These 4 CEOs Created a
New Standard of Leadership
At the height of the 2008 financial crisis, these four
corporate leaders stepped forward—and changed how we think of leadership
forever, says Bill George.
Four titans who defined a new era in business during the past
decade recently concluded their terms: PepsiCo’s Indra Nooyi, Unilever’s Paul
Polman, Mayo Clinic’s John Noseworthy, and US Bancorp’s Richard Davis.
When they became CEOs, the Great Recession of 2008 was consuming
the world’s attention. Many speculated about the possibility of a new
depression, a collapsing stock market, and extreme unemployment. Some
observers even began to question the foundations of capitalism, arguing it
needed to change in order to endure.
Nooyi, Polman, Noseworthy, and Davis recognized that business
had to contribute to society in meaningful ways, not just profit from it. They
believed that organization had to benefit all stakeholders: their customers,
employees, shareholders, and communities and that this approach would result in
sustained increases in revenues, earnings, employment, and shareholder value.
Through their leadership they encouraged other corporate leaders to embrace
this multi-stakeholder approach. Harvard Business School’s Michael E. Porter
called this idea “creating shared value” in January 2011.
Let’s examine how each of these leaders refined their
organizations’ missions and created sustained success.
The Visionary:
PepsiCo’s Indra Nooyi
India-born Indra Nooyi immigrated to the United States in
1978 to study at Yale University. She joined PepsiCo in 1994 and rose rapidly
through its ranks. When she was named CEO in 2006, Nooyi recognized the growing
obesity crisis and saw how food and beverages were impacting consumer health.
In early 2007, she launched PepsiCo’s new mission, “Performance
with Purpose.” She committed to reduce the sugar and sodium in PepsiCo’s core
snacks and sodas, which generated most of the company’s revenue, and created
the Global Nutrition Group to add healthier products to its lineup.
When soft drink sales declined in 2010, shareholders criticized
PepsiCo’s execution. Nooyi responded by beefing up PepsiCo’s marketing and
strengthening her leadership team—but held firm to her strategy. By 2012, Pepsi
was producing excellent results, which continued unabated through 2018. In
2013-14 Nooyi had to fend off activist investor Nelson Peltz, who called for
breaking the company in two, never wavering from her strategy.
Nooyi may have been ahead of her time, as America’s obesity
crisis has only recently started to impact consumer behavior, which has given
rise to many new healthy food companies and forced all food and beverage
companies to adapt. Nooyi will always be remembered for recognizing the importance
of food and beverages on consumers’ health.
The Statesman:
Unilever’s Paul Polman
Netherlands-born Paul Polman spent 30 years in leadership roles
at Procter & Gamble and Nestlé before becoming CEO of Unilever in 2009.
Observing the dangers of global warming, Polman focused on sustainability,
introducing Unilever’s Sustainable Living Plan and applying it to Unilever’s
products and supply chain.
Polman is a strong advocate for the multi-stakeholder approach.
In 2011, he told shareholders, “My job is not to serve shareholders, but to
serve Unilever’s customers and consumers.” He then suspended quarterly earnings
reporting, enabling executives to concentrate on long-term transformation. His
advocacy for sustainability earned him the United Nations Foundation’s Champion
for Global Change Award in 2014.
Polman faced his toughest test when Kraft Heinz launched a
hostile takeover bid in 2017. Within 48 hours, Polman rejected the bid and
convinced Kraft Heinz to withdraw its offer. Then he outlined a seven-point
plan to improve shareholder value, never wavering on his commitment to
sustainability. Since then, Unilever stock is up 20 percent from pre-bid
levels, while Kraft Heinz stock declined 50 percent.
Some consider Polman an enigma. One day he’s hailing the benefits
of sustainability and long-term focus at the World Economic Forum, and the next
day he’s demanding improved performance from
Unilever’s senior executives. In my view, Polman isn’t an enigma at all, but a
world statesman who exemplifies all the qualities CEOs require in this era.
The Healer: John
Noseworthy
When John Noseworthy became CEO of Mayo Clinic in 2009, the world-famous
medical center was struggling financially. Congress would soon be negotiating
the terms of the Affordable Care Act (ACA), the Obama Administration’s
signature health care legislation.
From the outset, Noseworthy built on the values of the Mayo brothers
and Mayo Clinic’s historic mission of putting patients first. He prioritized
Mayo’s focus on the most complex diseases patients faced, using its research to
develop new treatments for many diseases. He reorganized Mayo into a single
system of patient care at three major sites to deliver the highest quality care
at lowest cost. Noseworthy also took the leadership in Washington to ensure ACA
gave priority to patient outcomes.
Noseworthy’s focus on superior quality and patient outcomes
elevated Mayo to No. 1 on US News & World Report’s “Best Hospital” list the
last three years. He has restored Mayo to financial strength, increasing annual
revenues to $12 billion while reducing costs. A $3.6 billion fundraising
campaign further strengthened its balance sheet. With the help of a skilled
team of physician leaders and administrators, John Noseworthy will be
remembered for elevating Mayo as a great healer for millions of people.
The Servant Leader:
Richard Davis
Richard Davis started his career as a bank teller, and became
the most successful commercial banker in America after US Bancorp named him CEO
in 2006.
Under his leadership, US Bancorp became America’s
seventh-largest bank with the highest return on equity. He guided it through
the 2008-09 financial crisis without a glitch by avoiding high-risk subprime
mortgages and derivatives that felled so many other banks. Concerned about the
crisis’ impact on bank reputations, Davis stepped up to chair the industry’s
Financial Services Roundtable, working with President Obama and congressional
leaders on solutions to restore the industry, including the 2010 Dodd-Frank
Act.
Described by a fellow CEO as having a “banker
body, preacher soul,” Davis believes that bankers must be community leaders, not
just profit makers. He frames its civic mission in broad terms, “We’re bankers,
and it’s our role to get into the community and give back."
Davis walks his talk. In Minnesota, he has chaired the Minnesota
Business Partnership, the Minnesota Orchestral Association, and Greater MSP. He
also led the Minnesota Super Bowl LII Host Committee, and serves on the Mayo
Clinic and American Red Cross boards.
Davis leads with unimpeachable integrity. When arch-rival Wells
Fargo encountered its problems with three million unauthorized customer
accounts, he told his leaders that anyone who tried to take advantage of Wells
Fargo’s difficulties would be dismissed.
Richard Davis will be remembered as a true servant leader who
always puts others’ interests ahead of his own, making him a role model
for all bankers. He was recently named CEO of Make-A-Wish America foundation.
A legacy takes
shape
Nooyi, Polman, Noseworthy, and Davis ultimately set the new
standard of leadership in this era, never wavering from their purpose and
values. They became role models for the business community by serving society
through their organizations, strengthening their companies and communities at
the same time. With their collective breadth of experience and perspective,
these leaders will influence business and society for decades to come. Now
global leaders such as General Motors’s Mary Barra, Merck’s Ken Frazier,
BlackRock’s Larry Fink, and Salesforce’s Marc Benioff must now carry that
mantle for the next generation.
These 4 CEOs Created
a New Standard of Leadership
by Bill George
https://hbswk.hbs.edu/item/these-4-ceos-created-a-new-standard-of-leadership?cid=spmailing-24590450-WK%20Newsletter%2001-16-2019%20(1)-January%2016,%202019
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