How to Address Your Shell-Shocked Troops, by Michael Corbat

Vikram Pandit’s chair may still have been spinning on Wednesday when the man chosen to replace him atop Citigroup (C), Michael Corbat, began a conference call with the bank’s managing directors. The abrupt CEO switch one day earlier had been followed by precious little information: short notes from the two men, a conference call with analysts, and a lot of conspicuous silence from the company’s board. Wednesday’s call was Corbat’s first effort to address the most important employees of what is perhaps the most beleaguered bank.

The seven-minute call, a recording of which Citigroup provided to Bloomberg Businessweek, offers a preview of how Corbat will lead—in style, at least. The former Harvard football star, who’s well liked by colleagues and even regulators, followed these tactics:

Be frank. The first thing Corbat did was acknowledge the elephant in the room: the shock of Pandit’s departure just one day after Citi had announced its third-quarter earnings, with not even a hint given that he was on the brink of leaving. Citi employees found out with the rest of the world when the news broke in the media, not via an internal communication. “I know that yesterday’s news came as a surprise probably to many of you,” Corbat began. “Successions are not easy, but I know we can handle this.”

Thread the needle. Pay lip service to both staying the course and the need for change. “I think it’s all-important for everyone to know that I’m going to maintain the company’s fundamental strategy,” Corbat said, while nodding to “today’s challenging environment” and the need for flexibility.

Encourage questions. Pandit, with two engineering degrees and a doctorate, was criticized as a cerebral introvert who was perhaps not cut out to be the face of a global bank, especially one with morale issues. Corbat, who has spent his entire 29-year career at Citi and its predecessor companies, quickly invited the troops to speak up.

Be good-natured when people are too freaked out to ask any. After some silence, an MD asked Corbat when he would choose a new chief of the bank’s Europe, Middle East, and Africa business. After some more silence, it became clear that no one else was going to raise a hand. “So,” Corbat said, “I’m sure there are questions, but I understand potentially people’s hesitancy in asking. So what I’ll say is that if you do have questions, feel free to send an e-mail. … I think that questions are fair. So please feel free to ask them.”

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Amazon's Robotic Future: A Work in Progress

If you were watching Bloomberg TV recently, you may have seen our correspondent, Cory Johnson, standing in the middle of Amazon’s (AMZN) newest distribution center in Arizona. It’s an impressive facility, brand-new and owned by one of the hardest-charging, most-innovative companies to come onto the retail scene since Sam Walton opened a five-and-dime.

So where are the robots?

After all, aren’t robots supposed to be the future of such places as distribution centers and warehouses? Didn’t Amazon buy a robot manufacturer, Kiva, in March? The online retailer announced in October that it was taking on 50,000 additional part-time workers for the holiday season. Shouldn’t some of those spots be taken up by mechanical arms and wheels?

Maybe not. For all the anxiety over robots coming to take jobs, there are still limitations to what they can do—or what they can do well. Bruce Welty is chief executive officer of Quiet Logistics, an order-fulfillment company that manages the online inventory and distribution for retailers like Gilt, Zara, and Bonobos. He uses robots made by Kiva, the company Amazon purchased, but his warehouse in Massachusetts is not bereft of humans. “Robots aren’t very good at picking up things,” he says. “They aren’t very good at looking at a bin of different things and distinguishing one item from another.”

Welty’s robots do one task and one task only: They move racks of merchandise to workers, who then remove the products from the racks and pack them up for shipping. Saving workers the time and effort to retrieve products offers considerable benefit. “In a typical warehouse, that’s about 60 to 70 percent of the labor,” Welty says.

In addition to what the current state of robotic arts does well, there are further reasons for the continued presence of human beings in warehouses. Labor flexibility is one of the larger ones. “Automation won’t help Amazon in periods of peak demand,” says Stephen Graves, a professor of management science at the Massachusetts Institute of Technology. “People are far more flexible.”

The capital expense to add robots means they need to make sense 12 months out of the year, not two. “The only way to handle spikes in demand is by adding temporary workers,” says Jim Tompkins, CEO of supply-chain consultancy Tompkins International. “If you bought a whole bunch of robots to handle the holiday shopping season, you’d have a whole bunch of robots looking at you, come January.”

So if Amazon just spent nearly a billion dollars buying Kiva, but the robots they produce can’t make a huge difference in how the company operates, what are Amazon’s intentions?

For starters, it’s still early. An acquisition like that of Kiva will take a while to digest, during which time new applications for the robots will surely be devised. “They’re really in a test mode,” says Welty. “They’re going to work on getting it right before any major rollout.”

The Kiva acquisition may have had as much to do with software as it does with hardware, adds Tompkins. “Mechanically, there’s nothing that special about Kiva,” he says. “But what they do have is software that makes sure the robots are in the right place at the right time. This was a software play.”

That’s not exactly how most people would view the deal. But it may be just the head-fake that Amazon CEO Jeff Bezos intended. “I bet Jeff Bezos loves that people are running around trying to put more robots in their distribution centers,” Tompkins says.

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Can Business Leaders Promote Inclusive Capitalism?

Capitalism can get a bum rap these days: If free markets are so great, why are there so few jobs, a shrinking middle class, and so many companies that still put profits ahead of the common good?  With all this rhetoric about the “one percent” and the “47 percent” and who pays taxes on what, it’s no wonder that some worry about public faith in the system itself. If that faith were to falter, the result could be policies that truly sabotage growth. That’s the premise of the Henry Jackson Initiative (HJI), a trans-Atlantic group of leaders who are pushing their peers to devote more energy to fixing the system’s flaws.

The group, which is co-chaired by McKinsey chief Dominic Barton and Lynn Forester de Rothschild, held its U.S. launch on Oct. 11 with a gathering of business leaders at Bloomberg’s New York headquarters to talk about priorities. Their message: Let’s focus on the need to increase skills training, support smaller companies, and improve governance so the benefits of capitalism flow to more people. De Rothschild said that unless they start to acknowledge their personal responsibility to share in the bounty,  the offspring of the “greatest generation” will be remembered by their kids as the “greedy generation.” But the motivation for business leaders to take action is not just moral; it includes the specter that politicians might come up with a fix that they don’t like.

At first glance, it would be easy to characterize HJI as an effort to preserve the status quo by stepping up the good deeds of corporations. The task force, after all, lists individuals who have benefited from the status quo, from former Hewlett-Packard (HPQ) chief Carly Fiorina, Accel Partners’ Joe Schoendorf, and Citigroup (C) Vice Chairman Samuel Di Piazza to a set of titled U.K. luminaries. But the initiative points to a growing realization among leaders that the private sector needs to take on more of these issues if it’s going to thrive.

Many of the attendees are already doing a lot, from USA Networks founder Kay Koplovitz, who connects venture-backed companies with large corporations, to former Chrysler chief Bob Nardelli, who has helped the Savannah College of Art & Design establish innovative partnerships with businesses such as Microsoft (MSFT) and Coke (KO).

Is it enough? No. Kathryn Wylde of the Partnership for New York City pointed out that too many of these corporate efforts aren’t taken to a national scale, where they can really move the needle. Many companies, though, are starting to take their hodgepodge of philanthropic initiatives and be more strategic in organizing around a central principle. Time Warner Cable (TWC) CEO Glenn Britt talked about the value of doing that with his company’s “Connect a Million Minds” initiative.

More important, as my colleague Josh Tyrangiel points out in his piece on the inequality incentive, capitalism can’t become truly inclusive until everyone can see a clear path from where they are to where they want to be. The growing income gap doesn’t just tear away at opportunity, it has eroded trust.  As former Treasury Secretary Larry Summers, another task force member, argued to the group, real inclusion can only come if the top tier takes on a higher burden in taxes to help fund investments that promote greater opportunities. In that regard, it’s interesting that on Thursday Goldman Sachs (GS) CEO Lloyd Blankfein told CNBC he would be willing to pay higher taxes if that would cut the U.S. debt.

While the private sector can lobby all it wants, what happens on the policy front is largely out of business leaders’ hands. What they can do is take concrete action to address some of the scariest problems, such as massive youth unemployment. Some of the most intriguing experiments to watch are John Peace’s youth employment fund, which is creating sustainable employment in the U.K., and such innovative high school models as P-Tech in New York. The latter, which stands for Pathways in Technology Early College High School, is a partnership that brings together IBM (IBM), City University of New York, and the New York Department of Education to train kids for careers in information technology. A few years ago, many would have balked at the idea of a corporation getting so involved at the high school level to create the kind of skilled workforce it needs. Today, with so few students equipped to get good jobs, such efforts are welcomed.

If the initiative, named after former Democratic Senator Henry “Scoop” Jackson, does little more than provide a platform for other companies to learn about these kinds of efforts, capitalism may soon get a better name.

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