I am honored to receive a Lifetime Achievement Award from Trust Across America. Authenticity and trust go hand in hand. My full article on Trust as the Essence of Leadership can be viewed here and full text below.
Trust is the essence of leadership – the coin of the realm. Unless people build trust with their colleagues, they cannot gain legitimacy to lead, nor can they empower others.
Recent studies have shown that only half of Americans trust their leaders. Since the 2008-09 global financial crisis, many Americans have lost trust in their leaders and the institutions they lead.
Gaining the trust of people is essential for every leader. Leaders cannot be effective without full confidence of the constituencies that grant their institution its legitimacy, nor can capitalism function without trust.
No matter how effective your strategy, your vision, or your communication, you will fail to achieve the desired results for your organization if you cannot inspire trust as a leader. Lack of trust in your leadership will cause your team to fear failure, resulting in less risk-taking, and therefore, less innovation. Building a culture of trust starts with you. You must quell fears of organizational power by exhibiting authentic behavior that inspires trust and fosters an open, safe environment.
To be worthy of trust, leaders must have a clear sense of their True North – the purpose of their leadership and the essence of their beliefs, their values and the principles by which they lead. If they stay on course of their True North and do not deviate under pressure, then they can build trust among colleagues and legitimacy among all their constituencies.
What’s required are new leaders who are grounded in authenticity, relationships, and emotional intelligence. To gain trust, they must be genuine, sincere, transparent, and true to their word. People sense who is authentic and who is not. Only when they are authentic will people grant them the support they need to lead organizations.
To strengthen the trust and confidence in America’s leaders, we need a new leadership mindset and a new breed of leaders, with five characteristics in common:
- They should be authentic leaders, focused on serving their clients and all the institution’s constituents, rather than charismatic leaders seeking money, fame, and power for themselves.
- They should place the interests of their institutions and society as a whole above their own interests.
- They should have the integrity to tell the whole truth, admit their mistakes, and acknowledge their shortcomings. Authentic leadership is not about being perfect. It is having the courage to admit when you’re wrong and to get on with solving problems, rather than covering them up.
- They need to adapt quickly to new realities, changing themselves as well as their institutions, rather than going into denial when things don’t go as intended.
- They need the resilience to bounce back after devastating losses. Resilience enables leaders to restore trust by empowering people to create new solutions that build great institutions for the future.
Earning trust requires significant time and effort, and must come from a place of authenticity. Trust cannot be faked. You cannot become a trusted leader by trying to imitate someone else. You can learn from others’ experiences, but there is no way you can be successful when you are trying to be like them. People trust you when you are genuine and authentic, not a replica of someone else.
Don’t be afraid to show your vulnerability. Be transparent with your team, even when the truth may be unpopular or inconvenient. Don’t punish those who bring you bad news. Encourage risk-taking and celebrate “good failures” as opportunities to learn and move forward.
Remember: trust starts with you but it is a win-win for everyone.
By David Gelles for NY Times DealBook, January 21, 2015
DAVOS, Switzerland – For 10 minutes at the World Economic Forum here on Wednesday afternoon, a conference room jammed with more than 100 high-powered delegates was entirely silent.
The rare interlude of equanimity came during a panel called Leading Mindfully, a discussion of how meditation was impacting the workplace.
And with a mix of breathing instructions, management theory and personal reflection, the session provided a stark counterpoint to the frenzied discussions about geopolitical instability, currency fluctuations and climate change in nearby rooms.
“This is a very unusual event at the World Economic Forum, and it’s diagnostic of something much larger that is happening,” said Jon Kabat-Zinn, a molecular biologist who helped popularize mindfulness meditation in recent decades. “What was once considered a radical, lunatic, fringe thing has been incorporated into medicine, science, academics and more.”
In recent years, meditation has grown more prominent in the business world. Companies including General Mills, Aetna and BlackRock are teaching meditation to their employees, and students at Harvard Business School can take classes on mindful leadership.
“Even Goldman Sachs is doing it,” said William George, a member of the Goldman Sachs board who was on the panel and says hundreds of the investment banks employees regularly meditate.
At the same time, hospitals, schools, sports teams and the military are promoting incorporating mindfulness in to their training.
“Teachers are desperate to teach kids how to pay attention, rather than screaming at them,” said Mr. Kabat-Zinn.
In Davos, meditation has been on the agenda for each of the last few years. But this year, there was more interest than ever, according to Mr. Kabat-Zinn. An upcoming panel at the event will explore how meditation changes the brain, and this year, Mr. Kabat-Zinn is leading popular meditation sessions each day at 8 a.m.
“A few years ago no one showed up,” he said.
The panelists, who also included Arianna Huffington, spent time discussing how meditation can benefit workers, but the highlight of the event was the meditation session.
Led by Mr. Kabat-Zinn, the stretch of silence was intended to get delegates out of their heads, and instead notice what was happening around them.
“The first thing we notice when we practice mindfulness is how mindless we are,” said Mr. Kabat-Zinn, defining mindfulness as “paying attention, in the present moment, and non-judgmentally.”
The serenity was occasionally broken by the voices of other delegates in the halls, buzzing about contemporaneous panels including “The Geo-Economics of Energy” or “China’s Impact as a Global Investor.”
And the silence was too awkward for restless participants. Several people left during the meditation session, while others checked their phones.
When it was finished, Mr. Kabat-Zinn asked participants to raise their hand if their minds had wandered. Everyone in the audience raised their hands, including Matthieu Ricard, a Frenchman who has ordained as a Tibetan monk and been called “the happiest man in the world.”
Much of the discussion centered on how meditation might help executives perform better. “The main business case for mindfulness is that if you’re more focused on the job, you’ll become a better leader,” Mr. George said.
Mr. George said that Wall Street firms, in particular, could benefit from the virtues of meditation.
“It causes us to behave less aggressively,” he said. “Certainly, the financial community could use some of that.”
Meditation, the panelists said, also can reduce stress, improve well-being and promote calmness, clarity and creativity.
The room, with views of the Alps, was packed to capacity, with many attendees sitting on the floor. At two whiteboards around the room, artists drew interpretive illustrations of the themes being discussed.
“Here we are in this beautiful country, and has anyone bothered to look up at the mountains?” Mr. George asked. “Or are we just looking around for the next person to meet?”
It was perhaps an unusual theme for the power brokers at the event. But many on the panel and in the audience professed that meditation gave them a competitive advantage. And the burgeoning interest in meditation at the event mirrors a broader societal shift, in which yoga, mindfulness and meditation are becoming part of the mainstream.
“Modern science is validating ancient wisdom,” Ms. Huffington said. “We are living through a major tipping point.”
Attendees in the audience chimed in with their own stories. A professor from India described bringing meditation to her university with good results. An executive from an American company said mindfulness had improved relations in the C-Suite.
Another theme espoused by the panelists was the virtues of putting down smartphones and getting away from computer screens. Mr. Kabat-Zinn opened the session with a request for attendees to put away their devices and focus on being present for the duration of the unusually long, two-hour session. Not everyone complied.
“The truth is, we show much more compassion to our smartphones than ourselves,” Ms. Huffington said. “If we treated each other as kindly as we treated our smartphones, it would be a major revolution.”
Attendees at the session included executives, academics and politicians from around the globe.
“There is a hunger for this type of approach, especially at the World Economic Forum,” said Dean Ornish, a clinical professor of medicine at the University of California, San Francisco. “We focus so much on success and power, but people are beginning to realize that the more at peace we are, the more we can spread peace in the world.”
And at least one financier was taking the message to heart. Paul Meehan, who manages Europe, the Middle East and Africa for Bain & Company, the management consulting firm, has been practicing yoga for five years and attended the session.
“This is one of the most impactful sessions I’ve been to,” he said.
From Value Walk, December 29, 2014
Twitter CEO Dick Costolo for long has been questioned over his leadership abilities by many of the critics, and the latest to join the list is Bill George, a professor at Harvard Business School. They all are of the opinion that Costolo should resign from the position of CEO, and make space for someone worthy.
Twitter needs a new team
On Friday, George said on CNBC that the company needs a new team at the top and therefore Costolo should resign. George made Costolo’s comparison with the other biggies like Mark Zuckerberg, the CEO of social networking giant Facebook Inc (NASDAQ:FB) and with Larry Page CEO of Google Inc (NASDAQ:GOOG). Harvard professor said that Costolo is not at par with these names, and hence should step down allowing a better person to acquire the position. However, he did expressed his liking for the micro-blogging site, and said that he visits the site five times a day on a regular basis.
In an interview that lasted for few minutes, eight distinct complaints were put forward by the former CEO of Medtronic, George. The CEO of the medical device technology company said that with the losses that the company is making, it was not possible for the Street to stay with them for long. After the statement, he tweeted, “Time for new leadership @twitter; otherwise TWTR loses out to Facebook and Google.”
Time running for Costolo
Besides George, there are few others as well, who feel the need for Costolo to exit. Last week, Robert Peck, an analyst at SunTrust predicted that Costolo would exit the company in less than a year’s time. The news spread like fire, and the impact was clearly visible on the stock price, which was on the decline since the start of the year. This year the stock had registered a decline of 41%, but the news sent it up by 3.6%.
For the third-quarter, Twitter posted a revenue of $361 million up 114% on YoY basis. The same growth could not be seen in the number of active users while rival Instagram is stealing all the limelight. Facebook has more than 1.35 billion monthly active users while Twitter has no more than 284 million.
Twitter will report its next quarterly results on Feb. 5, and if the company fails again to meet the subscriber growth estimates, then the voices calling for the exit of Costolo will only get louder.
From Tech Insider, December 28, 2014
There seems to be no end to calls for resign of Twitter Inc CEO Dick Costolo. Investors, experts and shareholders are demanding Costolo to resign as he was unable to run the company successfully. In a recent development, Bill George, a senior Harvard Professor has said that Twitter Inc’s CEO could not run the company in the right way. He thinks that the Costolo has not the right repo, PR and fame like a CEO should have, CNBC reported.
George thinks that Dick Costolo does not maintain the right skills that are needed in a CEO of a big tech company. He gave the example of Larry Page and Mark Zuckerberg and said that these people have a grip and innovative approach towards the product curve whereas Twitter Inc’s CEO does not understand the product dynamics. George also thinks that Twitter Inc CEO has an ‘inflexible approach’ that is a major hurdle in the way of product innovation and growth.
George said that there must be a change in the upper management of Twitter Inc. The management has been getting rid of the excellent product development team and hiring the new guys which haven’t proven themselves.
The professor thinks that Twitter Inc is almost against advertising, which is a key revenue stream in the modern tech business. Twitter Inc faced a tough year 2014. Many developers and executives left the company. There were many embarrassing slippages, lack of innovation and monotonous interface updates, which have forced the investors and users to ask Twitter Inc’s current CEO to resign.
Full clip of this morning's CNBC Squawk Box discussion, "Does CEO Leadership Matter?": https://www.youtube.com/watch?v=kPr6aWUedn0. My answer? A resounding YES! Look forward to your feedback.
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.
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
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
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.
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.