Pressuring Generals (CEOs) to disclose their plans—Wrong!

For 2,500 years smart armies have known: “A great general is unfathomable, his actions having formlessness.” Translation: a great general keeps his enemy guessing. A great CEO moves in the same way because the competition wants to prevent him or her from reaching their goal. And reaching intelligent goals is where increases in equity holder value are found (the point of the exercise). But most market share needs to be “taken” just like ground in the battlefield. And taking ground is expensive in countless ways—and even more so if the enemy (your competition) is waiting for you which, if they’re good, may be the case.

So the great general (CEO) thinks ahead. Keeps his battle plans vague. Keeps the enemy (the competition) guessing. This allows the great general (CEO) to show up where he isn’t expected and that’s beautiful competitive technique. That's great corpcraft. And isn't that what we want when we hold equity in a company? Sure.

So why are some criticizing corporate leaders for not publicly disclosing their plans?

Last week the Financial Times (which we hugely admire), published a story with ratings of the annual reports and websites of 50 major companies in the U.S. and Europe. They listed the five “Best” and the five “Worst” companies via a multivariate model (the study was done by Shelly Taylor Associates). The companies were rated on a variety of parameters that heavily weighed how much information they disclosed to readers/viewers. What we found questionable was a major downgrade was bestowed if a chairman didn’t discuss, in relative detail, his or her upcoming plans. The more detail the better.

As sharp-end, equity holder oriented competitors, we think that’s a bit shortsighted.

Berkshire Hathaway was given the lowest possible rating, the bottom of the list (50th out of 50!) because Warren Buffett didn’t exactly rhapsodize about his future plans. Hey, we trust Warren to do right by equity holder value. I don’t want to know the details—because we don’t want the competition to know any more than they already do. We want Buffett to act like the great CEO (general) he is—be vague, be formless, keep the competition (enemy) off guard, in the smoke and wasting resources, all while our CEO skillfully swings around in the induced fog of competition and increases the value of the company.

Think about it…

A Reader's Strategy--Act Like a Snake

Last week we received an insightful e-mail from the famous CEO of a Fortune 100 company. He asked a quick technical question about e-mail and the use of our term ‘corpcraft’. As a postscript to our answer we asked him how he did it—how he had managed to consistently add or protect so much equity holder value, even in this grim market. His answer was illustrative given his fame as a fierce competitor, in both his business and personal life.

"Tal, to put it in terms you would appreciate: I learned a long time ago to act like a shuai-jan, you know, the snake. That and not being worried about personal embarrassment which opens up a lot of possibilities my counterparts avoid."

For the non-herpetologists out there: a shuai-jan is a snake mentioned in ancient Chinese texts on battle tactics: "When you attack the shuai-jan's head, it attacks you with its tail. When you strike its tail it attacks with his head. Strike at its middle and both ends will attack you."

Both traits help explain his happy equity holders.

Think about it...