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Bill George

Harvard Business School Professor, former Medtronic CEO

Where Have All the Leaders Gone (Part II)

Yes, there is a dearth of genuine leadership in business and politics. But there are examples we can look to for inspiration and guidance.

Since Enron’s demise in 2001, a new generation has assumed the helm of U.S. corporations. Very different from their predecessors, they recognize that for the 21st century a new kind leadership is required (BusinessWeek, 09/21/07).

As one current CEO told me, “Many of us followed iconic charismatic CEOs who were used to ruling their enterprises. To get things done in this century, we need organizations that lead by values, not directives, and collaborate with other companies, governments, and nonprofit organizations.”

Good-Bye to the All-Powerful Leader

Let me take this one step further: The era of the all-powerful leader who commands people to follow is dead-or it should be. Today’s leaders have to lead differently because the people in their organizations have changed.

  • Today’s organizations are filled with knowledge workers who know more than their bosses.
  • Those workers want the opportunity to step up and lead now, rather than wait in line for 10 years.
  • They have lots of options, as most will work for multiple organizations during their careers.
  • They are highly skeptical of image-oriented leaders who say one thing and do another. They want leaders they can trust, leaders who will empower them, not direct them.

A New Definition of Leadership

Successful organizations in the 21st century-those that sustain superior results year after year-will be led by authentic leaders who know how to motivate this new group of employees and gain their full commitment.

I would like to propose some new definitions for the 21st century leader who can “align, empower, and serve”:

  • Alignment: uniting the entire organization around a common purpose and values;
  • Empowerment: motivating employees to step up and lead to fulfill the organization’s purpose;
  • Service: dedicating themselves to all the organization’s constituencies-customers, employees, investors, and communities.

Serving All the Constituencies

Academics call this approach the “soft” side of leadership. It is anything but soft. It is a lot more difficult to gain alignment of employees around mission and values than it is to meet quarterly numbers or to cut expenses.

Empowering people is hard, but far more effective in getting people to sustain peak performance. Serving all your constituencies is more difficult than a singular focus on short-term shareholder value, but it is the only way to sustain success over the long term.

The good news is that today’s most prominent CEOs are authentic leaders who practice 21st century leadership. They are highly competitive individuals dedicated to building organizations for the long term. They engage actively and deeply in their businesses. They have the courage to resist being pulled off course by short-term pressures of the stock market.

Charisma Isn’t Everything

Who are these new leaders? They include A.G. Lafley of Procter & Gamble (PG), General Electric’s (GE) Jeff Immelt, Andrea Jung of Avon Products (AVP), IBM’s (IBM) Sam Palmisano, Xerox’s (XRX) Anne Mulcahy, Target’s (TGT) Bob Ulrich, and dozens more like them. All these leaders were chosen from within their organizations. By the time they reached the top, they knew the business, people, and culture intimately.

As good as these leaders are-and they are really good-none of them is especially charismatic. But they are genuine and trustworthy, and they have character and integrity.

Let’s look at some specifics:

  • Lafley, Jung, and Mulcahy were passed over initially, but stuck around until their boards turned to them to lead their companies out of difficulties.
  • Facing disappointing results for the first time at GE’s plastics division, Immelt recognized that this was a test and a chance to solve the problems his way. Immelt has said, “Leadership is a long journey into your own soul.” As CEO, he is applying that philosophy to transforming GE for the next 20 years.
  • Palmisano engaged all 350,000 of IBM’s employees in an online “values jam” to determine the company’s values. Now he is using “leading by values” to create IBM’s integrated global organization.
  • When Avon Products’ stock dropped 30% after years of rapid growth, Jung reinvented herself as CEO by cutting organizational layers dramatically and reinvesting the savings in future growth, which is paying off in Avon’s resurgence.
  • Mulcahy took over Xerox with $18 billion of debt. Urged to declare bankruptcy, she refused and instead rallied her employees around “restoring Xerox to its former greatness.” Not only did she stave off bankruptcy, she also turned Xerox into a highly effective competitor once again.
  • Target’s Ulrich is not nearly as well known as the famous Target Bull’s Eye. Named Chief Executive magazine’s “2007 CEO of the Year,” Ulrich claims, “It’s not about me. It’s about this team…the greatest team in the world.”

If they want to succeed in the 21st century, corporations would be well-advised to develop authentic leaders like these, who can build and sustain their long-term success.