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New York Times DealBook - When Activist Investors Aim at Strong Companies

From New York Times DealBook, November 20, 2014

Activist investors have the “hot hand” these days. Their calls to break up companies have attracted growing attention, and their hedge funds continue to add new capital. Bill Ackman, for example, netted more than $2 billion on his investment in Allergan. He pressured its board to sell to Valeant, but profited even though the company was ultimately sold to Actavis. Carl Icahn challenged Apple’s cash hoard, while Mr. Ackman dislodged Robert McDonald as chief executive of Procter & Gamble. Chief executives are concerned that their company may be next.

Fueled by growing funds under management and emboldened by media coverage, the activists have recently shifted their focus to targeting America’s best companies. Why are activists pursuing those companies instead of moribund companies on the wrong track? The lofty strategic rhetoric of the investors notwithstanding, they are looking for quick gains. This may net handsome profits in the short-term, but it places the competitiveness of America’s great global companies at risk.

Let’s examine four situations among some of America’s best companies — Amgen, PepsiCo, DuPont, and Allergan — to see where activists have it wrong.

Amgen Under the leadership of Kevin Sharer and Bob Bradway, Amgen has been a stellar performer. In the past five years, its stock has increased 185 percent. Apparently dissatisfied with this performance, Mr. Loeb wants to break up the company. Break it up? It’s all one business. Centralized research and development fuels innovation that results in a steady array of breakthrough drugs. Amgen has exceptionally high net income margins of 27 percent and generates $6 billion a year in free cash flow, even after investing 22 percent of its revenues in research. Mr. Loeb’s idea of splitting older drugs from newer drugs would destroy one of America’s most productive innovators by taking away the cash it needs to develop new drugs, meet patient needs and fuel the company’s growth.

PepsiCo When she became chief executive in 2006, Indra Nooyi foresaw the need for healthy foods and beverages — trends currently sweeping the globe — and devised a long-term strategy to broaden PepsiCo’s portfolio. Pepsi’s performance the past three years has been exceptional. Its 52 percent stock price increase is double that of its archrival, Coca-Cola, which is trapped in a single-minded strategy focused on carbonated soft drinks and bottled water. Nevertheless, the activist investor Nelson Peltz is agitating to split PepsiCo in two, just as he did with Kraft. But both Kraft and its spin-out, Mondelez, are struggling.

DuPont Perhaps stung by his inability to influence PepsiCo, now Mr. Peltz is trying to break DuPont into three pieces. Has he not studied what the chief executive, Ellen Kullman, has been doing the past five years? When she took over in 2009, 200-year-old DuPont was a disjointed conglomerate without a clear strategy. Its stock had declined 62 percent since 2000. Ms. Kullman immediately went to work to reshape DuPont’s portfolio for the future, spinning off slow growth, low-margin businesses like performance chemicals and coatings. Now, DuPont is focused on three high-growth, high-margin businesses: agriculture and nutrition, biotechnology and advanced materials. Ms. Kullman is using DuPont’s vaunted central research labs to drive innovation in all three sectors. Her strategy is working. The company’s stock has increased 250 percent since she took the reins.

Allergan Bill Ackman successfully partnered with Valeant’s chief executive, Mike Pearson, to put Allergan in play and ultimately force its sale to Actavis, but why was that warranted in the first place? Since David Pyott joined Allergan in 1998 as chief executive, he created a more than 2,400 percent increase in Allergan’s stock. Allergan spends 17 percent of its revenues on research and development. These smart research investments have sustained the company’s high growth rate. Valeant’s strategy was to cut Allergan’s research spending to 3 percent of revenues, lower its taxes from 34 percent to 3 percent, and eliminate its executive team — which would ultimately make the company noncompetitive. For what purpose?

In contrast, an outside perspective can be a powerful catalyst for improvement at performing companies that are not performing well. Ralph Whitworth of Relational Investors helped save Home Depot by unseating its chief executive, Bob Nardelli, in favor of Frank Blake, leading to a decade of strong performance. Mr. Whitforth also turned around a dysfunctional board at Hewlett Packard, one that had previously fired three successive chief executives. Likewise, Jeff Ubben of the hedge fund Value Act Capital Management pressured the Microsoft board for change after 14 years of marginal leadership by Steve Ballmer. Since Satya Nadella took over last February, the tech giant’s stock has jumped 75 percent.

But in the case of strong companies with effective managements, activist attacks are enormously distracting. Executives focus on saving their companies and short-term financial moves, instead of winning global competitive battles, creating great products and building new businesses.

Trying to break up great companies only weakens one of America’s greatest competitive advantages: the leadership, strength, and adaptability of its global companies. The activists should keep their focus on the underperformers, and work to build the next set of great companies like Amgen, PepsiCo, DuPont and Allergan.

Bloomberg Video - Actavis to Buy Allergan

Actavis acquires Allergan for $66 billion, and Valeant is out. This is a great deal for both ACT & AGN as it offers high growth & high R&D spend. Here are my thoughts on the acquisition on Bloomberg Market Makers: Video

Bloomberg Video - Activists Going After America's Best

Why are activists going after America's best companies instead of trying to help the worst? Here are my thoughts on Bloomberg Market Makers: Video

CNBC: Google shacks up with Equinix for cloud boost

From CNBC, November 5, 2014

For the 100 billion Internet searches and more than 6 billion hours of YouTube videos streamed monthly, Google is building supersized data centers across the globe. But for certain functions, the company is better off using other people's property.

Equinix, which operates more than 100 data centers in 32 metro areas worldwide, is announcing on Wednesday that Google will be using its facilities to help clients in 15 markets, including New York, Atlanta, Frankfurt, Germany, and Hong Kong, access Google's business applications and cloud infrastructure.

The Google cloud needs all the help it can get. While the Mountain View, California-based company dominates the online advertising market, it's playing catch-up to Amazon Web Services in on-demand cloud computing as it also battles Microsoft's Azure technology.

The three companies are engaged in a brutal price war as they try to lure businesses looking to offload their computing and storage instead of handling it internally. Amazon and Microsoft are already Equinix customers. Now businesses can use any or all of them via Equinix.

"This completes our access to the big three cloud providers," said Equinix Chief Technology Officer Ihab Tarazi. Businesses can "get significantly higher bandwidth for very low economics and be able to completely leverage the cloud."

Google disclosed the deal with Equinix on Tuesday as one of several announcements tied to its cloud platform. The company also introduced Google Container Engine and a partnership with Docker to make it easier to create and manage applications across machines.

It's all part of Google's deeper dive into the world of business software, and it's not cheap. In the third quarter, Google spent $2.4 billion on capital expenditures, largely on data center construction and real estate costs.

"Everybody's moving their infrastructures to the cloud," Google Chief Financial Officer Patrick Pichette said on the earnings call last month. "It is an area where we have fundamentally great assets to contribute to this industry, both in terms of the flexibility, the cost structure, the technology. And that's why we're investing heavily in there."

Google owns and operates 12 data centers in the U.S., Europe and Asia, according to its website. Much of the software that Google as well as Amazon and Facebook have developed to bolster the speed and capacity of servers and databases is being replicated across the technology industry.

But that doesn't mean corporate America is ready to spin all of its most critical data up to the public cloud. Using Equinix, they can plug into the power of Google's infrastructure without relying on it entirely.

Equinix has more than 4,500 customers using its facilities. In April, the Redwood City, California-based company launched a service called Cloud Exchange to provide an added layer of security and enhanced connectivity for businesses that may have previously been reluctant to move applications to the cloud.

InsiderMonkey: Google Inc.'s Diversification Will Be Key to Future Success: Bill George

From InsiderMonkey, November 4, 2014

Google Inc. has been on a diversification drive in the recent past as focus shifts from the core search-business that it has come to be known of, over the years. Former Medtronic CEO, Bill George, during an interview on CNBC, argued that the company is doing the right thing moving into other areas of operations despite increased concerns.

CEO, Larry Page, believes the company is still in its teenage years with a lot to grasp, moving into adulthood in terms of innovating new products. Changes in the company have seen Sundar Pichai being given more responsibilities on Google Inc.’s core products.

“They are investing in a whole lot of things and I think they are doing all the right things. The question is can Larry keep all this things on track, it’s a bottoms-up innovation company, I think they are probably the best innovator in the world today, “said Mr. George.

George believes reorganizing is especially important for such a big company like Google Inc. as one of the ways of keeping employees motivated. While focusing on short term results George argues that companies resort to developing and evolving products but when focusing on the long-term success reorganization of the leadership structure is essential.

Google has in the recent past been diversifying its operations tapping into the healthcare space with iCare as well as showing intention of tapping into the auto industry with the driverless-car technology.

“Google Inc. is going in all directions; they have done a lot of deals in Google Glass getting into iCare and diabetes so they are going in a lot of directions. Can they keep all in track? We will see. I love the bottoms up innovation at Google, “said Mr. George.

The fact that Google has grown to become such a big company in terms of fields of operations is raising concerns as to whether it will be able to sustain its operations with the addition of more sectors. Diversifying into other sectors is key, according to Mr. George as it protects the company from being trapped in one field of operation.

Remarks by Bill George: Celebrating the Life and Legacy of Warren Bennis

Yesterday I had the privilege to participate as a speaker at “Celebrating the Life and Legacy of Warren Bennis” at University of Southern California,” along with a number of speakers. It was a moving and upbeat memorial service, done with great grace and elegance, just as Warren lived his life. Warren was a great leadership scholar who have justifiably earned the title of “The Father of Leadership.” Over 600 friends, mentees and admirers joined his wife, Grace Gabe, and members of his family in celebrating this great man. Here are my remarks: 

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University of Southern California, September 30, 2014

Warren Bennis was my friend, mentor and colleague. I met Warren in the late 1990s, and he has been a loyal friend ever since – always available with positive encouragement and a helping hand. He had an enormous impact on the lives of so many people in just the same way – always with kindness, deep insight, and warmth.

Warren was a giant in his intellect, his heart, and his spirit. He transformed the understanding of what it means to be a leader. Rejecting the notion that leaders are born with certain traits, Warren opened the door to the real source of leadership: within you. It is who you are. He showed us how leaders develop through their life experiences, are shaped by their crucibles, and emerge ever stronger to take on responsibilities of leadership. As he said, “The process of becoming a leader is similar to becoming a fully integrated human being.” Which is how Warren led his own life.

In his younger years he worked with some of the finest leadership thinkers of the greatest generation, Douglas McGregor, Abraham Maslow, Erik Erickson, and Peter Drucker. Just as his thinking was influenced by this generation, Warren shaped the thinking of my generation of business leaders, showing us how to develop ourselves as leaders.

I first encountered Warren’s writing in 1989 when I read On Becoming a Leader, as I was joining Medtronic. It was a revelation: finally, I had found a philosophy of leadership I could resonate with!  As Warren wrote: “The most dangerous leadership myth is that leaders are born. That’s nonsense; in fact, the opposite is true. Leaders are made rather than born.” Throughout my years at Medtronic and at Harvard, I have carried his philosophies into my work and teaching.

Warren’s influence on business leaders was widespread and profound. So many who never had the privilege of knowing him were inspired by his writings and adopted his approach to leadership. Countless CEOs have told me personally what a profound influence he had on their leadership. For that, he is known as “The Father of Leadership.”

As president of the University of Cincinnati, he said: “I realized my personal truth. I was never going to be able to be happy with positional power. What I really wanted was personal power: having influence based on my voice. My real gift is what I can do in the classroom and as a mentor.” At USC, he found his “sweet spot” for the last 35 years. What other professors do you know who are still teaching at age 89?

In December of 2000 I invited him as a guest patient to an annual Medtronic event where he graciously thanked the employees who designed and manufactured his defibrillator. Warren was fond of saying that he had Medtronic “in his heart,” and then would describe how his defibrillator saved his life half a dozen times. I once witnessed this in person at Harvard while he was speaking: The defibrillator went off, and Warren slumped to the ground, dropping his papers. Ever the gracious soul, he picked up his papers, apologized for the disruption, and continued his talk. Ten minutes later when it went off a second time, the Cambridge Fire Department escorted him to safety.

Warren gave me the courage to embark on a new career of teaching and writing. He was even arranged for us to rent his Cambridge apartment my first semester at HBS. Warren generously shared his ideas on leadership, and was executive editor on four of my books. While writing True North, Peter Sims and I spent five days with Warren going over the ideas and stories in the book. Unlike many scholars who protect their ideas, Warren genuinely wanted us to expand on his and make them fully accessible to the new generation of leaders.

In Geeks and Geezers, Warren described his philosophy with the little known term neoteny: “Neoteny is the retention of all those wonderful qualities we associate with youth: Curiosity, Playfulness, Eagerness, Fearlessness, Warmth, and Energy. Undefined by time and age, older people with neoteny are open, willing to take risks, courageous, hungry for knowledge, and eager for each new day. Neoteny keeps older people focused on all the marvelous undiscovered things to come, rather than on past disappointments. Neoteny gives you a hungry heart. It is a metaphor for all the youthful gifts the luckiest of us never lose.” This describes Warren perfectly, right to his final days.

This past April Warren asked Penny and me to discuss leadership with him in the next-to-last class he ever taught. While his physical health was declining, his mind was as sharp as ever. Over dinner that evening Penny asked Warren what he would like on his tombstone. He replied, “Generous Friend.”

Warren, a generous friend is just what you were to me and Penny, to all of us here, and thousands of friends, students, scholars, and mentees whom you influenced with kindness, buoyancy of spirit, and wisdom. We miss you deeply, but will carry your love in our hearts and your wisdom in our work. That may your greatest legacy of all.

New York Times DealBook: Jack Ma on Alibaba, Entrepreneurs and the Role of Handstands

From New York Times Dealbook, September 22, 2014 

I spoke with Alibaba’s founder, Jack Ma, at a private luncheon on Friday, just an hour after his company had gone public. Mr. Ma is unlike any Chinese leader I have ever met. He is emerging as the face of the new China: a free enterprise entrepreneur working within the confines of a rigid government.

Alibaba’s stock had just started trading on Friday, and it immediately jumped in value. It ended the day up 38 percent, at $93.89, giving the company a market value of $231 billion. The company set the record for the largest initial public offering in history. Yet Mr. Ma was humble, preferring to talk about building a great company that helps its customers, creates jobs and serves society. “They call me ‘Crazy Jack,’” he said. “I hope to stay crazy for the next 30 years.”

China’s large and growing economy has made it an increasing economic force over the last two decades, but it had not produced global companies. Chinese businesses focused domestically and mass-produced products for international companies. Mr. Ma is taking a different approach. Alibaba has initially concentrated on China’s enormous markets, but he understands the Internet is a worldwide phenomenon that knows no borders. He believes that Alibaba can compete internationally and across sectors, and intends to serve the American, European and emerging markets. But he said he won’t stop there. He has plans to disrupt China’s commercial banking and insurance sectors as well.

Asked about his success, Mr. Ma shares his life story. He was raised in humble origins in Hangzhou in the 1980s, just as China was opening up to the West. Growing up, he overcame one obstacle after another. He was rejected at virtually every school he applied to, even grade schools, because he didn’t test well in math.

He persevered. From age 12 to 20, he rode his bicycle for 40 minutes to a hotel where he could practice his English. “China was opening up, and a lot of foreign tourists went there,” he said. “I showed them around as a free guide. Those eight years deeply changed me. I became more globalized than most Chinese. What foreign visitors told us was different from what I learned from my teachers and books.”

As a young man, he applied for jobs at 30 companies and was rejected every time. At Kentucky Fried Chicken, 24 people applied, 23 got jobs; only Mr. Ma was rejected. So he became an English teacher at Hangzhou Electronics Technology College. In 1995, he visited America for the first time. “I got my dream from America,” he said. “When I visited Silicon Valley, I saw in the evening the road was full of cars, all the buildings with lights. That’s the passion. My role model is Forrest Gump.”

Returning to Hangzhou, he and Joe Tsai, now Alibaba’s executive vice chairman, founded the company in Mr. Ma’s modest apartment. They called the company Alibaba because it is “easy to spell, and people everywhere associate that with ‘Open, Sesame,’ the command Ali Baba used to open doors to hidden treasures in ‘One Thousand and One Nights.’”

Mr. Ma focused on applying his team’s ideas to help businesses and consumers find hidden treasures of their own. Yet he was unable to raise even $2 million from venture capitalists in America. Once again, Mr. Ma persevered. Eventually he raised $5 million through Goldman Sachs. Later, Masayoshi Son of Japan’s SoftBank invested $20 million, making it Alibaba’s largest shareholder. That stake is now worth about $75 billion. Today, the Alibaba companies serve 600 million customers in 240 countries.

With Friday’s I.P.O., Mr. Ma became China’s wealthiest citizen, worth more than $18 billion. Yet when he asked his wife several years ago whether it was more important to be wealthy or to have respect from business people, he said they agreed on respect. Mr. Ma talks about building the Alibaba ecosystem to help people, a philosophy that is baked into the DNA of the company. At the founding of the company, Mr. Ma issued generous stock option packages to early employees because he wanted to enrich the lives of all involved in his venture. He insisted that Alibaba’s six values — customer first, teamwork, embrace change, integrity, passion and commitment — be placed on the pillars of the New York Stock Exchange the day of the I.P.O.

For all his success, Mr. Ma has retained his authenticity. He recognizes that leadership is character, and he is focused on building his team. His role model is a well-oiled soccer team where 11 players work together for the success of the team. He would rather hire entrepreneurs than seasoned business executives, who are always looking over their shoulders, trying to please their bosses rather than their customers.

His own commitment to a cause larger than himself has propelled him onward. “My vision is to build an e-commerce ecosystem that allows consumers and businesses to do all aspects of business online. I want to create one million jobs, change China’s social and economic environment and make it the largest Internet market in the world.”

American tech leaders like Steven P. Jobs, Larry Page, and Mark Zuckerberg have emphasized technology and product above everything. Not Mr. Ma. “I’m not a tech guy,” he said. “I’m looking at technology with the eyes of my customers, normal people’s eyes.”

Mr. Ma said this was not just about making money. “I’m just a purist. I don’t spend 15 minutes thinking about making money,” he said. “What is important in my life is influencing many people as well as China’s development. When I am myself, I am relaxed and happy and have a good result.”

His lighthearted nature has helped create a unique culture and fun atmosphere at Alibaba where employees are given cans of Silly String, encouraged to do handstands to bolster their energy during breaks, and participate in an annual talent show where Mr. Ma sings pop songs. He practices tai chi and uses the nickname “Feng Qingyang,” a reference to a Chinese kung fu guru who trained an apprentice into a hero. Mr. Ma called martial arts “the most down-to-earth way of explaining Confucianism, Buddhism and Taoism,” adding, “They cherish brotherhood, morality, courage, emotion and conscience.”

He said he worried that China lost an entire generation when Mao Zedong phased out Confucianism and other forms of spirituality. But he said he hoped to restore that sense of values and purpose to the next generation. “It’s not policies that we need, but genuine people,” he said. Asked about corruption in China, he said, “I would rather shut down my company than pay a bribe.”

He listed three worries: continuing to create genuine value for his customers, working cooperatively with the government and building his team of global leaders. What will he do with his fortune? His big dream is to found a university for entrepreneurs that can create the new generation of Chinese entrepreneurs.

Jack Ma is a force of nature. He may become the role model for the new generation of global leaders, not only in China, but also throughout the world. “Our challenge,” he said, “is to help more people to make sustainable money that is not only good for themselves but also good for society. That’s the transformation we are aiming to make.”

TwinCities: Guthrie event will honor female leaders

From TwinCities.com, September 15, 2014

The George Family Foundation and the Guthrie Theater will honor female leaders tonight at a Celebrating Twin Cities Women Leaders event.

The event will recognize 84 local women who have made a difference in the Twin Cities through business, government, education, social service, media and the arts. Among those recognized are Sen. Amy Klobuchar, D-Minn., former Minnesota Supreme Court Chief Justice Kathleen Blatz and St. Thomas University President Julie Sullivan.

"These women are leading or have led our major corporations, government organizations, nonprofit foundations, health care, universities and colleges and the arts," said Bill George, former Medtronic CEO and Harvard Business School professor. "We are proud to recognize these outstanding leaders."

The private ceremony precedes dinner and a preview of the Pulitzer Prize-winning play "The Heidi Chronicles."

Taking On The Ice Bucket Challenge

I am pleased to take on the Ice Bucket Challenge from HBS Dean Nitin Nohria, Medtronic CEO Omar Ishrak, and good friend Miles Sovell. We are also giving $1,000 to the ALS Research Association to help discover cures for this dreaded disease that took the life of my cousin Tessa. In turn, I challenge my Harvard colleagues David Gergen, Rosabeth Moss Kanter and Scott Snook to take the challenge: http://youtu.be/vg07VQyiUgs

The Remarkable Legacy of Warren Bennis

With the passing of Warren Bennis this past Thursday, a giant oak has fallen with an impact felt throughout the world. Small in physical stature, Warren was a giant in his intellect, his heart, and his spirit. Like the oak, Warren had deep roots that carried his wisdom and nourished blossoms that made the world more beautiful and humane.

Just as Peter Drucker was “the father of management,” Warren Bennis will be remembered as “the father of leadership.” It was Warren who first said leadership is not a set of genetic characteristics, but rather the result of the lifelong process of self-discovery. That process enables people to become fully integrated human beings who know themselves and bring out the best in others. As he once wrote:

The most dangerous leadership myth is that leaders are born - that there is a genetic factor to leadership. This myth asserts that people simply either have certain charismatic qualities or not. That's nonsense; in fact, the opposite is true. Leaders are made rather than born.

Warren’s early life was deeply influenced by his association at Antioch College and later MIT with Douglas McGregor, author of The Human Side of Enterprise. While in Cambridge, Warren connected with Abraham Maslow (“Maslow’s Hierarchy of Needs”), Peter Drucker, Paul Samuelson, and Erik Erikson, whose theories on the eight stages of human development influenced Warren’s own “generativity” in his later years (Erikson’s Stage 7).  Many of today’s influential leadership authors like Tom Peters, David Gergen, Jim O’Toole, Bob Sutton, Jeff Sonnenfeld, and Doug Conant are indebted to Warren for their ideas.

Warren Bennis’ life had its ups and downs. His first marriage ended in divorce in 1962. Thirty years later, he married his first sweetheart, psychiatrist Grace Gabe. In the early 1970s he was president of the University of Cincinnati during turbulent years for college presidents. There he realized he did not enjoy the transactional aspects of being president. As he said in a long interview he granted for my book, True North: “I realized my personal truth. I was never going to be able to be happy with positional power. What I really wanted was personal power: having influence based on my voice. My real gift is what I can do in the classroom or as a mentor.” Following his 1979 heart attack, Warren returned to teaching and writing, joining the faculty at the University of Southern California. He went on to write almost 30 books.

Personally, Warren was my mentor, friend, and intellectual colleague. He gave me the courage to become a writer. He generously shared his ideas on a whole new approach to leadership based on being authentic. He encouraged me to develop this thinking into the idea of True North. Warren was the editor on all four of my best-selling books, whose aim has been to influence the new generation of leaders to lead organizations with a clear sense of purpose, to serve others, and make this world a better place.

As I was joining Medtronic in 1989, I read Warren’s classic, On Becoming a Leader. For the first time an author described the kind of leader I wanted to be: purpose-driven, values-centered, passionate, and resilient. His book shaped my approach to leading Medtronic long before I considered writing about these ideas.

I first met Warren in the late 1990s when we were together at the World Economic Forum. My wife Penny and I had a very stimulating dinner with him and David Gergen, hosted by Dan Vasella, then CEO of Novartis. Warren suffered from heart problems, and had recently had a Medtronic defibrillator implanted. In December of 2000 I invited him as a guest patient to an annual Medtronic event where he graciously thanked the employees who designed and manufactured his defibrillator in front of 10,000 people.

Warren was fond of saying that he had Medtronic “in his heart,” and then would describe how his defibrillator saved his life half a dozen times. I once witnessed this in person at the Harvard Kennedy School where Warren was doing a program with James MacGregor Burns. The defibrillator went off – it feels like getting kicked in the chest by a horse – while Warren was speaking. He slumped to the ground, dropping his papers. Ever the gracious soul, he picked up his papers, apologized for the disruption, and continued his talk. Ten minutes later when it went off a second time, the Cambridge Fire Department escorted him to safety. Nevertheless, Warren continued his work unflaggingly for the next decade.

In 2002 Penny and I attended a seminar led by Warren and David Gergen at The Aspen Institute. At the time I was eager to write a book on my experiences at Medtronic, but was struggling to find a publisher. My intent was to incorporate many of the ideas I first learned from Warren into a practical approach to developing leaders that enabled people to be their authentic selves, rather than emulating others.

Warren encouraged me to broaden this concept into a book on Authentic Leadership. Ultimately, it was published by Jossey-Bass as part of the “Warren Bennis Signature Series”, with Warren as the executive editor. In his Foreword, Warren wrote, “Timeless leadership is always about character, and it is always about authenticity.” He closed by paying me one of the greatest compliments of my life, “Bill George will be remembered as much, perhaps more, for this book as for his extraordinary leadership achievements extending over four decades.”

In the midst of writing True North, Peter Sims and I spent five days with Warren at his home in Santa Monica going over the conceptual ideas and many of the stories we used in the book. Unlike many great scholars who protect their ideas, Warren genuinely wanted me to expand on his and make them fully accessible to a new generation of leaders, which he later called “the crucible generation.” Warren’s notions of crucibles and purpose-driven leadership permeate True North.

This past April my wife Penny and I had the privilege of participating with Warren in the next-to-last class he ever taught at USC, as he interviewed us about leadership. While his physical health was declining, his mind was as sharp as ever. Over dinner that evening Penny asked Warren what he would like on his tombstone. He replied, “Gracious Friend.” Warren was a feminist, always trying to develop women leaders. He had a special relationship with Penny. His wife Grace told us after he died that he was so pleased Penny had referred to him as “the older brother she wished she had.”

Warren’s legacy will be found in the leadership of the people he touched personally with inspiration, kindness, and thoughtful mentoring. After his True North interview, Warren emailed: “When asked what advice I would give to young leaders about preparing for the future, I recalled a poem by John Cage:

We carry our homes within us, which enables us to fly.”