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Bill George

Harvard Business School Professor, former Medtronic CEO

Category: Press

Takers and Givers

Today I am initiating the True North Blog as a vehicle to engage leaders interested in their development and all those who are interested in seeing better leaders throughout organizations. I welcome your inputs, challenges, inspirations, and critiques of these ideas, all with the intent of having “honest conversations,” something that is too often missing in businesses and non-profit organizations.

Back in 2003, the year after I retired as chairman of Medtronic, I wrote Authentic Leadership for two reasons: first of all, I was disgusted with the many business and non-profit leaders in my generation who were focused on “taking” rather than “giving.” Far too many leaders – not just who wound up in jail – took advantage of their power and position to reap personal benefits rather than building their companies and creating lasting value.

Cheered on by Wall Street and the neo-classical economists, they focused on maximizing shareholder value in the short-term, even if they wound up destroying it in the long-term. American icons like AT&T, Sears, General Motors, and K-Mart went into a long-term state of decline or ceased to exist, at least in recognizable form.

My second reason was to share with a wide range of leaders the insights I had gleaned from thirty-five years in the business world, and to encourage the new generations of leaders to become better leaders than my generation was.

After studying hundreds of business leaders – and personally knowing many times more – I have decided that you can divide them basically into two categories: “takers” and “givers.” The “takers” are out for themselves. They want you to support them in maximizing what they get, while you and your teammates get the crumbs left over. They want to get whatever they can, regardless of whether they perform as leaders and create lasting value.

The “givers” recognize they were chosen to lead for the purpose of serving others: their customers, their employees, their investors, and all those citizens that have a stake in the success of the organizations they lead. If you work for a “giver,” you will find that he or she is interested in your success, your ability to help fulfill the organization´s mission, and your development as an empowered leader. I call the givers authentic leaders because they are genuine people, true to themselves, who understand the purpose of their leadership, practice their values consistently, lead with their hearts, build enduring relationships, and have the personal self-discipline to produce sustainable results.

Of course, the “givers” reap big rewards as well, usually over a long period of time. Their rewards come because they have created value for others – customers, employees and shareholders. I believe their rewards are fully deserved, even when the accumulated financial gains appear quite large to the average person. The people on their teams can accept this because they too are handsomely rewarded over the long-term.

I confess that I was a large beneficiary of this approach. When I joined Medtronic the market value of its stock was $1.1 billion. It wound up at $60 billion. My original 25,000 shares of stock options split six times, giving me sixty-four times as many shares. We ensured that all Medtronic employees became shareholders as well, and they too reaped the benefits.

But the greatest benefit of all to my fellow employees and me was the intrinsic satisfaction of seeing how Medtronic products helped restored millions of people to full life and health. When I joined the company in 1989, around 300,000 new people were being restored every year. These days that number has grown to more than 8 million new people each year. That´s our real reward!

Please send me your reactions to these notions of “takers” and “givers.”

Why The 10,000 Point Dow Doesn’t Matter

The Dow is at 10,000.  Reporters glow.  Retirees relax.  Investors sigh: “Whew, we’ve made it.”

They’re wrong.  This purported milestone isn’t a victory.  It’s nonsense. 

The market is the wrong place to look when measuring the health of our economy.  The collective wisdom of mutual fund analysts was wrong in 1999, wrong in 2006, and it’s wrong right now. 

The best investor in the United States basically ignores Wall Street.  Warren Buffett has billions he could trade in and out of stocks.  Thousands of analysts would clamor to give him hot tips.  But Buffett ignores it all.  Serene, he sits in his office, reading annual reports, newspapers, and thinking about opportunities for growth.  He isn’t drinking champagne tonight.  And you shouldn’t be either.

We are far from out of the woods.  Large companies are still laying off employees.  When we cross the 10% unemployment line, consumer spending (now down to 70% of GDP) may contract even further.  It should probably should.  Consumer spending in the UK is 65% and in China it’s only 40%. 

Haven’t we learned something from this crisis??  Wall Street sold the world worthless securities, trillions of dollars of wealth evaporated, and now Wall Street is cheering this “new” bull market.  Now the bulls say it’s all okay again?! 

What you’re watching now is a bull market on government spending.  What you should be watching is the real report card: 

  • Inflation: There is $50T in unfunded liabilities on the country’s balance sheet.  If the USA played by corporate America’s accounting rules, we’d be bankrupt.  The laws of gravity still apply.  We will experience significant inflation within 3 years. 
  • Job Growth: Since the start of the recession in December 2007, we’ve lost 7.6 million jobs.  Millions more have stopped looking for work.  The analysts keep saying this downward trend will stop.  But it hasn’t.
  • Innovation: The credit contraction makes it harder for entrepreneurs and small businesses to invest in growth.  This segment of the economy is where a rebound will start.  Don’t watch the Dow, watch small business credit (contracting) and patents filed (contracting).
  • Education:  The important word is “Gross Domestic Product” is product.  We must have highly skilled knowledge workers to compete against other economic innovators.  A third of high school students aren’t graduating.  This is the HR pipeline??

Yes, we have stepped back from the abyss.  But some very smart people thought the same thing in 1932.  Then 1933 happened.  Not so fast, Wall Street…

This battle is far from over.  Let’s dig deep, focus on the long haul, and make the substantive policy and business improvements the economy needs to really rebuild.  Then, the Dow will take care of itself.  

Live Blogging from WBF09 Day 2