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Bill George

Harvard Business School Professor, former Medtronic CEO

Category: Politics

Leadership Kudos and Gaffes: John Hope Bryant’s commitment to financial literacy is leadership in action

Leadership Kudos this week go to John Hope Bryant,  founder, chairman and CEO of Operation Hope, the nation’s leading non-profit organization committed to financial literacy. Since founding Operation Hope in 1992, Bryant has raised more than $500 million to help the poor achieve financial literacy. He is vice chair of the President’s Advisory Council on Financial Literacy, appointed by former President George W. Bush and reappointed by President Barack Obama. Bryant is a Young Global Leader of the World Economic Forum and author of Love Leadership. With HRH Crown Prince Haakon of Norway and Finnish philosopher Pekka Himanen, Bryant founded Global Dignity Day, which has had global impact in restoring dignity for all people of the world. Most recently, Bryant started the Silver Rights Movement to help all people achieve financial literacy and 5MK – or Five Million Kids – to help children become financially literate. He is a remarkable leader: compassionate, passionate, and focused on helping the poor around the world.

Leadership Gaffes go to Corporate Lobbyists for their attempts to water down the Foreign Corrupt Practices Act (FCPA). While some clarifications in definitions may be necessary, we shouldn’t lose sight that FCPA has been an important force for the integrity of U.S. corporations in doing business overseas, setting a higher standard than those practiced by many other nations. The act has given the United States more than the moral high ground, it has also given American companies a competitive advantage.  By taking a higher road of ethical standards and focusing on product and service superiority, rather than paying bribes, U.S. companies outmatch non-U.S. companies in terms of real value creation. Indirectly, FCPA is having the impact of encouraging other nations also to set high standards of business practice. Reducing the U.S. standards for integrity would be a major mistake. 

A Fateful Weekend for U.S. Fiscal Stability

The fate of the fiscal stability of the United States was sealed on the weekend of December 4-5, 2010. The previous Thursday President Obama received the long-awaited report of his National Commission on Fiscal Responsibility and Reform, co-chaired by Democrat Erskine Bowles and Republican Alan Simpson. The report of the commission received a favorable vote with an 11-7 majority, but fell short of the 14 votes required for a mandatory “up-or-down” vote by Congress.

The commissioners delivered a balanced report that reduced U.S. deficits by $4 trillion over ten years – $3 trillion from spending cuts and $1 trillion from revenue increases. It received favorable consideration from both Republicans and Democrats on the commission. President Obama had the perfect opportunity to restore stability to U.S. finances by endorsing the plan and sending it to Congress.

For the President it was the perfect political setup, complete with “air cover.” He appointed a bipartisan commission. It had delivered a bipartisan proposal.  Surely, he could rally the country behind it by going directly to the American people. While the deficit reduction plan would have faced opposition from the extreme right and extreme left, President Obama had the opportunity to demonstrate his leadership and garner the support of fiscal conservatives, moderates and independents around the country.

What did the President do? Nothing.

The silence from the White House was deafening.  The President ignored the commission’s report entirely. He chose the politically expedient route and, in so doing, failed to lead the country by improving its long-run fiscal  health.

Actually, what he did was worse than nothing. Over that weekend, the President negotiated with Republican congressional leaders a $4 trillion increase in the nation’s deficits over ten years ($858 billion for the first two years, with the remaining $3.2 trillion projected over the next eight years). The added deficits came from a combination of tax cuts and spending increases – just the opposite of what the Bowles-Simpson commission recommended.

This new deal was passed by Congress over the objections of Democratic congressional leaders, who felt left out in the cold. On December 18, 2010 the President signed the deal into law, thereby killing any hope of deficit reductions coming from the Bowles-Simpson recommendations.

In one weekend our nation’s leaders swung from a plan to reduce the deficit $4 trillion to actions that increased it $4 trillion – an $8 trillion unfavorable swing.  This proves the old political adage that it is easier to cut taxes and raise spending that it is to demonstrate fiscal responsibility, as long as you’ve got a plan to get out of town before the sheriff comes.

The sheriff didn’t take long to arrive. Realizing this President wasn’t prepared to take tough fiscal actions, Republican leaders next played brinksmanship with appropriations. That brought the federal government to the verge of shutting down at midnight on April 8, 2011. A last minute deal to cut the budget by $38 billion averted the shutdown. President Obama hailed the agreement as “the biggest annual spending cut in history.” Hmmm. Seems pretty paltry compared to $4 trillion over ten years.

Republican leaders, seeing blood in the water, attacked again like sharks on a rampage in August, 2011. Demanding more spending cuts with no revenue increases, Republicans held the line against raising the debt ceiling until the August 1st deadline. A last-minute compromise reflected the agreement to disagree. At the 11th hour, the President and congressional leaders passed the Budget Control Act, appointing a Congressional “super committee” with the requirement to reduce the deficit by $1.2 trillion by November 23, 2011.

Concerned by feckless political behavior, Standard & Poor’s took the historic step of reducing the U.S. sovereign debt rating from AAA to AA+. “The political brinksmanship of recent months,” the company said, “highlights what we see as America’s governance and policymaking becoming less stable, less effective, and less predictable than what we previously believed.”

This paved the way for the super-committee’s failure on Monday. If committee members were ever serious about compromise, it wasn’t evident. Republicans refused to agree to any revenue increases, causing Democrats to back away from spending and entitlement cuts they had offered. Now $1.2 trillion in automatic cuts go into effect next September. Speaking on CNN, political commentator David Gergen called the move “an irresponsible, reckless gamble.”

The consequence of this gridlock? The financial troubles of the U.S. get worse, the country’s competitiveness continues to slip, and the prospect of a future deal is even further away.

And it all started with an $8 trillion reversal one weekend last December.

StarTribune: Extraordinary collaboration can rebuild Minnesota Miracle

Gov. Mark Dayton’s jobs summit last month was a remarkable example of the extraordinary collaboration taking place between business leaders and government officials to rebuild Minnesota’s jobs machine.

Historically, Minnesota has benefited from diverse industries including agriculture and food products, financial and professional services, health care, education, and high-technology manufacturing that allowed us to offset economic downturns. But after outpacing the nation for 30 years in job creation, Minnesota has fallen behind since 2003.

The 800 business and civic leaders who jammed into the ballroom at the Crowne Plaza in St. Paul engaged in serious discussions about how to stimulate job growth in Minnesota and re-create the Minnesota Miracle. This convergence of business and government leaders was a welcome contrast to the political gridlock that shut down state government in July.

At the summit the governor wasted no time in making his position clear: “It is the task of private enterprise to create jobs and wealth,” he said. “The government’s role is to create the environment and rules that make that possible.” Dayton put substance behind his pledge, announcing a $100 million fund for small business loans, distributed through 300 Minnesota community banks.

These efforts are none too soon. Alarmed by declining job trends, a group of leading CEOs and civic leaders formed the Itasca Jobs Task Force in 2009. Chaired by Ken Powell of General Mills and Marilyn Carlson Nelson of Carlson Companies, their 2010 report highlighted three strategic initiatives to improve the region’s competitiveness:

•Address the cost of doing business.

•Develop a vision, strategy, and approach for regional economic development.

•Enhance entrepreneurship and innovation.

To implement the report’s recommendations, Itasca formed a team of 60 participants, chaired by HealthPartners CEO Mary Brainerd. “For us, this is the most important thing we have been part of,” Brainerd said. “The commitment to a thriving community is really extraordinary.”

In addition, the Minnesota Business Partnership, which includes the heads of 150 local companies, formed three task forces of its own under the leadership of Ecolab CEO Doug Baker Jr. The partnership made concrete recommendations to the governor and Legislature regarding fiscal policy, health care, and education.

Also last month, 12 large companies joined with local municipalities to launch Greater MSP, with Baker as its chairman. A $2 million budget was established, with 70 percent from the 12 companies and the remainder from government units. Its mission is to recruit out-of-state and international companies to locate in Minnesota and to encourage local companies to expand locally. Michael Langley was hired as executive director, coming from Pittsburgh, where he led a comparable initiative.

These remarkable efforts are a testament to the quality of Minnesota’s leaders. Our state is blessed to be home to 20 Fortune 500 companies led by progressive leaders who understand that Minnesota’s quality of life and a well-educated workforce are essential to their success — and necessary to offset negatives like high taxes, high cost of living and weather.

Historically, Minnesota’s strength has been the quality of its workforce. Thanks to efforts put in place 50 years ago, the Twin Cities leads the nation with 93 percent of citizens holding high school diplomas, and is third in bachelor’s or graduate degrees with 37 percent. Ecolab’s Baker notes, “Ultimately, the education and skills of the workforce are MSP’s competitive advantages.”

But this advantage appears to be at risk. The Itasca report forecast a gap by 2030 of 322,000 skilled workers that could constrain the region’s growth. Bush Foundation President Peter Hutchinson notes that these other efforts will be in vain unless the region has the right workforce. He favors investments in infrastructure, K-12 schools, and higher education.

“It’s a painful reality that many of the 215,000 Minnesotans without jobs don’t have the education needed for the new economy,” said Steven Rosenstone, the new chancellor of Minnesota State Colleges and Universities (MnSCU). “By 2018, 78 percent of Minnesota’s jobs will require postsecondary education.”

Minnesota has its challenges. But given the remarkably committed leaders we have today, I feel confident that these new initiatives will bear fruit and create the second Minnesota Miracle.

 


Originially posted: StarTribune
November 19, 2011

Leadership Kudos and Gaffes: Erskine Bowles and Alan Simpson faced a crisis head on

Leadership Kudos this week go to Erskine Bowles and Alan Simpson, co-chairs of President Obama’s Deficit Reduction Commission. Last December they proposed a $4 trillion reduction in U.S. deficits over ten years with a balanced plan of spending and entitlement cuts, and revenue increases. Although the commission passed the plan with an 11-7 vote, it was not enough for a mandatory Congressional vote.  The thoughtful plan was ignored by President Obama and Congressional leaders in both parties. A great tragedy that led to the historic downgrading of U.S. sovereign credit ratings this past summer.

Leadership Gaffes go to Congressional Super-Committee for failing to come to a compromise agreement to reduce U.S. deficit by $1.2 trillion, setting the stage for automatic across-the-board cuts to go into effect. Confidence in Congress has dropped to 9%, and deservedly so. Congressional leaders continue to put party politics ahead of the needs of the country, as our financial state erodes and we lose competitiveness to many other countries. When will our politicians wake up and put their country first?

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.

What the President Should Say on Jobs and the Economy

Tonight President Obama addresses the nation at a joint session of Congress about his plans to expand job growth. Here’s what he should say:

My Fellow Americans:

Our country is facing a jobs crisis of major proportions, the greatest since the 1930s. This nation’s strength is based on its strong economy and the global corporations that dominated their industries and fueled growth throughout the world. But now that strength is waning, as other nations, from China, India, Singapore, and Brazil to Germany and Switzerland, threaten to outstrip us in competitiveness.

In the 1990s our economy produced 23 million jobs and three consecutive years of budget surpluses. The combination of the Bush tax cuts and spending to finance two wars and entitlement plans created an enormous debt burden that future generations will be forced to carry. The historic downgrade of the U.S. debt rating from AAA to AA+ by Standard and Poor’s is a warning we cannot ignore.

The excesses of the past decade have imperiled our fiscal stability and left 25 million Americans – 16.2% of the workforce – unable to find full-time jobs.  As a result, the United States has its smallest full-time workforce – less than 55 percent – and hundreds of thousands are dropping out each month.

When I came into office, I inherited a broken economy. Our banks, insurance companies and automobile makers were on the brink of bankruptcy. We took aggressive steps to stop the bleeding, and prevented the world from depression. I launched a $893 billion stimulus package but it had limited impact on the structural jobs crisis.

A robust recovery must start with jobs growth. Recent figures confirm that jobs are not growing, and there is no indication they will return without aggressive actions on our part. Yet we continue to get pulled off course by partisan showdowns over the budget and debt ceiling.

We need to stop making it difficult to grow businesses and hire workers in America. In response to excesses of the past, we overregulated our industries. With domestic growth approaching zero and the challenging regulatory, tax and political climate, companies are investing instead in rapidly growing emerging markets in Asia, Latin America and Middle East.

As a result, the jobs crisis is more severe than ever. The U.S. has sunk further into debt, and the country has reached the limits of its borrowing capacity. Our political stalemate has paralyzed our ability to take decisive action.

Therefore, I will use the powers entrusted in me as your President to take the actions required to put Americans back to work and restore domestic growth. All these steps must be taken without increasing the budget deficit.

Here is my plan:

  • Restore fiscal stability by implementing the proposals of the Simpson-Bowles Commission to bring revenues and expenditures in line and reduce deficits by $4 trillion.
  • With the recent debt downgrade, the government cannot subsidize federal jobs; therefore, I am appointing John Bryon, my Secretary of Commerce nominee and a former CEO, as Jobs Czar to work closely with American employers, large and small alike, to stimulate domestic investment and create 10 million jobs over the next decade.
  • To create a positive climate for business investment like that of the 1980s and 1990s under Republican presidents Ronald Reagan and George H. W. Bush and Democrat Bill Clinton, I am ordering all federal agencies to reduce or suspend unnecessary regulations and focus instead on expanding private sector jobs in the energy, transportation, health care, information technology, and financial service industries, as well as small businesses.
  • To prepare unemployed Americans for 21st century jobs, I will reprogram existing funds to invest in retraining and vocational/technical education.  
  • To make America more attractive for investment, I propose reducing the corporate rate to 20 percent, while eliminating complex deductions and credits.
  • For the remainder of my term, I will suspend taxes on repatriated foreign profits for corporations that reinvest their portion of the $1 trillion in cash trapped overseas in manufacturing, research, and job creation.
  • I will expand the number of H1-B visas, travel visas and green cards to make America an attractive place for immigrants to visit, work and start companies.
  • To expand exports, I will implement a free trade policy by moving ahead with free trade agreements with South Korea, Columbia and Panama, while working with nations of this hemisphere to turn NAFTA into the Americas Free Trade Agreement.

 

As your President, I am prepared to put my re-election on the line to put Americans back to work, reignite economic growth, and restore America’s competitiveness. While my plan will not please the extremes of either political party, I ask all Americans to join me in this commitment by putting their country ahead of partisan politics.

Leadership Kudos and Gaffes: Schultz leading globally and domestically, Boehner’s leadership relying on chaos

Leadership Kudos this week go to Howard Schultz, founder and CEO of Starbucks,for his courageous restoration of Starbucks to a pioneering coffee house, nowexpanding around the world under Schultz’s leadership. When Schultz returned as CEOin early 2008, most observers were predicting that the Starbucks mystique was waning and its growth was doomed. Schultz jumped in and addressed the problems head on, even closing all stores for a day to get his employees retrained on customer focus. Since then, Starbucks’ revenues have grown in double digits, earnings have tripled, andfrom its low point in the fall of 2008, Starbucks stock has quintupled. Who says founders can’t successfully go back home?

Leadership Gaffes go to House Speaker John Boehner for explaining Republicans hard line on the debt ceiling on talk radio, “A lot of them believe enough chaos would make opponents yield.” He and his fellow Republicans were certainly successful in causing chaos and contributing to the historic downgrade of the U.S. credit rating from AAA to AA+. But the deeper issue here is that Boehner sees everything as a win-lose contest between parties and isn’t focused on the country’s pressing problems: jobs, growth, and deficit reduction. With 25 million Americans unable to find full-time jobs, don’t we have enough chaos?

Debt-Ceiling Agreement: No Cause for Celebration

This week’s agreement to increase the U.S. debt ceiling is no cause for celebration.

Regardless of what the spin doctors tell us, there are no winners here. The political landscape is covered with the blood of all the politicians who were losers in this “no win” battle. Among the losers are:

  • The President, who lost the leadership on U.S. deficits last December when he ignored the thoughtful recommendations of the bipartisan Bowles-Simpson Commission, leaving deficit reduction up to the politicians in Congress.
  • The Republican Party, which let itself be dominated by Tea Party extremists, ignoring the wishes of the majority of Americans, walking away from a sound agreement and demonstrating its willingness to let the country sink for political gain.
  • The Democratic Party, which has rigidified into the party of more spending and higher taxes while ignoring the country’s mounting deficits. It even undermined its President as he attempted to negotiate an agreement with House Speaker John Boehner.
  • The United States, which has lost credibility in the eyes of the world as a constructive democracy and sound fiscal system which other countries can look to for leadership of the global economy.

The last minute agreement to avoid an historic default did not solve anything. It merely postponed the disagreements and set up yet another committee to resolve these complex issues.

“Gridlock” has become the new order of U.S. politics. Politics as the art of compromise has been abandoned by the current group of politicians who are willing to jettison the country’s best interests in order to gain short-term political advantage.

This is the third time since the November elections that the country has been traumatized by political deadlock:

  • In a single weekend last December, shortly after the Bowles-Simpson Commission proposed a bi-partisan $4 trillion deficit reduction plan, the President and Congressional leadership went in the opposite direction.  They lowered taxes and increased government spending by a combined $4 trillion, intensifying  the problems that lay ahead. 
  • In April, unable to agree on a budget for this fiscal year, the politicians once again took the country to the brink of shutting down the government. The midnight agreement involved more compromises that kept the country running on an empty tank.
  • For the past month the country has been paralyzed by the artificially-created debt ceiling duel. While mounting deficits are a growing concern, the politicians on both sides of the aisle were far less concerned about reducing them than they were in gaining political advantage through an historic game of “chicken.”

The biggest loser in all this is the United States and its citizens. Why? Because we are losing confidence in our elected leaders to put the interests of the country ahead of their political ideology and to reach sound agreements that enable the country to grow and produce jobs while putting the country on a sound fiscal footing.

Meanwhile, this debt ceiling tug of war distracted our leaders from the real issue: the sagging U.S. economy and jobs crisis. The U.S. continues to slip into a “no growth, no jobs” malaise, as recent GDP growth figures prove and twenty-six million Americans (16.2% of the work force) are unable to find full-time jobs. Until people get back to work and the economy starts growing, we will just continue to fight over a shrinking pie, as deficits continue to mount. The only solution to this dilemma is to get the private sector growing once again in the U.S.

However, the CEOs of companies, both large and small, that I have talked to in recent weeks are completely fed up by the political struggles in Washington.  They are turned off and tuned out. They want to have no part of the debate, unless they feel that they have to weigh in to protect their best interests.

These CEOs are pragmatists, not political idealists. In the absence of domestic growth opportunities, they are looking overseas where great growth potential exists. Meanwhile, they are shedding U.S. jobs in favor of productivity gains, which are substantial. Privately, they don’t believe that the President or either party in Congress is committed to building the private sector and removing the myriad barriers that are preventing growth in the U.S.

How can this dilemma be resolved? By presidential leadership, in which President Obama puts himself and his re-election on the line by taking a series of actions to restore private sector jobs and growth while cutting the deficits. President Obama is an extremely smart, savvy leader who knows what to do. Now he must take the political risk to do it because the risks to the country of inaction are far greater.

Leadership Kudos and Gaffes: Automakers lead on upping standards, while politicians distract the public

Leadership Kudos this week go the CEOs of U.S. automakers, Alan Mulally of Ford, Dan Ackerson of GMand Sergio Marchionne for their leadership in enthusiastically agreeing to automobile fuel economy standards that will increase to 54 miles per gallon by 2025. This represents a 50 percent cut in greenhouse gases and a 40 percent reduction in fuel consumption compared with today’s averages. For the next decade or more, using energy efficiently is the best new source of energy.

Leadership Gaffes go to all the politicians who distracted the country with a confidence-shattering debate on raising the debt ceiling – an artificially- egrocreated limit – instead of focusing on the growth and job creation the country so desperately needs. No matter how the politicians spin the agreement, there are no winners here, and a lot of losers, including the faith in our country’s fiscal stability.

Leadership Kudos and Gaffes: Leader of a Model American Company

Leadership Kudos this week go to Caterpillar and its CEO Doug Oberhelman. Caterpillar is rapidly becoming a role model American company, showing how American companies can compete globally. With its Midwest roots and values, heavy manufacturing in the U.S. and steady long-term investments, CAT has become a global leader in its field, with large exports to Asia, Europe and the rest of the world. In its most recent quarter CAT’s global revenues were up 37% and its earnings up 44%, as the company has added 6,000 American workers. More companies should follow CAT’s lead.

Leadership Gaffes go to Republican Tea Party and Democratic liberal Congressmen for blocking deals negotiated by President Obama and Speaker Boehner to solve the articifically-created debt ceiling crisis. These politicians continue to put the country at risk as they maneuver for selfish political advantage.