What is your opinion about sovereign wealth funds taking ownership of US companies? The stakes being sold are substantial, such as the government of Singapore’s 10% holding of UBS, and the management impact could be too, such as Saudi Prince Alwaleed bin Talal pushing Chuck Prince out of his job at Citigroup.
—Dipak Thakur, Decatur, Illinois
Now wait a minute. Was Chuck Prince really pushed out of his job as chairman and CEO by a single member of the Saudi Arabian royal family? Or was he asked to move on by the Citigroup Inc. board, which probably had input from, among many others, a large, concerned, long-term shareholder who happens to be a member of the Saudi royal family?
Our bet is the latter scenario and, in a nutshell, that’s why we are not even slightly worried about the recent upwelling of investments by sovereign wealth funds (SWFs) which are owned by governments or states and invest using national savings.
Yes, as you point out, some of the stakes being taken are substantial. Along with the UBS AG deal, for example, Singapore’s state-run Temasek Holdings recently bought about 9% of Merrill Lynch and Co. Inc., the Chinese government spent $5 billion (about Rs19,650 crore) for a piece of Morgan Stanley and Dubai’s state-owned investment group took a 6.5% stake in MGM Mirage. But rather than something worrisome, these transactions mainly seem to suggest that foreign investors, be they governments or individuals, are buying into US companies for the same old opportunistic reasons everyone else is. They see fundamentally good companies that can teach them a lot and are undervalued because of the weak dollar and hard times but will eventually come back strong. In other words, they see great deals and they want a part of them. What else is new on Wall Street? In fact, we consider all the recent SWF activity just the natural evolution of globalization and, at least for now, it’s all good.
At least for now, we say, because of course we’re not oblivious to the potential danger of foreign investment in the US’ strategic assets. You’ve heard the doomsday scenarios proffered by the most dire xenophobes, so we need not repeat them here. Nor will we dismiss them outright. But at the current levels of foreign investment, threatening developments seem highly unlikely. And should that change, you could expect US boards to step up to their responsibility of protecting homeland security. If they don’t, recent history has certainly shown us there will be more than enough government intervention to make up for it.
But why dwell on the negative of foreign investment anyway? Better to dwell on the upside of all that offshore money pouring into the US right now, recycling the trillions of dollars we’ve poured out in recent years to buy West Asian oil and low-cost imports. That’s globalization at work. And while it recycles, globalization expands opportunities for the world’s too-numerous have-nots and, perhaps best of all, increases the economic, political and social interdependence of nations. In these fraught and divisive times, who, we ask, could possibly do anything but cheer that dynamic?
And so, we would urge you to take another view of the foreign investments that seem to be concerning you. US companies in difficult circumstances will always attract opportunistic, activist shareholders. Sometimes they will look like Carl Icahn or Nelson Pelz and sometimes they will look like shiny-faced hedge fund managers just out of Wharton or Harvard Business School. And now, it seems, sometimes they will also look Chinese, or Saudi, or whatever. It doesn’t matter; they’re all after the same thing: the opportunity of the US’ capitalistic market.
What is the difference between leading and managing?
—Richard Zoretic, Virginia Beach.
You ask a real favourite; we get your question all the time, just about as often as we get, “Are leaders born or made?” Now, for that question we have already written an answer in this space, which was, just to paraphrase here, “Both”. Your question, however, is harder.
In other words, we don’t know. The way we see it, the matter is really just semantic. Leaders have to manage people and processes to get anything done, and a manager is pretty limited if he doesn’t also do the things a leader does, such as inspire and coach. Good leaders manage and good managers lead.
So where’s the line between the two types? We’d wager it only comes into play when you don’t want to offend an employee who can cross those t’s and dot those i’s but couldn’t excite a busload of kids on their way to Disney World. In such a scenario, what do you say? You guessed it. “You’re a good manager.”
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Jack and Suzy are eager to hear about your career dilemmas and challenges at work , and look forward to answering some of your questions in future columns. Jack and Suzy Welch are the authors of the international best-seller, Winning. Campaign readers can email them questions at email@example.com. Please include your name, occupation and city.
©2008/By NYT Syndicate