Financial Wisdom

     Corporate life can seem Darwinian: you either evolve or you die. In other words, your technical and leadership skills must continue to evolve if you want to stay relevant in the changing and complex business environment of the 21st century. No one guarantees you will gain wisdom solely through experience and living longer. If that were the case, all old people would be wise. Wisdom must be developed like any other trait. Learning, part of the FISO Factor, will ultimately create financial wisdom when you establish your own growth plan and apply the knowledge in different business situations.

     Sometimes business success requires people to learn additive skills, even complementing technical expertise with social adeptness. Recently, I attended the Forbes CEO Global Conference in Singapore having discussions with CEOs from many countries. Some had great financial wisdom to share and others struggled with their ability to stand out from their competitors. Yet, all have the potential to learn, adapt and improve their situation.

     Doug Conant, President and CEO of Campbell’s Soup Company, exemplifies the result of years of learning and growing. Campbell Soup Company is a global manufacturer and marketer of high quality simple meals, soups, baked snacks, vegetable-based beverages, and premium chocolate products. With worldwide revenues over US $7 billion, this company continues to evolve from its beginning in 1869. The company has experienced resurgence in revenue and profit growth under the leadership of Doug Conant and his team. When I asked Mr. Conant how he developed the ability to stand out, he demurred and explained how his philosophy evolved over time.

     Early in his career, Doug believed that work speaks for itself. He still looks to performance as a key determinate of success. Yet what skills he required to succeed at his job changed over time. When Doug needed to find a new position at a new company, an executive outplacement counselor told him that he would have a hard time finding a job since he gave horrible interviews. The counselor said: “you’ve been raised to be reserved and now must adapt to having two minutes to make an impression.” The counselor continued to coach Doug who was accustomed to be reserved, but now had to try a new approach which initially felt very awkward. Doug recalls learning that “You are misleading the interviewers when you believe you can do the job better than other candidates and don’t say it. People don’t read minds, so you need to speak yours.” Doug’s counselor termed this idea “integrity-laden role playing” – meaning that whatever role you are in, you need to learn to express yourself clearly with integrity and appropriate humility. Speaking up does not mean you are boastful. You must trust your instincts to speak your mind. You can stand out by acting as who you really are and letting others know your abilities and your desire to contribute.

     Doug evolved by improving his communication skills which ultimately allowed him to demonstrate the other skills he knew he had. CEO since January 2001, Doug Conant continues to lead a team that has improved the company’s financial health through a Transformation Plan and now a Quality Growth Plan. As a result, net sales and earnings per share have grown at above average rates over the past five years and, total shareowner returns have increased 45%, well ahead of the S&P Food Group and three times greater than the S&P.

     Of the many sources to help you develop a winning financial strategy and achieve wisdom, I would recommend a recent book written from an investment perspective called More Than You Know (Columbia University Press, 2006) by chief investment strategist at Legg Mason Capital Management, Michael Mauboussin. He writes about the importance of knowing what fitness landscape you are facing and the corporate strategy important for each type. Biologists developed the concept of a fitness landscape to understand evolution and to explain “how a species increases its fitness. Along the way, the framework has spawned useful ideas for corporate strategists.” One of the key points is to generate many options and then choose from the “best” ones. Then as the situation changes, you have the opportunity to allocate more of your resources to the winning strategies and stop investing in dead end or low return on capital efforts. With discipline and knowledge, you will start to invest wisely, develop your financial acumen and grow old with wisdom instead of ignorance.

Note: A more complete version of this essay will be published in Shattered Magazine in November.

© 2006 Blythe McGarvie
1-757-345-3595
bmcgarvie@LIFgroup.com