Today marks the third post in the new series from our leadership collection. Throughout the series we’re highlighting examples of business leadership - some ‘best practice’ and some with room for improvement.
Leadership Bull – Frank Stronach successfully orchestrates buyout deal
Life is good for Magna International founder Frank Stronach, who recently won court approval on the company’s buyout of his controlling shares in spite of protests from the country’s largest pension funds.
Under the deal, worth $863-million, Magna is paying Stronach about 17 times the market value for his multiple voting shares. To top it all off, he will also remain chairman and get $120-million in consulting fees over four years.
Ultimately, the deal illustrates Stronach’s sustained influence over a company he originally founded over 50 years ago. This, combined with his ability to persevere in the face of criticism, is why he’s today’s Leadership Bull.
The Canada Pension Plan Investment Board and the Ontario Teachers’ Pension Plan had fought the deal, which creates a 1,800 per cent premium for Stronach’s voting shares, on grounds that it will set a bad precedent.
But an Ontario Superior Court ruled that the deal is “fair and balanced,” citing – among other things – a shareholder vote in favour of the arrangement. Earlier, more than 75 per cent of Magna’s class A shareholders approved the plan to eliminate Stronach’s shares.
So how did Stronach, like a skilled chess player, get shareholders to vote in favour of his controversial plan?
Well, it didn’t hurt that he held the control block of shares. But he was also in a position to exert his influence because he had a good answer to the question of how the deal would benefit voting shareholders.
Most shareholders were in favour of the plan because they wanted to see the end of the company’s dual-class share structure, according to UBS Securities Canada Inc. By providing shareholders with an easy way to end this arrangement, Stronach had carefully orchestrated an offer that the majority of shareholders couldn’t refuse.
Successful leaders know that motivating people to act in a certain way requires patience, but above all, the ability to demonstrate how other people will benefit in the long run. Whether a leader is crusading for a dramatic change in corporate structure, or simply encouraging a manager to boost overall productivity, it boils down to more than just stating what is good for the company or its leadership team, but making a direct link to the impact it will have on the individuals who need to be influenced.
Leadership Bear – Mark Zuckerberg misses opportunity to address privacy head-on
You would be hard-pressed to find a general news article about the recent launch of Facebook’s Places – a new iPhone app allowing users to share their location status with friends – that doesn’t devote a significant amount of ink to privacy concerns.
Reporters have written about the public declaration from the Northern California chapter of the American Civil Liberties Union that it has “serious concerns about other privacy protections and controls associated with Places.” The media has also devoted some attention to potentially uncomfortable Places scenarios, like how a friend could start reporting on your whereabouts at place – like a seedy bar – which you don’t necessarily want other friends to know about.
To add fuel to the fire, there have also been reports that Facebook is rolling out the new service simply to generate more advertising revenue, making certain users uncomfortable.
It’s only natural for the media to include commentary from privacy critics when covering any new Facebook service. After all, this is the company that scrambled in early 2010 to simplify privacy controls to appease consumer groups, US lawmakers and the European Union.
CEO Mark Zuckerberg has also been widely criticized for ducking the issue of privacy before. Back in June, at The Wall Street Journal’s D: All Things Digital conference, Walt Mossberg and Kara Swisher grilled him about Facebook’s recent privacy changes. Several tweets reported that Zuckerberg dodged questions about privacy, while sweating profusely and appearing nervous.
Perhaps critics should give the guy a break. He’s only 26 years old, and even the most seasoned CEOs have a tough time keeping their cool in the line of fire.
But when Facebook Places lunched in the US last week, Zuckerberg was presented with the perfect opportunity to learn from previous mistakes and personally address the issue of privacy upfront. However, instead of tackling the issue head-on with confidence, Zuckerberg stumbled through a high-level product overview before turning the stage over to a product manager.
Good leaders are backed by a solid team of communicators who are aware of all the potential hot button issues. In certain cases, it makes sense to only address topics on a reactive basis. But if you and your team know that a sensitive topic will get raised repeatedly, it is best to take the bull by the horns. And when discussing controversial issues, people want to hear from the guy at the top.
So what’s the best way to talk about sticky situations? First, develop a set of key messages that relate to the issue at-hand. For each message, pull together statistics and anecdotes that will help you create a compelling argument.
The goal? To develop clear, straightforward messages that will resonate with the media and the general public. Sure, the critics and naysayers may still get coverage, but your perspective will shine through as well.
