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Power Sheet – January 19, 2015

You’ve probably never heard of Kasper Rorsted – I hadn’t until yesterday – but he turns out to be a highly valuable man. Adidas announced that he would be leaving his job as CEO of Henkel, a German consumer packaged goods maker, and would become CEO of Adidas in October, replacing CEO Herbert Hainer. Henkel immediately lost $2 billion of market value on the news, and Adidas, a smaller company, immediately gained $1 billion – on a day when German stocks overall lost ground. All because of one man planning to change jobs nine months from now.

Everybody nods their head when you say human capital is really important, but it’s easy to forget just how important one human being can be. Every board of directors’ most important job is picking the right CEO, and every business leader’s most important job is picking the people who report to him or her. Nobody’s batting average is perfect. So here are seven lessons I’ve learned from CEOs about this supremely important responsibility:

-Don’t hesitate to make a change. If you get CEOs – even the greatest CEOs – talking candidly about their biggest regret, it’s always the same thing: I waited too long to move a person who was in the wrong job. Only later do they realize the cost of their delay.

-Don’t tell yourself that you can coach the person you’ve chosen, even though he or she isn’t quite ready for the job or, once in the job, isn’t performing well. That’s one of the most common rationalizations. It almost never proves true.

-Pay attention to the person’s lifestyle. You say it isn’t strictly relevant? Yes it is. It bespeaks character. Former HealthSouth CEO Richard Scrushy partied hard, surrounded himself with sycophants, flew one of the company jets to gigs for the country band of which he was lead singer, formed and managed a girl band, raced around in his 10 boats…you didn’t need a lot of life experience to see that trouble was likely. Scrushy served five years in federal prison for bribery and still owes HealthSouth almost $3 billion.

-Check for grounding and humility. I once asked former Honeywell CEO and former General Electric vice chairman Larry Bossidy how he could tell when rising leaders weren’t going to make it. He answered, “They don’t grow. They swell.”

-Don’t hesitate to raise the topic of succession with a CEO, if you’re a director, or with anyone who reports to you. People often feel uncomfortable initiating this conversation, fearing they’ll be seen as trying to push the person out. But the best leaders are happy to talk about the process of developing their successor, knowing that the process takes years and that they’ll be judged in part by their successor’s performance.

-Analyze your calendar to see how much time you’re spending on leadership development and succession planning for yourself and those who report to you. It probably isn’t enough. The numbers I’ve heard from successful CEOs range from 20% to 60%. After all, this is your most important job.

-Don’t ever, ever settle. If you aren’t confident you’ve made a great choice, then don’t make it. Even if you are confident, you may still be wrong. But if the inner voice is telling you something isn’t right, listen to it.

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What We’re Reading Today

China’s growth hits quarter-century lull

With 6.9% growth in 2015, concerns over how to fix the slowing economy in China are on the rise. Financial markets have suffered due to confusion over China’s monetary policy. Some have called for Chinese President Xi Jinping to increase economic aid. However, some analysts aren’t sure Xi and Beijing’s leaders have the ability to halt the current trend.  Reuters

Twitter’s service fails across the globe

Jack Dorsey‘s company faced a global error, cutting service for many in Europe and Asia. Twitter responded with a message on Tumblr: “Some users are currently experiencing problems accessing Twitter. We are aware of the issue and are working towards a resolution.” As the social network tries to become a go-to source for business communication, issues such as these can have a dramatic effect on perception. Users in the U.S. appeared to be spared. TechCrunch

Unilever’s division head resigns…

…spreading speculation that the company will soon spin off its margarine division. Sean Gogarty, CEO of Unilever’s spread division, stepped down and it appears it’s in part because of differing opinions on the future of the business.  WSJ

Donald Trump wants to stop Apple’s operations in China

In a speech at Liberty University in Virginia, Trump said that, “We’re going to get Apple to start building their damn computers and things in this country instead of in other countries.” Trump didn’t explain how that might happen, but it’s the first time Tim Cook‘s company has been in the crosshairs of the GOP frontrunner. Fortune

Building a Better Leader

When you lose a valuable employee…  

…make sure to off-board her the right way with apprenticeships. It will ensure you don’t lose the employee’s knowledge. Harvard Business Review

81% of execs have a fear of becoming obsolete… 

…but more than half them are also afraid to innovate by disrupting an older line of business too quickly. Fortune

Can you name a CEO?

Then you’re in the minority, with 53% of the U.S. unable to name a single one. But the U.S. is better than the average. Quartz

Trying to Rebound

Adidas welcomes outsider as CEO

Struggles in the U.S. and poor investments in emerging markets convinced Adidas’ board to look outside the company for its next CEO. They found Kasper Rorsted, who heads Henkel, one of Germany’s largest consumer products companies. Investors liked the pick, sending shares soaring. Fortune

Michigan Gov. to lay down plans in Flint

Due to a switch in water sources, Flint residents have been drinking lead-contaminated H2O since 2014. It’s a health hazard that Gov. Rick Snyder has been slow to respond to. Flint residents have filed class-action suits against him and the state Department of Environmental Quality while President Obama has issued a state of emergency. Snyder says he will not resign and will outline a strategy to fix the issue today.  CNN

Changes over inclusion coming to the Academy

Academy of Motion Pictures Arts and Sciences president Cheryl Boone Isaacs says she’s frustrated with the lack of diversity in Oscar nominees. In response, she’s conducting a review to alter the Academy membership. The move comes after director Spike Lee and actress Jada Pinkett Smith said they would boycott the Oscars this year. USA Today

Up or Out

Delta has hired Rahul Samant as CIO. He replaces the retiring Theresa Wise. WSJ

John Foley has been named chief executive of Prudential’s UK & Europe division. Reuters

Fortune Reads and Videos

The IMF reduces its global GDP estimates

The reduced estimate of 3.4% growth this year is in large part due to China’s diminished economic prospects. Fortune

Catch Me if You Can conman joins cybersecurity startup 

Frank Abagnale will help try and solve authenticating identities online.  Fortune

Starbucks taps Spotify to bolster its app

Coffee drinkers can now instantly add music they hear in Starbucks stores to their Spotify playlists. Fortune

Google, Microsoft, others offer support to Samsung…

…against Apple in a recent court decision. In a letter to the Supreme Court, a trade group representing large tech firms says the decision to give Apple $399 million over iPhone design infringement is dangerous to the industry. Fortune

Today’s Quote

“As many of you know, we have implemented changes to diversify our membership in the last four years. But the change is not coming as fast as we would like. We need to do more, and better and more quickly.” —Academy of Motion Pictures Arts and Sciences president Cheryl Boone Isaacs’ response to growing concerns over the lack of diversity among Oscar nominees.  USA Today

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Produced by Ryan Derousseau
@ryanderous
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