The beginning of a year is full of promise. Just like spring training for sport, when anything seems possible, I’ve always looked at the early days of January with excitement and anticipation.
There will be much that will happen, both good and bad, that we simply can’t predict. But in the world of business, I can pretty much guarantee four sure things.
A CEO will be fired and walk away with tens of millions of dollars in “severance” pay
For shareholders, employees and CEO watchers, this is surely one of the most infuriating milestones in business. The leader who is unsuccessful is richly rewarded for his or her efforts on the way out, given a golden parachute. How is this possible? What about pay for performance, the mantra of shareholder activists and compensation apologists everywhere?
The dirty little secret is that boards of directors will struggle to bring on the CEOs they want without first ensuring a soft landing for them if things don’t turn out well. It’s not that these CEOs are being rewarded for poor performance, it’s that boards typically can’t even entice them to take on the top job without a golden parachute. It’s expected.
So steel yourself for this inevitable event in 2014, accompanied by the usual hand-wringing media commentary. But the die has long been cast. All that awaits is to see who gets the axe… and the loot.
A savvy investor in Hong Kong, London, New York, or maybe Singapore will bank eye-popping portfolio returns — and the next investment genius will be born
This is actually one of my favourites, and you can set your watch by it. In a world of investors, there is huge variation in the bets people make — from large cap stocks, small cap stocks, emerging markets, commodities, gold, real estate, fine art, the list goes on. Isn’t it rather self-evident that some investors will do extremely well and others will do extremely poorly? Yet we anoint the ‘home-run hitters’ with attributions of cleverness, daring and genius.
Nassim Taleb, author of The Black Swan, demonstrated how people are very bad at understanding random events. We have a natural tendency to create narratives that make everything sound logical. So we believe the super-successful investor did well because of his or her individual talent and behaviour.
Don’t fall into this trap. A more likely explanation: the distribution of investment outcomes inevitably includes outliers on either end. We call those on the extreme positive side “geniuses”, and those on the extreme negative side “fools”. Much more likely is that these outliers were extremely lucky, or unlucky.
A young high-tech entrepreneur will refuse to sell his super-hot start-up for billions of dollars to Silicon Valley royalty (think Google, Facebook, Apple)
The most prominent of such entrepreneurs in 2013 was Evan Spiegel, founder of Snapchat. He became more famous for saying “no” to Facebook’s $3 billion offer to buy his company than he was for creating the quick-disappearing instant messaging app in the first place.
But, for every entrepreneur, like Mark Zuckerberg, who turns down a billion-dollar suitor and does even better, there are countless others who should have taken the money and run. Andrew Mason, the founder of Groupon refused to accept $6 billion to sell his company to Google. He no doubt regrets that move, especially now that he’s been pushed out as CEO and, at the time, Groupon was worth around $3 billion.
Six years ago Yahoo was offered a blowout acquisition price by Microsoft — a whopping $44.6 billion — only to have founder and then-CEO Jerry Yang turn the other cheek. Even with a terrific 2013 run-up in Yahoo market capitalisation (under new CEO Marissa Mayer), the company’s valuation is still not back to the Microsoft buyout number.
Evan Spiegel may also be having second thoughts now that calls for his removal over his poor handling of a major security breach at Snapchat are accelerating. Despite being warned in August by a security firm that some of its program coding was vulnerable to hacking, little was done and hackers made off with 4.6 million user names and phone numbers. Instead of apologizing, Spiegel pinned the blame on the culprits without acknowledging any responsibility to his own customers.
Whether Spiegel will find himself in the same spot as Groupon’s Mason remains to be seen, but the pattern is set. The only question is, which entrepreneur will be next to tell a suitor that its money isn’t wanted?
More women will break the glass ceiling of the C-suite in major companies
I hope this one is not wishful thinking. In the Fortune 500 there are just 23 female CEOs — not a big number. But, that number is higher than it was just a year ago. In the last year giant companies like General Motors, Lockheed Martin and General Dynamics have promoted women to the very top job. The CEOs of IBM, PepsiCo, Hewlett-Packard, and Yahoo are also women.
It’s possible that my prediction on women may be aggressive, but it’s the one prediction I believe will be on everyone’s list for years to come. Just take a look at those who are excelling in high schools and universities, especially in the United States. Much of the new wave of talent coming into the workforce is female, which will surely create ongoing ripples for years to come. Coupled with (slowly) changing attitudes — at least in the most developed countries — about the role of women, and you have a movement.
Bob Dylan’s song Ballad of a Thin Man includes the refrain: “Something is happening here/But you don't know what it is/Do you, Mr. Jones?” Like many Dylan songs, its literal meaning is opaque, yet it seems appropriate as a descriptor of the changes afoot in the C-suite, in 2014 and for years to come.
You can count on it.
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