01 Oct 2002
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HBS professor Carl Kester discusses leadership with five of his classmates — chief executives from the Class of 1977

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Corporate leadership is a much-discussed topic these days. With financial scandals making headlines daily, the CEO hero worship that was common during the late 1990s is out and increased skepticism is in. “The imperial chief executive, hailed not long ago as the savior of entire companies and the driving force behind the turnaround of the American economy, is suddenly under siege,” the New York Times declared in June. In the months since, the chorus of voices questioning today's business leaders has only increased in volume.

In his role as MBA Program chair, HBS professor Carl Kester, a member of the Class of 1977, has engaged many students in discussions about leadership. So it seemed fitting for the Bulletin to ask him to coordinate an exchange of views on the topic among a small group of the many chief executives from his HBS class. Given their respected leadership of some of the world's best-known companies — Procter & Gamble, Credit Suisse, General Motors, Bain & Company, and AT&T Broadband — these members of the Class of 1977 have a first-person perspective on the challenges facing today's leaders.

Who are the leaders you admire today?

Rick Wagoner, GM: President Bush and former New York Mayor Rudy Giuliani exhibited remarkable leadership following the September 11 crisis. I also admire Michigan Governor John Engler, who's shown courage in taking on some tough but important political and economic issues. I have a lot of respect for Jack Welch for the sustained, excellent business results achieved during his tenure leading General Electric.

Bill Schleyer, AT&T: I would also pick Bush, as well as Prime Minister Tony Blair. I think their unequivocal, immediate, ongoing response to terrorism was admirable. They focused on doing the right thing rather than on the political consequences.

Lukas Mühlemann, CS: I believe it has become much more difficult to admire anybody today. Many people excel in a certain environment, but when it changes, many of the same people struggle.

Orit Gadiesh, Bain: It is hard to get any real perspective on our contemporaries, so I tend to reserve my admiration for historical figures. Winston Churchill comes to mind. As a leader, he had a remarkable ability to get people and processes moving together in the right direction, clearing obstacles and getting things done.

Has the public lost confidence in today's business leaders?

A.G. Lafley, P&G: I think the public has lost confidence, and leaders need to say what they'll do and do what they say. Integrity and delivering promised results will rebuild trust.

Mühlemann: Yes, the public has lost confidence. The recipes to restore it are not easy. Being honest, humble, and setting realistic expectations may be good ingredients.

Gadiesh: The public has lost confidence, and the underlying problem does not seem to be the absence of checks and balances, but that not everybody is making them work. Business leaders have to set a better example. We must foster a culture in business that does not tolerate “nodders” and “yes men,” neither in management nor in the boardroom. We need a culture that is willing, when necessary, to ask awkward and embarrassing questions and that insists on believable answers — one that does not shuffle responsibilities off onto the lawyers or the accountants.

Schleyer: The big offenders get people talking, but I don't believe the American public has in general lost confidence in corporate America.

Wagoner: Realistically, yes, the data suggest that business leaders — and business, in general — have lost a lot of ground recently in terms of public perception. We need to restore confidence through effective and proactive communications, through openness and candor, and through accuracy and conservatism in financial reporting.

What are some of the important skills a CEO must possess?

Gadiesh: A skilled leader will have a goal for his organization that is both ambitious and achievable, a strategy to get the organization there, and the ability to communicate this strategy clearly, simply, and repeatedly. CEOs also need to pick good people, put them in the right positions, and give them the tools to execute and achieve the desired results.

Wagoner: Leaders must know and stay on top of their business, and they must be proactive in driving for results. Good leaders don't wait for issues to arise, they anticipate them. They help solve problems. They listen to people and coach them — “We need to get these results; how can I help you get them?”

Schleyer: Let's not forget that it is crucial for a leader to be able to relate to all levels of an organization. Leaders need to have the ability to communicate with Wall Street and Washington, but more importantly, they need to be able to communicate with the top people in the company and the person who is working the assembly line or answering the phones.

How do you stay in touch with those who work for you?

Mühlemann: Walking around, seeing customers together with colleagues, e-mail, roundtables, site visits, being accessible.

Lafley: I call it MBWA: manage by walking around. I think talking is really the best thing.

Gadiesh: I spend about 70 percent of my time working directly with our clients and our teams. So I am present, and I communicate a lot. I also listen a lot. Face-to-face communication is essential. Nothing can replace it.

Schleyer: However, when in-person contact isn't possible, we rely on videoconferencing and e-mail. We also use handheld e-mail systems to send messages. It's the ultimate in multitasking and allows one to stay constantly in touch.

Wagoner: I think it's critical to stay in touch with the "pulse" of the organization, which can be challenging in a large company like ours. One thing I do is hold regularly scheduled "diagonal-slice meetings," which include people from all levels and all areas of the company.

What's the most valuable lesson you've learned from your employees?

Schleyer: I learn the most when I leave headquarters and go out in the field. There I have met so many workers who are incredibly motivated. It would be difficult to move the company forward without taking advantage of their collective motivation. Listening to employees has helped me formulate my own strategies.

Lafley: I agree, they have taught me the power of listening and of trust.

Mühlemann: I've learned the value of teamwork.

Wagoner: I've learned about the critical importance of providing consistent direction over time. It takes a while for direction to translate through the organization and for each unit and activity to align and support the achievement of objectives.

What are some of the leadership lessons to be learned from the fall of Enron?

Lafley: Beware of hubris. It raises the question, "Did they have the capability to understand the business model they created?" It shows the importance of experience as well as integrity.

Mühlemann: Arrogance and greed are bad advisors.

Gadiesh: First, no rug is big enough to sweep problems under indefinitely. If things are going wrong, stay humble enough to admit it and listen to the people who might know how to fix them. Second, for boards of directors: If someone can't explain something, it is either because they don't understand it, or they don't want you to understand it. In either case, the right response is to keep asking questions. Third, the importance of a focused growth strategy. Fourth, stay down-to-earth.

Schleyer: I would say the importance of corporate values - of identifying them, communicating them, demanding compliance to them, and living them.

Wagoner: Be on top of your business and know what's going on. If you don't know how you're making money, you could be in for a big surprise. It doesn't matter how big or powerful your company is, if you take risks you don't understand, you can destroy your business.

What is the single biggest challenge facing corporate America?

Wagoner: The global competitive environment. Certainly in the auto business, the competition is tougher and more global than ever before. Globalization provides us with more opportunities to grow, but the competition is definitely making it much tougher than it was when I graduated from HBS.

Schleyer: I think it's two things: short-term thinking and individual greed. When you put them together, you get serious problems.

Mühlemann: Regaining trust, growth, and finding a balance between corporate interests and the broader interests of society.

Lafley: I agree, the challenge is trust.

Gadiesh: Yes, trust. And I say trust - not accountability - because many CEOs and corporations are responsible and accountable, but given the recent events, there is a real issue of mistrust that spills into the general business environment.

How do you balance the demands of your career and your personal life?

Lafley: I don't manage as well as I'd like. I exercise regularly in order to stay healthy. I keep in close touch with friends and family and I work hard to keep outside interests alive.

Mühlemann: I do it by creating time for other interests — my family, art, reading, sport. Without some balance, I cannot do my job properly, certainly not over a long time period.

Gadiesh: I love what I do. Working with companies on their most pressing issues takes me to places I enjoy visiting and people I enjoy being with. Beyond that, reading is one of my passions, and travel allows lots of time for that. I am very fortunate to have a supportive husband who is also very busy. And we both enjoy the same things.

Schleyer: Well, I've been fortunate enough to have a wonderful wife for 23 years. We're having a great life together with our three sons. The family takes two interesting vacations together every year. I'm also involved in some nonprofit activities, including the Fish House Foundation, which raises money to help kids go to college.

Wagoner: I also have teenagers at home. I want to spend as much time with them as possible (or, should I say, as much as they'll tolerate), so I put a high priority on attending their school and athletic events.

In 1977, how did you define success? How do you define it today?

Mühlemann: When I came to HBS, I defined success as being in a position to effect change. This has not changed.

Lafley: I used to define success as making it to the general-manager level. Now I define it as being healthy, happy, and challenged.

Gadiesh: Back then, success was having more than $400—that was all I was allowed to bring with me when I came to this country—after paying back my student loans. Today, I define it as having the privilege to do what you love best, making a difference doing it, and having the respect of the people you work with for what you do.

Schleyer: In those days I was pretty shallow and mostly interested in compensation. I think you realize that family and relationships are more important as you get older.

Wagoner: I defined success as achieving a general management position in a successful company and having a fulfilling personal life. Today, I also want to lead a winning organization, one that can achieve excellent business results both now and in the future, and achieve them in the right way.

If you were to teach a business school course, what would its title be?

Mühlemann: "Managing Cultural Diversity in Large Service Organizations."

Lafley: "Leadership."

Gadiesh: "Turnarounds in High Heels," or, more seriously, "Managing through Turbulence and Turnarounds."

Schleyer: "Business Policy."

Wagoner: "Focus on the Steak, not the Sizzle."

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