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WSJ: How Microsoft’s Global Search Ended at Home

Great Wall Street Journal article by Rachel Feintzeig, February 4, 2014:

With the announcement of Satya Nadella as its new chief executiveMicrosoft’s global search for a new leader ended in its own backyard.

During the five month long search, the board was said to have courted candidates including Ford Motor Co. chief Alan Mulally and former Nokia Corp. leader Stephen Elop before tapping Nadella, a popular executive who started at Microsoft in 1992 and leads the division that makes technology to run corporate computer servers and other back-end technology.

When Nadella’s predecessor, Steve Ballmer, announced he was stepping down last year, he told The Wall Street Journal that the company needed profound changes, and he was not the executive to make them. Although companies often go outside for transformative leaders, by picking Nadella, board members are signaling that they believe an insider is up to the job.

More often than not, a company’s next CEO is already working there. In 2012, the last full year for which data is available, 73% of S&P 500 companies with outgoing CEOs selected an internal candidate as successor. This continued a slight downward trend – as recently as 2008, according to the research, 83% of companies chose to promote from within.

A high-profile search process is “not a very healthy time” for a company, said William George, a management professor at Harvard Business School and former chief executive of medical device company Medtronic Inc. Morale problems can spring up as workers grow uneasy about where their employer is headed; an internal pick, said George, may reassure staff.

Nonethless, the search process suggests that Microsoft failed to effectively plan for Ballmer’s successor, management experts said. The former CEO held his post for 14 years–plenty of time to have a replacement groomed and ready, George said.

Succession planning should start as soon as a chief executive starts his or her job, with three or four potential candidates on the board’s radar, according to Michael Useem, a management professor at the University of Pennsylvania’s Wharton school. The practice gives board members ample time to know the up-and comers, he said. Granted, Microsoft isn’t alone in having thin succession plans, and the company’s reorganization last year left it unclear who, exactly, was Ballmer’s number two.

And companies should move fast if they have internal favorites, George added.

“If you liked internal candidates, choose them. You know the internal candidates and you should step up to it,” he said.

Microsoft would not comment on the specifics of the search, but spokesman Peter Wootton said “it’s not uncommon for a search of this magnitude to require four to six months.”

For now, Microsoft must “build up the bona fides” of Nadella and clearly explain its choice, said Paul Argenti, a professor at Dartmouth University’s Tuck School of Business and a corporate communications expert who’s worked with companies like Novartis and Goldman Sachs Group Inc. Leaders should also note that the company needed to proceed carefully at a crucial time in the history of the business.

“Externally, it’s going to be a very tough sell. I think people are going, ‘This a very disappointing, boring, ho hum announcement,’” he said.

 

Target’s Leaders Follow The Playbook For Handling Crisis Well

Target CEO Gregg Steinhafel and his leadership team are experiencing every company’s worst nightmare. This problem is as bad as it can get. As a retailer, the loss of private customer data hurts consumer trust. The timing of the crisis—the biggest shopping month of the year—was doubly unfortunate. 

Yet, in response, Steinhafel and his team seem to be doing everything right. Steinhafel is wise enough to know that the most important thing here is Target’s ability to maintain the confidence of its customers. Every decision he has made since the crisis began is based on that clear objective.  Steinhafel and his colleagues have been fully transparent with their “guests,” as they refer to customers. They have offered to reimburse them for any losses incurred. They have not only reissued their Target credit cards, but any other credit cards used in their stores, and paid for the cost of reissuing them.

The good news here, if there is any, is that the actual losses incurred by Target customers pale in comparison to the enormous number of accounts breeched. In part, this is because Target moved so quickly to cancel and reissue credit cards.

Steinhafel seems to be following the well-known playbook of the 1982 Tylenol crisis, when CEO Jim Burke distinguished himself with his openness, authenticity, and transparency. At the time, many so-called experts predicted that Tylenol could never recover. As a result of Burke’s aggressive actions to protect consumers, Tylenol quickly regained its leading position in the consumer market.

Some pundits have criticized Target for additional revelations that expanded the number of customers who may have been impacted. If you understand even a little about cyber-security, you know that you often don’t have all the information initially. Firms like British Petroleum have tried to buy time by withholding information until they knew the full story. This only made the situation worse and caused them to lose control over the public messages.

Target has gone in the opposite direction, providing all the information it had at its disposal as quickly as possible. The problem is that you don’t know what you don’t know. As its team of experts dug deeper into its computer files, Target learned additional information that it immediately shared with its customers and the media. Since the crisis broke, transparency has been the company’s motto.

In 2009 shortly after the peak of the global financial crisis, I wrote the book 7 Lessons for Leading in Crisis, which provides a framework for handling this type of urgent, important, highly visible situation.  I’ll use it to check in against how Steinhafel’s actions follow it:

 

  • Lesson #1:  Face Reality: Steinhafel immediately recognized the potential impact of the data theft on its customers and did everything within its power to inform them and protect them from further harm. While this hurt Target’s pre-Christmas sales, it may have salvaged trust  with its customers.
  • Lesson #2:  Use Your Teammates: Steinhafel has formed a strong working team of his top executives, his board, and external advisors—they are working actively and diligently together.
  • Lesson #3:  Dig Deep for the Root Cause: Supported by outside experts, Target’s information technology team has continued to dig deeper into its computer files, enabling it to get to the root cause of the problem. They still have not figured out who invaded their systems.  (And they may not; the terrorist who laced Tylenol capsules with cyanide was never identified.)
  • Lesson #4:  Get Ready for the Long Haul: Target’s leadership has recognized that this crisis won’t go away easily, so it has focused on restoring the confidence of its shoppers as well as the general public.
  • Lesson #5:  Never Waste a Good Crisis: Steinhafel recognizes that he can use this crisis to strengthen his ties to Target’s guests by being open and offering to reimburse them, whatever the cost.
  • Lesson #6:  You’re in the Spotlight: Follow True North: Throughout the crisis Steinhafel has maintained his integrity and his openness. He has been visible to his customers, including his appearance on CNBC on Monday, January 13.
  • Lesson #7:  Go on Offense, Focus on Winning Now: It’s too soon in the crisis to think about winning in the marketplace, as Target is currently trying to hold its position with customers after the December shortfall. Looking ahead, I have no doubt that Target management will attempt to turn its handling of this crisis into expanding its business with its customers. 

 

I have known Steinhafel for nearly twenty years. Between 1995 and 2005, I served on the Target board when he was Executive Vice President, Merchandising and later President. He has also been a participant in the courses we run at Harvard Business School for new CEOs. He is a person of absolute integrity. I have never seen him prevaricate or dissemble, even under extreme pressure. For him, everything revolves around satisfying his guests. He is a brilliant merchant, arguably the finest in the retail field. He can anticipate customer needs and fulfill them.

This isn’t the first crisis Steinhafel has faced as CEO. Shortly after taking over the reins from former CEO Bob Ulrich, he faced an aggressive attack from activist hedge fund manager Bill Ackman, who wanted to break up the actual company.  Ackman’s plan proposed spinning off Target’s credit cards and its real estate holdings—destroying the company’s integrated strategy of retail merchandising, credit cards that offered customers the opportunity to contribute 1% of their Target expenditures to their favorite K-12 school, and real estate tailored to its merchandising strategy. Target management and its board rejected Ackman’s demands and won a proxy fight with 80% of shareholder votes cast. 

As an executive, you would never wish for a major crisis, but as I have learned in crises at Medtronic, Goldman Sachs and Exxon, they can make your company more effective and your organization more unified and committed to its True North in the long-run. Ultimately, I predict the same thing will happen at Target.

Your #1 2014 New Year’s Resolution? Resolve to Live More Mindfully

As 2014 approaches, many of us are looking for ways to live more mindfully. Many of us want to be more mindful, but few of us know how. Below I have compiled a sampling of eight exceptional books on mindful living that will help you become a better leader and a more fulfilled human being.

Focus by Dan Goleman: The breakthrough book of 2013. Goleman writes from his vast experience and understanding of the mind about living more mindfully to focus your life and your work on what is truly important in your life. After a treatise on neuroscience discoveries of how the brain can be remodeled through meditation and other calming techniques, Goleman brings great clarity to the subject at hand: finding inner focus (focus on self), focus on others, and focus on the world around you. If you adopt his approaches, your life will not only be more productive, it will be more fulfilling. For $27.95 minus the amazon.com discount, that’s a bargain.

Why Meditate? by Matthieu Ricard: As a molecular geneticist turned Buddhist monk, Matthieu Ricard is one of the world’s leading experts on meditation. As the Dalai Lama’s scientific advisor, he has been a pioneer in demonstrating scientifically the benefits of meditation in calming and focusing the mind. A frequent lecturer and panelist on mindfulness, he has helped open up meditation to non-Buddhists. He not only demystifies meditation in this book, but he also gives the reader practical instructions on how to do succeed at it.

Lean In by Sheryl Sandburg: The best leadership book of 2013. Guys, don’t be fooled! This is not a book solely for women. Leaders of both genders can learn a great deal about how to be successful in the workplace from Facebook COO Sandburg’s wisdom, candor and experience. Sandburg’s advice to be deeply engaged, passionate, and committed applies to all of us. She has deep thoughts on how we can all contribute more in the workplace, inspire those around us, and thus be more effective as leaders. She shares many personal stories. In so doing, she comes across as a humble leader who has gained much from her mistakes and learned from her challenges.

Wonder Women by Deborah Spar: If you resonate with “Lean In,” then you’ll like “Wonder Women” even more. Spar, who is president of Barnard College, is a former HBS colleague of mine whom I with on the board of Goldman Sachs. She is a superb writer, whose writing is deeply authentic and candid. She is genuinely honest about the challenges she and many other women face in trying to juggle their careers, marriages, mothering, and roles in the community. She acknowledges the barriers but also the self-imposed limitations many women create. You will come away inspired to open the doors and bring more women into the upper echelons of all organizations.

Becoming a Genuine Leader by Marilyn Mason: Mason delves deeply into the impact of one’s family of origin to discover the secrets required to become a genuine leader. As author Gail Sheehy writes on the cover, “She takes you home again, to discover how you learned to negotiate in the first organization to which you belonged, your family. Her psychological insights are stunning.  She illuminates the passage to authentic leadership.” (For the record, I consider that authentic leadership and genuine leadership are synonymous.) Mason has a deep understanding of family systems and how we carry the rules and the wounds from our families of origin into our families of choice and even find our families at work. In better understanding the families we grew up in, we can build better relations in our own families and in our chosen place of work.

Finding the Space to Lead, by Janice Marturano: Marturano is the former associate general counsel of General Mills. She began her work in mindfulness-based stress reduction (MBSR) by attending one of guru Jon Kabat-Zinn’s programs. Then she began teaching classes in MBSR at General Mills. Eventually, she morphed her work into mindful leadership and began running weekend seminars on that subject for executives. They were so popular that she had the courage to run these seminars as a full-time business. Her book provides a very practical guide to meditation (I prefer calling it by its real name rather than the “safe” euphemism MBSR) with numerous exercises that help the reader become more mindful and, thus, a better leader.

Daring Greatly, by Brene Brown: You may be acquainted with Brown from her exceptional TED talk, but her book takes you much deeper into how your willingness to be vulnerable can transform your leadership and your life. As she says, being vulnerable takes courage and the willingness to look deep inside yourself, confront your demons and your shame, and emerge a whole person. When you try to hide your vulnerabilities, others sense your weaknesses and they have the power. When you share them openly, then you have the power.

Conscious Capitalism by John Mackey and Raj Sisodia: Mackey, the founder and co-CEO of Whole Foods, teams with Sisodia to write the finest treatise of my adult lifetime on what genuine capitalism is all about. As I said in the Foreword that Mackey asked me to contribute, “This is the book that I wish I had written.” I said that because I believe that the authors have discovered how to build and sustain a successful enterprise. Their ideal company is driven by purpose and values, provides unique value for customers, inspires employees to peak performance, serves society and communities simultaneously, and ultimately creates lasting value for shareholders. They avoid the common trap of responding to short-term shareholders by staying focused on Whole Foods’ mission and greater purpose. Mackey’s idealism is truly inspiring – and he has backed it up by demonstrating conclusively that his approach creates superior results for the long term – not just for Whole Foods, but for many other companies as well.

Is Obama Backing Away From Obamacare?

The latest announcement from the White House on Thursday, December 19, seems to indicate that even President Obama is backing away from Obamacare. 

At the very least, he is bobbing and weaving like an exhausted prize fighter trying to avoid a knockout punch. For the President, that punch would be a disastrous rollout of Obamacare that leaves Americans so angry that the Democrats lose their five-seat majority in the Senate in 2014. That could happen with the never-ending fallout from the new plans. Not surprisingly, the latest White House retreat just before the December 23rd enrollment deadline was triggered by pressure from moderate Senate Democrats like Mark Warner (D-VA) and Mary Landrieu (D-LA).  Landrieu faces a tough 2014 election campaign.

Thursday’s announcement said that six million Americans who have had their insurance plans cancelled are eligible to buy catastrophic policies and are exempt from penalties if they go without insurance in 2014. Not that the new catastrophic plans are cheap. In California the pre-Obamacare median cost for a 25-year old non-smoking male was $92 per month on eHealthInsurance.com. This compares to $205 per month for a bronze plan and $184 per month for a catastrophic plan. Tacitly admitting that for many Americans the cost of buying insurance on the federal exchange exceeds their current insurance cost, Health and Human Services Secretary Katherine Sebelius offered them the opportunity to apply for a “hardship exemption.”

This is the fourth major pullback by the White House from the Affordable Care Act. In July the employer mandate to provide health care to all their employees was delayed one year until January 1, 2015. That followed the prior year’s scrapping of long-term insurance plans which were deemed too expensive. Then in November President Obama, facing massive criticism for not upholding his promise that all Americans could keep their insurance plans, told insurers to reinstate the cancelled plans, provided their state insurance commissioners agreed. (Several did not.) On November 27, the White House withdrew the opportunity for small businesses to buy insurance on federal exchanges in 2014.

All these changes are causing mass confusion and consternation for the insurers. Already, two of the four largest insurers – United Health and Cigna – have elected not to participate in the exchange, a decision that appears fortuitous. The remaining participants in the federal exchange are preparing for massive adverse selection that raises their costs far beyond the projections they used in bidding on these plans, especially the bronze plans. As the healthy young opt to go without insurance and pay the modest penalty or take the catastrophic plans, the insurers are left with the least healthy people in their plans. The latter comprise the vast majority of people enrolled to date.

All these changes are exposing the flawed premise on which Obamacare is based: that the healthy young are willing to pay much more for insurance in order to support the unhealthy elderly. This policy marks the first time in U.S. history that we are asking the young to pay for the old; historically, it has always been the other way around. Altruism would not have motivated the young to assume this new cost, so the Democrats used the mandate to force the young into the pools—subsidizing care of the elderly at much higher costs to themselves. The mandate eked through the U.S. Supreme Court on a 5-4 decision, thanks to the tortured logic of Chief Justice John Roberts who deemed it wasn’t mandate after all, but rather a tax. All this comes at a time when youth unemployment is still in double digits and many more young people are stuck in low-paying jobs that barely enable them to make ends meet.

To compound the problem, the law has a key provision that no one can be asked to pay more because they are in ill health. The converse of that clause is that insurers cannot offer incentives to people for remaining in good health through diet, exercise, stress reduction, and limiting consumption of cigarettes, alcohol and drugs. That forms a sharp contrast with self-insured employers who are racing to offer employees massive incentives for staying healthy. These employers understand the reality that Washington seems to deny: health care costs can only come down when people start taking responsibility to live healthier lives. Pragmatic employers who bear the cost of their employees’ health care, know that lifestyle accounts for more than 50% of total health care costs.  Therefore, they offer incentives to improve employees’ lifestyles.

The impact of this provision will become highly visible in early 2014 when insurers announce increased prices for their 2015 plans. That will trigger another round of consumer reactions, and responses from the Obama administration shortly before the November 2014 mid-term elections. Will the administration extend opportunities for people to go without coverage or shift to catastrophic plans? Or will the administration try to offset the rising costs by further reducing reimbursement to hospitals and physicians for Medicare and Medicaid? If the latter, we are likely to see a stampede of providers that refuse to take new Medicare/Medicaid patients, even those within five years of becoming eligible.

Given this looming disaster, I support the Obama administration’s “go slow” approach, and offering the option of catastrophic plans for all Americans. This is something I argued for unsuccessfully back in 2009-2010 before the law was enacted. To make Obamacare viable, however, two further changes will be required: 1) reducing the minimum requirements in the plans to enable people to select plans tailored to their needs, and 2) permitting insurers to offer incentives to their enrollees for staying healthy. The consequence of these two actions will be that unhealthy Americans will have to pay more, regardless of their age, and the healthy will not be required by law to subsidize the unhealthy. These changes are certain to raise the hackles of liberal Democrats, but they are the only to avoid the looming disaster in rapidly rising health care costs that could bankrupt Medicare/Medicaid.

In early 2014 the President will be faced with a stark choice, as the shortfall of healthy Americans signing up through healthcare.gov becomes reality, and the consequences of adverse selection cause insurers to reprice their 2015 plans. He can cling to the original liberal provisions of Obamacare and face massive political fallout. Or he can take a more gradual approach to universal health care that provides people with incentives to stay healthy. For the sake of our country, I hope he chooses the latter option.

McKinsey Interview on Rethinking Capitalism

Here is my video from the McKinsey website on the need for long-term investing in order to create superior value for their customers and why boards of directors must be prepared to stand up to activist investors urging short-term actions.

World Cup Draw: A More Professional Way

FIFA, the governing world body of soccer led by long-time mogul Sepp Blatter, loves controversy, chance and corruption. No doubt this generates lots of media attention--but it certainly does not instill a sense of equity in its decision-making.

How else could the world’s #2 team, Germany, be paired with #5 Portugal, #14 USA, and #24 Ghana?  All of these teams advanced to the next round in 2010!  Meanwhile the “Group of Death” has #3 Argentina’s group and also contains #45 Iran, #36 Nigeria, and #22 Bosnia. (Eat your heart out, Jurgen Klinsmann.)

FIFA’s latest manufactured controversy stems from its arcane method of placing the teams of 32 nations in eight brackets. Essentially, FIFA assigned each qualifying World Cup team into one of four pots. On Friday, balls corresponding to the teams were literally placed into four "pots" (actually bowls) and then teams were selected (at random) from the pots in a drawing. As each team's ball was selected from the pot, it was placed into an A-H grouping for the First Round. What a mess!

This is certainly not a difficult task by modern sporting standards. The world’s leading tennis tournaments figured this out decades ago. The NCAA basketball tournaments use a similar approach for both the men’s and women’s brackets.

How to do it? Just take the most recent FIFA rankings – that’s November 28, 2013, after all the World Cup qualifying games were completed – for each country’s team and place it in brackets from one to 32, eliminating higher-ranked teams that didn’t qualify. Here’s what the pairings would look like:

A

B

C

D

#1     Spain

#2     Germany

#3     Argentina

#4     Columbia           

#16   Croatia

#15   Chile

#14   USA        

#13   England

#17   Ivory Coast

#19   France

#20   Mexico

#21   Russia

#59   Australia

#54   South Korea

#51   Cameroon         

#48   Japan

 

E

F

G

H

#5    Portugal

#6    Uruguay 

#7    Italy

#8    Switzerland

#12  Greece

#11  Belgium

#10  Brazil

#9    Netherlands

#22  Bosnia

#23  Ecuador

#24  Ghana

#26  Algeria

#45  Iran

#41  Honduras

#36  Nigeria

#31  Costa Rica

While none of these brackets is easy, they are better balanced – and thus more equitable – than the mess that FIFA’s ranking system produced. Granted, the US would have to beat Mexico and Cameroon to advance, assuming #3 Argentina dominates this group. But that’s better than having to beat both #5 Portugal and #24 Ghana. And #11 Belgium couldn’t coast into the next round in a soft group like it has with Russia, Algeria, and South Korea.

By adopting this system, FIFA could restore an even playing field to the World Cup competition.  As it stands now, much of the competition will be determined by the luck-of-the-draw approach utilized to select the groupings. More importantly, teams that performed well in all competitions in the past year would be rewarded by accumulating objective points in FIFA’s ranking system.

The Greatest Leader Of Our Lifetime

Late this evening Nelson Mandela died at the age of 95. He was the greatest leader of our lifetime. His Long Walk to Freedom included 27 years in prison on Robben Island, hard labor, and cruel treatment for a political crime he did not commit.

Yet he emerged from prison on February 11, 1990, unbowed and unbroken, a proud man determined to save his nation from the civil war that had long been anticipated. His goal was to restore harmony between blacks, whites, colored and Indian. 

That evening in Cape Town, in his first public appearance in 27 years, he began by saying:

I stand here before you not as a prophet but as a humble servant of you, the people.
Your tireless and heroic sacrifices have made it possible for me to be here today.
I therefore place the remaining years of my life in your hands.

He concluded by telling the assembled masses:

It is only through disciplined mass action that our victory can be assured.
We call upon our white combatants to join us in the shaping of a new South Africa.
Our march to freedom is irreversible.
We must not allow fear to stand in our way.
Universal suffrage in a non-racial, democratic South Africa
Is the only way to peace and racial harmony.
It is an idea for which I am prepared to live for and fight for.
If needs be, it is an idea for which I am prepared to die.

Nelson Mandela indeed was able to achieve his dream and was elected president of the democratic South Africa, stepping down after five years.

How was this man, himself the victim of so much injustice, able to forgive his captors and work tirelessly for harmony between all the people of South Africa? He rose above his feelings of anger to recognize his greater calling to become the man of peace who could unite all his country’s people and put his country ahead of himself, his race, or his party.

For his vision, his passion for his cause, his compassion for his fellow people, and his courage to put his life on the line to achieve his goal, Nelson Mandela is the greatest leader of our lifetime. His life stands as a symbol of human capacity to set aside differences, ancient hatreds, and historic injustice to achieve peace and harmony.

On a personal note, although I have been to South Africa many times, I met Nelson Mandela only once, when he was in Minneapolis on a 2001 trip to raise funds for a museum at Robben Island.  Penny and I had fifteen minutes alone with him to hear his stories from his time in prison and his vision for the future of South Africa. He was so inspired about developing a new generation of leaders in South Africa and throughout the continent of Africa that we decided to fund the leadership development program he had created from this purpose. In an unrelated incident, in early 1997 when our son Jon - then a junior at Amherst College - decided to spend a semester in Soweto working as an orderly at Baraguawanth Hospital, he had trouble clearing customs as he did not have a work permit. A call from Winnie Mandela, at the time Nelson's wife, to the customs inspectors enabled him to clear customs and have a transformational experience that semester.

CNBC - Obamacare site tip of the iceberg: Ex-Medtronic CEO

"This is the Titanic." That's how former Medtronic Chairman and CEO Bill George described Obamacare.

"It's just at the iceberg and everyone is looking at the tip: HealthCare.gov," George told CNBC's "Squawk Box" on Wednesday. "It's not going to be solved by the end of the month," when the Obama administration has promised to have the troubled website working smoothly. Government officials and outside contractors have been rolling out improvements overnight for weeks.

At an Obamacare event in Florida, Health and Human Services Secretary Kathleen Sebelius said Tuesday she's confident that the government-run HealthCare.gov website is on the right track. She encouraged users who previously had problems to return—promising them a better experience already.

(Read moreSenior officialdrops Obamacare bombshell)

"You cannot solve a management problem with politics," said George, a professor of management at Harvard Business School. "Sebelius has done her time. ... Let's bring in the pros," people with private sector experience, he said.

Beyond the website, George said, "Look at this fiasco we have right now, we're trying to take people's insurance plans away; now we're giving them back." President Barack Obama acted "too late on the insurance plans."

Obamacare has to be fixed, he continued. "You're not going to repeal it. It's not going to be repealed because by 2017 this thing is going to be locked."

(Read moreObamacare may need bailout: Ex-HHS head)

One of the ways George said to fix the law is to give people an incentive for living healthier lives. Until then, he said, "We're going to have a huge snowplow effect of costs. It will not happen in this president's term. It will happen in the next president's term."

As for the tax on medical device makers, like Medtronic, to help pay for Obamacare, George called it a punishment for the industry's lack of support for the health-care law.

Bill George Awarded Prestigious Bower Award From The Franklin Institute

The Franklin Institute awarded Bill George its 2014 Bower Award for Business Leadership.  The Awards program, founded in 1824, is among the oldest and most prestigious honors bestowed in the United States.

Gayle M. Ober, Executive Director of the George Family Foundation, said: “This recognition of Bill George is well-deserved.  The Franklin Institute prize recognizes extraordinary business leadership, and Bill’s selection reflects the contributions he has made in the business, academic, philanthropic, and community realms.”

The awarded citation recognizes Bill George:

“For his visionary leadership of Medtronic Corporation, his promotion and writings on corporate social responsibility and leadership, as well as his extraordinary philanthropic contributions to education and health care through The George Family Foundation.”

Bill George’s business career was characterized by a mission focus.  As CEO of Medtronic for ten years, he measured success by the number of new patients the company was able to help each year “be restored to full health”—a number which grew from 300,000 to 10 million today.  As a professor at Harvard Business School, he has pursued a mission of building ethical leaders with equal vigor. Bill has written five books on leadership, informally advised numerous CEOs and emerging leaders, and contributed to the advancement of society through leadership on a variety of corporate and nonprofit boards. In addition, Bill has been instrumental in shaping the leadership funding focus of the George Family Foundation.  Influenced by his personal involvement, the Foundation has supported national and global leadership programs that train and nurture authentic leaders in all sectors

Past honorees of The Franklin Institute’s Bower Award for Business Leadership include Bill Gates, Gordon Moore, David Packard, James Burke, Roy Vagelos and Michael Dell. Past scientific laureates include Thomas Edison and Albert Einstein.

About The Franklin Institute

Founded in honor of America’s first scientist, Benjamin Franklin, The Franklin Institute is one of America’s oldest and premier centers of science education and development in the country. Today, the Institute continues its dedication to public education and creating a passion for science by offering new and exciting access to science and technology in ways that would dazzle and delight its namesake. Recognizing outstanding achievements in science throughout the world is one important way that the Institute honors its commitment to Benjamin Franklin’s legacy. For more information, please go to www.fi.edu/awards.

About the George Family Foundation

This mission of the George Family Foundation is to foster wholeness in mind, body, spirit and community by developing authentic leaders and supporting transformative programs serving the common good.  Founded in 1994 by Bill and Penny George, the Foundation supports innovative ideas in integrative health, leadership development, social justice, and spirituality in everyday life.

Six Ways to Save Obamacare

Only President Obama can save Obamacare.

Obamacare is not going to be repealed – not now and not in the future. However, there is real risk it could collapse under its own weight. If that happens, the President's credibility will collapse as well. Whether or not you support this President, this could seriously harm the health of our citizens and America’s fiscal stability.

The President will not succeed until he faces this reality: the challenge of Obamacare is not a political issue, it is a management issue. Playing politics--no matter how successfully--cannot solve management problems.

To save Obamacare, the President should:

#1: Replace the politicians with professionals. President Obama is a superb politician, but he needs to surround himself with experienced leaders who possess the capabilities he lacks. That means replacing HHS Secretary Katherine Sebelius (also a fine politician) with an experienced health care leader who has successfully created large-scale systems serving millions of people. My first recommendation is George Halvorson, who built Kaiser Permanente as its Chair and CEO. Other candidates include Dr. William Brody, MD, PhD, who currently heads the Salk Institute, and Lois Quam, who built Optum Health for UnitedHealth Group and was Hillary Clinton's head of global health at the U.S. State Department.

#2: Fulfill the promises that "No one would lose their current health plan" and "You can keep your doctor." The promises Obama made to build public support for the law are simply not true today. Already, two million people have had their health insurance cancelled, and the number could rise as high as 16 million. The law set uniform standards for all Americans at a very high level, knocking out high deductible plans and forcing levels of coverage that many people don't want or need. The President needs a quick fix by asking for Congressional approval to exempt all existing health plans for the next three years rather than forcing people into more expensive plans on the exchanges. Then HHS should notify participants in these plans they can keep their plans until January 1, 2017, providing adequate time to adapt to Obamacare.

#3: Turn healthcare.gov into a consumer-friendly website. The problem with the government exchange site is not a technical problem, but a management problem. Until this week, no one has been in charge of the overall system, leaving the techies working at cross purposes with each other and the federal bureaucrats trying to control them. Is anyone surprised this led to mass chaos? Worse yet, no one thought through what consumers wanted and how to make the system easy for them to navigate. Secretary Sebelius has acknowledged that HHS never did "end-to-end" testing of the system. Nor did HHS run pilot tests in any states. Can you imagine Apple not bothering to test the complete system before launching the iPad?

#4: Slow down Obamacare's implementation. After this false start, trying to force all Americans to choose a plan by January 1, 2014 is a formula for disaster. The President needs to take the pressure off by delaying the effective date of the individual mandate to July 1, 2014 or January 1, 2015. The latter is the new effective date of the employer mandate, which has already been delayed a year. Even the most skilled professionals can't fix this system overnight, so don't force an unrealistic timetable that causes frustration and chaos.

#5: Fix the problem of adverse selection before it spirals out of control. The underlying premise of Obamacare is to force high premiums on healthy young people to pay for the high cost of unhealthy older people. Early indications are that this isn't working, as high cost patients are signing up but young people are not. Many will simply opt out by paying a modest penalty for not carrying insurance – less than $100 in year one. To correct this problem, Obamacare should be modified to permit healthy and young people to enroll in high-deductible plans. This could lead to upward rate adjustments for the older population which better reflects their share of the costs. The President won't like this adjustment but it is inevitable, so he is better off being proactive than waiting for another crisis that could further derail Obamacare.

#6: Change the subject from insurance access for disease care to healthy living. For the past five years all the energy has gone into providing insurance access for all Americans – a worthy goal. Little has been done to address the real driver of health care costs: the declining health of the American people. More than 50% of health care costs are lifestyle-related, yet 95% of our efforts and the reimbursement that goes with it is for downstream care. By giving everyone full access to downstream care, there is no incentive to keep yourself healthy. In fact, the Affordable Care Act specifically prohibits charging less to healthy individuals, as most employer-based plans do. The only sustainable way of controlling costs is to incentivize people to take responsibility to keep themselves healthy with the support of their health care team, which should include health and wellness practitioners. For its part, HHS needs to move forward with the reimbursement shift for providers from "fee for service" plans to "paying for value" delivered to its patients, an essential step in shifting the focus.

Conclusion

Our health care system urgently needs to be fixed, but in its current form Obamacare is not what the doctor ordered. Republican efforts to repeal it altogether are a distraction that only serves to divide the country. In the three and one-half years since the Affordable Care Act was passed, the President has been unable to build support among the general population, nor is HHS ready to implement it in its original form. Instead, the President should take a pragmatic approach to give a new management team time develop a viable implementation plan that gives consumers time to adapt and incentives for staying healthy.