Blog > Category: Leadership
Originally Posted on Washington Post's On Leadership Blog
Q: Pope Benedict XVI's efforts to deal with the Church's sex scandal raises this question: Can a leader hold managers to account on an issue where his own past performance is in question?
Pope Benedict XVI is facing the greatest crisis of his long career. It's not just his leadership of the Vatican that is on the line, but the reputation of the entire Roman Catholic Church. If the Pope fails to face the reality that problems of pedophilia by priests have brought on the church, many Catholics may lose faith that their church leaders practice the same high moral standards that they preach. This situation is ironic for a Pope whose hallmark has been enforcing moral and sexual standards for one billion of the faithful. Does he have any choice but to require his priests to do the same?
Why is it so hard for the Vatican and especially this Pope to face reality? Is it denial? A cover-up? A double standard? Or simply a desire to protect its own leaders?
First of all, doing so means acknowledging that the church in not dealing as harshly with sexual deviants as civil law and basic morality would require. To suggest that these problems are limited to very few priests or a distant problem corrected long ago only accentuates public denial of the depth of these problems and widespread knowledge of them throughout the church hierarchy.
While addressing a crisis of this magnitude is painful, it must start with the Pope admitting mistakes the Vatican has made, including his own. Next, the Pope needs to deal as aggressively with past defenders as would be expected in a court of law. Then, he needs to install a compliance system that will prevent future occurrences and ensure the early identification of offenders. Finally, Pope Benedict XVI needs to make the Vatican itself much more transparent in order to prevent covering up problems in the future.
These steps, which are similar to what would be expected in government, public corporations, or other religious denominations, are required to protect children who believe in their church. Their protection is far more important than preventing wayward priests from being held to high moral standards.
The politicians chatter Sunday night during the historic House vote on access to health insurance gave the impression that reform was done. Speaker Pelosi called it an extension of the Declaration of Independence, declaring, “health care is a right,” not a responsibility. Republican Boehner all but claimed it marked the end of free enterprise.
Wrong on all counts.
Passing this bill is a momentous step in granting health case insurance to 32 million Americans who lack access, something we can finally take pride in. But it certainly doesn’t end the urgent need for health care reform. Rather, this is the end of the beginning. Now the hard work must begin in earnest.
The bill addresses only one of four essential elements of health care. Left unaddressed are cost, quality and lifestyles. Unless we focus on all four, we will continue to have a dysfunctional system with unaffordable costs.
The bill does virtually nothing to constrain health care costs. It is “paid for” with tax increases that take effect this year and projected cuts in Medicare reimbursement, while delaying most benefits until 2014. If we don’t get health care costs under control before then, the CBO projected deficit reductions will turn into a trillion dollar increase the following decade.
Even the current round of Medicare cuts – over 20% for many physicians and hospitals – is unsustainable, as politicians plan to reverse them retroactively. If they don’t, many physicians and hospitals will refuse to take Medicare patients, just as the Baby Boomers enter the Medicare system. Last month Mayo Clinic in Scottsdale announced it could not afford to accept Medicare patients. Longer term, this could push the U.S. toward the British system of splitting into private and public systems.
Nor does this bill constrain insurance premiums. Wellpoint’s 38 percent rate hikes in California are going into effect, in spite of jawboning by HHS Secretary Kathryn Sebelius. Expect other insurers to follow. Can you think of any other product or service that could pull off price increases of this magnitude?
To bring health care costs under control and sustain access for all Americans, three things are urgently needed:
- Realigning incentives for individuals and health care professionals
- Improving quality of medicine
- Taking responsibility for healthy lifestyles
Incentives. The incentives in the current system are perverse. There are no rewards for people who stay well, and no penalties for leading unhealthy lifestyles or overusing the system. Nor are there incentives for doctors and hospitals to keep people healthy and to prevent disease. Studies have shown that those who do so find themselves losing income.
As a result, primary care physicians are forced to pack more office visits into already crowded schedules, while spending less time with each patient. Specialists are incentivized to do more procedures, even when lower cost alternatives are available. Hospitals are forced to conduct more tests and get people out of the hospital before they are ready.
We need to realign these incentives by rewarding people for healthy lifestyles and taking more cost-effective approaches to their health. Hospitals and physicians should be rewarded for keeping people well, by paying for outcomes and managing groups of patients with similar disease states, as well as for prevention and wellness.
Quality. Experts like Donald Berwick, MD of Institute for Health Improvement and Charles Denham, MD of Texas Medical Institute of Technology have identified ten quality issues whose correction could save tens of billions each. Managing chronic disease, which accounts for 75 percent of health care costs, in a systematic manner instead of as a series of acute events, could improve outcomes and quality of life for millions of people, while dramatically lowering the cost of care. Yet there is no national push to get either of these things done.
Lifestyles. It is estimated that lifestyle issues like unhealthy diets, smoking, alcohol, lack of physical exercise, and unmanaged stress account for more than half of all health care costs. Addressing these issues requires a national movement for wellness and prevention, modeled after the highly successful anti-smoking campaign, something virtually ignored in the current legislation. To motivate people to take responsibility for their health and live healthy lives, there also must be rewards for those who do and penalties for those who don’t. Many successful ideas have been demonstrated locally through consumer-driven health plans and the integrated health movement. Now those must be taken to scale nationally.
This is a complex set of priorities to realize in an already-stressed system. It is too complex to leave in the hands of politicians who lack deep knowledge of health care and are swayed by lobbyists. For these reasons it is likely that solutions will be demonstrated in local communities and then taken to scale nationally. This is a long, arduous process. But unless we being immediately, the U.S. health care system will make our country less competitive and less healthy.
Now is the time for health care leaders locally and nationally to step up to these challenges and to lead the movement of the U.S. to healthy lifestyles and an effective health care system. Let’s get on with the hard work.
Originally posted in the Wall Street Journal on March 19, 2010
A revolution is reshaping America's best-led companies. Authentic leaders focused on customers are replacing the old guard of hierarchical leaders who concentrated on serving short-term shareholders. The old "command-and-control" style is being replaced with an empowering, collaborative style.
During the last half of the 20th century, business leadership became an elite profession, dominated by leaders who ruled their enterprises top down. Influenced by two World Wars and the Depression, organizational hierarchies were structured like military models.
Their leaders used multi-layered structures to establish control through rules and processes. People climbed hierarchies in search of power, status, money and perquisites. As stock holding periods dropped from eight years to six months, hierarchical leaders focused on generating short-term results, often to the exclusion of long- term growth.
In the past decade it all blew up, from the ethical scandals exposed by Enron and WorldCom to the Wall Street meltdown. As a result, people lost trust in business leaders to build sustainable institutions instead of serving themselves and short-term shareholders.
In my 1960s class at Harvard Business School our professor cited the Department of Defense and Catholic Church as the most iconic organizations. Business followed their lead, as General Electric, General Motors, AT&T and Sears became their role models.
By century's end, the latter three were in long-term decline, while GE was revolutionized by Jack Welch. Hundreds of other organizations like Kodak, Motorola and Westinghouse followed similar patterns of self-destruction. The hierarchical model simply wasn't working.
In retrospect, it seems obvious people weren't responding to "top down" leadership. Why not?
- The craftsman-apprentice model has been replaced by learning organizations, filled with workers with greater knowledge than their bosses.
- Young people are unwilling to spend ten years waiting for their chance to lead; instead, they want opportunities now, or they move on.
- People are looking for more than money, as few are willing to spend their lives in unfulfilling jobs, just for the compensation. Rather, they seek genuine satisfaction and meaning from their work.
To lead in this new century, we need authentic leaders who align people around mission and values, empower leaders at all levels, focus on serving customers, and collaborate throughout the organization, in order to achieve superior performance.
Aligning: The leader's most difficult task is to align people around the organization's mission and shared values. Gaining alignment takes regular engagement with employees at all levels. It is especially difficult in far-flung global organizations where local employees may be more loyal to native cultures than their employers, especially regarding business practices and customer relationships.
Global organizations thought they could solve this problem with rulebooks, training programs and compliance systems, and were shocked when people deviated. Aligned employees committed to the mission and values, and want to be part of something greater than themselves, form an enduring organization that is resilient through crises.
Empowering: Hierarchical leaders exert power over others and delegate limited amounts. These days that isn't leadership at all. Authentic leaders recognize they need leaders at all levels, especially on the front lines, where people must lead effectively without direct reports.
The leader's job is to empower people at all levels to step up and lead. Empowered leaders need sophisticated accountability systems with closed-loop management to ensure commitments are met.
Serving: Leaders' first obligation is not to their shareholders, but rather to their customers. Any organization that does not provide its customers with superior value relative to competitors will find itself going out of business. Employees are much more motivated to provide customers with superior products and services than to increase stock prices.
Collaborating: The challenging problems businesses face these days are too complex to be solved by individuals or single organizations. Collaboration—within the organization and with customers, suppliers, and even competitors—is required to achieve lasting solutions. Leaders must foster this collaborative spirit by eliminating internal politics and parochialism and focusing on cooperation internally to be competitive externally.
The ultimate measure of 21st century leaders is superior results. In today's business world, organizations filled with aligned, empowered and collaborative employees focused on serving customers will outperform a hierarchical organization every time. Top-down leaders may achieve near-term results, but only authentic leaders can galvanize the entire organization to sustain long-term performance.
Examples abound of organizations – Procter & Gamble, IBM, Novartis, Cisco, Genentech, Intel, General Mills, PepsiCo and Avon Products, to name a few – demonstrating that 21st century leadership creates lasting shareholder value. Authentic leaders like IBM's Sam Palmisano, Cisco's John Chambers, PepsiCo's Indra Nooyi, General Mills' Ken Powell and Avon's Andrea Jungare the new role models for modern corporations.
We need them to rebuild the trust that has been lost and to validate that capitalism is still the best economic system.
I own an iPhone and a Blackberry, and I use both constantly. Read articles. Set meetings. Watch videos. Send and receive emails. Check my Twitter feed. Find the best lunch spot in a new city. Chat with my friends and colleagues.
As one who's start-up small business thrives on social media - particularly, constant communication with my team, my clients, and my potential clients - I cannot imagine maintaining my current level of productivity or efficiency without my smart phones. As such, I would imagine other business leaders share a similar perspective, particularly as mobile devices become increasingly intuitive and practical.
For those leaders still on the fence, however, here are 8 reasons why I think mobility is critical for leadership:
- Every bad product review left unattended or complaint unresolved is an open wound for your company. Imagine the impact on a customer if you, the CEO, responds to his or her complaint, and actually fixes it. Imagine the ripples in the pond when word spreads of your customer-centricity. Little bad, and great good, can happen from genuine attempts at real-time problem-solving – and mobile web technology enables it more quickly.
- A definitive trend of the 21st century media has been an increase in velocity. You cannot ignore the pace of change – the speed of news cycles, the acceleration of your own company’s operations, and the ferocity of your competitors. Allowing yourself to be disconnected is to make way for others to sprint ahead.
- Crises – big (Toyota) and small (Google Buzz’s privacy hiccup) – do not wait for normal 9 to 5 business hours. As Bill George has so often noted, the first and most difficult step in resolving a crisis is facing the reality of your situation, beginning with yourself. Advanced mobile technology allows you to gather data, conference with your executive team, observe customer complaints, and mobilize around a response with the constraints of boardroom sitdowns. Akio Toyoda failed for a number of reasons, but his sluggish response was one of the most glaring.
- Your employees live in the mobile web. Ask Zappos’ Tony Hsieh or Google’s Eric Schmidt – each can attest to the inherent cultural benefits of open, active, mobile communication across social networks with employees.
- Your competitors live in the mobile web. And they are taking your customers.
- Your family and friends live online. Mobile technology offers much needed opportunities to connect with your spouse, children, friends and extended family to get a fresh perspective whenever you want or need to. No leader is successful without an active support network. Today’s mobile technology ensures you always have one.
- Your Web 2.0 culture-conscious customers expect you to be accessible by mobile, just as they expect your company employees to be. Mobile facilitates an even simpler and accommodating evolution in customer-interaction, and will allow you to monitor that evolution in real time.
- Mobile usage increased by 110% in the U.S. in 2009, and 148% percent worldwide as measured by growth in pageviews (see: January Quantcast report). Do you really want to have zero frame of reference as to the mobile lifestyle? That’s a dangerous concession. Get started now – if you’re new, there is a steep learning curve.
As my team, my family, and my friends often remind me, there’s always the “Power” button to set the necessary boundaries. Set them and stick to them, but actively engage in the meantime.
In my experience, you’ll be a better informed, more genuine, and more effective leader for it.
Originally Posted on Harvard Business School Working Knowledge
Toyota's tragic automobile recalls offer a historic opportunity for Ford's CEO Alan Mulally and General Motors' new CEO Ed Whitacre. After years of decline, they can reestablish the preeminence of American-made autos if they are wise at leading through this crisis.
In the past month Toyota has recalled almost 9 million vehicles—more than the entire number it sold the past three years. The irony is that Toyota gained significant market share in the past decade at the expense of its American competitors by offering superior quality vehicles. Now quality has become Toyota's Achilles' heel.
"This [process] will take enormous effort, ingenuity, and discipline along with massive investments."
No doubt Toyota will regain some of its lost market share in the short term, to the extent the automaker's production systems can respond by increasing production rates without incurring problems of their own. The bigger question is, will Ford and GM be able to capitalize on this opportunity for the long term?
I was with Whitacre when he initially learned that Toyota was suspending sales of 57 percent of its autos sold in the United States. He responded immediately by directing his executives to ramp-up production as quickly as possible.
While Whitacre and Mulally maximize current sales, taking advantage of this opportunity in the near term is not a long-term strategy. All too often, both GM and Ford have squandered similar opportunities by simply raising prices and profits, as they did during the three-year import quotas in the mid-1980s. They must recognize that no matter how wounded Toyota is in the short term by its quality problems, this company is a very tough and able competitor that will move quickly to revamp its quality and its product offerings.
On the march
GM and Ford need to move aggressively to secure their market share gains by investing windfall profits to make their auto lineups more competitive for the next decade. That means introducing new designs that offer attractive features, improved fuel efficiency, and better customer value along with superior quality. This will take enormous effort, ingenuity, and discipline along with massive investments.
In this regard, Ford has the jump on GM. When Mulally was hired from Boeing in 2006, Ford was in trouble. The company was stretched thin with too many product lines spanning too many countries and appealing to too few consumers. Mulally's first act was to borrow $23.5 billion by mortgaging the entire company to give Ford the runway necessary to retool its aging lineup.
Mulally moved fast, trimming unpopular lines, cutting management layers, and insisting on an R&D overhaul that hurt short-term profits. Having weathered the 2008 crisis without U.S. government support, Ford has $23 billion in cash in the bank and a lineup of eco-friendly automobiles to which U.S. consumers are gravitating.
GM only emerged from bankruptcy last July, when Whitacre was installed by the Obama administration as its new board chair. Since that time, he has acted decisively, removing Fritz Henderson as CEO and assuming the mantle himself. Whitacre quickly reorganized the company from top to bottom, cut out layers of middle management, initiated new product development programs, and revamped GM's international sales and marketing. He also put himself on the firing line, publicly taking ownership for GM's turnaround and appearing in a series of advertisements challenging consumers to compare GM autos with its competitors.
Glimmers of Ford's and GM's potential shone brightly at the Detroit Auto Show last month. Mulally showcased his new model range. Car experts and reviewers alike agreed the new models revitalized Ford. Whitacre also unveiled a new line of cars, admittedly trailing Ford, particularly in hybrids. He boldly predicted GM would be profitable in 2010 and would pay off its government loans.
January sales for Ford and GM jumped 24 percent and nearly 14 percent, respectively, year over year, in spite of high unemployment and low consumer confidence.
Chrysler falls further
In contrast, look at Chrysler and its new CEO, Sergio Marchionne. He ambitiously projected that Chrysler would become profitable in 2010 on an 18 percent increase in sales. Instead, Chrysler sales dropped 8 percent in January. Marchionne has not been aggressive in revamping Chrysler vehicles, repositioning the company's brand, or reorganizing its beleaguered management. As a result, it is falling further behind and missing this golden opportunity.
The last and perhaps most important lesson for leaders going through a crisis is that they cannot just play defense by cutting costs and waiting for the crisis to pass. They have to go on offense simultaneously by transforming their organizations and investing heavily in revamping their products and their marketing to focus on winning now.
That's precisely what Mulally and Whitacre are doing. They may not be automobile industry veterans, but they are highly competitive leaders, skilled at winning in the marketplace. The American automobile industry is a lot stronger today because of their decisive, visionary leadership.
Originally Posted in Harvard Business School Working Knowledge on February 22, 2010
Toyota's ever-widening problems are a tragic case study in how not to lead in crisis.
Under the media spotlight, Toyota CEO Akio Toyoda, grandson of the founder, went into hiding and sent American CEO Jim Lentz to make apologies. (Editor's note: Toyoda has agreed to appear before a Congressional inquiry this week.) Meanwhile, he let serious product quality issues spiral out of control by understating safety risks and product problems. This left the media, politicians, and consumers to dictate the conversation, while Toyota fumbled the responses.
Disingenuous quasi-apologies and disjointed plans for resolution have been Toyota's substitute for crisis response. As accounts pour in about declining quality, the company parades out relatively unknown mid-level managers to quell the firestorm.
It won't work. "You live by the sword; you die by the sword." Toyota's weapon of choice has always been quality, a competitive advantage that prompted many Americans to stop buying GM and Ford brands. Toyota can only regain its footing by transforming itself from top to bottom to deliver the highest quality automobiles.
When terrorists laced Tylenol capsules with cyanide in the mid-1980s, Johnson & Johnson CEO Jim Burke understood his company credo challenged him to put the needs of customers first. Although J&J was not responsible for these problems, Burke nevertheless recalled every Tylenol product from the market.
This is not a crisis of faulty brakes and accelerators, but a leadership crisis. During Chrysler's 1980s crisis, CEO Lee Iacocca took charge, restoring consumer trust and prosperity. When General Motors emerged from bankruptcy last summer, Chairman Ed Whitacre became the trustworthy, determined face of the company's comeback.
Toyota needs a credible leader with a strong, cohesive plan. Mr. Toyoda is anything but. His uninspired words of optimism from Davos only unnerved customers and U.S. regulators. Meanwhile, Ford and GM are working hard to regain the market share they lost at Toyota's expense.
How can Akio Toyoda get Toyota back on track? I offer recommendations based on my recent book, 7 Lessons for Leading in Crisis.
1: Face reality, starting with yourself. Faced with multiple reports of accidents from sticking accelerators, Toyota blamed the problems on stuck floor mats and panicky drivers. Instead, Toyota should acknowledge that its vaunted quality system failed. CEO Toyoda should take personal responsibility by saying that he pushed too hard for growth and neglected quality. By admitting his errors, he gives every Toyota employee permission to acknowledge mistakes and to get on with correcting them, instead of denying reality.
2: Don't be Atlas; get the world off your shoulders. Toyoda cannot expect to solve problems of this magnitude himself. Instead, he needs a crisis team reporting directly to him, working 24/7 to get problems fixed—permanently. He also needs outside counsel, as he appears to be listening only to insiders who are defensive about criticism. He should add the world's top quality experts to his fix-it team and listen carefully to their advice.
3: Dig deep for the root cause. When Toyota's problems first surfaced, the company blamed a symptom—loose floor mats—and exonerated the accelerators. Instead, management should have required its best engineers to get to the root cause of this problem and every other quality problem being reported. This is basic engineering and quality discipline.
4: Get ready for the long haul. These problems won't just fade away. In fact, they are likely to get worse before getting better. Just as the seeds were sown over the past ten years by placing growth ahead of customer concerns and quality, digging deep into problems will likely uncover more quality concerns that will take years to resolve. Toyota must invest heavily in corrective actions while its sales shrink and profits implode, requiring major cash resources until its reputation can be restored.
5: Never waste a good crisis. For all the pain Toyota is experiencing, this crisis provides a unique opportunity to make fundamental changes required to restore Toyota quality. The crisis is melting away the denial and resistance that existed in recent years. Employees are ready for new direction, and they are willing to make radical changes to renew the company. With Toyoda's leadership, Toyota automobiles can be restored to the world's highest quality.
6: You're in the spotlight: follow True North. In a crisis, people insist on hearing from the leader. Akio Toyoda can't send out public relations specialists or his American executives to explain what happened. Having lost sight of his company's True North—its values and principles—Toyoda must come out of hiding, take personal responsibility, and subject himself to intense questioning by regulators and the media. Then he should make a personal commitment to every Toyota customer to repair the damage, including buying back defective cars.
7: Go on offense; focus on winning now. Coming out of this crisis, the market will never look the same. GM and Ford are rapidly regaining market share, while the confidence of Toyota's loyal customers is badly shaken. Toyota cannot wait until all its quality problems are resolved. It must play defense and offense simultaneously. To win, Toyota has to offer advanced features and superior quality, better value for consumers, greater safety, and improved fuel efficiency.
This is a challenging menu, and this crisis is the true test of Akio Toyoda's leadership. Is Toyota up to these challenges? I believe this is a great company that will resurrect its reputation and restore its leadership.
I was very excited to hear about the Pepsi REFRESH project when it was announced at the beginning of the year. CEO Indra Nooyi’s decision to allocate marketing dollars to a community-reinvestment effort deserves great applause as it stands as a prime example of progressive, conscientious 21st centruy leadership. By shifting Super Bowl advertising dollars to philanthropy, Pepsi is making a smart investment in marketing and in communities.
The program is simple. Pepsi REFRESH invites anyone to submit a grant proposal for a project - all proposals are then judged by the Pepsi's online community, from their dedicated Facebook fans and Twitter followers, and beyond. Grants of $5,000 to $250,000 are awarded to dozens of applicants every month.
This project is exciting on multiple levels. First, it marks an encouraging departure from a dated era where corporate philanthropy and community empowerment was seen as a “nice-to-do," only done to enhance a firm’s public image. Over the past generation, corporate philanthropy has been impacted by Milton Friedman’s view that business is a “profit maximizing” entity, rather than an institution chartered by society as a steward of its financial and social well-being. But now, the idea that philanthropy is better left to shareholders is fading away - and I am glad to see Pepsi reinforcing a new ideal.
Second, Pepsi Refresh represents a marketing innovation. Indra Nooyi has long been at the forefront of progressive leadership, but green-lighting this project shows that she and her team at Pepsico are committed to exploring new ways of engaging customers. Instead of bombarding viewers with Super Bowl advertisements, Pepsi is seeking out their customers where they live – offline and online – and delivering value to their communities. Millions of Pepsi customers are engaging in social media and connecting online, actively seeking company engagement on this level. People want companies that seek out their advice and ideas, companies that talk with them in the way they want to communicate.
Third, this project is an investment in the next generation of leaders. The Pepsi REFRESH project empowers community activists, students, small business owners, and non-profit overseers in an unprecedented way - with no-strings-attached investments in their projects and complete corporation-backed empowerment. Not only is Pepsi providing funding for these projects, they’ve left the decision-making in the hands of the masses. Votes online will dictate what project - what up-and-coming leader - receives funding, not votes around a boardroom.
The Pepsi REFRESH project represents a monumental effort to be a trend-setter by redefining corporate marketing and customer engagement. If Pepsi is “the choice of a new generation,” then Pepsi REFRESH may well be “the empowerment of a new generation.”
Kudos to Secretary of Defense Robert Gates and Admiral Mike Mullen, chairman of the Joint Chiefs of Staff, for advocating repeal of the 1993 “Don’t Ask, Don’t Tell” law. This hypocritical act forces honorable military men and women to be inauthentic by hiding their sexual identity or be forced out of the U.S. armed forces.
Admiral Mullen was especially forthright when he stated, “Allowing gays and lesbians to serve openly would be the right thing to do.” He went on to say eloquently, “I cannot escape being troubled by the fact that we have in place a policy which forces young men and women to lie about who they are in order to defend their fellow citizens. . . For me personally, it comes down to integrity – theirs as individuals and ours as an institution.”
Mullen said what every military person knows, “I have served with homosexuals since 1968. Putting individuals in a position that every single day they wonder whether today’s going to be the day, and devaluing them in this regard, just is inconsistent with us as an institution.”
Since the passage of the 1993 law, the U.S. has officially accepted gays in the military as long as they hide their identity. In other words, your sexual identity is acceptable if you don’t tell anyone about it – or more baldly, just don’t be authentic about who you are. It’s hard to see what harm could be done to the armed forces if troops were allowed to be open, since every soldier already knows there are gays in the military. Are U.S. officials really that threatened by people who are gay or lesbian?
Last week I had the privilege of delivering the keynote address on “Authentic Leadership” at the U.S. Naval Academy’s annual leadership conference in Annapolis. This event included leaders from more than fifty universities and academies in addition to hundreds of cadets. As I got to know many future officers, it never occurred to me to wonder which of them might be gay. But it troubled me greatly to think that U.S. law forces those who are to be inauthentic – precisely the opposite message of my talk.
In my “Authentic Leadership Development” classes at Harvard Business School, I have had several retired military officers share with me their deep fears that every day their sexual identity might be exposed by a former partner or someone who didn’t like them. It is not surprising, but very sad, that these graduates of our military academies gave up their careers because they could no longer tolerate living a lie and living in fear.
It is worth noting that it isn’t just gays who are forced to compromise their honor. Many straight officers have confided their worries about having some of their best troops exposed and not wanting to begin the process of their expulsion from the military.
Most disappointing of all was Senator John McCain, who reversed his 2006 position when he declared, “When the military wants to change the policy, we should consider seriously changing it.” Now, he is accusing Secretary Gates of being “clearly biased.” Before making such accusations, McCain should look in the mirror and ask himself, “Who’s biased here?”
Sixty years ago – long before the passage of the 1965 Civil Rights Bill – the armed forces led the nation in integrating its ranks from top to bottom. What a loss it would have been to this nation had General Colin Powell not been permitted to serve his country as chairman of the Joint Chiefs. It’s about time that the military catches up to the rest of the country in openly accepting gays throughout its ranks. Might there be a gay person who could rise to the top as General Powell did?
One of the cases in my HBS course is on Lisa Sherman, a talented executive who felt forced to resign from Verizon in 1994 because she couldn’t safely reveal her sexual identity. Her departure caused former CEO Ray Smith not only to change the Verizon culture but to campaign for passage of the Employment Non-Discrimination Act.
I open the class by talking about our “hidden differences” and asking students to write down one thing about themselves they don’t want anyone else to know. This simple exercise enables them to “walk in Lisa Sherman’s shoes,” rather than objectifying her as a lesbian that many cannot relate to. All of us have hidden differences. Shouldn’t we work toward a society where we can share them openly without fear of rejection?
Thanks to Admiral Mullen and Secretary Gates for bringing us one step closer to the time when all Americans can reveal their hidden differences without fear of retribution and become truly authentic leaders.
Originally posted on the Wall Street Journal on January 7, 2010
America faces a deepening leadership crisis. A recent survey by Harvard's Center for Public Leadership found that 69% of Americans lack confidence in our leaders. Worse yet, 67% believe that "without new leaders, America will decline as a nation." Wall Street leaders are at the bottom of the list, closely followed by media, political and other business leaders.
I believe the root cause of America's economic crisis is leaders who practice "short-termism." What we need to get on the road to economic recovery are innovative, visionary leaders who can resist short-term pressures and build sustainable growth companies.
Two such leaders are Amazon's Jeff Bezos and Cisco Systems' John Chambers.
In the past decade both have overcome severe crises to emerge as role models of the kind of leaders America needs to build an innovation economy.
At a 1999 CEO conference at the height of the dotcom bubble, I witnessed a telling exchange between Mr. Bezos and Warren Buffett. On stage, Mr. Bezos was proudly proclaiming Amazon's success (measured in eyeballs) when Mr. Buffett challenged him from the audience.
Having worked the numbers, Mr. Buffett said there was simply no way to justify Amazon's stock price, even assuming remarkable growth and profitability. At the time Amazon was near $105 per share, with no earnings but a growing revenue base. Mr. Bezos protested Mr. Buffett's critique, but suspicious murmurs rumbled through the audience.
Cisco's Mr. Chambers was also on stage that day. Cisco was riding high with a rising stock price. Throughout the next year Cisco stock increased to $77 a share, making the company the world's most valuable in March 2000.
The higher they go, the farther they fall. In 2001 the dotcom bubble burst. Thousands of startups went belly up as the venture capital market virtually shut down. Amazon and Cisco both suffered from aftershocks of the implosion.
Amazon's stock collapsed to $6 per share. Cisco's crash was just as dramatic: from its high water mark, Cisco stock dropped nearly 90%. If Warren Buffett was in the business of shorting stocks, he could have made a killing on his prescient analysis.
Wall Street called for the blood of e-commerce and technology companies. Skeptics projected the end was near. Unlike many of their fallen contemporaries, however, both Amazon and Cisco rebounded.
Amazon's Mr. Bezos simply ignored the stock collapse as he moved forward with his strategic vision. In 2003 Amazon posted its first full-year profit. Throughout the decade Mr. Bezos continued to expand the company's product offerings. Even amidst the current economic crisis, Amazon's third-quarter profits surged 69% as the company established its supremacy in e-retailing.
John Chambers oversaw a similar recovery. Cisco has continued to dominate the market for computer servers and expanded into related products, such as its dramatic new TelePresence offering.
What allowed Amazon and Cisco to persevere as other Web 1.0 contemporaries tanked? How have they successfully navigated another vicious downturn?
The answers can be found in the belief that Mr. Bezos and Mr. Chambers have in their strategies and an unwavering passion for serving their customers. They power their visions with big investments in innovation and manage for long-term growth, even at the expense of short-term profitability.
Mr. Bezos founded Amazon.com in 1994 with secondhand computer stations in his Seattle garage. "There's no bad time to innovate," Mr. Bezos told BusinessWeek in 2008. "You should be doing it when times are good and when times are tough." Currently, Mr. Bezos is transforming the book-reading business with the Kindle e-reader, Amazon's first in-house hardware product.
Mr. Chambers has continued to build Cisco through innovation and long-term acquisition strategies. The company introduced its TelePresence product and focused its acquisitions on video and mobile technologies.
Through their long-term commitments, Mr. Bezos and Mr. Chambers have created tremendous value for their shareholders: Cisco's market capitalization is now about $140 billion, while Amazon's is about $58 billion.
To put the American economy back on the road to recovery, we need more long-term, visionary leaders like Mr. Chambers and Mr. Bezos who can transform entire industries and build sustainable innovation machines.
About the Author
Bill George is author of "7 Lessons for Leading in Crisis" and professor of management practice at Harvard Business School. The former chairman and CEO of Medtronic, he currently serves on the boards of ExxonMobil and Goldman Sachs. He previously was a director of Novartis.
Last week John Hope Bryant, Warren Bennis, and I had a leadership discussion, moderated by Dean Jim Ellis of USC Marshall School of Business. John wrote a great recap of the event, complete with pictures, which you can read here.
Back in October John and I had a similar dialogue with former Atlanta Mayor Andrew Young at the Andrew Young School of Policy Studies at Georgia State. Young has some especially interesting things to say about his relationship with Martin Luther King, Jr. C-SPAN2 recently aired our conversation, you can see a video of that event here.