It is hard to believe it was only a year ago that General Motors emerged from bankruptcy. How much difference a year has made! GM is now solidly profitable, growing its revenues once again, and retooling its lineup of automobiles. It is on the verge of a public offering that will enable the U.S. government to recoup the investment from its “bailout.”
GM’s fall into bankruptcy was more like a steady decline over fifty years, as its U.S. market share tumbled from 53 percent to a meager 19 percent. In spite of their loyalty to “Buy American,” many GM customers turned to higher quality, better designed vehicles made by GM’s Japanese and European competitors. Most younger buyers never began buying GM cars. A steady stream finance-trained executives – from Roger and Jack Smith to Rick Wagoner – focused on short-term actions to maintain some semblance of quarterly earnings while denying that GM’s autos were no longer competitive.
Every time union negotiations came around, these CEOs gave away the store to the UAW in order to avoid a strike, while the long-term obligations for health care, pensions, paying laid off workers, and work rule inflexibility just kept piling up. The GM board of directors was just as complacent as the management, and kept appointing finance executives without ever addressing the company’s long-term strategic issues.
When the end came in early 2009, President Obama had the courage to finance the company to bring it out of bankruptcy. Even more importantly, he appointed a highly successful board chair in Ed Whitacre, who became CEO four months later. Whitacre gained his reputation as the nation’s most successful telecommunications executive, as the chair and CEO of SBC who saved ATT from its demise. While Republicans moaned that the government was running the company, Whitacre told me that the Obama administration gave him and the new GM board complete freedom to run the company.
Ed Whitacre’s remarkable leadership had monumental impact in rapidly turning around this lumbering giant. His one-year tenure marked a dramatic shift in the old way of doing business at General Motors, as the days of redundant bureaucracy and disjointed innovation quickly ceased. Whitacre abandoned GM’s moribund committee system that protected executives from being held accountable for results, and made clear, decisive decisions while challenging his troops to move fast – much faster.
Whitacre even put himself on the line by appearing in GM advertisements, heralding the new GM and challenging customers to give GM cars a try while offering them their money back if they weren’t satisfied. He got a break earlier this year when arch-rival Toyota ran into quality problems, but he moved quickly to take advantage of the opportunity, ramping up production rates and sales and marketing efforts. GM still has a long way to go to catch up with Ford, whose highly successful CEO Alan Mulally started retooling Ford’s product lineup four years ago, but GM’s trajectory is solid.
Since turning over the CEO reins to successor Dan Akerson, Whitacre has received some undeserved criticism for stepping down after just one year. But this has been his intention ever since he took on the CEO title. He noted, “It was my plan all along…to help return this company to greatness and I didn’t want to stay a day beyond that.” He is a man of his word, and he delivered on every promise and commitment he made.
On August 13-14, 2010 Yongey Mingur Rinpoche and I co-led a two-day retreat in Minneapolis on the subject of “Mindful Leadership.” Over 400 people participated actively in the retreat. To our knowledge, this is the first time that a Buddhist Rinpoche and a leadership professor have joined forces to explore this subject and see how Eastern teaching can inform our Western thinking about leadership, and vice versa. Rinpoche led several guided meditations over the course of the two days, but this was strictly a secular event, not a Buddhist teaching.
The Mindful Leadership retreat enabled us to explore such complex subjects as the impact of mindfulness on leadership, new neurological research on the impact of meditation on the brain, understanding and framing your crucibles, the role of emotional intelligence and self-awareness in leadership effectiveness, gaining self-compassion, shared awareness through small group support, leading others mindfully, and self-actualization to contribute to a better world.
None of these subjects was easy, nor did we reach definitive conclusions. Our dialogue took the issues to a deeper level that engaged the participants and enabled each of us to gain a deeper understanding of ourselves.
Gaining awareness of oneself – our motivations, our destructive emotions, our crucibles, and our failings – is essential to being an effective leader. Based on my research into leaders, I have found the greatest cause of leadership failures is the lack of emotional intelligence and self-awareness on the part of leaders. I cannot name a single high-level leader who failed due to lack of IQ, but am aware of hundreds of leaders that have been unsuccessful due to their lack of emotional intelligence (EQ). The destruction of organizations caused by their shortcomings is staggering.
Mindfulness – the awareness of one’s mental processes and one’s mind works – offers leaders a path to address these issues in a non-judgmental, non-threatening way. Meditation is the secular process that enables us to develop mindfulness and to approach challenging issues in a calm, thoughtful manner.
Even more exciting are the research indications that meditation can enable us to reshape our brain (much more so that we can do for the IQ). One leading researcher at the seminar explained that measurable impacts have been found even after as short a period as eight weeks of meditating. Of course, people need to have consistent practices in order to sustain and strengthen the impact.
As Rinpoche said, we spend a great deal of time and effort in developing our bodies; shouldn’t we do the same for our minds? Just as we need sound habits for keeping our bodies in shape, we need regular practices to be mindful.
After working with Rinpoche and the Dalai Lama during the course of the past year, I have reached a preliminary conclusion that gaining mindfulness through meditation may be the most effective way to gain self-awareness and to develop self-compassion. Another important aspect is through group support that provides honest feedback, compassionate support, and deeper understanding of oneself. Having practiced meditation and having been part of a support group for thirty-five years, I have personally experienced the highly beneficial impact that they have had on my leadership effectiveness.
Having observed hundreds of leaders under pressure, I have no doubt that self-awareness and self-compassion are the essential aspects of effective leaders, especially when they are under stress and pressure. Leaders who develop and maintain these qualities are better able to lead others mindfully and to empower people to perform at a very high level. With a shared sense of purpose and common values, organizations can then take on very challenging goals and overcome great difficulties and achieve outstanding results on a sustainable basis.
Let’s look at some of the specifics of these two days and what can be learned from them:
Reflections on Day 1
The first day of sessions focused on developing self-awareness through leadership and though meditation. A key part of the Summit was devoted to learning from Rinpoche how to become mindful through meditation. After I outlined the plan for the summit, Rinpoche shared the story of how he first started meditating at nine years old. Suffering from panic attacks, Rinpoche turned to meditation as a method for facing his panic and calming his anxiety rather than letting them dominate his mind and his life.
Rinpoche noted that everyone has love and compassion within themselves, yet the hardest person we have to lead is ourselves. Through meditation we can become mindful in our leadership, especially when we are facing extreme challenges. He taught the group many different types of meditation: open awareness, breath, sound, object, and emotion.
Here are some of Rinpoche’s takeaways on meditation:
Mindfulness is like space, it is always there. But the monkey mind, the restless, confused part of our mind that is filled with random thoughts, often takes over our thinking. Give the monkey mind a job by focusing its restlessness to find greater clarity. Problems come to the surface during meditation, which is natural. The key is to use these problems, rather than surrendering to them.
Rinpoche suggested that we need to challenge our minds to bring those things that we don’t like about ourselves into our meditation. By owning them, they don’t own us.
Don’t force the mind to focus on one specific thing, but become mindful through awareness of our body and our surroundings.
Self-Awareness and Leadership
In the following session, I challenged the group to think about how they can gain self-awareness through understanding their life stories and their crucibles that will enable them to discover their authentic leadership and develop their emotional intelligence.
I also recommended Professor Paul Lawrence’s new book, Driven to Lead, which discusses how the mind can be remodeled for leadership. Lawrence has rediscovered Darwin’s theories that are not about the survival of the fittest, but development of the mind’s leadership qualities that can enable more effective decision-making. Developing a clear mind enables leaders to integrate the drivers of their minds – security, material acquisition, bonding with others, and the search for meaning – into an effective whole.
In the 21st century, leaders need to empower other people to lead rather controlling them through a hierarchy. Leader must learn to empower those around them to feel that they are a part of something special and to take on leadership challenges. Leadership no longer means getting people to follow us but rather about serving those around us.
Becoming a leader is not a straight line process; rather, it is a series of ups and downs. In those down periods it is your values, or your True North, that will enable you to successfully navigate the crisis.
Destructive Emotions
We closed the first day with a joint session on destructive emotions. Rinpoche and I encouraged the group to face their fears and those things that were dragging them down. We need to recognize that the things we don’t like about ourselves – our negative qualities – are just as much a part of us as are our positive qualities. I shared part of a David Whyte CD where he read his poem, “One Day the Hero Sits Down,” as a way of illustrating the importance of recognizing those things about ourselves that we suppressed long ago.
Reflections on Day 2
Day one of the Summit prepared us for the work on self-compassion that came on day two. Rinpoche opened with a remarkably effective meditation on compassion. It was composed of four successive parts: compassion for someone you care about; compassion for yourself (which is much more difficult than compassion for others); compassion for those you don’t know; and, most difficult of all, compassion for someone you don’t like or respect.
In my following session, I examined how to gain self-awareness, how to develop compassion for yourself, and the role of shared awareness through group support. We also talked about how support groups work, noting there are five keys to a successful support group: 1) openness, 2) trust, 3) confidentiality, 4) honest feedback, and 5) candor. The group then divided into six-person groups to practice the technique.
I have shared some slides from my discussion on developing a support group. I encourage you to think through how you can develop a group among your peers that you can turn to in times of crisis.
Leading Others Mindfully and Self-Actualization: Toward a Better World
In the final afternoon, Rinpoche and I had two dialogues on “leading others mindfully” and “how self-actualization can lead to a better world.” The mindful leadership dialogue focused on how to empower others, and how to give them honest feedback and compassion through effective leadership. In the final dialogue we talked about how we can create greater compassion for the world around us and that through compassion gain greater wisdom.
I was moved by the turnout this past weekend, not just the numbers but the depth to which people actively engaged in these complex topics and dealt with them on a personal level, not strictly an intellectual plane. For all of them, our hope is that this seminar will result in an acceleration of their journeys to authentic leadership.
The Mark Hurd situation can only be considered a tragedy for everyone involved.
Hurd is one of the most outstanding leaders in the U.S. In 2005 he took over an ailing technology giant and restored it to greatness in just five years. He refocused HP on its original mission and values and built the company around its strengths – technology, customer service, and managerial discipline. He built a much stronger organization with excellent leadership at all levels, and unified a dysfunctional board of directors.
During a short span, he turned HP into the world’s largest technology company and expanded its revenues to $125 billion and nearly $9 billion in profits. The markets rewarded his leadership, and HP’s market capitalization has doubled during a period in which the S&P declined in absolute terms. He leaves behind a company that is demonstrably stronger than it was when he took over.
So what happened here? Did the HP board act “in a cowardly manner,” as Oracle CEO Larry Ellison charged in his letter to the New York Times?
No, the HP board acted in a unified manner to address an extremely difficult situation. Most likely, the board was blindsided when it received the letter from Jodie Fisher charging Hurd with sexual harassment. The board did the responsible thing in conducting a thorough investigation that concluded there was no basis for the sexual harassment charges, but that Hurd had violated basic HP employee policies regarding expense reporting and other issues.
Should the board treat Hurd differently from other HP employees that had committed similar indiscretions? Its answer was “no,” that the values and principles of the company had to take precedence over any individual, no matter how well he had performed or how valuable he was to the company. So the board’s unanimous decision was that Hurd had to resign. Reports out of the company indicate that HP’s global employee base was overwhelmingly in support of the board’s decision.
As much as the HP board doesn’t want to go through yet another CEO search, at least this time around it has excellent candidates both within and outside the company. Hurd has built a strong executive team with several excellent successor candidates. If the board chooses to go outside, it will have outstanding applicants lining up to be considered for the top job in Silicon Valley.
The question remains, how did an exceptional leader like Hurd let himself get into this position? We’ll never know how Hurd let himself get into this position, nor is it ours to judge. But his greater error was to dig the hole deeper. This is a classic case of Murphy’s Law of Compound Loss; i.e., when something goes wrong, individuals often compound their problems by trying to cover up the initial problem. For example, President Richard Nixon’s cover-up of the Watergate break-in is what compounded his problems and led to his resignation.
Hurd could have acknowledged his liaison in the first place and wound up with only a reprimand. Instead, he compounded his problem by submitting inappropriate expense accounts. Then, when the HP board initiated its investigation – which it was compelled to do by Fisher’s letter – Hurd made an agreement with her that kept her from cooperating with the board’s investigation. In business, we call this “hush money.” In criminal law the proper term is obstruction of justice. After his resignation was announced, Hurd allowed his close friend, Larry Ellison, to defend him by attacking the HP board.
In spite of his recent actions, I continue to believe Mark Hurd is an authentic leader who lost sight of his True North. No matter how authentic they are, all leaders make mistakes. When this happens, the key is to recognize that you alone are responsible. By having the self-awareness to see how you strayed off course, or by accepting honest feedback from people who know you well and care about you, you can acknowledge your problems and return to the course of your True North.
Hurd is as human as we all are. He’s facing the music for a personal failure, but this is far from his last chapter. Mark Hurd is only 53 years old. He has nearly half his life ahead of him. If he acknowledges where he went wrong, he can come back to lead other organizations and continue to make a positive difference in the world through his leadership.
Originally posted on the New York Times DealBook Blog on Monday, August 9, 2010
You don’t have to be an economist to recognize America’s economy is in trouble.
Ten years ago, America’s economy was booming. American business was the envy of the world. Stock prices were soaring. Dozens of new companies were created every day. Private sector investments were at an all-time peak. Most importantly, the federal government had generated budget surpluses for three consecutive years.
What happened?
Two successive administrations and the Federal Reserve shifted the focus from investment to stimulating consumer spending with low interest rates, easy money, high leverage, low personal tax rates and increased government spending. The result? The federal deficit will hit $1.4 trillion this year, with cumulative debt reaching $18 trillion by 2015. That’s $60,000 for every American.
Since early 2009, economists have promised economic growth of 3 to 4 percent, saying that job growth — “a lagging indicator” — will surely follow. Eighteen months later, things have not improved. Estimates of growth in the gross domestic product continue to decline, as do durable goods orders. Twenty-six million Americans (16 percent of the work force) cannot find full-time jobs. After its 2009 rebound, stock prices are declining, reflecting growing pessimism.
While the fundamentals are awry for the United States, leading American companies are doing well. Second-quarter corporate earnings consistently exceeded expectations, as companies reported solid productivity gains. Corporate coffers have $1.8 trillion in cash. Yet companies are not investing — at least, not in America.
In talking with dozens of chief executives, I hear pragmatic managers focused on building their businesses and earning fair returns for shareholders, yet extremely concerned about government policy. Here are the real reasons they are not investing in America:
They expect no real domestic growth for the foreseeable future. In contrast, they foresee emerging markets sustaining double-digit growth. As a chief executive at a large consumer products company told me: “Half our revenues already come from Asia; within 10 years it will be 70 percent. Naturally, we are shifting more operations there.”
To compete with local companies, global companies are investing overseas in factories and sales and marketing personnel. Foreign governments like China and Singapore make investments very attractive. One chief executive noted that he chose China for his $62 million factory because local subsidies reduced his investment to only $13 million.
Companies are also moving infrastructure support from the United States to lower-cost areas in Asia. Unable to obtain visas for its Indian employees, a major computer software company moved most of its software operations to India, where well-educated employees enjoy higher standards of living at one-quarter of the cost.
Without domestic growth, there is no need for additional employees. Instead, companies are achieving productivity gains by running lean. Mounting costs of doing business and increased benefit costs have created so much uncertainty that chief executives are reluctant to hire, especially small business owners.
Chief executives feel they have access in Washington, but limited influence. Without any business people in the Obama administration, there are no advocates for sound business policies. A successful commercial banker described how open the president appeared to his concerns, yet the next day — without any consultation — the administration announced a new $50 billion bank tax.
Ask yourself: if you were faced with these conditions, would you be investing in America and hiring more people? Unless the climate in Washington changes dramatically, this no-growth, no-jobs environment will continue indefinitely.
How can the administration reverse this economic malaise?
To get the country growing and Americans back to work, the government must shift course to invest in America. Tax policies and incentives should stimulate private sector companies to invest domestically in research, innovation, manufacturing, infrastructure and exports.
Here are six specific ways to accomplish this shift:
Double the investment tax credit for new tangible assets to encourage investment.
Double tax credits for increases in research and development to stimulate research and innovation.
Introduce a graduated capital gains tax based on length of time assets are held, with rates declining to zero after 10 years.
Offer a capital gains tax holiday the first time companies are sold to encourage investment in start-ups.
Grant special loans and job credits for small businesses, where 70 percent of jobs are created.
Offer export tax credits for the next two years to reinvigorate export growth and rebalance trade.
This set of pro-investment, pro-growth policies would supercharge American investment, rekindle innovation, create millions of sustainable jobs and restore continued economic growth. This would result in increasing tax receipts that would pay back these tax credits many times over.
Most important of all, this would make America competitive once again, focusing on our strengths of entrepreneurship, innovation and creativity.
Posted Aug 8, 2010 by Bill George |
| Filed in: Leadership
Originally Published in the Star-Tribune on August 7, 2010
It is in fashion these days to vilify leaders, from Tony Hayward of BP to Wall Street bankers. When a problem arises, we look for the villain who caused it. Then we search for the perfect leader to guide us out of the wilderness, only to find they have feet of clay.
It's time to recognize that leaders are just as imperfect as the rest of us. Instead we need authentic leaders -- people who own their mistakes and acknowledge their faults. More importantly, we need leaders who always put the interests of their organizations ahead of their self-interests.
Young leaders need role models whose actions provide guidance for their leadership. My role model is Minnesota's Winston Wallin. Now in his mid-80s, Win is former chairman and CEO of Medtronic and my ex-boss.
He's had three distinguished careers -- at Pillsbury, Medtronic and the University of Minnesota. As a board member, Win made major contributions to the success of such important Minnesota corporations as Cargill and Norwest Bank (now Wells Fargo). But his greatest legacy may be the Wallin Education Scholars, a program that's enabling thousands of high school students to attend Minnesota's colleges.
Recently Win and I had a thoughtful discussion in his gazebo. He still combines keen insights and laser-sharp focus on what's most important along with a wicked, self-deprecating sense of humor. No matter how tough things seem to be, Win can lighten up any group with a clever line. As we talked, Win shared his wisdom and perspective about the challenges we faced together at Medtronic, and even more passion for the Wallin Educational Scholars. His commitment to help people is stronger than ever.
After graduating from University of Minnesota, Win joined Pillsbury, where he spent 37 years, rising to president and chief operating officer. The Pillsbury board made a grievous error in not choosing him to succeed Bill Spoor as CEO, one for which the corporation paid dearly. When Spoor's successor failed, Pillsbury fell prey to a hostile takeover by Britain's Grand Metropolitan PLC. After years of malaise under Grand Met and its successor Diageo, Pillsbury was acquired by Minnesota-based General Mills.
Beyond pacemakers
Pillsbury's loss was Medtronic's gain. Win accepted the board's request to become chairman and CEO in 1985. Medtronic was floundering, due in part to a mishandled quality problem. But it didn't take Win long to recognize that Medtronic's entire future was at risk: Medtronic was blocked from entering the nascent implantable defibrillator market by a pioneering patent held by archrival Eli Lilly.
Ironically, Michel Mirowski, inventor of the defibrillator, had worked for Medtronic until the company unceremoniously dismissed him and told him to take his patent with him. Lilly purchased exclusive rights to his design and patent.
Win saw something few others realized: Not only was Medtronic blocked from this essential market but its mainstream pacemaker business was vulnerable. Win's first act was to charge Medtronic pacemaker chief Bobby Griffin with launching a massive R&D effort to get Medtronic into the defibrillator business. In typical Wallin style, he told Griffin, "Spend whatever it takes."
Soon Lilly sued Medtronic to halt its defibrillator research, and a Philadelphia judge ordered the company to "cease and desist" all efforts. At this point most executives would back off. Not Win Wallin.
Undeterred, he shifted the defibrillator project to Medtronic's Dutch research center, beyond the purview of U.S. courts. He then hired former Pillsbury general counsel Ron Lund and told him to get the court's decision overturned at any cost. In 1990, Medtronic won a 6-3 decision from the U.S. Supreme Court.
Win also recognized that the company was too reliant on pacemakers, in part due to several failed attempts at diversification. So he hired Dr. Glen Nelson as vice chairman in 1986, and together they began to diversify Medtronic's business.
Two years later, Win contacted me while I was at Honeywell about joining the company as president and chief operating officer. Initially, I declined because I was immersed in turning around Honeywell's space and aviation business. After we got that business back on track, I called Win. Joining Medtronic in 1989 was the best move of my career.
My first week on the job, Win told me, "Bill, don't worry about the numbers for six months. Get out and learn the business from the top doctors." That sent me on a quest to work with some of the world's finest physicians by gowning up and watching them implant everything from pacemakers to defibrillators and stents.
Win retired from Medtronic in 1991, but he certainly didn't retire from life. In addition to chairing Medtronic's board, he joined five corporate boards where he provided invaluable advice.
Wallin also answered U of M President Nils Hasselmo's request to help the U turn around its struggling health sciences area. At the time the medical school was being challenged by the FDA for selling unapproved transplant drugs. Win dove into his new job and helped get the academic medical center back on track.
In the early 1990s he and his wife, Maxine, formed the Wallin Foundation, setting aside a significant proportion of their gains from Medtronic stock. Together they started a scholarship program at South High School in Minneapolis for talented students from low-income families. Eventually the program was converted to a private operating foundation now known as Wallin Education Partners. More than 3,000 students have benefitted from $26 million in scholarships.
Aspiring young leaders look to high-profile success stories like Apple's Steve Jobs and Facebook creator Mark Zuckerberg. For a model of sustainable success impacting the lives of millions of people, they would do well to look to Win Wallin. They won't find a more authentic leader anywhere.
