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Measuring CEOs’ Capacity for Information Complexity (Requisite Organization)

Forrest Christian Managing, Theory Leave a Comment

I’m announcing my intention to code the interview Charlie Rose did with Lee Raymond, outgoing CEO of ExxonMobil. Raymond is a remarkable thinker and I believe illustrates strong high-mode characteristics in this interview.

What caught my attention was his use of the timespans. He mentioned research that Exxon did into alternative fuels back in the early 1980s. Rose considered that a long time ago but Raymond didn’t: “The laws of thermodynamics haven’t changed since then.” He talked about multi-year cycles in the oil business which meant that he had to level out profits over ten or fifteen years.

But that wasn’t the long term for him.

He obviously out-classed Rose, who while not incredible is no idiot. He seemed to be able to range across more than fifty years in his discussions of problem-solving.

Anyway, the transcript is available online for a minimal fee. I’ll put him to the test, something I’ve been meaning to do for lots of people, and see. I reckon that his incredible tenure with the company has been a result of hard work, lots of study and high-mode. When I get done, I’ll post my results for y’all’s review. You can decide whether or not I’m on the right track.

Since I think that he might be Str9, coding him should be fascinatingly hard to do.

If you’d like to see the difference — and you caught that November episode of Charlie Rose — take a look at a Motley Fool interview from 2000 with David Edmundson, now CEO of RadioShack Corporation. [Requires free signup.]

TMF: Could you talk a bit about how you see your revenue breakdown between your various products and services today and how you might see that changing in the next five years or so?

Edmondson: Five years, that’s a long time in the technology business. I will say that if you go back a couple of years ago, services were nonexistent. This year, services will represent about 7% of our total business. Computers will probably stay pretty solid at about 10% to 12%. The accessories and parts business is down to about 28% today, because other parts of the business are growing faster — a couple of years ago it was around 34%. The communication business was about 20% of the business; today it’s about 33% of the business. We see that growing.

He later talks about three years prior, two years prior. These might be clues to a 2-4 year time horizon. Certainly back in 2000 people were already talking about how computers would become a commodity item, and that wireless would replace it as the hot product, even in America. He could have easily predicted that computers would fall as a percentage of both sales and profits, and that wireless would see a general trend upwards as long as new technologies and benefits kept coming out. It’s odd that he didn’t see any HDTV growth, even in connectors, which might explain Radio Shack’s dearth of offerings in that area.

The interview was five years ago when he was 40, so plug in a 2-4 year time horizon onto Requisite’s chart. I’d guess he crossed into Str5 within the last year or two, making him Mode-6.

That would also explain why Tandy Corporation had to die. The company just didn’t have the horsepower at the top in order run thse multiple businesses. RadioShack Corporation, with its focus on the 7,000 retail stores and various manufacturing partnerships, is still pretty big. I wonder how he will do running it at Str5, if that’s accurate, which it very well may not be. One of the consultants who periodically reads this has worked for RadioShack Corporation or its predecessor. I wonder what he thinks of the business possibly being led from Str5.

UPDATE 2013: How Edmondson did as CEO of Radio Shack. Turned out about how I expected, indicating that assessing CEOs through interviews made in earlier positions can be an effective way to find red flags for investors.

Image Credit: “Zuschneidewerkstatt in Cottbus”. Bundesarchiv, Bild 183-43049-0001 / Schutt, Erich / CC-BY-SA

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