Power Sheet - December 21, 2016
Leadership notes from the news:
-Yes, a CEO can defy Donald Trump (at least for now). Trump got a lot of mileage from keeping his vow to prevent United Technologies’ Carrier business from closing a factory in Indianapolis and sending the jobs to Mexico, though Carrier will eliminate many of those jobs and is getting substantial concessions from the city and state in the bargain. Far less attention focused on a highly similar Trump promise that he tweeted earlier this month: “Rexnord of Indiana is moving to Mexico and rather viciously firing all of its 300 workers. This is happening all over our country. No more!”
Well, maybe just a little more. Rexnord quietly agreed with the United Steelworks on severance pay for those 300 or so workers, and the company will close its Indianapolis ball-bearing factory in the spring, shifting production to Mexico.
Sticking with Plan A may be a shrewd bet by CEO Todd Adams. Trump is preoccupied with forming an administration and is basking in the glow of the Carrier resolution. Why should he risk a re-run? And now that Rexnord and the union have a deal, it’s a little late for Trump to fly to the workers’ rescue.
-A major company, a dramatic reversal of fortune – and tech disruption isn’t the culprit. Nike got a glimmer of good news yesterday when it reported better than expected profits and the stock rose. But the company remains the worst performing component of the Dow this year, down 17%. What happened?
The answer is simple and old-fashioned: Nike let its critically important basketball business weaken, while the competition, Under Armour and especially Adidas under North American boss Mark King, has grown markedly stronger through superior management. Nike is still massively larger than its competitors, and CEO Mark Parker has compiled an outstanding record over the past decade; no one should count him out. But fortunes often rise and fall for unglamorous reasons that are just as powerful as trendy, obvious ones like technological disruption.
-The UBI isn’t going away, and business leaders need a point of view on it. UBI is the universal basic income, and early next year Finland will become the latest country to experiment with it – handing regular checks to 2,000 randomly chosen unemployed workers without restrictions, even if they start earning money on their own. Sounds crazy? Elon Musk believes it’s on the way. “I think that there’s a pretty good chance we end up with a universal basic income, or something like that, due to automation,” he said last month. “I’m not sure what else one would do.”
The idea that millions of adults might need a free subsistence income because they won’t be able to find work is still far-fetched, but if it happens, business will be blamed for it and will ultimately have to fund it. That’s why leaders need to start thinking seriously about it.
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