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From Lee Schweichler, a premier executive search professional (he placed John Chambers at Cisco) serving the high-tech industry and a good friend of mine:
All CEOs have five tasks: (1) define the business; (2) recruit the team, (3) arrange financing, (4) set the culture, and (5) shape the product strategy.
And the 11 traits of a successful CEO in an early stage company are:
1. Judgment needed to make tough calls in novel, complex situations with no roadmap;
2. Ability to define the business strategy beyond the original product concept and capture the support of internal and external audiences for that strategy;
3. Ability to recruit a high quality team;
4. Understanding of how markets work: what products to make, how to get customers, and how to get customers to buy them;
5. Ability to establish a value set and culture that promotes desired results;
6. Capacity to manage talented people effectively and generate high levels of performance from them;
7. Consistent focus on the few critical variables that make the business work;
8. Constant attention to the critical importance of cash;
9. Strong intellect, coupled with pragmatism and pure common sense;
10. Built-in, unrelenting drive to succeed; and
11. Magnetic personal style that motivates people throughout the company. |
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As readers of this blog and my book know, I've been talking for quite awhile about a leadership crisis across most sectors of society. The just-released results of the third annual Center for Leadership/U.S. News poll confirm the existence of the crisis and put some numbers to it.
Over 75% of people either strongly agree or agree that we have a leadership crisis today.
Nearly 48% believe the country is moving in a negative direction, with another 37% believing we are staying about the same. Only 14% believe we are moving ahead. 51% believe we are falling behind other nations.
63% believe we have worse leaders than we had 20 years ago. Only 18% believe we have better leaders today.
While 40% of people have a great deal of confidence in military leaders and 27% have a great deal of confidence in medical leaders, less than 25%, and in most cases far less than 25%, have that level of confidence in political, judiciary, educational, nonprofit, business, Wall Street, media, and entertainment leaders.
It's grim out there. New tools are needed to lead effectively. Check out The Source of Leadership. |
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I've been a fan of Stanley O'Neal, Merrill Lynch's former Chairman and CEO who resigned under pressure yesterday, for a long time. It appeared he had all the character traits and performed all the functions expected of a great leader. Yesterday, someone asked me where I thought he failed. Well, although he delivered fantastic results for years, he certainly did not produce the results expected by his board and investors in this sub-prime debacle. Specifically, he went long on the sub-prime market, the market went bust, and Merrill lost billions of dollars. And producing results is probably the most important function of a leader.
But are we right to expect positive results all the time? Are leaders who occasionally fail to deliver results failures? I think not. We want leaders to be courageous and take risks. And what is risk? The exposure to the chance of loss. And we take risk because the reward is the possibility of gain. Or at least we perceive the possibility of gain. So if we want our leaders to take risks in the pursuit of gain, we have to accept some loss.
If all this is true, why is O'Neal now retired? Welcome to the unforgiving world of public companies. CEOs that lose billions of dollars generally aren't given a chance to do it again, at least at the same company. Interestingly, though, if O'Neal had avoided the sub-prime market and it had not crashed, he would likely have been fired for failing to take the risk and losing out on billions of dollars in profits Merrill could have booked. So, in the public company world, it's damned if you do and damned if you don't. Take risks, but never err - at least in a big way - or you'll be fired. |
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Personally, I don't like Rex Tillerson, CEO of Exxon Mobil, the world's most profitable and valuable company. I don't like him because I think his sponsorship of groups that deny the existence of global warming and his refusal to step one inch toward green is harmful to humanity. I don't like him because I don't agree that profits should be sought to the exclusion of all other values.
But I do respect him as a leader. I think he's an extraordinary leader. If your values are aligned with his, you ought to be investing in his company and buying his company's product. He is self-defined, forward thinking (specifically, he believes the world is not running out of oil and there is no business case for the development of alternative fuels), highly credible to his team members, investors, and customers, inspiring (in that each person on his team him sees his or her role in creating profits), energetic, focused, courageous (it does take courage to be anti-green these days), and organized. And talk about producing results. In 2006, EM earned $39.5 billion in net income, higher than any company in history. Its return on capital far exceeds its competitors.
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I just read The Essential Wooden, by John Wooden, the legendary former UCLA basketball coach and perhaps the greatest coach of any sport ever. This gentleman’s record is phenomenal. 10 national championships in 12 years; 7 national championships in a row; an 88-game winning streak; a 38-game winning streak in national championship play; 12 Final Four appearances in 14 years; and 4 undefeated seasons. I’ll bet those kind of numbers will never be exceeded.
Remarkably, although he wanted to win, winning is not how he defined success. He defined success as "the peace of mind which is a direct result of self-satisfaction in knowing you made the effort to become the best you are capable of becoming." In fact, scores of his players attest to the fact that he never even mentioned winning. All he asked for was a best effort.
The book contains his famous Pyramid of Success, containing the 15 elements of success, developed over many years. It also contains scores of compelling leadership anecdotes and tips. An enjoyable read and a necessary addition to a leadership library. |
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Bush proclaimed in a debate with Al Gore in 2000 that he doesn’t believe in activist judges. And he has repeated that opinion over and over again ever since. In reality, it has been a useful phrase, pure propaganda, to advance his agenda. For instance, he criticizes as “activist” those judges who interfere with his disassembly of environmental protection, support same-sex marriage, condemn his continual attempts to bolster executive power, and restrict his efforts to destroy our right to privacy. In reality, he has stocked the federal judiciary with activist judges…active in the interest of his agenda.
Let’s look at his nearly 300 appointments to the judiciary. 9.6% of the district court appointments came from large law firms, which tend to represent large corporate clients, compared to 2% by Carter and 6.6% by Clinton. Over a third of his appointments to federal appellate courts and the U.S. Court of Federal Claims previously worked as lawyers or lobbyists for oil, gas, and energy industries. And what kind of results are they producing? Still too early to tell, but there is some interesting data. According to a 2006 study by People for the American Way, Bush appointees are leading efforts to limit the Civil Rights Act, the Voting Rights Act, and the Family and Medical Leave Act, as well as limit access to courts by plaintiffs. A 2004 study by the Environmental Law Institute found that in National EPA lawsuits pro-environment plaintiffs won 46% of the time before all judges, but only 28% of the time before Republican appointees, and only 17% of the time before Bush appointees. Remember, as a result of life-time appointments, it often takes a generation or more to reverse federal judicial trends.
So how about Johnny Roberts and the Supremes? Still too early to tell. There is a distinct separation between conservatives (Roberts, Alito, Kennedy, Scalia, and Thomas) and liberals (Stevens, Souter, Ginsberg, and Breyer). They have been fairly effective in limiting Bush’s incessant attempts to expand executive power, and scored big points with the left for their April 2007 ruling on emissions, but all-in-all they have been, as the majority would indicate, a conservative body that tends to be pro-business, anti-consumer, and interested in walking backwards when it comes to race, free speech, abortion, and church-state relations.
No “F” here because it is simply too early…
Grade: C |
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Bottom line, on this issue of tremendous importance, Bush hasn’t done shit. In a July 22, 2007 Press Democrat article, Shirlee Zane, CEO of Sonoma County’s Council on Aging, points to a World Health Organization report that ranks the U.S. only 37th out of 190 in health care services. Does this embarrass you as much as it does me? The 36 countries that have lower infant mortality and greater longevity have a form of universal healthcare. 70% of Americans believe we need a national health care program, up from 40% only ten years ago. And in the face of all of this, Bush proposed in this year’s State of the Union address a plan in the extreme opposite direction of a national plan. Specifically, he pitched a plan that would provide tax incentives for individuals to procure their own private coverage and tax them for what he called “gold-plated” employer-provided coverage. Another attempt to sweeten things for corporate interests, at the sole expense of individuals and, frankly, the have-nots and have-less-thans. The U.S. health care system is broken, about as badly as you can imagine. While it has begged for leadership, Bush has been intermittently asleep at the switch, preoccupied with bombing countries that represent no threat to the U.S., or pitching new plans that favor his corporate buddies.
Grade: F |
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I so wanted to entitle this "Diplomacy," but I just couldn’t bring myself to do it. You see, the term "diplomacy" involves the element of negotiation. And there hasn’t been a shred of negotiation in the policies of the Bush/Cheney administration. There has only been "my way or the highway." Our administration has been arrogant, indifferent, and, much worse, deceitful. (So now you know what the grade will be!) After 9/11, Bush told the world that the U.S. had no need for international treaties or coalitions. He was only interested in a "coalition of the willing." That’s the arrogant and indifferent part. And the deceitful part is when he lied to us, his own electorate, as well as everyone else in the world by preaching that Saddam Hussein represented a global threat because he had WMDs and close ties to Al Qaeda.
Bush refuses to talk with any nation (e.g., Iran, North Korea) he considers rogue. Instead, he uses the press to issue threats about what we might do if they continue down whatever path they are on. You don’t have to be an expert in communications to appreciate the idiocy of this strategy. It’s a mere prelude to war.
Bush declared that the Geneva Convention does not apply to the prisoners at Guantanamo Bay. Interesting…particularly because there is not one legal or other theory that can even arguably support that position. In front of the whole world, then, we imprison and abuse hundreds of people who have virtually no legal rights or access to judicial review. How can we ever have the respect of other nations when don’t even respect our own laws and principles?
Need more? Abusing prisoners at Abu Ghraib and Bagram and dismissing it as the work of a few bad apples. Dismissing and now trying to undermine the efforts of the International Criminal Court, formed by other nations in 1998 in an attempt to try the most egregious crimes against humanity. As the world’s most powerful, advanced nation, the one that wants to be acknowledged as the foremost global leader, first denying and now ignoring global warming such that hundreds of millions of people in the world, in hundreds of nations, are at risk of dying in the next century.
Grade: F |
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If we gave Bush another few years, he’d have the entire Constitution disassembled, except perhaps the right to bear arms. Let’s look at separation of powers. The Bush administration has repeatedly argued that the President is, in effect, above the law. In 2002, it argued that Bush could order the torture of enemies despite the fact Congress had made it a crime and the U.S. was party to a treaty prohibiting it. Bush, in effect, used the “President knows best” argument that, of course, has only limited Constitutional merit. He used the same argument in 2004 in defending his right to detain foreign nationals at Gitmo. He used it again in defending his right to wiretap Americans without probable cause or judicial oversight. Fortunately, the courts rebuked the President in each of these cases, but it makes me nervous that a U.S. President believes so sincerely he is above the law.
Let’s look at the Fourth Amendment’s rights to privacy. Here, Bush has accomplished a lot more. Under the Patriot Act, the government’s right to spy on us has expanded dramatically. Even with these expanded rights, the Bush administration has not been satisfied. The Justice Department’s own inspector general recently found that the government’s use of administrative subpoenas was virtually out of control, used well beyond what was authorized by the Act.
Fifth Amendment’s right to due process? Nowadays, “enemy combatants” can be held indefinitely without trial, suspicious groups can have their assets frozen without notice and hearings, and military tribunals can sentence folks to death on the basis of hearsay and coerced testimony.
First Amendment’s right to associate? It was effectively written out of existence by the post-9/11 executive order that that assets of any person or entity can be frozen if the Treasury Dept. deems the person or entity “otherwise associated” with anyone the administration deems
- in its sole discretion - a terrorist.
Grade: F |
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While I don't know much about the politics of New York City Mayor Michael Bloomberg (I understand he was a Democrat for a long time, then converted to Republican, and just recently converted again to Independent as a possible prelude to a run for President in 2008), I've been reading about the results he has produced in New York in only 5 and 1/2 years and it's extremely impressive.
He took the city schools over from the state and test scores have dramatically improved. Staring at a budget deficit of nearly $6 billion, he focused on the City's strengths for solutions. Believing that New York had enormous unmet marketing potential, he decided cutting services would undermine this potential. Instead, he raised property taxes by 18% to pay for services essential to change the image and, indeed, the reality (e.g., poor transportation, high crime rates, and dirty streets) of New York. He hired a kick-ass marketing head, tripled the marketing budget, and set a goal of attracting 50 million annual visitors by 2015. He implemented a 311, 24-hour service line allowing residents to report or comment on virtually anything and everything, thereby providing him with invaluable feedback about the needs of the City. He made City Hall transparent. Not only does he require an open-office design, but insists that the information produced by the City is concise and simple to grasp.
His efforts have been a boon to the City's economy. It has reached a surplus and Bloomberg is now looking to cut $1.3 billion in taxes. He is attracting more film business than ever in its history. Property values are up 55%. Annual visitors are up to 44 million from 35 million, well on its way to his 2015 goal. He's added 151,100 private sector jobs. Not surprisingly, he has 70% approval ratings.
If I look deeper, I may end up not liking this dude, at least as my President. But I am going to look deeper. This guy deserves it, just based on his results. |
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| In sports, at least at the major college and professional levels, poor and even mediocre coaching is not tolerated for very long. In other arenas, however, the leash given leaders by their constituents is much longer. Politicians are protected by the length of their elected terms, but even then mediocre incumbents have a great advantage over challengers. In the corporate world, mediocre leaders last what must seem like eons to shareholders. (Witness Bob Nardelli at Home Depot, only recently canned after five years of ineffectiveness.) In academics, it seems almost impossible to be fired. True, in sports, you have the binary function of wins and losses. Good leaders win and poor leaders lose. The quality of leadership is not so evident where wins and losses are not involved. But is this only because we, as followers, don't trust our intuitions and instead need mountains of data over a long period of time to assess a leader's performance? And don't our intuitions tell us how a leader is doing very early in the game? Doesn't this high velocity, highly complex existence of ours beg for good leaders and require that we assess them more quickly than in the old days where no real harm was done by waiting out poor leadership? Just asking... |
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At the end of the day, a leader's job is to bring a team together and produce results. When there is a huge divide between supporters of that leader and dissenters, and each group is not insignificant in size, a leader simply cannot produce results. He or she is at war with a large portion of the team he or she is supposed to be leading. He or she has failed.
This is precisely what is happening in Washington as we speak. Whether you are a supporter of Bush or dissenter, you’d have to agree that the country is polarized and paralyzed with him at the helm. The majority of Americans are unsatisfied with his leadership, and particularly his handling of the Iraq situation, and a substantial minority supports him. And our disagreement over his leadership is intense. We are on the same team, but seemingly at war with each other, and this is a hallmark of failed leadership. Isn’t there anyway to bring 2008 along more quickly? We need a leader who can unify this country and produce some positive results.
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| Rush Limbaugh, Don Imus, Howard Stern, Rosie O'Donnell...all the talk show hosts on radio and television. No question, they entertain us. But are they leaders? Thought leaders? Or are they irrelevant as Arnold Schwarzenegger characterized Rush Limbaugh recently on The Today Show? If they are irrelevant, why was Imus fired for his racist behavior? Seems more likely that they are relevant in some way. But how? And to what degree? |
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| I've long advocated paying our national legislators a huge annual salary, upwards of $5 million, even $10 million. The expense is a mere drop in the bucket of our national budget. The benefit, I believe, lies in the draw it will create for very talented people to join in our national leadership. Right now, many of our best and brightest look at what they can earn in the private sector and avoid public service because it pays a mere fraction of what they can earn in the private sector. Lest elected officials be insulted, I am not saying very talented and dedicated people are not already serving in public offices. I am saying that we would reap big benefits by having many more talented and dedicated people addressing our social needs. Our needs are huge; I’d like the best people from the largest, highest quality pool addressing them. |
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The controversy over executive pay continues. The media and shareholders begrudge corporate executives who earn tens, and sometimes hundreds, of millions of dollars in comp. So long as the pay is tied to shareholder value, there shouldn't be any controversy. If a company in which I own shares experiences a share price increase of $10, reflecting a $1 billion increase in market cap, I don’t see any reason why the person who led the effort shouldn't make 10% of that, or $100 million. This is a capitalist economy and everything, including the services of people, trade at fair market value. Restrict that leader’s pay, and she'll go elsewhere, where she will be paid fair market value. The company she leaves will have saved $100 million, but lost $1 billion in overall value.
The cases where shareholders should be enraged are where no value is added to the company. Run a company for five years, leave it with a share price lower than when you started, and you shouldn't be earning the big bucks.
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| I had a conversation today with a new acquaintance who built and runs a $400 million company. I told him about the book I have written and, upon hearing the general theme, he quickly told me about his experience with The Tao of Leadership, a book written by John Heider in 1985. He credits Heider, above all others, for the success he's had. He has copies of the book, which contains 81 principles, on both his office desk and his nightstand. The book was recommended to me about a year ago by a close friend and I share both his and my new acquaintance's enthusiasm. It is fantastic. I have Googled Heider, but can't track him down. I'm wondering if he is still alive and, if so, what he is doing now. I think he was way ahead of his time, which is strange to say given that he was applying millennia-old principles to leadership. His book is a treasure, and more timely than ever. |
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| As the problems in our world mount, and the feet of our elected leaders and the leaders of most of the largest corporations seem stuck in concrete, it is fascinating to watch other leaders emerge from the woodwork with energy, ideas, and operating models for ways to solve our problems and better our world. Powerful grass roots initiatives - in areas such as energy, the environment, health care, poverty, foreign policy, you name it - are gaining incredible traction. And the leaders behind them are as diverse as they are inspiring. Big money people like Bill and Melinda Gates, Ted Turner, Gordon and Betty Moore, and George Soros. Entertainers such as George Clooney, Julia Roberts, Leo DeCaprio, Al Gore (former politician, current movie star), Bette Midler, and Oprah Winfrey. And entrepreneurs who seem as driven by altruistic goals as economic bounty. I'm going to spotlight some particularly inspirational leaders and their initiatives as we move along. And I welcome comments about leaders you've seen emerge as this new generation of leadership dawns. |
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A New Leadership Paradigm!
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