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Bill George

Harvard Business School Professor, former Medtronic CEO

The New 21st Century Leadership

Times of great upheaval sow the seeds of great leadership.

The war for American independence was filled with uncertainty and tumult.  George Washington, John Adams, and Thomas Jefferson emerged to form a nation and set a new course. The Civil War split the fledgling country in two.  Abraham Lincoln helped stitch us back together as the likes of Carnegie and Rockefeller then put the country to work.

The Great Depression and Second World War left the world in uncertain hands.  Franklin Roosevelt and Harry Truman brought clarity of purpose to the political helm and IBM’s Thomas J. Watson wrote the playbook on ethical, sustainable growth.

The recession of the early 1980’s put Americans on their heels as businesses stagnated, weighed down with their own bureaucracies. Jack Welch taught a new generation of managers to be internally efficient and externally competitive, as Bill Gates and Michael Dell led a new generation of entrepreneurs.

The dot-com bubble had us star struck–the burst turned us cynical.  Then Enron imploded, along with hundreds of other companies that admitted to inappropriate accounting. As we picked up the economic pieces, Google’s Sergey Brin and Larry Page and Apple’s Steve Jobs redefined customer-centric technology in the 21st century. Once again America became excited about business and its future.

The Root Cause of All These Ups and Downs

Just a few years later we’re back in the mire. America is still recovering from the most significant financial meltdown in eighty years, a jobs crisis that has left 26 million Americans searching for full-time jobs, massive federal deficits, and the greatest environmental disaster in the nation’s history.

What’s the root cause of all these up and downs? In a word, leadership.

More precisely, the downturns have resulted from leaders who focused on the short-term and put their self-interests ahead of the institutions they were chosen to lead. The successes have resulted from visionary leaders with a passion to change the world for the better by building enduring organizations.

America is in dire need of a leadership rebirth. As the result of the well-known failures of many “baby boomer” leaders that got caught playing the short-term game, the time has come for a new generation to step up and lead our corporations and institutions. Personally, I am encouraged that the new heads of major corporations – from IBM, Ford and General Motors to PepsiCo, Xerox, Unilever, and many others – are values-centered leaders focused on building sustainable organizations that serve society.

Rejection of the “Command and Control” Leader

These leaders have rejected the “command-and-control” style of the 20th century. They understand their success is dependent on developing capable, authentic leaders throughout their organizations – leaders aligned with the company’s mission and values, who can empower other leaders, and are effective in collaborating inside the organization and externally as well.

For this reason they are focusing more of their time on developing rising leaders than on developing their stock prices. It takes time and patience to develop future leaders who can be successful in a wide range of highly stressful situations while retaining their purpose and character. More importantly, it requires the personal engagement of top leaders with the rising stars, both to mentor them and to learn from them.

Pepsi’s Indra Nooyi is a beacon of this philosophy, steering the soft drink giant toward healthier food options, focusing the Pepsi Foundation on a campaign to overcome obesity, and experimenting in philanthropy-marketing via the Pepsi REFRESH program.  She focuses time and energy in developing leaders for the future that can help her grow a sustainable enterprise that will positively impact the communities Pepsi serves. 

We need leaders with the humility to share success and accept responsibility for failure.  After watching so many top leaders pass the buck and deny their responsibilities, the next generation of leaders needs to develop a deep humility and a keen sense of their responsibilities.

Among the Leaders Stepping Forward….

Among the generation of younger leaders stepping forward, Tony Hsieh, CEO of Zappos, stands out.  An entrepreneur who cut his teeth in the dotcom era, Hsieh is redefining customer-centric leadership, creating a team at Zappos whose sole mission is customer service. Hsieh holds his employees – and himself – accountable to the first company value: “Deliver Wow through service.” He notes, “We’ve formalized the definition of our culture into 10 core values. Basically what we’re looking for are peoples whose personal values match our corporate values, who naturally live the brand.”

Under Armour’s CEO, Kevin Plank, is another example of the best of the younger generation.  When his company underperformed in early 2008, Plank cut his own salary from $500,000 to $26,000, owning the misstep and apologizing to his team.  A year later, Under Armour is generating record revenues and is the fastest growing sports apparel company in the world, but Plank credits his teammates rather than himself. 

For tomorrow’s leaders to propel us to a more vibrant future, today’s business leaders need to get personally involved in mentoring future leaders and in guiding their development.  But most of all, they need to create opportunities for emerging leaders to gain experience on the firing line. That’s something you can’t get in a staff role preparing power point charts or in searching for merger deals.

Unfortunately, many young leaders, having succeeded at everything they have done, fear that failure in a line role might kill their careers. Actually, that’s not true. It is only through mistakes and failures that young leaders can understand their shortcomings and focus on the hard work of developing their leadership abilities

There is only so much that can be learned in a classroom, or even the conference room.  The next generation needs dirt-under-the-fingernails experience.  And they will only get it if the current leadership thrusts them into it. 

I faced my first business crisis when I was only 27 years old, thanks to a boss who had the courage to bet on me. Working for Litton Industries, I was sent to Minneapolis as assistant general manager for Litton’s fledgling microwave oven division. At the time, along with several competitors, Litton was trying to create the U.S. market for consumer microwave ovens.

The night before, as I was packing my bags, I heard the radio announcer say, “The Surgeon General of the United States has just declared that microwave ovens may be hazardous for your health.” The next morning I found the small division in chaos and its leadership paralyzed like a deer in the headlights. The FDA was proposing new safety standards that no one was certain the new designs could meet. Meanwhile, the first two thousand ovens had already been shipped to customers.

Not being an expert in the business or the technology, nevertheless I instinctively jumped in the leadership void and got everyone organized to address the issues. It was also clear we needed a more experienced executive team, so I set out to recruit them. Meanwhile, the corporate executive vice president arrived and immediately ordered that we recall all the ovens we had shipped, in spite of my protestations that they were safe. His arbitrary decision may not have had any analytical basis, but intuitively he knew we were in trouble.

That forced us to redesign our products for the tightest of safety standards while our production crews stood idle. Many nights I went into the factory around 4:00 AM to see if we could restart production when the assembly workers arrived – and often we couldn’t.

At the same time I learned a great deal about dealing in the public eye as the deluge of negative media stories about unsafe radiation was overwhelming. Step-by-step we had to dig ourselves out of a hole, but eventually we built a viable market and became its leader. While I made many mistakes through my “baptism by fire,” I learned a great deal about leading through crisis – lessons that were invaluable in facing the much greater challenges of running Medtronic.

Today’s young leaders will soon find themselves in similar situations, if senior leaders give them opportunities to learn on the firing line, as the military does with young officers. That’s the only way they can learn about themselves and their leadership so they are prepared for the greater challenges that lie ahead.

Leading in a Sustainable, Authentic Way

Tomorrow’s leaders find themselves at a similar inflection point: America needs them to lead now in a more sustainable, authentic way than many of their predecessors have done.  We need entrepreneurs to grow businesses and create jobs.  We need 21st century leaders who will collaborate across organization lines to solve society’s most intractable problems in a global world.

That’s a tall order, but I am confident that the new generation of leaders is ready to step up to it.   

 

Originally Printed in the Fall Edition of MWorld