Your “true north” cannot be redirected by external pressures. Once you start trying to satisfy one shareholder, you’ll have to deal with another shareholder with a different point of view. Same with board members and all your other constituencies. If you allow yourself to be pulled off course, you’re going to destroy your enterprise.
An attitude that leaders serve customers first is especially vital to sustaining success. Employees are only empowered by serving customers. They’re not motivated by getting the stock price up, cutting the budget, or increasing the earnings. They don’t see tangible rewards from succeeding by those metrics, even if you make them shareholders. They get turned on about customers. In a Starbucks store, the barista gets excited about creating an environment that’s fun for the customer. I was at Starbucks earlier this morning and saw a barista greet a customer by saying, “Oh, Rick, nice to see you. Do you want the Rick special?” Rick comes there every morning because he has a relationship with that Starbucks employee.
The leader’s job today, in 21st-century terms, is not about gaining followership. Followership is an outmoded notion. Leadership starts with gaining alignment with the mission and values of the organization: What are we about? What do we believe as a group? Goldman Sachs, where I serve on the board, has achieved solid alignment around its mission: “The clients’ interests always come first.” At Medtronic, we aligned around the idea of “alleviating pain, restoring health, and extending life.” It was clear that anyone who didn’t buy into that could work somewhere else.
Employees, the key is what motivates people. And they are not gonna be motivated about maximizing shareholder value. I can tell you that. You can make them all shareholders, and that will help. But they're—only gonna be motivated about a sense of purpose.
How do we serve society? We serve society by good jobs. We serve society by creating wealth for people. We also mostly serve society by creating great services and products for customers.
Well, I don't think people go into business to be corrupt. And so it's not like the—we—we have people with bad values going into business. I think what happens is a lot of people, very well intentioned, who know what they believe in, get, if not corrupted by the system, they get seduced by it, or they—they yield to the pressures.
I think we've been choosing boards of directors and many wrong leaders for the wrong reason. We choose people for their image, their charisma, their style and we should be choosing them for their integrity, for their character, and their substance.
Emotional intelligence also matters. As Dick Kovacevich of Wells Fargo says, “Above the 99th percentile of intelligence, there is an inverse correlation between leadership and intelligence.” In other words, many exceptionally intelligent leaders try to be the smartest person in the room and impose their views. They don’t get the best out of their people. Leadership is about much more than IQ, and requires you to develop yourself through the mosaic of all your experiences.
Your “true north” cannot be redirected by external pressures. Once you start trying to satisfy one shareholder, you’ll have to deal with another shareholder with a different point of view. Same with board members and all your other constituencies. If you allow yourself to be pulled off course, you’re going to destroy your enterprise.
You have to stay a step ahead. You have to say, “This is what we stand for. This is a long-term growth company. It will give you great long-term returns, because we perform very well. Are you interested? If you’re not, you may want to put your investment somewhere else.” I’m not saying that you have to dismiss your shareholders or your board. But you must remember who you are and what your company is.
The leader’s job today, in 21st-century terms, is not about gaining followership. Followership is an outmoded notion. Leadership starts with gaining alignment with the mission and values of the organization: What are we about? What do we believe as a group? Goldman Sachs, where I serve on the board, has achieved solid alignment around its mission: “The clients’ interests always come first.” At Medtronic, we aligned around the idea of “alleviating pain, restoring health, and extending life.” It was clear that anyone who didn’t buy into that could work somewhere else.
