– Paul Krugman (Princeton University)

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To clarify and elaborate on my slightly controversial previous post: In my own experience, I have wondered why organizations have confused an angry executive with an effective one.

Reflecting on my own career, the least effective executives were those who found it necessary to exhibit anger and rage to their subordinates and claim that it’s an effective management style. I experienced several of these people and concluded that they had not a clue as to how to manage anything, so they hid it under the facade of “Boy, am I tough!”

Here’s what I’ve tried to do in my life and am on the lookout for managements who subscribe to the following:  

1. Do not judge the behavior of others.
2. Do not judge or compare people to other people.
3. Do not even try to always understand the behavior of others.
4. Do understand that your operating people need your support, not your anger or unfounded criticism.

(I must admit that I do judge, compare, and try to understand, but I realize that it’s not necessarily a good thing to do.)

I’ve noticed in both my business and personal life that every day brings the opportunity to either exacerbate or ameliorate situations. In the majority of these situations, it seems (to me) that people in management positions at media corporations choose to exacerbate situations rather than ameliorate them. Many are concerned when dealing with staff that they understand the notion of “Do you know who I am or how important I am?”

With the exception of my years at CBS, my managements were invariably preoccupied by meaningless minutia. This never manifested in things like “How can we help you do more business?” but rather “How can we force you into spending less?”

After giving Fay Vincent (Columbia Pictures President) a tour of our Los-Angeles-based sales base, Fay asked, “Norman, do you really need to have all of these people to operate?” I replied, “We were having trouble in a studio softball league, so we hired a few ringers to play ball for us.”

The “management games” that intrigued me most as an operating executive were those that involved the creation and execution of operating overhead and sales budgets. Whatever we presented as an operating budget was considered too high, and whatever we presented as a sales budget was too low.

The corporate staff people just adored their power when it came to formulating operating budgets. They would remark something like, “Norman, we think you’re spending more money than you need to spend by having a German office.” I would then ask the management if they knew anything whatsoever about the television market of Germany. Had they ever even been to Germany? Did they know anything about the structure of German television?

A CFO once asked me to submit a contingent 15% reduction in our operating budget, and I submitted it to him along with a reduction in our sales projections. He called me and told me that he didn’t expect any reduction in sales that came with reduced overhead.

One last example: The head of Polygram (as I recall, a $3 billion company at the time) said to me, “Norman, here at Polygram we judge our executives by their ability to answer detailed questions about their operating budgets and balance sheets.” I endeared myself to him by saying, “Wolfgang, no wonder the company is failing.”

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– Kevin Carson (Center for a Stateless Society)

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I am the product of the industry in which I have worked for 50+ years. In fact, the only insight I can bring to anything is not based on my intellect, but rather on my experiences in life in general, as well as the Air Force and the business of television.

I grew up watching my father run his small dress manufacturing business at 1385 Broadway in New York. To me, he was to me the ultimate operating executive in that he knew everything he needed to know to run his business. Everyone who worked for him had a job to do (including my Dad). He had no “formal” business training, yet he ran a profitable business for many years.

My career in the entertainment industry started as a part-time, minimum-wage shipping clerk and messenger for the editorial department of Screen Gems Television in New York. In the intervening years, I became a functioning operating and sales executive. Although I’ve had many staff positions in the intervening years, I’m still an operating guy.  

Sadly, for the most part, I have reported to corporate “staff” people who had no clue what our people were doing. The Columbia CFO was very upset with me because I wasn’t happy that the “corporate” people took large profit-sharing awards for themselves and gave little to me and my people. When he told me about “their” great overall responsibilities, I suggested that that they “just kept score” while we actually did the business.

In the late ’70s, following an annoying budget meeting with my Columbia Pictures management, I met with the company’s president in his hotel.  I told him I was upset that neither he nor his people had the slightest idea what my staff and I had presented to them and that they had asked no questions about any aspect of our business. We made a detailed presentation about our business and its future, and not a single question was asked nor did they say anything other than they wanted us to spend less.

I pointed out to him that he was a tax lawyer, his COO had been the chairman of a car rental company, his CFO had been with an accounting firm, and his general counsel had been a partner in a law firm prior to joining Columbia. None of them had any operating experience whatsoever. None of them had a clue what we had been talking about. My associates and I had spoken about the expansion of the media, and no one seemed the least bit interested.

At Polygram, a multi-billion-dollar company, I was the only divisional president who was not a lawyer.  As I remember, they had 19 operating divisions.

At MGM, it was mostly the same. The President was a lawyer without an operating clue, nor did any of the corporate staff have any knowledge of our industry.

In order to end whatever vestiges of a career I have in the entertainment industry, I will comment briefly about “senior managements” I’ve reported to at Columbia Pictures (twice), CBS, Polygram, and MGM.

• Columbia Pictures, 1960-1968: Abe Schneider and Leo Jaffee — chairman and president, respectively — were finance executives and didn’t have an operating clue about their movie and television businesses.
• CBS, 1968-1970: Bill Paley and Dr. Frank Stanton operated the “Tiffany Network,” and look at the results. They respected their operating people.
• Columbia Pictures, 1970-1978: Alan Hirschfield told me something like, “Norman, you’re making a lot of money for the company. If anyone gets in your way, let me know, and I’ll take care of it.” Now how great is that? He “protected” me from the invasion of corporate staff people who only wanted to discuss and “approve” everything that we did, even though none of them had any operating experience.
• Columbia Pictures, 1978-1980: Francis (Fay) Vincent and Robert L. Stone. A total disaster. Vincent had no experience, and Stone was a notorious “cost cutter” who didn’t have an operating clue. I ended up reporting to Stone. He made my people crazy with his “expense policy guidelines.”
• Polygram, 1980-1985: Harvey Schein. Again, a lawyer without an operating clue. He was mostly interested that everyone knew that he was in charge!
• MGM, 1986-1992: Lee Rich (the chairman) once said something like, “Norman, I hired you to do a job. Just do it, and leave me alone.”

It’s still my opinion that, if you’re going to “manage” operations, you need to have had at least a modicum of operating experience in doing something.

I functioned as a manager of sales and production companies. Because of my operating experience, I understood the barriers to maximizing revenue. I tried to hire the best people I could get, pay them as much money as I could, clearly outline our goals, and “set them loose” to do their jobs. I also realized the importance of minimizing expenses but at the same time not being stupid about it.

Because none of my managements had an operating clue about what we did and how we did it, I would try to explain to them that they needed to love and encourage their staff and not take issue with them for small amounts of money. Bob Stone at Columbia exemplified the wrong attitude about this issue and would be critical of our sales guys for spending very trivial amounts of money. An associate and I were once in the middle of trying to conclude an $8 million deal when Bob Stone called me about a $25 item on a salesman’s expense report. Not good.

It was my attitude to have the “corporate staff” serve the “operating staff” and not the other way around. Now how quaint is that?

I’m reminded of the rabbi who had to give a eulogy about a reviled 90-year-old. He said, “What can one say about Jacob Abramowitz?” His mind was racing as he repeated the question, until a member of the congregation shouted out, “His brother was worse!”

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If you’re going to have one central bank, you need a vehicle other than monetary policy to relieve regional disparities.

Paul Krugman, January 2011:

[Making] the euro work is more feasible than I used to think. True American-style labor market integration isn’t…going to happen. But more fiscal integration could.

Now let’s see how long it takes them to admit my other conclusion:

You need to design the system so it has time to adapt to isolated changes without a negative ripple effect.

Economists Oliver Hart and Luigi Zingales have proposed a regulatory system that anticipates banks’ distress based on their credit default swap prices and restructures their debt before bondholders are in panic mode. In 2001, U.S. Treasury Secretary Paul O’Neill proposed an international bankruptcy court that could serve the same purpose for sovereign debt.

The global economy is wound pretty tightly these days. Maybe it’s time to make it a little safer for the occasional error.

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