01 Oct 2002
View from the Top
HBS professor Carl Kester discusses leadership with five of his classmates — chief executives from the Class of 1977Topics:
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
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
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
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
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
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
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
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
Gadiesh: "Turnarounds in High Heels," or, more seriously,
"Managing through Turbulence and Turnarounds."
Schleyer: "Business Policy."
Wagoner: "Focus on the Steak, not the Sizzle."