The Mechanics of Successful Executive Transitions – Part I of IV

Monday, October 5th, 2015

Are You ReadyExecutive Transitions: Confronting the myths of effective succession planning

Ask any human resources (HR) or Organizational Development (OD) professional about their company’s succession planning process, and you’ll likely hear a dozen different versions of the process. From 9-box grids with quotas, secret and non-secret hi-po lists, slates of candidates attached to the most senior jobs with various readiness-ratings—ready-now, ready in six months, etc.—and computer generated profiles complete with color pictures and career histories compiled in advance of talent calibration sessions. All the accouterment and not much else according to the HR folks we’ve spoken to.

HR: We have a pretty rigorous process in our talent calibration and we’re proud of how many ready-now leaders we have.

Navalent: That’s great—what exactly are you doing to get people “ready” to assume bigger jobs?

HR: Well, that’s where we fall short. We don’t really do great executive development.

Navalent: Then how do you know the candidates are “ready now?”

HR: Well, we know they are more ready than anyone else in the organization.


HR: It’s frustrating that all the execs show up to the conversation with everyone rated as a 9, and then we spend the entire session downgrading enough people so we only have a few real “hi-pos” left in box 9.

Navalent: What criteria do you use to determine who gets downgraded and who stays a 9?

HR: Basically, it’s whoever fights the loudest for their people.

And our favorite:

HR: We make our best choices when there’s a crisis.

The conversations don’t get much better than that. The fact is, that for all of the activity devoted to future executive leadership, the results are pretty dismal. In our 10-year longitudinal study of executive transitions (Rising to Power: The Journey of Exceptional Executives), which included interviews with 2700 leaders and a survey of more than 100 recently transitioned executives, 76% indicated that the formal development processes of their organization were not, or at best minimally helpful in preparing them for their executive role, 55% indicated that they had minimal, if any, ongoing coaching and feedback to help them refine their ability to perform in an executive role, and 61% said they were unprepared for the roles they assumed. It has been known for decades that somewhere between 50%-60% of executives fail within the first 18 months of their appointment, and somehow we’ve come to accept that failure rate as “normal.”

Want to take a simple test to determine if the approach your organization takes to preparing future leaders has any chance of making a lasting impact or not? Answer two simple questions:

  1. What determines where the process starts?
  2. What determines where the process finishes?

Let’s look at each one separately.

At the outset: Your organizations articulated strategy must underpin all leadership decisions

It’s astonishing how many organizations don’t tie their leadership work to their strategies. They tout great growth aspirations, launching new products, acquisition plans, turn-around investments, refined market segmentation to acquire new customers, and never once identify the leadership requirements to accomplish any of it. The closest we’ve seen is when HR identifies “most critical jobs” as priority for identifying successors, but even then, when you dig deeper to see what criteria gets a job labeled as “most critical,” it’s usually the size of the role, the iconic nature of the incumbent and the cost of the talent acquired underneath them, or an incumbent that is perceived as a “retention risk,”—all of which may, or may not, have anything to do with the organization’s most strategic aspirations.

All too often, the succession process begins with the HR forms to be completed. It begins with whatever mechanics were chosen for the approach, and whatever HR was able to convince the CEO to tolerate. More enlightened CEOs and executive teams whose talent gaps are more glaring are usually more open to having robust talent conversations, but rarely are they able to connect all of the dots between their strategy gaps and their talent gaps. And once the process becomes politicized in any way, hijacked by individual agendas and ambitions, the likelihood of ever connecting those dots is slim.

The first question a succession planning process must answer is “What are the most critical leadership requirements for delivering against this strategy, and in what jobs are those requirements most evident?” Once that is answered, you have the beginning of a succession process with teeth. From there, you can then determine the ideal profile of prospective candidates, development gaps for those candidates, and prioritize preparing those leaders with the greatest promise of meeting those requirements.

Measuring Success: A process that yields truly prepared executives

We had one client who lost their company’s number two leader (ranked simply by the size of his part of the organization, not his effectiveness) in a sudden defection—which of course could have been seen coming had anyone been looking for the right signals. They boasted that their succession planning process had proven effective because they had “a ready-now candidate ready to go, and were able to orchestrate a very smooth transition of leadership as a result.”

Six months after the successor had taken over, the organization had devolved into utter turmoil. Turns out the successor, whose previous role was running about a $1.5B business and the role he assumed totaled about $9B across multiple businesses, had demonstrated some “control issues” in his previous role. Guess what those looked like at 9x the size of the job? He had the organization so hamstrung to act that major bids were lost, product launches botched, and profits in decline. He, of course, had blame to pass around, excuses to make, and justifications for his choices. Hardly evidence of an “effective succession process.”

But it was declared effective because the organization felt they had identified a successor for the role. If you looked deeper, little had actually been done to prepare him to assume a role that much larger and more complex than the one he’d been in. Ironically, not one person was “shocked” at what unfolded. Many who reported to him in the smaller role said things like, “Could’ve seen that coming.”

An effective succession process can be considered complete when tangible investments to actually prepare leaders for future roles have been effectively executed. It’s not enough to simply list leaders you believe could take on bigger jobs as potential successors. Aggressive, robust efforts must then be made in the development and cultivation of that leader’s capability to ensure they have what is required to succeed in that role—and not the role as it is “today,” but the role as it will likely be when they assume it. If the job drives $100M in revenue today, it may well be $200M or more when they get it. If it leads an organization of 1000 employees today, that could be 2000 or more when they eventually assume it. Active and ongoing work must be done to deepen and broaden the leader’s ability, and to surface and address the hidden pathologies that will most assuredly become more pronounced as responsibilities expand, complexity multiplies, and pressure and risk intensify. Short of that, there’s really no point of putting their name on any list unless you are willing to draft their severance agreement at the same time.

In the next post in our series, we’ll take a look at the vast network of relationships that actually determine the success of any successor once chosen. Far more than just that leader and their new boss, the cast of characters actively engaged in enabling, or disabling, the success of newly appointed leaders is far more extensive than most realize.

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CarucciRon Carucci, Managing Partner of Navalent, is a seasoned consultant with more than 25 years of experience working with CEOs and senior executives of organizations ranging from Fortune 50 to start-up in pursuit of transformational change. His consulting has taken him to more than 20 different countries on 4 continents. He has consulted to some of the world’s most influential CEOs and executives on issues ranging from strategy to organization to leadership. You can learn more about Ron and his work at:


EppersonJosh Epperson has spent the last decade at Navalent helping leaders and organizations overcome their most difficult business challenges. He works with a variety of organizations and leaders ranging from community NGOs, privately-owned family businesses, and multi-billion dollar public corporations. Transformation of these leaders and organizations usually includes strategy articulation, organization architecture, leadership capability or a combination therein. You can learn more about Josh and his work at:

Topic: Change Management, Corp Governance, Human Resources, Leadership, Management, Org Behavior, Strategy
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Understanding Our Roots To Determine Our Future

Wednesday, September 2nd, 2015

Have you ever read the U.S. Constitution? Perhaps you don’t think you will be able to understand it? Do you wonder if it relates to us today? Do you know anything at all about the Bill of Rights? Do you agree with the 2nd Amendment? How about the 1st Amendment? Are you sure you know what they say? Did you know there may be exceptions to automatic citizenship for those born in the U.S.?

As we move toward an election year, with all of the political controversy, don’t you think it would serve us well to know something about how the United States. Republic was established and where we get our laws?

I was recently given the opportunity to review two fascinating books on the U.S. Constitution and the Bill of Rights. I know, the last sentence sounded dull and the word “fascinating” sounded like it was trying too hard. However, if you a want a quick tutorial on the documents underpinning our laws, our government, and our rights these books are both well worth reading.


Henry-Bain-BookThe Constitution of the United States of America: Modern Edition

Dr. Co, Editor

Greenleaf Book Group Press, Austin TX

Approx. 120 pages

This book makes reading the Constitution accessible to everyone. It was rearranged and edited for ease of reading by Dr. Henry Bain, who is a constitutional expert and who has been credited with finding a typographical error in the Constitution that had previously gone unnoticed by other scholars.

Although this book has stirred up controversy for those who believe Dr. Bain is trying to rewrite the Constitution, and while I am not a Constitutional scholar, I found it worth a read.

First Bain reorganizes the Constitution in topical order and includes the Bill of Rights and Amendments within the text. Since the topics do not follow a consistent and/or logical order in the original document, presenting the text in this way offers readers the complete law as it should be interpreted. Each section includes a corresponding number which represents the placement of the content in the original document.

Also, without overly altering the language of the founders, Bain edits some grammatical forms, punctuation, and style to make the text more understandable in today’s language. Throughout he gives definitions of terms within the context of usage to elucidate the content.

Bain places the items that are outdated or changed by other amendments at the end. For comparison, in Section 2 he gives the Constitution and the Amendments in the traditional order.

This book can be read in an evening and offers a richer understanding of the U.S. Constitution that is so often discussed and yet so often misunderstood and misinterpreted.


McWhirter bookBills, Quills, and Stills: An Annotated, Illustrated, and Illuminated History of the Bill of Rights

Robert J. McWhirter

American Bar Association

Over 500 pages

As the Bill of Rights would fit on a few pages, you may be daunted by a 500-page book on the topic, but fear not, this book is great fun to read. It is lively, colorful, and energizing in its layout and format and a fascinating read.

The top half of the page contains details about each of the so-called amendments in the Bill of Rights and the bottom half contains extensive details (somewhat glorified footnotes) with historical facts that apply to where the line of thought underpinning each amendment developed. There are anecdotes and historical facts from ancient history, various religious beliefs, and modern culture. McWhirter adds pictures and drawings representative of the note and includes movie and culture tidbits to show how we use these ideas in our contemporary culture.

While not a read-in-one-evening book, this is more like salted peanuts, you sit down and enjoy a few pages or notes at a time, that is if you can put it down. For those who want more information, McWhirter includes sources for additional reading and references. In fact, if I have any complaint is that while the footnote is engaging, some of the context gets lost in the sourcing of references.

Both of these books are great primers if you slept through your civics or American history classes. For those who are more informed, the books will add a new dimension to your understanding of how our government and laws were formed.

Topic: Business Law, Ethics, Public Policy
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Raising Financially Responsible Children

Wednesday, July 1st, 2015

As a professor of finance, I have spent years interacting with men and women of different ages and professional identities, helping them navigate the intricacies of financial markets as much as clarifying the idiosyncrasies of the investment process. I’ve learned that by working with kids from an early age in nurturing an understanding of the value of money, engaged parents help them develop a future ability to manage it properly.

Davide Accomazzo

Davide Accomazzo, adjunct professor of finance

One element that struck me was a recurrent lack of understanding of the basic foundations of financial literacy. While many had some level of technical knowledge, often they lacked sensible comprehension of the underlying fabric that leads to good long-term financial decisions; an issue seemingly overlooked since the early days of one’s general educational journey.

The importance of financial literacy at an early age resonated with me even more when I worked on developing educational modules on helping wealthy families train the newer generations in dealing with the responsibilities of a significant inheritance. And while very wealthy families undoubtedly face some peculiar issues, the framework of our modules seemed applicable to most families interested in raising financially responsible children.

The first item of debate is when to start a financial education. I think that at some light level, it is never too early. Naturally the process needs to keep into consideration the child’s cognitive ability related to his or her age, however, an early start always seems advantageous.

Many young men and women do not seem to have a good grasp over what money really is. In fact, there is a stunning inverse relationship between the family wealth and the understanding by the next generation of what money is.

By working with kids from an early age in nurturing an understanding of the value of money, engaged parents help them develop a future ability to manage it properly. Starting an allowance program very early in the life of a child should set the right foundations for his/her understanding of the three aspects of money management: spending, saving, and investing.

An allowance program can be used as a tool to improve discipline and decision making as the child will now have to deal with constrictions and parameters. The program can also be modified as contingencies change; for example, the length between cash flows should systematically be increased to improve the kids’ ability to manage their funds over longer periods of time.

The next step should be concerned with training a child in the budgeting process. Integrating allowance management with budgeting can be a powerful cocktail in your children financial education.

The first action we take when we start working with any client, is to require them to work on a very detailed budget. This step occurs regardless of the level of wealth behind the client; budgeting “amnesia” is unfortunately a very common symptom. This is understandable since budgeting can be tedious and generally annoying as, regardless of one’s wealth, it creates limitations. This is why a budgeting discipline needs to be instilled early in young children.

When the kids grow up, more teaching opportunities become available. Making the kids acquainted with the banking system and bank accounts is an obvious starting point. This can be followed by an investment program. In this case, the child can be exposed to the intricacies of capital markets by opening a brokerage account or at least by playing a stock investment simulation game.

Exposure to capital markets also reinforces a spirit of entrepreneurship. While not everyone is built to be an entrepreneur, the sense of responsibility and empowering that comes from running one’s business—even if it may only be a lemonade stand—can have invaluable long term positive influence.

To this point, some families of means go the extra mile of setting up a “family bank” designed to finance well thought out and well-presented projects proposed by the kids. Naturally, large family wealth can facilitate this process but the framework can be scaled down and utilized at different economic levels.

Another interesting tool for educational money management is to engage our children in charitable projects. Choosing a cause and dedicating time and some financial resources to it can have a very positive effect on the child’s ability to strengthen the connection between scarce resources, effort, prioritizing, and results.

One word of caution before embarking on this educational journey comes from psychologist Lee Hausner, author of the book “Children of Paradise.” Dr. Hausner advises parents to take a moment as a first step to examine their own attitude and behaviors in relation to money. Money can be and mean very different things to different people and the way we operate can have great influence in what we teach our children. It is imperative that we as parents do what we say we’ll do and that our messages be clear and healthy. Dr. Hausner suggests husband and wife start a self-discovery process where each asks direct questions on their past and present money models. This action should improve convergence of intent between the two parents and it should help clean up attitudes toward money that may have gotten polluted over the years by past experiences or wrong teachings.

Dr. Hausner also stresses the results of many studies that point to two main elements as pillars of a fulfilling life: love and meaningful work.

Regrettably, at Thalassa Capital we are not qualified to advise on love but we believe that the self-respect and discipline that will come naturally to a child properly trained in financial matters might also help in nurturing more loving relationships with others. On meaningful work, we are again in complete agreement with the mentioned studies. From a financial literacy perspective, parents should stress the importance of pursuing meaning via work and simultaneously stressing the link between work and money. The mutually beneficial relationship between doing something that one loves and the remuneration that comes from it should go a long way toward improving our children’s happiness.


  • Hausner, Lee, “Children of Paradise”
  • Godfrey, Jolene, “Raising Financially Fit Kids”
  • Kobliner, Beth, “Get a Financial Life in Your Twenties and Thirties”

Feel free to call us should you want to explore this theme in more details.

Topic: Accounting, Economics, Finance, Investing, Work/Life Balance
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How Extreme Self-Confidence Can End Up Working Against Entrepreneurs

Wednesday, June 17th, 2015

More Introspection Is Needed For Long-Term Business Success 
Says Randy H. Nelson, Former Naval Officer

The entrepreneurial spirit may be taking a hit these days.

Studies show members of the Millennial generation appear less interested than previous generations in starting their own businesses, preferring instead to find work with established companies. In 1989, 11.6 percent of households headed by someone younger than 30 held a stake in or owned a private enterprise; today that percentage is 3.6 percent, according to a recent Wall Street Journal report.

Randy H. Nelson finds that troubling, but perhaps understandable.

“The statistics show the odds of success for a new business are pretty dismal,” says Nelson, author of the Amazon best-selling book “The Second Decision: The Qualified Entrepreneur.” (

“Half of new U.S. small businesses fail in their first five years, and 70 percent have gone under by year 10. That’s not exactly a new trend, but what is a new is that each year in the United States more businesses now are shutting down than are being started.”

But Nelson, who developed leadership skills as a Navy submarine officer and has a track record of starting and building successful businesses, says there is a reason for those sobering statistics.

Anyone can become an entrepreneur. No qualifications are required. If more entrepreneurs understood the ramifications of that – and took steps to compensate for their weaknesses – the odds of success could improve, Nelson says.

One problem is entrepreneurs tend to be extraordinarily confident, which can blind them to their weaknesses.

Nelson remembers that early in his business career his wife asked if he knew what he was doing. He assured her he did. Since then, experience taught him he was wrong.

“The truth was, I didn’t know what I didn’t know,” Nelson says.

Over time, Nelson became what he calls a “qualified entrepreneur.” He says when he looks back over his 25-year entrepreneurial career that he could clearly identify four components of the qualified entrepreneur, and recently he added the fifth component, self-awareness, which is an important piece of each of the other four.

• Entrepreneurship. People who become entrepreneurs are usually brimming with self-confidence, Nelson says. That helps them when it comes to making that “first decision” of starting a new company, all but ignoring those sobering odds for failure that would dissuade many others. The entrepreneur optimistically thinks: “I know I can do this.”

• Career-Long learning. Entrepreneurs think growth all the time for their businesses. They preach their vision to employees and hire the best talent to help them reach their goals. But are entrepreneurs growing their skillsets as fast as their companies grow? If not, they risk becoming the wrong person in the wrong seat, with the very employees they hired to take them to the promised land asking: ”What value do you bring to the company?”

• Leadership. The importance of good leadership is paramount to business success, but not all leaders are created equal. Nelson breaks down leaders into four types. The “urgent/reactive” leader thrives on an almost crazed atmosphere where he or she can ride to the rescue, put out the fire and move on to the next problem. There isn’t much time for introspection and no real vision. An “ever optimistic” leader starts from the belief there is nothing he or she can’t do. “Yes, we can do that!” is the typical answer from this type of leader…leaving it up to their staff to figure out how, even if accepting the new business takes them away from their core focus.

The “reflexively pessimistic” leader plays to survive, not to win. This leader has been toughened by hard times, and always worries about the economy’s effect on the business, Nelson says. In some industries easily battered by a downturn, this style can be effective. But if maintained too long, the pessimism becomes a self-fulfilling prophecy. The final leadership style, the “steady/proactive” leader, is the one every CEO should strive to become, Nelson says. This type of leader values productivity and profitable growth above all things, knows how to achieve both and can course-correct no matter the difficulty. “They understand both offense and defense, and can shift between them as cycles dictate,” Nelson says.

• Life cycle. A business has different needs at different stages of the corporate life cycle. The qualified entrepreneur must recognize that. The startup stage is where many entrepreneurs thrive. Creating something from scratch is what they are about. Needs and challenges change, though, as companies enter growth or expansion stages. The entrepreneur’s needs change, too, because entrepreneurs have their own life cycle, Nelson says.

First, there’s getting the business started, and then there’s the second-decision stage when the entrepreneur needs to choose what role he or she plays in the business, and whether others might be better equipped. There’s also a third decision when entrepreneurs realize work infringes too much on family and personal time, Nelson says. “To avoid regrets later, you have to consider whether you need to make a stronger commitment to a more balanced life.” Finally, there’s the end stage when the entrepreneur is finished with the current business and must decide what is next. Having experienced the “exit” twice in his career, Nelson has come to realize that after the sale only a few lives really change. Everybody else goes on with their normal day while the entrepreneur, much like a retired athlete, must figure out how to function without leading their entrepreneurial venture every day.

“Ideally, entrepreneurs and CEOs would be more knowledgeable than everyone we manage,” Nelson says. “That’s rare, though. The rest of us would benefit from a better understanding of the vast reaches of what we don’t know, and a dose of the humility that goes with it, and this is where the self-awareness component comes in.”

• Self-Awareness. Entrepreneurs need to know their strengths and weaknesses, and how they affect the business, Nelson says. Unfortunately, that’s a trait they often fail to develop. His suggestion: Surround yourself with people who know more than you (entrepreneurs, leaders, and coaches/advisors who have been through all the life-cycle stages the entrepreneur is navigating through) and learn from them. Once you have a clear understanding of what you do and don’t know, you can decide your next steps. Will you continue to lead the business directly; take a supporting role and let someone else lead; or move on to create another business?

About Randy H. Nelson

Randy H. Nelson is a speaker, a coach, a Qualified Entrepreneur, a former nuclear submarine officer in the U.S. Navy and author of “The Second Decision – The Qualified Entrepreneur” ( He co-founded and later sold two market-leading, multi-million dollar companies — Orion International and NSTAR Global Services. His proudest professional achievement was at the Fast 50 awards ceremony in the Raleigh, N.C., area when NSTAR, a 10-year-old company, and Orion, a 22-year-old company, were awarded the rankings No. 8 and No. 9, respectively. Nelson now runs Gold Dolphins, LLC, a coaching and consulting firm to help entrepreneurial leaders and CEOs become Qualified Entrepreneurs and achieve their maximum potential. He has a Bachelor of Science degree in Accounting from Miami University, Ohio, and was awarded the Admiral Sidney W. Souers Distinguished Alumni Award there in 2011.

Topic: Entrepreneurship
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Thalassa Blog – Of Long Term Success, Short Term Temptations and German Novelists

Thursday, May 14th, 2015

“I don’t think anyone is thinking long term now.” Thomas Mann

Davide Accomazzo

Davide Accomazzo, adjunct professor of finance

It is interesting that even Thomas Mann, German novelist, social critic, and Nobel Prize winner in 1929, would already worry about people’s short-termism during his tumultuous years. It seems that things have not changed and almost 100 years after his words, we should worry again that social and technological contingencies are pushing us to short term decision making rather than taking the long term view.

Short-termism is affecting many areas of our lives but it is certainly most apparent in financial matters. From the daily nuisance of CNBC to analysts’ obsession with companies’ quarterly numbers, short-termism is spreading everywhere. Investors of all kind are not immune either; professional investors are now generally not more inclined to a longer term view than the often criticized retail ones. To this point, Morningstar, a well-respected research shop, reveals that the average holding period for stocks in the 25 largest mutual funds in the U.S. is now only 1.4 years. Interestingly, the long term view in investing is usually quickly resumed as a convenient slogan during any significant correction; retail investors who would have otherwise quickly taken profits, during a correction suddenly declare a long term faith in their investment ideas. This strategy switching conveniently avoids the embarrassment and physical pain of actually taking losses. On the other hand, professional money managers, make sure to remind their retail clients that investing is a long term game and only by staying fully invested at all times, can gains be produced; this in spite of their own somewhat contradictory portfolio turn-over.

In light of such pervasive action, one should wonder if perhaps the short term view may actually be more beneficial than the much more boring long term approach. In fact, we do have evidence of higher benefits from long-termism in many areas of social development, including portfolio management.

Keith Ambachtsheer, in his interesting article “The Case for Long-Termism,” published on the Rotman International Journal of Pension Management, traces the roots of social success to that tipping point in time when mankind switched from a short term strategy of day to day survival to one of long term wealth creation. Initial survival needs forced mankind to implement very short term decision making; in financial terms, Ambachtsheer defines this situation as one where the discount rate for saving and investment decisions for a time frame longer than the immediate present is very high. However, as progress helped produce more than it was needed in the current time reference, discount rates started to fall and long term decisions became prevalent ensuring a rapid advancement of our civilizations.

Perversely, long-termism may be the victim of its own success. As technology and social organization become more and more complex, additional intermediate agents are needed to manage the intricacies of daily life; this proliferation of agents often leads to a misalignment of interests and reward mechanisms along with an increase in asymmetrical information. For instance, think of the executive managers that lead a company but may not own it; because of their frequent reporting duty to investors who, conversely, own but not manage, the managers’ interest will inexorably lead toward short term actions regardless of any long term benefit. This contingency is much like the politician’s situation where any long term decision carrying short term pain would be deemed, from a career perspective, suicidal or like BBC fictional UK Prime Minister Jim Hacker would euphemistically say “courageous.” Interestingly, one solution devised to overcome this problem—rewarding managers with stock options to increase their stake in the company they managed and align them more with the stockholders—resulted in an even more significant inclination toward short-termism. Decision making ended up being driven purely by the rhythm of quarterly results. Very reluctantly, a trend toward linking executive pay with long term performance rather than quarterly results is now under way.

However, from an investment management perspective, managers’ reward and clients’ performance expectations are still deeply rooted in short-termism.

While fixing managers’ incentive structure may encounter resistance, the formula to use in the future may be rather self-evident. What may be more difficult to change is the pervasive investing mentality poisoned by emotional biases, media self-interests, and an understandable fear of the long term unknown.

In the past, we have indicated a number of relatively simple practical solutions to mitigate the damaging inconsistencies caused by the noise surrounding the investment process. Conversely, Ambachtsheer highlights three major common themes he detected in his research of successful investment outfits:

  • Articulate a clear stance
  • Think as if you were investing directly in a business
  • Balance conviction and humility

Articulating a clear view of the ultimate goals and processes to achieve such targets is key in sidestepping classic mistakes produced by short term emotional biases. Ambachtsheer, in his work, found that being out of step with the short term mainstream was not only acceptable, but actually viewed as a competitive advantage.

The following point is a favorite of many successful money managers, among others Warren Buffet, as it clearly forces an investor to focus on the long term viability of an investment and its proper valuation rather than being swayed by price fluctuations of the day-to-day action. Thinking of an investment in the market as if one were buying an actual operating company, rather than just acquiring stock certificates, will redirect one’s attention to the actual business fundamentals and operational dynamics.

The third theme goes right to the heart of most emotional biases. Many investors often lack conviction in their investment processes and therefore become subject to short term noise with the result of damaging their long term performance. On the other hand, many other investors tend to overplay their conviction mode and rarely accept that perhaps a mistake was made and corrective action might be in order. Walking the fine line between confidence and reality, between discipline and smart flexibility, is a must in determining the success of any investment framework.

In the course of modern investment history, practical examples of the long term advantage can be found in different cases. Ambachtsheer quotes John Maynard Keynes’s track record when managing the Cambridge University endowment in the 25-year span from 1921 to 1946. Keynes’ strategy was based on an overweight in stocks (unheard of at the time) chosen based on fundamental metrics and with a history of dividend paying. Keynes also preferred to concentrate his portfolio only in positions he felt strongly about and that he could hold for a long time. During his tenure as the investment manager for Cambridge, he earned an average annual return of 16% on the discretionary part of the Endowment fund versus 10.4% and 7.1% respectively for the British stock and bond indexes.

In our own research, we have found that certain specific strategies do benefit from a longer term approach. Value based portfolios are a classic example of situations where the longer the investing horizon, the better results tend to be. On this point, James Montier of GMO has been writing extensively; in back-testing across different time frames his results seem to indicate that a longer time horizon is often required to allow markets to arbitrage such value discrepancies. Montier found that while value outperformance can be realized as quickly as in one year periods, a five-year investment horizon seems to help magnify the value/growth delta to a significant 40%. Along the same lines, for instance, Berkshire Hathaway uses a rolling five-year performance of the Standard and Poor’s Index as its benchmark in an effort to match its longer term investing commitment. Even more extreme is the example of the Singapore Sovereign Wealth Fund that publicly maintains a 20-year horizon for value creation. Finally, we should also mention the Yale Endowment model whose success was based, among other metrics, on the ability to arbitrage in the long term those short term dislocations that reoccur in financial markets.

It would seem that investment performance, like fine wine, does get better with age.


Bio: Davide Accomazzo is the Chief Investment Officer for THALASSA CAPITAL LLC, a Registered Investment Advisor and Family Office. He is also Adjunct Professor of Finance at the Graziadio School of Business and Management at Pepperdine University in Malibu, California. Mr. Accomazzo writes extensively on markets and portfolio management issues for different specialized publications and he is one of the contributors to the book Alternative Investment: Instruments, Performance, Benchmarks, and Strategies, part of the Robert W. Kolb Series in Finance. Mr. Accomazzo resides in sunny Topanga, California, with his daughter and wife.

Topic: Accounting, Economics, Finance
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6 Great New Articles on GBR

Wednesday, January 21st, 2015

The new issue of the Graziadio Business Review includes a variety of articles written by knowledgeable authors that we believe you will find informative, insightful, and engaging.

Editors NoteWhile women make up half the workforce in nearly every country, women do not comprise half of the leadership. In “A Values Approach to Advancing Women in Leadership,” Dr. Bernice Ledbetter highlights recent research conducted on women, their leadership and values that offer new insights on why it is necessary to advance women in leadership if organizations hope to create and sustain economic competitive advantage.

Dr. Steven Ferraro and Dr. Richard Powell discuss “The Halloween Effect” in their article “Is ‘Go Away in May’ a Good Portfolio Play?” While this seems to be a compelling trading notion, is it really as profitable as the mantra asserts?

In “Trends in Employee Turnover and Retention,” Dr. Joel Goldberg covers the problems with trust and loyalty on both sides of the employer/employee relationship in the new labor market.

“Is Warren Buffett Unpatriotic?” in merging Burger King World Inc. with Canada’s Tim Hortons, Inc. and moving the headquarters to Canada? Or is this a systemic problem of increasing tax inversions caused by globalization and high U.S. taxes on businesses? In this article Dr. Robert Lee and Dr. Abraham Park discuss the issue.

Dr. Cam Caldwell and Larry Floyd offer seven practices for “High Performance Work Systems” and explain why creating partnerships with employees makes economic sense.

How do businesses remain competitive, develop high-performing teams, and keep up in this fast-paced business climate? RuthAnn Ritter will elaborate in her article “Infusing Traditional Business Systems with Spiritual Wisdom.”

When you are finished with these, you might be interested in looking through our archives, book reviews, and videos.

If you have questions, comments, or would like to submit an article, please contact Nancy Ellen Dodd at: nancy [dot] dodd [at]

Topic: Accounting, America's Financial Crisis, Business Law, Change Management, Corp Governance, Economics, Finance, Global Marketplace, Human Resources, Leadership, Management, Org Behavior, Strategy, Women and Business
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6 Tips for Improving Your “Lines of Gratification”

Tuesday, December 23rd, 2014

Principles that Reliably Yield Success

Headshot 1 smAs we enter the year’s final quarter, Dr. Robert J. Cerfolio, a world-renowned cardiothoracic surgeon, says it’s never too early to think about self-improvement for the New Year … and this year.

“Habitual procrastination can really hurt you in the long run because waiting to take care of something that’s obviously important to you – health, money, family matters – weighs on your subconscious,” says Dr. Cerfolio, known as “the Michael Jordan of lung surgery.”

Understanding one’s personal “line of gratification” is the foundation for sticking to self-improvement goals, he says.

“There are many kinds of lines of gratification,” he says. “For some, they’re the number of zeroes in their bank statement; for others, the curves of their muscles after they leave the gym. It’s good and healthy to look back on your hard work and admire what you have accomplished before moving on to the next task.”

Dr. Cerfolio, author of “Super Performing at Work and at Home: The Athleticism of Surgery and Life,” shares tips on how to make those lines of gratification more impressive.

  • Be an early riser. The main reason operating rooms hum into action at 7 a.m. is tied to human physiology; the bodies of patients are better able to handle the stress of surgery at that time. “People are generally better off getting work done early in the day when we’re better prepared for stress and performance,” he says. “And getting a job done early frees you up later in the day.”
  • Love what you do. Why wouldn’t you want to take ownership, responsibility and pride in what you do for a living? When you treat a job as only a means to a paycheck, you are missing the point. If your job isn’t the one you’d really love to have, don’t make it worse with a negative attitude. Instead, make it your own. Make it a point of personal integrity and principle to challenge yourself to achieve something every day. After all, 40 hours a week is a long time to stay anywhere.
  • Ask yourself: Did I really try my best? “I tried my best” is a common refrain from those who haven’t reached their goals. An honest response you can ask yourself is, “Am I sure?” This question is not about being overly critical. It’s simply about realizing that, if you had practiced or studied an extra 10 minutes each day, you would’ve been that much closer to your goals.
  • Set specific, measurable goals. Results define Every individual should have clear goals that are objective and measurable. Goals such as “to be happy,” “to do well at work” or “to get along” are too nebulous. To be successful, you have to be able to define your goals by measurable results.
  • Find the high ground. In anything you do, aspire to live up to the noblest, highest aspect of your job. Certain jobs – such as police work, firefighting, teaching or working in health care – are service oriented, so it’s easier to feel good about your contributions. Look for the contributions you’re making in your job and take pride in what you’re doing to make the world a little better.
  • Be the go-to guy or girl. This takes time, practice and the confidence necessary to want the ball in a critical situation. Being the go-to guy or girl means being willing to take responsibility and risk failing. A go-to person is also willing to speak up about problems or changes necessary in a business or organization, and suggest solutions.

Book Cover smAbout Robert J. Cerfolio, MD, MBA

Robert J. Cerfolio, MD, MBA, is the James H. Estes Family Endowed Chair of Lung Cancer Research and Full Professor Chief of Thoracic Surgery at the University of Alabama in Birmingham. He received his medical degree from the University of Rochester School of Medicine, surgical training at the Mayo Clinic and at Cornell-Sloan Kettering hospital, and has been in practice for more than 26 years. The author of “Super Performing at Work and at Home,” Cerfolio, who was a First Team Academic All-American baseball player in college, is a world-renowned chest surgeon and recognized as one of the busiest and best thoracic surgeons in the world.


Topic: Work/Life Balance
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New Issue Available

Thursday, October 16th, 2014

Welcome to a new issue of the GBR.

This issue includes a variety of articles written by knowledgeable authors that we believe you will find informative, insightful, and engaging.

Editors NoteWho were the beneficiaries of the TARP bail-outs? Dr. Joetta Forsyth has done extensive research on the TARP bail-outs and the regulatory filings and how they intersect. Her article “Did Widespread, Government-Detected Regulatory Filing Errors Predict Which Lenders Were Subsequently Bailed Out Under TARP?” is an interesting overview of how the crisis developed. The article will give you pause about who is handling your paperwork and the culture in which they are working.

Dr. John Paglia and Dr. Craig Everett along with MBA student Chanel Curry-Brooks wrote “Crafting a Strategic Financing Plan: How Business Owners Should Think About Raising Financing and Capital.” The authors note that one common oversight in financial planning is developing the proper plan to secure the right type of financing. This is a must-read for entrepreneurs, small business owners, and anyone responsible for raising capital for their business.

From finance we move to coaching and leadership. “See reality as it is, not as you wish (or fear),” is one of the suggestions for peer coaching in the article on “Developing Peer Coaching: 10 Suggestions for Success” by Dr. Robert Fulmer and John Brock. The article explains how to build a coaching culture, the “Grow Model,” and their suggestions that will not only develop better coaches, but also better leaders.

Dr. Cam Caldwell offers “6 Insights for Transformative Leaders: Keys to a Competitive Advantage.” The first key starts with listening to what really matters to discover the leader’s calling and concludes with authentic caring for the most important assets of the organization.

Friendly rivalry? Not always. In “Managing the Dark Side of Competitive Rivalry: When Competition Leads to Alarming Behavior,” Dr. David King explores when competition goes from creating better products and services at lower costs to having a negative impact on both the company and the customer.

Crowd-pleasing. Crowd-funding. Crowdsourcing? In management education? Dr. Owen Hall, Jr. explains how that occurs and the benefits in his editorial “Crowdsourcing Management Education.”

In “The Book Corner,” Dr. William Bleuel reviews two books Keeping Up with the Quants, by Thomas H. Davenport and Jinho Kim; and Customer Experience 3.0, by John A. Goodman. He gives each book 5 stars: Stop what you’re doing and read this book now! The Corner also includes my review of Mark Allen’s AHA Moments in Talent Management, an engaging fable that teaches the 13 Talent Management Principles using a story format and gives practical exercises for assessing whether your organization incorporates these principles.

When you are finished with these, you might be interested in looking through our archives, book reviews, and videos.

If you have questions, comments, or would like to submit an article, please contact me at: nancy [dot] dodd [at]


Topic: Uncategorized

What do Music, Business, and Academia Have in Common?

Wednesday, April 23rd, 2014

Welcome to the new issue of the GBR.

We believe that you will find these articles informative as well as a challenge to take a deeper look at your business life, your work life, and as it applies, to your academic life.

In this issue we have two articles on the importance of ethics in business, how business and academia can partner to improve the integrity of leadership, and the importance of ethics and integrity in academia. Check out Dr. Cam Caldwell’s article “Forging Ethics-Based Business Partners” and Dean Linda Livingstone’s article “Integrating a Spiritual Life into the Work Life.”

Yes, Dorothy, there is a PhD in Thinkology. Dr. Mark Allen shares ways that corporate universities have managed talent, retained employees, initiated more effective deployment, and prepared for succession in his article “Talent Management and Corporate Universities.”

How does an organization compare to a music composition? If you enjoy music, you will enjoy the musical metaphor Dr. David R. King and Dr. Samuel M. Demarie composed in their article “Organizational Jazz.” They will explain how the culture of music can be used to improve the organizational culture.

“To MOOC or not to MOOC, is that the Question?” Read Dr. Owen P. Hall, Jr.’s article to find out more about the impact of Massive Online Open Courses on management education.

When you are finished with these, you might be interested in looking through our archives, book reviews, and videos.

Topic: Ethics, Leadership, Management

New Issue of Graziadio Business Review

Friday, December 20th, 2013

If you have time over the holidays, be sure to check out the latest issue of the Graziadio Business Review.


The Supreme Court has ruled federal law blocks consumers from suing for injuries from generic drugs, yet brand name drugs do not have the same protection.


Skill vs. Luck in Wall Street by Andreas Simon, PhD, and E. Matthew Van Winkle, PhD
Investors are largely powerless in determining the degree to which an analyst’s results are a function of skill—and how much they are attributable to plain luck.

Self-Control at Work by Charles D. Kerns, PhD, MBA

It is estimated that we allocate approximately 25 percent of our waking hours, about four hours a day, managing our impulses.

Why Credit Rating Agencies are Being “B” Rated by Abraham Park, PhD, and Robert Lee, PhD
Banks have developed various credit derivatives to deal with the credit risk of loans. In addition, banks can use credit derivatives to transfer risk to a third party.


The American Debt Crisis by Rob Jamplis
If the Federal debt causes investors to lose confidence in America’s ability to pay back loans, investors will demand higher rates of return making it harder for the U.S. to borrow money.


In The Book Corner you will find the following reviews.
Reviewed by Davide Accomazzo, MBA


Reviewed by David W. Crain, PhD
Reviewed by Richard Herko
Reviewed by Edward H. Rockey, PhD
Merry Christmas and Happy New Year
From the GBR staff

Topic: Uncategorized