Tuesday, December 10, 2002

Lance Knobel on US Treasury Secretary-designate John Snow: The Wall Street Journal reports that Treasury secretary-designate John Snow's company, rail freight giant CSX, is no great shakes. "For all its progress, CSX still has the worst operating ratio, a common measure of railroad efficiency, among big North American railroads." That sounds like a recommendation. But wait! There's more! And in 2001, Snow earned "$2.2 million in cash, plus $7.1 million in restricted stock awards. In addition he received $753,057 in additional compensation, including $117,900 in life-insurance premiums and $323,266 in 'above market' interest on deferred earnings". When he retires he qualifies for Welch-like perks, including "use of private aircraft for the remainder of his life". Just the man to tackle concerns about corporate governance. 9:04:47 PM    comment []  trackback []

Let's be careful out there II Photographer arrested for taking pictures of Vice President's hotel: "An amateur photographer named Mike Maginnis was arrested on Tuesday in his home city of Denver - for simply taking pictures of buildings in an area where Vice President Cheney was residing." [From the Desktop of Dane Carlson] [John Robb's Radio Weblog] 8:59:53 PM    comment []  trackback []

Let's be careful out there That's what the sargeant on Hill Street Blues used to tell the cops before sending them out on the beat. It's a phrase that comes often to mind: McKinsey and Failing Airlines. McKinsey was the central "consultant" at Swissair during the several years that led to the destruction of the Swiss airline. Their "work" cost Swissair about $60 million dollars -- while it lost all profits, revenues, and assets. McKinsey is also well-known for having preached at Enron, and presented that company as a success to emulate, until the fall. Business Week: Many of the intellectual underpinnings of Enron came from McKinsey... NYT: Now that United Airlines has filed for bankruptcy protection, the critical challenge facing the airline... is to find a business strategy that works. To that end, United has hired McKinsey... Why McKinsey? While Andersen helped cook the books at Enron, didn't McKinsey also play a key role in that massive failure? [Jinn of Quality and Risk] Note:  the article also lists some recommendations from McKinsey on how United can improve performance.  Unfortunately, these improvements will barely offset the monthly fees McKinsey is charging the airline. [John Robb's Radio Weblog] It's not that consulting is a Bad Thing. (I should know; I am one!) But consulting that takes you away from ethics, good sense and business fundamentals? Let's be careful out there! PS: It's not that airlines being in trouble is anything new. Check out the systems analysis done by UC Davis prof Kenneth EF Watt in the 70s. (I'll see if I can find the citation.) 7:45:55 PM    comment []  trackback []