Leadership Kudos of the Week go to Novartis Chair Daniel Vasella and CEO Joe Jimenez: Vasella for his courageous strategies of internal investment in research and diversification into generic drugs, vaccines, and eye care, and Jimenez for his skillful implementation of these challenging strategies. Vasella’s decision to invest heavily in new research headquarters in Boston has led to continuing flow of breakthrough drugs, including recent treatments for multiple sclerosis and gout. Instead of buying other pharma companies, he diversified into generic drugs (now second largest in world), vaccines (creator of H1N1 vaccine), and eye care with $52 billion bet on global leader Alcon. Jimenez is making all these moving parts grow in unison. The stock market, finally recognizing Novartis stands out from pharmaceutical industry’s problems, this week pushed NVS stock to all-time high of $63.35, making its $167 billion market capitalization second highest in industry behind J&J. Since the start of 2000, Novartis stock is up 71% compared to 59% for J&J, whereas Pfizer and Merck have declined 53% and 45%, respectively.
Leadership Gaffes of the Week go to Hewlett-Packard’s board of directors for losing sight of the HP Way – the culture created by founders David Packard and Bill Hewlett – and failing to develop leaders internally. Since 1999, the HP board has gone outside company management three consecutive times in choosing Carly Fiorina, Mark Hurd, and Leo Apotheker, all of whom have tried to put their own stamp on the culture while ignoring the culture that made HP so successful for forty years. Since taking the helm two months ago, Apotheker has replaced ten EVPs and SVPs and half the board with outsiders. Will HP ever recover its former greatness?
Today I was on CNBC’s Power Lunch, responding to hedge fund analyst David Einhorn’s call for Microsoft CEO Steve Ballmer to resign. I strongly disagreed, as I believe Ballmer is making the right calls in expanding Microsoft is making the right moves to build new revenues through diversification. Witness X-Box, Skype, and important partnerships with Facebook and Nokia. Microsoft is experiencing a renewed surge of innovation, just what the company needs at this time in its history. Here’s the video of our discussion.
Leadership Kudos for the week go to Ford CEO Alan Mulally. Joining deeply-troubled Ford in 2006, Mulally has pulled off the greatest corporate transformation in recent decades -- and in the process restored faith in the American automobile industry and the U.S.'s ability to compete globally in heavy manufacturing. An exceptionally humble leader, Mulally's authentic, high-performance style has brought humanity and discipline back to Ford. The proof is in Ford's results: in the most recent quarter Ford sales were up 18 percent, profits up 22 percent, and its share of the U.S. market gained the #1 spot.
Leadership Gaffe for the week goes to IMF chief Dominique Strauss-Kahn, arrested for sexually assaulting a chamber maid in New York. A momentary lapse? Unlikely. Strauss-Kahn has a long history of extra-marital relations. The larger question is why he was trusted with such an important international post. Leaders need to set a higher standard, not seek the lowest common denominator.
Leadership Kudos for this week go to His Holiness the Dalai Lama for his work in creating a more peaceful, compassionate world. He was in Minneapolis last weekend, where we are pleased to have the second largest Tibetan community outside India. Our family had the privilege of being with him at a series of events. He recently turned over the political leadership of the Tibetan people to a democratically-elected leader so he can concentrate his full energies on working toward peace and compassion. His messages focused on secular ethics, not Buddhism, to unite people around finding inner peace through mindfulness and compassion. He is, no doubt, one of the world's great spiritual leaders.
I was on CNBC today with Yale’s Jeff Sonnenfeld commenting on Microsoft’s purchase of Skype. While the interviewers took a short-term view of stock price movements, Jeff and I believe it is an important deal for Microsoft, as Skype has myriad revenue-producing opportunities for growth in the video-conferencing. We use it all the time to stay in touch with our grandchildren in Munich and San Francisco – we’re one of 663 million users. But its potential on the business side is far greater as transmission quality improves and Skype can offer multi-point capability. The latter will be critical for the expansion of small, personal groups, which we call True North Groups (the title of my new book, to be released on September 1, 2011) which want to operate remotely.
Steve Ballmer is doing just the right thing here. I hope this will be the first of many smaller ventures Microsoft acquires. They came close with Facebook three years – for $15 billion – and should pursue “the next great thing(s)” coming in the tech space. Most people don’t recognize that Microsoft has grown from $28 billion when Ballmer took over to $62 billion in 2010, in large part due to internally-created businesses in servers, X-Box and Bing that now account for 40% of its revenues. With $36 billion in cash, Microsoft has plenty of capacity to make a lot of bets on future growth engines. Even if some don’t make it – which they won’t – they may hit on the next Facebook, Google or YouTube.
This is the second portion of an excerpted guide I wrote for my Authentic Leadership class on Why Leaders Lose their way. On the heels of the recent scandals, I believe we must reexamine what motivates inappropriate behavior from leaders at the top of their game.
How can we avoid the pitfalls of falling into the same traps of so many leaders who have lost their way? It starts with devoting ourselves to a lifetime of personal development that strengthens our inner life and keeps us grounded throughout our lives.
To get started, let’s return to the question posed earlier, “What is your purpose for becoming a leader in the first place.” “What are you passionate about?” “What really excites you and turns you on?” “Do you find the intrinsic purpose of your work fulfilling, or is it just a job?”
This may require a reframing of our role from the hero or savior into a servant of the people we lead. This requires a great deal of thought and introspection to bring our egos in line, as most of us go into leadership roles in response to our ego needs in the first place. But which ego needs? The external gratification of people telling us how great we are? Or the internal satisfaction of making a difference in the world through our leadership? Through wealth, fame, prestige, and visible power? Or the deeper knowledge that if you do good work and serve others, that this will be your reward, and the external rewards will be “the frosting on the cake.”
To develop themselves for increasing levels of responsibilities, leaders need to continue their development in seven areas, 1) personal disciplines, 2) managing stress, 3) building relationships, 4) connecting with their communities, 5) focusing inward, and 6) finding balance in our lives.
Being effective in your work and staying sharp to make complex decisions under pressure requires personal practice and discipline. It may be surprising to young leaders to learn that the habits they establish early in life will continue with them for the rest of their professional lives.
Taking care of your body through eating healthily, exercising regularly, and getting your required level of sleep is an important part of being an effective leader. It is difficult, if not impossible, to think deeply and clearly when you’re tired, out of shape, overweight, and stressed out. Some people turn to chemicals to make them feel better, to give them a lift out of depression. But it doesn’t work; they’re just digging a bigger hole for themselves.
Leading is high stress work. There is no way to avoid the stress of being responsible for people, organizations, outcomes, and the constant uncertainties of the environment. The higher you go, the greater your freedom to control your destiny, but also the higher the level of stress involved. The question is not whether you can avoid stress, but how you can control it to maintain your own sense of equilibrium.
Managing stress requires discipline. Some people practice meditation and/or yoga to center themselves and relieve stress. Others find solace in prayer. Some people find they can relieve stress by taking a long run. Still others find relief through laughing with friends, listening to music, watching television, attending sporting events, reading, going to movies, or watching the performing arts. It doesn’t really matter what you do, as long as it works for you to manage the stress in your life and enables you to think clearly about your work and personal issues.
Building Relationships: Who Will Be There to Help?
Ask yourself the question, “Who in my life influences me in profound ways? How do I stay connected to them?” Few of us can stay centered all by ourselves. We depend upon the people in our lives to keep us grounded – those who know us best and to whom we will really listen. For many of us that person is our spouse or our partner in life, because they know us better than anyone else. They are not impressed by our titles, our prestige, or our growing accumulation of wealth. In fact, they are worried that these outward symbols may be causing them to lose the authentic person they were attracted to in the first place. In their presence it is difficult to use our false self or our dominant tendencies to avoid having them hold a mirror up to us that reflects our true behavior.
But we shouldn’t put the entire burden on our spouses or partners. All of us need mentors. A mentor is someone whom we turn to for advice and counsel when we are facing difficult decisions or irresolvable dilemmas. It is someone with whom we can be completely honest. A reliable mentor can be counted on to be completely straight with us, and help us define our truth and develop action plans to change if we are dissatisfied with our leadership or our lives.
Having a group of close friends who serve as your personal advisors can be also invaluable. They too are not overly impressed by your external success, because they know you well enough, and care enough about you, to confront you when you are not being honest with yourself. A team of professional advisors, be it your board of directors, your colleagues, or others in your line of work, can also be a great source for sharing your problems and seeking honest consultation on how to address them. In your organization it is more than healthy – it is essential – to have one or more “honest critics” who are prepared to challenge your ideas and action, to help you see the other side or the way others will view your actions.
Connecting with my Community
Another means for staying grounded, and developing compassion for others, is through direct community service. Examples include tutoring inner city students, working in a homeless shelter, reading to the blind, befriending people in need, and connecting with the lives and needs of people with limited economic means. Direct contact is infinitely more important and rewarding, but also less comfortable, than chairing the board of the United Way or a social service organization. The reasons for this are obvious: as we progress in our professional lives, it is easy to lose touch with the lives of ordinary people. Instead of becoming more compassionate, over time our hearts become hardened. By engaging with our community, we remain in touch with the real world.
Understanding our role in the world is the most personal and profound area of our leadership development. Many people turn to their spiritual and religious practice to engage these issues, either privately or with like-minded people. Some seek the answers through a process of introspection. Others explore them through discussions with the people closest to them in their lives. Still others choose to ignore these questions altogether until confronted with an overwhelming dilemma, a personal tragedy, or a life-threatening illness.
Finding Balance in our Lives
Finally, we stay grounded by regularly rebalancing our professional lives and our personal lives. There is no doubt that the time commitments of leading major organizations can absorb all our time and emotional energy, leaving little left for ourselves or for those closest to us. This poses an enormous danger: the very act of working ever harder distorts our judgment and our ability to think clearly, and accentuates the risk of losing our way. We have a continual need to recalibrate what our behavior says about what is most important in our lives.
But keeping ourselves grounded through personal disciplines, developing close relationships, and maintaining a reasonable balance between our professional and personal lives can provide the basis for long-term success in whatever venue we choose for leadership. It positions us to discern the authentic purpose of our leadership and to draw satisfaction from its intrinsic rewards.
There is no guaranteed path to become a good leader. It is a process requiring a lifelong commitment to personal development, so that you will be prepared to confront the enormous complexities leaders face and, under tremendous pressure, to fulfill your responsibilities honorably and successfully. The challenges are great, but the satisfaction of knowing you made a positive difference in the lives of others is even greater.
David Sokol, Mark Hurd, Greg Mortenson, Eliot Spitzer, and Rajat Gupta. The list of talented leaders at the top of their game losing their way continues to expand. All of these leaders were highly successful in their respective fields and had promising careers ahead of them. For this reason, their behavior is especially perplexing and raises many questions:
What causes these leaders who have been known for their integrity and their leadership to engage in unethical activities?
Why are they willing to risk great careers and unblemished reputations for such ephemeral gains?
Is this simply greed, as many have suggested, or is something deeper going on?
Do they think they won't get caught, or could they honestly believe their elevated status puts them beyond the law?
Did they get caught the first time they did something inappropriate, or have they been building to this for a long time with lesser actions paving the way?
Despite myriad news articles, I have yet to see one that illuminates what led to such unusual behavior by such successful people. To be clear, I’m not taking a position on the legality of their actions, but rather examining the root causes of their actions.
After the fall of Enron, WorldCom, et. al. in 2003, I became very troubled by what had happened to so many of our corporate leaders. In 2004 I wrote a paper for my new class on "Leadership and Corporate Accountability" at Harvard Business School titled, "Why Leaders Lose Their Way." I’ve excerpted pertinent examples below, which seem very pertinent to today’s cases:
Part I - Why Leaders Lose their Way
In the seemingly never-ending revelations of corporate scandals that have been exposed since the fall of Enron, the media, politicians, and the general public have taken to characterizing their leaders `as “bad people,” even to the point of considering them evil. The rest of our leaders have become suspect, as corporate executives are tied for dead last with used car salesmen in terms of the public trust. These overly simplistic notions of “good leaders” and “bad leaders” only serve to cloud our understanding about the nature of leadership in the business world and how good leaders can lose their way.
Very few people go into leadership in business to cheat or do evil things. Yet all of us have the capacity to do things we deeply regret unless we develop the means of staying centered within our leadership. These leaders are not bad people; they have just gone astray.
Before anyone takes on a leadership role, they should first ask themselves two fundamental questions, “Why do I want to lead?” and “What is the purpose of my leadership?” These questions are simple to ask, yet the process of seeking answers to them is profound and may take decades, even a lifetime, to answer.
If the truthful answers to the first question are simply power, prestige, and money, these leaders may be at risk of relying on external gratification as the source of their fulfillment. There is nothing wrong per se with desiring these outward symbols as long as they are combined with a deeper desire to serve something greater than oneself, such as to be responsible to those you are leading and to serve them. That’s where the deeper sense of inner satisfaction comes from, not from having money, prestige or power.
Leaders whose singular goal is the quest for power over others, unlimited wealth, or the fame that comes from success tend to look to others to give them a superficial sense of satisfaction and to attest to their greatness, if not their goodness. In public, as well as in private, these individuals exhibit ego-centeredness. As their names appear more frequently in the media, they start to believe their own press. As leaders of institutions, ultimately they come to believe that they are the institution and that the institution cannot survive without them.
Most leaders don’t start out this way. Yes, they like to be fairly compensated for their accomplishments and to have the material pleasures that come with them. Being given added power reinforces their success, and they enjoy the prestige that goes with it. But along the way, their success in these realms can go to their head, and they start seeking more and more external success until they cannot get enough. It is at this point – at the height of their power, their fame, and their material wealth - that they are most susceptible to losing their way, if they haven’t already lost it. Their string of successes creates a deep desire to keep it going, just as they feel more and more like imposters in their roles. Out of fear of losing their status and stature, they are prone to doing increasingly bizarre and even illegal things.
Losing Touch with Reality
Let’s examine how this happens. By focusing on external gratification instead of inner satisfaction, leaders find it difficult to stay grounded. They begin to lose touch with reality, even if the ability to define reality accurately was a key quality that brought them success in the first place. Typically, these leaders reject the honest critic who holds up a mirror to them and “speaks the truth to power.” Instead, they surround themselves with sycophants who tell them what they want to hear. Over time, these leaders lose the capacity for honest dialogue, as others learn not to confront them with reality or the truth.
Let’s look deeper into the root causes of these behaviors. Losing touch with reality, which is one of the most common and dangerous traits of successful leaders, often results from the lack of introspection about who they are. Underlying these tendencies may be an insatiable craving for success caused by a burning desire to overcome narcissistic wounds from childhood. These wounds may have been caused by perceptions that their parents did not love them, they are not good people, or the trouble they had in making friends in their early years. So they try ever harder to keep their string of accomplishments going so the external world will view them as highly successful.
. . . and Fearing Failure
The other side of the coin of craving for success is a deep-seated fear of failure. Many leaders get to the top by imposing their will on others, even to the point of destroying people that stand in their way. By the time they reach the top, they may be paranoid that someone else waiting in the wings to knock them off their pedestal. This is akin to the “King of the Hill” game that little children play in the schoolyard. Thus, these leaders can develop “the imposter complex,” caused by a deep insecurity that they really are not good enough to hold such a powerful leadership role and that any day now someone is going to unmask them.
To prove that they are not imposters, they drive so hard for perfection that they are incapable of acknowledging their failures and their weaknesses. When confronted with information demonstrating their failures, they try to cover it up or to create a rationale that convinces others these problems are neither their fault nor their responsibility. Often they will look for scapegoats on who they can blame their problems, either internal to their organization or on the outside. Through the combination of power, charisma, and communications skills, they force others to accept these distortions, causing entire organizations to lose touch with reality.
Making Big Mistakes
At this point leaders are vulnerable to making big mistakes, such as violating the law or putting the very existence of their organization at risk. In their desperation to keep their success going, they may wind up stretching the rules beyond legal limits. In some cases their distortions of reality and powers of persuasion enable them to convince themselves and others they are doing nothing wrong. Or they believe they can outsmart the enforcers of laws. Some rationalize that their deviations are acceptable because they are seeking to create a greater good.
In examining the behavior of leaders at this stage, one may conclude that they lack a moral compass, a sense of their “true north,” that keeps them centered. Some may have had a moral compass originally, but lost sight of it as they got caught up with external gratification.
The Loneliness Within
It is lonely at the top. No one doubts that. When you’re in that position, you know that the lives and fortunes of so many people rest in your hands, and you are ultimately responsible for what happens. If you fail, many will be deeply hurt. You try to deny that loneliness, which may lead to avoiding the anxiety of facing reality. You shut down your inner voice, because it is a constant reminder that long ago you abandoned your true self. It is just too painful to confront or acknowledge, but it returns to you in your dreams as you try to resolve the irresolvable conflicts rustling around inside your head.
. . . that Can Lead You Astray
Lacking connection with your own inner voice, you start listening to all the voices pressuring you, thinking that if you can satisfy them, all will be well. But their advice is often conflicting, or too painful to face. So you choose to listen only to those voices that reinforce your views. Meanwhile, your work life and your personal life are growing more and more unbalanced. Fearing failure, you favor your work life, even to the point of saying, “My work is my life.” You lose touch with those closest to you – your spouse, your children, and your best friends – or you co-opt them with your point of view. Eventually, you lose your capacity to think clearly about important issues.
By now your little mistakes have turned into major ones. No amount of hard work can correct them. In your desperation you keep digging yourself a deeper and deeper hole. The collapse is near. When it comes, there is nothing you can do to avoid it. You attempt to stave off the consequences, but societal powers overwhelm you. You are trapped. The tragedy of your behavior is unfolding to its ultimate conclusion. There is nothing you can do.
Who are you? You could be one of those executives facing prosecution for their actions. Or just a former CEO forced to resign “for personal reasons.” But “you” could be me, as we are all subject to these tendencies, in greater or lesser ways. We may not face a plight as severe as these leaders, but we can all go this route.
Here's an interesting video from a panel I participated in last fall at Harvard Center for Public Leadership's Fellows Reunion. Thepanel discussion was on "Next Generation Leadership." The panel included David Gergen, executive director of the Center for Public Leadership; Rosalinde Torres, managing director of the Boston Consulting Group; Betsy Myers, leadership advisor and former chief operating officer for the Obama campaign; and myself. It was moderated by George Leadership Fellow John Coleman who was in his final year of the joint degree program of Harvard Business School and Harvard Kennedy School.
We have scheduled a second course at HBS on September 25-30, 2011 with the same great faculty: Dean Nitin Nohria, Rob Kaplan, Scott Snook and Joshua Margolis. Hope you can join us. Applications are open at HBS executive education.
Last week I served as faculty chair for Harvard Business School's new executive course, "Authentic Leadership Development." Sixty-four executives from 60 global companies spent five intense days honing their leadership.
Here's the catch: They concentrated almost entirely on leading themselves, not others.
What does leading yourself have to do with becoming a leader? Everything, actually.
Traditional leadership development programs have missed the mark for years, as they tried to remake leaders into someone different. I had this unfortunate experience numerous times in my career. It was never successful.
One boss told me that I needed to improve my management style, which was an accurate observation. When I asked for clarification, he said, "Be more like me." That feedback wasn't helpful, as his style and strengths were completely different than mine. If I emulated him, others would have seen me as phony, and I would have been much less effective as a leader.
We've all seen dozens of leaders fail in trying to emulate great leaders. At a recent conference, I asked the participants, "Can we all agree that the 'Great Man' theory of leadership is dead?" The essence of leadership is not trying to emulate someone else, no matter how brilliant they are. Nor is it having the ideal leadership style, achieving competencies or fixing your weaknesses. In fact, you don't need power or titles to lead. You only have to be authentic.
In observing leaders for 40 years, I have never seen someone fail for lack of IQ. But I have seen hundreds fail who lacked emotional intelligence (EQ). Psychologist Daniel Goleman first popularized the concept in his 1995 book, "Emotional Intelligence.'' He defined EQ as competencies driving leadership performance, including:
• Self-awareness: reading emotions and recognizing their impact;
• Self-management: controlling emotions and adapting to change;
• Social awareness: understanding others' emotions and comprehending social networks;
• Relationship management: inspiring, influencing, and developing others while managing conflict.
In researching my 2007 book, "True North,'' several colleagues told me they hoped we could identify the definitive traits of successful leaders. More than 1,000 prior studies had failed to do so. In interviewing 125 authentic leaders, we learned that the essence of leadership comes from not from having pre-defined characteristics. Rather, it comes from knowing yourself -- your strengths and weaknesses -- by understanding your unique life story and the challenges you have experienced.
Everyone has a life story they are eager to share if anyone will listen in an accepting, nonjudgmental way. I have great admiration for Sen. Scott Brown's courage in telling his story of being sexually abused as a child. His story acknowledges the life forces that shape who we are. In sharing their stories at last week's program, the executives found liberation and power by claiming who they are, not by trying to emulate someone else.
This isn't a new idea. Four thousand years ago the Oracle of Delphi said, "Know thyself." What's new is that we are learning how important self-awareness is to leadership development. Being self-aware is easier said than done. That's why so many leaders engage in self-defeating behaviors that cause them to fail.
How can you become a self-aware leader? Start with experiences in leading others in school, sports, or early work assignments. However, having one experience after another is not sufficient. Instead of plunging immediately into the next experience where you are prone to repeat your mistakes, you need to reflect on what you learned. Introspection can come from keeping a journal, meditating, praying or just sitting quietly.
Next, seek honest feedback from people you work with. The best developmental tool is 360-degree feedback from peers, subordinates and superiors. As one leader said, "Feedback is the breakfast of champions."
Finally, develop a small group of people with whom you can be completely open and honest in sharing your joys, sorrows, fears and dreams. They will support you in challenging times and provide invaluable insights that enable you to grow as a human being and leader.
We call these small groups "True North Groups" because they help you stay on course.
Leadership is not exerting power over others or exhorting them to follow you. Rather, it results from your example of empowering others to step up and lead. Leaders do that by learning to lead themselves, becoming self-aware and behaving authentically.