CNBC: Bill George: The President is Distracted, Lacks Focus

Bill George, former Medtronic CEO and CNBC contributor, discusses the Trump administration's agenda as everyone awaits the announcement of the tax plan.

This content was originally posted on on 4/25/17. 

HBS: Courage: The Defining Characteristic of Great Leaders

Courage is the quality that distinguishes great leaders from excellent managers.

Over the past decade, I have worked with and studied more than 200 CEOs of major companies through board service, consulting, and research as a member of Harvard Business School’s faculty. I’ve found the defining characteristic of the best ones is courage to make bold moves that transform their businesses.

Courageous leaders take risks that go against the grain of their organizations. They make decisions with the potential for revolutionary change in their markets. Their boldness inspires their teams, energizes customers, and positions their companies as leaders in societal change.

The dictionary definition of courage is “the quality of mind or spirit that enables a person to face difficulty, danger, pain, etc., without fear.” Courageous leaders lead with principles–their True North–that guide them when pressure mounts. They don’t shirk bold actions because they fear failure. They don’t need external adulation, nor do they shrink from facing criticism.

Courage is neither an intellectual quality, nor can it be taught in the classroom. It can only be gained through multiple experiences involving personal risk-taking. Courage comes from the heart. As Buddhist monk Thich Nhat Hanh once said, “The longest journey you will ever take is the 18 inches from your head to your heart.”

It takes bold decisions to build great global companies. If businesses are managed without courageous leadership, then R&D programs, product pipelines, investments in emerging markets, and employees’ commitment to the company’s mission all wither. These organizations can slip into malaise and may eventually fail, even if their leaders can move on to avoid being held accountable.

Why do some leaders lack courage? Many CEOs focus too much on managing to hit their numbers. They avoid making risky decisions that may make them look bad in the eyes of peers and external critics. Often, they eschew major decisions because they fear failure. I know, because it happened to me.

In my first year as CEO of Medtronic, I passed up the opportunity to buy a rapidly growing angioplasty company because it faced patent and pricing risks. While those risks proved valid, Boston Scientific bought the company instead, transforming both enterprises and creating a formidable competitor for Medtronic. I didn’t have the courage to accept short-term risk to create long-term gain. It took Medtronic two decades of expensive research and development programs and additional acquisitions to become the leader in this field.

Let’s look at some recent examples of courageous leaders whose actions transformed their companies:

Alan Mulally When Mulally arrived at Ford, he found a depleted organization losing $18 billion that year and unwilling to address its fundamental issues. To retool Ford’s entire product line and automate its factories, Mulally borrowed $23.5 billion, convincing the Ford family to pledge its stock and the famous Ford Blue Oval as collateral. His bold move paid off. Unlike its Detroit competitors, Ford avoided bankruptcy, regained market share, and returned to profitability.

Mary Barra In contrast to Mulally, General Motors CEO Rick Wagoner and his predecessors refused to transform GM’s product line, even as the company’s North American market share slid from 50 percent in the 1970s to 18 percent. When the automobile market collapsed in late 2008, Wagoner was forced to ask President George W. Bush to bail the company out. Even so, GM declared bankruptcy months later.

Mary Barra, GM’s CEO since 2014, demonstrates the difference courage can make. Immediately after her appointment, she testified before a hostile Senate investigating committee about deaths from failed ignition switches on Chevrolet Camaros. Rather than make excuses, Barra took responsibility for the problems and went further to attribute them to “GM’s cultural problems.” Three years later, she is well on her way to transforming GM’s moribund, finance-driven culture into a dynamic, accountable organization focused on building quality vehicles worldwide.

Paul Polman When Polman became Unilever’s CEO in early 2009, he immediately began transforming the company, declaring bold goals to double revenues and generate 70 percent from emerging markets. He aligned 175,000 employees around sustainability, publishing the Unilever Sustainable Living Plan with well-defined metrics the following year. Polman’s efforts in his first eight years returned 214 percent to Unilever shareholders. Nevertheless, Kraft Heinz, owned by Brazilian private equity firm 3G, made a hostile bid to acquire Unilever on February 17, 2017. Polman immediately wheeled into action, convincing KHC to drop its bid two days later. Then he announced seven bold moves to enhance shareholder value without compromising the company’s ambitious long-term plans.

In comparison, Kraft CEO Irene Rosenfeld quickly capitulated when confronted by activist Nelson Peltz in 2012. He wanted to split Kraft’s global business by spinning off its North American grocery products unit, which Rosenfeld wound up leading as an international business renamed Mondelez. Without the ability to access global markets, the old Kraft went into a period of decline, making it vulnerable to 3G’s 2015 takeover; meanwhile, Mondelez is adrift with declining revenues and earnings.

Indra Nooyi: Named CEO of PepsiCo in 2006, Nooyi foresaw the coming shift among consumers, especially the millennial generation, to healthier foods and beverages. She immediately introduced PepsiCo’s strategy “Performance with Purpose,” that focuses on complementing the company’s core soft drink and snack business with healthy foods and beverages. In 2013, PepsiCo was challenged by activist Peltz to split the company, but Nooyi steadfastly refused. Instead, she restructured her leadership team to deliver strong near-term performance while continuing to invest in her transformation strategy.

Nooyi’s arch-rival, Coca-Cola CEO Muhtar Kent, decided instead to concentrate on sugar-based soft drinks while ignoring these obvious trends. As a result, Coca-Cola’s performance has consistently lagged PepsiCo’s. Since 2011, PepsiCo stock is up 70 percent, while Coca-Cola’s has increased only 15 percent.

The courage cohort

There are literally thousands of competent managers who can run organizations efficiently using pre-determined operating plans, but few with the courage to transform entire enterprises.

The courage cohort includes Delta’s Richard Anderson, Starbucks’ Howard Schultz, Xerox’s Anne Mulcahy and Ursula Burns, Nestle’s Peter Brabeck-Letmathe, Novartis’ Dan Vasella, Tesla’s Elon Musk, Amazon’s Jeff Bezos, Merck’s Ken Frazier, and Alibaba’s Jack Ma. They join the growing list of authentic leaders that have made courageous decisions to build great global companies.

To quote poet Maya Angelou, “Courage is the most important of all the virtues, because without courage you can't practice any other virtue consistently.” Boards of directors need to examine their leaders carefully to determine if they have the courage to navigate their organizations through turbulent times while enduring hardship, risk, and criticism to ensure they are building sustainable enterprises./p>

With more courageous leaders like those cited above, the business world will be able to create enormous value for all its stakeholders.

Bill George is Senior Fellow at Harvard Business School, former Chair & CEO of Medtronic, and author of Discover Your True North.

This content was originally posted on on 4/24/17.

Should the Wells Fargo Board Be Reelected to Continue Turnaround?

Next Tuesday, April 25 is a fateful day for the board of directors of Wells Fargo.

That’s the date set for the company’s annual shareholder meeting in Ponte Vedra Beach, Florida. Due to recommendations to vote against most of Wells’ board members by two shareholder advisory services – ISS and Glass Lewis – shareholders will have to decide whether to support the Wells Fargo board in its efforts to overcome fraudulent actions in its community banking division, or to reject their reelection.

My recommendation is to reelect the Wells Fargo board members, trusting them to continue restoring the bank to its former position of integrity and commercial success. Here’s why:

Since the board became fully aware of what happened in Wells’ community banking division six months ago, it has stepped up to its responsibilities with a series of aggressive actions, both to punish the wrongdoers and to rebuild its culture with new leadership.

As a Wells Fargo customer since 1970, I was shocked by last fall’s revelations that 5,300 Wells employees had been terminated for establishing 2.1 million false accounts for unsuspecting customers. Until then, I viewed Wells Fargo as the role model commercial bank. Even more unsettling was the way former CEO John Stumpf blamed first-line employees for the problems, saying, “If they're not going to do the thing that we ask them to do—put customers first, honor our vision and values—I don't want them here." Meanwhile, he continued to protect community banking head Carrie Tolstedt, praising her as “a standard-bearer of our culture” and “a champion for our customers.” Blaming people making $12-14 per hour for such widespread fraud was preposterous. Meanwhile, Tolstedt walked away with a $125 million “retirement” payout.

The Board Wheels into Action

There was a public uproar when these misdeeds were announced, followed by Stumpf’s disastrous performance before the Senate Banking Committee. It was then that the Wells Fargo board realized Stumpf and Tolstedt had misled the board, so it belatedly wheeled into action. It terminated Stumpf immediately, replacing him with chief operating officer Tim Sloan and appointing Mary Mack as head of community banking. Later, it revoked Tolstedt’s retirement and terminated her for cause. In addition, it “clawed back” $41 million of Stumpf’s compensation, $19 million from Tolstedt, and $48 million from other senior executives – a total of $108 million.

But the board didn’t stop there. It amended its bylaws to require the separation of the roles of chairman and CEO. Former General Mills CEO Steven Sanger, who had been the board’s lead director, stepped up to the chair’s role and Elizabeth Duke, former member of the Federal Reserve Board, became vice chair. It also reorganized its risk and corporate responsibility committees.

The Wells Fargo board then launched a major independent investigation of what had happened, appointing law firm Shearman & Sterling to do the detailed work. The board’s 113-page report, released in its entirety on April 10, 2017, was highly revealing. It pulled no punches in its extreme criticism of Stumpf, Tolstedt, and Wells’ community banking culture. Based on this report, the board extracted an additional $28 million from Stumpf’s compensation and $47 million from Tolstedt, bringing the total clawback to $183 million – the largest such action in U.S. banking history.

The investigation singled out Tolstedt 142 times for creating the wrong culture in her unit and covering up its misdeeds. It noted she intentionally misled the Wells board as she “minimized and understated problems,” saying only 230 of her employees had been terminated when the regulatory settlement acknowledged the actual number was 5,300 employees. When Tolstedt began reporting to Sloan in late 2015, he wanted to terminate her, but Stumpf refused, saying she was “the best banker in America.” Lead director Sanger and other board members also pushed unsuccessfully for her removal at that time.

How could things have gone so awry at Wells Fargo with the controls placed on large banks by the Federal Reserve and other regulators? Stumpf seems to have disengaged from the day-to-day conduct of bank affairs. He clearly had a blind spot regarding Tolstedt, giving her far too much latitude in Wells’ decentralized structure. According to the board report, she ran her unit in an “insular and defensive” way, not letting corporate officials examine what was going on. As some former employees have alleged, Wells’ community banking had a “soul-crushing” culture of fear and daily intimidation. When alerted to the sales fraud, Stumpf refused to believe Tolstedt’s business model was seriously impaired and that the fraud could be systemic. He actively discouraged critical feedback from his subordinates, as he continued to tout Wells’ “culture of caring.”

How Could the Board Not Know Wells Was So Far Off Track?

Given the extent of wrongdoing, how could the board not have seen what was going on? In retrospect, it is clear that both Stumpf and Tolstedt were actively misleading the board until the blowup occurred in 2016. As the board’s report noted, “the Board should have been more forceful in pushing Stumpf to change leadership.”

However, I strongly disagree with ISS’s and Glass Lewis’s recommendations to get rid of the board members who are solving the problems, namely chairman Sanger and the bulk of the board. When there is blood in the water, count on these sharks to attack because they have nothing to lose. It is an easy shot for these two advisory firms – neither of which holds shares in Wells Fargo – to recommend against the board, but doing so would ignore and punish the board’s aggressive actions since the debacle became public.

While I am critical of Wells’ board for not acting earlier, it has taken more aggressive action than any commercial bank to correct its problems – actions for which it should be applauded, not attacked. Having served on 10 corporate boards including Goldman Sachs, I know just how difficult it is to know what is going on in the trenches. Board members are dependent on the veracity and transparency of their chief executives and their subordinates. In the Wells Fargo case, they were sorely misled.

Many other boards would have “circled the wagons” and used lawyers to protect and defend themselves. Not the Wells board. That is thanks to the leadership of chairman Sanger and CEO Sloan, who showed their confidence in Wells Fargo by purchasing $3 million and $2 million, respectively, of Wells Fargo stock last week. They are moving as aggressively as they can to solve the cultural problems in community banking with an entirely new management team, revised sales incentives, and centralized risk processes. While this is a work-in-progress – organizations with 268,000 employees don’t turn around overnight – their intentions are clear and their progress in the last six months is very noteworthy.

For these reasons, I recommend that Wells’ shareholders give its board members a vote of confidence next Tuesday by reelecting all of them.

Bill George is Senior Fellow at Harvard Business School, former Chair & CEO of Medtronic, and author of Discover Your True North. He serves on the boards of Goldman Sachs and Mayo Clinic. He has no connection with Wells Fargo other than as a customer.

CNBC: Oscar Munoz Keeps Digging the Hole Deeper

This content was originally posted on on 4/11/17.

Battle for the Soul of Capitalism: Part II

As it promised in February when it rejected Kraft-Heinz’s hostile takeover bid, Unilever today announced a vigorous program of enhancing its long-term shareholder value with a series of aggressive restructuring moves.

In CEO Paul Polman’s announcement, he committed to:

  1. Improve operating margins from 16.4% in 2016 to 20% by 2020.
  2. Increase targeted savings in marketing overhead from $1.2 billion to $2.4 billion per year by 2020 as part of its prior Connected 4 Growth initiative, including consolidation of its Foods and Refreshments business into a single unit based in the Netherlands.
  3. Spin off its declining spreads business.
  4. Improve gross margins by increasing supply chain savings from $3.6 billion to $4.8 billion, including an 80 basis point (0.80%) improvement in 2017 gross margin with underlying sales growth of 3-5%.
  5. Buy back $6 billion of Unilever stock to enhance earnings per share.
  6. Increase cash generation, thereby doubling its free cash flow as % of net profit.
  7. Continue to seek bolt-on acquisitions, such as its 2016 purchase of Dollar Shave Club, including the possibility of acquiring Reckitt Benckiser’s food business.

The stock market has responded favorably to these moves, pushing Unilever stock from $42.57 before the Kraft-Heinz bid to $49.66, up an additional 1.1% on April 5.

Unilever’s strategic and financial decisions illustrate a balanced mix of creating long-term shareholder value while meeting the demands for short-term performance.

Read more from my CNBC article here

CNBC: The Trump CEO Playbook

Heidi Messer, Collective[i] CEO, and Bill George, former Medtronic CEO, discuss the town hall meeting at the White House for CEOs and the administration's relationships with business.

This content was originally posted on on 4/5/17.

Fortune: President Trump Shouldn’t Trust Paul Ryan With U.S. Tax Reform

There is a stark lesson to be learned from last week’s dramatic collapse of the American Health Care Act, as created by House Speaker Paul Ryan and backed by President Trump. To make massive changes in a democratic society, you need a bipartisan approach that benefits the vast majority of Americans, not the kind of ideological scheme created by Ryan and his Republican colleagues.

In retrospect, it was surprising that an astute politician like Trump threw his full weight behind a health care plan that took insurance away from 24 million people while cutting taxes for wealthy Americans, pharmaceutical companies and health plans by $885 billion. Trump dodged a bullet when support for the bill collapsed among Republicans, as it would have done great harm to the working class – the majority of them Trump voters, angry about disparities between the rich and the poor.

Next on their agenda, Trump and Ryan are planning to tackle tax reform. If Trump thought health care was complicated, wait until he digs into the complexities of the U.S. tax code, and has to deal with myriad lobbyists who jealously guard tax breaks on behalf of their sponsors.

It is time for President Trump to adopt an entirely different approach:

Giving the lead on tax reform to Ryan – who has yet to demonstrate he can deliver his Republican caucus – would be a monumental error, compounding the problems encountered on health care reform. Ryan and House Ways and Means Chair Kevin Brady are advocating a “border adjustment tax” (affectionately called BAT) of 20% on all goods coming into the U.S. They hope to raise $1 trillion to pay for tax cuts to benefit the wealthy and to persuade manufacturers to relocate to the U.S.

There are three fundamental problems with their approach:

Retailers like Walmart, Target and Best Buy import over 90% of their merchandise from outside the U.S., so they will be forced to raise their prices to consumers by 20%. These price increases will fall most heavily on people who can least afford them – the working class, discount store shoppers that voted for Trump. In addition, the retail industry employs 42 million people directly and indirectly, far more than the entire manufacturing sector. (Ref: If the BAT is enacted, many retail employees will lose their jobs as retail profits are squeezed.

First, in response to the BAT, it is likely that China, Mexico and European nations will retaliate with 20% tariffs of their own. These will hit American exporters the hardest, especially high tech producers like General Electric, Boeing, Pfizer and Caterpillar that sell their goods to the Chinese. Rather than helping U.S. employment, they may be forced to shift production overseas to avoid the punitive tariffs. In addition, farmers will be hard hit as they export one-third of their crops – over $130 billion each year – to Mexico and Canada.

Secondly, it is a myth to think that the BAT will stimulate U.S. production in any meaningful way. Textile and apparel manufacturers are not coming back to the U.S. Nor are television set makers. Those industries were lost 30 years ago.

Take the auto industry for example. Today General Motors sells more automobiles in China than it does in the U.S., and its component parts are made all over the world. In competing with local Chinese manufacturers, GM can ill afford the higher costs and tariffs associated with U.S. exports if the BAT is enacted.

The long-term implications of Ryan and Trump’s strategy are even more severe. Since the end of World War II, the U.S. has had a bipartisan commitment to reach trade agreements with developed and developing nations to reduce tariffs to the benefit of U.S. consumers and exporters. If America abandons its commitments to free trade by attempting to renegotiate long-standing agreements, the world could devolve into a 1930s-style trade war that will harm everyone. President Trump may find the Chinese are a lot harder to negotiate with than the recalcitrant Republicans in the Freedom Caucus that doomed the health care bill.

There is a better way to go: Trump should give the assignment to pragmatic, non-ideological advisors like Gary Cohn, head of the National Economic Council, and Treasury Secretary Steve Mnuchin, and their staffs and let them devise a sound plan that addresses the most severe problems in the U.S. tax code. Given its complexities, they should focus on a few key proposals for which they can gain a bipartisan consensus, rather than trying to revamp the entire tax code – which they will find is an extraordinarily difficult task and virtually impossible to build a bipartisan consensus.

On the top of their list should be some of the following proposals for which there could be support on both sides of the aisle:


  • Repatriation of cash held overseas by corporations with a one-year tax holiday if companies get a plan approved by the Treasury department to invest repatriated funds in the U.S. to expand U.S. manufacturing, research and development and workforce training.
  • Reducing the corporate tax rate from its present 35% – the highest in the developed world – to a more competitive 25% in exchange for eliminating many of the corporate loopholes that enable many companies to pay minimal taxes or none at all.
  • Reducing taxes on individuals earning less than $50,000 per year while paying for the reduction by cutting back on deductions like interest on mortgages above $250,000, state tax credits, etc.
  • Providing workforce training tax credits to both individuals and companies to ensure that America has a more competitive workforce that is skilled in computerized, automated tasks.
  • Reducing regulations on high-tech manufacturers and large exporters to make U.S.-based companies more competitive globally.


Even with these modest proposals, Trump will have to learn how to work with moderate Democrats in both the House and the Senate in order to gain backing for his legislation. In so doing, he will lose some of the extremists in his own party, but so be it. In the U.S. two-party system, compromise generally produces better outcomes than one-party legislation. Trump will also be forced to fend off the lobbyists – thus fulfilling his campaign promise to “drain the swamp” – in order to gain approval for his legislation. For example, will he and ex-real estate executive Mnuchin be willing to ignore the lobbyists from their former real estate industry to pass a tax bill for the good of the American people?

In spite of its obvious perils, tax reform presents President Trump the opportunity to fulfill his campaign promises to strengthen America’s economy, create jobs, and expand our leadership of the most important industries for the future.

It will make America even greater.

Bill George is senior fellow at Harvard Business School and former chair and CEO of Medtronic. He is also author of the book, Discover Your True North.

This content was originally posted on on 3/31/17. 

CNBC: The Battle for the Soul of Capitalism Explained in One Hostile Takeover Bid

Last month's quickly aborted bid by Kraft Heinz (KHC) to take over Unilever brought into sharp relief the ongoing war between two different philosophies of capitalism. On one side Unilever CEO Paul Polman champions sustainable growth in earnings to raise long-term shareholder value. On the other side KHC and its Brazilian owner 3G advocate maximizing short-term earnings to increase near-term valuation.

Long-term investors' perspective

CEOs of companies aiming for sustainable growth in shareholder value know they must achieve short-term results while they continue to invest in R&D, capital expenditures, global expansion, and people development to sustain their growth. During economic downturns, this can be a difficult balancing act, but nothing less is required.

These long-term value creators use compound growth in revenues, earnings per share, and return on capital invested as measures of longer-term performance. The great value creators of recent decades like Berkshire HathawayJohnson & Johnson, and Disney have mastered the ability to achieve these long-term metrics as well as their near-term goals, thereby sustaining growth in shareholder value.

But this doesn't protect them from activist investors seeking immediate returns.

Traders' perspective

Traders seek immediate gains in stock values to demonstrate above market returns to their investors, with little regard to the long-term future of the companies.

In recent years, fund managers have shifted their focus to cash flow available for shareholder distribution, either through dividends or repurchase of shares, with growing pressure on companies to increase share buybacks. However, there is scant evidence that buybacks produce sustainable increases in shareholder value.

Corporate leaders are thus faced with ongoing tradeoffs between using their cash flow for internal expansion and acquisitions versus increasing dividends and buybacks

Latest battle: Anglo-Dutch Unilever versus Brazilian 3G

Last month's proposed takeover of London-based Unilever by Brazilian private equity firm 3G provided a real-time example of how these conflicting objectives collide.

Unilever's roots date to 1872 with the founding of Margarine Unie and 1885 founding of Lever Brothers. Their 1930 merger as Unilever created the first modern multi-national company with equal roots in Britain and the Netherlands. When Dutchman Paul Polman took the helm in early 2009, he declared bold goals to double Unilever's size from 40 billion Euros to 80 billion by 2020, and generate 70 percent of revenues from emerging markets.

"The larger issue at stake here is not just the fate of a single company, but the fate of capitalism itself."


Polman has transformed Unilever into a growth-oriented global competitor that has more deeply penetrated emerging markets than any other consumer products company. To date, Unilever has made significant progress toward Polman's goals, with 2016 revenues of 53 billion Euros, including 57 percent from emerging markets. He takes justifiable pride that Unilever has increased its dividends 8 percent per annum for the past 36 years. Polman has used "sustainability" as the company's unifying force, introducing the Unilever Sustainable Living Plan in 2010 with dozens of metrics to measure progress. For his advocacy of environmental sustainability, Polman received the UN's "Champion of the Earth Award."

Yet, some investors worry that Polman's commitment of Unilever resources to sustainability is detracting from its financial performance.

Unilever's track record attests to Polman's success: in his eight years as CEO, Unilever's revenues have grown 32 percent, averaging 3.8 percent the past four years, making it one of the top performers in consumer products. Its stock price is up 144 percent, with a total return to shareholders of 214 percent.

3G attacks

3G is the brainchild of Jorge Paulo Lemann, a former investment banker who built Brazil's "Goldman Sachs." 3G's playbook is to buy moribund companies in need of shaking up, cut operating expenses 30-40 percent, including longer-term investments, replace the entire management team with hungry young Brazilian managers, and rapidly increase earnings and cash flow. With its aggressive, "take no prisoners" style, 3G uses the cash it generates to pay down debt and buy additional companies. 3G has successfully applied this formula to the retail, beer and fast food industries.

In 2013 3G saw the opportunity to shake up old-line food companies whose iconic products were out of favor with Millennials. It purchased Pittsburg-based Heinz with Warren Buffett's Berkshire Hathaway as co-investor, and immediately applied its cost-cutting formula. Initial success led 3G to buy a failing Kraft Foods in 2015 and merge it with Heinz as Kraft Heinz (KHC).

Since then, revenues have fallen by 4-5 percent per year, raising questions about whether KHC can sustainably grow earnings without further investment or acquisitions. Most security analysts predicted 3G would tack on additional acquisitions, with food company targets like MondelezCampbell Soup or General Mills. Few suspected KHC would attempt to take over a top performer like Unilever, whose business is 60 percent personal care and home care.

KHC launched its attack by offering $50 per share, 18 percent above Unilever's stock price. This was equivalent to its price last fall before it fell in sync with the weakening Euro, making KHC's low-ball offer easy for Unilever's board to reject. According to British press reports, KHC's executives were taken aback by the ferocity of CEO Paul Polman's rebuff, along with its cold reception from the British government.

"Those of us who believe capitalism is a great long-term value creator must care about the fate of great companies that are role models for the way capitalism should work."


Consequently, KHC withdrew its offer just 50 hours after the takeover was launched. Many suspect that Buffett, who has always opposed hostile offers, told Lehman he wasn't willing to fund a war between Unilever and 3G. Although the war ended as quickly as it began, it sent shock waves through Unilever's organization and the British investing community.

. . . and Unilever responds

In response, Unilever's leaders mobilized, recognizing KHC's offer was "a shot across the bow," and the battle is far from over. Immediately following KHC's withdrawal, Polman met with his board and announced that Unilever will undergo a complete assessment by April of its product portfolio, cost structure and balance sheet in order to enhance near-term shareholder returns.

It is likely that Unilever will consider leveraging up its balance sheet and announcing stock buybacks rather than letting an aggressor buy the company using its own balance sheet. More cost reductions may be in order going forward if the softness in the consumer packaged goods market continues. Also on the docket is the analysis of Unilever's vast product portfolio, which may trigger the sale of declining brands and categories, or even breaking the company in two by spinning off its foods business.

Reflections on this battle

Nevertheless, the question remains: why did 3G choose to attack 145-year old Unilever, a top performing company with aggressive leaders that are creating great value for shareholders as well as customers, employees and society at large through sustainability initiatives?

3G's attack on Unilever raises important concerns about these competing models of capitalism. Those of us who believe capitalism is a great long-term value creator must care about the fate of great companies that are role models for the way capitalism should work.

Sustainable enterprises that prosper for many decades – General Electric, Procter & Gamble, IBM, Ford, and Exxon, just to name a few – have created enormous value for everyone involved, from employees to shareholders. If a top performer like Unilever can be attacked, then no company is safe from hostile takeover.

The larger issue at stake here is not just the fate of a single company, but the fate of capitalism itself. In a world increasingly concerned with disparities between the haves and have-nots, the voters that chose Brexit and elected President Trump are expressing deep feelings of powerlessness in a world dominated by wealthy elites. Unconstrained capitalism focusing strictly on short-term gains can cause great harm to employees, communities and the greater needs of society. In this case capitalism will face the wrath of democratic nations as their citizens demand significant constraints on all companies that limit their freedom to operate.

If this happens, we will all be worse off.

Commentary by Bill George, a senior fellow at Harvard Business, former Chairman & CEO of Medtronic, and the author of "Discover Your True North." Follow him on Twitter @Bill_George.

This content was originally posted on on 3/24/17.

CNBC: If AHCA Bill Passes, It Will Be Negative for Hospital Stocks

Watch Bill discuss the House vote on the GOP's Affordable Healthcare Act, starting at 2 minutes and 15 seconds: 


This content was originally posted on on 3/23/17.

CNBC: GOP Plan Puts the Whole Insurance Market At Risk

This content was originally posted on on 3/7/17.