fought. The results can be surprisingly positive.

Times of change create leverage for shifts in market position. Leader / incumbents all too often see threat, when they should be seeing an opportunity to solidify and extend their positions into another generation of customer experience. This takes courage, confidence and imagination. If mustered however, it brings great reward.

Ellie and I visited The Frick Collection in NYC last week, for the first time. Located in the former residence of Henry Clay Frick, prominent 19th century industrialist / capitalist who made his first fortune in coke (no… the kind used as a critical input to steel production), then, on teaming up with Andrew Carnegie, in steel.

It's called the Frick Collection, not the Frick Museum, because the vast majority of its enormous assemblage of paintings, sculpture and decorative items were hand-selected by Frick himself. (The balance have been selected by a trusteeship, whose first president was Frick's son.)

If the building was empty and had barren walls, it would still amaze. By the time he set out to have it built, Frick had split with Carnegie, amidst great acrimony. The former "junior" partner in the Carnegie enterprise was determined to build a monument that would make the formidable residence of his once colleague, just north on Fifth Avenue, look like a hovel.

Intrigued to learn more of the history of these two titans of America's Gilded Age, I sought a biographical history that might fill in some of the particulars. Which is how I now find myself reading "Meet You in Hell," and even before finishing it, recommending it to your attention.

The title is taken from a closing episode in the shared history of the protagonists. On his death bed, after twenty years or more of no contact with Frick, the older Carnegie scribbled off a note suggesting a reconciliation meeting, and had it delivered by his assistant to the very building I visited last week. On reading it, Frick crumpled it into a tight ball, tossed it at Frick's man, and said, "Tell Carnegie I'll meet him… meet him in Hell, because that's where we're both going!"

After reading only the first third of this excellent volume, it's clear to me already just what lay behind that comment.

These were hard men. Their goal was accumulation of wealth. And that's what they did. Many of the key levers  they pulled toward that end would have landed them in jail today. Partners were wronged. Outside shareholders worse. Employees died and were killed.

Frick's reputation was reasonably consistent with the facts: he was viewed as a hard ass in his day. Carnegie's was more confused: he regularly used pro-union, populist rhetoric, while engaging in and authorizing the strongest of strong arm tactics against those very movements. Machiavellian? Self-rationalizing delusion? Don't know.

Regardless, it makes for fascinating history to ponder. And, as a free market capitalist by nature, it's illuminating for me the boundaries within which that game must be played if it's to be sustained.

Winter in this part of the world is our rainy season. Upwards of 90% of annual rainfall in Carmel Valley happens between November and March, typically delivered in the concentrated form of showy winter storms rolling in from the Pacific, some ten miles to our west. Winds, usually from the south, will blow at 60 or 70 miles per hour up on our hill, driving the rain in slanting sheets across the valley.

Well, winter arrived a bit early this year. Here's the view from our living room today, followed by a picture from a more typical autumn day…

Opening google.com this morning brought a smile, because this is what greeted me:

Since, paraphrasing an old SNL skit, "Bar coding's bin berry, berry good to me," I couldn't help but feel great that, on the 57th anniversary of the patent that started it all, the center of the Internet universe tipped its jolly hat to the technology that connects Google's domain (the world of bits) with the physical world in which we all live (the world of atoms). See here for related thoughts.

Happy birthday, my friend!

Returning to our apartment in San Jose, too tired after the flight from New York to drive down to Carmel Valley, but too awake to turn in immediately, I scanned the DVR recordings for options.

I'm partial to Charlie Rose, so his folder was where I looked. His two most recent shows: tonight's hour-long interview with Nancy Pelosi (Afghanistan, etc) and last Friday's solo appearance by Jude Law, discussing the current Broadway production of Hamlet, in which he plays the title role.

I chose the later, and chose wisely. Both discussions involved life, death and politics. But Shakespeare sheds light, and shadows, to illuminate the contours of our condition with sublime insight. He, from the remove of 400 odd years, sees into our state today, as people and polity, and helps us understand. Our present day politicians all too often embarrass with their crass simplifications and muddled thinking, even in their most earnest moments.

An unfairly high standard of comparison, I know, but it's time we hold up tall rulers to our present leaders in light of current circumstance.

How does a company grow from an entrepreneur's idea to a $4 billion player in a market space that it not only emerged to lead, but played a dominant role in shaping? What combination of people, strategy, circumstance and luck made it possible? What was it like to be part of that experience?

These are among the questions I'll try to address in a series of posts about the company where I spent a quarter century of my career: Symbol Technologies.

As I noted in an earlier introductory comment, for me this is something of a love story. While not everything about my time there was perfect (far from), it was an experience defined by learning, growth, winning and passion — I believe for the vast majority of us that called it home for so many years. I'll never forget it.

So how did it happen?

I believe that the central theme to the story behind the answer to that question is all about people and passion. If a group of capable folks can be attracted to a business, engaged in stimulating work with team mates they enjoy and can learn from, and given a taste of challenge, winning and personal growth — passion emerges.

A culture characterized by passion creates a powerful flywheel effect: Everyone works harder. Group energy is largely focused on what's important and on team results, rather than on unproductive or politically-driven activities. Customers recognize it, and want to buy from you. Partners see it and want to be part of it. New talent hears about it, feels it — and wants to join the team. All of which leads to accellerating success — and more passion.

Passion broke out early at Symbol, and never left. Our founders, Jerry Swartz and Shelly Harrison, planted its seeds. The early glimmers of what might just be possible kept it growing through the initial years of struggle. Perserverance (THE defining word for Jerry Swartz, pictured here) through those struggles bred confidence — passion's close companion. Pivotal wins and market coups fanned its flames. Rapid growth, continued years on end, added further fuel. Pride in our success and emergence as the leader in our industry cemented it in place as the central character of our culture.

Passion is what drove us to do our best: Design the most innovative products. Close the biggest deals. Even throw the best parties! Do enough of those things, and you can grow a $4 billion company.

Even when other, less noble human factors came into play, the dominant sensibility was defined by passion to win. Yes, as in most any enterprise involving those organic, imperfect, squishy things we call people, greed, ambition and ego also played roles in this story. But even in the darker passages of our shared history, they were undercurrents, not the dominant themes.

Passion. You show me a company with a passion-infused culture, and I'll show you a winner. Show me one lacking it, and you'll have found an also-ran or loser. Passion is both cause and effect. It creates the basis for success, and grows still stronger with that success.

I'll return to this theme of people and passion frequently as I tell this story in the days and months to come. But of course there's more to this tale. In my next post I'll say a few words about what was special about the fertile ground in which Symbol was planted.

Saturday, late afternoon, Carmel Valley.

Background jazz (Martin Headman — don't think that you'd know him, a local). Weather perfect now, after morning fog and some midday scuttling confusion. Soft breeze, sun.

Evening plans set: local bistro, just about reachable down the hill in neutral from our place.

All caught up on last week's work. Closure still elusive however.

Thinking about making the turn onto a different road ahead… one whose on ramp is still unmarked for the moment.

In late May of 1978, the day following my graduation from The State University of NY at Stony Brook, I joined a start-up company called Symbol Technologies, as its fifth employee.

I learned only later that, as of that first day on the job, Symbol had negative revenues for the year — the result of a customer returning a system shipped the prior year, and no new sales yet recorded in '78. I didn't know enough to be concerned by this fact. I was getting married in three months, and I had a job!

By the time I left Symbol, twenty five years later as its Vice Chairman and CEO, annual revenues had increased to over $1.6 billion, our team was 5600 team strong, Symbol was the acknowledged innovation and market leader in our industry and Wall Street valued us at nearly $4 billion.

There are many stories to be told about the years between those points in time. Some funny, some sad. Many instructive about what to do in trying to build a great company (I believe it's fair to say that we were), and what not to do (we came close to disaster on more than one occasion). Stories about technology, innovation, strategy and leadership yes, but mostly stories about people. People whose ideas and inventions led Symbol to be awarded the National Medal of Technology, people who our customers trusted to bring them the great products and ideas that would help them lead in their industries… and others whose failings nearly resulted in the company coming undone.

Perhaps these stories will cohere into a book at some point. For now, I'll use this blog to share a few of them with you from time to time. I hope that you'll enjoy my recollections, and perhaps take away a point or two of insight or even inspiration on occassion.

I have a great affection for Symbol still (though now it's part of Motorola), and especially for the people who worked there over the years. Many among them remain close friends to this day. Even though my career there didn't have a traditional Hollywood happy ending (we'll get to that at some point), my memories are almost universally fond ones. I'll try not to embellish or romanticize them however, though that may be tough… because, in the end, this is a bit of a love story.

First installment coming soon to this space. But first, tomorrow, a story about some long-ago advice, and a journey toward following it. It's not about Symbol, but it is about someone I came to know there, and how he touched my life, twice.

Open Question

How might it be possible to inform the great unwashed (first class) multitudes that it is impolite to recline their seats in a spastic lurch rearward, on a flight where the pitch (regrettably) results in their seat backs approaching the proximity of my nose with stunning suddenness, threatening to crunch my laptop (were it not for practiced reflexes) en route?

Lonely Outpost

Our driver to Kahalui Airport reported that the Krispy Creme we passed just before reaching our destination was the lone purveyor of that delicacy in the state of Hawaii. "Not Kaua'i, not O'ahu… nowhere by Maui. One dozen doughnuts are eleven dollar, ninety seven cents. One doughnut, one dollar seventeen. I see lots of people from other islands lined up every morning. They buy, and bring home. Once in a while, I buy one dozen to bring to my family (one dollar, seventeen). The owner is a rich man." For the full effect, enhance the preceding dialogue with your best attempt at Vietnamese. His name: Hai. His employers, Mai and Tai.

Where did THIS come from?

On biting down on the first cashew secured from the pre-drinks service on UA 34, my left jaw reported great distress, signaled with equal measures pain and immobility. No warning, other than a vague earlier sense that the overhead vent in the taxi may have been blowing a bit too cold, a bit too vigorously, a bit too long during our way to the airport. Paul Theroux would be pleased: badge of honor as a traveler, not a tourist. I fear dentists lie in my near future…

Tonight's Plan

Pick up luggage at SFO. Meet driver, who'll take us to Santana Row. Pick up luggage left there last week (on the assumption that we'd be spending the night in our apartment before heading to NYC tomorrow). Drive to Carmel Valley. Attempt to sync display-dead IPhone with MacBook Pro there. Take the Pro with me regardless. Unpack. Sleep (4 hours). Pack. Drive to Santana Row. Meet driver (same), who'll take us to SFO. Fly to JFK. Taxi to Manhattan. Check into Ritz Carlton. Walk to Apple Store on 5th and 59th. Genius Bar: replace IPhone and upload data from backup file (fingers crossed). Back to Ritz. Sleep. (More later.)