AFTER A tension-filled conference call with representatives of the three families who depend most heavily on my investment advice – the Rockefellers, Mellons and Murchisons – I finally received permission to share that advice, in this column only, with those of you who earn money the old-fashioned way. My recommendations for investing in one company instead of another ignore historical trends, the Dow Jones averages and the wholly impenetrable Ml and M2. Nor do I take into account John Houseman, the Merrill Lynch bull or the fun-loving desert foxes of OPEC. Instead, my investment philosophy is based solely on my own invention, which is called The Presidential Accessibility Index. The easier a person is to reach, the higher the rating and the stronger my recommendation to buy the stock. I will use only those examples that prove its infallibility.
The late Charles Tandy, the charismatic leader who built Radio Shack into one of the nation’s most successful corporations, insisted that his top executives always answer their phones. He wanted his management to be accessible to opportunities, possibilities and – most important – customers, even if the price was having to listen to an occasional nutcake. John Roach, Tandy’s able successor (and no patsy), continues the Tandy tradition. “We operate with the basic premise that nobody’s going to call unless they have something to say. If you have too many people interceding, communications get delayed and you get cut off – maybe from a bit of information the company could benefit from. It’s a contact with what’s really going on. Our job is to solve problems; and to solve them you need fresh, spontaneous information.” By the way, Tandy Corp. made a profit of more than $250 million last year on sales of $2.26 billion. The company gets the maximum 10 on the Accessibility Index with a strong recommendation to buy.
Now let’s contrast Radio Shack with a Dallas conglomerate we’ll call Neither Fish Nor Fowl Corp. The CEO of Neither Fish Nor Fowl, with a steady hand on the tiller, presided over a loss of more than $160 million last year. He takes a more Olympian approach to communications than Mr. Roach: He makes himself unavailable to nearly everyone except Dr. Kissinger. He prefers his photograph and a ghostwriter’s message to run in his company’s full-page Wall Street Journal ads. To communicate with his troops, he sends out videotapes of himself being quizzed. The man doing the quizzing (for a tidy five-figure sum) is Frank Gifford. Frank’s questions are not rigorous. This company gets a 1 on the Index and a definite “sell quick” recommendation.
To be accessible, business leaders must deal with surprises, and most of them don’t like surprises. They prefer to get their information filtered, neat and even-handed in tone -everything the marketplace is not. The marketplace is raucous and sends conflicting messages. Those who read it correctly don’t need secretaries who, when you ask for Mr. Big, say, “Does he know the nature of your call?” or, “Will he know what this is in regard to?” These business leaders who like their communications remote remind me of a mirror at the intersection of two long hallways in the offices of The New Yorker. Harold Ross, the magazine’s first editor, had it installed so he could avoid encounters with disgruntled writers. He would simply duck into the nearest available office until the chance of the encounter passed.
Now that you know of the power of the Accessibility Index to pick the right stocks, don’t hesitate to use it in judging nonprofit institutions and the inexcusable remoteness that characterizes so many of their leaders. Instead of realizing their responsibility to large, diverse constituencies, such leaders concentrate their sycophantic efforts on a handful of board members upon whose favor they mistakenly think the enterprise’s existence depends.
Have the great failures in American business come from company presidents who were too accessible or too remote? If a president is remote, he only encourages other management people to follow his example. Soon, everyone in the company is putting distance between themselves and the marketplace – and the strange phone call. The result is not sudden failure; that would be helpful. Instead, the failure is gradual, as it was in the American automobile business. And gradual failures too often fail for good.
Put your faith in the Accessibility Index. If it doesn’t help us, it surely will help the people who gave us Pearl Harbor.