Blog > Category: Business
From The Huffington Post, posted July 27, 2015
From the moment you wake up, you're bombarded with distractions. Emails clog your inbox, requests pile up, and notifications flicker in the background. Within moments your attention is scattered. Given the realities of today's 24/7 world, how do great leaders slow down and focus in order to make thoughtful decisions?
Mindfulness is the practice of self-observation without judgment with a focus on our minds and inner voices. Mindful practices include daily meditation, prayer, journaling, or jogging alone. In a fast paced world, mindfulness enables you to clear your mind of clutter, focus on what is important, and be creative. Leaders like Arianna Huffington and Steve Jobs are well known for their mindfulness practices.
As our lives have become filled with technology, the distractions we face increase exponentially. With it, our ability to focus has diminished, but our need to think clearly in order to make complex decisions has not. More than ever, leaders need to train themselves to be fully present.
Becoming a mindful leader isn't easy. There are no five easy steps to do so. A few years ago when I asked the Dalai Lama how we can develop a new generation of compassionate, mindful leaders, he replied simply, "Develop a daily habit of introspection."
Today many more companies are promoting mindful practices to improve the health and decision-making of their leaders. Google, under the tutelage of Chade-Meng Tan, trains 2,000 engineers in meditation each year. When I visited Google this spring, it was evident that mindfulness is one of the key reasons behind Google's innovative and harmonious culture. Leading financial services firms like Blackrock and Goldman Sachs offer mindfulness courses for their employees. At General Mills Janice Marturano was so successful in mindfulness training that she founded the Institute for Mindful Leadership.
My Mindful Practice: Meditation
In 1975 my wife Penny and I went to a weekend program on Transcendental Meditation. At the time I was working nonstop, coming home exhausted, and having late dinners. I even got denied for life insurance because of high blood pressure. After the training, I started meditating twice daily--not as a spiritual practice, but for health reasons. Forty years later, I still practice regularly.
Meditation is the best thing I have ever done to calm myself and separate from the 24/7, connected world. By centering into myself, I can focus my attention on the important things, develop an inner sense of well-being, and gain clarity in making decisions. My most creative ideas come from meditating, and meditation has built resilience to deal with difficult times. No doubt it has helped me become a better leader.
The Science of Mindfulness
Mind training, of which meditation is one form, can change the composition of your mind. Research by Wisconsin's Richard Davidson demonstrated direct correlation between mindfulness and changes in the brain - away from anger and anxiety and toward a sense of calm and well-being. UCLA's Mindful Awareness Research Center found meditation can improve executive functions (sustaining attention, diminishing distractibility) better than medication in many cases.
Daniel Goleman, the father of emotional intelligence, describes the effect of mindfulness for focusing the mind's cognitive abilities. As Goleman says in his new book, Focus, "One way to boost our will power and focus is to manage our distractions instead of letting them manage us."
The Growing Importance of Mindfulness
Increasingly, companies see mindfulness training as a competitive advantage. Aetna, the nation's third largest health insurer, partnered with Duke University to study meditation and yoga. Researchers found these practices decreased stress levels by 28%, improved sleep quality (20%), reduced pain (19%), and improved productivity 62 minutes per employee per week. Aetna is now offering similar programs to all employees as well as its insured customers.
The World Health Organization estimates that stress costs American businesses roughly $300 billion dollars per year. Over the past thirty years, we've experienced an 18-23% increase of self-reported stress for men and women, respectively. As companies such as Google, General Mills, Blackstone, and Goldman Sachs have shown, mindfulness training decreases stress levels.
The key to effective leadership is the ability to integrate your head (IQ) with your heart (EQ). As Buddhist monk Thich Nhat Hanh taught me years ago, "The longest journey you will ever take is the eighteen inches from your head to your heart." Our hearts are where essential leadership qualities like passion, compassion and courage reside. By practicing mindfulness, mindful leaders exhibit high levels of self-awareness and intentionality in their actions.
The best time to start a mindful practice is now, but don't take the word "practice" lightly. Maintaining the discipline of your practice isn't easy. To become a mindful leader, you need to make this a daily introspective act. As you do so, you'll worry less about day-to-day problems and focus on what is most important. As you become more mindful, you will be a more effective, successful and fulfilled leader.
That's worth twenty minutes a day, isn't it?
Bill George is a senior fellow at Harvard Business School and author of Discover Your True North. He is the former chair and CEO of Medtronic. Read more at www.BillGeorge.org, or follow him on Twitter @Bill_George.
Afterword: If you are interested in engaging more deeply in mindful leadership, please join Penny and me at the Mindful Leadership Conference in Washington, DC on November 6-8, 2015: http://www.mindfulleader.org/#home
From CNBC, posted July 22, 2015
Never accuse Starbucks CEO Howard Schultz of being afraid to take on tough issues.
His latest effort is aimed at the issue of youth unemployment, which is stuck at 12 percent for people 16 to 24 years of age. This age category includes many young people who dropped out of school and have never been regularly employed. In many cases, they do not have the skills or training required for today's jobs, even with four million current jobs going unfilled. None of this fazed Schultz, as he organized Opportunity 100,000 to create 100,000 jobs for unemployed youth.
This time, however, he isn't taking on such a complex issue alone. In his recent announcement, Schultz said he had commitments from 16 companies that include some of America's largest employers: Wal-Mart, Target, Microsoft, Macy's, CVS Health and Hilton.
Schultz is hearkening back to the days of his youth growing up in Brooklyn's Bayview housing projects. There he witnessed many people, including his father, who were left out of the American dream. Determined to change this, Schultz put together funds to acquire the original Starbucks from its founders in 1987.
He created Starbucks "to build a company my father would be proud to work at," adding, "My inspiration comes from seeing my father broken from the 30 terrible blue-collar jobs he had over his life, where an uneducated person just did not have a shot." Later Schultz provided health-care coverage for all Starbuck's employees, including part-timers. "I wanted to build the kind of company my father never had a chance to work for, where you would be valued and respected, no matter where you came from, the color of your skin, or your level of education, and a company that linked shareholder value to the cultural values we create with our people." Today, Schultz has built a thriving enterprise that employs 191,000 people in 22,000 stores, as Starbucks has created $83 billion in value for its investors, including employees who get "bean stock."
Schultz's vision goes far beyond providing first-level jobs to youth. He is equally committed to helping them develop the skills needed to take on higher level, better paying positions. To this end, he has teamed with Arizona State University to establish online training programs for his employees. He and his wife are contributing $30 million toward local job training and mentorship programs. Next month Schultz is kicking off Opportunity 100,000 with a jobs fair in Chicago.
While Schultz's initiative will impact only a fraction of the 5.6 million young people who are neither working nor studying, it is a worthy effort to attack one of America's most persistent problems. The larger issue is the capacity of the American economy to generate sufficient jobs that pay Americans a living wage, not just the current minimum wage.
America needs to embark on a massive revamping of our training and education systems to prepare our young people for the jobs of the future. Such a program should start in high school and offer students a choice of a college track or a vocational track, much like the German system. This includes apprenticeship programs, such as those created by North Carolina's Central Piedmont Community College, which has over 20,000 students, with the support of the Germany's Siemens. If we can train people for skilled jobs in computer graphics and programming, skilled trades like electricians and carpenters, or running complex machines, companies can and should pay them much more for their efforts. In doing so, they can fill many of the four million vacant jobs companies report having.
That's the only viable way to attack the pervasive income inequality challenges we face. The goal must be to make the pie larger, rather than legislating what share everyone gets of a fixed pie. In turn, America will become more competitive in global markets, and all our citizens will be able to realize the American dream, just as Howard Schultz has done.
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.
Disclosure: Bill George does not own any of shares of Starbucks or Siemens, nor does he have any other business relationships with the company.
From The Huffington Post, posted July 20, 2015
Donald Trump wants to become president. He's running a campaign based on vanity and ego, not authentic leadership, with some prejudice tossed in. You will have to look far and wide to find a public figure who is less authentic than Trump. Last Saturday he reached a new low when he attacked Senator John McCain's war record, saying, "He's not a war hero because he was captured." While McCain was held captive in the "Hanoi Hilton," Trump avoided the war through deferments.
Trump is the perfect illustration of why "you can't fake it to make it" to become a leader. Running for the nation's highest office without ever holding an elected position, he is trying to act like a leader without developing himself as an authentic human being. People immediately sense who is authentic and who is not, and Trump doesn't pass the sniff test.
Nevertheless, according to Fox News, Trump leads the Republican primary polls. This may say more about dissatisfaction of the electorate than Trump's qualifications to be president. Without question, a Trump presidency would severely damage our nation. "The Donald" has driven organizations into bankruptcy, made racist slurs, and denied climate change. As a result, a dozen companies recently severed ties with him.
As a wannabe leader, Trump tries to comb over more than his hair. In the past, he has advocated government health care, an assault weapons ban, and 14.25 percent flat tax on all wealthy Americans. Now he opposes all three. Does he stand for anything, other than promoting Donald Trump?
In 2012 Trump told Newsmax the GOP wouldn't win election if it was perceived as "mean-spirited to Latinos." Contrast that with his recent presidential announcement, "When Mexico sends its people, they're bringing drugs, they're bringing crime, they're rapists." With that, he stirs up racial prejudice and divides our country.
Trump's phoniness stands in sharp contrast to Starbucks CEO Howard Schultz. This past Monday, Schultz announced that Starbucks, in partnership with 16 other companies, will hire 100,000 minority youth workers by 2018. In addition, Schultz is putting his money where his mouth is. He and his wife Sheri donated $30 million from their family foundation to fund local job training. Through these initiatives, Schultz is hearkening back to the challenges of his youth by making a commitment to help young people get started. As Schultz said "It's very personal for me, having grown up in public housing and understanding what it was like to be that poor kid."
At Harvard Business School, we have spent the past 10 years in helping develop authentic leaders among MBAs and executive participants. As I describe in my forthcoming book, Discover Your True North, the mark of an authentic leader is being a servant leader who focuses on others. To become authentic leaders, all of us have to make the transition from "I to We" -- recognizing that leadership is not about us, but empowering the people we serve.
Howard Schultz made that transition, which Trump never did. At Starbucks, he's focused on improving the lives of employees, becoming the first retail chain to offer health care to all employees, including part-timers. Over the past five years, Starbucks has committed to hiring 10,000 veterans, providing in-job training, and paying for employees' online college education through Arizona State University. Schultz has also been an advocate for same sex marriage, gun control, and improved federal health care. In the absence of federal government action, he believes the business community must take the lead in addressing the jobs crisis.
Schultz isn't perfect, but he acknowledges his mistakes and moves on. For example, his "Race Together" campaign this past spring received an avalanche of criticism. In this case he moved too far, too fast to address a highly charged subject, but does anyone doubt that we need to have honest discussions about racial issues?
On the other hand, Trump has only moved from "I" to "I am running for president." Where Schultz has focused Starbucks on serving others, Trump has focused his companies on promoting himself. Over the past 30 years, Trump developed multiple products with his name: Trump Towers, Trump Vodka, and my favorite, Donald Trump The Fragrance. In his television show, "The Apprentice," Trump's favorite phrase was "You're Fired," spoken with all the compassion of a cruel despot.
In the past, Trump's self-serving style of leadership was all-too-common. In that era many leaders focused on extrinsic metrics of success: money, power, and fame. Today's authentic leaders recognize that to be effective leaders they must serve others. They know that empowering others to lead, rather than exerting power over them, is the only way their organizations can be successful.
Donald Trump's rise in the polls legitimizes a broken style of leadership. For young leaders, Trump provides the wrong type of model - a self-focused egomaniac. For authentic leaders, Trump insults the humble service they give to their organizations. For the rest of us, Trump represents a well-crafted persona who cannot be trusted.
As our increasingly diverse nation honors the enormous contributions of newly immigrated Americans, it is a sad commentary that Trump's racist statements about Mexicans have taken him to the top of the Republican polls.
Does something smell rotten in this presidential election? It must be Donald Trump The Fragrance.
Insightful article from Emily Peck for Huffington Post in which I'm honored to be quoted, posted July 20, 2015:
After spending decades as Wall Street darlings, arrogant business leaders are out of fashion. The new hotness for CEOs these days? Displaying humility, self-awareness and honesty.
In this new world, a good leader doesn’t brag about his "TEN BILLION DOLLARS," as Donald Trump's campaign did last week. A good leader doesn’t rank his workers and fire the bottom 10 percent each year, as revered General Electric CEO Jack Welch did back in the day. The new CEOs project humility. They apologize when they screw up. They admit when they don’t know something, and they empathize with their workers and treat them decently.
“You have to be real and authentic. It requires having strong character,” the former CEO of Medtronic, Bill George, told The Huffington Post. “The Donald Trumps of the world, they make it in politics, not business.”
Since declaring his intention to seek the Republican nomination for president last month, Trump has been out on the campaign trail, touting his leadership skills and experience. But for the most part, the business world has actually moved past his autocratic style. The shift has happened gradually over the past few years, in part because the financial crisis bred a deep mistrust for overly confident leaders and in part because social media has made it much easier to call out a boss for arrogance or wrongdoing.
“The world has become more transparent, and the bar is being raised for who the leader is, not just what they know how to do,” said Fred Kiel, a former chief executive who now runs a consulting firm focused on leadership.
Highly regarded CEOs are nearly six times as likely as poorly regarded CEOs to be considered humble, according to a survey of 1,700 executives across the globe (minus CEOs) released in March by Weber Shandwick, a public relations firm. Weber Shandwick also found more than 50 articles that mentioned “CEO humility” in 2014 -- about twice the average number for each year going back a decade or so.
Humility in this case shouldn’t be confused with shyness, said Leslie Gaines-Ross, a public relations strategist at Weber Shandwick who advises executives on how to enhance their reputations. Rather, it’s about being more thoughtful and introspective. “It used to be that there were many more celebrity CEOs,” she said. “Now, most are more intent on building a good place to work than being stars.”
Consider the first line of Satya Nadella’s email to employees on his first day as CEO of Microsoft: “Today is a very humbling day for me.”
Nadella, a longtime Microsoft worker, has rapidly changed the culture at the company since becoming chief executive last year. He's fostered more teamwork and collaboration among employees who were once pitted against each other through a Hobbesian performance review structure. He’s forged partnerships with companies once considered bitter rivals.
He’s also quick to acknowledge when he’s made a mistake -- as he did last year after telling women to have faith in the system to give them the “right raise.”
Microsoft’s stock is up 8 percent since Nadella started.
Apple CEO Tim Cook also embodies the new leadership style. Cook’s been outspoken in his support for gay rights, first coming out as gay in an October 2014 essay for Bloomberg Businessweek, then becoming a high-profile advocate for the LGBT community. He even chastised his home state of Alabama over its treatment of poor people and minorities.
“Here’s a guy who seems to stand up for what he thinks is right,” said Kiel. “He’s also open to admitting mistakes.”
Cook’s 2012 apology for a botched rollout of mapping software stood in sharp contrast to the non-apology offered by his predecessor, Steve Jobs, over an iPhone glitch in 2010.
Under Cook, Apple’s financials have soared.
CEOs who display character run companies that perform better financially, according to Kiel’s research -- an exhaustive seven-year study of 84 CEOs across multiple industries.
Kiel defined character using four moral principles: integrity, responsibility, forgiveness and compassion. He also came up with a list of 25 behaviors and attributes that embody these principles, like “telling the truth,” “forgiveness” and “owning up to your mistakes.”
He and his team asked CEOs to assess themselves on these traits, and asked their employees how they would rank their CEOs on the same metrics. They discovered that the CEOs who were graded as having the strongest character brought in five times more for the bottom line than the low-character CEOs.
The CEOs at the bottom, said Kiel, tended to see the world as a dangerous place where people would take advantage of you. They didn’t always tell the truth. They placed their own financial security over the well-being of their company and their employees. Their workers didn’t trust them.
The arrogant CEO started losing favor during the early 2000s with the downfall of self-interested scoundrels like Tyco’s Dennis Kozlowski, of $6,000-shower curtain fame, and Enron’s Jeff Skilling and Ken Lay, both convicted of fraud and conspiracy.
The nail in the coffin was, of course, the financial crisis of 2008, when Americans lost patience for executive bravado and arrogance.
“The recession changed everything, and we are just coming out of that on a global basis,” said Gaines-Ross.
Another reason for the change has to do with the way chief executives are hired these days, said George, the former Medtronic CEO, who is a fellow at Harvard Business School and who writes frequently about what he calls authentic leadership. About 85 percent of chief executives are hired from within their company, he said, and "boards don’t easily get fooled by internal candidates."
George was careful to note that arrogant CEOs aren’t yet extinct. “Wall Street is a little behind,” he said. “There’s so much ego there. Big ego.”
It’s worth noting that the shift in leadership style has coincided with the rise and influence of women in the business world. “Women do tend to be more down-to-earth and genuine,” said George. “But I don’t think this is a gender thing.” There are women who embody the old style, too, he said. (They seem to be pretty rare, though, considering less than 5 percent of Fortune 500 CEOs are women.)
What's really turned the tide in favor of positive human traits in the corner office is social media. Like other public figures, CEOs can’t escape the ubiquity of Twitter, Facebook, iPhone videos and the rest. If they make a misstep, the world will know. Their employees will know. They will demand answers and apologies. Chip Wilson, co-founder of Lululemon, was vilified on Twitter and Facebook in 2013 after he said that some women didn’t belong in the company’s yoga pants. He ended up leaving the company.
The arrogant superstar CEO was probably best embodied by GE’s Welch, a hard-charging “celebrity CEO” who famously fired the company's bottom 10 percent of performers every year. The strategy, which was replicated elsewhere, didn’t exactly win the hearts and minds of his employees. Welch’s GE was “where the weak went to the wall and only the strong survived,” as one columnist wrote at Forbes earlier this year.
“It is really hard to find a celebrity CEO these days,” said Gaines-Ross. “Trump is one of the very few.”
When HuffPost asked whether Trump -- whose campaign did not respond to a request for comment for this article -- was doing well reputationally, Gaines-Ross laughed.
“No," she said.
From Huffington Post, posted July 6, 2015
"True North is your orienting point that helps you stay on track as a leader. It is derived from your most deeply held beliefs, your values, and the principles you lead by." -- Introduction to Discover Your True North
Today, I am launching this new weekly column, "True North Leaders," in conjunction with The Huffington Post. Each Monday, it will feature leadership insights and the stories of authentic leaders making important differences in the world. We will also take on current leadership challenges and analyze why leaders fail. Most important, the ideas in this column will help you discover your True North, so you can lead authentically throughout your life.
First, a little personal background about why I believe it's so important to develop more True North Leaders. After 33 years in the business world, the last thirteen at Medtronic, I set out on a journey to discover my next steps. As part of my search, I spent 18 months in Switzerland teaching business and technical leaders at two leading Swiss institutions before joining the faculty of Harvard Business School.
It is no secret that there has been a crisis in the business world the past twelve years. While I was in Switzerland, the first corporate crisis -- stimulated by the scandals at Enron, WorldCom and other companies -- ripped the business world asunder. When Congress passed Sarbanes-Oxley to reform corporate governance in 2003, more than 200 companies announced "accounting adjustments," some as much as $3 billion. Five years later, the financial crisis hit, triggered by the failure of Lehman Brothers, AIG, Citigroup, Fannie Mae and many leading banks.
These crises were not caused by the lack of governance procedures or subprime mortgages, but rather by failed leaders.
What caused leaders to fail?
In the 1990s many corporations chose the wrong people as CEO. Under pressure from Wall Street to maximize short-term earnings, boards of directors frequently selected leaders for their charisma rather than their character. These leaders put their companies at risk by focusing on the spoils of leadership instead of building organizations for the long-term.
These stock market pressures boomeranged in the fall of 2008 when many financial institutions became insolvent, forcing the U.S. government to intervene to save the system from complete collapse. The Great Recession that followed depleted the savings of millions of Americans and U.S. unemployment rose above 10 percent.
As a result, trust in business leaders fell to its lowest level in 50 years. In business, trust is the coin of the realm. The success of any organization depends upon customers' trust in its products, employees' trust in their leaders, and investors' trust in those who steward their funds. Seven years later, public trust in business leaders is still low.
The positive side of these crises is the high quality of leaders who have emerged. From these debacles today's leaders learned what not to do. They saw many of their predecessors get caught in the trap of chasing money, fame and power, and learned the perils of putting self-interest ahead of the institutions they served.
True North Leaders are the antidote to this crisis -- people who can lead us through the myriad problems we face. While many of the leaders we feature have accomplished remarkable things, these columns aren't about their successes, but rather the incredible challenges they overcame in becoming leaders. Through in-depth studies of 170 leaders, we learned their successes are the result of what they learned about themselves through their life stories, their crucibles and their journey to discover their True North.
These new leaders are bringing about a fundamental transformation in leadership. No longer is leadership about being charismatic, emulating others, or acting like a leader without going through rigorous self-reflection. These leaders learned that being authentic is the most effective and sustainable way to lead.
The hierarchical leadership style of the 20th century is fading fast in favor of today's empowering and collaborative leaders. In today's organizations people want to make meaningful contributions to the world through their work. They seek opportunities to lead now, not to wait their turn as so many did in my generation. They yearn to see their leaders not as figureheads, but as real people, authentically struggling with challenges just as they do.
This is not to say that these new leaders are perfect. Far from it. All leaders have weaknesses and are subject to human frailties and mistakes. Yet by acknowledging their shortcomings, their humanity comes through, and they are able to connect with people and inspire them.
As we examine these leaders, we hope to challenge you to learn more about yourself and your leadership, and to discover your True North. The bottom line is this: You can discover your True North right now.
- You do not have to be born with certain traits and characteristics
- You do not need a title or have to be at the top of your organization
- You can step up and lead at any point in your life.
There are no magic answers here -- no seven easy steps. People recognize immediately who is authentic and who is not, so you cannot "fake it until you make it." Instead, by being authentic and continuing to develop yourself, you can become a True North leader.
I look forward to going with you on this journey.
Bill George is senior fellow at Harvard Business School and former chair & CEO of Medtronic. He is the author of four best-selling books, including True North. His new book, Discover Your True North, will be available in late August, 2015.
From Fast Company, posted April 17, 2015
On a broad scale, how do we create altruistic organizations that can really transform society and transform economic systems? This is the field I’ve been studying since I left the corporate world eight years ago, and I’m convinced that the key to this is compassionate, authentic leadership. We need a new generation of leaders to step forward and provide this new kind of leadership.
My basic premise is that compassionate, authentic leadership is essential. It’s not just that it’s good to have—it’s necessary for a healthy society. I’m disappointed in my generation of leaders; I believed that they failed in their responsibility. As a result of the failures of leadership in the last decade, there’s been a loss of confidence in our leaders, and a loss of trust. Each of us who takes a leadership role has a responsibility to the people we serve. If we put ourselves ahead of the public, we have failed in our responsibilities and we can cause great harm.
At my former company Medtronic, which makes medical products, our mission and our meaning was to restore people to full life and health. The way we measured ourselves was not by earnings per share but by how many people we helped. My greatest source of pride is that in the time I was there, we went from 300,000 people per year to 10 million people per year who were being restored to fuller, more active lives through our work. We always tried to convey this meaning to the people in the company, because that’s what inspired them, not the stock price, not the earnings.
THE CHANGING ROLE OF LEADERS
The role of the leader in this century is different than in centuries past. It’s to bring people together around this sense of meaning, purpose, and values. It is a very difficult task, particularly in organizations that span the globe, to gain that kind of alignment where people believe in the purpose of the organization and practice its values.
The second role of the leader is not to exert power over other people. Many scholars have written about leadership as power. This idea of power suggests a zero-sum game: if I give you power, I have less. But I reject this idea. I think leadership is about empowering people to lead. If we can empower other people to step up and lead, then we have much stronger organizations, and we can all contribute to the best of our abilities.
Let me give you an example of a woman whom I met at Medtronic many years ago. She was making heart valves. If a human heart valve failed, they could actually take a valve from the pig and use it to replace the failed human heart valve. This woman was the top worker in the plant. When I asked her about her work, she looked at me with passion in her eyes and said, "My job is to make heart valves the save people’s lives. I make one thousand heart valves a year. If one valve is defective, someone will die, and I could never live with the idea that I caused the death of another person." But she also said, "You know, when I go home at night, what I’m thinking about is that there are five thousand people in the world today who are alive and healthy because of the products I made."
This woman is an empowered leader. She doesn’t have a formal leadership role, and she isn’t a supervisor, but everyone looks to her for inspiration. This is the kind of empowered leadership we need to spread more broadly.
—William George is a professor of management practice at Harvard Business School, where he teaches leadership development and ethics. He is the former chairman and CEO of Medtronic. Under his leadership, the company’s market capitalization grew from $1.1 billion to $60 billion, averaging a 35% increase each year.
This has been a very good week for America – a week in which the rights and dignity of all people have been upheld.
In just a week, what progress we have made! Recall:
- The Supreme Court upheld the legal right of all people to marriage, overcoming centuries of discrimination against same sex couples.
- The Court also affirmed the Affordable Care Act that offers health care to most Americans – ensuring the millions now covered by health insurance will continue to receive coverage.
- Republican leaders in the Senate and House worked with President Obama to give the president the ability to ratify free trade agreements, including the Trans-Pacific Partnership.
- The President spoke for all Americans as he preached on grace, then captured a unifying moment in Charleston and across the country as he sang “Amazing Grace” at Emanuel AME church.
- Americans banded together to ask that the Confederate flag be taken down – 150 years after the end of the Civil War.
- The Gates Foundation announced it will invest $2 billion in breakthrough renewable energy projects.
For socially progressive, fiscally conservative people like myself, these are signs of genuine progress that our country is getting back on the right track, attempting to heal some of our historic wounds and bring the country together, so we can focus on growth and opportunities for all Americans to live healthy and prosperous lives.
In each case, leaders made the difference by acting with courage and listening to their conscience. Kudos to:
- Justice Anthony Kennedy who wrote the majority opinion on marriage equality.
- Chief Justice John Roberts who wrote the majority opinion upholding the Affordable Care Act.
- Speaker John Boehner, Leader Mitch McConnell, and President Obama for uniting forces against the Democrats and labor unions to bring the benefits of free trade to all Americans.
- South Carolina Governor Nikki Haley, four living former South Carolina governors, and the South Carolina congressional delegation who unified to urge the Confederate flag be removed from the South Carolina statehouse.
- Bill Gates for his focused philanthropy and for encouraging others to join him and Warren Buffett in The Giving Pledge to give away 50% or more of their net worth.
It is pioneering leaders like these and many others who are making the difference in our country, in large ways and small.
Finally, on a personal note, at a gathering in Minneapolis, Hillary Clinton praised the George Family Foundation for the work of its Catalyst Initiative to address “toxic stress” in underprivileged communities through mind-body approaches to health. My wife Penny George’s visionary leadership in integrative health is enabling people to achieve health in mind, body, and spirit. Penny continues to inspire and amaze me.
Target's CEO, Brian Cornell, is no stranger to difficult decisions.
In 1981, Cornell stood in his UCLA dorm room, struggling with the biggest choice of his life. He could attend his college graduation, or he could fly to London to chase the girl who had "absolutely stolen his heart."
Thirty-four years later, Cornell faced another difficult decision. While dining with CVS CEO Larry Merlo, he and Merlo hatched a plan to sell Target's pharmacies and its in-store clinics to CVS.
In both cases, he made the decision to choose the important over the immediate.
The partnership with CVS represents yet another opportunity for Target to build its business. The transaction frees up resources for growth priorities — wellness and healthy foods, e-commerce, and new store formats like Target Express, small stores near college campuses and in urban areas. The move will also bring more guests to Target stores as CVS owns Caremark, a pharmacy benefits manager with over 70 million users.
Since taking the helm just ten months ago, Cornell has moved quickly to enable Target to regain its mojo, which had steadily slipped away in the past five years. He did so by making hard choices and refocusing the company on its roots that gave it the cache to be known among guests as Tar-Jay.
When Cornell took over, Target was not in good shape. Since 2007, the percent of Americans who say they've visited a Target store in the past four weeks has dropped by 30 percent, according to Kantar Retail. Its thrust into food was achieving mixed results; its long overdue e-commerce initiative was cumbersome to use; and its expansion into Canada was failing, as that division had lost $2 billion since opening in 2011. Then in December, 2013, the Target data breach burst into the open, affecting up to 70 million of its credit-card users.
Facing these difficult challenges, Cornell wasted no time in putting them behind him. After spending his first month touring stores, he announced that Target would focus on four key categories: fashion, kids, babies and wellness. Recognizing that Target's headquarters staff had become bloated, he slashed 2,300 positions. And he ventured into London to recruit Tesco's Mike McNamara as CIO, giving him a broad portfolio that includes Target's digital platform, information security, and its omnichannel strategy.
Cornell's toughest decision came last January. After visiting several of Target's Canadian stores, he announced the liquidation of the Canadian division, closing all 133 stores. I realized what courage he had not to throw good money after bad, and to reinvest south of the border. He described the decision as "the toughest of my career."
Hard decisions like these characterize great leaders. They build upon their company's roots and its strengths, and don't try to do it all. As my Harvard Business School colleague Michael Porter teaches, "Strategy is all about choices and deciding what not to do." That's precisely what Cornell has done at Target.
Freeing up investment dollars is enabling him to sharpen merchandising in focus categories, expand Target's presence in urban areas with TargetExpress, and invest $1 billion in Target's digital platform.
These moves are also enhancing Target's same-store sales and profitability. Since Cornell took over last August, Target stock is up 40 percent, while rival Wal-Mart has declined 4 percent. As Target's first CEO to come from outside ranks, Cornell is reaching out to the local community, vowing to continue Target's policy of giving 5 percent of its pre-tax income to philanthropic causes.
For Cornell, "It's all about people." Upon arriving at Target, he moved from the 26th floor CEO corner suite to a smaller office down the hall. He then moved the majority of the executive team to the 26th floor to make communication easier.
Brian Cornell has hit nothing but bull's-eyes in the past year.
And the girl he chased in 1981? He and Martha have been married for twenty-five years.
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.
Disclosure: Bill George does not own any of shares of Target or any other companies mentioned here, nor does have any other business relationships with them.
By Maureen Milford, The News Journal, May 14, 2015:
To du Pont family member Tatiana Copeland, the DuPont Co.'s chief executive, Ellen Kullman, emerged Wednesday as "the hero of America."
"She's the female John Wayne," Copeland said of Kullman after the company's annual meeting, where DuPont beat back activist investor Nelson Peltz and his Trian Fund Management in its bid to get four seats on the company's board.
"She didn't flinch."
Copeland is not alone in her opinion. Following DuPont's victory Wednesday, some investors, academics and businesspeople said the struggle went far beyond DuPont. Now, Kullman and the board have set a standard for companies facing future proxy wars, they said.
"Everyone was watching it. This was a seminal test," said Bill George, former chief executive of Medtronic and a director of Exxon Mobil and Goldman Sachs. "It's a much bigger battle between advocates of short-term returns and believers in the long-term value creation for employees, customers, community and shareholders."
The way George sees it, the DuPont win over Trian was an example of a corporate CEO and board not being intimidated when an activist investor tried to push its way into board seats. Now, a "playbook" has been created for other corporate leaders to follow, he said.
"I think people will think twice before anyone runs a proxy contest against a capable CEO doing the right things with a clear strategy and a strong board," he said.
Jeffrey Sonnenfeld, senior associate dean for leadership studies at Yale School of Management, said Kullman showed other corporate leaders how to "take on an activist."
"She never stooped to the mud-throwing. There were no personal invectives. She took the high road and said, 'Here's the truth. Here's the facts,' " Sonnenfeld said.
To Sonnenfeld, the DuPont victory has done three things in corporate America: It will fortify the courage of corporate leaders who have strong performance records; it will embolden boards and CEOs to hold their ground and not capitulate when unfairly under attack by activist investors; and it will discourage activist investors and proxy rating firms from "using reckless bravado."
"Activists still have a role to play. They should focus on the facts and not ad hominem attacks," he said.
Lawrence Hamermesh, professor of corporate and business law at Widener Delaware Law School, said it's possible to overestimate the impact of the DuPont proxy contest as a model for corporate America. Peltz is a serious investor who has made a large investment and is not a quick in-and-out activist, Hamermesh said.
"DuPont's win depended on the fact that [Kullman] and her team have already done a lot of things to show they're responsive to investor concerns," Hamermesh said. "You don't get CalPERS [California Public Employees Retirement System] to support you by ignoring investor interests."
George said he believes this battle was about more than money to Kullman.
"She's not doing this for herself," George said. "She bleeds DuPont red."
Brien Jamison, Kullman's brother, agreed. He said his sister put her "heart and soul" into the battle.
"I think it drained her emotionally," Jamison said.
Former DuPont Chief Executive Edgar S. Woolard Jr., the former Apple Computer Inc. board chairman credited with helping to bring Steve Jobs back to that company, called the proxy victory "a great job done by the DuPont team."
"I always knew they would win," he said.
Copeland, whose father-in-law was the last du Pont family member to head the company and once was the largest single stockholder, said shareholders issued a clear vote of confidence for Kullman and should help her move forward with the company's initiatives. Copeland said she and her husband, Gerret, continue to own "a lot" of DuPont stock but declined to say the amount.
Many experts believe individual investors like the Copelands helped push Kullman and DuPont to victory. Following the announcement detailing the results of the voting, the roughly 400 shareholders in attendance at DuPont's new corporate headquarters at Chestnut Run stood and applauded long and loud.
"That's when I saw Ellen crack a little smile," Copeland said.
In a press conference following the annual meeting, Kullman behaved as if it was just another working day and appeared to take the win against Peltz in stride. She emphasized that employees "during this period have been phenomenal, focusing on the business, focusing on our customers, on innovation, continuing to make progress out in the marketplace."
"I'm very proud of my board. They are a board that continues to raise the bar. They are a board that continues to engage with management and yet this took it to another level in terms of telling our story with shareholders, as well," she said.
She acknowledged that individual – or so-called retail – investors "normally don't vote as often as they should." Retail investors represent about a third of the company, she said.
"But apparently we got their attention this time, and they were very active in that. I think that's unusual for a company to have a large retail section so I do think they were helpful because normally they're supportive of management," she said.
Kullman's first cousin, Sharon Baker, whose mother owns DuPont stock and whose late father worked for the company, said she emailed Kullman Wednesday morning with a "Go get 'em."
To Baker, the vote is "a huge victory and for all the right reasons."
"It's wonderful to know that bullies don't always get their way," Baker said.
Kullman, 59, grew up in suburban Wilmington and attended the private Tower Hill School. Members of her large, extended family had business dealings with DuPont since the 19th century.
Jim Horty, vice president of Commonwealth Trust Co., whose family has been friends with Kullman's family for generations, said the DuPont win "is good for Delaware, good for the employees, good for the retirees, good for the stockholders and good for the community."
"I think there are a lot of CEOs that think it's about time someone took these activist investors on – and she took 'em on big time," Horty said.
Shareholder Nelson Fernandez of Allentown, Pennsylvania, who did not work for DuPont, was all smiles after the vote.
"We're not a fan of what we see Nelson Peltz do," Fernandez said.
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.