A Tale of Two Decision Makers

Wednesday’s New York Times (Mar. 6), offered two stories, appearing side-by-side, that present a contrast in decision-making between two high-profile executives. One uses rationalization while the other employs reason.

The two company figureheads I’m talking about are Marissa Mayer, newly installed CEO of Yahoo, an Internet search engine company, and Martha Stewart, author, magazine publisher and founder of Martha Stewart Living Omnimedia.

In 2004, Stewart was convicted of lying and obstruction of justice with respect to using insider information to sell shares of her stock in ImClone Systems. To this day, Stewart has denied the charges in spite of testimony from three individuals including her broker’s assistant that she was, in fact, apprised of the knowledge in advance.

Stewart is now back in court. “The main allegation,” The Times writes, “is that Ms. Stewart’s company violated a contract with Macy’s when it agreed to provide similar merchandise to [retailer J.C. Penney].”

After successfully selling Stewart’s goods in Macy’s since 2007, “Stewart testified that she was ‘flabbergasted’ by Mr. Lundgren’s reaction when she tried to tell him about the Penney’s deal in a phone call. ‘I don’t know if I got through even half the points before he hung up.’ ”

“Flabbergasted,” really? After calling a business partner for the last 4 years and telling him that you’re changing the terms of an “exclusive” contract, you’re “flabbergasted” at his reaction?

According to the Christian Science Monitor (Mar. 5), “Martha Stewart and Penney are using what they believe is a loophole in the agreement between Macy’s and Martha Stewart to move forward with their deal. It’s a provision that allows Martha Stewart to sell some of the products that it offers in Macy’s stores at Martha Stewart shops, as well.

“According to Martha Stewart lawyers, because the Macy’s agreement doesn’t specify that Martha Stewart stores have to be ‘stand alone’ locations, the mini shops within Penney’s stores would not violate the contract.”

Based on the precise wording of the contract, Stewart may be on solid legal ground. However, from an ethical standpoint, Stewart knows exactly what she is doing.

What’s particularly evident in her testimonies both past and present is how she attempts to beguile the judge with her personality and merchandising expertise. “Why do you think the headlines are pitting me against J. C. Penney’s and Macy’s?” Stewart says, in faux amazement. “They’re fighting over something, and it’s not just home. It is our amazing product.”

“There’s a difference,” Justice Potter Stewart (no relation) once wrote, “between what you have a right to do and what is right to do.”

On the other hand, there’s Marissa Mayer, six-month CEO of Internet giant Yahoo.

“When [Mayer] took over as chief executive at Yahoo last summer,” The Times writes, “she confronted a Silicon Valley campus that was very different from the one she had left at Google.”

“Parking lots and entire floors of cubicles were nearly empty because some employees were working as little as possible and leaving early. Then there were the 200 or so people who had work-at-home arrangements. Although they collected Yahoo paychecks, some did little work for the company and a few had even begun their own start-ups on the side.”

In abolishing Yahoo’s work-from-home policy, Mayer explained that face-to-face interaction among employees fosters a more collaborative culture which leads to innovation.

Since the release of the memo, Mayer has faced criticism by many regarding flexibility in the workplace. However, company managers have assured employees that the policy change was directed at approximately 200 employees who work from home full time. “One manager said he told his employees, ‘Be here when you can. Use your best judgment. But if you have to stay home for the cable guy or because your kid is sick, do it.’ ”

From an ethical standpoint, Mayer’s decision makes perfect sense. And so do the others changes she’s implemented that have not dominated the talk circuit such as free food in the cafeterias as well as employee Android and iPhones. Mayer also instituted an all-employee Q&A meeting on Fridays allowing a free exchange between executives and employees.

As a result, “A recent internal employee survey found that 95 percent of employees were optimistic about the company’s future, a 32 percent bump from the previous survey… Since Ms. Mayer made food free, there are now crowds in the cafeterias, lingering to talk about new ideas, employees say — exactly what she wants to encourage by requiring people to work in the office.”

From my perspective, Mayer is transparent both in her goals for Yahoo as well as employees, and seems to be leading with reason and intelligence. While time will tell how all this plays out with the company’s larger goals, she’s off to a great start.

However, I remain disappointed with Martha Stewart – an incredibly smart woman with ideas and products that the public clearly enjoys, but every time she faces a crisis of conscience, she fails at taking responsibility and doing the right thing. If Hubris ever became a household product, Stewart would make a fortune selling it.

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