The Milgram Experiment in Crony CEO Capitalism, the Commonalities Between Enron and SuperMedia

September 11, 2010

Stop the Stock Scam by Crony Executives at SuperMedia and Verizon

In the early 1960’s Stanley Milgram, a scientist, wanted to uncover what kind of common characteristics existed in evil people. So he set up an experiment with an actor playing an experimental subject and a real experimental test subject. The real subject would ask a question to the subject (the actor) and then if the subject got the question wrong the real test subject would shock the actor with an “electric charge”, so long as the scientist, an authority,would reassure the test subject that what he/she was doing was the right thing. The electric charge was not real, the actor would scream out in pain as the test subject would increase intensity. Approx 50% of the test subjects tested would continue the shock treatment on the subject to the point of death.

This experiment is a classic example of what is wrong with evil corporations and crony executive leaderships. Test subjects or loyal sycophants will do anything, as long as they have the encouragement of the superior or authority figure.

For 10 years I was a participant in an industry that had an Enron style corporate culture. Regardless of what happened to clients, shareholders, and employees not in management, executives would continue to demand people stay the course. Executives, like Scott Klein the CEO of SuperMedia, had zero investment in the company. Employees who understand the business were told to “shut-up” and agree, accept, and fulfill the changes the new CEO was making. Regardless whether or not these changes are in the best interest of shareholders, employees, or the future of the organization.

Being a corporate leader requires the utmost ethical conscience, honesty, and fraud prevention and corporate crime policing.  Whistleblowers are to be respected and given a podium to speak from.

When the SEC began investigating Enron, Ken Lay reaffirmed traders and other employees that he and the company were frauded by “Andy” Fastow, yet the companies auditor Arthur Anderson was busy shredding evidence of wrongdoing. Ken Lay the Enron CEO shifted all responsibility to Andy, traders, the Government, and anyone else besides the executive leadership.

Jeffrey Skilling told employees to “invest your 401k” into Enron stock while he committed fraud. Skilling himself moved his money out of the stock. His Milgram Experiment was to keep influencing employees that what they were doing was right. Keep selling. Employees had faith in leadership. Leadership does not “fall on a knife” when corruption is discovered. When Scott Klein from Idearc met with employees, while being aware of his bankruptcy plans for the company, he assured employees and investors that the spin-off debt and stock arrangements were “strong.”

In Dallas, at a Fuller Drive meeting, Scott Klein the new CEO of Idearc Media reassured employees that the company was financially sound and had cash on the balance sheet few companies had. Instead of going into detail about the companies longterm plans, Scott Klein proceeded to pander to employees his “7 keys to success,”” a presentation better suited to High School kids.

Atleast, we now know how Mr. DeKlein likes his cocktails.

During the rise and fall of Enron, employees and investors were scammed for more than 20 billion. Just the same, Verizon scammed investors with Idearc stock, as well as FairPoint Communications and Hawaiian Telecom spin-offs. The fraud committed by Verizon, Idearc Executives, and SuperMedia’s CEO Scott Klein will be uncovered just like Enron in years to come.

I respect those who blow the whistle to protect the innocent. Those who are not in leadership or positions of influence. I respect the honest worker who gets up, turns on the pot of coffee and heads to work to do good. I respect the Good Guys, not those that put on a super cape and claim “Good Guy” status.

It is wrong to tell investors you have challenges with receivables yet turn around and increase the credit limitations to clients. It is wrong to tell investors good news while hiding the bad. This is manipulation and dishonest.

Milgram’s experiment emphasizes that leadership is ultimately responsible for corporate culture.

Leadership doesn’t get the axe. Take a look at the 545 folks who run this country. Do they get fired? They work for us voters, yet we can’t seem to fire them and they just blame the bad decisions on co-workers or subordinates.

It’s time to put your big boy britches on fellas. Grab your whistles, proxy statements and voting cards….. Make a CHANGE. It is in your hands. When people are crying out in pain, will you continue shocking them? Do you want the blood of the innocent on your hands? What will you do? I suggest it is time to grab and axe and start hacking away at the leadership team. Time for them to get fired!

(btw, I wonder why would an executive commit suicide? Enron’s executives did after the Justice Department began inquiring about illegal activities. Thousands of people faced with crimes go to prison or face social scrutiny, so why are white collar criminals so spineless that they become suicidal?)

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What do you do when your cheese is moved?

September 4, 2010

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It happens.

Did landline phone companies expect to lose business to wireless, voip, and cable providers?

Did typewriter manufacturers anticipate the PC? (Well…sorta)

Will cable and media companies be prepared for the shift to a new era? The era of the contributor is near. Bloggers, video producers and folks that want to star in the next “Today’s Show” tomorrow. Wayne’s World is the future. No longer do we need to spend big bucks for big media. Demand media is the future. Subscription is the future. Pay as you go.

Apple’s AppleTV (what I prefer to call iTV) is coming. Cable companies will charge to store your preferences. YouTube will be the next YouTV.

Change is coming. Old media methods don’t work. Gen X, Gen Y, and the generation before them are not interested in telegrams, telegraphs, snail mail, or yellow pages. Search marketers understand that the channels of the future are authoritative, answer difficult questions (such as what, where, and WHEN…. then how much.)

Those that don’t have the courage to test the limits of human ingenuity won’t make it. Last week I attended OpenCamp at the Crowne Plaza Hotel in Addison Tx ( http://www.OpenCa.mp .) OpenCamp is a bloggers convention of sorts. It is an event that discusses all things related to blogging, including the web content management systems used to blog (Joomla, Drupal, and WordPress.)

At OpenCamp, I discovered the next generation of media: the artist. You see, the web is not fully evolved. New applications, coding such as HTML5, and creative ideas will revolutionize what we think of the internet. The art of entertainment, contribution, and collaboration is growing beneath big media. Channels and personalities for your entertainment are flourishing, such as iJustine on YouTube and Twitter.

Stay tuned. Adapt or die.

Can’t wait to say, “I told you so.”

To answer the question “what to do when your cheese is moved?,” you move with it. Just because you business is relevent today does not mean it will be relevent tommorow.

Marketing is not something you learn in a textbook. Marketing is effort. Marketing is experience. Marketing is about having something good to say, smart, funny, and interesting. It is about things people want or need. As long as you have the desire to stay relevent, you have something to offer.

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Why do crony executives hide behind “company policies”…

August 24, 2010

Were You Fired From SuperMedia Due To Executive or CEO Fraud?It is easy. Our company policy requires you to disclose wrongdoings. 

Take a look at Sea World. They knew the whale was more trouble than it was worth. A $75,000 suit later after discovering that executives tried to hide the fact that they knew about the potential troubles. 

All they do is blame it on the employees for not “filing a complaint” or grievance. Reminds me of the corporate culture I witnessed while working in “corporate America.” Executives know what happens. They just blame it on subordinates for not filing a complaint or reporting to HR. Yet I personally witnessed employees being pushed out, pressured, and terminated for “blowing the whistle” on wrongdoings. 

Easy for the executives. Let the minions fall on the sword. It is so easy to avoid it as the boss. Who is going to fire the boss? His team of circle jerks? 

Makes me sick and glad to be away from corporate politics. 

Seriously. I left High School and 2 months later joined Verizon Information Services. 9 years + later, I can attest that the only protections employees have is other employees. Yet I still have negative opinions about unions. I was one of the non union fellas who witnessed wage decreases and modest merit increases while unions negotiated cadillac contracts, pensions, and benefits packages. 

Damned if you do. Damned if you don’t. 

Guess the only option is to stop overpaying crony executives for working less hours than regular employees and to limit the ability for a single hiring manager to term an employee? But putting wrenches and restrictions on the workforce limits a companies ability to respond to the marketplace. 

So what is the solution? 

Culture. It begins at the top and finishes at how you train clients to agree, promote, and accept your ethics, mission, and positive working environment. Clients are trained to cheat by shady unethical consultants. Don’t allow executives to ignore wrongdoings. Don’t allow co-workers to do the same. 

Your company may not have great sales results, dividends to investors, or huge executive bonuses, but you can always take pride in your corporate culture. Atleast you won’t be ranked on JobVent as on of the worst places to work. 

Btw, notice how companies avoid the “blogosphere” by just posting press releases vs allowing comments? Another way to keep the community silent and from voicing concerns. I love exposing the tricks from so-called corporate reputation management professionals. 

Cheers, 

Mike 

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Concierge….. potential future for publishers.

August 24, 2010

Yellow Page Concierge Services…..

It is not really lead generation, but more of an opportunity for publishers to become a subscription based business.

Service Magic has cost per lead for service companies locked and loaded. Yext is up and coming. Transparency is the future. Why? Because the internet is the “bathroom wall of America.”

Who will be the first publisher to attempt to incorporate pricing (such as a hotel concierge who provides the best deals to VIP clients for local sporting events, operas, and concerts) and providing the best local products and services. Not those backed by some long micro print guarantee that has nothing but a “these are the guys who purchased our ads” seal of approval. Consumers want to subscribe to the best deals. The best providers. And the best resources of information. The best directories offer traffic to advertisers. How do you get traffic? Well, you can buy it (not so smart) or earn it. Earning it requires unique value propositions and key differentiators.

What more can a yellow pages publisher do than stop offering up the biggest ad spenders, but those smbs most capable of servicing the true client of the yellow pages company, the CONSUMER.

Doesn’t sound cheap. Probably requires going back to the “compensation committee” and lowering the CEO’s salary and bonuses. But hey, when your stock is tanking and you already have an exit strategy in place, why would you want to rock the boat?


The Fate of Yellow Page Company Business Models…

August 23, 2010

What an interesting topic? Almost as interesting as discussing the weather on June 3rd, 1963.

Well, I had an interesting call with Yext folks once again. Paying up to $25.00 per call for quality leads is not asking for too much, unless you can get them for less by a qualified local search engine marketing firm. A client has a Yext account. Why you ask? Because sometimes SEO agencies don’t or are not capbable of serving “bold listing” and “HS ad” type budgets. This is why YEXT is such a good offer. They gamble on the search marketer skills in-house by providing result within a margin and aggregate traffic amongst all the different listing sites, such as SuperPages.com, Yp.com, CitySearch, AllTheWeb, Local.com, etc.  Most small search marketing agencies focus on Google, Yahoo, Ask.com, and Bing.  Sometimes, especially in rural markets, the value of local directories with older and less experienced computer users, the directory sites can provide a greater value. Competitive markets that have populations over 200k drive up cost by aggressive advertisers and amount of advertising competiton as well as standard bid minimums and less volume to justify monthly media service fees.

So…. what is the fate? Better focus on driving quality traffic to you directory. I think print will still be fragmented with competition and .com will be all about customer traffic, managing traffic, and cost per aquisition or lead.

Your thoughts?

That is why going from 20 million UVs (unique visitors) to 8 million is such a big deal!

If you think a sales model is the future of the internet you are DUMB or a liar.  Traffic driving lead aggregators, search engines, local search companies will saturate the local smb market. The company that wins adapts a service oriented holistic approach.

Bet!

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Phonebook’s are not dead…… seriously!

August 22, 2010

“Just because your business is relevant today, does not mean it will be relevant tommorow!”

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Have you noticed how the terminology of the word “phonebook” has shifted from discussions of 5lb paperweights to contact lists on mobile devices. I just did a search on Twitter for “phonebook” and noticed that the repeated complaints about getting yellowpages directories delivered unsolicited to ones domicile with the “#phonebook” hashtag/keyword have been trending down. It is not like folks simply stopped complaining about “phonebooks” and unwanted yellowpages directory spam, I am just saying that the overall awareness, meaning, and viability of printed directories is dead. Although the word “phonebook” may become a very popular word once again in the near future!

The resurection of the printed book is not likely going to happen, but mobile devices will keep the idea of a “phonebook” on the forefront of our daily activities. When is the last time you used the white pages? Most folks are no longer programming cerebral sponges (brains) to remember phone numbers. We are becomming increasingly relient on our “phonebook” to provide us numbers and contact information.

Recently Yahoo stated that mobile search will account for 50% of all searches. I predicted mobile being 40% in less than two years just a few months ago on this blog. Now that smart phone technology is advancing to new leaps with great mobile browsers like Google’s Android browser, which has just recently officially taken the #1 spot from the iPhone’s Apple Safari Mobile Browser, and smart phones are no longer priced for affordability by the wealthy, I have a hunch that this migration to mobile will inundate the “local product or service” market quickly.

This all helps explain why SuperMedia stock, publisher of the SuperYellowPages “phonebooks,” is at an all-time low of around $12 per share.  I also recall that Oppenheimer finally downgraded the stock from outperform to perform (the only other measurement is underperform) and the analyst who rated the company is likely on some sort of “shitlist.”  Oppenheimer is no longer covering SuperMedia due to the size, or lacktherof, of SPMD’s stock marketcap.

Link: http://www.learningmarkets.com/News-Feed/2010081939950/supermedia-inc-endures-analyst-downgrade-spmd-v-kong.html

The Paulson Hedgefund, who owns approx. 16.9% of SuperMedia stock recently sent a “not-so-secret” message to investors by selling a few small shares of the company. Last I heard this is a known trick on the street to encourage shortselling of a stock.

It is interesting to see that while SuperMedia’s pending doom is approaching, the “phonebook” is still alive and well. Phonebook’s will outlive the yellowpages phonebook. Trust me!

Meanwhile, I still feel 110% confident that I have a cure for wannabe “integrated media companies” who want to transition from a non transparent, unfocused, hard sell, high margin, dying business model to a transparent collaborative service oriented enterprise2.0 business model. Stay tuned.

Join me at PubCon Vegas for details! See ya there folks!

Don’t forget to wear your red on Thursday folks! SuperSleuth out!

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Corporations must learn lessons too. Does your CEO care?

June 12, 2010

Former BP ad campaign is now our nightmare.

I was considering posting my thoughts about the Gulf Oil Spill Crisis and BP.

Found out today via Facebook that someone else knows what’s up!

Instead of me offering my opinion, take a look at Paul Dumas website at Optimized Local Search, and his comments related to BP and an unlikely but practical solution to the Gulf Oil Spill.

Seems that we forget BP is a foreign company.  Do you think BP’s executives are handling the situation correctly?

After reading Paul’s thoughts, do you think he is right? Do you think BP = YellowCrooks?

Letting a massive oil company self-regulate its own environmental disaster might not be the way to go.

It is one thing to fail to admit when one of your executives has a drinking problem, it is another to lie about how bad things are.  Is BP trying to get the Gulf Coast to drink oil flavored Kool-Aid? Let’s hide how bad things really are.

Sounds like they have a great future. Time for us to hold corporations, companies, and executives accountable for actions that not only harm investors, but also the general public interest.

That’s my 3 cents.