A professor filled a jar with rocks and asked his students if it was full. They agreed that it was. Then, he added pebbles and asked again if it was full. His students acknowledged that yes, the jar was still full. He poured in sand, which filled the spaces between the pebbles, and his students confirmed that the jar was full. The professor explained that the rocks represent your top priorities. The pebbles are the things in life that are less important, and the sand is the little, every day stuff. Then, he dumped out the jar and filled it with sand. Once the jar was full of sand, there was no room for the pebbles and the rocks.
Are you filling your daily jar with sand first, or are you tending to the rocks? Answer these questions to guide you towards your True North – figuring out which priorities in your life are rocks, and which are the sand and pebbles.
1. If money was no object, how would you spend your time? What would your day look like?
A 2014 Harris Poll asked workers what they would do if they won the lottery. More than half said they would still choose to work, and 30% would keep their current jobs (although just 15% reported that they already had their dream job). The most common reason people gave for staying employed was “I would be bored if I didn’t work.” If that’s the case for you, you’re living to work and not working to live. While your job should coincide with your True North, there’s more to life than work. Think about your hobbies and the things you care about. For smart, hard-working people, boredom is never an issue.
2. If you were to donate everything you have to a cause or charity, which would it be?
What cause is dearest to your heart? Most people care about several different issues, from animal rights to homelessness. But if you had to select only one cause or charity to receive everything you own, which tops your list of priorities? When was the last time you did something to support this cause? Our top priorities are usually close to home – family, health, friends, and work. But you must care about the world at large, too. “A society grows great when old men plant trees whose shade they know they shall never sit in.”
3. What keeps you awake at night when you should be sleeping? What gets you out of bed in the mornings?
The moments before you fall asleep should be peaceful – what are the problems that disturb you during that time? This question doesn’t just address your priorities; it can also indicate your tolerance for stress. Are you worrying about issues you have no control over? There are some things in life that we simply cannot influence. Good leaders don’t waste time fretting over these things. They plan for every contingency and focus on the decisions that they can make. As to the second question, don’t merely think about what gets you out of bed grudgingly. What makes you leap from your bed with excitement and face the day with a smile?
4. What bugs you? If it makes you mad, you’re passionate about it! Can you make your anger productive?
Like all emotions, anger has its uses. What really perturbs you? I’m not talking about your pet peeves – I mean the things that really get you fired up. Channel your anger into passion, and you’ll be motivated to do something about it. Whether you’re changing your own life or changing the world, passion is the driving force behind your True North. If you aren’t passionate about what you’re doing, it’s not where you should be directing your energy.
5. What price would you take to give up on your dreams? What price would you be willing to pay to achieve them?
The price you’d be willing to pay to achieve your dreams is a question you answer every single day as you make decisions about how to spend your time. Should you eat dinner with your family, or work an extra hour? Go for a run, or watch a movie with your significant other? We answer these questions differently depending on what our dreams are, but each decision requires that we give something up. The first part of this question is, to me, more interesting, although it’s less frequently posed. What would someone have to offer you for you to give up the pursuit of your dreams?
30 Questions to Help You Discover Your True North poses these five questions as well as several others. Think about each one. Time truly does fly, and it’s worth spending these extra minutes to make sure you’re not wasting the precious time you do have on things that aren’t as important to you. Figure out what your rocks are, so you can fill your jar with the important things in your life.
From CNBC, posted June 16, 2015
American unions rallied together for a show of power after years of losing members and political influence. They garnered enough Democratic votes to shoot down their own president, Barack Obama. Sunday's New York Times explained how this coalition came together. The feature pointed out that the unions threatened Democrats who voted for the bill with loss of funding and support. Money talks louder in politics than sound policy.
In advocating enthusiastically for the trade bill, President Obama was following in the footsteps of another Democratic president, Bill Clinton. Clinton's support for the 1990s trade bills, the North American Free Trade Agreement and General Agreement on Tariffs and Trade, helped launch a jobs boom in America. Obama wisely saw the opportunity to do the same for American workers in today's era with the Trans-Pacific Partnership.
Obama's efforts were to no avail.
Ironically, the defeated bill provided retraining assistance for workers dislocated by the trade bill. Lawmakers had crafted this legislation specifically to help the workers represented by the unions working so actively to defeat it. A further irony is that free trade agreements are heavily weighted to America's advantage because they open up foreign markets – in this case, Asian markets – to American goods, which face substantial restrictions in the form of tariffs and other limitations on their marketing. In contrast, American markets are already wide open to foreign goods with few limitations other than agriculture.
There is no doubt that globalization of the workforce – a trend that is inevitable in today's global world – is putting downward pressure on wages. For decades, labor unions have been steadily losing members. Additionally the public has gained greater insight into how certain union agreements hamper productivity, such as in the automobile industry. If labor fails to effectively partner with management and together create value for consumers, both labor and management will lose their jobs.
The reality of the trade bill's defeat means that more American manufacturers will be required by foreign governments to set up production and often research and development, thereby cutting production in the U.S. The trade bill would go a long way to alleviate that. As American companies expand globally, inevitably they add many more jobs here in the U.S. – engineering, manufacturing, marketing, finance, and management.
Former Ford CEO Alan Mulally directly addressed these issues shortly after taking over Ford in 2006. He saw that Ford, General Motors, and Chrysler were steadily losing market share for several decades and de-emphasizing cars (in favor of SUVs) because they were unprofitable and could not compete with German, Japanese, and Korean cars built in plants in the Southern states. He met with leaders of the United Automobile Workers and devised plans to bring jobs back to Detroit, based on lower starting wages for new workers with the goal of cost parity with plants in the Southern states. This plan worked. Ford's market share has grown dramatically, and its Midwest factories are flourishing.
A further reality is that many of today's workers will not be qualified for their positions by 2025 as increased technology is changing their job requirements. The only solution to this challenge is to retrain American workers for the jobs of the future. This is what Germany does so well through its apprenticeship programs and other worker training. And it explains how German manufacturers have grown so much in the era of globalization. Their quality and design expertise enable them to expand their export sales worldwide.
A natural compromise is to combine a worker retraining bill – something Democrats favor – with the trade authority President Obama seeks.
It's time for both sides to come to their senses and support the president on this bill – both the free trade agreement and the worker retraining. If lawmakers don't get this done, China will proceed to form its own coalition of nations willing to agree to free trade among themselves, and American companies and their workers will find themselves shut out of exporting to Asian markets. In this case, American workers will be the big losers as U.S.-based global companies will be forced to move more jobs overseas.
And the Democrats will become known as the party of the labor unions, not the party of job creation. It's their choice.
Commentary by Bill George, a senior fellow at Harvard Business School and the former chair and CEO of Medtronic. He is the author of the book "True North." Follow him on Twitter @Bill_George.
We each have certain assets and certain liabilities. You can maximize the use of your skills and talents and overcome your handicaps, but only if you’ve identified them. The fourth part in my series on Discovering Your True North helps you discover the positive qualities you may not even realize you possess, as well as any weaknesses that could be stumbling blocks to your success as a leader. Think about each question, and don’t just go for the easy answer. We all have a token response when someone asks us what our strengths and weaknesses are, but dig deeper!
1. What one word do you want people to use to describe you? What do you think they’d currently use?
If someone were to describe you to a stranger using only one word, what would you want that word to be? At its heart, this is a question of values. We all want to be known as intelligent, responsible, etc., but which of these traits is most important to you? The second part of this question deals with how people currently perceive you. Are you the person you want to be? And do you demonstrate those values to those around you?
2. What would others say is your biggest asset? What would they say is your biggest flaw?
This is a tough question to answer objectively, so consider asking someone who knows you well (and who will break your biggest flaw to you gently!). You shouldn’t be astonished by what you hear; ideally, you’re familiar with your own strengths and weaknesses. You might be surprised, though, to learn which qualities people think you could really maximize, and which are harming you more than you may know. Are you taking advantage of these assets? How can you work on overcoming your flaws?
3. What skills do people frequently compliment you on? These may not be what you think you’re best at.
What’s the nicest compliment you’ve ever received? This is a clue into what qualities you’d like to cultivate within yourself. There may be things that people often compliment you on that you simply brush off. For example, perhaps others frequently mention that you’re a good teacher, or that you communicate ideas clearly. Don’t take these skills for granted – not everyone has that ability. Instead, hone it and put it to use to further your goals.
4. What do you not want others to know about you?
We all have character flaws and tendencies that we’d rather keep hidden. Maybe you always procrastinate, or you can’t seem to make it to meetings on time. If you have a recurring problem like that, make an effort to fix it! It’s easier to work on your problems than it is to suffer the consequences from them. Examine the answer to this question closely – maybe it’s a part of your personality, and you can’t or won’t change it. In that case, root out and conquer those insecurities.
5. Think about your talents, passions, and values. How can you use them to serve and contribute to society?
Your strengths and passions are the tools you will use to carve out your future. What are your tools best suited to create? Consider your talents, passions, and values separately. You may be considerably talented in one area, but if you don’t enjoy it or you aren’t passionate about it, you shouldn’t make it your ultimate goal. Lastly, think about how you can apply the things you love, care about, and are good at to improve the world in some way. Isn’t that the point, after all?
My blog on 30 Questions to Help You Discover Your True North offers several thought-provoking questions to help you find your way. In part five of this six-part series, I’ll discuss the role priorities play in discovering your True North.
The fish rots from the head, and this is undoubtedly the case with FIFA and its leader, Sepp Blatter.
U.S. Attorney General Loretta Lynch’s indictment of 14 senior FIFA officials confirms what we all knew. FIFA is a deeply corrupt organization. Lynch, who collaborated with the police in Switzerland to arrest seven FIFA officials, detailed at least $150 million in corrupt payments over 24 years. At week’s end, Justice Department officials said they were preparing additional indictments.
The only objections came from Russian President Vladimir Putin, whose compatriots worked with representatives of Qatar to lock in the 2018 and 2022 World Cups for their respective countries. Putin seemed genuinely concerned that revealing the corruption that led to this surprise dual selection could jeopardize Russia’s chances for 2018.
That led UK Prime Minister David Cameron to speak out. Having lost the 2018 bid to Russia, Cameron bluntly called for Blatter’s resignation. “We cannot have accusations of corruption at this level and on this scale in this organisation, and pretend that the person currently leading it is the right person to take it forward. Frankly, what we’ve seen is the ugly side of the beautiful game and he should go, and the sooner that happens the better.”
Meanwhile, soccer leaders prepared to re-elect Blatter last week. The FIFA delegates meeting in Switzerland last Friday overrode the objections of the European nations and the United States, and voted overwhelmingly to re-elect the 79-year-old Blatter for a fifth term.
In defending himself, Blatter made the absurd claim that “I cannot monitor everyone all the time.” Really? Some 14 of Blatter’s closest subordinates have been criminally indicted, and he has no responsibility?
No self-respecting public company board would accept this response from its leader. Global CEOs are charged with monitoring the behavior of their subordinates. A key part of the job is to ask probing questions, build awareness of potential reputational risks, and identify issues like this. It’s governance malpractice for a governing board to not immediately relieve the chief exective of his duties in a circumstance such as this – particularly in light of Blatter’s very public and blatant statement abdicating responsibility for the situation. If he’s not responsible, who is?
The FIFA situation raises a difficult issue: How can corrupt global organizations be transformed when those governing them re-elect themselves? In this situation, they also have too much money and limited financial controls.
This week’s events demonstrate that national law enforcement is one avenue for justice. The other way, which would have swifter impact, is for FIFA’s commercial and media sponsors to withdraw their funding. Thus far, several major sponsors, including Coca-Cola, Visa, McDonald’s, Adidas, Budweiser, and Hyundai, have said they are “reviewing the situation.” These high integrity global organizations should immediately suspend their sponsorships until FIFA has new leadership. The same goes for the television sponsors, Fox Sports and Telemundo. Blatter won’t survive for long if they cut off his cash flow.
Is your organization showing signs of moral decay? Do your leaders take responsibility for the integrity of the entire organization?
Leaders are responsible for creating a moral climate in their organizations, and ensuring that its business affairs are carried out with integrity. Of course, there will always be individuals who deviate from company policy, in which case high integrity leaders move swiftly to terminate them and take appropriate follow-up action to prevent repeat incidents.
The vast majority of today’s business leaders do precisely that. The exceptions, such as Blatter, give a poor name to all who view leadership as a higher calling. High integrity leaders must support firm action against those who destroy important enterprises like world soccer.
The sponsors whose funds are being used by corrupt leaders like Blatter and his compatriots should take definitive action now. Instead of “reviewing the situation,” they should collectively suspend their corporate relationships with FIFA. This definitive statement can reshape soccer and restore integrity.
We’ve looked at where you’ve come from and where you are now; it’s time to examine your future. Unlike your past and present, the future is vague and nebulous. Don’t let the unknown intimidate you. Each choice you make now will impact your path to your goals. Instead of worrying about what lies ahead, seize control of it. You are in charge of your own destiny, regardless of your circumstances. Don’t rely on luck to get you where you want to go; hard work trumps good luck every time. Answer these questions to narrow your focus and define your future.
1. What do you want your legacy to be? 10, 20, 50 years from now, what will your name mean?
In the grand scheme of things, we only have a short time on this earth. What are you going to do with it? Don’t just think about your legacy in 50 or 100 years from now. Think about your reputation in 10 years. What is important to you? What do you want to be known as? This isn’t necessarily fame and fortune. What do you want people to say about you when your name comes up in casual conversation? Will they talk about your philanthropic efforts and your generous soul? Your ambition and sharp mind for business? The skills and personality traits you hone now will become your legacy later.
2. Who do you look up to? Who are your mentors, both those you know personally and those who inspire you from afar?
Mentors are essential to success. They act as a sounding board in life and in business. Often, we’re so mired in our own problems or concerns that we can’t see the forest for the trees. A good mentor helps us to take a step back and look at the bigger picture. When it comes to shaping your future, mentors can give you more than a helping hand. Look at the journeys of those who inspire you, even if you’ve never met them. When faced with decisions, where did they succeed? Where did they stumble? Learning from the lessons of those you admire is easier than trying to clear a new path to the same destination.
3. Fast-forward ten or twenty years. What is the one thing that, if you never pursued, you’d always regret?
This is a big picture question. Chances are your answer won’t be something like, “I wish I had taken that position at Google,” or “I wish I had worked more hours.” What is something you’ve always wanted to do? Perhaps you’ve always thought you could write a book. Go for it! You’ll never have to wonder what might have been. Many people have a goal that they want to pursue, but don’t because they are afraid to fail. In the long run, the regret of not trying your hardest to achieve your dreams will haunt you more than if you tried and didn’t succeed.
4. Fill in the blank: My life is a quest for ________. What motivates you? Money? Love? Acceptance?
What is it that you want out of life? Be honest with yourself about what truly makes you feel good. Think of the last time you felt an overwhelming sense of happiness. Were you surrounded by family and friends? Did you just get a raise at work? Maybe you were simply relaxing on the beach and reading a good book. What is the Holy Grail in your life? Don’t be too specific. Think about the general things you’d get out of it, like a sense of security and respect from others.
5. Now that you’ve answered these questions, what is your action plan? What steps will you take today?
You’re creating your tomorrows, today. Each moment in time sets the stage for all the moments following it. You can spend your time wisely, furthering your goals and creating a better future for yourself, or you can squander it. You’ve thought about your future and you have a good idea of where you’d like to be in the next 5, 10, and 20 years. What is the first next step to getting there? And why not take it today?
For more thought-provoking questions, read my blog on 30 Questions to Help You Discover Your True North. The fourth blog in this six-part series will help to identify your strengths and weaknesses.
A map is useless if you don’t know where you’re currently located. The questions in this blog, the second in a six-part series on “30 Questions to Discover Your True North,” are designed to help you determine where you are at this moment. Once you know where you stand, the path to your True North will be much clearer. Answer each question honestly and thoughtfully. Don’t get discouraged, and remember: where you are today is not where you’ll be tomorrow. The question is, are you moving forward or crawling back?
1. If you accomplish one thing by the end of the year, what would make the biggest impact on your happiness?
The year is almost halfway over. What could you do in the next six months that would make you the most happy? This doesn’t have to be work-related; maybe 2015 is the year you finally lose that college weight you put on 20 years ago, or you commit to a significant other. Perhaps there’s a certification you’ve always wanted, or you take the first steps towards going back to school. On New Year’s Day in 2016, what will you look back on and say, “I’m really glad I did that”?
2. What do you love most about your current job? What do you wish you could do more of?
If your answer to the first question is “money,” try harder. Even the worst jobs have aspects you love (or at least like). Maybe it’s a specific task or project you enjoyed working on, or you like your coworkers or the corporate culture. Keep this in mind as you develop your goals and seek your True North. The second half of this question is about the responsibilities and tasks you enjoy the most. Some people really like to network with others. You may long for those days where you tuck yourself away in your office and write code or crunch numbers. Since these tasks are already part of your job description, tell your superior how much you enjoy them, and seek out ways to take a bigger role in those activities.
3. List your core values. Use your company’s mission statement to list its core values. Do they match up?
What are your core values? What do you care about most, both in your personal life and in business? Think about your own personal “mantra” to help you figure out your values. Are you more of an “honesty is the best policy” type of person, or do you believe “the end justifies the means”? Honestly assess your priorities – if prestige, ambition, and opportunity for advancement are important to you, that’s okay. Acknowledge it and seek out a job where you can find those things. You’ll be happier than if you try to pretend you don’t care about them. Whatever your values are, look for a company that is in alignment with your vision.
4. List the five people you interact with most frequently. How is each helping you to reach your goals (or not)?
These five people may not necessarily be those we typically think of as the most important in our lives. Focus on who you interact with, not whose advice you value or who you care about the most. Who do you communicate with frequently? These are the people that will have a serious impact on your frame of mind and attitude. If you consistently have to deal with someone you dislike, that will affect your mood. After you’ve listed these five people, think about how they might be influencing you. Is each a positive force in your life?
5. What in your life is “on hold”?
We all have that goal in life that we’re going to get to… eventually. You think, “Once I do this, then I’ll start working on that goal.” You’d love to write a book, but you’re putting that on hold until you retire. You’d love to run a half marathon, but that’s on hold until you lose weight. There will always be an excuse not to do something. If these goals are important to you, don’t wait until tomorrow; start now! Don’t restrict yourself with imaginary chains. You can do what you love today – you just have to make it a priority.
For more thought-provoking questions, read my blog on 30 Questions to Help You Discover Your True North. In my next blog, I’ll discuss goal-setting for the future.
Everyone makes mistakes, and we all fail at some point. It’s tempting to try to forget these failures, pushing them to the backs of our minds. But the mistakes we make lead us to better choices, and ultimately help us discover our True North. That’s why the past is the first thing I’m going to examine in this six-part series to help you determine what it is you’re looking for at this stage in your life - and the steps you need to take to get there.
While you don’t want to be a prisoner to the mistakes of your past, you do want to carefully examine your experiences for takeaways you can apply to your present and future. With that in mind, consider the following questions:
1. What is your biggest regret? If you could go back and have a ‘redo,’ what would you change?
Be careful with this question. It’s easy to get caught up in the many ways your life would have changed if you had made a different choice. The point of asking yourself this isn’t to follow the domino effect of doing something different, and any rosy fantasy of the future you missed out on is just that – a fantasy. Instead of focusing on ‘what could have been,’ think about why you made the decision that you made. Did you make the best choice at the time? Hindsight is always 20/20, after all, but you may have had to make do with the information at hand at that moment. On the other hand, maybe you made a legitimately bad decision. If so, why? Did you ask for advice from others? Did you get advice, but ignore it? Learn something from the mistake you made and move on.
2. What did you like to do when you were 10 years old? When was the last time you did that activity?
Soccer practice, arts and crafts, the school play…what did you love when you were young? For many people, the complications and time constraints of the day-to-day get in the way, and you gradually give up those things. But if you loved it then, you may find that bringing one of these activities back into your life will reinvigorate you. Your workplace probably isn’t putting on a play, but acting is a lot like public speaking. Join Toastmasters or seek out opportunities to talk in front of a crowd. You’ll get that same rush you used to get from acting – and improve your leadership and communication skills.
3. If yourself from 10 years ago met you today, would he/she be impressed with where you’ve gotten? Why or why not?
Imagine it. You from ten years ago bumps into you today, and you get to talking. What would a ten-year-younger you think of the life you lead? Would she be shocked to learn that you’re still working at the same company – and you haven’t gotten a raise the entire time? Would she be impressed by your time management skills, or horrified because you eat take-out almost every night? And the most important question: Would she have a point? How would you respond to your younger self’s criticisms and compliments? Priorities are dynamic; perhaps the goals you used to have are less important to you now. What do you think (or hope) you’d say if you met yourself in ten years?
4. When was the last time you embarrassed yourself?
The only way to grow as a leader and as a person is to step outside your comfort zone, and that means you’re going to feel embarrassed at some point. Again, you don’t need to throw yourself so far out of your comfort zone that you’re burning with shame. Take small steps. If you normally wouldn’t speak up during a meeting, make a comment or ask a question. If you have the opportunity to meet with a client or go out to lunch with a peer, do it. These baby steps will expand your comfort zone.
5. When was the last time you told a lie? Why? What would have happened if you told the truth?
Whether it’s a little white lie or a major whopper, this answer will reveal something about yourself and your motivations. Perhaps it was a “kind lie” and you wanted to spare someone’s feelings. But if you had told the truth in a kind way instead, what’s the worst that would have happened? Maybe you told your boss you started a project when you hadn’t. It may not hurt anyone (and you did start it right after you told the lie) but it does demonstrate that you need to work on your time management skills. You can’t lead authentically if you’re telling lies or half-truths. Understand the motivation behind any deception, and consider what the consequences would have been had you been honest. People will appreciate the honesty and reciprocate by being clear and open in their communication with you.
For more thought-provoking questions, read my blog on 30 Questions to Help You Discover Your True North. In my next blog, I’ll be looking at questions you can ask yourself to define where you are in the present moment.
From CNBC, Posted May 14, 2015
In the seminal proxy contest of the year, DuPont CEO Ellen Kullman and her board prevailed over an aggressive attack by activist investor Nelson Peltz and his Trian Fund, who nominated himself and three other directors. The re-election of all 12 members of the DuPont board is a significant victory for long-term investors who supported Kullman's transformation of this 212-year-old company, one of America's crown jewels of science and innovation.
In an era of growing focus on near-term gains, the proxy contest raised an important issue: could an activist investor holding less than 3 percent of the company's shares prevail over a highly successful management team overseen by a united and prestigious board?
In recent years, activist investors have been gaining support. Actively-managed funds that are struggling to beat index funds in order to justify their much higher fees have been voting for the activists. Support for the activists from the media and academic circles has been growing as well. In today's shareholder vote, the majority of DuPont shareholders backed continuation of Kullman's leadership and her strategy that is transforming DuPont and creating great results in the market. The wisdom of long-term investors prevailed as they ignored the proxy-advisory services and made their own decisions to vote for the DuPont board and Kullman.
This proxy contest also reflected the shifting focus of activists to challenge highly successful companies like Apple, Amgen, Allergan, PepsiCo, eBay and DuPont, rather than attempting to go after poor performers that lack clear strategies. Perhaps the activists learned the pitfalls of attempting to transform these poor performers from Bill Ackman's enormous losses incurred in trying to run J.C. Penney. On the other hand, they may feel there is little downside to investing in these top performing companies.
Whatever the reason, Kullman's tenacity may cause activists to think twice about starting a proxy contest against well-run companies led by successful CEOs with capable boards. Let's hope so, as these fights are enormously distracting for both the management and the board. In Peltz's case nothing was contributed that wasn't already being done by Kullman in leading the transformation of DuPont.
I support activist investors who work quietly with managements and board to improve struggling companies. Such was the case with Jeff Ubben of ValueAct in encouraging Satya Nadella's replacement of Steve Ballmer as CEO of Microsoft, and Ralph Whitworth of Relational Investors in encouraging Home Depot to replace Bob Nardelli with Frank Blake. As chair of Hewlett-Packard, Whitworth skillfully led Meg Whitman and the H-P board to split the company into a hardware company and a systems/software company. The contributions of these behind-the-scenes activists are already apparent in these companies. But their strategies are vastly different than the very public attacks on successful companies that other investors have waged. Peltz's defeat could be the Waterloo of the latter, as more CEOs may be emboldened not to capitulate to their bullying tactics.
The defeat of Trian's nominees also reflects the waning influence of the proxy advisory services like ISS and Glass Lewis, both of whom supported Peltz and his slate. Today the leading institutional investors have formed committees that carefully weigh the pros and cons of each side's arguments and reach their own conclusions. This is all for the better. Unlike the advisory services who hold no shares in these companies, institutional investors have a large stake in their long-term success, as well as a fiduciary duty to vote their shares in the best interests of the actual owners of the stock. Not being short-term traders, they have to live with the long-term consequences of their decisions.
There is also a growing recognition from institutional investors that all the great value-creating companies of the last 25 years are led by CEOs and boards with long-term visions and strategies. Hence, companies like Berkshire-Hathaway, Wal-Mart, Intel, IBM, FedEx, Microsoft, Genentech, Amgen, Medtronic and Exxon give their owners consistently strong gains, and are now being followed by newer companies like Apple, Google, Starbucks, Amazon, and Facebook. But reaping the rewards requires long-term investments that pay off over decades.
In the end, however, the success of DuPont over Trian comes down to one exceptional and highly authentic leader: Ellen Kullman. A 27-year veteran of DuPont who was raised in Wilmington, she has repeatedly demonstrated the vision and the courage to transform one of America's greatest companies into a highly competitive specialty chemicals firm that can compete effectively on the world stage. In the face of withering attacks and enormous pressure to change course, Kullman did not deviate from her True North. In the end, she deserved to prevail.
The sub-title in Saturday’s New York Times op-ed by Joe Nocera jumped off the page, “Why shareholder value has become a disaster for the country.” Nocera was writing about the seminal proxy fight that will be settled on Wednesday, May 13, at DuPont’s annual meeting.
On one side is the DuPont board of directors, one of the most distinguished of any U.S. corporation, which recommends the re-election of its 12 members. On the other is the activist investor Trian Fund that proposes a new slate of directors, led by Trian CEO Nelson Peltz, to replace four current DuPont directors.
The two strategies for the company could not be more different. The DuPont board proposes to complete the divestiture of its performance chemicals business into a new company, Chemours, and concentrate on its three high growth, high margin businesses: agriculture & nutrition, advanced materials and bio-based industrials, all anchored by DuPont’s famed central research laboratories. Trian and Peltz, on the other hand, have contemplated separating DuPont into three companies and eliminating central research, which spends just $220 million per year (0.7% of sales).
Outside activists play a useful role when they recommend transformation to poor management teams at under-performing companies. At DuPont, CEO Ellen Kullman is an outstanding executive running a high-performing company. Upon her election to CEO in 2009, she immediately began to streamline DuPont and transform it into a competitive chemicals company focusing on its high margin businesses. During her first six years, DuPont’s stock rose 266% compared with 165% for the S&P 500. Kullman has positioned the company for sustainable growth and profitability while the market has recognized the progress. Where is the need for an activist in this equation?
Trian’s proxy attack is perplexing, yet is one of a number that activist investors have launched targeting healthy companies. In his recent forays, Peltz has been successful in taking over H.J. Heinz and splitting apart Kraft. Both efforts led to mediocre results and wound up with both companies being sold to Brazilian private equity fund 3G. Meanwhile activists have also attacked many of America’s greatest companies, including Apple, Amgen, PepsiCo, Dow, Allergan, and Target. This can only make America’s business focus even more short-term – damaging the country’s long-term competitiveness.
Of great concern to me is that these activist pressures will result in significant reductions in long-term corporate performance. The playbook for many of these activists is to cut research, throttle back on new businesses, eliminate thousands of jobs, and leverage the balance sheet. These actions almost always improve the financial numbers in the next reporting period, but they weaken the long-term earning power of the company. Worse, they put the entire enterprise at risk when unpredicted events occur, such as the next economic downturn.
As a professor at Harvard, I have been an outspoken advocate of creating sustainable shareholder value by balancing near-term performance with long-term investments. The right long-term investments drive future growth and profitability. While leading Medtronic, we transformed the company into the leading medical device company and grew the company’s market capitalization from $1.1 billion to $110 billion today.
I have no problem with activist investors that challenge poorly managed companies without viable long-term strategies. Rather, I am a critic of corporate boards and executives and activists who only focus on the short-term stock price. Recently, Larry Fink, CEO of Blackrock (the world’s largest fund manager), wrote all 500 of the S&P 500 CEOs and urged them not to respond to these pressures for financial engineering and to continue to invest for their long-term futures.
Wednesday’s vote will be seminal in determining how aggressive activists will be in taking on major global corporations. Peltz and Trian have run a very effective proxy campaign for their nominees, using the media and working closely with many investors to persuade them to vote for their slate. This effort convinced both proxy advisory services, ISS and Glass-Lewis, to back all or part of its slate. DuPont, led by Kullman, has also worked extremely hard to tell its very positive story. CalPERS and the Canadian Proxy Fund recently endorsed management’s efforts. The vote appears to be extremely close, with half of the shareholder votes still not in.
Peltz has some investors asking, “What’s the harm in electing Peltz to the DuPont board?” A great deal. Peltz’s presence will not only disrupt DuPont’s long-term strategy for sustainable success, it will signal “open season” to activists launching proxy fights. If DuPont gets broken up and its central research labs shut down, it will mark the loss of a national treasure, just as it did the demise of the famed Bell Labs. Beyond that, it will give momentum to the short-term shareholder activists.
The DuPont proxy vote is a part of a battle for the soul of corporate America. The venerable Martin Lipton, quoted in Nocera’s column, has it right: this form of shareholder value is “a disaster for the country.”
From The New York Times, posted May 1, 2015
When Sherry Lansing, the former chairwoman of Paramount Pictures, decided to end a 40-year career in the rough-and-tumble of Hollywood, the question she faced was where to direct all the energy and drive that had propelled her to the top of the industry.
Lounging about in the suburbs of Los Angeles at age 60 was not going to be an option. So instead, she turned her attention to medical research — cancer research in particular, a subject that had taken hold of her years earlier when her mother died of ovarian cancer at age 64.
“For me, it’s something I always had inside of me, something I always wanted to do,” Ms. Lansing said. Acting on that passion, she started the Sherry Lansing Foundation, which funds cancer research, about 10 years ago, and is a member of the California Institute for Regenerative Medicine, which promotes stem cell research.
“They had to explain things to me and I had to learn things,” she said of the medical experts and scientific researchers with whom she began associating. “I felt young. I felt curious. Everything was new because I didn’t know,” she said. “If you keep curious, you keep young.”
Whether closing that next deal or creating that next film, high-powered executives thrive on the next big thing. Without it, some are left searching for meaning or another challenge. To that end, a growing number of Americans are creating a new phase of life, sometimes called a “third chapter.”
Often leading the way are those at the top, who typically have the most options but can also face struggle and rejection as they grapple with trying to find a meaningful role in the later years of life. Many who have achieved considerable success in one field want to reach new heights in another field.
Whether they make money or not, the most driven search out stimulating ways to live life, including new areas of work. If you have a passion for something, they say, figuring out what to do next can be easier. Yet changing the pace of life brings with it adjustments, no matter how extraordinary, or ordinary, that life may be.
“I think the most important thing is to be brave, not to be afraid of failing,” said Stephen J. Friedman, 77, who has been president of Pace University since 2007. Before that, he was dean of the Pace University Law School for three years, senior partner at the law firm Debevoise & Plimpton and a commissioner at the Securities and Exchange Commission.
“I just didn’t think of myself as an education person,” Mr. Friedman said. “I never thought I could become a law school dean.” It was actually a younger lawyer in his firm who had a doctorate in history who suggested that Mr. Friedman talk to Pace about the law school deanship, he said.
Mr. Friedman emphasized that being “comfortable when you are on a learning curve” is at the core of making transitions. You must “have the confidence that you can get to the point reasonably quickly where you know enough,” he said, even if you are missing some of the context. “A lot of people are afraid of that, of being in a situation where they don’t have the full context, and saying the occasional stupid thing.”
Therein lies the satisfaction of beginning anew later in life. “We’re looking for new meaning and purpose,” said Jeri Sedlar, co-author with her husband, Rick Miners, of the book “Don’t Retire, Rewire!” She is also a personal transition guide who ran an executive search firm. “Do your planning in advance so you won’t get blocked out of something.” Ask yourself, if you had infinite time and money, what would you want to do? “Write these things down,” Ms. Sedlar said. “Start to look now.” What does it take to get there?
Those who have had high-level careers can be role models for others who are 60 or 65, as well as for those who are much younger.
Joseph McInerney, who was president and chief executive of the American Hotel & Lodging Association in Washington for 12 years, until September 2013 — after years of private sector leadership roles in the hospitality industry — is developing another chapter. He continues to consult and serves on the advisory board of Attract China, which markets and promotes destinations to Chinese tourists, and other hospitality industry businesses such as the Hotel Inventory, a website for the buying and selling of hotels.
“The day you’re no longer the C.E.O., your life changes — so you have to decide what you want to do to move forward,” Mr. McInerney, 75, said. “The important thing to do is network with all your connections. I started talking to a lot of different people and opportunities arose.”
Mr. McInerney, who also was chief executive of the Pacific Asia Travel Association for four years, based in Bangkok, is leading a training program for the World Bank for the Municipal Development Fund of Georgia in the former Soviet Union. The program’s mission is to train hotel and restaurant workers, tour guides and retail wine clerks in customer service skills. “I enjoy going to work,” he said. “I’m not making a lot of money but I’m having a lot of fun making a difference in people’s lives.”
Many who have had high-powered careers look for opportunities to help others, particularly in guiding the next generation. Sometimes they find advisory roles for themselves in start-up companies, other times they teach at the highest level, write books and serve on the board of major corporations.
Bill George, the retired chief executive of Medtronic, the medical device company, finds nurturing and mentoring the next generation of leaders brings significant meaning to his life. The author of several books, including “Authentic Leadership: Rediscovering the Secrets to Creating Lasting Value,” Mr. George is on the board of the Advanced Leadership Initiative at Harvard, and serves on the board of more than one company.
In his 70s, Mr. George finds satisfaction interacting with people who are “doing challenging work,” and derives “vicarious pleasure in their success,” he said. In addition, “becoming a learner” later in life brings additional satisfaction when you are “no longer carrying the organization’s responsibility.”
John Seffrin, who was C.E.O. of the American Cancer Society for 23 years, has a plan for the next part of his life. In an interview just days before he retired on Friday, Mr. Seffrin, 70, kept returning to the same theme: battling cancer as a major public health problem.
“We can make this cancer’s last century,” he said.
As he leaves his current position, Mr. Seffrin expects to go through a period of change. “It’s a transition,” he said. He already has some teaching opportunities he is considering, having spent two decades in academia earlier in his career at Indiana University. “I might become a consultant, do some teaching,” he said.
As a chief executive, “real work-play balance is not possible,” Mr. Seffrin said. Instead, he said, the answer has been “finding play in your work when you have to work all the time.”
Mr. Seffrin recommends finding, or in his case having, a mission when you retire: “You need to find a way in which you are committed to something other than your ordinary self.” In short, he said, find a role in which you are making a difference in this world, and that’s what he intends to do. He is passionate about battling cancer as a public health problem. One of his grandmothers and his mother died of cancer. His wife is a breast cancer survivor.
Looking ahead, Mr. Seffrin spoke about anticipating becoming a grandfather this month for the first time. In fact, those in high-level careers often spoke of a desire to deepen relationships with family and other loved ones.
“Sixty is young enough for a whole third chapter,” Ms. Lansing said. “I didn’t dislike my job, but I had done what I set out to accomplish. I didn’t have the same passion for it. I wanted a whole new chapter. In terms of my life, too, I wanted a different kind of life, where I could actually be on vacation and stay another day.”
She added: “I used to read scripts during a concert. I loved it at the time. There is a season for everything. You need to be interested and curious until the day that you die.”