Discussing management issues in the auto sector with Suzy Welch, "Winning" co-author; Paul Argenti, Dartmouth professor; Jeff Sonnenfeld, Yale School of Management; and Bill George, Harvard Business School.
The original video was posted on 06/02/16 on CNBC.com.
The Forum was thrilled to have Bill George as our closing speaker on Day 3. Former Chairman and CEO of Medtronic, Senior Fellow at the Harvard Business School, and author of Discover Your True North, Bill discusses finding your own True North – the internal compass that sets one on a path toward their fullest potential as a leader. Today’s global business community calls for leaders who will change the world for the better and inspire others around them to do the same.
This content was originally posted to stthomas.edu on 05/19/16.
I asked a few leaders about their concept of leadership. Typical answers are: it’s a position, role, job, or responsibility. One rare response I heard is that “leadership is acting.” You fill in a leadership position and you’re expected to act in a certain acceptable manner. To be effective as a President, you’ve got to look and sound Presidential.
Duterte and Trump
Their detractors may not like it, but Rodrigo Duterte and Donald Trump are presumptive winners in their separate quests for leadership posts in opposite parts of the world. Their similarity doesn’t end there.
Both leaders don’t exactly fit the conservative mold of traditional leaders. They make quick, binding statements that they later reverse or “clarify.” A little more finesse in their deportment or language can improve their image, but they didn’t seem to bother about them during the campaign. Their followers saw a brighter future with them at the helm. WYSIWYG. What you see is what you get.
From the time of the Greek philosophers, to the time of Shakespeare, and until Bill George wrote his book in 2003, people have been amazed at how authenticity became a revered trait of great leaders. In Shakespeare’s Hamlet, Polonius said, “To thy own self be true.”
You’ve heard of different types and styles of leadership – benevolent, fierce, autocratic, tough-minded, failure-tolerant, participative, or servant leadership. Starting in early 2000s, authentic leadership became part of the vocabulary of modern management art and science.
From a practical sense, if you were the follower, you wouldn’t be comfortable with a leader who wears different masks. During office hours, your boss is a non-nonsense stickler to the rules, flagellating employees to produce the last ounce of productivity. At five o’clock, he transforms before your eyes to an inveterate gambler, womanizer and drunkard. Before the clock strikes 12, he’s a henpecked husband bringing midnight snacks for the wife and kids.
The term authentic leadership has had many meanings and slants, but many gurusagree that authentic leaders:
Are self-aware and genuine. They’re aware of their own strengths, limitations, and emotions. They’re not afraid to show their real self to their constituencies. They act consistently, whether in public or alone with their close friends. They don’t hide their mistakes, nor are they afraid that they will look weak because of past mistakes.
Are mission-driven and results-oriented. They’re able to subordinate their personal interests to the bigger goals the organization. They are passionate with what they do, and will follow through completion the results they seek to achieve, not for their own glory, power, money or ego, but for the genuine good of the organization and its constituents.
Lead with their heart. They use both the heart and mind. They’re not afraid to show emotions. Like all humans, they have their own vulnerability. They could cry when showing empathy to others. This doesn’t mean they’re “soft.” They just know how to connect with the people they lead.
Focus on the long term. In Bill George’s model, authentic leaders are focused on the long-term. They nurture organizations and people over the long term, and spend time and effort to ensure continuity of leadership and organizations. They despise short-termism that can show current benefits and prefer large dividends for the people and the organization over extended periods.
In his book, Bill George deplored the way some CEOs were running large organizations. He wrote, “… integrity, stewardship and sound governance are deeper issues that must be addressed by leaders themselves.” To build enduring organizations, George believes that leaders of the highest integrity must have the “courage to build their companies to meet the needs of all their stakeholders, and recognize the importance of their service to society.”
Authentic leaders have a genuine desire to serve others, empower the people they lead to make a difference, and are “guided by passion and compassion as they are by their logical minds.” George thinks that an authentic leader must develop his or her own leadership style “consistent with his or her personality and character. The authenticity of the leader is more important than the style with which the leader leads. To be authentic means to accept one’s faults and shortcomings, as well as to use one’s strengths in bringing the organization and the people to a better future.”
Simply put, authenticity is being genuine, not pretending to be someone else. However, it doesn’t mean, “This is me. I am bad, and I shall always be bad. I am your leader, and you have to follow or else …”
On the other hand, it means, “I may not be perfect, but because I care for you and our group, I will improve myself where I am weak. I will use my strengths to get us to where we all want to be. I will not pretend to be what I am not. Let’s help each other achieve our shared vision of a better future.”
Henna Inam said, “Authentic leadership is the full expression of ME for the benefit of WE.”
(Ernie is the 2013 Executive Director and 1999 President of the People Management Association of the Philippines (PMAP); Chair of the AMCHAM Human Capital Committee; and Co-Chair of ECOP’s TWG on Labor and Social Policy Issues. He is President and CEO of EC Business Solutions and Career Center. Contact him at firstname.lastname@example.org)
In health care, there are no shortcuts and no quick paths to market.
Health care companies face challenging times as they adapt to the Affordable Care Act (ACA) while still delivering for customers and shareholders. Most companies have navigated these fast-changing times well. But three bad actors – former Turing CEO Martin Shkreli, former Valeant CEO Michael Pearson, and Theranos’ Elizabeth Holmes – threaten to drag down the legitimate companies.
The Price Gouger
Pharma’s bad boy Shkreli became the poster child for abusing patients through price gouging by hiking the price of Daraprim, a 62-year-old HIV/AIDS drug, from $13.50 to $750 per pill. Then he had the audacity to flaunt it by saying, “I wish I had raised prices more.” Merck CEO Ken Frazier called Shkreli “a hedge fund guy masquerading as a pharmaceutical executive.”
Shkreli incurred the wrath of the general public. Even presidential candidates rebuked him. His actions had broad implications because they threatened the already unsteady alliance between big pharmaceutical companies and the Obama Administration. These pharmaceutical companies had agreed to pay $70 billion to support ACA in exchange for a legal restriction on the U.S. government in negotiating drug prices.
The “Quick Fix” CEO
Valeant’s Pearson also raised prices 500-800% on older drugs, but his flawed approach went much further. He claimed his company did not need to do research on new drugs because it could simply buy older drugs and take over companies like Salix and Bausch & Lomb. His business model called for limiting drug development expenses to 3% of revenues and paying only 3% in taxes through a series of clever tax schemes. Big investors like Sequoia, Pershing Square, and Value Act talked up the stock as Valeant’s market capitalization rose to $91 billion. And several other mid-sized pharmaceutical companies copied Valeant’s approach.
Those with a long-term view called out Valeant’s short-term game. Presidential candidate Hillary Clinton ran ads attacking the company. Warren Buffett told CNBC, “You wouldn’t want your son to grow up like Mike Pearson.” Buffett’s partner, Charlie Munger, called Valeant a “sewer.” The game ran out when a short-seller exposed Valeant’s distribution through specialty pharmacies that forced enormous price increases. In the past six months, Valeant investors have lost $81 billion, dragging down the activist funds that propelled the company’s growth.
Theranos’ Holmes claimed her company could render obsolete the one billion blood draws done in the U.S. with a simple prick of the finger – an exciting prospect that caused investors to value her private company at $9.1 billion. Her board of directors included several former U.S. senators and former presidential cabinet members, but few with experience in medical technology.
With her story and her glamour, Holmes became the darling of the media and Silicon Valley moguls. Theranos went directly to the consumer market by cutting big deals with Walgreens and Safeway, but Holmes never produced any test data to validate the claims, citing confidentiality concerns. The media passively accepted her lack of transparency.
Then the Wall Street Journalpublished an expose calling into question the effectiveness of the company’s testing methods and scrutinizing its resistance to share test results to back up its claims. WSJ published this piece in spite of heavy pressure from Theranos’ legal team, which was led by high-profile lawyer David Boies. Since the WSJ article was published, the company has imploded. Now the U.S. government has launched a criminal investigation to determine whether Holmes intentionally misled her investors. Thus far, Holmes has yet to produce validated test results proving Theranos’ claims.
A Hippocratic Oath for Health Care Companies
While these three companies and their leaders will be mere footnotes in business history, they cause great harm to legitimate companies trying to help patients. Their missteps confirm the importance of putting patients first, rigorous testing, FDA oversight, transparency, and pricing products to support patient access, regardless of their income bracket.
When scandals occur, they have a negative impact on companies that are doing things right. The subsequent public outcry tends to harm the committed, experienced companies, as politicians paint all health care companies with the same brush. This leads to delays in the FDA approval process for the most scientifically minded companies, denying patients products they need. It also creates public pressure for price controls.
Theranos, Valeant, and Turing took multiple shortcuts, and they won handsome short-term rewards for their behavior. But others who jumped on board have now lost billions. Neither Shkreli, Pearson, nor Holmes had any health care experience before taking over their companies: Shkreli worked at hedge funds, Pearson was a McKinsey consultant, and Holmes was a 19-year-old freshman at Stanford. Facebook’s Mark Zuckerberg’s motto of “move fast and break things” may be valid for social media, but it doesn’t work for heart surgery, drug development, or medical devices.
The first rule of the Hippocratic Oath all doctors take is, “First, do no harm.” Why did Theranos, Valeant, and Turing assume so much risk? They focused on the short-term at the expense of their companies, their patients, and the health care industry. These companies proved what others have known all along: when you’re dealing with human health, shortcuts backfire.
Worst of all, these three companies fostered the impression that health care companies try to take advantage of an unsuspecting public. As a result, legitimate medical entrepreneurs now have trouble finding the funding required to do rigorous clinical trials in leading academic medical centers—something that Theranos refused to do.
For capitalism to work in the medical field, companies must be able to make the long-term investments required for breakthrough bio-pharmaceuticals and medical therapies. There are no shortcuts and no quick paths to market, but the long-term payoff can be enormous.
Investors with a fiduciary responsibility to their clients should carefully evaluate the leaders of companies they are investing in to ascertain their medical expertise and soundness. Entrepreneurs, who are essential to foster medical breakthroughs, need to learn the lessons from these bad actors and avoid taking shortcuts when human lives are at stake. We need to be patient with healthcare timelines, so we can enjoy the tremendous benefits that legitimate companies can offer.
Bill George is Senior Fellow at Harvard Business School, former Chairman & CEO of Medtronic, and author of Discover Your True North.
This article was originally published by Fortune.com on 5/10/16
After the WSJ reported regulators are considering banning Theranos founder Elizabeth Holmes from owning or running any labs for at least two years, Jeffrey Sonnenfeld, Yale School Management; Bill George, Harvard Business School; and Les Funtleyder, ESquared portfolio manager, discuss Theranos.