A Leadership of Frankness

The headlines these days are literally shouting:

“U.S. STOCKS SUFFER ON FEARS FOR ECONOMY”

“FIGHT FOR SURVIVAL ON WALL STREET”

“DAY OF RECKONING ON WALL STREET”

“U.S. SEIZES MORTGAGE GIANTS”

“AIG, LEHMAN SHOCK HITS WORLD MARKETS”

And on the front page of the New York Post, a big red arrow and the number “504” in bold type. The Dow Jones Industrial Average had dropped 504 points in one day, the largest drop since after the markets opened following 9/11 and two points larger than the crash of October 19, 1987 (although less as a percentage of the entire market.)

I part the slats on the Venetian blinds in my office. Summer Street in downtown Stamford is empty. Thank goodness. No bodies on the streets. So far this is not a replay of Black Monday, the day of the big 1929 stock market crash.

But it is serious, make no mistake. Last year there was fear that homeowners may not be able to pay their mortgages. That led to fear that the bonds backed by those mortgage payments might default. As the value of those bonds plummeted, the credit of the companies holding them dropped. Then the people dealing with those companies started to worry and ask for more collateral support. Which brings us to today, when it sounds like the banks themselves are nervous: Nervous that when they loan money to each other it may not be repaid.

As Franklin Roosevelt said in his inaugural address, “We have nothing to fear but fear itself -- nameless, unreasoning, unjustified terror which paralyzes needed efforts to convert retreat into advance.”

I went back to Roosevelt’s address. You can find the entire text of the speech here: http://www.americanrhetoric.com/speeches/fdrfirstinaugural.html . Reading it I was surprised to find that his statement about fear was not in the middle of his address. It was right up front. Roosevelt was elected in the middle of the Great Depression, 1932, and he chose not to sugar coat his message but to use it as a sledge hammer. Here is the way his address began:

“This is a day of national consecration. And I am certain that on this day my fellow Americans expect that on my induction into the Presidency, I will address them with a candor and a decision which the present situation of our people impels.

“This is preeminently the time to speak the truth, the whole truth, frankly and boldly. Nor need we shrink from honestly facing conditions in our country today. This great Nation will endure, as it has endured, will revive and will prosper.

“So, first of all, let me assert my firm belief that the only thing we have to fear is fear itself -- nameless, unreasoning, unjustified terror which paralyzes needed efforts to convert retreat into advance. In every dark hour of our national life, a leadership of frankness and of vigor has met with that understanding and support of the people themselves which is essential to victory. And I am convinced that you will again give that support to leadership in these critical days.” [Emphasis mine.]

Wow. I know that our current economic climate does not approach the terror of the Depression. I also know that we are in the middle of the “silly season” of political posturing, when both parties revel in pandering to applause lines and quoting each other out of context and playing “gotchya” with each other, and when so much of the rhetoric that postures as commentary is babbling palaver.

Still, Roosevelt is on to something when he talks about “a leadership of frankness.” If we don’t acknowledge our challenges, we can’t meet them. We can be ostriches, hoping that things will improve. Or we can be lions, straddling the path and confronting our demons.

I have been relieved to see leadership in our economic policy over the past few weeks. It’s just a shame that it took a crisis for us to make important changes in our financial system. But I sit here wondering: What will it take for us to give the same serious attention to energy policy. We are in a world of energy shortage, with a delicate supply and demand balance that is on the verge of crisis. And yet, unlike the frenetic action we have seen in recent weeks in the financial markets, we see no such sense of urgency in the energy world.

So the next time you hear a politician talk about energy policy, ask them why they aren’t frank with us. Why they don’t acknowledge that we will never have alternative energy if we keep looking for short term fixes instead of long term solutions. Why we need to invest in new energy technologies and make carbon a more costly alternative, not a cheaper one. Why we need to make energy a small fraction of the family and business budget the way it used to be, not the growing cost it is today.

And when the politicians show us that they are willing to provide a “leadership of frankness,” then we will respond with the “support of the people themselves which is essential to victory.”

Just the facts, Ma'am

One of our Investors, a very smart guy with tons of experience and wisdom, loves to ask questions about the way our business works: How we manage to protect customers from energy price spikes when energy prices are so volatile, how we protect our reputation by making sure that our sales people are honest to customers about the benefits of our products, how we attract the best people to our team and how we promote values of hard work and integrity in our organization. After we talk on the phone he often says just before we hang up: "Good, now I feel like I've accomplished my goal for today, to be smarter than I was yesterday."

The comment is notable for two reasons. First, coming from one of the savviest business people I know it's humble. Here is a guy who has a breadth of understanding and insight into business that I marvel at. Yet he is willing to acknowledge readily the gaps in his knowledge. Sometimes I wonder whether he's really making me feel good, fulfilling the adage that I once heard about management, "The good leaders are the ones who are not eager to show you how smart they are but the ones that show you how smart you are."

But I also think he's often being sincere. He is eager to learn and gets constant satisfaction from doing so. He gets excited the way a kid might when shown a new card game or an adult when they learn of a new short cut to the grocery. "I can't believe I didn't know that," we'll say. "How could we have lived so long ...?"

My friend's observation says something else about people, a point worth making about business in general. We are all hungry to learn and understand how things work. We learn with experience that things are often not as simple as they may at first appear. And given the choice between having a superficial understanding of something and learning the detail about how something works most of us will welcome the detail. (Possible exception: when it comes to taxes I would prefer to hear the bottom line and not understand how the accountant got there!). What makes my friend special is that he acknowledges his ignorance and is not afraid to ask whereas most of us will take pleasure in new knowledge but don't go out to get it.

I was reminded of this recently when I spoke to a group of 300 or so of our sales representatives in Georgia. I was talking about energy markets and why prices are so volatile and why customers are eager to protect themselves from higher prices. One of our agents had brought a friend who works for another company. She told me later that he was reluctant to come because "he had heard it all before." Midway through my talk, she said, her friend turned to her. "You know," he said, "When I went to other sales meetings, all I heard was 'Sell, sell, sell.' Here I'm getting an education."

I don't know if our competitor's sales agent will join us. I hope he does. But he reminded me of my friend's comment. So many American companies talk down to their customers and to their employees as well. They treat people as stupid and naive.

Wouldn't it be nice if companies trusted us to know the truth. If they gave us straight answers to our questions. If they told us the good and the bad about their products instead of ignoring the stuff that we'll learn about anyway as time goes on.

In our business most companies promise customers they will save money. That is like a bank telling homeowners that they will save money on their mortgages if they lock in an interest rate. Hello? How does the energy company know, any more than the banker, that energy prices are going up? Do they have a crystal ball? Do they know that there is a hurricane blowing through the Gulf of Mexico or a war about to break out in the Mideast?

Of course not. These promises are hollow and phony. Imagine if the potato chip bag said something like: Bigger package, no more inside! Or if the corner gasoline station said: $3.91/gallon!

I am grateful for that comment in Atlanta. It made me smarter than I was the day before. A good day.

Observations After Ike

Last week someone had mentioned to me that the true test of a company was whether people wanted to do all they could to support it or, whether they felt they needed to be protected from it.

As I watch our team members struggling to get to the office in Houston and carry on as if their hometown had not been devastated by a monstrous storm and I watch them working from home while their families are still scattered and some of their homes and yards are a shambles - I think one thing is clear.

We are blessed with a team that is dedicated to our business, our customers, and most remarkably to each other.

It is a humbling experience. An army is only as strong as its weakest soldier, as its lowest ranking recruit in the mess hall. I think we pass the test!

Reflections on 9/11

Thursday is the anniversary of September 11, 2001. On that day almost 3000 of our fellow citizens lost their lives in a sudden and unexpected act of terror.

In some ways time has left us numb to the profound feelings of horror and loss we felt that day. We humans have an amazing ability to bounce back from tragedy. We mourn and then we go about our business with new vigor. But we also remember, and in remembering we honor the good and innocent people we lost that sunny Tuesday morning seven years ago.

We all remember where we were that morning when we heard the news.

The whole world remembers. I was on a business trip to Ohio that day. The night before I had addressed the town council of Aurora Falls, a suburb of Cleveland. Aurora Falls had just agreed to purchase gas from MXenergy on behalf of its citizens. I was going into a meeting that morning with the town's consultants when I heard a radio report about the first plane. Anybody who lives in New York City thinks about planes crashing into tall buildings all the time; after all, it happened in the 30s when a small plane crashed into the Empire State Building in the fog. This was different.

Our meeting started at 9. I suspected this was not an accident and had trouble concentrating. I asked if we could recess so I could check the news.

I found a television in the lobby and turned it on to pictures of a strange sight: Smoke and only one tower which was also smoking. As I asked out loud where the other tower was the announcer said the unthinkable. Moments later the second tower fell as well. There was silence in the room as each of us heard our own inner voices in silent prayer.

Like many of us I knew people in those buildings. I had been in them the week before. In one was an energy futures broker who taught me so much about trading and managing risk. Hardly a day goes by that I don't remember something he told me. In the other building were bankers and government workers. Many people I met in the next few weeks had miraculously escaped. Many others had not.

As I drove home from Cleveland that day I stopped at truck stops along the way. Outside small towns in central Pennsylvania I found people from all walks of life gathered in front of televisions, watching the unfolding news in silence. Out of a shared sense of loss there seemed to be a sense of cameraderie and friendship, of people supporting each other in their grief, helping each other cope. In the coming days there would also be a tangible feeling of common purpose, of unity in the face of adversity, of pride in the courage and sacrifices shown by the firefighters and by many of the victims themselves. Most of all there would be, for a few months at least, an international sense of solidarity and affection for those who had suffered, for our shattered era of peace, and for the great city itself that had lost forever two of its landmark buildings.

You may not know it but that morning we at MXenergy immediately suspended marketing and did not resume until several days later. In the meantime we asked our hardworking folks in Customer Care to spend time with their customers, letting them talk about their feelings and reactions to the events. Everybody felt the need for a helping hand in those days and we wanted to do our part.

Today, MXenergy observed a moment of silence at 8:46 EST to commemorate the events of that morning and the meaning that September 11 has come to symbolize. We are a busy company but not too busy to pause, reflect, and remember our common humanity.