From The Huffington Post, Posted on September 29, 2015
As a proven investor who has created hundreds of billions in value for his shareholders since 1965, Warren Buffett has delivered the most spectacular performance of any investor in modern history. Yet remarkably, Buffett has no qualms about sharing the "secrets" to his success. For example, in his latest letter to Berkshire Hathaway shareholders released in February 2015, Buffett reflected on investing lessons he and Vice Chairman Charlie Munger learned during the last 50 years leading the firm, offering tactical pieces of advice relevant to investors at all sizes and stages.
So when one of the most successful investors of all time so openly gives you a glimpse into the inner workings of his success, you'd be wise to pay attention. But why do most other funds ignore Buffett's investing strategies despite their successful track records?
In my view, a great deal of this is explained by incentive misalignment between hedge fund and activist investors who are investing other people's money for large fees and short-term gains, versus Buffett who charges no fees to his investors and invests 99 percent of his wealth alongside them. While some hedge funds make it big in the short-term, they usually cannot sustain their success. It seems to explain why all the pressure from traders, hedge funds, and their academic partners is on the short-term gains -- which ultimately led to the 2008 financial collapse.
Berkshire Hathaway's success is due, in part, to Buffett's willingness to avoid playing the short-term financial game. Buffett has said that his preferred holding period is forever. In the 2015 letter to shareholders, Munger wrote that Buffett would "deploy most cash not needed in subsidiaries after they had increased their competitive advantage, with the ideal deployment being the use of that cash to acquire new subsidiaries." In short, Buffett did not want cash back from a business until it had both increased its competitive advantage and considered good-fit strategic acquisitions.
On Wall Street, where failure to produce short-term results often leads to termination, Buffett has been able to rise above this pressure to build a transparent, values-based company dedicated to upholding the highest levels of business ethics and personal integrity. How? Buffett operates in his "sweet spot," a term I describe in my new bookDiscover Your True North as the intersection of one's extrinsic and intrinsic motivations and greatest strengths.
Claremont professor and pioneer in psychology Mihaly Csikszentmihalyi, has given the following advice about motivation: "Find out what you are good at and what you like to do." When you uncover opportunities that appeal to your motivations and utilize your strengths, you discover your sweet spot and will be most effective as a leader. Buffett's success lies in a conscious decision to design his life to take advantage of his strengths and focus on his motivations. Clearly, Buffett's strength is investing. His passion for the trade began when he was a young child. At the age of 11, Buffett made his first stock investment in three shares of Cities Service Preferred at $38 a share. Despite the stock dropping quickly to $27, Buffett held on and sold when the stock reached $40.
In his first full-time job as a stockbroker, Buffett felt conflicted because he could only generate commissions by pushing clients to trade actively, even when it was against their best interest. Rather than learning the tricks of the trade, Buffett invested his time in learning how to fundamentally analyze stocks. In 1954, Buffett took a position as apprentice to The Intelligent Investor author Benjamin Graham, without even asking the salary. When Graham decided to retire two years later, Buffett returned to his hometown of Omaha, Nebraska to open his own investing firm at the age of 26. This bold move positioned Buffett at the intersection of his motivations and his greatest strengths -- his sweet spot.
Extrinsically, Buffett is motivated by being valued and gaining public recognition that allows him to raise his profile and gain access to deals. He is not motivated by material possessions. He still lives in the Omaha house he bought for $31,500 in 1956, eats simple meals at his favorite restaurant Gorat's, and drives a 2014 Cadillac XTS that he bought after he sold his 2006 Cadillac DTS in a charity auction. Intrinsically, Buffett is motivated by learning and sharing his knowledge, as evidenced by his candid and educational Berkshire Hathaway letters to shareholders.
As a result of Buffett's philosophy, Berkshire Hathaway's returns have more than doubled the S&P 500 Index for the past 40 years. To put that success in context, Buffett has created twice the shareholder value of Goldman Sachs and Morgan Stanley combined with 24 people in a 5,000 square foot office in Omaha.
Buffett asks his partners, "Do you love the business, or do you love the money?" He only wants those who love the business.
From Psychology Today, posted September 29, 2015.
How well do you know yourself? How deeply do you understand your motivations?
If you’re on this website, you probably know the basics of psychology. You understand biases, the power of the halo-effect, or even how we make decisions.
But, do you understand what drives you? Your own self-image? Or how others experience you?
The charge, “Know thyself,” is centuries old, but it has never been more important. Research from psychologist Daniel Goleman shows that self-awareness is crucial for all levels of success. As he outlines in Emotional Intelligence, above an IQ of 120, EQ (Emotional Intelligence) becomes the more important predictor of successful leaders. Developing self-awareness is the first step to develop your EQ.
You can’t gain self-awareness through knowing psychology. Rather, it requires a deepunderstanding of your past and current self. Experiences shape how we see the world. So, we have to reflect on how the world has shaped us.
How can you gain self-awareness? Here are three steps to start.
1.Understand Your Life Story
Over the past 10 years, psychologists have focused on a new field of research called narrative identity. As Dan McAdams, Northwestern University psychology professor, explains, “The stories we tell ourselves about our lives don’t just shape our personalities –- they are our personalities. ”
Your narrative identity is the story of your life; but it’s more than just a story. How you understand your narrative frames both your current actions and your future goals. As research from Southern Methodist University shows, writing about difficult life experiences improves our physical and mental health. How much you confront your life’s challenges - what I call “crucibles” - defines your level of self-awareness.
So, how can you begin? In Discover Your True North, I give a few questions to start.
Looking at your early life story, what people, events, and experiences have had the greatest impact in shaping the person you have become?
In which experiences did you find the greatest passion for leading?
How do you frame your crucibles and setbacks in your life?
2. Create a Daily Habit of Self-reflection
Next, you should develop a daily practice of setting aside at least twenty minutes to reflect on your life. This practice enables you to focus on the important things in your life, not just the immediate. Research from Wisconsin’s Richard Davidson demonstrated direct correlation between mindfulness and changes in the brain - away from anger and anxietyand toward a sense of calm and well-being.
Reflection takes many forms. Some keep a journal, some pray, and others take a long walk or jog. Personally, I use daily meditation as my mindful habit. By centering into myself, I am able to focus my attention on what's really important, and develop an inner sense of well-being.
3.Seek Honest Feedback
We all have traits that others see, but we are unable to see in ourselves. We call these "blind spots." Do you see yourself as others see you? If not, you can address these blind spots by receiving honest feedback from people you trust.
Receiving feedback is hard. So, focus on psychological triggers that might block your learning. As Harvard’s Sheila Heen argued in “Thanks for The Feedback”, three main triggers prevent our learning: relationship triggers, identity triggers, and truth triggers. If you feel defensive, think back to why you do. Often, we can explain it using these triggers.
Becoming self-aware won’t happen in a day. Rather, it will take years of reflection, introspection, and difficult conversations. As you follow these three practices, you will find you are more comfortable being open, transparent, and even vulnerable. As you do, you will become a more authentic leader and a more self-aware person.
From The Huffington Post, Posted September 24, 2015.
The following is an excerpt from Daniel Goleman's new collection, The Executive Edge: An Insider's Guide to Outstanding Leadership.
Daniel Goleman: You say that you have to do a certain kind of inner work to find your true north, to be an authentic leader. What is that inner work, and where does it lead?
Bill George: I think it starts with your life story, knowing where you came from, who you are, what really is important. What has shaped you along the way. And what we found was everyone wants to talk about that, but about 80% of the people want to talk about the crucible -- the most difficult time of their life. Think of the crucible where the refiner's fire tests you, and that's where you're really tested. We aren't tested by success; we're tested by going through a very difficult time and saying, "If I can get through this, I can get through anything." You don't deny that you went through that, and I think that's what shapes you, but the key is: How do you frame that crucible?
Goleman: The crucible can be a job loss, a disaster, a business going under?
George: A rejection by good friends, not being cool in school. I lost seven elections. Was I a failure? Yeah, but I had to learn from that experience. I wanted to be a leader and I was being rejected, seven times in a row.
If you aren't willing to live it, if you go into denial and say, "well, that didn't happen" -- actually it did happen. It's part of who you are, so it's how you frame it. Can you frame yourself as a victim? "Those kids didn't like me, so that was the problem," or do you see how that was a great learning experience, and ask yourself, "how do I learn?" And so that then shapes what we call your true north, your most deeply held values and beliefs. What do you really believe, at your core? Do you believe people are inherently good, or basically not good? What are the values you live by, and then what are the principles you translate into leading or interacting with people?
And people know what those are. I've rarely encountered anyone who didn't know. The question is: "Can I stay on course? Can I be successful? They're going to kill me. If they knew who I really was, they wouldn't be interviewing me." Well, actually, they might! It's a cathartic experience to share who you are, and not be rejected. I think that's so important, because otherwise you're living a lie. You're hiding parts of you -- that you got fired from a job, that you had problems. But that's part of who we are. If that's what has shaped you, it's a good thing.
Goleman: What's the role of self-awareness in finding your authentic self?
George: There's been a lot of work -- and you've done a lot more work than I have on this -- but one of the things that I've observed in leaders is beyond a certain level of IQ. Leadership is not defined by IQ, it's defined by emotional intelligence. And at a certain level of IQ, I actually think it's inverse, so if your IQ is so high that you won't listen to anyone else, you're not going to be a very good leader. And so it can actually work against you.
Goleman: Although, I would say it may not be your actual IQ. It sounds like you're talking about a narcissistic leader.
George: Exactly. That's a person who has to be the smartest person in the room, no matter what the question is, what the field is, or whether it's his area of expertise or not.
But to me, the essence of emotional intelligence is self-awareness. How can I have great relationships with other people if I don't know who I am? And that is the key factor of why people are successful in leadership. They may achieve, they may get to this point, but they may fail too. Better to fail early than to fail when you get the big responsibility.
What I've been wrestling with is how do you gain self-awareness? I feel that you have to have real-world experience. I think you have to have a way to process experiences internally. Call it reflection, introspection. I have to meditate regularly. Some people like to pray. Some people have an intimate person, a spouse, or someone with whom the can share everything. You have to have some way to process that experience. Just having the experience doesn't do it, because you'll repeat the same mistakes and you just find the mistakes get bigger and bigger. I also think you need to have a way to process it through feedback -- honest feedback with other people that you trust, not feedback from people you don't trust. Having a group of people with whom you can share on an intimate level, not at a superficial level. So many of our societal interactions are superficial today. They don't allow us to be truly authentic.
From The Executive Edge: An Insider's Guide to Outstanding Leadership. Copyright 2015 More Than Sound. Reprinted with permission from More Than Sound.
From Total Picture, Posted September 22, 2015.
Don't expect the same Q&A with Bill George on other podcast interviews. We don't go by the talking points provided by the publisher. True North, originally based on first-person interviews with 125 leaders, became a must-read business classic when it was first introduced in 2007. Today, authenticity has become a key issue in the C-Suite, boardroom, in HR and recruiting initiatives, corporate communications, marketing campaigns, and of course, politics.
In his substantive follow up to True North - Discover Your True North: Becoming An Authentic Leader, Bill George, former Medtronic chairman and CEO, and senior Fellow at the Harvard Business School, Introduces 47 additional interviews with leaders who represent the diversity of a new generation.
Welcome to a Leadership Channel podcast on TotalPicture, this is Peter Clayton. Today, I'm pleased to welcome Bill George to the program.
Today's feature interview with Bill George is brought to you by RecruitiFi, a unique new category of recruiting that connects top recruiters with companies looking to hire exceptional talent. Use this link and receive a special discount offer on your first JobCast.
I also want to give a shout-out to our friend and frequent contributor to TotalPicture David Dalka, who was instrumental in organizing today's interview, research and development of our talking points. David was scheduled to participate in our discussion with Bill, but couldn't, due to technical issues with his Skype connection.
Questions Peter Clayton asks Bill George in this podcast:
I've had a number of retired and former CEOs tell me what they miss the most is the corporate jet. What do you miss the most?
Although Medtronic has a diverse board of directors (good for them)! What did you learn from the transition as CEO to former CEO? Going from 110% to 0%
You are on a number of important boards, including Mayo Clinic and Goldman Sachs. Joining a board of directors is not what it was 20 years ago. What have you learned from your participation in a number of high-profile boards?
What advice do you have for those seeking, or considering board membership?
Speaking about 20 years ago... it's a different world today. Corporate PR departments no longer control the message: Facebook, Twitter, Glassdoor and others do. What recommendations do you have for leaders regarding social media - and how they consistently deliver their "True North" in such a volatile 24/7 environment?
M&A deal are back in fashion. However, corporate cultures often clash. - (Say BofA and ML) What advice to you have for those in management and leadership positions caught in a merger? How can True North help determine outcomes?
Bill George is Senior Fellow at the Harvard Business School and former chairman and CEO of Medtronic, the world's leading medical technology company. Under his leadership, Medtronic's market capitalization grew from $1.1 billion to $60 billion, averaging 35 percent a year. He is the author of the best-selling Authentic Leadership and a board member of Goldman Sachs, Exxon, and the Mayo Clinic. George has been recognized as "Executive of the Year" by the Academy of Management, "Director of the Year" by the National Association of Corporate Directors, and received the prestigious Bower Award for Business Leadership - given annually to the nation's top business leader.
Link to Podcast HERE.
From The Huffington Post, posted September 22, 2015.
Are companies and their boards succumbing to short-term pressures from shareholders?
That's the concern of Larry Fink, CEO of Blackrock, the world's largest fund manager with $4 trillion in assets under management. Fink personally wrote to all CEOs in the S&P 500 index last spring to warn them about trying to return money to investors through so-called "shareholder-friendly" steps like increasing dividends and buying back stock. Fink believes pressure from activist investors is harming long-term shareholder value, despite stock price increases that often follow.
The pressures today have never been greater on chief executives and boards to produce short-term results and maximize shareholder value. The paradox of these pressures is that they may actually destroy long-term shareholder value if they force executives to cut R&D, capital spending, new ventures and expansion in emerging markets, thus constraining future growth potential.
What is missing in the faux debate about "shareholders versus stakeholders" is a deeper understanding of how shareholder value is created. It is not just by cutting costs, as steadily declining revenues spell doom as they did for Sears and Kodak. Rather sustainable shareholder value - which I believe should be the goal of every company - comes from serving society through great products and services that in turn meet customer needs and create profitability, cash flow for ongoing investments and shareholder value. As Infosys Founder Narayana Murthy argued, "You cannot sustain long-term shareholder value without creating sustainable value for your customers."
The responsibility of corporate leaders is to achieve their short-term objectives while investing for future growth. It is not an either-or trade off. But those who make their quarterly numbers by cutting future investments or financial engineering are headed for trouble. Investors can always sell their stock before the long-term consequences are apparent, but corporate leaders are responsible for ensuring their firm's viability for the long-term.
Look at what happened to General Motors under former CEO Rick Waggoner and his predecessors, who consistently opted for short-term profits over product improvements and quality. Over forty years GM's U.S. market share eroded from 52% to 18%, and the firm wound up in bankruptcy when the global recession hit in late 2008. Contrast that with Ford's Alan Mulally who borrowed $23.5 billion in 2006 to invest in retooling Ford's entire product line and had sufficient reserves to withstand the 2008-09 market downturn -- consequently, Ford continues to thrive.
In recent years short-term traders and hedge funds have steadily gained power. These active investors, earning high fees and taking 20% of gains, have had a powerful impact on capitalism. For the past five years, however, they have struggled to justify their high fees because they have been unable to consistently outperform index funds, so increasingly they focus on driving short-term gains rather than investing for long-term returns.
These trends are raising questions about the ultimate purpose of business: is it solely to meet shareholder's near-term expectations or do companies have larger obligations to serve society and all their stakeholders, including shareholders?
Public companies get significant privileges as limited liability corporations because they are chartered to serve society. If they do not honor their obligations to individual countries, they may be forced to depart, or have their freedom constrained by laws like Dodd-Frank imposed on financial institutions. Unfortunately, current pressures in the financial system may be forcing companies to view themselves as extractors instead of beneficiaries of society.
As my HBS colleague Michael Porter argued in his 2011 HBR article, "Creating Shared Value," when businesses focus on both societal benefit and economic profit, they do the most good through the business model itself. General Electric's Eco-Imagination line, for example, develops energy efficient products like traditional light bulbs that are growing rapidly and have positive externalities in saving energy.
Instead of including society as one of its many stakeholders, World Economic Forum President Klaus Schwab argues that companies should view themselves as stakeholders in society. When the world we live in improves -- education expands, violence decreases, or global warming slows - everyone wins, especially shareholders. Walmart, for example, cut greenhouse gas emissions in 2009 by reducing packaging and decreasing truck routes by 100 million miles, and it saved $200 million.
As Porter observed, "The new thinking reveals that congruence between societal progress and productivity in the value chain is far greater than traditionally believed. Few companies have reaped the full productivity benefits in areas such as health, safety, environmental performance."
A pioneer in the sustainability movement, Unilever CEO Paul Polman summed up this new mission of business, "It's not enough anymore to say you contribute to a better world. Instead of thinking how you can use society to be successful, you have to start thinking how you can contribute to society and the environment to be successful." Polman concluded by saying, "Unilever's purpose is having a sustainable business model that is put at the service of the greater good. It is as simple as that."
What if all companies reframed their purpose along these lines? Think of the impact that global companies and local enterprises could have on addressing the world's most pressing problems.
From PostBulletin.com, posted September 18, 2015
Four years after its creation, the Mayo Clinic Center for the Science of Health Care Delivery kicked off its inaugural Delivery Science Summit on Wednesday.
The three-day conference at Mayo Civic Center is the ambitious initiative's first opportunity to gather medical, big-data and clinical-research professionals in order to move academic initiatives closer to implementation.
The three goals of the gathering were "the holy grail" of health-care reform, in the words of Mayo Clinic CEO Dr. John Noseworthy: improve population health, improve the patient experience and better manage costs.
This means looking beyond the best treatments for illnesses, said course director Dr. Lois Krahn, to understanding the barriers preventing health systems from delivering those treatments on a consistent basis.
"We hope our participants will gain an appreciation of high-quality health-care delivery, that it's important to get the right diagnosis, and critical to get the right treatment. But unless that reaches the patient, we will not reach our objective."
The center was made possible by a $100 million gift from benefactors Robert D. and Patricia E. Kern, and its work is meant to be shared.
"It's really a chance to begin to roll up our sleeves to fix health care as a team," said Dr. Veronique Roger, director of the center, who said that a big challenge is learning how to take ideas into practice. "How do we get it to become business as usual, that's the big question. It takes 17 years for information to get from the lab into practice. We need to compress that time."
Speakers drew attention to integrated care and team-based medicine, historically Mayo attributes positioning the center to become a leading voice on the question of how to repair a fragmented system.
"We are organized around hospital needs and departments," said opening speaker and former Medtronic CEO William George. "We need to organize health systems around patients, and not siloed departments."
George also called for organizing care around disease states and not medical specialties, in order to insure that specialties work together. "All too often we are reimbursing outputs," he said, "not outcomes."
His other targets included "the unhealthy competition between primary and specialty care," and the idea that only those at the top of the system can make change happen.
"Leadership happens at every level," he said. "The missing element in health care is the absence of leaders. Each of us is called upon to lead and do what we can to make changes in the system."
"We need a deeper understanding of the last three feet of health care," he said, "the distance between me and my doctor, or my nurse or my receptionist. We have to understand the last three feet of medicine."
The meeting drew 80 percent of its 350 attendees from within Mayo Enterprise, but also drew visitors from six countries and 23 states. It continues today through Friday at the Mayo Civic Center.
From Star Tribune, posted September 17, 2015
Former Medtronic CEO Bill George told students at Minnetonka High School on Thursday to find out who they really are and to stay true to that through the travails of life.
Everyone’s purpose takes some digging to pinpoint, he said, and he believes it is crucial for people to find their own “true north.”
George’s message went beyond life-coaching, touching on a tragedy still fresh in the community.
“Life is very precious,” he said.
George, 73, was referring to the loss of his mother and fiancée early in his life, but also a tragedy that was close to home for the audience. The school is still wrestling with the Short family murder-suicide last week. The children, Cole, who was 17, Madison, who was 15, and Brooklyn, who was 14, had all attended Minnetonka High School.
George said these tragedies often serve as a reminder of what he views as a major purpose in his life: making a difference.
George, who is now a professor of management practice at Harvard Business School, has written books on this subject.
Minnetonka High School students in a professional studies program are studying one of his books, “Discover Your True North,” which focuses on leadership and ethics in business.
The program, called VANTAGE, is a yearlong course for juniors and seniors where students learn about business through projects, case studies and community mentorships.
George didn’t always know his “true north.” He’d thought he was on the path to becoming CEO at Honeywell, but realized he had lost his purpose. So George turned to Medtronic and immediately felt at home there, calling it the best time of his professional life.
“Stay on track,” he said to the crowd. “Know who you are.”
That message of experimenting before finding a perfect fit left an impact on students in the audience who are deciding on college and career options.
“I found it to be really insightful that the best way to find where you want to be is just to try it out,” said Smetana Larson, a senior in the VANTAGE program.
From The Huffington Post, posted September 16, 2015
Are you the hero of your own journey? Or are you a servant-leader who empowers others?
All of us start out in this world as individual contributors. In our early years we are measured by our grades, test scores, and solo accomplishments. As we enter the world of work, many of us envision ourselves in the hero's image who can change the world. This is a perfectly natural embarkation point for leaders. Today's leaders like Facebook's Mark Zuckerberg and Google's Larry Page have their own change-the-world narrative, yet as they matured, both have become outstanding leaders of others.
As we take on leadership responsibilities, our orientation must change. As GE's Jamie Irick said in Discover Your True North, "If you want to be a leader, you've got to flip the switch and understand it's about serving the folks on your team. This is a very simple concept, but one many people overlook. The sooner people realize it, the faster they become leaders."
Irick captured the essence of servant-leadership. Robert Greenleaf, father of servant leadership, described servant leaders in 1970:
A servant-leader focuses primarily on the growth and well-being of people and the communities to which they belong. The servant-leader shares power, puts the needs of others first, and helps people develop and perform.
We call this journey the "I to We" transformation, because it requires that you shift your focus from your success to the success of others. In our classes for MBAs and executives at Harvard Business School, we realize this transformation is the most important one leaders experience.
Some leaders never get there, as they envision amassing legions of followers whose roles are to support them. If you fall into that trap, you will never engender great loyalty or commitment from your teammates, nor will you become an authentic leader.
Nonetheless, some fear that focusing on others may sidetrack them from reaching their personal goals. However, the opposite is true: As a leader, you can only achieve great things by being a servant leader.
Research has demonstrated conclusively that "other-focused" leaders lead more effective teams. As Wharton psychologist Adam Grant explains, "They do so by bringing out the best in others." As a result, givers rise to the top of their profession.
When leaders stop focusing on their needs, they are more effective in developing other leaders. By overcoming their need to control everything, they learn people are more interested in working with them. A light bulb turns on as they recognize the unlimited potential of empowered leaders working together toward a shared purpose.
The graphic below captures some differences between "I" leaders and "We" leaders.
At the core of these two approaches is the leader's belief: "I" leaders believe they have the answers, and the best results will be achieved if others follow their direction. "We" leaders, on the other hand, believe that superior results result from teams of people exploring possibilities, debating options, and agreeing upon a course of action. Underlying their approach is the belief that "people support what they help create."
It took me a long time to learn this. In my early leadership roles, I had a clear vision of what needed to be done. I spelled it out clearly to my team and invited them to challenge it, spending most of my time selling others on my ideas. When you're the boss, you can be quite "persuasive"! As one confidant said to me, "Bill, you're not getting the best out of your team because you're so forceful that you shut out their ideas." Advice well taken. After that, I tried my best to draw out others before asserting my opinions.
Making the transformation from I to We requires introspection and cognitive reframing of how you see your role as a leader, and how much you respect others' ideas and their willing commitment. For some leaders this requires a mid-career crucible.
Steve Jobs faced such a time when he was fired by the Apple board. During his early years, Jobs was the classic "I" leader. Wildly charismatic and visionary, he bullied, cajoled, inspired, and ultimately exhausted everyone around him. The board determined the company simply couldn't handle his domineering, though brilliant approach. He went on a journey to rethink his life and leadership. As he said,
I didn't see it then, but getting fired from Apple was the best thing that ever happened to me. The heaviness of being successful was replaced by the lightness of being a beginner again, less sure about everything. It freed me to enter one of the most creative periods of my life.
As part of his journey, he purchased an animated movie company, which he renamed Pixar. There, he teamed up with two great innovation leaders, Ed Catmull and John Lassiter. From this experience, Jobs grew from a great innovator to a great innovation leader. That paved the way for him to return to Apple as much more of a "We" leader who knew how to use the talents of his teammates.
Where are you in your journey? Have you become a "We" leader? Or do you shift back into an "I" mode under pressure? How has this affected the results your team accomplishes?
As you make this transformation, you are growing into a "leader of leaders" who has unlimited potential to lead others to achieve great things. In so doing, you become a servant-leader. Isn't this what leadership is all about?
The ideas in this article are drawn from Chapter 9 of Discover Your True North.
From CNBC.com, posted September 15, 2015
Just when we thought we were past the corporate scandals of the past decade, two new crises have emerged at large global companies – Toshiba and United Airlines.
Last week, Toshiba announced an "accounting adjustment" of $1.9 billion, more than four times the original estimate in April when the problems initially surfaced. Toshiba's problems extend back for seven years, and have cost CEO Hisao Tanaka and two key executives their jobs. They have acknowledged awareness of the improper accounting, which they attribute to short-term profit pressures.
These adjustments are not just accounting errors, they may be indications of potential fraud. If Toshiba was an American company operating under Sarbanes-Oxley, its CEO and CFO could be subject to criminal penalties.
That was followed by United Airlines announcing the resignation of its chief executive, Jeff Smisek, for his involvement in the corruption scandal with David Samson, former chair of the Port Authority of New York and New Jersey, involving special flights from Newark to Columbia, SC, where Samson has a home. In addition to Smisek's resignation, two other top United executives involved in the scandal have also departed.
The former CEO of Continental Airlines, Smisek led the merger of United and Continental in 2010. As CEO for the past five years, he has been confronted by a host of operating problems from delays, computer problems and breakdowns in the reservation system plus difficulties with merging the unionized workers of the two airlines. This has led to enormous pressure on Smisek from United's shareholders.
What is even more shocking about Smisek's departure is that the United board has granted him a $4.9 million termination settlement plus 60,000 shares of stock worth more than $3 million. He was also awarded lifetime flying and parking privileges, this year's bonus and his company car. This calls into the question whether the board exercised its responsibility to set a high bar on ethics for the company.
Scandals like these have no place in today's world. They tarnish all corporations in the eyes of the general public. In both cases the CEOs were well aware of the rules and yet engaged in inappropriate and potentially illegal activities. For what reason? It appears they were responding to pressure from investors to improve short-term performance. That's no justification for engaging in corruption, nor should we blame investors for demanding better results. And both scandals involved their subordinates as well. Will it turn out that the corruption at the top levels of United and Toshiba goes much deeper?
The CEO's role is to develop sustainable strategies that enable their companies to perform in the near term while investing for long-term growth. In sharp contrast to Smisek's leadership, Delta CEO Richard Anderson has done just that since the company emerged from bankruptcy and acquired Northwest Airlines in 2008. Delta's employees are engaged and focused on their customers, its computer systems work well, and the majority of its flights arrive early. This has led to very strong bottom-line results.
These days the public and investors are entitled to demand that companies have integrity in their accounting and their dealings, and operate with openness and transparency. Neither Toshiba nor United did so. As a consequence, their reputations are deeply scarred.
Asking board members who presided over these debacles to take over as CEO is not right either, other than on an interim basis. Rather, the boards of Toshiba and United Airlines need to bring in high integrity leaders who can restore the confidence of their customers, employees and shareholders. Failing that, expect both of these giants to continue to decline.
The only good that can emanate from these situations will be if other companies' boards and CEOs learn from them. Capitalism only works when its leaders put first their moral responsibilities to the company and society.
From Fortune.com, posted September 9, 2015
If baby boomers are the “Me” generation, then millennials are fast emerging as the “We” generation. With a focus on service, global leadership, diversity, and emotional intelligence, they are taking on leadership roles faster than any cohort since the Greatest Generation.
During the past 12 years, I’ve taught more than a thousand millennials at Harvard Business School, spending countless hours to help them understand their aspirations and motivations. To attract the best talent and motivate millennial workers, boomer-run businesses need to understand them and create opportunities for them to lead now, so the baton can be passed.
In putting together my new book, Discover Your True North, I learned even more about this generation. Here are four key lessons I picked up along the way, along with four star millennials who embrace each one.
Millennials are committed to serving others rather than pursuing their own self-interests. Many are looking for opportunities to serve in immediate ways and help solve social problems.
Look at Seth Moulton, one of the youngest U.S. Congressmen at 36 years old. In his Harvard commencement address, he challenged his peers to commit to service. But it wasn’t just lip service: After graduation in 2001, Moulton joined the Marine Corps and served four tours of duty in Iraq—the last as special assistant to Gen. David Petraeus during the Iraq surge. Seven years later, he upset a long-standing Massachusetts incumbent after trailing by 32 points the summer before the election. In his victory speech, he talked of Congress’ misunderstanding of the military and lack of support for veterans, declaring, “I am going to Washington to change that.”
Millennials’ perspective is more global than any other generation. They engage deeply in global issues, especially in developing countries.
As a teenager, Abby Falik traveled to Indonesia and was overwhelmed by the extreme poverty there. She then spent a summer teaching in Nicaragua and took a year off from college to return to build a library, an experience she said “broke me down.” Falik then created non-profit Global Citizen Year (GCY) in 2008 to create a bridge year between high school and college for high-potential leaders who want to do service work abroad. Thus far, GCY has sent 500 students to live in developing countries and has secured donors including the Arnhold Foundation and money manager Shelby Davis, who have each contributed a million dollars or more.
Millennials celebrate diversity. They welcome people of different ethnicities, religions, genders, national origins, and sexual orientations, recognizing that these differences enrich their lives.
In 2009, Brian Elliott founded Friendfactor, a non-profit organization that recruits straight people as visible allies to their LGBT colleagues in their workplaces and campus communities. The group’s flagship program, the Friendfactor MBA Ally Challenge, tries to get business schools to engage as many students as possible in building LGBT-friendly campus cultures. Since 2012, Friendfactor says the Challenge has included 23 MBA programs and more than 11,000 students, and improved the schools’ cultures with 50% more LGBT students feeling comfortable being out to everyone on campus.
Millennials rely heavily on emotional intelligence (EQ). The old notion of leaders as the smartest guys in the room has been replaced by authentic leaders with high EQs. Millennials yearn to see their leaders as authentic people, with whom they can relate on a personal basis.
Tracy Britt Cool, a mentee of Warren Buffett, exemplifies the importance of EQ. Britt, who grew up working long hours on her family farm, stood out in my MBA classes with her insights into the human dimension of business problems. Upon meeting in 2009, she and Buffett connected instantly, as he sensed her talent and integrity, and she immediately accepted his offer to join Berkshire-Hathaway brk.a. Five years later, Britt oversees investments worth billions, sits on the board of Kraft Heinz, and is CEO of Berkshire company The Pampered Chef.
With all the differences emerging among millennials, it remains to be seen whether they will stay committed to serving others into their middle years, or fall prey to using their newfound power for their own benefit. The boomers of the “Me” generation were kids of the Kennedy era, who were equally idealistic in the 1960s, only to have their idealism squelched by the Vietnam War and their desires for increased financial stature.
Will the millennials face a similar fate? Only time will tell. Nevertheless, it’s time to give them the opportunities they seek to lead now. They will change the face of America and of our business, non-profit, and government organizations.
That will be good for all of us.