One of America's iconic companies is under new leadership. Procter & Gamble, the world's leading consumer products company, turned the reins over to Robert McDonald, a 29-year PG veteran. McDonald is a former Army captain and a graduate of The United States Military Academy at West Point. I found his background particularly interesting because of a recent experience with another West Point grad. At my son's high school graduation a few weeks ago, there were four students who earned appointments to the United States Army, Navy, and Air Force Academies. The representative from West Point made a profound statement during his remarks. Describing a West Point education he said, "Much of the history we teach was made by those we taught."
I can't help but wonder if some of our leading business schools are saying the same sort of thing to the incoming class of MBA students - Much of the business we teach was made by those we taught... Doesn't quite have the same eloquence, does it?
I think we may be entering an era during which the leadership provided by a CEO will have a far greater impact on a firm's success than it has historically. Which begs the question - What is it about the current economic environment that makes the CEO role so much more important? Let me get back to that...
Congress and the Obama Administration are working on plans to reform our health care system, which costs too much, covers too few, and is so bombarded by special interests that it is for all intents and purposes, unmanageable. The system is, in a word, broken. Do the leaders in Washington have the wisdom, discernment, and strength of character to identify and implement changes that will lead us out of the health care quagmire? Another tough question...
Wisdom, discernment, and strength of character... There is a long list of corporate CEOs that have been taken to the proverbial woodshed in recent months, perhaps for good reasons. I don't think I can really add much to that story, but it is one that just doesn't seem to want to go away. A recent, rather curious controversy, involves the CEO of Bank of America, Ken Lewis, and his role in the acquisition of Merrill Lynch during the darkest days of the financial crisis. According to Mr. Lewis and his supporters, he was bullied into the decision by the Feds and had no choice. His detractors counter that he could have fallen on the sword and been forced out by the Feds, thereby cementing his legacy of putting shareholders first. Instead, he chose self-preservation, and shareholders and taxpayers paid the bill.
The challenges facing much of corporate America are formidable. Intense global competition, recessions in most major markets of the world, a difficult credit environment, and a tapped out consumer, create powerful headwinds. The challenge to find innovative new products, to control costs, to market effectively on a global basis, to motivate employees in countries around the world to work toward a common vision, all in an environment of intense competition and slow overall economic growth, is quite a task for any corporate leader. In this context, I sense that the old leadership style will be ineffective going forward. At the risk of being too cynical, the old leadership style is one of placing self first and all others second. It does not fit the times or the challenges ahead. Any leader that does not put his team before himself has no chance to succeed in this environment. Only leaders who put colleagues, employees, customers, and shareholders before themselves have a fighting chance of achieving success.
The call for servant leadership... Mr. McDonald, at PG, has been described as a "servant leader." One article written about him said that as an Army officer he would insist that his men eat before he did. A simple gesture perhaps, but it builds teamwork and loyalty.
OK, let's get back to the earlier question - What is it about the current economic environment that makes the CEO role so much more important? In a word, it is complexity. A large part of our economy seems to be unmanageable. What we have witnessed at several financial behemoths, General Motors, and the US Government would tend to support this view. I think it is also fair to say that a lot of this mess is the result of greed and arrogance, or at least, self-centeredness.
A welcomed breath... A servant leadership style would be a welcomed breath of fresh air, in my view. I'm not saying it doesn't exist, because it does, but I am saying we need a whole lot more of it. Beyond that, success economically, at the corporate or governmental level, depends on it. Why? Complexity. In a complex world teamwork is essential for business success. A leader can not effectively motivate a team to work toward a common vision unless the team knows that the leader cares more about them than he does himself. In other words, people don't care how much the leader knows until they know the leader cares. Servant leadership is the most effective, lasting way to build teamwork. More effective, on a long-term basis, than even paying fat bonuses, which are gone by the way, at least for a while.
We will soon see whether new CEOs like Mr. McDonald can harness servant leadership to achieve future business success. We may also see whether entrenched CEOs, as well as politicians, are willing to embrace servant leadership if they haven't already done so. Imagine, for a moment, what that would be like...
