AUTHENTIC LEADERSHIP Rediscovering the Secrets to Creating Lasting Value Bill George Jossey-Bass, 2003, 202 pp.

Jossey-Bass seems to publish books that take the moral high road. This one certainly does. George retired in 2001 after 10 years as CEO of Medtronics, a medical device company. Reflecting on the Enron and similar scandals, he makes the case that we need new leaders, not just new laws to bring us out of the corporate crisis. By candidly reflecting on his own lessons, he demonstrates how to develop the five core dimensions of authentic leadership: purpose, values, heart, relationships, and self-discipline. “Timeless leadership is always about character, and it is always about authenticity.” (Warren Bennis, Foreword) Chapter 1. Becoming an Authentic Leader The Enron and Arthur Andersen scandals awakened the world “to the reality that the business world was on the wrong track, worshiping the wrong idols, and headed for self-destruction.” “What’s missing? …leaders committed to building authentic organizations for the long term.” “Far too many leaders got caught up by the short-term pressures of the stock market and the opportunities it brought for personal wealth.” 1) “Our system of capitalism is built on trust…” (1) “We are witnessing the excesses of the shareholder revolution that began fifteen years ago. In its early stages, pressure from shareholders did much to improve the competitiveness of American corporations…. However, the financial rewards from their actions, both corporate and personal, were so great that companies and shareholders alike developed an inordinate focus on short-run results.” (3) “To offset financial problems, many executives stretched the numbers and the accounting rules well beyond their intended limits.” (3) “Somewhere along the way we lost sight of the imperative of selecting leaders that create healthy corporations for the long term.” “We need new leadership. We need authentic leaders, people of the highest integrity, committed to building enduring organizations. We need leaders who have a deep sense of purpose and are true to their core values. We need leaders who have the courage to build their companies to meet the needs of all their stakeholders, and who recognize the importance of their service to society.” (5) “I want to share how I dealt with the tough issues throughout my life and what I learned to be true.” “There is a better way to lead…, by pursuing your mission, living by your values, and getting superior results for all stakeholders.” (7) “Leadership is authenticity, not style.” “Leadership begins and ends with authenticity. It’s being yourself; being the person you were created to be.” Trying to emulate a list of leadership characteristics is developing a persona or image – the opposite of authenticity. (11) “Authentic leaders genuinely desire to serve others through their leadership. They are more interested in empowering the people they lead to make a difference than they are in power, money, or prestige for themselves. They are as guided by qualities of the heart, by passion and compassion, as they are by qualities of the mind.” (12) “They lead with purpose, meaning, and values. They build enduring relationships with people. Others follow them because they know where they stand. They are consistent and self-disciplined. When their principles are tested, they refuse to compromise.” (12) “The best leaders are autonomous and highly independent. Those who are too responsive to the desires of others are likely to be whipsawed by competing interests, too quick to deviate from their course or unwilling to make difficult decisions for fear of offending.” (12) “Learning to cope with the loneliness at the top is crucial so that you are not swayed by the pressure. Being able to stand alone against the majority is essential to being your own person.” (130 “To become authentic, each of us has to develop our own leadership style, consistent with our personality and character.” “Your leadership style is not what matters.” However, “it is important that you develop a leadership style that works well for you and is consistent with your character and your personality.” “Good leaders are able to nuance their styles to the demands of the situation, and to know when and how to deploy different styles.” (13-14) “Being true to the person you were created to be means accepting your faults as well as using your strengths.” (14) “Think of your decisions being based on two concentric circles. In the outer circle are all the laws, regulations, and ethical standards with which the company must comply. In the inner circle are your core values. Just be darn sure that your decisions as CEO stay within your inner circle.” (quoting Congressman Amory Houghton, former CEO of Corning Glass, p. 16) “Little by little, step by step, the pressures to succeed can pull us away from our core values, just as we are reinforced by our ‘success’ in the market.” (17) “The test I used with our team at Medtronic is whether we would feel comfortable having the entire story appear on the front page of the New York Times. If we didn’t, we went back to the drawing boards and reexamined our decision.” (17) Authentic leaders demonstrate five qualities: (18) · Understanding their purpose · Practicing solid values · Leading with heart · Establishing connected relationships · Demonstrating self-discipline “Leadership for what purpose? If you lack purpose and direction in leading, why would anyone want to follow you?” (19) “If people feel you are genuinely interested in serving others, then they will be prepared not just to follow you but to dedicate themselves to the common cause.” (19) “Leaders are defined by their values and their characters. The values of the authentic leader are shaped by personal beliefs, developed through study, introspection, and consultation with others—and a lifetime of experience. These values define their holder’s moral compass. Such leaders know the ‘true north’ of their compass, the deep sense of the right thing to do.” “Integrity is the one value that is required in every authentic leader. Integrity is not just the absence of lying, but telling the whole truth, as painful as it may be. If you don’t exercise complete integrity in your interactions, no one can trust you. If they cannot trust you, why would they ever follow you?” (20) “To excel in the twenty-first century, great companies will go one step further [than engaging their employees’ minds] by engaging the hearts of their employees through a deeps sense of purpose.” (22) “The capacity to develop close and enduring relationships is one mark of a leader. Unfortunately, many leaders…just delegate the work to be done, remaining aloof from the people doing the work. The detached style of leadership will not be successful in the twenty-first century.” “They insist on having access to their leaders, knowing that it is in the openness and the depth of the relationship with the leader that trust and commitment are built.” (230 “At the heart of leadership is the leader’s relationship with followers. People will entrust their hopes and dreams to another person only if they think the other is a reliable vessel.” (quoting David Gergen, 24) [And that’s just chapter one! dlm] Chapter 2. The Transformation of Leaders Warren Bennis observed that most leaders he interviewed “passed through a crucible that tested them to the depths of their being and enabled the successes they realized later in life.” A developmental quality is required for each dimension of leadership: (p. 36) · Purpose: Passions · Values: Behavior · Heart: Compassion · Relationships: Connectedness · Self-Discipline: Consistency “Passion for your purpose comes when you are highly motivated by your work because you believe in its intrinsic worth, and you can use your abilities to maximum effect.” (37) Your values are not solid until they have been tested by pressures to compromise or you have to deal with potential conflicts between them in the context of difficult decisions. This is not easy when the outcome is uncertain and there is a lot at stake. (37) “There is nothing worse than leaders who preach good values but fail to follow their own advice, or who set double standards for their employees and themselves. If you want to see employees become cynical, just watch what happens when the top executives behave in ways inconsistent with company values.” (38) “Finding a company where there is a solid fit between your values and the organization’s values is more difficult than it sounds.” “The important takeaway is not to let your values be compromised by the organization.” (39) You can’t really lead authentically without compassion. “It is your life experiences that open up your heart to have compassion for the most difficult challenges that people face along life’s journey.” “Every day we have opportunities to develop our hearts, through getting to know the life stories of those with whom we work….” (39) “Enduring relationships are built on connectedness and a shared purpose of working together toward a common goal.” “It is in sharing our life stories that we develop trust and intimacy with our colleagues.” “Trust is built and sustained in the depths of these relationships…” (40-1) “To be authentic, leaders must behave with consistency and self-discipline, not letting stress get in the way of their judgment.” (41) “My greatest joy in work has come in organizing a group of people to build something of real importance and great meaning.” (44) Chapter 3. Leading a Balanced Life “(Often) our behaviors suggest that our work is our life, or at least that it takes priority over everything else.” (45) “Balanced leaders develop healthier organizations.” “In the end they achieve better results on the bottom line.” (46) “Finding a balance between your work and home life is one of the most difficult issues any leader faces.” (48) “The key …is to examine it continually….” (51) “Mentoring—both being mentored and mentoring others—has led to some of my most treasured relationships and has helped me grow in many new ways.” (53) The second section deals with building an authentic company. An authentic company “is guided by a mission and vision and practices a consistent set of values.” “(It) is characterized by an enduring organization that is disciplined in producing results for all its stakeholders.” (57) “Through interactions with the organization, (leaders) become more effective in their roles. In turn, the organization responds to their leadership.” “As a result, such leaders renew themselves and their organizations.” (58) Chapter 4. Missions Motivate, Dollars Don’t “The best-kept secret in business is that mission-driven companies create far more shareholder value than do financially driven firms.” “It is only through a sense o purpose that companies can realize their potential. It is their raison d’etre that animates employees and inspires them to turn purpose into reality.” “The best path to long-term growth in shareholder value comes from having a well-articulated mission that inspires employee commitment.” “Employees today are seeking meaning in their work.” (61-2) “Sustainable growth cannot be achieved by a series of short-term actions.” “The real failing in focusing on short-term value is the inability to motivate large numbers of employees to exceptional performance.” “Y “You cannot inspire employees by urging them to help management get the company’s sock price up.” (63-4) “Companies that stay true to their mission through good time and bad can sustain their growth indefinitely.” “In my experience motivating employees with a sense of purpose is the only way to deliver innovative products, superior service and unsurpassed quality over the long haul.” (65-6) “The difference at Medtronic is that employees really believe in the mission and use it as a constant guide in their everyday work.” “I was struck by the focus on the company’s customers, the patients it serves.” “It’s not about the statistics, but the personal life stories.” “Employees discuss the mission constantly—in the halls, the company cafeteria, and conference rooms where life-saving product decisions are made. They share patient stories, talk about telephone calls they receive from patients, challenge each other about whether quality of Medtronic products is high enough, and dream about new inventions that can restore thousands more to full life.” (67-9) Chapter 5. Values Don’t Lie “Values begin with telling the truth, internally and externally. Integrity must run deep in the fabric of an organization’s culture. It guides the everyday actions of employees and is central to its business conduct. Transparency is an integral part of integrity. The truth, both successes and failures, must be shared openly with the outside world.” (71) [Note: with the outside world! Dlm] “Values have to be discussed at every opportunity, constantly reinforced, and consistently reflected in the actions of management at all levels.” “Inculcating values throughout an organization starts with the leader, who sets the standard of behavior for everyone in the organization.” (72) “Leaders may spend a decade in building trust and lose it all in a single act.” But “What appears to be a compromise of values in a single instance is usually the final act in a series of compromises.” (75) “Values are only one part of an organization’s culture; the other half is its operating norms—the way in which day-to-day business is conducted.” “Practicing solid values does not guarantee results unless a passionate commitment to performance standards is incorporated into the organization’s norms.” “Do the organization’s norms drive performance or do they undermine it?” (76) “The lack of performance standards related directly to the organization’s inability to deal with conflict.” (77) “I had learned from my days in the defense Department during the Vietnam War the perils of well-rehearsed, positive presentations that avoid the essential realities.” (79) Chapter 6. It’s the Customer, Stupid! “The purpose of any company boils down to one thing: serving its customers.” “This is true across all industries and all types of businesses.” (87) “Executives must recognize the employees who are actually serving customers…and provide the environment that empowers and rewards their efforts.” “Achieving and sustaining very high levels of customer service requires continuing focus on aligning employee interests with customer needs.” (87) “A Medtronic executive once told me that all Medtronic employees have ‘a defining moment’ in which they come face to face with a patient whose story deeply touches them.” He describes his own experience hearing the story of a young patient whose life had been restored by a Medtronic product. “It was a galvanizing moment. I saw the mission itself come to life.” (88) “If we examine organizations that are highly customer-focused, they are usually headed by leaders with real passion for serving the company’s customers.” (89) Chapter 7. It’s Not Just the CEO The greatly successful corporations were built by teams at the top. (91) “As a leader, I have always surrounded myself with people who are more knowledgeable and experienced than I am. The key is having people around you who complement your weaknesses and make up for your lack of experience.” (92) “I survived the crisis only by forming a team with my subordinates, relying on their superior expertise, and prodding them to work together. My skill was to pull together the right people and empower them to solve the problems, one at a time.” (93) “To build a top quality team around you, it is essential early in your tenure to assess whether you have the people in place who can enable the organization to reach its long-term goals.” (94) Chapter 8. Whose Bottom Line: Customers or Shareholders? “In the end the success of every leader is measured by the results their organizations achieve for their stakeholders.” “But the question remains, what results should be measured…?” (101) “The criterion … should be how well they serve everyone that has a vested interest in the success of the enterprise.” (102) This includes customers, employees, shareholders, suppliers, and communities. “Serving all your stakeholders is the best way to produce long-term results and create a growing, prosperous company.” (102) This requires discipline, vision, and committed leadership. (104) “George W. Merck, the son of Merck’s founder, told his employees, ‘We try never to forget that medicine is for the people. It is not for the profits. The profits follow, and if we have remembered that, they have never failed to appear. The better we have remembered it, the larger they have been.’ Merck’s mission states, ‘our business is preserving and improving human life.’” (104) Chapter 9. Seven Deadly Sins – Pitfalls to Growth “The real test of an authentic company is whether it can sustain its growth for an extended period of time without falling prey to short-term pressures or temptations to cut corners.” (109) The seven pitfalls: (109-10) · Working without a clear mission · Underestimating the core business · Depending on a single product line · Failing to spot technology and market changes · Changing strategy without changing culture · Going outside core competencies · Counting on acquisitions for growth “Without clarity over purpose, it is difficult if not impossible for your customers, your employees, and your shareholders to know what your company stands for and where it is going.” (110) “When growth slows, as it inevitably will, leaders have to renew their commitment to growth and seek out new avenues for expansion, avoiding the temptation to retreat into cost-cutting mode.” (115) Chapter 10. Overcoming Obstacles “The leader must get everyone working together toward fulfilling the company’s mission. This requires two things, strategic focus and a burning desire to succeed.” (117) Chapter 11. Ethical Dilemmas – When in Rome, Don’t Follow the Romans “Often the most significant challenge in dealing with ethical dilemmas is recognizing them to begin with….” (127) “…upholding an ethical standard…requires a detailed system of compliance, enforcement, and punishment for improper action.” “The key is having open lines of communication with people on the firing line….” (132) Chapter 12. Innovations from the Heart “Passion begets innovation.” (133) “Effective leaders must stay close to the innovators that create organic growth.” “Leaders are also in the marketplace continually looking for innovative ideas and bringing them back to the company’s creative people.” (134) Chapter 14. Shareholders Come Third “Leaders are continually confronted with the competing interests of their stakeholders.” “The first purpose of any corporation is to serve its customers.” (153) “If leaders treat their employees well, employees will treat customers well. It is as simple as that.” (155) “Transparency is key to dealing with shareholders. Communications these days are so fast and open that it is essential for the leadership to communicate exactly the same messages inside and outside the company.” (158) Chapter 15. Governance Is Governance “One of the hardest things for a board to do is to make changes in leadership in a timely manner. When the company fails to perform…, the board of directors may be the last to recognize the depth of the problems. By the time it does, it could be too late.” “There are several reasons this occurs. Board members are frequently out of touch with the management beneath the CEO and the organization itself so they miss the signals.” (173-74) Chapter 17. Preparing for Succession…and Moving On “One of the most important things leaders do is to prepare for their own succession. The mark of authentic leaders is how well their organization does after they are gone.” (187) “The final third of your life is about giving back.” “The key to being fulfilled in the final third of life lies in our desire to continue to grow intellectually and in our hearts.” “The key to the personal side of this transition is having something to move to, so that you are not just leaving the thing you love.” (191) Epilogue. If Not Me, Then Who? If Not Now, When? In thinking about whether to step up and led, ask the above questions. “The world needs your leadership today.” (197) If you are called to lead: · Be motivated by your mission, not your money. · Tap into your values, not your ego. · Connect with others through your heart, not your persona. · Live your life with such discipline that you would be proud to read about your behavior on the front page of the New York Times. “Engaging the hearts of others requires a sense of purpose and an understanding of where you’re going. When you find that special alignment, you and your team will have the power to move mountains.” (198) “What will be your legacy? At the end of your days, what will you tell your grandchild you did to better humankind?” (199)