Blog

Leadership Kudos and Gaffes: Tenacity and courage from Merkel and Sarkozy

Leadership Kudos for the week go to Germany Chancellor Angela Merkel and French President Nicholas Sarkozy. Their tenacity and political courage enabled them to forge a deal to prevent the pending default in Greece and requiring the bankers to take a reduction of 50 percent in the value of their bonds. This was not an easy sell politically in either country, but they both recognized the importance of the Euro and keeping a single trading group in Europe. Only time will tell whether Europe’s other high-debt nations like Spain, Italy and Portugal will move aggressively to get their economies in order and reduce their debt, but Merkel and Sarkozy have sent an important signal of what is required to save the Euro.

Leadership Gaffes go to MF Global and CEO Jon Corzine for taking the firm into bankruptcy by betting $6.3 billion on the sovereign debt of Italy and Spain, refusing to listen to colleagues who pleaded with him to reduce the risk, and declaring “our positions have relatively little underlying principal risk.” In this volatile era solid risk management, adaptability to changing markets, and high levels of liquidity are essential for survival.

Fortune "40 Under 40" Show a Bright Future for America's Emerging Leaders

Fortune magazine is out with its annual “40 Under 40” list of business leaders and superstars. Reading through their bios gives great hope for the leadership we can anticipate from the next generation. All forty of these leaders are passionate about their work, deeply engaged in it, and most important of all, committed to making a difference in the world.

Familiar names like Facebook founder Mark Zuckerberg (#1), Google founders Larry Page (#2) and Sergey Brin, and Tony Hsieh of Zappos dot the list. But a deeper dive reveals some of the most interesting leaders of the new generation. Let’s take a deeper look at some of them:

  • Aditya Mittal (#4) may have a famous father, Lakshmi Mittal, but he is a genuine star in his own right. Aditya has been CFO of AcelorMittal, the world’s leading steel company, for a number of years and he personally led the complex merger between French producer Acelor and U.K.-based Mittal. In spite of the pressures of his work, he is equally committed to his children and his wife’s career.
  • Daniel Ammann (#7) is the CFO of General Motors who has led GM back to profitability, financial stability, and competitive labor agreements with the UAW. The latter will enable GM to get a lot closer to being competitive on a global scale and bring small car production back to Michigan – and they said it couldn’t be done!
  • The entire George family is thrilled that our son Jeffrey made the list at #9. Thanks to Novartis leaders Dan Vasella and Joe Jimenez, he was given a remarkable opportunity three years ago to lead the turnaround of its generics drug subsidiary, Sandoz. Now the second largest generics company in the world, Sandoz has grown in double digits each of the last three years.
  • Kevin Plank (#12) is a superstar who founded Under Armour and has built it into a remarkably successful sportswear company. Its fashion-forward apparel are the rage of the younger generation and it's is rapidly growing among the older set as well.
  • Cesar Conde (#14) is president of Univision Networks, the leading Spanish language television network in the U.S. Cesar’s mother fled Cuba after the Castro revolution. In 2007 we interviewed Cesar for True North where he noted in reference to his employees, “It is motivating to realize I have the opportunity to do something great for other people.” Cesar is a caring and compassionate leader who heads the most rapidly growing cable network.
  • Michael Hasenstab (#15) runs one of the world’s largest hedge funds for Franklin Templeton, where he manages $60 billion and has achieved double digit gains with contrarian bets. Coincidentally, he went to Carleton with our son Jeff, where they were both international relations majors who led Carleton’s very successful Model UN team.
  • Marissa Mayer (#20) is a superstar at Google where she led the creation of breakthroughs like Google Earth and Google Maps. Currently, she is spearheading the integration of Zagat, Google’s most recent acquisition.
  • Libby Wadle (#23) is executive vice president of J. Crew, where she built its outlet division and is currently running its retail and direct-sales operations. That puts her in line to succeed CEO Mickey Drexler.
  • Charles Best (#31) founded Donors Choose, a rapidly growing non-profit that has raised $90 for public school classrooms in the past decade. His creative funding model is bringing in tens of thousands of new donors to the philanthropy world.
  • Erin Burnett (#33) is the rapidly rising star of the cable world. She led CNBC’s very successful early morning show, “Squawk Box,” where she interviewed me numerous times. The depth of her questions reflected a probing intellect and thoughtful insights that went well beyond the obvious conclusions. Now she has joined CNN, where she has her own primetime show. Look for more great things in the future from Erin.
  • Carolyn Everson (#35) is leading Facebook’s initiatives in creating partnerships with name brands and advertising agencies – the backbone of Facebook’s revenues that has created its market value of more than $50 billion. She and COO Sheryl Sandberg form an awesome team whose efforts make Mark Zuckerberg (#1) not only look good but remarkably wealthy, on paper at least.

Books We Trust

By: Charles Green of Trusted Advisor

This is the seventh in a series called Books We Trust.

Bill George is author (with Peter Sims) ofTrue North: Discover Your Authentic Leadership. Part of the J-B Warren Bennis series, it has been widely read and praised. In his new book, True North Groups, he (with co-author Doug Baker) focuses on how True North precepts can get established for people and organizations.

Bill George is another small-town Midwesterner who made it (very) big. After punching his ticket in the McNamara Defense Department days, he eventually spent a decade each with Litton Industries, Honeywell, and Medtronic (where he was CEO).

These days he teaches leadership at Harvard Business School and serves on the Board of several Very Big companies. Click to his bio; you’ll be impressed.

Bill does not waste time; we got right into it.

Capitalism: Back to the Future

Trusted Advisor Associates: Bill, after your MBA, you spent decades in big-business companies that worked closely with government. How did you feel watching the progression of Milton Friedman, Michael Jensen, Ayn Rand, Alan Greenspan, and the doctrine of shareholder value—an ideology that pitted business against government?

Bill George: Michael Jensen has recanted; he’s writing about ontological leadership with Werner Erhard. Greenspan admitted the flaw in that ideology.

There’s been a total transformation. We have collectively realized the flaws in those old simplistic economic theories; this notion that people are motivated only by self-interest, this is simply not true. Mike Porter is another one, a brilliant guy who is now writing about shared value, not shareholder value.

There is a transformation in business right now of major companies moving away from that old paradigm.

Take Alan Mullally at Ford; he’s changing things there right down to the individual employee level. He is focusing on the long term, on sustainability.

Corporate CEOs today are the best I’ve seen, the best in my lifetime. Besides Mullally at Ford, there’s Palmisano at IBM. Steve Jobs rightly got a lot of credit. All the CEOs I know are moving away from shareholder value to values and vision. Paul Polman at Unilever says, ‟My job is not to serve the shareholder, but to serve the customer.”

TAA: That’s pretty optimistic. What do you think happened?

Bill: It’s just what’s happening, that’s all. These things only happen when you come to realize we were going the wrong way. Think Enron; that was a hugely emblematic event…there were 100 large companies with very large “accounting” problems.

You get a raft of major companies like BMS with a $1.5B accounting adjustment, and that’s not an accounting problem—that’s a failure of leadership. This went way beyond a few crooks; this was a business disaster.

But we’ve seen that. Outside Wall Street, there are a lot of really big companies that are just done thinking that way. Not going back.

Wall Street and Washington

TAA: What about Wall Street?

Bill: Wall Street never ceased. The problem is maximizing short term shareholder value―that’s the best way to go out of business. So it’s really not surprising Wall Street melted down.

Regarding Wall Street, I’m a wait and see guy. There are all new CEOs on Wall Street now―Jamie Dimon and Lloyd Blankfein are the old guys. The new folks are the ones who’ll have to make the call. A guy like Paulson can make $4B selling things short; that’s legal, he does it fair and square, but let’s not kid ourselves that’s value creation—it’s not.

TAA: What about Washington?

Bill: I’d like to see them lead, but we’ve got to take it out of the political arena: we’re just not going to get there via the politicians. They’re more interested in the parochial, ideological interests.

And that’s the greatest sin. We in business lost sight of why we were in business, lost track of the role of leadership in the first place.

Toyota and J&J took their eyes off the ball. Ford’s now beating Toyota, because Toyota took its eye off the long-term, culture/quality ball. And Ford rediscovered it.

I was on the board of Novartis. They always focused on a breakthrough drug to solve unmet patient needs―a drug that is going to advance medicine. Look at Ken Frazier at Merck, Pfizer vs. Merck, he’s pushed to keep up the level of R&D spending. Pfizer’s done the exact opposite. The short-termers keep citing Net Present Value as the driver of short-term focus, but the truth is they don’t know how to do the math right.

[CHG: An aside—read this WSJ article from February 4 of this year detailing Bill’s point: when the two companies announced their opposite strategies, the market drove Merck stock down 2.7%, while Pfizer saw its stock rise by 5.2%. That’s an 8% spread because of announced strategies.

Today, 8 months later, try comparing the two companies’ stock prices; they are back to dead even; the gap is gone. But Merck has the advantage of a tailwind in its R&D momentum; Pfizer gave it up.]

Leadership and True North

TAA: Let’s talk about leadership and bring it back to True North Groups. What should leadership be about?

Bill: Back in the day, HP was just a great company. Dave Packard totally practiced MBWA, management by walking around, a truly humble guy. Four successive CEOs now have gone the wrong way. Leadership matters greatly.

The key issue now is that the leaders’ job is not to exert power, but to empower people, including those who have no direct reports. You have to have an empowered group of employees that are excited about mission and values. If you only bring your head to work, you cut yourself off at the neck; if that’s all you can bring to the game, I’d love to compete with you.

The key issue in leadership is not to develop the next CEO, it’s to develop leaders all over the place. It’s not about developing a few good people at the top, but working on 10,000 or more.

The question is how to develop those leaders: you can’t do it through the old Darwinian GE model. Not everyone should be focused on getting Jeff Immelt’s job. That is just not where the traction is.

That’s where True North groups come in. Turns out that the best way to truly develop individual leadership capabilities is in small groups, made up of peers, of people who tell life stories, where people can find out who they really are. Because if they lead life as a fraud, thinking they’re impressing the world, it won’t work.

Steve Jobs’ most powerful message was to be who you are. Don’t let others’ opinions—Wall Street, recruiters—rob you of the courage to follow your heart. They used to snicker at me at Harvard Business School when I talked like that, but they don’t today.

TAA: How do you find a True North Group, and how do they get it right?

Bill: We found it happens in small groups. You see the success of this small-group phenomenon in affinity groups—AA, the YPO, breast cancer survivor groups, Rick Warren’s Saddleback Church—read Malcolm Gladwell’s explanation of it.

We tried to take this to people who don’t have an affinity group like that; people in business—what are they supposed to do? A great way to define a True North group is to ask yourself, “If I found out I was going to die, who would I talk to?” That’s your group.

TAA: What is it that True North Groups do?

Bill: If you buy the premise that we have to help develop people, this is the way to do it. You don’t go to Wimbledon to play tennis—you start years before. You don’t learn leadership by reading, you learn it by doing it—by living it, and talking about it. And then you need a way to process that.

There are several things we write about in the book that are critical to True North Groups’ success; I’ll highlight a few. One is non-judgmental feedback.The courage to tell it like it is—not ‘brutally,’ because that would come with judgment. Just speaking the truth, straight-up.

TAA: This is not leadership development ala Jack Welch’s GE.

Bill: A lot of people still want to use leadership development as a selection process; the big boss comes in and watches a while and says this guy’s good, that guy’s not.

Instead, you’ve got to have confidentiality and peers. This is a little hard for the leadership development people; a lot of them still like bringing people to Crotonville, but that’s too expensive.

You know the one thing we heard from leaders we interviewed? Loneliness. They’re alone. That’s true for middle managers too—the sandwich phenomenon, pushed from both ends. What’s the treatment for loneliness? A group.

People want to know, can I be real in the workplace? Is it OK? A group deals with that.

Making It Happen

TAA: You’ve actually influenced the Harvard Business School to do this, right?

Bill: My course on leadership uses small groups of 6 people. Half your time in this course is spent in authentic leadership development this way. 1,500 HBS students have gone through it—1,100 or so MBAs, and another several hundred from exec ed programs. About half your credit is for hanging out in that small group.

TAA: How well does it go over?

Bill: Neo-classical economists don’t get it, and neither do Wall Streeters—for the most part. Yet. But the rest do. It is quite significant that the Harvard Business School appointed Nitin Nohria as Dean. [Readers might also enjoy an early TrustMatters blogpost on the MBA Oath].

TAA: How does this play out for you?

Bill: Here’s the irony: all my life I’ve seen myself as a leader—because people followed me. Now I realize, that’s not what it’s about at all. It’s about empowering others.

I get to talk to all these great leaders—Mullally, and so on. I tell them all, ‘Just call me, let’s talk.’ Because we all need that. No charge, of course; we just talk.

TAA: This has been great. I will try and organize these notes into a coherent whole, and run them by you so you get the final word.

Bill: Nah, don’t worry about that. Just print it up.

Leadership Kudos and Gaffes: President Obama leading this week on foreign policy

Leadership Kudos this week go to President Barack Obama, who had "a very good week." Obama's steady head about foreign policy - tough-minded but cool - and the tireless efforts of Secretary of State Hillary Clinton are showing consistent results. The latest was the ultimate success of Obama's policy in Libya that paid off when strongman Colonel Moamar Gaddafi was killed in Thursday's shootout. On Friday the President announced the end of U.S. engagement in Iraq with all troops slated to come home by the end of the year, a peaceful end to nine years of bloodshed. These successes add to his support of the Arab Spring and the liberation of Egypt and mounting signals that he would like to move away from involvement in Afghanistan. Meanwhile, the President is being very tough with the Pakistanis and holding off Iran's advances in the Middle East. Finally, he signed at long last three free trade bills with South Korea, Columbia, and Panama that will give a boost to the economy, in spite of opposition from his own party.

Leadership Gaffes go to Abbott Labs and its CEO Miles White for breaking up a great health care company by spinning off Abbott's $18 billion pharmaceutical business in search of "unlocking shareholder value." In his 12 years as Abbott's CEO, White has done a good job in moving the company into medical devices and expanding its revenues in all its businesses. It is hard to see how any sustainable economic value will be created by this bit of financial engineering. Abbott's move seems intended to mask the reality that the company has been unable to fulfill its mission of discovering drugs and is facing the loss of patent protection on its leading drug. To its credit Abbott has followed a broad health care strategy similar to Johnson & Johnson and Novartis, but the latter two firmly believe their breadth and impact on health care are well served by their strategies. After decades of success, why shift to chasing short-term shareholder value?

Leadership Kudos and Gaffes: Justice Department for a carefully constructed case

Leadership Kudos for the week go to U.S. Justice Department for presenting a carefully constructed case for insider trading against Raj Rajaratnam, leader of the Galleon Fund.  The case led to his criminal conviction and sentence of eleven years in federal prison, the longest ever for insider trading. Sadly, Rajaratnam drew many other people into his illegal trades, often with money and favors, who have already pled guilty to participating with him in these activities

Leadership Gaffes go to Reverend Robert Jeffress and backer of Governor Rick Perry for calling the Mormon faith "a cult," and those Republican presidential candidates who failed to denounce him. The separation of church and state is a bedrock principle of the United States, and as long as candidates for president adhere to that principle, their religion should not become a political issue. Our political leaders should be focusing on the many problems the country is facing by uniting us, not by permitting attacks on candidates for their religious beliefs that only tend to divide the nation.

Leadership Kudos and Gaffes: Recognizing a leader's legacy

Leadership Kudos go to all those who have finally recognized Steve Jobs’ leadership legacy. Jobs didn’t fit anyone’s classic description of a leader but he was always authentic, passionate, visionary and committed to the highest standards – AND he grew wiser by understanding his failures and following his heart to the end. It is great to see him so recognized at his passing. His best advice that we can all follow: "Your time is limited, so don't waste it living someone else's life. Don't let the noise of others' opinions drown out your own inner voice. And most important, have the courage to follow your heart and intuition." 


Leadership Gaffes this week go to Reed Hastings of Netflix who tried to be too clever with Qwikster.  He got caught with chasing his escalating stock price . . . and wound up destroying 65% of Netflix market cap. Hasting needs to get back to focusing on his customers before he loses them to competitors Amazon and Apple.  While Hastings admitted his error, he doesn’t seem to acknowledge the root cause of his mistakes. As Rob Kaplan says, it’s time to look at the person in the mirror.

Remembering the Greatest Innovator of the Past Fifty Years

With the tragic death of Steve Jobs at the age of 56, the world lost its greatest innovator in the past fifty years. Through his visionary genius, Jobs transformed five separate fields: personal computers with the Macintosh and iMac, animated films with Pixar studios, music players with the iPod, entertainment storage with iTunes, the smart phone with the iPhone, and most recently, created an entirely new field with the iPad. No one in history has successfully transformed so many different fields.

Jobs was not an engineer or scientist, nor did he make use of traditional marketing techniques such as consumer focus groups. Rather, his creative genius was his ability to perceive what consumers would want before they could articulate it. In a data-based era where everyone is demanding data and “proof” in advance, Jobs used his intuitive abilities to envision the kind of problems that would please consumers and meet their unstated desires.

Then he translated those wants into simple, yet elegant devices that were so intuitive to use that no user manual was required. In 1985 he pioneered creative graphics, using a wide array of color, that brought computer screens to life and made them easy to use without understanding programming languages. I had my first Apple product with the Apple 2 in 1982, but my engagement with personal computers really took off with my first purchase of a Macintosh in 1986. Since then, I have enjoyed using my iPod, iTunes, iPhone, iPad, and I ‘m looking forward to becoming an iCloud user.

What’s not well understood about Jobs is the extent to which he was influenced by failure – his own. Recognizing the limits of his managerial abilities in his younger years, the Apple board insisted he bring in a business partner, which led to the recruiting of John Scully in 1982. That marriage, which seemed to go well at first, blew up in 1985 when the two differed on strategy. Was it Jobs’ rigidity over refusing to open up Apple’s unique software to applications developers, or Scully’s need to call the strategic signals – or simply an inevitable power struggle between two strong-willed personalities? We may never know the real answer to that question.

Confronted; by Scully with an “either/or” decision, the board unwisely went with Scully and fired Jobs. As Jobs said later, “How can you get fired from the company you founded?” But fired he was and cut adrift at age thirty to rethink his future. In his prescient graduation address at Stanford University in 2005, the year after he was first diagnosed with pancreatic cancer, Jobs acknowledged that his firing freed him from carrying the burdens of managing a large enterprise. It also permitted him to pursue his creative desires, unencumbered by managerial tasks he didn’t enjoy and wasn’t especially good at.

For the next twelve years, Jobs flourished while Apple floundered. He founded a new computer company called NeXt that enabled him to start all over in designing his ideal computer. Then he bought a small computer graphics subsidiary of Lucas Productions from George Lucas and turned it into Pixar animation studios. Pixar became the greatest producer of animated films of all time, highlighted by Toy Story 1, 2, and 3. At the height of its success, he sold Pixar to Disney in 2006, taking a large ownership position in that company and joining its board of directors.

Meanwhile, Apple stumbled after Jobs left, as Scully demonstrated that he lacked the insights or leadership abilities to keep Apple’s success going through creative designers and exciting new products. His termination led to a succession of outside recruits, including Michael Spindler and Gil Amelio, all of whom fell victim to their inability to lead and inspire Apple’s people. In a historic turn of events, the Apple board purchased NeXt in its desperation in 1996 and brought Jobs back in an undefined role.

But this was not a rapid turnaround. Jobs led the design of the iMac, which was widely appreciated by Apple devotees, but failed to stem the steady slide of Apple’s market share, which dipped below 3%. Apple’s stock continued to slide. By 2003 it was worth no more than when Jobs returned to Apple seven years earlier. My former company, Medtronic, had a market capitalization in 2003 that was ten times Apple’s; today, the tables are reversed as Apple is the world’s most valuable company with a share value that is ten times Medtronic’s.

Then came the iPod, which to computer gurus seemed like a diversion from the computer business, and perhaps it was. But its linkage to reams of legal music files through iTunes wiped out both the player business and the compact disc market. More importantly, it paved the way for integrated information/entertainment devices like the iPhone and iPad, putting Apple well ahead of established competitors in those fields.

It is worth noting that Apple is the only integrated computer company with its own unique hardware, software and retail stores. The latter has created the highest sales per square foot in the history of retailing, featuring only Apple products and authorized accessories.

To me, the most important lesson of Steve Jobs’ life is the way in which he learned from his own hardships – of being an adopted child, of being fired, and of facing death every day for seven years. He accepted these hardships not just as part of life, but as opportunities to go his own way in making a difference in the world.

And make a difference he did! No one in our lifetime has made more unique contributions to the worlds of innovation, of business, or of consumer stimulation. Let us hope that in celebrating his life many other young people will be inspired to go their own ways, trust their intuition, and pursue their dreams and their visions. That could be Steve Jobs’ greatest legacy of all.

Leadership Kudos and Gaffes: Amazon taking the Kindle to the next level and Kodak's board for ruining a great company

Leadership Kudos this week go to Jeff Bezos of Amazon, introducing his latest product breakthrough, a new tablet called Kindle Fire. Listed at a remarkable price of $199 (Apple charges $499), the Fire will offer users a remarkable array of Amazon products, all stored on Amazon's cloud and rapidly downloaded. Staying true to his convictions, Bezos stayed the course with his on-line retail strategy in 2002 when the stock market collapsed and his stock lost 92% of its value. Then he invested heavily in Amazon's first hardware product, the Kindle, revolutionizing the book reading business. This week Amazon's market capitalization topped $100 billion. You have to admire Bezos' courage is taking on Apple frontally, something H-P and others have failed to do.

Leadership Gaffes go this week to the Kodak Board, which has presided over the demise of a once-great corporation. In past twelve years Kodak stock has lost 99% of its value, plunging from $75 to a new low this week of $0.78. (That's not a typo!) Anticipating the digital revolution but unable to develop an internal leader, the board went outside its ranks to recruit George Fisher, then CEO of Motorola, who served as CEO from 1993-2000, but was unable to move the company into the 21st century. Fisher was succeeded by Dan Carp, who drifted from one strategy to the next during his five years as CEO. Then Antonio Perez was recruited from H-P to save the company once again, something he has failed to do. A sad tale, much like H-P, of a board that can't figure out what business it is in.

Leadership Kudos and Gaffes: Howard Schultz builds long-term value at Starbucks

Leadership Kudos for the week go to Starbucks Chair & CEO Howard Schultz, who returned as CEO three years ago and has restored SBUX to its original coffeehouse feeling where baristas and customers have real relationships, not the assembly line feeling it had slipped into. Revenue and earnings growth have been restored, thanks to Schultz. And Howard has the courage to take a stand on our political impasse, buying full-page ads imploring people not to give to either party until someone puts country ahead of party. Who says leaders can't stay true to their values and their roots and build great global franchises?

Leadership Gaffes this week go to Solyndra leadership and government officials who funded it. Solyndra squandered a $535 million government "loan" by building solar panels its customers didn't want. Now it is bankrupt and can't repay the loan. Maybe renewable energy companies should be held to the same economic tests that other industries are - of keeping their costs below their revenues without subsidies - and bring costs in line while innovating. A sobering experience for everyone who believes in subsidizing preferred technological solutions.

Fortune - The Church of B-School

FORTUNE -- About an hour into a leadership class at Columbia Business School, all 50-odd students were sitting rail-straight with their eyes closed. A blonde research associate with the slightest hint of a German accent cooed instructions at the front of the class. "Notice the sensation of your shoes," he said.

Personal Leadership & Success, which is taught by leadership expert Hitendra Wadhwa, is considered one of the "softer" offerings at Columbia, especially when compared to "hard" courses such as finance. The idea behind it is that good leadership begins with self-knowledge, hence the meditation exercise.

It may seem far out, but there are similar classes at business schools across the country. Stanford has offered a class called "Touchy-Feely" since 1966. And a class at Harvard Business School takes this idea of self-knowledge through group learning a step further.

Recreating the community group

The class, developed by former Medtronic (MDT) CEO and Harvard management professor Bill George, runs on the premise that groups of business-minded leaders can offer better leadership guidance than other networks, including family and friends. For this class, Harvard MBAs from different backgrounds are put into small groups where they complete coursework together and share deeply personal experiences.

Those shared experiences can fill an unmet need for community. Americans have become less social, George argues in his recently published book True North Groups. He cites the work of fellow Harvard professor Robert Putnam, whose research has shown that Americans' participation in groups outside of work, such as rotary clubs or religious groups, has plummeted. According to Putnam's research, the number of people attending meetings of any kind of club in the U.S. dropped by 58% from 1975 to 2000.

That's where some business schools are starting to step in, and students are responding. Personal Leadership & Success is one of the top 10 most popular electives for second-year MBA students at Columbia out of about 200 elective courses. Since 2008, over 600 students have applied every year for the 240 spots in Bill George's class at Harvard (George now teaches a version for executives). This year, the Personal Leadership & Success program for MBAs is expanding to take on 60 more students per year.

Some students say they are attracted to these kinds of courses because they feel like they are learning to lead in a vacuum. According to Rye Barcott, a Duke Energy (DUK) employee and Harvard Business School alum who took George's class, the problem with many leaders today has little to do with their ability to crunch numbers, but rather a lack of values. "When you think about the biggest failures of corporate executives, they're not necessarily technical failures, but ethical ones, " Barcott says.

Programs like George's class can help sharpen those ethics in future executives, says HBS alum and film executive Peter Bisanz: "I think that if our business leaders had insight into their own strengths and weaknesses, we would not have had the excessive greed that would have led to the financial crisis."

Granted, both of these men were star students in the class and they believe in the methodology. But they both opened up to their peers in ways that may seem, at first glance, out of place in a business school setting.

The crux of George's class is the students' identification of a "crucible" moment, described in True North Groups as sharing with their groups "the singular experience that has tested you to the limits and impacted your life." Some choose to open up in front of everyone, and these crucible moments can be intense -- one person stood up and came out as a homosexual in front of the whole class, Bisanz says. Bisanz himself shared his experience with alcoholism.

It can be tough to have the kind of intimate interactions with personal friends that are necessary to grow as a leader, George argues in his book. Barcott agrees: "How do you bring up what the crucible moment is in your life without sounding like a tool?"

The program is no stand-in for therapy though, George insists, and some topics should stay out of these discussions. For example, in his book, he refers to a married couple in a True North group that wanted to talk about issues they had been having as swingers. It was disruptive.

But students likely to be at Harvard Business school could use the self-reflection a True North group requires, perhaps more than anybody, says Bisanz. "A lot of them haven't had to be subjected to deep personal examination of their lives," he says, because their paths have led to a top business school, so they've been pretty successful by most standards. But he thinks that makes business-oriented soul searching even more necessary. "When those people are tried and tested, they're going to have to decide who they are and what they believe in."

A generation in search of purpose?

This idea that your beliefs should guide your career resonates among younger students and employees. Take Ben Austin, one of the students in Wadhwa's class at Columbia. He used to work for film crews in Hollywood, fetching lattes, he jokes, but actually scoping out promising films at festivals. He hopes Wadhwa's class will help him hone his sense of purpose and match that to his career goals. He isn't so much looking for a job as a skill set, he says.

Millennials tend to, on the whole, crave jobs with a greater purpose. In a survey by consulting firm Mercer, young jobseekers ranked a company's good reputation as one of the most important draws for a job, although salary still held the No. 1 spot. More than other workers, "Millennials are looking for a value congruence -- it's very important for them that the company they work for reflects their values," says Jason Jeffay, a senior partner at Mercer consulting firm.

Clearly, that's not true for all young people. Plenty of MBAs are strictly salary-driven, and both George's and Wadhwa's classes are electives, so they select for a population that's searching for this kind of guidance. It's unclear whether coursework like this could ever be mandatory, George says.

When work and personal life become one

At its core, these courses try to teach "social intelligence," otherwise known as compassion mixed with common sense. Being a decent, fulfilled person will help you become a better leader and manager, the thinking goes.

In truth, the business and personal worlds are collapsing in on each other. Many of us carry work with us wherever we go and spend more time with colleagues as the workday grows longer and longer. So it makes sense that business schools are turning into places where students want to learn how to be good at life in general.

Ben Austin said as much. He suggested that this article open with a description of the students meditating, then continue to describe how no, this wasn't a scene at a temple of worship but rather [dramatic pause] "Columbia Business School: a temple of commerce."

Austin has a point. The lines between where we go for moral guidance and where we go to learn how to balance a budget are growing blurrier these days.

 


Orginially Posted on Fortune.com on September 15, 2011