Friday, August 14, 2009

Instructions to Board of Directors on how to ruin a great company in 5 easy steps.

1. Take a great company and put in place a CEO who is greedy and arrogant. Allow him to go on a wild buying spree without a clear strategy, thereby using up the accumulated cash on useless and worthless purchases.

2. Let CEO get rid of all the strategic assets by outsourcing them indiscriminately to foreign corporations in a tricky strategy disguised as a means of reducing costs, and then let him leave with a tremendous bonus.

3. Replace CEO with a series of incompetents who have no knowledge of the core industry. Let them steal the company blind and run it into the ground with frivolous marketing and technology decisions.

4. Declare bankruptcy protection to allow the surreptitious division of the company into chunks that can be sold off piecemeal to previous competitors at bargain basement prices.

5. And as a final icing on the cake, ensure all employees and retirees are victimized by eliminating promised benefits, and under funding all trust funds so that they will lose most of their earned benefits.

I’m sure American and Canadian business schools will be using the example of Nortel’s mismanagement for decades and possibly centuries to come. It’s too bad that the board of directors of Nortel were so inept and unable to control the people who took over the reins of the company, once it had become a major world player. Nortel’s loss is not just Canada’s loss; it is also North America’s loss. With Lucent owned by Alcatel, and Nortel gone, there are no major N.A. players who can truly call themselves telecommunications giants. How shortsighted is that?

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