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The U.S. and Iran can't agree on fully reopening the Strait of Hormuz. The solution could be straight out of the Old Testament

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LeadershipPower Sheet

Power Sheet – May 16, 2016

By
Geoff Colvin
Geoff Colvin
and
Ryan Derousseau
Ryan Derousseau
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By
Geoff Colvin
Geoff Colvin
and
Ryan Derousseau
Ryan Derousseau
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May 16, 2016, 10:35 AM ET
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Our topic from this morning’s news is a leadership style that never goes away, despite its remarkably poor record: dictatorship. While the relevant news is usually about nations, the issue arises often in business, as anyone with much organizational experience knows well.

-The crisis in Venezuela is worsening to the point that U.S. intelligence officials said over the weekend they believe violent insurrection is becoming likely. Food and even water are in desperately short supply, and electricity is so scarce that the government operates only two days a week; blackouts strike other areas often and without warning. Hospitals struggle to carry on; one effect is that infant mortality has increased by 100 times – not 100%, but 100 times – from three years ago. President Nicolàs Maduro has responded by claiming dictatorial powers, and on Friday he extended the self-declared state of emergency by another 60 days. On Saturday he announced military exercises because his enemies, he says, are planning to orchestrate foreign intervention.

This is the classic dictator playbook when things are going badly. Maduro blames “foreign threats,” the U.S., and “the bourgeoisie” for Venezuela’s troubles, but the real problem is low oil prices in a market-hostile, centrally directed economy. Like most dictators, Maduro is doubling down rather than unshackling the forces that could stop the disaster. Analysts wonder how much longer he’ll stay in power.

-A raft of Chinese economic statistics over the weekend came in below expectations and below last year. President Xi Jinping and other top leaders, whose instinct is to make things happen rather than let things happen, are apparently divided over what to do. Articles in the official People’s Daily last week featured Xi and an unnamed “authoritative person” criticizing China’s current policy of monetary and fiscal stimulus. But if there’s disarray at the top, there’s also agreement on at least one policy: intimidating researchers, stock brokers, and journalists into reporting only upbeat economic news by threatening them with prison or fines for doing otherwise. This also is classic. Dictators may be the only ones who don’t realize that squelching accurate information makes the problem worse, not better.

-And yes, a system of all-powerful rulers can give way gracefully to democracy over time. Exhibit A will be on view Wednesday, when Queen Elizabeth II opens Parliament. She will enter the House of Lords chamber, and an official will be sent to the House of Commons chamber, where the door will be slammed in his face, a reminder that since 1642 the monarch has been barred from entering the Commons while it’s meeting. The members will eventually walk down to the Lords to hear Her Majesty read the Queen’s Speech. But she only reads it; the government writes it. The people have all the power, the monarch virtually none. But she’s still called the queen, and the people love her.

Of course you’re not a dictator. But business leaders who are perceived by their followers to be gathering power to themselves, or blaming implausible sinister forces for problems, or punishing unwelcome accurate news in favor of happy talk, are heading down a well-worn path that leads nowhere good.

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What We're Reading Today

Warren Buffett and Dan Gilbert team up for Yahoo bid

The unlikely duo have made it into the second round of bidding for Yahoo's internet business, as have Lowell McAdam's Verizon and TPG Capital, among others. Buffett is only providing financing for the deal, while Quicken Loans founder Gilbert handles the negotiations. It's a sign of how far Marissa Mayer's company spread its net in searching for potential new owners.  NYT

South Korea accuses Nissan of emissions cheating 

South Korean regulators claim Nissan used emission cheating software in its Qashqai models, built in the U.K. The models were tested by European Union authorities, which did not discover any cheating software. Carlos Ghosn's company, which just bought a $2-billion stake in Mitsubishi, denies the allegations. South Korea plans to move forward with recalls and fines. BBC News

Amazon enters perishable goods business

As early as this month, Jeff Bezos's company could launch a private label food business. Products will include nuts, coffee, tea, and baby food, plus non-perishable items such as diapers. It's not the first time Amazon has tried private labeling; in 2014 it pulled its diapers off its digital shelves weeks after launching because of design flaws. WSJ

Didi Chuxing targets IPO date in 2018 

The race for ride-hailing services to go public just became more intriguing with China-based Didi Chuxing planning listing in New York in the next two years. The announcement puts pressure on Travis Kalanick's Uber and Logan Green's Lyft. Kalanick has said he wants to delay going public for as long as possible, but competition with Didi could force his hand. Fortune

Building a Better Leader

Half of the top 10 U.S. companies shedding jobs...

...have been hurt by low oil prices. National Oilwell Varco tops the list with 17,850 jobs cut so far this year. CNNMoney

To update your resume for 2016... 

...do away with the objective statement, add a summary, and make sure your contact information is clickable. Fortune

Startups embrace resolution tactic favored by big business

To reduce potential litigation costs, many are requiring arbitration to settle workplace disputes. But the practice can conflict with promises of transparency to employees. NYT

Worth Considering

Tim Cook visits China

The Apple CEO visits Beijing today to meet with government officials. The government recently blocked some Apple services in the country. Cook also met with Didi Chuxing President Jean Liu just days after announcing Apple would provide $1 billion in funding to the car-hailing service. Reuters

Applebee's overhauls menu with wood-fired grills

The change is a big bet by Applebee's parent DineEquity and CEO Julia Stewart, costing the company $75 million to replace the grills in 2,000 locations. It will change the taste profile of 40% of menu items, which risks turning away current customers but could also attract new ones. Fortune

Nelson Peltz bows out of Pepsi

The activist investor has sold his PepsiCo stock three years after his failed bid to break up the company. CEO Indra Nooyi argued against a break-up and launched a cost-cutting plan. Investors sided mostly with her. While Peltz didn't get his way, he made a lot of money on the stock, which is up strongly over the past three years. WSJ

Up or Out

Newell Brands has hired Tiffany CFO Ralph Nicoletti for the same role.  BusinessWire

Fortune Reads and Videos

Venture capital fund raises $100 million... 

...using blockchain technology. The fund, DAO, doesn't have a clear leader or corporate structure. Fortune

MIT hyperloop team reveals design

The group won the first round of the SpaceX Hyperloop competition. Fortune

Anti-Trump Republican group is actively seeking... 

...a third-party candidate to run as an independent. Their top options had included Ohio Governor John Kasich. Fortune

Some members of Congress have been working hard...

...to ensure any NASA efforts to reach Mars don't take off.  Fortune

Quote of the Day

But I am also aware that I am walking without pain. For the first time, I am grateful for each breath in and out—grateful for the gift of life itself. I used to celebrate my birthday every five years and friends’ birthdays sometimes. Now I celebrate always. I used to go to sleep worrying about all the things I messed up that day—and trust me that list was often quite long. Now I try really hard to focus on each day’s moments of joy.

It is the greatest irony of my life that losing my husband helped me find deeper gratitude—gratitude for the kindness of my friends, the love of my family, the laughter of my children. My hope for you is that you can find that gratitude—not just on the good days, like today, but on the hard ones, when you will really need it. -- Facebook COO Sheryl Sandberg in a commencement speech at UC Berkeley.  The Verge

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About the Authors
Geoff Colvin
By Geoff ColvinSenior Editor-at-Large
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Geoff Colvin is a senior editor-at-large at Fortune, covering leadership, globalization, wealth creation, the infotech revolution, and related issues.

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By Ryan Derousseau
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