Carlos Ghosn, CEO of Renault 70 “Too Big to Know” and Nissan Motors

the gender gap • p.j. o’rourke on the end of conversation the korn/ferry institute briefings on talent

The Giving Back Issue

Philanthropy, Turkish Style Carlos Does Capitalism Have Ghosn Betting Big on & a Future? leadership Collaboration Why Leaders Lie Messy Innovation Investing in Brains issue 10 Q2. 2012

Q2.2012 Chief executive officer Gary Burnison Chief marketing officer Michael Distefano

Editor-in-chief Joel Kurtzman creative Director Joannah Ralston Circulation director Peter Pearsall marketing operations manager Reonna Johnson

Board of Advisors Sergio Averbach Dennis Carey Robert Hallagan Indranil Roy Michael Bekins Bob Damon Katie Lahey Jane Stevenson Stephen Bruyant-Langer Ana Dutra Robert McNabb Anthony Vardy Cheryl Buxton Joe Griesedieck Byrne Mulrooney

Contributing editors Chris Bergonzi Victoria Griffith P.J. O’Rourke David Berreby Dana Landis Glenn Rifkin Lawrence M. Fisher Stephanie Mitchell Adrian Wooldridge

Cover photograph: The Korn/Ferry International Briefings on Talent and Leadership is published Courtesy of quarterly by the Korn/Ferry Institute. The Korn/Ferry Institute was founded to serve Renault-Nissan Alliance as a premier global voice on a range of talent management and leadership issues. The Institute commissions, originates and publishes groundbreaking research utilizing Korn/ Ferry’s unparalleled expertise in executive recruitment and talent development combined with its pre-eminent behavioral research library. The Institute is dedicated to improving the state of global human capital for businesses of all sizes around the world.

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3 letter from the ceo

Latest Thinking 16 “you can’t discipline innovation" 6 does capitalism have a future? Creativity can be a messy process. Will demonstrations lead to changes? BY victoria griffith 8 why the gender gap won’t go away 22 philanthropy turkish-style Despite years of effort, women still make less. The focus is on small communities, women 11 playing to the crowd and health.

To solve problems, it takes a village. BY tim hindle Viewpoint 28 why leaders lie 14 the end of conversation Little white lies aren't so bad after all. Who really understands what their teenagers say? BY david berreby BY p.j. o’rourke 34 betting big on collaboration In Review An interview with Carlos Ghosn, CEO of Renault 70 “too big to know” and Nissan Motors. BY doron levin and yanick binvel Parting Thoughts 42 advice to boards on risk: 72 what is self-interest, anyway? seek returns Why Adam Smith meant we, not just me. Companies need ROR, return on risk. BY joel kurtzman BY dennis carey and judy roland

48 investing in brains A billionaire's philanthropic quest to understand the brain. BY glenn rifkin

56 room to read Entrepreneurs teach kids to read around the world. BY lawrence m. fisher

64 seizing the moment A deeper understanding of the organization you lead. BY dee gaeddert

66 one bad seed spoils an office To get something done, you need a can-do culture. BY stephen j. trachtenberg AD from the ceo

Lessons are rarely taught, they must be learned — usually from others. At the end of every practice coaching my son’s basketball team, I always ask a player to attempt a 3 point shot. If made, the team avoids having to run laps. Last season, we had a great team. There was one player, however, who was a little smaller, a little shorter and not as athletic as the rest of the team. In fact, this boy hadn’t scored a single basket all year but, unlike the others, Jason had never missed a single practice. is what On the final practice before the championship game, I asked the team, you know. “Who wants to take the 3 point shot?” Nine eager hands went up pleading to shoot; one hand did not flinch — it was Jason’s. Nevertheless, something compelled me to give him the ball as the others, not so quietly, moaned, “we’ll be running laps for sure.” Jason shot the ball. It hit the back of the rim, bounced high off the iron grazing the basket on the way down, unsuccessfully. I immediately did something I had never done before which was to give him the ball again. Jason didn’t hesitate. This time it was a swish. Jason’s grin was a mile wide as the other kids were jumping up and down in celebration. Out of the corner of is my eye, I caught a glimpse of Jason’s dad with a satisfied smile. He later acknowledging walked over to me and with a slight tear said, “I don’t care if Jason scores what any points on Sunday, that made the entire season for me.” We did win the championship that Sunday. I can’t remember the score you don’t know. or how we did it, I only remember one moment from that season: The

Knowledge beaming smile of a 12 year old and the watery eyes of a proud father. That defining moment on the basketball court serves as a lesson to me that leading is much less about analytics and decisions — and, much more about enabling and empowering others. In essence, changing peoples’ lives. Sometime ago, I heard a story that continuously serves as a lesson to me about the true meaning of changing peoples’ lives. A little girl, Elizabeth, was suffering from a life-threatening illness. Her only chance of survival was to receive blood from her brother. Without hesitation, the boy said, “Yes, I’ll give Lizzy blood if it will save her life”. After the transfusion, Elizabeth was wheeled away to what would become a full recovery. The doctor, after the procedure, asked the boy how he was feeling, “I feel OK right now, but how many more minutes will I Wisdom live now that I’ve given my blood to my sister?” By Gary Burnison Just like the boy exhibiting complete selflessness, leadership, in its purest form, is all about the other person. In this issue of Briefings, we highlight several leaders who are not only instruments of change in the world but models of change to learn from. We spot light three individuals from the cross-roads of business and philanthropy who have changed thousands of lives. Erin Ganju co-founded the NGO Room to Read. Now in its 11th year, Room to Read has built 12,000 libraries

Leading is much less about analytics and decisions — and much more about enabling and empowering others.

4 Q2.2012 The Korn/Ferry Institute Leading

is much

less

about analytics anddecisions—much

Briefings onTalen t &Leadership Photos by Dov Friedmann/Photography by Dov Like O’Rourke, I am in the unenvious position of being a father of teenage beingafatherof Iamintheunenviouspositionof Like O’Rourke, McGovern andGülerSabancıarenotpassivelywritingchecksto charity, International Data Group, a $3.2 billionmediagiantthatistheworld’slead- International DataGroup, a$3.2 Hindle profilesSabancı’s passionforsocialchangeandresponsibility much fasterthanStarbucksandMcDonaldsareaddingnewoutlets. In inextinguishable obsessionwithourthumbsandtinyelectronicdevices. we’ve recentlyseen we’ve ing purveyor of technology researchandpublicationssuchasComputerworld, technology ing purveyorof nial MOS(MotherOverShoulder). who dieswithwealthinshame.MuchlikeCarnegie,ErinGanju,Patrick arguably thethirdmostpowerfulbusinesswomaninworld.AuthorTim globalbraincenters.a familyof InBriefings,wealsohighlightGülerSabanci, McGovern’s overthelastfourdecades, technology world of The wantto Japan tosacrifice,responsibility,Japan change. andbeinganenablerof automotive industry. InafarreachingconversationwithGhosn,weexplore executivecurrentlyintheglobal a lifeortwoasthelongest-servingchief and conferencessuchasMacworld.Not satisfiedwithmerelychangingthe Ganju’s words, sheistryingto“scale socialgood”asfastcompaniesscale and 1,500 schools, sixperday, andisaddingnewlibrariesattherateof perspective toshare,butindividualswhoaremakingadifference inthe billion-dollar conglomerate.ListeningtoSabancı’s passionaboutthere- person, changingpeople’s lives. that hascreatedlastingimpactinpeople’s livesthroughphilanthropy. The topics rangingfromthegreatrecessiontodevastatingearthquakein they are living waves in the pond of mankind. they arelivingwavesinthepondof theindustrialistAndrewCarnegie:He thinking aboutthephilosophyof kids and had the pleasure of spendingtherecentholidaybreakbeing kids andhadthepleasureof lives of others.lives of Giventhetremendouschallengesandglobal changesthat Sabancı Foundationhasgivenmorethan$1.5 billiontocharitable causes global brands. change mankind by giving away $1.2 billion of theirfortunetoestablish billionof change mankindbygivingaway$1.2 ever leadersneedtoembracethebasic:Leadershipisallabout theother schooled in the new Morse code of TTYL, LOL, BRB, LOL, G2Gandtheperen- TTYL, JK, schooled inthenewMorsecodeof Conversation"aboutour Endof P.J.satire of wholamentsin"The O’Rourke sponsibility togivebackbythosethatarefortunate,Icanvividlyremember offices overlooking the rolling hills ofoffices overlookingtherollinghills Istanbulwheresheoverseesamulti- her over theyears. Lastyear,in visitingMs. Ihadthepleasureof Sabancı After all,aman’s mosaicistheimpacthehas hadonothers. TTYL. In In this issue of Briefings,wealsofeatureCarlosGhosn,whohaschanged In thisissueof In addition,GlennRifkinprofilesPatrickMcGovern,whofounded Of course,ourBriefingsperiodicalwouldn’tOf becompletewithoutthe Briefings, wehavesoughtoutleaderswhonotonlyaunique — economically, socially, geopolitically

about enablingand empoweringothers. — morethan

Q2.2012 5

The Latest

China, Brazil and Germany. In the Does Capitalism United States, the number of Ameri- cans who agreed that the world’s best Have a Future? bet was the free-market system had fallen from 80 percent in 2002 to 59 Those who demonize capitalism and those who deify it percent in 2010. may both be misguided. A strong case can be made, of course, that our current problems In the early days of the Occupy ketplace. In 1980, after years of stub- emanate not from the capitalist sys- Wall Street movement — when it born stagflation, a Time magazine tem itself, but from the perversion seemed more driven by legitimate cover story famously asked, “Is Capi- of it through unfair practices, poor grievance than by bizarre and some- talism Working?” Ironically, the en- governance, and the bad behavior times dangerous street theater — suing decades brought an economic of a few. “The Occupy protesters are occupiers were often seen holding golden age, fueled by an increasingly not wrong in indicting our system a sign that, for many, encapsulated vehement belief that free markets, today for unfairness, crony capitalism, their message. It read “Capitalism unfettered by government interfer- insider dealings and corruption,” Is Dead.” It was just the kind of un- ence, will self-regulate. said Arthur C. Brooks, president of equivocal, defiant proclamation one Then came the Great Meltdown the American Enterprise Institute. would expect from a would-be revo- of 2008, and the coroner’s inquest “However, the overwhelming major- lution, but it was nothing new. about the demise of capitalism re- ity of Americans believe fairness Since the 19th century, capital- sumed with vigor. In recent years, means rewarding merit, even if that ism has been pronounced dead or countless blogs, along with The New means some people have a lot more dying many times. Limited liability York Times, The Washington Post, The than others.” corporations were supposedly going Financial Times and even the normally George M. Taber, the editor who to kill it by allowing risk without a reserved McKinsey Quarterly have all wrote the 1980 Time magazine cover threat of real failure. Pensions were perseverated about the future of cap- story, recently told Knowledge@ going to undermine the incentive to italism. A 2011 poll by the Canadian Wharton that he still agrees with the save. Government agencies like the firm GlobeScan pronounced the capi- conclusion he offered 30 years ago: Food and Drug Administration were talist ideology on the wane almost “For all its obvious blemishes and

going to limit free choice in the mar- everywhere in the world except needed reforms, capitalism alone Munoz. Left: Hal Mayforth Reuters/Eduardo Top:

WHAT’S KEEPING US UP AT NIGHT The 5 most serious business risks cited by C-suite and board-level executives are: 1. Loss of customers/cancelled orders 3. Reputational risk 2. Talent and skills shortages 4. Currency fluctuation (including succession risk) 5. Changing legislation The risk of talent shortages has escalated dramatically, from a lowly 22nd ranked priority in 2009 to 2nd in 2011. Source: Lloyd’s and Economist Intelligence Unit

6 Q2.2012 The Korn/Ferry Institute holds out the most creative and dy- needs an overhaul. At a 2011 sympo- lead to prolonged periods of high namic force that any civilization has sium called “New World, New Capi- unemployment — a scenario that we ever discovered: the power of the talism” in Paris, French President have certainly observed in the past free, ambitious individual.” However, Nicolas Sarkozy, former British four years. he added, “Well-intentioned, but Prime Minister Tony Blair and Ger- Still, all of the hand-wringing unwise, changes in the nature of man Chancellor Angela Merkel each about the death, health or reform of American capitalism could do dam- made presentations on the need for capitalism raises an important ques- age that will be felt for decades.” fundamental change. Nouriel Rou- tion: has the unfettered “free market” Nevertheless, a growing chorus bini, professor of economics at the that so many devoutly extol or revile of voices are suggesting the system Stern School of Business, contended ever really existed? has outlived its relevance and effec- in a recent blog post that Karl Marx “The truth is there never has tiveness. Even capitalist icons like “was partly right in arguing that glo- been absolute freedom in free mar- Microsoft founder Bill Gates and balization, financial intermediation kets. There have always been codes of competitive strategy guru Michael run amok, and redistribution of conduct,” said Greg Pytel, an interna- Porter have lately been calling for income and wealth from labor to tional business consultant. William change. Gates has been talking about capital could lead capitalism to self- Galston, a senior fellow at the Brook- the need to engage in “creative capi- destruct. To enable market-oriented ings Institution, agreed: “[Although] talism” by acting on our “primal im- economies to operate as they should, markets are the principal drivers of pulses to do good.” Porter has been we need the right balance between economic activity, this activity takes promoting “shared value,” arguing markets and the provision of public place within a system of public rules. that “creating societal benefit is the goods.” Regulatory institutions are not anti- best way to create economic value In that same vein, there has been thetical, but rather essential to a cap- for the firm.” a revival of interest in Keynesian italist system.” While Gates and Porter essen- economics, which advocates signifi- What’s more, it would be diffi- tially propose to overlay the existing cant government and public sector cult to find a modern capitalist econ- system with mandates for social re- involvement in the private sector omy that did not rely to some extent sponsibility and sustainability, oth- economy and warns that without it, on transactions that occur outside

Clockwise from upper left: Reuters/Stephen Lam, Reuters/Andy Clark, Reuters/Lucy Nicholson Clark, Reuters/Andy Reuters/Stephen Lam, Clockwise from upper left: ers believe the system is broken and inadequate aggregate demand could market dynamics, such as unemploy-

Briefings on Talent & Leadership Q2.2012 7 The Latest Thinking

ment benefits, public pensions, social services, [and] he was concerned parting from the agenda that Smith security and the public provision about the inequality and poverty that outlined.” of education, health care and other might survive in an otherwise suc- In the final analysis, as econo- services. cessful market economy.” mist Richard Wolff has noted, “Social Indeed, early proponents of the Smith also argued that insuffi- systems don’t come into being in a virtues of markets, including Adam cient regulation of financial activi- self-aware manner.” Capitalism has Smith, did not expect the market ties would lead to illegitimate prac- never been a planned system, but mechanism or the profit motive to, tices, over-speculation and excessive rather an emergent one. As such, it is by themselves, create optimal out- risk-taking — an argument difficult governed not by consistent practices, comes. According to Amartya Sen, a to refute in light of recent events. In but by evolving practices subject to professor of economics and philoso- Sen’s view, “If we were to look for a consistent rules. The essential rule phy at Harvard, “Smith’s economic new approach to the organization of of capitalism is not that markets analysis went well beyond leaving economic activity that included a should be free from regulation or everything to the invisible hand of pragmatic choice of public services augmentation, but that individuals the market. He was a defender of the and well-considered regulations, we should be free to compete in fair role of the state in providing public would be following rather than de- markets.

Why the Gender Gap Won’t Go Away Reports of women’s progress in advancement, compensation and career satisfaction are, at the very least, overstated.

The pipeline is no longer the dramatically worldwide. problem. Due largely to efforts by Progress in the pipeline is not business schools around the world translating to progress in the work- to recruit more female students, place, however, as women still repre- record numbers of women are sent just three percent of Fortune seeking and earning MBAs. Nearly 500 CEOs and less than 15 percent 40 percent of Harvard Business of corporate executives and board School’s graduating class in 2013 will members at top companies world- be female, the school’s highest per- wide. Catalyst, a nonprofit focused centage ever. At Wharton, the num- on expanding opportunities for ber will be 45 percent. London Busi- women in business, conducted a ness School announced recently that 2010 survey of more than 4,000 it will target 30 percent enrollment women M.B.A.s who graduated be- in its M.B.A. program going forward. tween 1996 and 2007 and found that According to the U.S. Department of women continue to lag men in posi- Education, women received 44 per- tion and pay at every career stage. cent of M.B.A.s in 2007, the latest “For the past two decades, the year for which data are available, rep- assumption has been that as we reach resenting a 75 percent increase over the point that entry-level cohorts are the prior 10 years. And, while U.S. equally gender divided, those cohorts women represent the largest female will in due course yield equal num- influx to business schools, the numbers of women and men at the top,” ber of female applicants is also rising said Christine Silva, a research direc-

8 Q2.2012 Top: Hal Mayforth. Bottom: James Bennett region andotherfactors.”Not onlydo make: theyleaveworktostartfami- from behindwhenitcomestolevel for priorworkexperience,industry, instance, thatthegapisafunction and pay after MBAgraduation,womenstart away,” you saidSilva,“butweseeif butas women lagmenattheoutset, no childrenandwhoexplicitlystated valid. Ithasoftenbeensuggested,for that evenwiththeirveryfirstjob found,however,“We tor atCatalyst. this phenomenonseemlessand discounted suchfactorsbylookingat lot of people suggest that if wejust people suggestthatif lot of lies, ortheysimplydon’t aspireto upper management. Catalyst’supper management. study give ittime,thegapgetswider.” give ittime,thegendergapwillgo careers progress, thegapexpands. “A subsets of womenandmenwhohad subsets of of thechoicesprofessionalwomen of The familiarexplanationsfor The — even afterwecontrolled “I’m stuckonbacktoconferencecallssoitlookslikeI’llbeeatinglunch SAY WHAT? al descotoday.” al desco[adj.]Thepracticeofeatingamealatyourdesk: recruitment, development, andmen- development, recruitment, in leadership. theCatalyst Infact, Catalyst report, “Sponsoring Women “Sponsoring Catalyst report, women todayhavemorementors panies todayhavesophisticated their desiretobecomeaseniorexec- tutional bias. However, manycom- to encouragetheirfullparticipation toring programstoguardagainst to Success,” identifiedasubtle,cru- than mendo. has beentoassumelingeringinsti- have plenty of advisorsandconfi- have plentyof utive. Anothertoo-facileexplanation cial differencebetweenmentorsand structural biasesagainstwomenand sponsors. While femaleexecutives sponsors.While study suggestedthathigh-potential In 2011, however, afollow-up

2011, reachedthesameconclusion. Center. whoarequalifiedto “Women ney throughuppermanagement.” and protectthemselvesontheirjour- power,”women inpositionsof said advocate for their advancement. An- advocate fortheiradvancement. absence of advocacyfrommenand absence of pointed outthatevenwhenwomen backing necessarytoinspire,propel back, thestudyfound, isn’t amale back, the Center for Work-Life Policyin the Centerfor dantes, menaremorelikelytohave lead simplydon’t havethepowerful Sylvia Ann Hewlett, president of the presidentof Sylvia AnnHewlett, conspiracy butratherasurprising senior executivesintheircornerto other study, “The Sponsor Effect,” by Sponsor Effect,” other study, “The “What’s beenholdingwomen “What’s Equally significant, thestudy Equally significant, 9 The Latest Thinking

recognized the importance of spon- a willingness to take more risk. through the filter of these perceptual sorship, they often failed to cultivate Another 2011 study, by Columbia biases, each of the studies would it, seeing it as an unfair way of getting Business School professor Michael seem to have identified deficiencies ahead based on personal connections. Morris and Emily Amanatullah, as- in women’s approach to leadership. Recent studies corroborate what sistant professor at McCombs School But from a different perspective, it seems to be reluctance among high- of Business, found that women fare seems obvious that being thought- potential female executives to push worse than men when negotiating fully cautious, believing one’s accom- themselves forward. For example, a for salary and budgets. That, however, plishments should stand on their 2011 study by Europe’s Institute of is not because they are less effective own, avoiding bluster and self-pro- Leadership & Management, titled bargainers or less ambitious, but motion, and being more comfortable “Ambition and Gender at Work,” con- rather because they rein in their advocating for others than for one- cluded that women in leadership assertiveness to conform to gender self are ideal leadership characteris- roles display less confidence and role expectations. Interestingly, when tics, not signs of a lack of confidence, more caution than men. This finding women are negotiating on behalf ambition or efficacy. It would be was based on scores of inter- of coworkers or team members, they preferable if, rather than requiring views and 360 reports that are as effective as men because ag- sponsorship to compensate for these described female executives as gressive bargaining in others’ behalf “deficiencies,” more companies began being overly modest (believing is more with consistent with the to recognize the value of such behav- that their accomplishments expected female role of caretaker. ior in its own right and rewarded it should speak for themselves), Collectively, these studies indi- accordingly. failing to aggressively apply for cate that the systemic bias at the root Now that the pipeline is flowing promotions, and not seeking to stand of the gender gap has less to do with and an array of hiring and develop- out or grab the limelight at meetings formal hiring practices and talent ment practices have been put in place, or in groups. In a similar vein, recent management than with entrenched the final challenge for organizations research at the University of South- organizational and cultural notions seeking parity for women in the ern California has suggested that of how leaders should behave, what workplace is to eliminate the biases women respond to stress by becom- they should value and how they that define talent and leadership ing more cautious, while men display should get things done. Viewed too narrowly.

Total Health Expenditure per Capita and GDP per Capita

$8,000 USA 7,000

6,000 switzerland belgium canada 5,000 HEALTH CARE COSTS OUTPACING austria norway germany INCOMES 4,000 netherlands Health spending is rising faster than france Australia incomes in most developed countries, 3,000 italy sweden an issue that is particularly acute japan

per capita health spending health per capita spain u.k. in the U.S., which not only spends 2,000 much more per capita on health care, but also has had one of the highest 1,000 spending growth rates. $25,000 $30,000 $35,000 $40,000 $45,000 $50,000 $55,000 $60,000

Source: Kaiser Family Foundation and OECD GDP Per Capita King. Bottom: Hal Mayforth J.D. Top:

10 Q2.2012 J.D. King Playing totheCrowd magazine coinedthetermto movement, Wikipedia andeBay movement, models forcreatingvaluewith for performingroteoperational out- functions tolargegroupsof facturing ing phenomenonexemplified is theservicemarket- ing expert. ing expert. agencies, someformof nesses, andgovernment a futuristandcrowdsourc- Crowdsourcing hasshowngreatsuccess,promiseanda numberofredflags. by theopen-sourcesoftware place, anonlinemeeting has proliferatedintoa“diverse land- describe the practice of out- describe thepracticeof do and the shape of organizations,”do andtheshapeof global distributedworkisgoingto crowdsourcing is the model of choice crowdsourcing isthemodelof wasthenaburgeon- What call. crowdsourcing models theworkwe change howwework, crowds,” accordingtoRossDawson, siders in the form of anopen siders intheformof sourcing traditionallyin-house said Dawson. start-ups, establishedbusi- scape offeringoveradozendistinct Today, forallkindsof One of themoreestablished One of five years since Jeff five yearssinceJeff Howe’s articleinWired gun toaffectjustabout crowdsourcing hasbe- everything. Ithasbeen In veryshortorder, — products. “The reality of realityof products. “The managing risk, driving managing risk, marketing, funding, innovation, andde- as wellforanalyzing tasks atminimalcost data, messagingand signing — andmanu- 2005, whichatanygiventimeoffers Many of theseare“microtask”Many of plat- money throughvolume forms wherelarge-scaleprojects in mostcases, pennies individuals thatusetheservicewith intelligence tasks, or“HITs” workforce. and providingthebusinessesor an inexpensive,on-demand,scalable and freelancers bid for the work. and freelancersbidforthework. per HIT, makingtheir perform thetasksfor, place wherecompaniespostprojects hundreds of thousands of human thousandsof hundreds of quiring skillssuchastranscription, lation. Registeredusers categorization ortrans- chanical Turk, launchedpubliclyin chanical Turk, are brokenintomanybite- platform isAmazon’s Me- the bestknownmicrotask though simple,require human intelligence.Perhaps size, web-basedtaskswhich, years arebasedonvariations founded inthelastseveral A number of companies A numberof — re-

first itwasprimarilythe yielded promisingideas made iteasytosecuredonations model, knownas“crowdfunding,” messaging, R&Dandproductdevel- from supporters at very low cost. At from supportersatverylowcost. is evolvingrapidlyassocialmedia arts, butmorerecentlysites and have micropayment technology $5,000.age jobfeeof ability tomakecontributions paigns, charitiesandthe politicalcam- province of Ecomagination Challenge the nature and complexity of thejob.the natureandcomplexityof to workersgenerallycorrespond the crowd’s such ascrowdcube.comare oDesk, forexample,reportsanaver- oDesk, opment. In2010,opment. GeneralElectric’s open-competition modeltotapinto flow management, guaranteed flow management, focusing onfunding ways toofferinvestorsequity. and organizationsareusingan businesses ratherthan assurance. Clientsareabletouse worker, Crowdflower and Serv.io haveex- panded theconceptto them ason-demandagenciesfor turnaround timesandquality dination and oversight, work- dination andoversight, lancer.com, Click- creative venturesandfinding staff departmentsorhandle staff special projectsortovirtually ongoing functions. Feespaid offer theiruser-clientstaskcoor- oDesk, Elance,Free - oDesk, the service model. of Another popularcrowdsourcing Increasingly, companies — ortheircustomers’ —

The Latest Thinking

for efficient energy production, in 1,300 challenges and solved sourcing has gained, which GE invested $200 million. half of them, including or perhaps because of When the Defense Advanced Re- identifying a biomarker to it, many have voiced search Projects Agency wanted to measure the progression of legitimate concerns design a new Humvee in 2011, it amyotrophic lateral sclero- — about the quality, held an open contest that drew 160 sis in patients, designing new meth- controllability and accuracy of the entrants in just two weeks. Fourteen ods of oil spill recovery, and invent- work, the logistical obstacles pre- weeks later, the winning design — ing a solar-powered light for areas sented by integrating the crowd into which looked like a futuristic, jacked- without electricity. a company’s workflow, and the wis- up SUV — was built and hailed as the There has been a boom in simi- dom of having outsiders work with first crowd-sourced military vehicle. larly ambitious crowd-competition information that may be sensitive or When Goldcorp, a financially strug- sites in recent years. Kaggle, founded proprietary. Increasingly vocal pro- gling Canadian mining company, in 2010, is a platform that allows fessionals, especially in creative or was unable to find gold on its land organizations to post their data and highly specialized fields, contend in northern Ontario, it put all its have it scrutinized by scientists that crowdsourcing devalues their geological data online and offered around the world. Competitors are profession by increasing the amount $500,000 in prize money for offered prizes to de- of unpaid “on-spec” work and puts accurate suggestions. The velop algorithms that such severe pressure on prices that company received submis- predict outcomes it will destroy companies and spawn sions from all over the world, based on the data, “digital sweatshops.” including some using 3D such as predicting Most crowdsourcing advocates computer-modeling tech- bankruptcy from do not dismiss such concerns, but niques, and found $3 billion credit scores or hospi- they tend to believe equitable stan- worth of gold, making Gold- talization rates from dards and best prac- corp one of Canada’s biggest mining medical claims. A newer site, Fore- tices will emerge. companies. casting Ace, asks registered volun- For John Winsor, The granddaddy of crowd-com- teers to predict future events and founder and CEO of petition platforms is InnoCentive, outcomes based simply on their in- Victors & Spoils, an launched in 2001 by Eli Lilly as a way formed, but not necessarily expert, ad agency built on to connect with innovators outside judgments. The project is sponsored crowdsourcing the company. It soon became clear by a U.S. government agency, the In- principles, it will that InnoCentive was attracting a telligence Advanced Research Proj- require “a delicate wide variety of experts ects Activity, to test the premise that balance between encouraging partic- who were adept at aggregating a large volume of such ipation and maintaining clarity of solving problems out- judgments can yield accurate fore- overall business objectives. Every side their disciplines, casts about politics, business, tech- company will develop its own way so Lilly decided to nology, medicine and social trends. of handling that debate. For now, open up its brain trust, Despite the breadth and seem- the most important thing is to for a fee, to other com- ingly irresistible momentum crowd- jump in and try.” panies. Those companies posted their problems and chal- By the end of 2011, more than 250,000 InnoCentive solvers lenges and offered thousands of dollars for solutions — sometimes worldwide had worked on more than 1,300 challenges and tens or hundreds of thousands, de- solved half of them, including identifying a biomarker to pending upon the complexity of the measure the progression of amyotrophic lateral sclerosis in problem. By the end of 2011, more patients, designing new methods of oil spill recovery, and than 250,000 InnoCentive solvers

worldwide had worked on more than inventing a solar-powered light for areas without electricity. King J.D.

12 Q2.2012 The Korn/Ferry Institute Korn/Ferry AD view point

the end of conversation

By P.J. O’Rourke

I have seen the end of conversation.

My 14-year-old daughter and her friends text easy to understand. What’s incomprehensible is why any- each other constantly. Even when they’re all gathered body would look at them. I suspect nobody does. A careful analysis of blogs lacking commercial or organizational pur- together in the food court at the mall their skinny pose probably would reveal that all blog hits come from other fingers are blurs upon their touchpads. The dispatches bloggers looking for something to plagiarize plus the blog- are going nowhere but to the iPhones on the other gers’ mothers checking to see if they’re still on their meds. side of the Coke cups and the pizza crusts, and they Facebook is different from giving a speech to the ether: spend much more time texting than reading the texts it’s putting a billboard there. A Facebook page is a promo- tional conundrum, advertising something we all claim to they receive. This is not because typing takes longer believe can’t be bought or sold. (Excepting those who want than reading, which I’m not sure it does for the digi- to be “friended” for the purpose of an age-old commerce and tal generation. The girls already know the message, should go on Craigslist.) If it’s our pals who respond to our the message being “I’m texting.” ad we acquire what we already have. We’re customers at our own yard sale. Facebook works the same way. “Everybody has a Facebook And Twitter is an on-line version of walking around in page,” my daughter insisted, so we let her have one. When the park with nothing on under your raincoat except the not texting she is on Facebook. But it’s always her own Face- cut-off ends of your trouser legs fastened with elastic around book page she’s looking at. “Why,” I ask, “aren’t you looking your knees. at everybody’s Facebook page?” There was once something called social intercourse, the “Huh?” she says. And “Huh?” is — except for the declara- mutual exchange of information, concepts, theories — an tive sentence quoted above — pretty much all she’s had to say expansion of intelligence and understanding. I’m not finding to me since she ceased being 12. I could continue making fun that e-mail broadens the intellect much, or improves the tone of teens in the customary fashion, but it so happens I think of parlance either. What happened to the formal salutation “Huh?” is a deeply insightful comment on modern discourse. and the complimentary close? My dear Mr. O’Rourke, I remain All our technological advances seem to be employed in very sincerely yours. This has been transformed into “hi!” and taking the “co-“ out of “communication.” We’ve invented a “-me.” E-mail is as abrupt as a note tied to a rock and thrown thousand ways to speak to each other and are using them to through the front window. Although this, at least, is mail that talk to ourselves. Having arrived at an age when I actually announces its arrival with the exciting tinkle of broken glass. do talk to myself — driving my family crazy muttering I’m- Not that e-mail really is mail of any kind. It’s more akin making-a-sandwich-now, Time-to-rotate-the-tires-on-the- to a slap on the back or a wave from a passing vehicle or a tug Chevy-soon, Why’d-I-go-down-the-basement? — I can’t fault on a sleeve. E-mails do not inspire a response, they nag for a my daughter for doing the same with greater tech savvy. “reply.” E-mailers are in such a hurry that even moving a pin- We can’t know what was going on in the little monkey kie to the shift key to capitalize is too time-consuming. The brains of Australopithecus, but surely the original motive for form is so affectless that, to indicate whether the sender is making ourselves understood to others had to do with those kidding or sorry or whatever, things called “emoticons” must others, not just the self. If not, we could have stepped outside be used. These keyboard symbols make your inbox look like a our cave alone and addressed the whole world with random speech balloon from a novice newspaper cartoonist who hasn’t grunts. Which is a pretty good description of most blogs. yet learned how to %|&@#$! swear : ( The psychological motivation behind personal blogs is Very little of what takes place on e-mail can be called con-

14 Q2.2012 The Korn/Ferry Institute versation. And the telephone doesn’t ring anymore, which is heads cut off by grumpy kings, doublets rapiered by testy an absurdity since these days everyone has a telephone all the courtiers or Globe Theater thatch roof set on fire by irked time everywhere. It’s being used to leave voice mail messages: drama critics. No wonder they were all so eager to retreat “Hi! Me. I’ll text you.” behind motion picture cameras, radio microphones and the In fairness, the Romney campaign people do phone most security guards at television studios. evenings around cocktail hour, just when I’m ready to chew The idea that communication goes in only one direction the fat about health insurance mandates. But they turn out to means an uncommunicative culture. We saw it first with the be recorded. My daughter’s “Huh?” is more of a response than highbrows and their modern poetry, abstract painting and I get from robo-calls. atonal music. What was this stuff supposed to mean to the Like making fun of teens, Luddite rants can go on forever. public? The highbrows didn’t give a damn. Then the cultural But, in fact, technology didn’t cause the incommunicado trend. journeymen, the fetchers of punch lines and carriers of plot We’re just using technology to help us say, “Will everyone points in the creative world, quit giving a damn too. Will please shut up. I can’t hear myself shouting.” somebody please tell me, what’s the point of reality TV? This is a natural human tendency. The first thing a baby On one cable channel there’s a fellow called Billy the does at birth is shriek. He doesn’t even know if anyone else Exterminator. He dresses funny and kills mice. I can do that exists and he’s flaming in the chat room of life. at home. I do do that at home. Why is it on television? Supposedly there was once a greater give and take in dis- The contestant shows — “American Idol,” “X Factor,” “Danc cussion. According to the Old Testament, even God used to ing with the Stars,” devote most of their airtime to people with show up now and then to shoot the breeze. Although, to be vocal cords made of shoelaces or with two left shoes. What in- frank, He isn’t portrayed as a great listener. formation, concept or theory is being conveyed? Then there are Plato’s famous Dialogues show- The tenets of popular culture run down- ing wise Socrates using his Socratic method, ask- hill to politics. The Democratic president ing questions instead of making pronounce- seems to feel it’s beneath his dignity to ments. Socrates, however, does most of the have a conversation with the Ameri- answering himself. In the dialogue with can people about his big ideas. The Phaedrus, here’s a sample of Phaedrus’s Republican presidential candidates side of the conversation: seem to feel it’s beneath their dignity “True.” to possess any ideas worth having a “Very true.” conversation about. Except for Newt “No doubt.” Gingrich who has so many ideas his It’s as if a Democratic Party poll- head explodes. And that’s a conversa- ster had gotten to him with leading tion stopper. questions about income inequality. Political protest movements Before amplification, entertain- have followed course. Occupy Wall ers had to be personable with those Street is completely incoherent on they meant to entertain. All perfor- purpose and proud of it. mances are interactive when I have a rough idea of what the end the performer is within of conversation means for society. Forty fruit and brickbat range. I’m years ago teenage boys of my generation sure Homer quickly gave in came up with a form of non-communi- to calls for a lyre solo during cation that predicted the future of art, dull parts of the Iliad. popular culture, politics and Internet con- This is probably why literacy tent. Mooning. We’d drive around in search was invented. The written word is a great of respectable, well-behaved, reasonable- way for authors to escape from audiences. looking people, and when we found them we’d It makes sure that, while writers are tell- pull down our pants and stick our bare behinds ing everybody what’s what, readers are out the car windows. Now everybody’s doing it. off in an armchair or living a couple of dozen centuries in the future. P.J. O’Rourke is a political satirist, humorist and author of many Think of the royal minstrels, books including “Don’t Vote, It Just Encourages the Bastards,” “Eat court jesters and Shakespearean actors the Rich” and “Parliament of Whores.” He was foreign editor of Roll-

Bill Cigliano who, at any moment, could have their ing Stone magazine and is a regular contributor to The Atlantic Monthly.

Briefings on Talent & Leadership Q2.2012 15 ‘‘ 16 Q2.2012 innovation. You can’t discipline ’’

Credit Credit CEO ofMillennium Pharmaceuticals Deb orah Dunsire, By Victoria Griffith 18 Q2.2012 setting agoalasdeceptivelysimpleitisambitious. plastered everywherearoundthecorporation’sheadquarters, pany’s newmotto.Thewords“We AspiretoCureCancer”are Cambridge, Mass.,wouldhaveahardtimemissingthecom- A visitortoMillenniumPharmaceuticals’headquartersin 1993 at the cusp of thegenomicsera.Byusingsuper- 1993 atthecuspof Millennium wouldsoonturntheworldintoadisease- The entrepreneurMarkLevinfoundedMillenniumin The ment turnedouttobealotmorecomplexthanjust theworld’smost many hadexpected.“Markwasoneof Dunsire, Millenniumisagingmoregracefullythan Dunsire wasnotinheroffice. Sheexplainedthatshe free environment. from diabetestoheartdisease.Afterasessionwiththe from acorporatestructurethatwasbettersuitedto in thebody. ButMillennium’s immaturitywasnotonly a more staid version of itsearlierself.Andunderthe a morestaidversionof about whatitcanandcan’tinto doasittransformsitself maladies,aimed todeveloptreatmentsforallsortsof number of genesinteractingwithoneanotherinunpre- number of vision wasn’t mature.” around thebuildingforimpromptu exchangeswith arrived atthecompany’sheadquartersforaninterview, actually alotmoremodestthanthecompany’soriginal prescient visionaries,” Dunsire,hishand-pickedsuc plined approach for getting drugs to market. When I When plined approachforgettingdrugstomarket. tance of environment, whichinfluenceshowgenesact environment, tance of tually realizedthatalmostalldiseasesarecausedbya high-energy Levin,earlyinvestorsmayhavebelieved high-energy has beentotakeLevin’s visionandturnit into adisci- due togapsinscientificknowledge.Italsostemmed dictable ways. Researchersalsorediscoveredtheimpor - linking asinglegenetodisease.Scientistseven- executive,Dr. thecurrentchief leadership of Deborah computers tohomeinondisease-causinggenes, Levin cessor, saidinaninterviewwithBriefings.“Buttheearly employees, whonumber 1,100. start-up thantoalargepharmaceuticalgroup. spends littletimethere,preferring insteadtowalk objective, whichwastocure,well,justabouteverything. While themissionstatementappearslofty,While itis The companyisalotmorerealisticthesedays The That’s partly because of thescience.Drugdevelop- partlybecauseof That’s Dunsire exudesadown-to-earth practicality, ashift Since shebecametheCEOin2005, Dunsire’s job

P — morphs intoabiggeroperation.AndMillennium’s trans- mature corporationthatMillenniumistodayhasnot ment Velcade, wereslipping.Worse,theproduct was ment David Pyott, Allergan’sDavid Pyott, CEO. “She’ll asktheonequestion recruiting atMillennium,whereDunsireconfessesto formation wasacceleratedafteritspurchase,in2008, by facing anewcompetitor:Celgene’s Revlimid.Dunsire modest circumstances in anyargument.” family movedtoSouthAfrica,sheaspiredbecoming from thebig-dreamingLevin.Herfriendssaysheis CEO, thecompany’s onlydrug,thecancertreat- salesof Japan’s Takeda billion. for$8.8 Pharmaceuticals while waiting for her specialist program to start, she while waitingforherspecialistprogramtostart, answered awantadinthenewspapertooverseeclinical a nurse,butdecidedtobecomephysicianwhenit achievers. been easy. Manymanagers stumbleastheirstarstart-up that gets right to the point of wheretheweaknesslies that getsrighttothepointof that often;butwhenshedoes,said everyonelistens,” trials atthepharmaceuticalgroupSandoz.Eventually, turned out she was near the top of herclass.turned outshewasnearthetopof Onawhim, turning away big-talking job seekers in favor of quiet turning awaybig-talkingjobseekersinfavorof get-it-donementalityspillsoverinto the dishes. This type whocomesoverfordinnerandinsistsondoing her careerledtoNovartis, wheresheheadedtheoncol- energy of theyoungMillenniumtomorefocused, of energy class ScottishimmigrantsinwhatistodayZimbabwe ogy group.ogy Fromthere,shemovedtoMillennium. Dunsire learnedtodreambigbydegrees. Afterthe Yet Dunsirehasmet withsuccess. shebecame When Transferring thecreative,butattimesinefficient, Dunsire isaquietachieverherself.Bornintovery tion attherighttime.“Deborahdoesn’t speak up she isknownforaskingtherightques- eople intheindustrypraiseDunsirefor her incisivemind.Asaboardmember of the biotechnology companyAllergan, thebiotechnology of — her parentswerelower-middle- The K orn/F erry Insti ute

Photograph courtesy of Millenium Pharmaceuticals realized that the company’s future relied on Velcade’s it can take 10 years to move a drug from laboratory to success, and she worked to improve its sales. Her efforts the doctor’s office, the short-term approach made it dif- have paid off. ficult for Millennium to fill its pipeline with promising Under Dunsire, annual sales of Velcade have jumped new medicines. almost 40 percent, to $492 million last year. Takeda has The “have to keep” column was longer. At the top of given its subsidiary oversight of nine new cancer com- the list was maintaining Millennium’s entrepreneurial pounds that were discovered outside of Millennium, a spirit. Dunsire admits that is tough for a larger com- sign of its faith in Millennium’s drug development pro- pany, which can often drown innovative impulses in a gram. Perhaps most reassuring to investors is the com- sea of bureaucracy. The key, she said, is to set up an orga- pany’s robust pipeline. Millennium now has seven nization that is simple enough to “read,” but doesn’t just oncology drugs in late-stage clinical trials, targeting pan- throw huge groups of people together. “The human creatic, lung and ovarian cancers, as well as lymphoma mind can’t deal with too much complexity; the span is and other conditions. too large, so it’s tempting to just lump things together,” “I don’t think you can discipline innovation,” Duns- Dunsire said. “You have to resist that, because it won’t ire said. But it may be possible to discipline the manage- facilitate adaptability. Innovation happens best in small rial structure surrounding innovation, which is what groups of people that can move rapidly on the science Dunsire tries to do. Being part of a big operation like and respond very fast to emerging knowledge.” Takeda was not something Dunsire aspired to. Dunsire She decided to organize Millennium into small, says she loved the energy and camaraderie of the old cohesive teams that would take charge of specific proj- Millennium. But she also realized that the deal was best ects. In doing so, Dunsire concedes, she was taking a for shareholders. Takeda’s offer was 13 times Millenni- page from the book of Glaxo, the largest pharmaceutical um’s annual revenues, a 53 percent premium over its company in the world, which has met with success in share price. recent years by breaking the company into units of a At the time of the negotiations with Takeda, Duns- few hundred people, and teams of a few dozen. “It made ire was reading “Built to Last” by James Collins and Jerry the people in each team hungry to succeed,” Dunsire Porras. The book had a big influence on her decision to said. “Big organizations are not stupid, but their scale stay with the company and take it into a new phase. “I can make them slow.” went around talking to people and tried to avoid the Yet breaking things down is not enough. It’s also tyranny of the ‘or’ and instead looking for the ‘and,’ ” she important, Dunsire says, to create connections between said. “After a while, we all began to see that we can be groups, both to avoid doing the same work twice and to innovative, cohesive and be part of a big company.” increase synergies. For instance, someone in each group Rather than fret about what Millennium was giving keeps tabs on what’s happening at the home base in up by making the transition from small biotech to “big Japan, to see if some of the research done there can be pharma,” Dunsire tried to focus on three things: what imported to Cambridge, or vice versa. workers would like to keep from the old Millennium, The entrepreneurial spirit of the project-based what they would gain, and what they would rather leave behind. Even the most beloved organizations have weak- nesses. In the “better left behind” column, Dunsire placed Millennium’s old practice of making every decision by consensus. “There was this idea that everyone “Dunshire will was holding hands at the table, because every person in the company had such a big stake in its future,” she said. At the new Millennium, Dunsire has instituted a clear ask the one decision-making structure. “We want to hear all voices,” Dunsire said, “but we are not a democracy.” question that Another “good riddance” item was the tyranny of quarterly earnings announcements. Like other young gets right to the companies, Millennium had limited resources and needed to show investors every three months that it was point of where producing results. That, according to Dunsire, made it harder to concentrate on long-term investments. Because the weakness lies in any argument.” Briefings on Talent & Leadership organizational model has had an impact not just on the ment comes in drug development, especially clinical tri- company’s scientific side. Sara Tong Benyamini, a learn- als. Underfinanced young drug companies often falter at ing and development specialist in the group’s human this stage, which means they can’t pursue a key strategy resources division, said she was inspired by the small- in Dunsire’s playbook: maximizing opportunities. team approach to take on a challenging project: grab- Brand-new drugs are few and far between, which bing a spot for Millennium on Fortune magazine’s list of makes it essential that when a new product does come the 100 Best Places to Work. along, it is milked for all it’s worth. “Biotech companies Benyamini came up with the goal back in 2007. weren’t really good at this, because they thought after At first, she thought it was just a matter of waiting for they’d done all this great science, people should just buy Millennium to grow a little, then filling out the forms. the drug,” Dunsire said. As a physician herself, Dunsire The minimum number of employees for the Fortune list knew that things don’t just happen like that. is 1,000. At the time, Millennium was 100 workers short When Dunsire took the reins at Millennium, the of that. But once the company did get to the magic num- company had one drug on the market: Velcade. But the ber of 1,000, Benyamini found that its purchase by use of Velcade was limited to just some of the people Takeda once again made it ineligible for that year’s Best suffering from the blood marrow condition called mul- Places to Work list. Not until 2011 did the company tiple myeloma: patients who had tried another drug and finally pull it together. “Making that list is a lot more not improved. (This is often referred to as a second-line complicated than it sounds,” Benyamini said. “It in- treatment.) In 2006, Millennium got Food and Drug volves hundreds of workers filling out forms and all Administration approval as well for patients suffering sorts of requirements and deadlines you need to meet.” from mantle cell lymphoma, an aggressive form of the blood cancer non-Hodgkin’s lymphoma. In 2008, Vel- cade was also approved for use in multiple myeloma patients who had never taken any drugs before, granting Dunsire’s questioning is it first-line treatment status. The new indications for Velcade have raised sales of the product, and Millennium is hoping for even broader meant, in part, to get her use in the years ahead. But Dunsire says that approvals are not enough; the company needs to get the word out staff to prioritize and focus. to physicians about the product as well. “Having been a doctor myself, I know how busy they are,” she said. “If you haven’t synthesized your information to tell them The project came to the attention of Dunsire, who about your product in an efficient way, you’ll fall to the is grateful that Benyamini took charge. “Being on that bottom.” Dunsire decided that the marketing material list makes it so much easier to recruit the people we for Velcade was just too wordy, and she ordered that it want to recruit,” she said. “And talent is what we’re all be cut down. about.” While Dunsire aims to imbue all the divisions, from marketing to human resources, with a sense of creativity, Maximizing Opportunities Millennium remains primarily a science-based corpora- he main advantage to being part of a large tion. And Dunsire doesn’t pretend to be scientist. In fact, operation is clear to Dunsire: capital. But big Dunsire goes out of her way to avoid making scientific companies actually have such an abundance of decisions, giving her chief science officer, Joe Bolen, resources that it is difficult not to waste them. complete responsibility in that area. She often excuses Dunsire is constantly asking herself if resources herself from scientific discussions at the company, pre- Tare appropriately divvied up. She keeps certain guide- ferring to sit in the audience instead. “I do try to learn lines in mind, but does not draw a line in the sand. as much as I can, so that I can ask the right questions,” “We try to spend about 30 percent of our resources on she said. research,” she said. “But in any given year, the actual Dunsire’s questioning is meant, in part, to get her spending can be 28 percent or 34 percent, depending staff to prioritize and focus. It’s an extension of the “As- on the specific circumstances.” piring to Cure Cancer” motto. The motto is effective as For a pharmaceutical company in particular, finan- a marketing tool for Millennium, Dunsire says, as well cial resources are critical. Laboratory research is one of as serving as a motivator for nonscientists in the com- the cheapest stages of drug development. The real invest- pany. The mission statement also gives management a

20 Q2.2012 The Korn/Ferry Institute Briefings onTalen t &Leadership Courtesy of Millenium Pharmaceuticals Velcade intreatingcoloncancer. Yet experimentsin Velcade effectivelyintransplantpatientstodampdown Millennium couldn’t affordtodoboth,andcutinflam- In reality, drugdiscoveryisalotmessierthanMillenni- Tokyo andCambridge,Dunsire travelsregularlyto Takeda,” shesaid.“Butthat’s whatmy job asCEOisall mation research. from doctorssayingthattheyhavebeenabletouse it. Forinstance,Millenniumhadhighhopesforusing it. involving inflammationascancer. Dunsiredecidedthat Japan. Takeda’sJapan. topexecutivesalsomadeapilgrimage aconnector. I’m about. Ilistentothedoctorsandpass board meeting held outside of Japan. board meetingheldoutsideof plans tolookintoitfurther, inorder to maximizeVel- to MassachusettsinMarch2010 for thegroup’s first ten tothescientistsandcommunicateresearch the informationtoscientistsatourcompany. Ilis- that areafailed.“Now weneedtofindoutwhy,” Dunsire adrug,andsometimesagainst times worksinfavorof to rejectneworgans. It’s notcancer, butMillennium the immuneresponsethatoftencausespatients’bodies lennium, thecompanywasjustasinterestedindiseases um’s messinesssome- missionstatementimplies. The cade’s use. said. Butrecently, Millenniumbeganreceivingletters self-disciplining tool. When DunsiretookoveratMil- self-disciplining tool.When our headquartersinJapan.” To strengthentiesbetween “We may end up passing that, inalaterstage,to mayenduppassingthat, “We Yet focusshouldnotkillflexibility, Dunsiresays. • • • • • • • Innovation accordingtoDunsire to add,andwhatisbetterleftbehind. it takestorecruitanddeveloptalentinyourorganization. crucial, butmaximizingsalesoftheendproductisjustasimportant. Constantly Maximize Breed Break downgroupsintosmallerunitsto Manage Listen Don’t ignoremarketing. entrepreneurial attitudeandtostreamlinedecisions. connections.Makesuretheunitsaretalkingtooneanothertakeadvantageofsynergies. . Acknowledgewhatyoudon’tknowasCEO. yourtalent.Don’tskimponthetime think opportunities.Laboratorybreakthroughsare aboutchangeinyourorganization:whatyou’dliketokeep, encourage

But it’s arolethatcomesnaturallytoher. “Iamlikethe andthecompanyunderDuns- remains itsonlyproduct, remains inshortsupply:hertime.Sheconfessesto Dunsire has done a good job of maintainingMillenni- Dunsire hasdoneagoodjobof micromanaging tendencies, andhashadtolearn Dunsire oftenhastotakealowermanagerialprofile. from thelaboratorytodoctor’soffice.Andwhile ire hasyettoprovethatitcanmoveabrand-newdrug and talkwithresearchersotherworkers. pany, Takeda. Millennium’s subsidiarystatusmeans A longtimecorrespondentforThe to bringgreatmusicians together andgetthemtoplaythe symphony.” um’s thefinaldecisionsover the independentspirit, covers businessfromBoston. conductor of the orchestra,” Dunsire said of herCEO theorchestra,”Dunsiresaidof conductor of itsparentcom- company’s futurerestinthehandsof cultivates an image of anopen-doorCEO,cultivates animageof regularly style. “Imaynotplaytheviolinoroboe,butmyjobis scheduling timetowalkaroundthecompany’sfacilities Dunsire step backandletothersgetonwiththeirwork. sources toMillennium,Dunsiresaysoneresource an Millennium stillfacesseriouschallenges.Velcade While Takeda financialre- While providesplentyof — in thiscasescientists Financial Times,VictoriaGriffith

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Q2.2012 21 g

22 Giving

Back Turkish-Style Q2.2012 Philanthropy,

“honor” killings of allegedlyunfaithfulwivesarestillcommonplace. “honor” killingsof 2009,- she wasawardedtheRaymondGeorisPrizeforInnovativePhilan Award, whichrecognizesindividualswhohave“demonstrated visionary In an innovative program designed with the support of theUnited In aninnovativeprogramdesignedwiththesupportof Then, last September in New York, shereceivedaClintonGlobalCitizen lastSeptemberinNewYork, Then, Holding, thebusinessfounded byhergrandfather, HaciOmerSabanci, Nations, shehashelpedandencouragedwomenacrossthecountry remarkable members. Sabanci Chairwomanandmanagingdirectorof Financial Timeshaslistedherasthethirdmostpowerfulbusinesswoman in preservingrainforestsaroundtheworld. theprize.” somanyepitomizedtheveryspiritof impact onthelivesof ingly winninginternationalrecognition. in theworld.Particularlyclosetoherheartrecentyearshasbeen and built up byherunclesintothelargestindustrial groupinthecountry,built and with Trudie Styler, themusicianSting,recognizedforherwork wife of vert dreamsandidealistichopesintoconcreteresultsthathave apositive Güler SabanciisthemostsuccessfulbusinesswomaninTurkey, andThe pioneered largelybytheSabanciFoundation,whichhasgivensome thropy. Europeanprize’s jury said,“Sabanci’s The uniqueabilitytocon- to setuplocalorganizationsdefendtheirrights. have doubledsince2004, whenshetookthehelm. dation focusedinitiallyoneducationandculture.ButSabancihas leadership insolvingpressingglobalchallenges.” Shesharedaplatform $1.5 billiontocharitablecauses. Foundedalmost40yearsago, thefoun company’s innovative program of philanthropy,company’s innovativeprogramof aneffortthatisincreas- she oversees asprawlingmultibillion-dollar conglomeratewhoseprofits steered itfirmlytowardwomen,inacountrywherechildbridesand Born intoaremarkablefamily, itsmost Sabancihasbecomeoneof Corporate philanthropyisrelativelynewtoTurkey, havingbeen Sabanci’s workisreceivinggrowinginternational recognition.In erview with An Iterview Güler Sabanci by TimHindle

Credit Credit 24 Anatolia thathehadleftbehind. Mediterranean Sea. There, hegainedarespectfortheland, Mediterranean Sea.There, Q2.2012 finances some 1,300 scholarshipseveryyear,finances some focusingitsef- 1,300 (1912-13), HaciOmerSabanci,thenaged12,walkedthe200 Kayseri andthegiftsshewouldtakewithher. Inthesame Foundation, the vehicle for the philanthropy of boththecor- vehicle forthephilanthropyof the Foundation, Haci OmerSabanciinhislateryears, andthenthe homeof rounded bytalldarkpinesandfast-runningwater, avery mentally sound energy policieswillbethemajorchallengein mentally soundenergy miles fromhishomevillagenearKayseriincentralAnatolia frastructure. “Creating sustainable,competitiveandenviron- forts oneducationbutlookingparticularlytohelpwomen, its very beginning. When his father died in the Balkan Wars hisfatherdiedintheBalkan When its verybeginning. among steeplyslopinggardens. theBosporus,wooden mansiononthewesternslopesof sur- annual visitshergrandmotherwouldmaketothevillagenear ness grew, hewouldreturneveryyeartohisvillageandgive which wassomuchmoregenerousthantherockyplainsof Carrefour andDia).UnderSabanci’s guidance,thegrouphas work. She is now chairwoman of the trustees of theSabanci thetrusteesof Sheisnowchairwomanof work. a stretch of flat, hot, well-wateredcountrysideclosetothe hot, flat, a stretchof added interestsinfinancialservices(Akbank),automotive a tiremanufacturer, andthenrunningKordsa,aleadingpro- Ottoman landscape. The house was the summer home of housewasthesummerhomeof Ottoman landscape.The brought upthereforawhileby hergrandparentsand,asa band’s death. been the founding of SabanciUniversity,been thefoundingof Tur- alreadyoneof has achievement poration andthefamily.notable Itsmost bul, Sabancijoinedthefamilybusinessin1978. Sheearnedher the foundation.Itincludesconference roomsandawonder- to thosewhohadstayedbehind.Sabancistillremembersthe this century,” shesaidinthecompany’slatestannualreport. to her. She was 49 years of age. In recent years, Sabanci’s heart Sabanci’s years, to her.recent Shewas49 age.In yearsof the younganddisabled. to the coastal region of Adana, Turkey’s version of Texas Adana,Turkey’sversionof to thecoastalregionof key’s topengineeringinstitutions. Nowadays, thefoundation his sonSakip. ItisaveryspecialplaceforSabanci. Shewas her uncleSakip,his thebusinessfrom theprincipalleaderof has growncloserandtothegroup’s philanthropic ducer of nylonandpolyesteryarn.Herabilitycaughttheeye ducer of generation, andwhenhediedin2004, themantlewashanded child, shespenthersummersin thehouse,whichisset components (Brisa)andsupermarkets(inpartnershipwith embarked on a program of massive investment in energy in- massiveinvestmentinenergy embarked onaprogramof spirit, hergrandmothersetupthefoundationafterhus- spirit, stripes workinginunglamorousbusinesses After gaining an M.B.A. fromBogaziciUniversityinIstan- After gaininganM.B.A. The company’soriginal businesswastextiles;ithassince The Now amuseum complexsetupby itisthecenterpiece of He becameasuccessfulcottonfarmer, andashisbusi- Philanthropy has been part of thefamilybusinessfrom hasbeenpartof Philanthropy Sabanci andImeetintheSakipMuseum,a — first forLassa, — It is something very dear to my heart. Itwassetup sabanci: Itissomethingverydeartomyheart. French artist Sophie Calle. One part consists of a series of dis- aseriesof French artistSophieCalle.Onepartconsistsof Are thestrategiesoffoundation andyourbusinesses museum supportedbyafoundationwhosecentralaimsare made Istanbul ahighlysought-afterrecreationaldestination. fully originalrestaurantcalledChanga,whichhasjustopened an offshoot in the West End of London. The museumisnowat London. an offshootintheWestEndof promoting culture,womenandthedisabled. by adonationfrommygrandmother. Mygrandfatherhad together: an exhibition of awoman’stogether: anexhibitionof disabilityina imagesof turbing imagesandstoriesrepresentingthelastthingsthat thevibrantculturallifethathasinrecentyears the centerof trustees, thetrusteesaremembers andwhile amajorityof board that itsgovernancecamewithintheSabancigroup. The her wealthtosetupthefoundation.ShewasasimpleAnato- died in1966, andmygrandmotherdecided togiveawayall lian womanwhowasconfidentthathersixsonswouldtake Briefings: Tell me abouttheSabanci Foundation care of heronceshehadgiveneverythingaway.care of several blindedTurksrememberhavingseen.Itallcomes vehicle, Ibelieve,forallyourfamily’scharitablegiving. of thefamily,of theydon’t havetobedirectlyinthebusiness. theSabanciholdingcompanynowelectsboardof of developed together? This autumn, it is the site of anexhibitbytheavant-garde autumn,itisthesiteof This The foundationwasestablishedin1974suchaway The The Korn/Ferry Ins titute — the

Ed Robinson/OneRedEye (all) The second thing that the foundation focused on in its early years was cultural activities. It built cultural centers in Adana, Izmir and other cities, and these were also donated to the relevant local authority. This first stage in the foundation’s history I think of as being mostly to do with hardware.

What came after the “hardware” stage? sabanci: Following it, there was a second stage — a stage which involved doing joint hardware and software things together. We had a theater in Adana, for example, so we set up a theater festival there — which, by the way, became the first example in Turkey of a joint public-private cultural venture. Now it has become an annual event. One of the turning points for the foundation came in 1994 when the trustees decided to set up a private university. I was given the responsibility of leading the project, and that was quite a task. It involved not only building the university but also building up the programs and taking responsibility for managing the project — another example of mixing hardware and software. Although the government gave us the land for the project, it was not really a joint public-private venture, for that was all they gave us. Half of the foundation’s annual budget now goes to the university.

sabanci: No. The foundation has its own strategy and its own What are you doing to plan for the future of your long-term plans quite separate from the business. Over the philanthropic efforts? years, Turkey’s needs have changed — after all, it is an emerg- sabanci: Since I became chairman of the trustees in 2004, we ing economy — and the foundation’s aims have changed too. have held a number of conferences here in Turkey on the sub- Its aims today are “to promote social development and social ject of philanthropy. “Let’s invite people who are involved in awareness among current and future generations by support- this world,” we said, “so we can learn about the future of phi- ing initiatives that create impact and lasting change in peo- lanthropy, where it is going, and what we should be doing in ple’s lives.” Turkey.” From the beginning, there was one basic difference between the Sabanci Foundation and other similar foundations What was the outcome? that were being set up at the same time. Whereas the others sabanci: These discussions helped us to define a “new era.” were mostly involved in Istanbul, Ankara and the main cities, Since 2006, the foundation has decided to focus on fewer our foundation spread its efforts all around the country. things. We want to look more at social change, and that means more software. For instance, we have started to produce a pro- Where did the foundation’s approach come from? gram called “Turkey’s Changemakers.” People from all over sabanci: My uncle Sakip was the chair, and in the early days Turkey nominate individuals who they think have made a about 75 percent of the foundation’s giving went to educa- change to their communities, and we make a video of ones tion. It built schools, dormitories, cultural centers, etc., and that we select and tell their stories. They are then shown via donated them all to the relevant local authorities. From the the Internet and have so far attracted an audience of more beginning, the trustees were focused especially on girls’ edu- than a million. cation. For example, we built a dormitory in Ankara so that The second thing we agreed when we defined the new girls from the Anatolian countryside could benefit from a era is that we cannot do everything on our own. We have to higher education in the capital. Also, we set up a technical do more through partnerships. All my career I have been college for textile workers, exclusively for girls, in Adana. working through partnerships. In the 1980s, I was one of the This degree of focus is unusual. A recent study by the first in the group to be involved in foreign commercial part- European Foundation Center found that, right across Europe, nerships, and I was very much supported by my late uncle foundations give less than 5 percent of all their donations to Sakip. In the end, globalization meant that it was the right projects supporting women and girls. thing to do.

Briefings on Talent & Leadership Q2.2012 25 Will public-private partnerships remain your focus? what are the criteria for it to be successful. By merely asking sabanci: I believe we have to go beyond public-private part- the right questions, we make them think also. When we nerships. In one instance, we have developed a project started, there were some of the cities where there was not together with U.N. agencies in Turkey and the Ministry of even one women’s NGO. But, after four to five years’ work, the Interior. Its aim is to improve girls’ and women’s human there are now at least three or four in each place. These are rights in Turkey. We chose six cities at first, and with a meth- small efforts, but they can make a big difference. odology that the U.N. helped us with, we brought together In one case, an NGO pushed the government to provide local groups — the mayor, other NGOs, schools and people easier access to services for the seasonal migrant farmers involved in education — in order to define the priorities who are still a big feature of the largely agricultural Turkish among women’s issues in that city. Obviously, they vary. In a economy. Another project is aimed at raising the awareness city like, say, Izmir in the west of the country, the issue may of child brides, with the hope of increasing the official age well be jobs for women; in a city like Urfa in the east, it might of marriage to 18. At the moment, almost 40 percent of mar- be the issue of child brides. riages in Turkey involve women under the age of 18. As part of It is important to create an awareness among the leaders the project, more than 11,000 people in 51 cities took part in of each community that they have these issues. We ran a one- seminars to discuss the issues raised by such early marriages. week program at Sabanci University where we “taught the teachers” from the six cities. Teachers came to Istanbul for one What you described sounds very ambitious. Do you think week to increase their knowledge of women’s rights. They results will come quickly? then went back and taught other teachers, all of them from sabanci: Creating social change takes time. You need patience. state schools. The ministry of education is very happy about it We are now going into a second phase of the U.N. project, ex- In the end, the NGOs prepare a project and submit it to tending it to another 10 cities over the next three years, build- the Sabanci Foundation, where a committee decides which ing on the successful examples we have in the original six. ones we are going to support. It’s not easy. Not everything about social change and philanthropy is about giving money. I have been to every partners’ How do you decide which group or project gets your support? meeting in places such as Kars and Urfa for five years. Wher- sabanci: We have a team of experts inside the foundation and ever I go, I sit together with all the local officials and listen to an independent panel of university professors, journalists and the grant projects. The women stand up and talk about what sociologists. We also have U.N. people to help us. They assess they have achieved, the change that has been brought about. the projects and select the ones to be given grants. Projects last 12 to 18 months, and we follow their progress and their Do you think the changes you are describing are the job outcomes. of government? We ask the people behind each of the submissions to sabanci: My grandfather and my uncle always said that be- explain how much of a change their project is going to make, cause we come from an emerging country, we cannot expect

26 Q2.2012 The Korn/Ferry Institute the climate, there are things you cannot change. But you adapt to the climate. You have to have the right seeds for that soil. And you have to be patient. And even then not all of them will come up perfect. But next year you will do better. It is a continuous improvement, a continuous effort.

Is there a Turkish tradition of philanthropy? sabanci: I grew up with my grandfather and my grandmother. My grandfather was a hard-working man, very appreciative of the land, and when he became successful, he said to my grandmother, who was also originally from Kayseri: “We may not be rich by Adana standards, but we are rich now compared with our small village in Kayseri. So it is time for us to go back to our village and to give back.” The first thing he did was to build a road to connect the village to the city, to open it up. The second thing he did was to bring water into the village. And the third thing was to build a primary school.

Was he unusual in doing these sorts of things? everything to come from the government. They felt that we sabanci: He always believed that those who are more fortu- have to be involved together. A joint effort is required. And nate than others should give back. He said, “We should give more and more the whole world is realizing this. Even in what this land has given to us back to its people.” This is not Davos, corporate social responsibility is a major topic now very different from his contemporaries. The Ottomans created and has been for a decade. tens of thousands of foundations (“vakifs” they were called), In my uncle’s time, no one called it social responsibility; and they had all sorts of charitable purposes. There was even it was called charity. Now it is more and more obvious that one for saving the nightingale. The Muslim religion too, of the sustainability of the world, in every sense, requires that course, is very strong on giving back, and my grandfather was we work together. Social responsibility is about everything a man of faith. — climate, people, everything. You need to have balance in the world. There are so many imbalances. These very prestigious awards that you have been getting lately — do they make a difference? In philanthropy the metrics are very different from what sabanci: It’s interesting for me to meet people with such a they are in business, are they not? serious feeling for giving and for making a difference to sabanci: Completely different. For one, the time element is people’s lives. At the Clinton Awards this year, Bill Clinton different. You need to be patient. I learned that from being a was there himself from 9 in the morning to midnight every member of the European Foundation Center, where I met day during the ceremonies. He believes in it and puts all his incredible people who have been involved all their lives in resources into it — all his accumulated network — and he philanthropic work. I learned from them that whatever you brings them all there together, to meet and to spark ideas. achieve in business in three to five years, in philanthropy They are very generous, very generous. They inspire you you need to double that. more, encourage you more. They also provide feedback, con- The second thing is that effectiveness in philanthropy is firmation that we are on the right track and taking the right not measured only by the numbers. It is important how many approach. students you educate, how many women you reach, but it’s really about the change that you are able to bring to that per- Does it put greater pressure on you to meet higher son and to their society so that they can really change others. expectations? sabanci: It does, yes it does. It increases the responsibility. But And do you get a feeling when that is happening? life is like that. I have climbed those stairs before. The higher sabanci: Yes, you can feel that. I always use the metaphor that you get, the more challenging are the responsibilities. philanthropy is like farming, whereas business is like hunt- ing. You have a target, you go out, plan, wait, study and shoot. Tim Hindle is founder of the London-based business language consul- And you achieve a goal. But in philanthropy, as with farming, tancy Working Words. He was a contributor to The Economist for 25 you need seeds, you have to work on the soil, you depend on years and was editor of EuroBusiness in the 1990s.

Briefings on Talent & Leadership Q2.2012 27 LIE 28 Q2.2012 The endoftheCubanmissilecrisisisgenerallyregardedasatriumphlead The Sovietswouldpulltheirmissilespublicly,The buttheAmericanquidproquowouldbe USSR wouldwithdrawthemissilesitwasinstallinginCuba,exchangeforwhichUS would removeitsownJupitermissilesfrombasesinTurkey, wasa ontheSovietborder.It recipe; do you like it?” franknesswon’t serveyou,oranyoneelse,verywell.) recipe; doyoulikeit?” missiles trade,liedandsaidno. NikitaKruschev:The managed toreachanunderstandingwithhisSovietcounterpart, tion. She once had 147 students keep diaries of their dealings with other people for a week, theirdealingswithotherpeopleforaweek, tion. Sheoncehad147studentskeepdiariesof CaliforniaatSantaBarbarahasquantifiedthiscommon-senseobserva- the Universityof asking thattheyrecord“anytimeyouintentionally trytomisleadsomeone.” Herperfectly kept secret. The Sovietsagreed,andKennedy, The kept secret. he’dmadethemissiles-for- whenaskedif Cuba andenduringanuclearwar, and executiveheldoutforsettlement, theyoungchief ership forPresidentJohnF. Kennedy. day- good trade (thanks to new class of submarine-launchednuclearmissiles,good trade(thankstonewclassof theJupiterswere enemy, norcouldhepubliclyviolateAmericancommitmentstoTurkeyaboutthemissiles. obsolete anyway).Buttherewasacatch:Kennedyfelthecouldnotbeseentogiveinhis ordinary volunteerslied,onaverage,1.5 timesaday. Andsoit’s lifethatintheir afactof WHY Like other forms of deception, lying is a fact of life. The psychologist Bella DePaulo of psychologistBellaDePauloof life.The deception,lyingisafactof Like otherformsof to-day lives, leaderslietoo. alovedoneasks,or “It’s (When “HowdoIlook?” anew LEADERS By DavidBerreby

As hisadviserspreparedplansforinvading The Korn/Ferry Ins titute

Jon Krause (all) Briefings onTalen t &Leadership Credit Q2.2012 29 But the lie that averted Armageddon illustrates an auction to assess interest from potential buyers (a a seldom-acknowledged truth: Sometimes leaders process that eventually ended in the company’s sale deceive where nonleaders would not; sometimes to Sprint the next year). During this auction, Centel leaders deceive because they’re leaders. They fib (and issued a statement that “the bidding process contin- spin and mislead) because they can. (Until and unless ues to go very well.” (In fact, the bidding was going something goes wrong, no one objects to a falsehood very badly — the company was discovering that it had that led to success.) More important, leaders lie no takers.) because leadership at times requires deception.“It is Then too, there’s “spin” — statements that arrange clear from the historical record,” writes the University the facts to paint the rosiest possible picture — and of Chicago political scientist John J. Mearsheimer, the mega-spin that the philosopher Harry G. Frank- “that although lying is often condemned as shameful furt calls “bullshit.” (At least liars know the truth, behavior, leaders of all kinds think that it is a useful Frankfurt writes. But the defining trait of b.s. is that tool.” the issuer isn’t paying any attention to truth at all.) Some, like Eric Bergman, a communications consultant in Toronto, even include “staying on message” in their list of deceptive tactics (since sticking to one’s message means ignor- ing questions you’re asked in favor of the sub- jects you would rather talk about). In the abstract, you could argue — as for example, the philosopher Sissela Bok suggests in her influential work “Lying”— that none of these tactics are as good as plain unvarnished truth-telling. But a place in the C suite can land you in situations that most spouses, parents or friends never face, and in those special circumstances, different standards for deception do apply. Consider, for example, a bad presentation by one of your direct reports (Is calling her out in front of the whole team really the best move?). Or a crucial negotiation (Who gives away their reservation price before the game starts?). Or a press release about down- sizing (There has to be a better way to say, “We can’t afford to keep paying these people”). Or a firing (“Of course, we’ll say you’re leaving to pursue other opportunities and give you a letter of recommendation”). History is rich in leaders who decided Of course, leaders need to set an example of that spin, omission or outright lies — whatever it honesty and integrity for their organizations. (They took to get people to do what had to be done — would shouldn’t lie for selfish reasons.) But part of the art serve their constituencies better than the truth. (The of leadership is knowing when lies have to be told, founder of the modern Turkish republic, Kemal and being able to distinguish those deceptions — the Ataturk, had a saying: “For the people. Despite the ones created for unselfish reasons — from the purely people.”) Consider, as Mearsheimer recounts in his self-serving kind. recent book, “Why Leaders Lie,” the reason that Strategic deception, of course, needn’t involve heavy-duty armored vehicles are called “tanks”: dur- out-and-out lies. There are many more subtle ways ing World War I, British leaders told the public they to deny people accurate information that they would were developing a water-delivery system on wheels like to have. There is, for example, telling the truth for the troops in the trenches. They chose deception but creating a false impression. In 1992, the Centel in order not to give away their real plans to the en- Corporation, a telecommunications company, held emy. Should they instead have told the truth about

30 Q2.2012 The Korn/Ferry Institute the new weapon, thus endangering their own soldiers a leader’s moral calculus about deception. and their nation’s interests? The most obvious difference between the roles Under the theory of “role-differentiated moral- of leader and follower, of course, is that the leader is ity,” the philosopher Fritz Allhoff of Western Michi- responsible for the survival of the organization. Since gan University argues, certain jobs make some acts the late Renaissance, for example, political thinkers permissible, or even obligatory, that wouldn’t be in have referred to “reasons of state” to describe the any other context.(For example, a good lawyer under- imperative to keep the nation in existence, no matter mines a hostile witness, even if that witness is sin- what. Respecting this principle, a leader deceives cere and truthful, because the lawyer’s job is to make when the truth would kill her organization; she the client’s case. A good soldier is willing to kill peo- deceives to survive and fight another day. “There’s ple, because his duty is to help win the war.) nothing sacred, neither fellowship or faith, when Trouble is, the temptation to lie arises without kingship’s at stake,” wrote the Roman poet Ennius. reference to moral philosophy. A selfish lie that A number of philosophers think the same rule doesn’t necessarily help the organization can feel, applies to business ethics. The philosopher Alan in the moment, like the best choice. In fact, casual Strudler of the Wharton School, for example, argues

In ordinary life, we tend to be more frank and confiding with those we trust; and Whom when we have a close relationship with someone, we feel we owe him or her the truth. But leaders of democratic nations, John J. Mearsheimer found, are more inclined to lie to those Do You who trust them — their people — and less inclined to lie to other leaders. “When I began this study,” he wrote, “I expected to find abundant evidence of statesmen Trust? and diplomats lying to each other. But that initial assumption turned out to be wrong.” The reason: national leaders function in a competitive and ruthless landscape where almost anything goes, because the stakes are nothing less than national survival. Therefore, they don’t much trust one another. Paradoxically, that reduces their incentive to lie to each other. If you’re inclined to be skeptical of everything I say and to verify it independently, then what do I have to gain by trying to deceive you? You will find me out soon enough. Therefore, Mearsheimer reports, in his study of decades of diplomatic activity, he found few instances of leaders lying to one another. Instead, he concluded, leaders tell lies to those who do trust them — their own people. If you want the truth, it seems, the best place to get it from is your competitors.

and selfish lying— which makes life easier for indi- that deception in business can be the equivalent of viduals but doesn’t help the organization — is the self-defense in a bar fight. Centel’s executives, for bane of many a business. It leads to the substandard example, knew that presenting an accurate picture culture that the Harvard Business School’s Ginger L. of their auction would cause investors to clobber the Graham calls “the organizational lie”: “marketing company’s stock. So the company said the auction materials touting a commitment to ‘customer delight’ process was going well, which was technically true even as customer relationships falter; silence when (procedures went without a hitch) but still deceptive an individual isn’t performing or has behaved inap- (those procedures showed that no one would buy the propriately; denial when a program isn’t yielding company’s assets). When several investors sued about results, allowing it to continue.” this, they lost. Courts recognized that Centel’s leader- How, then, to separate deceptive urges that are ship had wide latitude to defend the share price. purely selfish and lazy (the ones that help you escape More commonly, though, the fate of the entire embarrassment or that avoid unpleasant but needed organization isn’t in play, and the reason for deception confrontations) from the ones that are genuinely and is what Plato called “the noble lie.” The noble lie emerges strategically necessary? Getting clear on this distinc- from a situation where the truth, while not fatal, would tion requires getting clear on the exact nature of those nonetheless lead to worse outcomes than would a responsibilities to an organization that would alter well-chosen falsehood.For example, Kennedy’s missile

Briefings on Talent & Leadership Q2.2012 31 fib was the right decision, Mearsheimer argues in describe every candidate as outstanding.) “Why Leaders Lie,” “since that lie helped settle the Sometimes, though, the stakes involved in de- Cuban missile crisis and avert a possible war be- ception are less about an urgent organizational need tween the nuclear-armed superpowers.” To go from than they are about maintaining order, morale and the geopolitical to the personal, every résumé con- focus. Leaders will lie, at times, to preserve what the tains some noble lies, at least from the perspective of military calls “social honor”: the dignity and self-re- its authors. The sin of exaggerating responsibilities spect of the brand, the organization and individual here or puffing up skills there will be outweighed by team members. (As Mearsheimer recounts, as a West the great job I’ll do when I get the position. The same Point cadet he was forbidden to deceive others, ex- goes for talking up the superstar “friend” you haven’t cept when a fib would preserve “social honor.”) Con- actually seen since 2002 or, for that matter, dyeing sider, for example, the firing by Mayor Michael R. your hair. Bloomberg of New York of a deputy mayor last sum-

A Liar’s Library Journal articles: • Fritz Allhoff, “Business Bluffing Reconsidered,” A number of executives, political scientists and, espe- Journal of Business Ethics 45 (2003): 283-89 cially, philosophers have pondered the relationship of • Albert Z. Carr, “Is Business Bluffing Ethical?” deception to leadership. Here are the best books and Harvard Business Review, January-February 1968, 143. papers to sharpen your thinking. • Thomas Carson, “Second Thoughts about Bluffing,” Books: Business Ethics Quarterly 3(4) (1993). • Sissela Bok, “Lying: Moral Choice in Public and Private Life.” • Stephen L. Carter, “The Insufficiency of Honesty,” Vintage, 1999 Atlantic Monthly, 277, 2 (February 1996). • John J. Mearsheimer, “Why Leaders Lie: The Truth About • Ginger L. Graham, “If You Want Honesty, Break Some Lying in International Politics.” Oxford University Press, 2011 Rules,” Harvard Business Review (April 2002). • J.J.C. Smart. “Ethics, Persuasion and Truth.” Routledge & • Alan Strudler, “Deception Unraveled,” Kegan Paul, 1984 Journal of Philosophy, 102, 9 (September 2005).

According to many of the philosophers who mer. The official, Stephen Goldsmith, was arrested on have pondered the ethics of deception in business, a domestic violence charge after an argument with many business negotiations practically require the his wife (who later did not press charges or endorse “noble lie.” “Is Business Bluffing Ethical?,” the author the police report). Bloomberg decided that his deputy Albert Carr asked in a famous Harvard Business Review had to go. He also decided that he would announce article published in 1968. Carr said it was, because that Goldsmith was leaving to “pursue private-sector negotiations have different rules from normal con- opportunities in infrastructure finance.” versations. Like poker games, he argued, they require When journalists put the real story before the that “players” hide truths from one another. To quote public, the mayor was unrepentant about rating honor the British statesman Henry Taylor, a “falsehood above candor. “I make no apologies for either the fact ceases to be a falsehood when it is understood on all that Mr. Goldsmith has left city service, or for treating hands that the truth is not expected to be spoken.” For the Goldsmith family with basic decency as he left,” example, when Centel investors sued over the com- Bloomberg said. The enduring impression that his pany’s deceptive statements about its auction process, direct reports are honorable people, and that team courts held that no one involved had a right to expect members are loyal to one another, was worth pre- total disclosure. (In the federal appeals court decision, serving, in Bloomberg’s view, at the relatively small Judge Richard Posner held that investors know to look expense of public information. “I have long believed at a company’s reports the same way that employers that public officials are all too willing to humiliate the look at piles of recommendation letters, all of which people who work for them whenever it’s politically

32 Q2.2012 The Korn/Ferry Institute convenient or advantageous,” he said.“It’s an outrage, and other members of society? and I refuse to play that game.” Obviously, this consultation is sometimes impos- If survival, damage control and “social honor” sible, but you can, if you take a moment, imagine how all can justify deception, the central task for a leader other reasonable people would react to your planned is this: distinguishing the situations where those deception. And, Bok argues, you must do this in order motives do justify falsehood, from those where de- to really weigh the costs of a possible deception against ception would still be wrong. Granted that leadership its benefits. sometimes requires an atypical relationship to the obligation to tell the truth, how are you supposed to tell when your situation meets the criteria for a special case? In hindsight, there’s no denying, the ulti- mate standard is success. In international politics, Mearsheimer writes, “the main reason that a leader would likely incur his public’s wrath is because the policy failed, not because he lied.” Generally, he adds, “success excuses lying, or at least makes it tolerable.” But, of course, future success can’t be your criterion for choosing a strategy before implementation. Everyone thinks his or her decision will lead to success, but not everyone is right, because success is unpredictable. Leaders need guide- lines for decision making when information is imperfect and outcomes are still uncertain. On this score, Sissela Bok proposes a methodology that’s both insightful and practical. In “Lying” she applied the framework only to out-and-out falsehood, but it works too when pondering more finely shaded forms of deception, like artful omission, spinning, b.s.-ing and so on. Bok argues that any possible lie should be subjected to two tests. First, the principle of veracity (the self- evident fact that people need to tell the truth most of the time for their business, and the larger society, to function) requires that you ask yourself some tough questions: Are there truthful Her argument is general for all people in all places, ways of accomplishing what the falsehood would but it has a particular resonance for leaders precisely achieve? What are the arguments both for and against because the gap between ordinary obligations and the lie? What effect would this lie have on the general those of leaders is greatest in times of stress. practice of truth telling? Sometimes, a proposed deception, omission or If, after some clear-sighted answers to these spin will pass all these tests. Sometimes, though, you questions, you still find that deception looks justi might find an alternative. Part of the art of leadership, fiable, Bok argues, you need to go further. Because it seems, is knowing the difference between when we are all self-serving in our judgments, especially you could deceive and when you really have to. under stress, your argument with yourself is not

enough. You need to see how other reasonable people David Berreby ([email protected]) is the author of “Us view the potential lie. How would it look to your and Them: The Science of Identity” (University of Chicago Press, colleagues? Your friends? Your fellow leaders? Even 2008). He writes the Mind Matters blog for Bigthink.com and more important, how would it look to people with a has written about the science of behavior for a number of different perspective on life— to other stakeholders leading publications.

Briefings on Talent & Leadership Q2.2012 33 34 Q2.2012

Credit Credit Betting I Collaboration on Renault mightaswelldumpthecashinPacific. the world’smostlucrative. prosper intheUnitedStatesmarket, matic executivewithathoroughlyglobalpedigree.Born in Ghosn,whospeaksfivelanguages,more important, wasaprag- ing it. The strategy was seen as a practical means of preserving wasseenasapracticalmeansof strategy The ing it. was CarlosGhosn.GhosnhadbegunhiscareeratMichelin,the Brazil, hemovedwhenwas6toLebanon,wherehis family tire maker, Atbothcompanies, thenmovedtoRenault. Ghosn tigious ÉcolePolytechnique. the autonomy of thetwoautomakers,the autonomyof along withtheirbrands, enterprisewithout absorb- controlling theJapanese the aimof One prominentautomotiveexecutive,BobLutz,quippedthat had itsroots. GhosnstudiedengineeringinFranceatthepres distinguished himself withseniorassignmentsabroad.Even distinguished himself equity stake of approximatelyone-thirdinthecompany,equity stakeof with The person whom Renault put in charge of rescuing Nissan personwhomRenaultputinchargeof The Rather than acquiring Nissan outright, Renaultboughtan Rather thanacquiringNissanoutright, to savetheNissanMotorCorporationfromimminent little experience in Japan. Inaddition, Nissanwasnot little experienceinJapan. strong inEuropeandneithercompanywasmanagingto sent $5 billion and a group of European executives to Japan European executivestoJapan sent $5billionandagroupof competing poorlyagainstToyota, andRenaulthadvery collapse, asuccessfulrescueseemedremote.Nissanwas n 1999,whentheFrench automakerRenault S.A. Big

Q2.2012 35 36 GHO You andyourteam’srescueofNissanisapowerful Yokohama and is now the longest-serving chief exec- Yokohama andisnowthelongest-servingchief Q2.2012 What followsisadiscussioninvolvingCarlosGhosn; What Binvel, aseniorclientpartneratKorn/FerryInterna- Nissan alliance produces about 10 percent of the Nissan allianceproducesabout10 percentof returned toParis, where meal namedafterhim.In2005, Ghosntriumphantly Doron Levin,aBriefingscontributor;andYannick feet, he broughtanendtopromotionbyseniority,feet, lifetime inside thecompany. Imet with peopleeveryday in 1999, ourproblemswereinternal and oursolu- world, each serving large areas of theglobalmarket? world, eachservinglargeareasof the with adistinctculture,intwodifferentpartsof world’s cars. GhosncommutesbetweenParisand and logical and pragmatic. When IarrivedatNissan When and logicalpragmatic. Ghosn, nowNissan’s CEO, begandeliveringthehigh- vehicle developmentandmarketing. a straight-talkingchangeagentwhoquicklybuiltreputa- national andcorporatecultures. been writtenabouthim.Heevenhadabentobox based on execution breakthroughs. They arestrate- based onexecutionbreakthroughs. They based onanintellectualbreakthrough becoming chief executive of twoFortuneGlobal500 executiveof becoming chief tional. The discussiontookplaceatRenault’s head- tional. The tions wereinternal them. Ididn’t useanyconsultants. Ijustlistened topeople tion assomeonewhocouldbetrusted.To putNissanonits him hero status in Japan, where a flood of articleshas whereafloodof him herostatusinJapan, quarters inParis. utive intheglobalautoindustry. gies thatareputinplaceawayismotivating explained yourstrategyoflinking NissanwithRenault inan company. weputitintoashapewithcredibility, Then asense cultures andbusinessstrengths, withoutriskingaclashof companies simultaneously. Together, theRenault- est profitmarginsintheindustry. Hissuccessgave favored employment andloyaltytothekeiretsusystemof suppliers. basicprocesseslike Heforcedtherestructuringof san’s CEO when youwenttoJapanfixNissan? In your2005book,“Shift,” abouttherescueofNissan, you of clearprioritiesandanopportunity tofinallybesuccessful. of solutionwaswidelyknownwithinthe thesolution.The of They allhadbitsandpieces peopleinthefirstthreemonths.of business lesson.Itisnotoftenthatcompanies come backfromthebrink.Whatdidyoudofirst Look. Most turnarounds of companiesaren’t Mostturnaroundsof SN: Look. At Nissan,nowtheNo. Ghosnwas 2automakerinJapan, The rescue worked, and six years after moving to Japan, rescueworked, andsixyearsaftermovingtoJapan, The But howdoyouleadtwoglobalcompanies, each — he was named CEO of Renault, thereby Renault, he wasnamedCEOof — it justtooksomeonetounlock — in additiontobeingNis- — they are — hundreds

— GHO mid-term. The plans of both companies, and the way we work, bothcompanies, plansof and thewaywework, mid-term. The for decisionmaking,twoheadquartersandbrandsthat will continue to evolve. In fact, wewill neverstopchanging will continuetoevolve.Infact, and evolving.It’s worked sowell acquisition, andnotafusion nership betweentwoentitieswithcultures, two bodies new governing bodies, new ways of doing work, newsyner- new governingbodies, doingwork, newwaysof long us intothefutureforaverylongtime.No oneknowshow gies. It’s notacalcifiedorganization.Butthebasicmind-set continue todoverywell.Asaprinciple,thealliancecancarry cause the alliance has developed a lot in 12 years. There are cause thealliancehasdevelopedalotin12years. There seeable future, and for sure during the course of asix-year seeable future,andforsureduring thecourseof alliance. Thestrategyworkedwell12yearsago,inpart because Nissanwasindesperatestraitsandreceptiveto cultural changesimposedbyRenault. AsNissanhasgrown stronger, has the original basis for the relationship changed? that thisisapartnership, notaconventionalmergerand SN: Itdidn’t workonlyin1999 — in business, everything canchange — The Korn/Ferry Ins titute remains inplace.It’s apart- — not onlyin1999, butever — it stillworkstodaybe- — but forthefore-

Previous page: ©Everett Kennedy Brown/epa/Corbis Briefings onTalen t &Leadership Courtesy of Renault-Nissan Alliance GHO in the auto industry where you’re nothearingaboutdramaor in theautoindustrywhereyou’re thing’s wrong. You would hear about it. Believe me. You can’t Believe me. You wouldhearabout it. thing’s wrong. hide it. Now,hide it. youaskedhowlongwecancontinue.Yes, we Perhaps you’vesimplybeensuccessful keepingthedrama conflicts. since out ofthemedia. SN: No way. It’s verydifficulttohidethings whensome- change-agile organizations. this rareskill,andgoesonestepfurthertocreate been rockedbyuncertainty. CarlosGhosnleadswith the abilitytoinspireandempowerpeoplewhohave quires focusandcalminthe“heat”ofchange, rally drawntothebleedingedgesofinnovation.Itre- ity, inwhichaleaderisgalvanizedbycrisis,andnatu- least commonformoflearningagilityischangeagil- with ambiguity, andhighlysociallyattuned.Butthe world, visionary, willingtotrynewthings,comfortable tend tobehighlylearningagile-curiousaboutthe even amongworld-renownedCEOs.SuccessfulCEOs experience andrazor-sharpinstinctsisararetrait, crisis andchange.BehindCarlosGhosn’ssubstantial would emerge,definedbytheirabilitytoleadthrough the giants,itmakessenseanewschoolofleaders In theautomotiveindustry, wherestasisalmostkilled “Change Agility” — and it’s theonlycross-culturalcombinationorentity Global SearchAssessment,Korn/Ferry —Dana Landis,Ph.D., VicePresident,

GHO We’re not on the defensive. We’re opentochange,adaptation We’re not onthedefensive. We’re motivated andtotallyintegratedasnormalcitizens ing, “Let’s establish anallianceorastrategiccooperationin ing the people of thecompanyyouareacquiringfiredupand ing thepeopleof nized. So back to your question: One of thereasonswewere nized. Sobacktoyourquestion: Oneof acquisitions. Acquiringacompanyisveryhardbecausemak- and evolution that might make sense to collaborate on and we said, “You that mightmakesensetocollaborateonandwesaid,“You know what? There’s enoughonthetabletoestablishastrate- know what?There’s Can thisbusinesscombinationbeasgoodorbetterthan gic cooperation.” Now, strategic thisistheimportantpart:The cooperation wasestablishedaftertheobjectiveswereorga- can continue, but, thatsaid,adaptationshavetobemade. can continue,but, specific projects; where is the substance?”and onlythensay- specific projects;whereisthe substance?”and arethe so successfulwasthatwestarted byasking,“What a successfulmergeroracquisition? order toextractsynergiesand to eventuallyimaginemore O.K., firstthing:Ihaveapreconceivednotionagainst SN: O.K., GHO I havemydoubts.maintainthesame whyif That’s They’re emotionally connected with the technology emotionallyconnectedwiththetechnology They’re Remember: Inthisindustry, pride. peoplehavealotof Daimler’s CEO, buttherelationshipwithDaimleris it shouldmakeusquestionwhethermakessense. and thebrand.Is itpossibletointegratethispassion? an interestingcasestudy. Daimler, Inthecaseof we and let’s organizeprojects.” No. Instead, westarted position. goingtodoitthatway.pride, I’m waysparesa That business resultswhilekeepingthecompaniesauton- batteries, andsoon. project together.” ourteamslookedattheprod- Then candotheTwingo/Smartsmall-car by saying,“We that we could do specific engine exchanges. Then that wecoulddospecificengineexchanges. tion is very small. And, in fact, we’ve seensomany we’ve tion isverysmall.And,infact, try. likelihoodthattwocompanieswithdifferent The disasters inthepast10 years, somany“divorces,” that lot of energy fightingagainstanemotional,defensive energy lot of light commercialvehicle did not start by saying, “We aregoingtoestablisha did notstartbysaying,“We uct plansandsaid,“And wecanalsodoanL.C.V. Let’s talkaboutDaimler, thenewestmemberof cultures willendupinasuccessfullong-termintegra- second- orthird-classcitizens saying it’s impossible,butit’s veryhardinthisindus- strategic cooperation,sonowlet’s organizeateam omous andkeepingintacttheirownhistory the alliance.Howandwhydidyouorganizethis relationship? SN: Idon’t wanttotalkformyfriendDieterZetsche, So welinedupallthepotential — with the same mind-set of mutualrespect. with thesamemind-setof — together.” wefound Then — is very hard. I’m not is veryhard.I’m — all theprojects Q2.2012 — not —

37 38 “Hey, there’s andthat more herethanjustaspecificproject,” GHO GHO GHO You andDieterZetschearefriends.Doesthishelpmake Q2.2012 U.S., and he came to visit me in Greenville, S.C. Andyes, there andhecametovisitmeinGreenville,S.C. U.S., Are youdevelopingmorecooperative projectswithDaimler? raised the question of cooperationandcollaboration. raised thequestionof it, itwouldneverwork. it, ing point. The relationshipbeyondthathastobebasedon The ing point. as youknowexactlywhywant todoapartnershipand we candotogether, soweextendedit to Nissan,andlittleby was personalchemistry. ButIwouldsaychemistryisastart- Michelin.Wewerebothworkinginthe and Iwasheadof alliances andcombinations, somegoodandbad,tocome Carlos Ghosn (left) addressesworkersataJapaneseNissanplant. Carlos Ghosn(left) partnerships, andfor morestrategiccooperationaslong projects andprinciples.Webothhadenoughexperiencewith to Renault. Daimlersaid,“Canto Renault. weworktogetheron thenext than that.” Rightnow, therelationshipisextremelyproject together onthis. little moreprojectscame,andthenImetwithDietersaid, Smart?” They werelookingforapartner. They Wesatdownand Smart?” How didthealliancerelationshipstart? started with a framework, andthentriedtoexecuteagainst started withaframework, we start withprojects.If Wedon’t startwiththeframework. said, “O.K., let’s workonit.”said, “O.K., Wesaidtheremaybeotherthings oriented, synergies oriented, and extremely pragmatic. We oriented, synergiesandextremelypragmatic. the relationshipworkmoresmoothly? Yes,SN: isroomformore therealready areothers. There cooperationstartedwitharequestfromDaimler SN: The Freightliner,SN: Oh,yeah.Hewasheadof thetruckmaker,

GHO GHO Again, this skill used to be a nice management trait, butnow Again, thisskillusedtobeanice managementtrait, We knowthatwedon’t doitthesamewayaswedid20 years Then youalsohavetoknowhowworkwithpeoplefrom Then you’re workingwiththerightpeopleandthere’sYou you’re respect. you knowhowtoworkwithmyAmericanemployees, Chi- matic way. ment. Diversityisn’tment. onlysomethingdifficulttomanagebut background,ethnic- understandthatdiversityof They matic. it’s absolutelyarequirement. ity and point of viewcantranslateintowealthandenrich- ity andpointof working withadifferentcompany inadifferentcountry. want peoplewhowillworkcollaborativelyandinaveryprag- was newandinteresting,buttodayit’s abasicrequirement. who participateintheseprojectsareusuallyextremelyprag- ago. Backthen,wedidn’t needasmuchcross-cultural and nese employees, Europeanemployees, And that’s etc. notall: What typeofmanagerworksoutbestinapartnership different corporate cultures in the form of alliances.different corporateculturesintheformof So it’s How doyoudefinecross-culturalmanagement? environment? Canyoudisclosehowidentifythese company indifferentcountries aroundtheworld,butit’s cross-functional managementasweneedtoday. Backthen,it cross-cultural squared something that can be positive. You can’tsomething thatcanbepositive.successfulwith- out understandingwhatIcallthe“culture management.” of they mayface? people, howyoutrainandacclimatethemtothesituations Cross-culture means: if you are a Japanese company, youareaJapanese SN: Cross-culturemeans:if SN: Managinginthe21stcentury — it’s notonlyworking onyourown The Korn/Ferry Ins titute — it is different. People it isdifferent.

Bertel Schmidt (3) Is the educational system evolving so younger managers saw clearly the value that people are adding and they saw how understand the cross-cultural approach you are describing? they contributed. It’s not a situation where one group says, GHOSN: Yes, we’re going in this direction. Not all business “It’s not our company anymore.” It’s a way of finding the best schools are at the same level. Not all have embedded this into talent and making them comfortable on a global team. And, the teaching yet. But there’s no doubt that this is coming. I do by the way, all the time we are hiring top talent we also have enough speaking at business schools to know, based on the to keep reminding everyone that Nissan is a Japanese com- programs and questions they have, that we are going in this pany, it has Japanese DNA — but it’s much more open-minded direction. and global than it used to be, and it’s much more equipped to deal with problems and crises. You cannot globalize your What are the barriers to creating a global management team artificially or introduce diversity from one day to the team? next. This is a long-term effort where people can feel your GHOSN: What’s the most important challenge? People become investment and your belief. very defensive when you try to diversify. If you bring in too Another thing that’s important is stepping up to do what many foreigners, people from the country start to become a is obvious and taking full responsibility. Someone needs to little defensive. This is the most important challenge you accept the risk of becoming unpopular, and losing everything face: how can you globalize, how can you diversify, without if the solution doesn’t work. In this case, it was me as the CEO putting your organization on the defensive? It’s not obvious. — I would pay a very high price if the turnaround strategy You need to explain why, be extremely selective, be sure that didn’t work. But the truth is very few people want to sacrifice the people coming into a country are extremely top-notch their reputation and everything else for the sake of getting so other people see the value in bringing in these sources of their organization out of trouble. diversity. You send them into different parts of the organization and you give these people a kind of global track record Are you suggesting that people in positions of responsibility so that they gain credibility and so they can understand the lack courage? challenges. GHOSN: My point is that it’s difficult. Even if the solution is obvious, getting a company or organization out of a particu- Is that the approach you are taking now? larly tough circumstance doesn’t come naturally. It comes GHOSN: At Nissan, non-Japanese people hold 46 of the top 100 through a lot of perseverance and difficulty. Turnarounds are jobs. O.K., you might think they are all French — but that’s not based on execution, and execution is the hard part. And tak- the case. They are Dutch, South African, British, American — ing personal responsibility is also very difficult. You need to more than a dozen citizenships. And this, by the way, took accept the fact that you’re willing to sacrifice something— more than a decade to do. In that decade, the Japanese team everything — to change.

Briefings on Talent & Leadership Q2.2012 39 Nissan had a number of plants and a number of people revival plan, I said I’d resign if any of our top three priority working very near the site of the devastating March 2011 commitments were not met: We said by end of year we’d be earthquake in Japan. You received a lot of positive atten- profitable. By the end of three years, we’d cut the net automo- tion for the way you handled the crisis and were able to get tive debt in half. And, third, we said we’d achieve an operating the company operating again. What’s your approach to profit of at least 4.5 percent. I said that if any of these are not crisis management? met, I would leave and the operating committee would leave GHOSN: In crisis management, you have five important steps with me. I was very committed to this — I was fully engaged, that need to be done perfectly and religiously. First, there is and I fully engaged the team. This is extremely important. assessment. You need to go for assessment, diagnosis, and And the last step is, when the crisis is finished, the only you need to do it quickly and intensively. You need to know thing you can be sure of is another one will hit you. We went what’s going on. Assessment is a very important part of how from the Lehman collapse — when the so-called Great Reces- to face a crisis. When we had the earthquake crisis on March sion was supposed to be the crisis of the century — to the March 11, the same day the earthquake hit we had a team in place 11 earthquake and tsunami, which was the natural disaster of connected with all the plants and teams. We sent people and the century. Then we got flooding in Thailand, then the yen instructions to make the decisions on the ground. And we appreciation, and now we’ve got the euro crisis. It’s coming made assessment continuous, which is very important. If you from everywhere. But you know what? This is a really good don’t know what’s going on, you can’t take a bold action. opportunity, and you can identify your heroes this way.

What comes next? What do you mean by heroes? GHOSN: After you make the assessment, the second thing GHOSN: Well, crises are great, in a certain way, because you you need to do is establish an action plan and, importantly, can see who your heroes are. People who you didn’t notice you must also offer a vision for the time when the crisis is before will stand up and you will say, “Oh, my God, this guy over. You need to line up the priorities — the priorities now is more powerful than I thought.” In crises, these people will and those we need to keep — and you need to keep them reveal themselves. We have heroes who emerged after the extremely simple. Usually, it’s only one priority. After the Lehman shock, during the earthquake, in the flood— these Lehman collapse and the onset of the global financial crisis, are good opportunities. You see people standing up to chal- our priority was save cash flow. After the earthquake, it was lenges you would have never expected. Without the crises, to “push production” — we needed to produce as many cars these people were still good employees — these are not peo- as possible for customers. At the same time, there are also ple who were ever inefficient. But they didn’t necessarily secondary priorities that you can emphasize. After Lehman, stand out. They seemed normal and then, whoof, a crisis during the Great Recession, I said not to compromise our comes, they rise up, and they become leaders. We are fortu- electric car project or electric vehicle production generally. nate in some ways that we have had experiences that allowed You need to know what you must prioritize, but you also must us to identify a lot of leaders. We have a deeper talent bench. know what — at any cost — must be preserved for the long term. We could not have imagined this.

What’s the third step? So are crises not only unavoidable but important? GHOSN: Empower! In a situation of crisis, people want to GHOSN: Yes, they’re important because crises are the true centralize. Wrong. Decentralize! Empower people! Make nature of business. A crisis is an acceleration of reality. All sure the plant manager has more power than he ever has of a sudden, you have things you usually do or see coming to engage and repair, to approve expenses, to hire and fire. together very fast. You don’t need a CEO when times are good. Make sure your engineers engage. Engage and empower the You need a CEO when things become hectic, when you need gemba — which is Japanese for “the real place” or “shop floor”! to re-establish north, to re-establish coherence. You need to give the power to people on the ground for a turnaround to go very fast. The people on the ground have Is the European economic and currency situation just the the most information — you must empower them because latest crisis then? they are closest to the solutions and action. GHOSN: Frankly, I think the situation in Europe is not impos- Next, just as you empower people at the gemba level, top sible, and I don’t think it will be doomsday. There are many management needs to engage fully. In Thailand, which had a solutions for what we’re going through — all the solutions huge flood, our head of production took the plane to Thailand have a degree of difficulty, but there are solutions. immediately. We said to him, you have full power and en- In our case, we are preparing for a very volatile year. 2012 gagement, you will have everything you need, and top man- has a very high degree of uncertainty. It’s very difficult to see agement is committed and accountable. During the Nissan if Europe will be in heavy recession, mild recession or stable.

40 Q2.2012 The Korn/Ferry Institute Briefings onTalen t &Leadership Associated Press GHO GHO Armageddon scenariostoo. everyoneisslowingdown,if If Yes, theLeafisanexcellentcar. I’m impatientbutnotverypessimistic. I’m They’re stillexpensive.It’s anobviousthingthatelec- They’re you stop hiring, if you stop employment, if youstopinvest- if youstopemployment, you stophiring,if No oneinEuropebelievesgrowth ries, youmakeitdifficultforsuppliersandemploy- if rently onisunsustainable.Soyoucan’t lookatall regulation aroundglobalwarming;developmentof ment infuturetechnologies, youdecreaseinvento- if in front of uncertainty,in frontof is“hopefor ingeneral,thestrategy is facing in 2012. I don’t buy it. There’s enoughknowledge, in 2012. Idon’tThere’s buyit. will gofasterorslowerdependingoncircumstances nobody deniesthattheoilpricewillgonorth, agree thatEuropehasmademanysmartchoicesin be adifferentstory. Butpeoplereallylovetheirelectriccars. beyond ourcontrol.ButIthinkitwillgofasterbe- people whohavedrivenit. prophecy. So, Idon’t believeinArmageddonEurope the car the best, planfortheworst.”the best, Butyouwanttoavoidunrealistic youare When the growthscenario.You preparefortheworst. tric cars will become part of ourfuture.Now,tric carswillbecomepartof adoption technologies but they’re notready technologies butthey’re these trendsandsay, “Let’s donothing.” Youhaveto the carindustryinemergingmarkets. And,bytheway, today andinthefuture;globalwarming;costof the challengesthatwearefacing,carindustry know howtoputtogethersolutions. Andbytheway, taking place.Fundamentally, notverypessimistic. I’m Yes, the past. there’s wrestlingandnegotiation alotof dependence on oil. We have the technology; andwe We havethetechnology; dependence onoil. drive, or didn’t have excellent performance, O.K., thatwould drive, ordidn’t haveexcellent performance,O.K., denies that the trend of globalwarmingwearecur- denies thatthetrendof look for a solution, and be part of thesolution. look forasolution,andbepartof Outside ofsomeemergingmarketcountries,it’snot change. And we underestimate the consequence of change. Andweunderestimatetheconsequenceof cause Ithinkweunderestimatethetrendonclimate electric car. It’s thezero-emissioncar. areother There ees, thinkingbecomesaself-fulfilling thistypeof experience and history on this continent, andwecan experience andhistoryonthiscontinent, should lookatthemasanopportunity. lookat First, a secretthattheworld’scarmarketsarestillbit taking abigrisk? introducing zero-emissionelectriccars.Aren’tyou shaky. Giventhatfragility, Nissan andRenault are That’s what I’m saying! If thecarweremiserableto saying!If whatI’m SN: That’s You You shouldn’tSN: lookatelectriccarsasarisk. What isthemostelegantsolutiontoday?It’sWhat the — — the Nissan Leaf the NissanLeaf too much dependence on oil; the cost of oil too muchdependenceonoil;thecostof — is verywellacceptedbyallthe — — like fuelcells. so weareeliminating

We’re in asituationwherewearesellingeverycarmake. We’re you make,don’t knowwherethepent-updemandis. In you imaginethat?SoIprefernot totalkaboutrisk But here’s the interesting thing: When you’re sellingeverycar you’re But here’sWhen theinterestingthing: receiving witharmsopen. are associating our name with a technology thatpeopleare are associatingournamewitha technology people haveneverdrivenoneand theyalreadywantone!Can So that’s anotherbigreasonIprefertotalkaboutopportunity: car fortheirnextcar, theywouldwant anelectriccar. These surveys that we’ve doneandthatareconsistentwiththose surveys thatwe’ve say if theyhavechoicebetweengas,say if diesel,hybridorelectric others have done, we keep seeing this: 10 percent of people others havedone,wekeepseeingthis:10 percentof opportunity forRenaultandNissan! It’s abigbenefit!We — Q2.2012 it’s an

41 42 Q2.2012 I on to Boards Advice Instead, the goal should be to prudently manage risk to limit the likelihood of havingdamage Instead, thegoalshouldbetoprudentlymanagerisklimitlikelihoodof recent years, he said, is greater sophistication in the ability to graph quantitative risk, andwhile recent years, hesaid, isgreatersophisticationintheabilitytographquantitative risk, KevinBlakelyprovidesacontextualframeworkaswellpractical advicefor Huntington Bank, manage theriskyoudecidetotakeon.Bankinghasbeenaround, inoneformoranother, for must understand that risk management is not generic. Everycompany hasitsownrequirements.must understandthatriskmanagementisnotgeneric. alone isakinto“driving forwardwhilelooking intherear-viewmirror. Frankly, thereisnosub- boards thataregrapplingwiththeirrolevis-à-visriskmanagement. this is crucial to determining an accurate forecast for risk management, it is not in itself suffi- itisnotinitself this iscrucialtodeterminingan accurateforecastforriskmanagement, years,thousands of andwelearnfromdownturnswhat we candobetter.” theadvancesin Oneof desirable nor even possible. Risk is part of allbusiness,desirable norevenpossible.Riskispartof andwithoutittherearenorewards. cient. Inmostcases,cient. hesaid, sinceweusepastdatatoforecastthefuture,relyingonnumbers stitute forthequalitativemeasure observe the boundary line that separates governance turf frommanagement turf.Moreover,observe theboundarylinethatseparatesgovernanceturf they occur. theyshouldcarefully Andasboardsimplementthesystems andprocessestomanagerisk, a toll in terms of missedopportunityandvaluecreation. a tollintermsof n the aftermath of the financial collapse of 2008, thefinancialcollapseof n theaftermathof anincreasedemphasisonriskmanagement tolerance orevennotolerance.Butanoverlycautiousapproachtoriskmanagementcantake has meant, insomecases,has meant, low thatthependulummayhaveswungtoofarindirectionof “Don’t shy away from risk,” Blakely advised. “Shy away from inappropriate risk, andactively Blakelyadvised.“Shyawayfrominappropriate risk, “Don’t shyawayfromrisk,” As the former head of the Risk Management Association and current chief risk officer of riskofficer theRiskManagementAssociationandcurrent chief As theformerheadof There has been too much emphasis in the literature on eliminating all risk, whichisneither hasbeentoomuchemphasisintheliteratureoneliminatingallrisk, There S S E E By DennisCare&JudRoland E E k k — for judgment, experienceandastrong culture.”for judgment, R R E E T T u u R R n n The Korn/Ferry Ins titute s s

Randall Enos (all) Briefings on Talent & Leadership Q2.2012 43 The board’s role agement throughout his career, both from the point of view of the executive team and as a director. ompany boards are comprised of very smart people,” In advising directors, Zimmerman said, “The subject of ‘‘c said Stewart Goldman, who heads Korn/Ferry’s North risk management can drive you crazy” because directors can- American Risk Management Practice, “but their time not and should not be involved at all levels. “The system I’ve is not best used deciphering the nuances of financial risk constructed and relied on from the perspective of the board modeling and analysis. Directors need concise, consolidated is that there are four areas I need to worry about: regulatory, reporting from executive management that helps them to controls, financial and business strategy.” identify and focus on the most critical risks to an organiza- Viewing risk as comprising those four areas, Zimmerman tion in order to be effective.” But, Goldman noted, boards play said, can help boards get their arms around risk management, a more or less active role managing risk depending on their and when they do, they may come to the realization, as he has, industry, particularly when grouped by financial-related com- that boards as a whole belong squarely in the business strat- panies versus nonfinancial-related companies. egy quadrant. “If you look at the other three areas — regula- “In financial services and other regulated industries, the tory, controls, and financial— those are managed in deep board will be active in driving the agenda on risk appetite, dives by committees, committee chairs and outside auditors,” but will not play as active a role in day-to-day risk manage- he said. ment,” explains Goldman. That’s because those industries Where the board — the entire board — needs to spend have a more mature risk management framework within more time is on the business strategy; that’s where the board their executive management teams. But the board is still on adds value. For most companies, Zimmerman believes, taking the hook as far as liability and needs to be aware of the risks calculated risks that will pay off when it comes to business being taken. The board will, of course, be generally knowl- strategy is difficult because “it’s hard to move off of where edgeable about the business, but will possess the you’ve been,” particularly, perhaps, with large companies that most significant risk expertise at the commit- have been highly successful with one strategy over a long pe- tee level, particularly on the audit, compli- riod of time. ance and compensation committees. While it is impractical, indeed impossible and even inappropriate,

But there are many things to consider when deciding whether to shift a business strategy and assessing and rank- for directors to be involved in the minutiae of risk manage- ing the risks inherent in each approach. The road not taken, ment, they can ask questions to ensure that they create a for example, may result in a loss of opportunity as well as an dashboard on which all major risks can be monitored and opening for a competitor. When Xerox bought Affiliated Com managed. Such questions include: Who is responsible for risk puter Services Inc. in 2010 to create one of the largest busi- management? How are we conveying that message and en- ness process and document management platforms, it may suring that people throughout the organization understand not have been an ideal time from the perspective of Xerox it? Are we providing sufficient information on corporate risk stock (it was at a low point), but it was the only time, accord- tolerance, boundaries and the repercussions for overstepping ing to Zimmerman. “The mistake would have been to let it them? Do we have confidence in the information we get from go, let someone else get in there, and end up with nothing,” management? Is it too much? Too little? Is it timely? Are the he said. “Not taking the risk would have been the wrong deci- incentives we provide aligned with and reinforcing our sion; it would have been riskier.” agreed-upon risk appetite and philosophy? Maintaining board involvement in business strategy, including access to the management team to get the best in- Covering the bases formation, and ensuring the company is well positioned to awrence Zimmerman, who serves on the Stanley Black & make the right bets are crucial. “At Xerox,” Zimmerman said, l Decker and Brunswick boards, and also on the Delphi “we worked closely with the business units on business strat- Automotive board, has focused a great deal on risk man- egy on a regular basis. When working on the strategic plan,

44 Q2.2012 The Korn/Ferry Institute we would ask those in the business to list the five most impor- Therefore, a broad, realistic definition of the risks to be man- tant bets they would be making or not making, and then we aged includes more than the most predictable catastrophic would fold them in.” The boards on which Zimmerman serves situations and financial risk. The board’s primary responsi- — as with most effective boards now — review strategy at bility in risk management is to ensure that the business is board meetings but also devote a couple of days off site once run by people with high ethical standards and unassailable or twice a year to assess strategy with senior management to integrity. discover what is working and where shifts need to be made, Very few organizations look at CEO succession as part depending on what is changing in the external environment. of a risk management strategy, but it is crucial and should in- An understanding of the strategy provides an essential volve the entire board, ensuring that potential candidates are foundation for board discussions and decisions related to asked the right questions and that they are assessed on their business strategy risk management and all the board’s other potential not only to help the company but also to hurt it. responsibilities as well. With the strategy humming in the “The tone is set at the top,” Blakely asserted. “It is criti- background, any presentations, proposals and decisions can cally important for the board and the CEO to set the right tone be assessed according to how they align with that strategy. and broad parameters regarding risk management. Other- Lack of alignment may send up a red flag indicating that wise, it’s like going sailing without a rudder; you don’t know either a particular move is not the right one for the company where you’ll end up and more than likely you won’t like the or perhaps that the strategy should be revisited and revised. result. The board sets the risk appetite and the processes that One risk management fundamental that Blakely recom- will be established to monitor it. Then the CEO and manage- mends boards keep in mind when making decisions regard- ment execute against that. Everything has to be measurable, ing the business strategy is: If you don’t understand it, don’t so it’s apparent that you are in conformance do it. “If it can’t be examined and justified in a logical way, it’s with the established risk tolerance, and not something you want to engage in.” It’s a lesson from the there has to be a mechanism for financial meltdown of 2008. No business, product or initia- reporting back to the board.” tive should be so complex, arcane or far out that the CEO and Ensuring adherence to the board cannot understand why the company is so engaged, boundaries and reiterating what risks are involved and whether they can be properly the importance of not over- managed. stepping them sometimes requires the CEO and the

The crucial human factor board to regularly underscore, in unmistakable terms, what he biggest risk to manage — one often overlooked, even is acceptable behavior and what is not. At Huntington Bank, T in the current environment where risk is continually Blakely said, the CEO would occasionally publicly call out the discussed and monitored by boards — is the risk inher- actions of various people, not always for what he considered ent in people and leadership. Because directors must rely on positive behavior, to illustrate a point. “It was his way of em- management for much of the information they need, that fil- phasizing what his expectations were, as well as those of the ter greatly increases the chance that something may go awry. board, for risk management and individual accountability, “Management is in control of much of the information that and the impact it had on the corporation was amazing,” he the board receives,” Zimmerman explained, “and you have said. “He not only continued to set the right tone, he also to have absolute trust in those running the company; there established a standard of behavior and expectations so that is plenty of opportunity to cover things up if people are so everyone was rowing in the right direction.” inclined. The CEO and the CFO have to be first-rate. When In their day-to-day routine, Blakely said, people are so boards get into trouble, it is usually a people-related issue at busy that they may not hear or understand the overarching the top.” messages concerning the organizational tolerance of risk. People are the single biggest reason that things go Regardless of level or position, everyone should be able to wrong in any business, whether it’s an unethical CEO, con- articulate the organization’s risk appetite in a similar way, tractors cutting corners or a rogue trader out to make a killing. simply and succinctly.

Briefings on Talent & Leadership Q2.2012 45 46 Q2.2012 The Korn/Ferry Institute Embedding a culture of risk management Maintaining the right level of board involvement

mong the lessons learned in the last several years is the ecause they are part-timers at companies and because a growing realization that risk management is everyone’s B they are responsible for governance, not management, business, not limited to those in control or risk manage- directors have to ensure that they maintain the right ment functions. “An understanding of risk-reward tradeoffs level of involvement when it comes to risk management. needs to be driven down into the organization, and every- Boards help to establish the framework for managing body needs to be aware of the corporate appetite,” Goldman risk. By consulting with those who lead the business, they said. “What are the tolerances we are willing to accept?” And, can determine the most likely risks and create a scorecard he added, there has to be an internal framework so that the to keep an eye on them and sound the alarm if necessary. big picture of risk is readily viewable with a consolidation of It’s generally considered undesirable for directors to be positions that are being taken. too intimately involved with management. At some compa- But information should flow in both directions, and nies, however, key committees, like audit and compensation, feedback that makes its way from the businesses to the CEO have begun to work more closely with relevant executive and the board is also crucial. A system designed to set off team members to manage their sizable workload — the CFO needed alarms — signaling that the organization is approach- and chief human resources officer, for example— often ing limits of risk tolerance — is essential to avoiding major bypassing the CEO, while still keeping him or her in the loop. problems. This sort of partnership, where directors are closer to the The growing organizationwide approach to communi- business, may have other benefits as well, including the abil- cating about and managing risk — as opposed to the more ity of boards to spot early warning signs of trouble, the result siloed functional approach, has led to a different view of the of a thoughtful risk management process, enabling them to required skill set of the risk manager, Goldman said. “The intervene before a full-blown crisis develops. risk manager needs to be more of a commercial thinker than Building a culture in which all understand their role in in the past,” he said. “He or she has to be able to speak the lan- monitoring and identifying risk is part of a complex process guage that those who run key businesses will understand to where the board and the CEO set the tone and the agenda, but effectively create a risk culture.” It’s an area in which Korn/ everyone is a sentry in the corporate army. Assuming those Ferry has maintained a dedicated focus since the accounting in the organization have gotten the message and the CEO scandals of 2001, he said, when the firm worked with the and board establish the right sort of environment, people government to assemble the Public Companies Accounting will be motivated to say something when they see something, Oversight Board. “We are seeing greatly increased demand although that is sometimes easier said than done. It takes from clients for this new breed of risk manager, which we courage for a risk manager, when assessing the risk-reward expect will continue.” equation against a particular transaction to stand up and say, In an organization with a risk-aware culture, risk belongs “We can’t do this,” especially to the individual who pays his to everyone and cannot be shirked by anyone. “Everyone owns or her salary. But a carefully devised culture, supported by risk; that’s our mantra at Huntington,” Blakely said. “It doesn’t proper incentives, can go a long way toward encouraging matter if you approve or source deals — you will be held ac- people to do the right thing. countable. Anywhere you are able to avoid responsibility for Boards should recognize risk for what it is and will con- risk as ‘not my job,’ you are destined to have significant prob- tinue to be: a fact of corporate life. When risk is consciously lems.” In a financial services company, Blakely identified three accepted, harnessed and actively managed on an enterprise lines of defense for risk management, which ensure broad level, and no one is permitted to abdicate responsibility for ownership and little opportunity for anything to fall through it, however, it becomes a critical competitive advantage. This the cracks: disciplined, systematic approach to risk management should • The risk taker — on the front line with the client enable boards to evaluate the risks inherent in all aspects • The primary oversight function — risk management of their work, determine what risks are worth taking and • Additional backup functions — internal audit and calculate their return on that risk. credit review It’s a team approach, not unlike a hockey team’s approach Dennis Carey is vice chairman of Korn/Ferry International and special- to defense, Blakely said. izes in the recruitment of CEOs and corporate directors. He is lead author “It’s the goalie’s job to prevent goals, but if defense be- of “CEO Succession: A Window on How Boards Can Get It Right When longs only to the goalie, you will lose the game,” he said. Choosing a New Chief Executive” (Oxford University Press). Judy Roland “Everyone has to be a risk manager. Revenue producers have is president of Roland Communications in New York, and works with to see it as part of their responsibility.” clients on communication strategy and planning.

Briefings on Talent & Leadership Q2.2012 47

Giving Back investing in brains

Pat McGovern’s

Philanthropic Quest

By glenn Rifkin

he transformation of the Kendall Square technology

hub in Cambridge, Mass., is startling. Where the headquarters of the Polaroid Corporation, now defunct, once sat alone in its self-proclaimed Tech Square, Kendall Square has morphed into a crossroads destination for some of the world’s best and brightest thinkers. In a relatively short time, the once moribund neighborhood on the border of the M.I.T. campus, Thas become a world center for biotechnology, a draw for most of the world’s largest pharmaceutical companies, and a mecca for all manner of scientific and technological research organizations, from the Broad Institute to Biogen. Photograph of Pat McGovern courtesy of IDG. Photograph brain cells: Yingxi Lin Photograph of Pat

Brain cells growing in a culture dish 50 technology McGovern believes its widespread dissemination and use willbring people together dissemination its widespread McGovern Institute,financedbya$350milliongift first time.Intruth,McGoverncaresdeeplyaboutpeo- This isastate-of-the-art LEEDS-certifiedgreenedifice This manner can seem aloof tothosemeetinghimforthe manner canseemaloof from PatrickJ. andLoreMcGovern,hasquicklybecome - heisabillionaireandtechnology-indus face. Though important top-shelf businesscelebrity,important top-shelf hewilltalk world. Prize winnerH.RobertHorvitzandtheNational Medal at the intersection of VassarandMainStreets,at theintersectionof andthe about himself onlyreluctantly.about himself with the man himself is enlightening. The institute, The isenlightening. with themanhimself nation andusewillbringpeopletogethermoreeffec- accomplished neuroscientists, includingtheNobel ple andashiscareerwindsdown,hebelievesmore been atouchy-feelytype,andhissomewhatrobotic bespeaking hisintenselyprivatenature.Hehasnever travels withoutanentourageand,unlikemanyaself- try pioneer, hehasmaintainedaself-effacing,humble tively than politics or economics. Though hehasan tively thanpoliticsoreconomics. Though anditswidespreaddissemi- than everthattechnology list of thewealthiestAmericans),this the 2011 Forbeslistof houses theMcGovernInstituteforBrainResearch. eye-catching six-year-oldglass-and- hood isM.I.T.’s demeanor throughouthisnearly50-yearcareer. He like the building, is state-of-the art. A core team of Acoreteamof like thebuilding,isstate-of-theart. global media,researchandventurecapitalconglom chairman of International Data Group, a $3.2 billion InternationalDataGroup,chairman of a$3.2 construction worker’ssoncareslittleforthetrappings erate, isstillanimposingfigure,straight-backedand estimated net worth of over $3.3 billion(No. over$3.3 estimated networthof 103 on sturdy, withpenetratingblueeyesandakind,open steel BrainandCognitiveSciencesBuilding,which sines fortaxis. one of thetopneuroscienceresearchcentersin one of of wealth.Hestillfliescoachandeschewsblacklimou- of At 74,the6-foot-4McGovern,founderand Among themorerecentadditionstoneighbor- His greeting,asusual,iswarmbutrestrained, Getting a tour of thisstunningresearchfacility Getting atourof and of SciencerecipientAnnGraybiel, of into a hotbed of researchanda into ahotbedof post-docs andgraduatestudents. has turned the decade-old M.I.B.R. has turnedthedecade-oldM.I.B.R. sought-after destinationforyoung The M.I.B.R. ishighlyunusual M.I.B.R. The Brain cellsgrowinginaculturedish in thattheMcGoverns insisted thatitbemore than anacademicde-

M.I.T. biology professor Phillip Sharp, professorPhillip biology aNobel laureate, M.I.T. In2000,McGoverns sought. theuniversity’spresident, University of CaliforniaatBerkeley,University of Stanford,Caltech Nobel laureatesintheneuroandbiologicalsciences research, from understanding the basis of learning research, fromunderstandingthebasisof researchers wouldhavetobecomefacultymembers research. They established an advisory board of five established anadvisoryboardof research. They Parkinson’s andAlzheimer’s. More esotericadvances, weren’t happeningbefore. It’s extraordinarytoseethis ing whattheyaredoingatthelabbenchintosome- in that department. in thatdepartment. was namedfoundingdirector. Mostpeopleassumed one announcedthe$350milliongift, Vest, Charles and autism.Simultaneously, workisbeingdonetofind and memorytoasearchfordeeperunderstandingof wanted thebestcenter,” hesaid. we couldunderstandthebrain,more alumnus. But he insists that wasn’t the case. “We just alumnus. Butheinsiststhatwasn’t thecase.“We theseproposalsfocusedon and Columbia.Butallof the thesizeof and begantoformulateaplan.Inlightof brain disorderslikeschizophrenia,bipolardisorder proposals from a range of universities,proposals fromarangeof includingthe theMcGovernshadnotroubleattracting potential gift, partment withinamajoruniversity, butinsteadamul- the financialandemotionalsupportthatgivesthem thing thatisgoingtohelpsociety,” saidRobertDesim- tions with light. tions withlight. the causeandpossiblecuresforbraindiseaseslike the donation came because McGovern is an M.I.T. the donationcamebecauseMcGovernisanM.I.T. receivedambitious They top-level academicinterest. to catalyze a whole new level of sophisticatedbrain to catalyzeawholenewlevelof to moveahead.Technology hadadvancedfarenough that somedaywewantedtocontributeidea.” tidisciplinary meltingpotwhereresearchersinarange developing newresearchprograms, programsthat like EdBoyden’s optogenetics, workinthefieldof are come togethersoquickly. It’s anincrediblypowerful confidence togointotheseareasandtakerisksin creating a single academic department, whereall creating asingleacademicdepartment, showing promisingresultsforcontrollingbrainfunc- solve humanproblems,”McGovernsaid.“Weknew one, the M.I.B.R.’s current director. “They aregetting currentdirector. “They one, theM.I.B.R.’s of the largest in the history of higher education. The highereducation.The thelargestinhistoryof of of fields couldcollaborateonleading-edgeideas.of “People hereareexcitedbecausetheytranslat- “Lore andItalkedalotabouttheideathatmore It was M.I.T. thatofferedtheenvironment It wasM.I.T. Here, the work spans a wide range of neuroscience Here, theworkspansawiderangeof By 1996, theMcGovernsfelttimewasright The Korn/Ferry Ins titute more effectively

Michael Wells, Guoping Feng than politics oreconomics. technology McGovern believes its widespread dissemination and use willbring people together dissemination its widespread and more effectively

Briefings onTalen t &Leadership Photograph of Pat McGovern: Jason Grow It may be because the building has his name on it, but, but, It maybebecausethebuildinghashisnameonit, research enterprise coming together almost overnight, research enterprisecomingtogetheralmostovernight, more likely, thesebrilliant researchersareasmoved aweandadmirationthathisemployeesdo.mixture of in scientifictime.” write a check. He is hands-on, present, attendingthree- Heishands-on,present, write acheck. as McGovern’s employeesbyhisdeep thousandsof presence has the same impact at M.I.T. asitdoeswhen presence hasthesameimpactatM.I.T. personal interestinwhattheyare doing.Hedidn’t just he arrivesatIDG’s offices. Inbothlocales, heisarock day seminarsonesotericsubjects, speakingtoscientists star and,here,thescientistsobservehimwithsame For amanwhomaintainslowprofile,McGovern’s than politics oreconomics. M.I.B.R. is just the first piece of whatheenvisionsas isjustthefirstpieceof M.I.B.R. ments. Evertheentrepreneur, heuseshissuccessin for researcherswithnonconformingideaswithinthe institute. AndMcGovernhasadeepinterestinpeople. China, Germany and Singapore. The firstsuchcenter,China, GermanyandSingapore. The at TsinghuaUniversityinBeijing, whichMcGovern theirfortunetosupportneuro- billionof allocated $1.2 McGovernshave globalbraincenters.a familyof The venture capitaltoseedsmall“skunk works” projects significantdevelop- at lengthandstayingabreastof calls “the M.I.T. of China,”is alreadysetinplacewith of calls “the M.I.T. science, andsimilarresearchinstituteswillbebuiltin Ever thevisionary, McGovern pointedoutthatthe

51 to becontrolledbylight. that allowsbrainactivity called ‘optogenetics’ pioneered atechnology McGovern Institutehave Researchers atthe 52 B Working ForPat Q2.2012 An Wang, luminarieswhowerechanging Despite hisproximity, McGovernwas the cornerfromComputerworld then wereinFramingham, Mass.,around Pat, abigbearofmanwith awarmdis- tion thatyoubegantohearaboutUncle up publicationsineverycountrythat tan phonebook,andtheappleofeye the technologylandscapeandgrabbing tional DataGroup’sempire,Computer- ular andinfluentialtechnologytradepubli- his timeflyingaroundtheworld,setting rarely inourbuilding.Hespentmuchof run hiscompany. Corporateheadquarters position andunusualideasabouthowto wasn’t longafterjoininganIDGpublica- mainstream businesspublications. had nobackgroundincomputers,Iwas world wasacashmachineinthosedays, each weeklyissueasthicktheManhat- dazzled tosuddenlybecoveringthelikes Having cation inaburgeoningindustry. increasing realestateonthepagesof of IDG’sfounder, Patrick McGovern.It of SteveJobs,BillGates,Ken Olsenand As thecrownjewelinInterna- G ack intheearly1980s,Iwentto work asawriterforComputer- world, atthetimemostpop- related magazineslikeComputerworld , GamePro, also parent of the global technology research giant theglobaltechnology also parentof be nocentralgovernance;theywillactasbrothersand the drawingboard.“Eventually, we’llhavefiveorsix InstituteinMunichon the secondatMaxPlanck Building anEmpire centers around the world,” he explained. “There will centers aroundtheworld,”heexplained.“There sisters andcollaboratehelpeachother.” Network World, iven hisaccomplishments, PatMcGov- pany of IDGCommunications,pany of thepub- lisher of hundreds of leadingtechnology- hundredsof lisher of landscape ispuzzling. IDG, parentcom - ern’s relativeobscurityinthehigh-tech ’s offices. Infoworld andMacworld,

first foreignentrepreneurtosuccessfully thousands ofemployeesandshakehands, true aroundChristmas,whenMcGovern tion wouldblankettheoffice.TheBigGuy than $25,000ayear, thecheckwasa graphic memory, McGovernnotonly reap hugedividendsoverthenext30years. nist China,wherein1980hebecamethe would havehim.TheseincludedCommu- with hefty bonuschecksstuffedinside. with make personalsmalltalk,thankthemfor would personallyvisiteveryoneofIDG’s was here.Stayalert.Thisespecially really mattered.Ifyouhadeverworked make youfeelthatyourcontribution project youwereoverseeingandhewould mention somearticleyouhadwrittenor remembered yournamebuthewould most whoworkedthere.Withhisphoto- making thatleftanindeliblemarkon welcome gift. Butitwasthatpersonal a jobwelldoneandhandoutholidaycards ask aboutit,offercongratulationsand start ajointventure,aneffortthatwould quickly andasenseofnervousanticipa- elsewhere, youknewthatchiefexecutives connection thatMcGoverninsistedon When hedidshowup,wordspread For thoseofusmakinglittle more CIO, PCWorld,

IDG’s decen- growth.Hebecame afanaticaldevoteeof IDC, hasbeenamajorcatalystintheinformationtech- media giant. media giant. focused onaworldview. hewouldreturnfrom When industry-leading titlesintomorethan90countries a long trip and find piles of paperonhisdeskand a longtripandfindpilesof and built his privately held company into a $3.2 billion and builthisprivatelyheldcompanyintoa$3.2 industryfornearlyfivedecades.nology McGovern,a peripatetic worldtraveler, hasinjected hundredsof tralization, of smallbusinessunitsrun bytalented tralization, of that atop-downmanagementstructure wouldstunt cheered on by a very hands-off boss.cheered onbyaveryhands-off countless projectsawaitinghissignature,herealized entrepreneurs whowouldhave theresourcestosucceed, From thecompany’searliestdays, McGovern

trips fortwotoCaribbeanislands,ski the year. Employeesandtheirspouses, the wholethingin1964. the stamponanotherkick-assyearin Lore Harp,herselfasuccessfulentrepre- bearing cashbonusesweremythological were treatedtoaremarkableevening after thishappymoment,thecompany’s year-end frenzymorethanPat McGovern, resorts orotherluxurydestinations. prizes thatconsistedofall-expensespaid which hisempirehadgrownmoremas- remember beingastonishedathisenergy reserved andunassuming,wouldlet neur. At6-foot-4and250pounds,built and thesensethatforhimthisnightput sive, moreinfluentialandglobal, downtown Bostonhotel,toppedoff creatures, notunlikeunicorns.Andsoon decked outintheirbestpartyclothes, lavish Christmasparty, heldinafancy just ashe’denvisionedwhenhestarted disco songended,withhisstrikingwife, loose anddanceasifnoonewaswatch- like anNFLlinebacker, McGovern,usually ing, partyasiftherewasnotomorrow. I of food,drink,dancing,videosanddoor out onthedanceflooruntilverylast No onedancedandworkeduptoa The Korn/Ferry Ins titute —Glenn Rifkin

Sputnik Animation Briefings onTalen t &Leadership Yingxi Lin 500 timesreturn,itbuildsup,” hesaid. 1980 and,againstallconventionalwisdom,fostered year, everyyear, McGovernmadepersonalconnec- Boston, Vietnam andSouthKorea.Frommodestroots,Boston, management; amajorityisinChina. media arm. “We neverexpectedtheinvestmentstobe media arm.“We made $85millioninprofitoverthenext25years.” its nowcomefrominvestments ratherthanits in 2001 for$120 million,whichisastellarreturn.To- was justaprivateroomattheBeijingHotel,and venture agreementtostartanews ness with Commies? This isoutrageous. Wewould ness withCommies?This areyoudoingbusi- and myboardwasfurious:`Why who venturefirmbe- promised massivechanges. The Chinese leaderslikeDengXiaopingandJiangZemin with athrivingstart-upenvironment. venture capital operation in China, with $4.4 billion venture capitaloperationinChina,with$4.4 in1992,ledtothe vast countryand,moreimportant, puter ministry, pledged$250,000 andwroteajoint The Journal peared intheNorthThe Americaneditionof Computerworld. before thatnationembracedamarketeconomy. Ina personal connectionsthatledtothefirstjointventure pany, anditbecamethebiggest instantmessaging put $1millionintoTencent thecom- for20 percentof the company now has more than $4.9 billionunder the companynowhasmorethan$4.9 the door,” he recalled. “The next day,the door,” thestoryap- herecalled.“The tions withinagovernmentthatwasjuststartingto have deniedyouapprovaltodothis!’ has grownintoa$200 millionmediaempireinthat day, IDG’s 20 percentwouldbeworth$9billion. under management. ByvisitingChinafourtimesa under management. gan investinginChinesestart-upslikeBaiduandTen- company inChina,”McGovernsaid.IDGsolditsshares China.“We cent thathavebecomeInternetgiantsof crazy, there’s nomarketthere,”McGovern believedin creation of IDG Venture Capital,todaythebiggest IDG creation of embrace the idea of becominganinnovationsociety embrace theideaof so successful,butwhenyouare getting400timesand typedupunder slipped ashortpressreleasethatI’d so IwenttothelocalWallStreet Journaloffice,which single day, China’s McGovernmettheheadof com- similar venturefundsinSanFrancisco, London,India, $250,000 investment smiles whenheadds, “That of any kindforanAmericancompanyinChina,well of “I thoughtsomeonemightbeinterestedinthis According to McGovern, 70 percent of IDG’sAccording toMcGovern,70percent of prof- While competitors laughed and said, “You’re competitorslaughedandsaid,“You’re While Indeed, ChinaComputerworldwastheseedthat The ChineseventureexperimentledIDGtoopen The He madeafatefulvisittoCommunistChinain paper calledChina ” McGovern

Appleseed on a global basis for the importance of I.T.,” I.T.,” Appleseed onaglobalbasisfortheimportanceof Apple II or I.B.M.’s corporate Apple IIorI.B.M.’s networks within large McGovern asapivotalfigureintheriseandpromi- Rayport said.“Hesowedtheseedsforaprofessional management, marketingandcommunicationsabout management, information technology.” ing technology research firm. “We reallywouldn’t research firm. technology ing is doing. He could no sooner retire and play golf than is doing.Hecouldnosoonerretire andplaygolf and, increasingly, around the world. economyintheUnitedStates thetechnology nence of and formerHarvardBusinessSchoolprofessor, has venture capital business is just another expression of venture capitalbusinessisjust anotherexpressionof and completelypassionateabout whathedoes. The been adirectoronIDG’s boardforadecade.Hesees ported, advertised,analyzedandpub- been the tech industry’s megaphone foralltheseyears.” needs thatmegaphoneandhe’s industry panies.Every the publishingindustrythatsup- history of thetechnol- history of have been able to understand the architecture of the have beenabletounderstandthearchitectureof damental part of that damental partof he’s Rayport said.“Heisabsolutely turnedonbyit,” last 40years, he’s afun- licized the thatindustry,”growth of community togetreallysmartwithrespectthe corporations without Pat McGovern,becauseIDGwas chairman of ForresterResearch,alead- chairman of cess isbuiltuponanunrelentingpassionforwhathe educating the world about allthoseproductsandcom- world the educating story inthathecreated said GeorgeColony, founderand stop breathing.“He’s whathe’s notjustproudof done, ogy industry overthe ogy “You could argue that Pat was a kind of Johnny Johnny couldarguethatPatwasakindof “You “If you lookatthe “If and playgolfthanstopbreathing. he isdoing.Hecouldnosoonerretire upon anunrelentingpassionforwhat McGovern’s underlyingsuccessisbuilt As Rayportsuggests, McGovern’s underlyingsuc- Jeffrey Rayport, a technology industryconsultant atechnology Jeffrey Rayport, Brain cellsgrowing in aculturedish 53 “He’s a 54

Cerebellum tissue, light micrograph F dreamer Louis Rader, McGovern Univac, executiveof thechief Westinghouse ScienceFairandwonanaward.Amem- With abushelofotherscholarshipoffers,McGovern He hadeditedhishighschoolnewspaperandbecame mies. Forhim,whatIDGreallystandsforisactuallya from theseexoticforeignlocalessparkedMcGovern’s ics andcomputerscaughtmyattention,”hesaid. ing. LorettebecameamathematicianattheUniversity in CorporateAmerica.Duringan appointmentwith had in settingupandrunningsmallbusinesses. They noble socialgoal.” was awedbytheprospectofattendingM.I.T. an editor at The Tech, the M.I.T. paper. Hehadalso Tech, theM.I.T. an editoratThe also harboredaninterestinthemediaandbusiness. bases inBermuda,OkinawaandIceland.Postcards ber oftheM.I.T.alumniassociationgotintouchwith the ENIACcomputer. “Herenthusiasmformathemat- to build a product, sellstockandliquidateattheend to buildaproduct, taken partinaJuniorAchievementprogramhigh his paperroute,builtarudimentarycomputerthat him andsuggestedhecometoCambridgeforcollege. dating butinfluentialforce.“ShewasanAmazonwho lifelong passionfortravel.Atanall-boysCatholichigh Fueling theDream could beatmeupatamoment’s notice,”hesaidlaugh- create jobsandmoresuccessfulmarketecono- could playtic-tack-toe.Heenteredthedevicein eled theworldtoworkonmassiveprojectslikenaval school inPhiladelphia,McGovern,usingmoneyfrom shared anopinionthathewasseeing toomanyprod- school inwhichlocalbusinessmencoachedstudents of Pennsylvania and one of thefirstprogrammerson Pennsylvaniaandoneof of of usefulinformationaboutcomputersandtheiruse of hiscompanyallthreeyears.of eachschoolyear.of McGovernwaselectedpresident It was1964,andwhathediscoveredadearth Their fatherwasaconstructionworkerwhotrav- Science was just one of McGovern’sScience wasjustoneof passions. He His sisterLorette,fiveyearsolder, wasanintimi- deep fascinationwithscienceandtechnology. educated, betterequippedtocreatewealth, ogy that willmakepeoplesmarter,ogy better rom his childhood in Philadelphia, Mc- rom hischildhoodinPhiladelphia, Govern hadaninsatiablecuriositythat stoked avoraciousreadinghabitand was: howdoyoudemocra- tize sophisticatedtechnol- his originalvision,which

— andhe thinks “What would you charge for this?” wouldyouchargeforthis?” “What McGovern offeredalowerprice,Radercuthimoff: “No, Watson Sr., the legendary founder of I.B.M. Watson Watson Sr., I.B.M. thelegendaryfounderof I.B.M.’s manager in Reykjavik. Henotonlyknewthe managerinReykjavik. I.B.M.’s firm, thoughtupthenameInternationalDataCorpora- years later, againrespondingtoaperceivedneedinthe young McGovern.Hespokeaboutvaluingemployees He sketchedoutabusinessplanforcomputerresearch Data Group. IDC,theresearcharm,retainedoriginal from his chair. “That’s justwhatweneed,”hesaid. from hischair. “That’s fellow’s name,butheknewwhathiswife’s name was face brokeintoasmileandhebegantotalkabout industry bibleandacashcow. Spreadingitsarmstoa industry, McGovernbegantopublishComputerworld, widening audience,thecompanybecameInternational were using or how they were using it. McGovernvol- were usingorhowtheyit. which Watson and I.B.M. werewidelyknownincor- which WatsonandI.B.M. a cathartic conversation he had had with Thomas a catharticconversationhehadwithThomas a weeklynewspaper, andinshortorder, itbecamean Govern wasexcited.“Ilikethatbusinessmodel,”he aprofessional.” thinkyou’re and they’ll no.You don’t understand.No onewilltrustinforma- and he knows the name of amanager inIcelandand heknowsthenameof and a companywith300,000 peoplearoundtheworld and thathehadthreechildren.“Here’s aguyrunning and givinggenerousbenefitssalaries, atenet for porate America. When McGovernmentionedthathe porate America.When tion andthensoldhiscarfor$5,000inordertostarta highertheprice,moredemand.” “The thought. Charge$80,000they thinkit’suseit. qualityandthey’ll tion thatissocheap. Youhavetochargealotmoreso the lack of goodcomputercensusinformation.Nothe lackof one had come to speak at M.I.T., and as editor of thestu- andaseditorof had cometospeakatM.I.T., had any accurate data on what technology companies had anyaccuratedataonwhattechnology his wife and children,” McGovern thought. “Hereally his wifeandchildren,”McGovern thought. had recentlyreturnedfromatriptoIceland, Watson’s dent newspaper, McGovernscoredan interview. Wat- database of suchinformation,andRaderfairlyleaped database of ucts that had no proven need in the marketplace. “You’re ucts thathadnoprovenneedinthemarketplace.“You’re unteered tosendoutsomequestionnairesandcreatea company name. company. Heboaststhathehasneverhadtobeputan- exactly right,” Raderreplied.Hewentonarantabout exactly right,” son saidtwothingsthathadadeepimpactonthe other dollar of hisowncapitalintothecompany.other dollarof Three of $40,000. Rader replied, “That’s unacceptable.” $40,000.of When Raderreplied,“That’s In buildinghiscompany, McGovernremembered Calculating quickly, McGovernsuggestedaprice On the train back to Boston from New York, Mc- On thetrainbacktoBostonfromNew York, very big.”very The Korn/Ferry Ins titute

C.J. Guerin, PhD, MRC Toxicology Unit/Photo Researchers, Inc. Briefings onTalen t &Leadership Bottom: John Stubler. Right: Zephyr/Photo Researchers, Inc. 43 yearsandwasMcGovern’s bestmanathiswedding 10-year anniversaries. Ijoinedthemandwehada I rememberonetimewhenwewereinTokyo. Hewas memos as we left, itbecameclearthatthetwolimoswerefor as weleft, world. weeklong tripfortwotoanywheretheychooseinthe aires. McGovernroutinelysendsout“GoodNews” versation (seesidebar).Thecompany’sESOPplanhas ployees todinnerand20-yearemployeesaregivena taking two Japanese employeesouttodinnerfortheir taking twoJapanese this isasecondmarriageforboth.Eachbroughttwo them butrarelyabouthimself.LoreHarpMcGovern the employees.Wehadtorusharoundgettingsoaked to LoreHarp, hasalwaysbeenamazedatMcGovern’s turned hundredsoflong-termemployeesintomillion- his goals. wealth. Hehasnevercaredforthetrappingsof lovely dinnerandafterwardtwolimousinespulledup does put peoplefirst.”does looking foracab. Pat.” That’s get a limited version of McGovern.Hewilltalkabout get alimitedversionof children intothisnowblendedfamily, whichincludes cific jobwelldone.Hepersonallyescorts10-yearem- ent, McGovern’sgenerosityisalwayspartofthecon- stantly. moneyhasneverbeenamong pursuitof The said. “He’s livesinhotels, aworkaholic, travelscon- stamina anddrive.“He’s notHollywoodatall,”Farmer sion. AtanygatheringofIDGemployees,pastor pres- offers asidethatfeweversee.Marriednowfor30years, Itwaspouringdownrainand outside therestaurant. Yet, mostemployees withallthepersonalcontact, Watson’s insightmadeadeepandlastingimpres- Robert Farmer, whohasbeenonIDG’s boardfor — unsolicitedpersonalcomplimentsonaspe- After she parachuted out of aplaneforher50thbirth- After sheparachutedoutof McGovern echoed her husband’smantra:“Somuchto mation abouttechnology. Wehadsetupmeetingswith for anewMcGovernInstituteBrainResearch,Lore father and grandfather and an an and father andgrandfather in 1990aftertheSovietempirecollapsed,wetookatrip imagine.” incurable romantic whoiscon- incurable will.’ Henotonlysetupthesebusinesses, heempowered and drovethroughPoland,Romania,Bulgaria.And air miles already logged, they love to travel together, travel to love air milesalreadylogged,they millionsof Mitchell,anddespitehistensof and Joni Baez,BobDylan reason. HelovesJoan particular no nine grandchildren.She points Strategy +Business,andmanyotherpublications. people andmadethemfeelthattheycoulddogood people, andwestartedbusinessesinthesecountries. I big.” agreementwithPekingUniversity jing tosignaletterof through EasternEuropeancountries. Werentedacar things. Heisthemostencouragingpersonyoucan day, McGovernfollowedsuit. do, solittletime.” looked at Pat and said, ‘You are the ambassador of good aretheambassadorof looked atPatandsaid,‘You Glenn RifkinhaswrittenforTheNewYork Times,FastCompany everywhere we went, peopleweresohungryforinfor- everywhere wewent, stantly sendingherflowersfor off the beaten track, on the beatentrack, off hiking or skiing adventures. out thatherhusbandisadevoted “Pat hasgreatcompassion,”shesaid.“Iremember “He isadreamer,” sheadded,“andhethinksvery As thecouplepreparedforyetanothertriptoBei-

Q2.2012 White matterfibers,DTIscans 55 56 Giving

Back Q2.2012

The Korn/Ferry Ins titute

Credit Room to Read

by Lawrence M. Fisher

rin Ganju used to tell audiences that Room to Read, the NGO she co-founded, was building libraries in developing countries faster than Starbucks was adding new coffee shops around the world. But since Starbucks starting cutting back, she has had to find a new stretch goal. “Now I just say, ‘Wouldn’t it be great if we could scale social good as fast as we’re scaling these global brands?’ ” says Ganju, Room to Read’s chief executive officer, at the E organization’s San Francisco headquarters. To a remarkable extent, that is exactly what the organization is doing. Room to Read recently handed out its 10 millionth book, at a ceremony in Vietnam. Now in its 11th year, it has built 12,000 libraries and 1,500 schools, and is adding new libraries at the rate of six per day. McDonald’s adds one new burger joint every 1.08 days. Fast-growing not-for-profits face many of the same challenges as their for-profit counterparts, with the additional hurdle of attracting ever greater donations from a finite pool of donors. Many charities fail to build a culture or structure that can be sustained once the organization outgrows the small circle of acolytes surrounding a charismatic founder. Many struggle to attract, train and retain talent in a competitive market. Others founder on the shoals of weak governance and poor accountability. Room to Read is a case study in anticipating and overcoming these pitfalls. Room to Read’s genesis dates to 1998 when John Wood, a marketing executive with

Left: Room to Read, Danielle Reichner. Right: Room to Read, Andrea McTamaney Room to Right: Reichner. Read, Danielle Room to Left: Microsoft, took a sabbatical to go trekking in the rugged mountains of Nepal. While charmed

Briefings on Talent & Leadership Q2.2012 57 by the warmth and resourcefulness of the Nepalese people, “I was disillusioned with the banking world, disillusioned Wood was struck by the absence of schools and libraries in with the corporate world,” Ganju says. “We were opening up the villages. Where such facilities did exist, they lacked books these state-of-the-art factories and hiring people who didn’t suitable for school-age children. He promised a local teacher have electricity or running water. And yet you could see that that he would return, with books. if children grew up with more education, you could break From his base at Microsoft’s Sydney, Australia, offices, that cycle of poverty in one generation. I was searching for a Wood quickly gathered a pile of books, which he ultimately way for how I could help contribute to this. I had worked for delivered to the mountain school on the backs of several don- a few tech start-ups and confronted, as everyone did, a sort of keys. The experience changed the course of his life, as he later meaningless existence.” wrote in “Leaving Microsoft to Change the World” (Harper Ganju had spent two years in Vietnam with Unilever, 2006): “Words were hard to find. I struggled to explain that helping set up an ice cream business, but she had found her the school had filled my heart with a feeling it had never be- greatest satisfaction working on a community outreach pro- fore experienced — that I had made a difference in the world, gram to help a village near the factory build a new school. She or at least one very small part of it. For these children, there told Wood she wanted to expand his program into Vietnam, was a bit more opportunity than there had been yesterday.” and that she would help raise the funds to make it happen. Wood’s book inevitably prompts comparison to “Three Cups of Tea,” Greg Mortenson’s best-selling account of building schools in Pakistan and Afghanistan, but nobody would mistake the two. Mortenson paints himself as a swashbuckler, dodging bullets and kid- napped by the Taliban — an account now disputed by a number of news organizations, including “60 Min- utes.” Wood is the quintessential numbers guy. He stays out of war-torn countries and keeps careful account of his debits and credits. From the outset, he wanted to build an organization that could scale and sustain. Wood’s initial book delivery was facilitated by Dinesh Shrestha, a community organizer and member of the Kathmandu chapter of the Lions Club. Shrestha urged Wood to spread his efforts among several schools, not just the one he had visited, and subsequently planted the seeds for a tiny not-for-profit organization called Books for Nepal. To the astonishment of friends and She started work the next day. Within a month, she had family, Wood quit his job at Microsoft, broke up with his obtained funding and permission to build a school in Can girlfriend, and moved to San Francisco to open an office for Gio district, a two-hour drive from Saigon. With the move his nascent charity. into a second country, Books for Nepal needed a new name; Wood came up with Room to Read. ood might have spent many years Though Room to Read’s three founders are all self- just serving the needs of Nepal; described “action-oriented optimists,” they have disparate the country has 23,000 villages but complementary skills that created a firm foundation for and an illiteracy rate of about the organization. “John came from marketing and sales, I w 70 percent. But he knew from his was operational,” says Ganju. “Dinesh, our Nepali founder, travels that countries like Vietnam, came from a community engagement, development aspect. Cambodia, Zambia and Guatemala all faced similar issues, and The combination of great ideas and very different perspec- he had absorbed a crucial lesson from his corporate mentor, tives really helped create the Room to Read model.” Steve Ballmer, Microsoft’s hard-charging chief executive: go That model is, in essence, quite simple, which is surely big or go home. He just couldn’t see how. part of its success. Around the world, there are 759 million Then one day his cellphone rang. It was Ganju, asking for people who cannot read and write; 98 percent live in the de- a meeting. She was ex-Goldman Sachs, ex-Unilever, ex-a couple veloping world, and two-thirds of them are women and chil- of Silicon Valley start-ups. Like Wood, she had attained a dren. People in the developing world know that education is measure of financial success at a relatively young age. But she the great leveler, the key determinant in pulling oneself up

craved something more. from poverty, but they lack the resources or access to educa- Rish Amatya to Read, Room

58 Q2.2012 The Korn/Ferry Institute Room to Read's Erin Ganju (above, center), John Wood (left) and Pierre Towns (right).

tional materials. Room to Read tackles that problem one village at a time, by building schools and libraries and filling them with appropriate books. It also offers annual scholar- ships to girls, to address their disproportionate numbers among the uneducated in developing countries. Room to Read opened its first library in Nepal in 2000. Eight years later, it built its 5,000th library — also in Nepal. In April 2010, just two years after launching library No. 5,000, Room to Read reached another milestone as it opened a library at the Shree Jana Kalyan Secondary School in the village of Dulegauda in Nepal’s Tanahun district, bringing its tally to 10,000. After growing through Asia to Vietnam, Cam- From the outset, Ganju and Wood benefitted from access bodia, Laos, India and Sri Lanka, the organization expanded to the legions of young, successful former Microsoft and to a new continent, with openings in Zambia and South Goldman colleagues they could reach with an email, and their Africa. In 2012, it will open in Tanzania and Bangladesh, San Francisco office’s proximity to Silicon Valley. But those reaching over 5 million children in 10 countries. donors are also metrics-oriented and results-driven, much “We started with a few things that served us very well,” like Room to Read’s founders. With that in mind, Room to says Ganju. “A focus and a clear mission was key. We focused Read created an unusually transparent funding structure that on children’s education, particularly literature and girls’ edu- also increased its attractiveness to larger family foundations cation. A lot of nonprofits, because of their need for funding and institutional philanthropies. For $8,000, the organiza- or community needs, start to spread themselves too thin and tion would build a school, or for $10,000, a school plus a li- try to be all things to all people. We could contribute to the brary. For less affluent individuals, a donation of $250 pays overall ecosystem, but if we tried to meet all the needs that for a girl to attend school for a year, including all fees, two children have, from inoculation to clean water, we would di- school uniforms, two pairs of shoes, a book bag, school sup-

Room to Read (2) to Read Room lute our own effort. That clarity was crucial,” she says. plies, health insurance and a bicycle.

Briefings on Talent & Leadership Q2.2012 59 The direct relationships between donations and out- or example, 2010 revenue was $33.8 mil- comes contrast with typical charities where all monies are lion in cash donations, up 20 percent combined in a pool of funds. “That helped us communicate from $28.3 million in 2009, while dona- the results of what we were doing and motivate people to get tions in-kind, primarily children’s books involved,” Ganju says. “The world seeks simple and clear mes- f donated by publishers, grew 12 percent sages. There’s a lot of noise. People want to draw a line from to $5.1 million, from $4.6 million in the their financial gifts and their time to a result. Adopt a project, prior year. Room to Read raised $17.6 million outside the U.S. help support a library; here’s a very tangible way you can through foreign fundraising sources in 2010, a 33 percent impact children’s lives. From the beginning we had that one- increase over $13.1 million in 2009. Spending on programs to-one relationship.” totaled $31.8 million, a 35 percent increase from $23.5 million That kind of relationship spoke to Pattie McDowell, who in the prior year. had grown up in a blue collar family but became wealthy over “One of their really strong points is their accountability,” a 15-year career with Charles Schwab. Through her family says Eva Halper, vice president for corporate citizenship at foundation, she first made a small grant to Room to Read. Credit Suisse in London, which has partnered with Room “Then they invited me on a trip,” she says. “We went to to Read since 2007 as part of its Global Education Initiative. Cambodia and Vietnam. Our bus broke down. We were hiking “Their reporting and use of funds is extremely reliable. They’ve hired people with very strong development credentials, and they’ve got accomplished advisory boards. They draw on expertise. They don’t just make it up themselves. It’s highly professional.” Room to Read leverages its professional staff with legions of volunteers, organized in local chapters around the world. These volunteers solicit donations from friends and family, and seek matching funds from their employers. In 2010, the organization added to fund-raising posts in London and Hong Kong, in space donated by Credit Suisse and the Finan- cial Times, with new operations in Australia, Japan, and New York. The organization has 52 fundraising chapters in 16 countries, representing more than 10,000 volunteers worldwide, and raised 45 percent of its capital from outside the U.S. last year. On any day, from Seoul to Paris to Perth, a Room to Read event is likely to be taking place. These events keep Room to Read connected to “investors, who are the donors, who have to sense that your product is worthy,” says Kim Anstatt Morton, a former equity analyst and member of Room to Read’s board of trustees. “Because this is about feeling good. Donors have to feel that it is real, with water buffalo to get over the border before it closed. My impactful. But the one thing that really roots Room to Read life was forever changed. I had bought myself a convertible is oversight and governance and the board. Nothing is over- Jaguar, but I looked at it afterward and sold it. Then I bought looked. If overhead moves 0.05 percent, we talk about it at three schools in Vietnam, one for each of my daughters, so they the board level,” she says. “Every single number is questioned. would have a connection to the country, to girls. My kids were Nothing can be hidden. If I were on the outside, I’d say, ‘How never going to know the ‘pull yourself up by the bootstraps’ can they do that? It’s not possible.’ But I’m inside, and it is.” experience, but they could know the responsibilities of wealth.” Bankers are well represented on Room to Read’s board, For institutional donors, Room to Read stresses its low with both Barclays and Goldman executives, but the group overhead ratio, just 17.4, which means that more than 80 per- includes prominent lawyers, educators, and publishers, plus cent of donated funds support its programs. Charity Naviga- Tim Koogle, the founding chief executive of Yahoo!, now a tor, America’s largest and most-utilized independent eval- venture capitalist. It is an activist board, in the most literal uator of charities, has awarded Room to Read the coveted sense of the word “active.” four-star rating for sound fiscal management every year since “We find the most creative ways to fund-raise,” says Anstatt 2006. And the organization’s financial reports show the kind Morton. For example, for major initiatives, like the move into

of strong, steady growth that would gladden any investor. Tanzania, “We write private placement papers, like a bank Susie Cushner to Read, Room

60 Q2.2012 The Korn/Ferry Institute where books still matter

For an organization whose founders include a former Microsoft executive and a Wall Street banker, Room to Read’s approach to tackling illiteracy is surprisingly low-tech. In an age of tablets and Wi-Fi, the organization still works primarily with books and mortar. But as co-founder Erin Ganju explains, most of the work is in places far removed from the superhighways of the information age. “We are working largely in government primary schools in pretty rural conditions in the developing world,” she says. “Thus, for several reasons, technology solutions to the delivery of education are challenging. Generally most of our schools are not on an electric grid and have very simple because they could get higher-paying jobs books as their primary platform.” says infrastructure, so there are no computers elsewhere once trained,” she says. Ganju. “Technology is a means to an end or Internet available in the schools. These There was also little content on the and can be employed in creative ways, but it are also expensive solutions to scale in the Internet in local languages. “By all accounts, does not replace the need for solid instruc- countries that we work in.” our library program using books was a more tional materials and well-trained teachers.” That is not to say that Room to Read cost-effective solution that could scale eas- Ganju says Room to Read is platform has not considered and experimented with ier and reach more children in the countries agnostic and will continue to look at ways higher-tech solutions. “We ourselves ran Room to Read works in.” to incorporate technology as appropriate a computer lab program where we estab- It is worth noting that despite all the solutions are developed. “But for now more lished computer labs in schools but shut it money thrown at computers in the United basic approaches using books seem to be down in 2008 as it was very expensive to States, their value as pedagogical tools in more effective in the communities where establish computer labs relative to librar- the primary years remains in question. Even we are working. For most, the first time ies, hard to maintain the computers. Most in Silicon Valley, children learn reading they have access to child-friendly, colorful schools we work with didn’t have electric- primarily from books, not iPads. “Even in children’s books in their local languages is ity or Internet services in their areas; and developed countries, teaching children to after a Room to Read library is established teachers who were trained by us in IT read and develop a regular habit of reading in their school.” would often leave the teaching profession at young primary school ages still uses —Lawrence M. Fisher

would. That’s a really creative way to get big chunks of funding. pure start-up. The look is intentionally spartan, with exposed You can shop it to high net-worth individuals and foundations.” HVAC ducting and prefab cubicles parked wall to wall. There The fundraising machine never stops because Room to are more than a few advanced degrees from Stanford, Berke- Read starts over each year building its budget from scratch. ley and the Ivies in the room, though the pay scale is closer to Though it has some corporate and foundation support, there public school teacher than Silicon Valley, let alone Wall Street. is no endowment, and 65 percent of its funding comes from “Of course we have to pay competitively, we have to pay individual donors. For an organization growing 27 percent a a living wage, but clearly these people could work anywhere year, that is a lot of one-on-one contacts, a lot of checks in the they like,” says Pierre Towns, Room to Read’s chief talent offi- mail. Without the chapter structure, the organization could cer. “We spend a lot of time interviewing staff. A typical hire never keep up, Ganju says. here may talk to 15 people. And we do really try to understand Rapid growth strains an organization’s internal struc- what’s going on with them. They need to be competent. They tures, particularly one that strives to run lean. Room to Read’s need to be a good cultural fit, in terms of working in a collab- base is in a grand old building in San Francisco’s financial dis- orative environment. And they need to be really excited about

Room to Read, Ian Murphy to Read, Room trict, but open the doors to its offices and the atmosphere is changing the world.”

Briefings on Talent & Leadership Q2.2012 61 One unusual aspect of Room to Read’s recruitment prac- swer was a resounding no. There are relatively few factors tices is that its overseas positions are always filled by local that we know affect classroom outcomes, and they tend to be people, never ex-patriots. “We can attract some of the best based in teachers, and to a lesser extent, curricula.” people in-country. They’re talented, and they understand the Room to Read’s leaders say they are aware of such cri- local culture,” says Towns. “When you talk to them about the tiques, and concede that in the early days of the organization work they do, they say, ‘We’re doing this for our children.’ It’s they were more focused on outputs — just getting schools not dropping in and doing a job. We also offer a track record built and libraries filled with books— than they were on out- of success. We offer a work environment that is much more comes, such as a measurable improvement in literacy. But empowering for our staff, driven by core principles and a phi- they say they have moved aggressively to improve outcomes, losophy we have here in San Francisco that we work through- by adding teacher training in-country, by commissioning and out the world. In Tanzania or publishing more children’s books wherever, we expect the same in their native languages, and by in- courtesy, the same egalitarian stituting best practices that can be approach. We believe good ideas readily adopted by local educational can come from anywhere.” leaders. The not-for-profit world is “We are now implementing a not immune to talent poaching, strategy where we focus more on and Room to Read’s high media developing reading skills in pri- profile has made it an attractive mary students,” says Dinesh Shres- target for recruiters. Towns says tha, on a Skype call from Lusaka, the organization has not been Zambia. “We have introduced liter- as effective in training and re- acy instruction programs where we tention as it should be. A new work with the governments. We mentoring program will be im- prescribe them new introduction plemented in 2012. and materials, textbooks, and teach- “We have a number of ini- ers get trained to implement those tiatives this year to address just programs. And we have close moni- that, because Room to Read staff toring of that. Room to Read may are sought out,” Towns says. not be there forever, but these pro- “We’ve got to be very, very sure grams need to be sustained.” that we’re doing the right things Although John Wood remains to retain them. We need to do a the globetrotting public face of more effective job in coaching Room to Read, Ganju succeeded and mentoring, especially in- him as chief executive in 2009. country. We need to make sure While succession is often as diffi- our supervisors are not so cult for non-profits as it is for cor- swamped by responsibilities that they can’t spend quality porations, the transition was a natural one, and part of an on- time with their teams. We encourage them to meet one-to- going strategy to build a sustainable organization, she says. one, sit down and have a conversation that’s not just a task “I was chief operating officer, running the business day checklist, but about career aspirations, developmental needs, to day, really since the beginning,” Ganju says. “He was the coaching opportunities. Informally, we try to give them the visionary CEO. There was already a yin and a yang. We needed opportunity to contribute any way they can. We don’t limit to very thoughtfully scale and create room for new leaders, them because they’re 25 years old.” and the succession allowed me to hire another layer of man- One criticism of Room to Read and programs like it is agement depth beneath me. We didn’t want to stifle the orga- that there is little empirical evidence to show that donating nization by holding on too tightly to our roles. Eventually educational materials and buildings improves literacy. I will need to find another role. Who knows who started “As far as I know, there’s not been any rigorous evaluation Oxfam, or Save the Children? You know them for the quality of Room to Read, and the rigor that is out there would not fa- of their work. We want to be known for the quality of our vor their approach,” says Tim Ogden, editor in chief of Philan- contribution to children’s education.” thropy Action. “There was a study in Kenya looking at various teaching aids, starting with textbooks, with the question: do Lawrence M. Fisher has written for The New York Times, Strategy +

better and more textbooks lead to better outcomes? The an- Business and many other publications. He is based in San Francisco. Chaudhary Varun to Read, Room

62 Q2.2012 The Korn/Ferry Institute AD SEIZING THE metrics and accountabilities for his executive team. But instead — with all eyes in the organization on him — he aligned his behavior with his message and left no doubt MOMENT about where he would be leading the organization. Leaders underestimate their impact on the people around them, and that is especially true when a new leader ADVICE FROM THE comes on the scene. The leader might think they will be given some time to get acclimated before people pay close attention and make judgments. Not true. In fact, in the FRONT LINES first weeks and months of his or her tenure, people are paying rapt attention to the new leader’s every move, every by dee gaeddert word and every nuance, looking for clues about what they can expect. Making the most of your leadership “moment” requires three things: f you run an airline or a theater company, you are very fa- • Knowing your message. Articulate the reasons you miliar with the concept of perishable assets. When a flight have assumed this role. Even though your vision will be takes off or the curtain goes up and you have not filled ev- imperfect in your first months on the job, identify what you ery seat, the opportunity to capture the return on those as- uniquely bring to this role and how that intersects with the sets vanishes. Executives who are about to assume a new needs of the organization. Describe that for yourself in the role hold in their hands a perishable asset, too: the undi- clearest way you can and then consider the next steps. What vided attention of people. And this may be the most fre- will the strategy be? What changes will be required in the quently squandered asset of newly transitioned executives. Few leadership challenges can be met without commanding the attention of those the leader is trying to Imobilize. Reaching employees, customers, shareholders, analysts and board members to share a vision, to give a direction or to inspire an action is the executive role that transcends all other roles. Connecting with these stakeholders is a challenge of monumental proportion. But there is one time when commanding that attention is easier. When an executive assumes a new role, there is a moment when all eyes are on him or her. It is an opportunity for the new leader to set the stage for his or her vision and priorities. It is the time when that most precious and most fleeting of leadership assets— the undi- vided attention of people — is at its peak. A newly named division president, knowing that an insular and internally focused culture was jeopardizing the growth of the business, used his “moment” to catalyze his externally focused strategy. For his first two weeks on the job, he spent every day visiting customers with his sales team and his vice presidents. No meet-and-greets at headquarters, no town hall events, no executive staff meetings. Just a very strategically focused message: our days of navel gazing are over. Of course, this is a message he could have talked about in his meet-and-greets, covered in a town hall PowerPoint presentation or laid out with

64 Q2.2012 The Korn/Ferry Institute Briefings onTalen t &Leadership Chris Gash (though youmaybethat).It’s importanttothembecause you leadtheorganizationtowardthatobjective? you beginyournewjob, makeagridthatwillhelpyou you will expect of them. They wouldliketoknowhowyour them.They you willexpectof in yourorbitisreadingthetealeaves. It’s importantto with this alignment. Yourmessagesaretherows.with thisalignment. Your behavior through everychannelconsistently. that you, in turn, need to be a keen observer of yourown that you,inturn,needtobeakeenobserverof wouldliketoknowwhat they careabouttheirjobs. They them notbecauseyouareendlesslyfascinatingto leadership will impact their day-to-day lives. That means leadership willimpacttheirday-to-daylives. That channels arethecolumns. Ineachcellwritethewaysyou changes will be coming. They wouldliketoknowwhat changes willbecoming.They are beingobserved. sions ship lesson,youareprobablyunderestimatingthedegree organization to effectively achieve the strategy? Howwill organization toeffectivelyachievethestrategy? of scrutiny thatyoureverywordandactiongets.of Everyone • • — Aligning yourmessageandbehavior. Understanding thechannelsthroughwhichyou to ensurethatyourintendedmessageiscoming — your words, actions, decisions, tone,expres- Even if youhavelearnedthisleader- Even if Before

resources? Bythestoriesyoutell?agendaset reinforced byyourearlydecisions?Bythewayyouallocate Recognize andexploittheopportunitytousethiscrucial moment wheneverysoundyoumakeintheforestisheard. meaningful leadershipmessagetobeabsorbedandfol- for yourmeetings?Bythewayyouspendtime? which peopleareattuned.Areyourkeymessagesbeing albeit fleeting plan tosendyourmessagesthrougheverychannel the talentyouselectonyourteam? the answerisno. Peoplehavetobepayingattentionforany lowed. When youtakeonanewleadershiprole,have lowed. When Succession practice.Sheisapsychologistwhofocusesonbuilding Korn/Ferry Companies,andisbasedinMinneapolis. President ofLomingerInternational,andCOOLeadershipSource, Dee Gaeddert,Ph.D, isSeniorPartner atKorn/Ferry International, Global LeaderforOnboarding,andamemberofthefirm'sCEO est makes a sound if no one is there to hear it. Leadersknow nooneistheretohearit. est makesasoundif talent solutionsforexecutivesandorganizations.Gaeddertwas The oldriddleasks whetherthetreefallinginfor- The — moment tosetthestageforyourvision. Q2.2012

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65 ej A bl a F GN Ac h p Dg BtL H d F bOf HaLQ F A l iN pA i p ti g BL H iNA i L f tA sInd Euclid’s geometry, thep shortest distance betweenp two points on I rG One a flat surface is a straight line. In the arena of professionalft man- bu um s ausEPe agement, the shortest distance between two positions is rarely a u a straight line: getting from here to there requires a little wiggle d gL room. If you want to change a company’s product line or alter the a Bad present method of doing business, you quickly appreciate that i building consensus calls for a deft hand, a strong shoulder to push the grindstone, and the patience, if not of Job, of a kindly u Seed kindergarten teacher. Herewith are three examples. at Spoils an Office

By Stephen J. Trachtenberg a A friend had been chairing a local not-for-profit board for about four months into her three-year term, pre- siding over monthly meetings that she reported were congenial and good-spirited when she began to notice that her colleagues fell into predictable patterns of behavior, beginning with where they sat around the board table, moving on to how and when they asked questions or addressed their favorite issues. Not 1 surprisingly, “the finance people” direct remarks about the budget “Yes, and investments, and “the pol- counselor, icy folks” offer opinions on why certain operations should you have a remain the same or change. question?” But one trustee stands out: an articulate, well-respected attor- ney. Let’s call him Clarence Darrow. Even when asking a minor question row’s sense of appropriate time man- now looming monumentally over the (“Is our next meeting in two weeks or agement is well off the mark. He of- board’s head. While Clarence isn’t three?”), he makes it sound like a clos- ten steers the group to tangentially wrong, he’s also not right. ing argument in a high-profile court relevant matters rather than the point My friend decided she needed to case. Commanding the floor, Clarence at hand. In other words, he hogs the rebut in a respectful but forceful way. begins his soliloquies as follows, “I’d arena. At the next meeting, she presented like to make three points: the first is He also makes all matters, trivial the first weighty matter up for discus- extremely important and has two ar- or momentous, into ethical discus- sion and concluded her introduction eas I will address; the second is also of sions of moral consequence: “As trust- by saying, “And now before opening great importance and has three areas ees you have the obligation to make up the floor to comments, I’d like to of concern; and the last is only slightly sure all reports are filed in a timely ask and answer the first three ques- less critical but demands everyone’s manner. I’m not saying our staff isn’t tions Clarence Darrow will likely full attention.” Although he is persua- filing reports in a timely manner, only pose.” As the group broke into light sive, informed, and interested in the that it is important we ensure they laughter, even Clarence smiled: mes-

good of the institution, Clarence Dar- continue to do so.” A hypothetical is sage received. Caceres (all) Francisco ej A bl a F66 GNQ2.2012Ac h b p DgThe Korn/FerryF InstituBtte LA Hl iN pA i p L F H OfiHaLQ u ftia gL g BtLA sdiNpA p I rGL g ftbu d aum s aus EPe ej A bl a F GN Ac h bOfpHaLDgF BtLA HldiN pA i p i F H A i Q ft g BtLA sdiNp pt uI rGL s b You’re a change agent — um s f fast on a au EPe u your feet, a force of nature with an L didea a minute popping into your head. g You float trial balloons and sketch out a scenarios as you walk from place to place. At the start of staff meetings i you say, “I have a new project for us to consider,” or, “How about we take u a hard look at this approach.” With at the senior staff sitting around the table, you vet the proposals, and by the end of the meeting the two deemed most feasible remain on a the table and the three less likely to succeed are set aside. Assign- ments are doled out and the wheels of ingenuity begin to spin. So what’s the problem? Your No. 2 is risk-adverse, un- comfortable with change. You and he are the yin and yang of upper management. This senior vice president is a good egg: he’s smart, But though perhaps a tad too bureau- we’ve cratic in style, but well read in his always done area, knows the industry, stays focused, and keeps the ship on an it this even keel. He works hard, convenes way. task forces, and organizes nicely illus- 2 trated reports filled with charts, graphs and a narrative of history. Competent someone you believe to be more flex they report back at various junctures, with computers, he’s recently mas- ible and willing to try “the new.” In- alerting you if any pitfalls are discov- tered the ever-popular PowerPoint — struct the first to study why some- ered on the pathway. but he’s basically a 20th-century guy thing should not be done, the second Or you might engage an outside trying to walk in 21st-century shoes. to look at why it should happen. Each consultant to convene the group, tell- It is an awkward fit. is to report back to you — and you have ing the senior vice president that he More times than you’d like to a deciding vote. Each vice president is already has too much on his plate, hear, he explains why after careful playing to his strength. and this facilitator will see the proj- study his best advice is to leave things You can also “stack the deck” of ect through. Sometimes the small fee as they are. You know that the time’s the committee by allowing the senior for the consultant is money well ripe to innovate, to shake things up, to vice president to be the titular head spent. keep apace if not ahead of the compe- but appointing a group to work with An extreme but sometimes neces- tition, and a general who is delibera- him, people who are aggressively in- sary route is to reorganize: it may be tive, slow and steady may not be the terested in new paths. You run the risk time to move No. 2 out of his office. one to lead the charge up the hill: he’s of the senior VP slowing down mo- This is, of course, a difficult and some- not a wartime consigliere. What to do? mentum with his traditional bureau- times painful assignment, especially Next time a new idea is presented, cratic style, but if the marching orders when longevity and loyalty are in- appoint two committees — one chaired are clear, the other members should volved, but with creative planning it by the senior vice president and the be able to set a brisk pace. Set bench- is often possible to accomplish. And second headed by another manager, marks for the committee and ask that it may be the best alternative. ej A bl a F GN Ac h b p DgF BtLABriefingsHl on Talent & LeadershipiN pA i p Q2.2012 67L F H OfiHaLQ u ftia gL g BtLA sdiNpA p I rGL g ftbu d aum s aus EPe ej A bl a F GN Ac h p D F bOf HaLQ g BtLA Hs iNpA ip d senter to rank his objectionst to the bu draft. The absolutist didn’tf budge, and L u in the end he refused to sign off on the report, insisting on writing a detailed minority opinion. g a When the assignment ended, Kissinger issued a report with 19 i supporting signatures and one minority vote. The viewpoint of the “one” u became increasingly irrelevant when the public saw the diversity of the 19 at who had reached consensus. Being the single holdout does not always put you on the winning side. a Back to Euclid: using his theorems, it is possible to prove many a problem. But how one develops a proof can show either an elegant or a plodding style. The fewer steps needed to complete the assignment, the simpler The man the explanation, and the more didn’t sophisticated the solution, the understand better the approach. So, too, with management. the Moving an organization from 3 question place to place usually involves a series of turns in the road, of Henry Kissinger told me a story and knew he’d have to stops and starts akin to herding cats. about a 20-person bipartisan national horse-trade. He understood that he’d Few companies move in lockstep. commission the former secretary of give up some things in order to get Divisions have independent cultures; state was chairing on an important approval on others — it was not going managers differ in their styles and foreign policy issue. With a mix of to be a zero-sum game for either side. modes of operation. Navigating the Democrats and Republicans debating Most everyone on the commission un- waters of change with everyone rid the merits of the United States’ policy, derstood the unwritten rule — agree- ing on the same raft takes skill and Kissinger knew that he’d have to craft ing to serve on the task force means finesse. Stay one stroke ahead of the a final report that represented the you come up with a report everyone rapids and don’t let anyone stand viewpoints of his participants. As they can live with — a document that gives up in the boat. neared the end of the study period and each side more than half a loaf. began drafting the text, Kissinger put But there was a holdout: a moral Stephen Joel Trachtenberg is president emer- together a long list of items to include absolutist who felt his way was the itus and university professor of public service in the report. Some were favorites to only way. Kissinger tried to lay out the at the George Washington University and one side and others more in line with merits of each bullet point. He quoted chairman of the Education Specialty Practice the thinking of the “opposition.”He historical precedent, mentioned dip- at Korn/Ferry International. He is based in was beginning to search for consensus lomatic alliances, and asked the dis- Washington, D.C.

HACK-PROOF YOUR PASSWORDS The five worst, easiest-to-crack passwords according to security experts are: 1. password 2. 123456 3. 12345678 4. qwerty 5. abc123 Source: SplashData a Q2.2012 The Korn/Ferry Institute ej A bl F68 GN Ac h b p DgF BtL F H OfiHaLQ g BtLA sdiNpA p I rG ftbu d ej A bl a F GN Ac h p D F bOf HaLQ g BtLA Hs iNpA ip print d ftbuL u g Manthe behind a the i Cloud The Korn/Ferry Institute’s Briefings offers

aul Maritz, CEO of VMware, a fast-growing high-tech company with a $38 billion market cap, is back in Silicon Valley. Maritz, who grew distinguished narrative on topical issues, up in South Africa, began his career in London in the 1970s, and went to work at Intel in the early ’80s, at the dawn of the PC era, which revo- lutionized computing. He was at Intel when its legendary founders, Robert Noyce and Gordon Moore, and its iconic CEO and later chairman, drawing on groundbreaking research u Andrew Grove, still walked the halls demonstrating to the young Maritz how to build and run a great company. Maritz carried their lessons with a him throughout his career. From Intel, Maritz moved to Microsoft, where t another revolution was taking place — on the desktop and at the office. Maritz was from the firm’s unparalleled expertise and at Microsoft from ’86 to 2000, when Windows, databases, client servers, and networks of PCs were taking shape. At Microsoft, Maritz was a member of the company’s five-person Zé Otavio (all) executive management team, which included Bill Gates and Steve Ballmer. pre-eminent behavioral research library. Credit

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lated that Americans consumed 3.6 zettabytes of information in 2008 alone. Don’t know what a zettabyte A Tsunami of is? You are not alone. And any explanation will only confuse you more Knowledge placeholder than help you. Google tells us a zetta photo only byte is 1 sextillion bytes. Hmm. Okay, What to do when your library Weinberger suggests if you calculate becomes infinite that Tolstoy’s “War and Peace” takes up 2 megabytes of space on a Kindle, the zettabyte would equate to a stack nformation overload is hardly a of copies of “War and Peace” extend- new concept. Long before futurist ing 47 billion miles out into space. Alvin Toffler coined the term in his Don’t ask. 1970 bestseller “Future Shock,” phi- Though the Internet has flooded losophers and scientists worried the world with information, society about mankind drowning in ever- remains intact. Weinberger writes, Ideepening waves of data. The Roman Facts, Experts Are Everywhere, and “As the amount of information has philosopher Seneca, born in 4 BCE, the Smartest Person in the Room overloaded the overload, we have not wrote, “What is the point of having Is the Room” (Basic Books), David proportionately suffered from infor- countless books and libraries whose Weinberger offers a frightening but mation anxiety, information tremors, titles the owner could scarcely read cogent look at the impact this Web- or information butterflies-in-the- through in his whole lifetime? That based tsunami of knowledge is hav- stomach. Information overload has mass of books burdens the student ing on our lives. become a different sort of problem.” without instructing.” “There was always too much to Rather than causing an epidemic Indeed, those nattering nabobs know,” Weinberger writes, “but now of psychological breakdowns, ren- who whined through the generations that fact is thrown in our faces at ev- dering people confused and demoti- about the harsh impact of too much ery turn. Now we know that there’s vated, information overload has be- information hadn’t seen anything too much for us to know. And that come a cultural condition. “And the yet. Because in today’s Internet-based has consequences.” fear that keeps us awake at night is reality, we have learned that the in- Weinberger, a senior researcher not that all of this information will formation well is bottomless and the at Harvard’s Berkman Center for In- cause us to have a mental breakdown very term “knowledge” must now be ternet & Society and co-author of the but that we are not getting enough of redefined. bestselling “Cluetrain Manifesto,” the information we need,” he writes. And in his excellent new book points out that the levels of informa- If the Web has a trillion pages “Too Big to Know: Rethinking Knowl- tion these days ought to render most of information and is growing con- edge Now That the Facts Aren’t the of us catatonic, unable to process the stantly, the world has indeed become fire hose of data gushing at us. He too big to know. Weinstein lays out quotes researchers at the University the consequences in this eminently of California-San Diego, who calcu- readable book. Among his concerns: • Our old institutions are not up WHO’S HOLDING THE FAMILY to the task of handling all this knowl- PURSE STRINGS? edge because the task is just too large. • In nearly 90 percent of high net worth There are no filters capable of households, women are either the sole revealing the complete set of knowl- decision maker or an equal partner in edge we need. “There’s just too much directing their family’s philanthropy. good stuff.” • Source: Bank of America Merrill Lynch There is also too much bad stuff. Hal Mayforth

70 Q2.2012 The Korn/Ferry Institute Briefings onTalen t &Leadership Hal Mayforth “We cannowseeeveryidioticideaput “leading fromthegut”andreconsider According toWeinberger: Weinberger says.“Wehavesomany Traditional corporationscanlearn from network-basedenterprises. from WestPointtoWikipedia,as facts supportingotherinterpreta- facts atsuchreadydisposalthatthey forward seriouslyandeveryserious is beingled.” ing apropertyofthenetwork,leading adecisionmeansfindingyour idea treatedidiotically,”hewrites. way throughadensethicketof and morewhat???? abandon theJackWelch-styleof and ineffective.Today’sleadersmust berger writes,“there’smorewhat tion getsfilteredupthepyramid. to believeandwhatsourcestrust.” the effectofthisinformationover- truth canbeobscuredorlost. tions,” hewrites.Inthismorass,the the vastnetworkofresourcesand top-down, commandandcontrol have embracednewleadershipmod- knowledge thatdefinesmostbig drain crucialdataasthatinforma- down becausetherearealwaysother load onorganizationsandleader- lose theirabilitytonailconclusions leadership methodsareoutdated chical leadershippyramidssteadily change. “Justasknowledgeisbecom- claims, decidingwhatinformation els, Weinbergerexplainshowhierar- examples ofnetworkedentitiesthat ership isbecomingapropertyless scales upbetterthanhierarchical de- ship, Weinbergersuggeststhat of theleaderthangroupthat organizations today. “In theAgeofNet,”Wein- 1) In oneinsightfulchapterabout The natureofleadershipmust Thus, wearetooeasilyledastray, Using aseriesoforganizations,

Network decision-making — than ever.Mak-

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rate socialresponsibilityprograms motivate peoplewherehierarchical, ward isnotyetfullyknown. ways. are fluidanddiverse,orthepathfor- amid onthebackofasinglehuman volunteers. Inthismanner,corpo- are likelytoexpresstheinterestsof par being arenotasresilientorgani jor weathercrises,relyondistributed top-down decision making would throughout aconnectednetwork. that restonthepointyendofpyr- the localmembers,whotypically,are the corporateto-dolist. that arehuge,spreadoutanddiffer- the multi-componentorganizations have theoppositeeffect. zations thatdistributeleadership deal oflocalknowledge,whichis decisionmaking inhighlyeffective uted throughoutthenetwork,more cally throughoutthenetwork,they come morethanacheck-offitemon can providetangibleresultsandbe- circumstances. “Hyper-networks,” cision-making does,atleastinsome entiated, suchasrespondentstoma- excels whendecisionsrequireagreat of thelocalknowledgecanbeapplied. Source: HSBC with 3.9%intheUS. is 35%.Thiscompares while inIndiathefigure their GDPforretirement, save theequivalentof38% Chinese householdscurrently EAST-WEST RETIREMENT DIVIDE ticularly thecasewhensituations 4) 7) 5) 3) 2) 6)

Network decisionmakingcan As thebusinessenvironment Network decision making also Network decision When decisionsaremadelo- When decisionsaredistrib- Hierarchical organizations Net, itwilltakeanetworktomake Net, reductivestrategiesrunan more essentiallyentwinedwiththe missing thedetailedcontoursof man orwomantoknowandprocess from seniorleadershipwasaconfes- iors anddeedsthroughouttheorga- increasing riskofgoingwrongby in ordertoimpartwisdom,vision ing theNetwork(incapitals)and way toomuchinformationforone nization. Lameasthatmaysound, any largeorganization.Thisisnot and directionforacorporationor allowing ittoempoweranarmyof berger’s essentialmessage: becomes morecomplex,thanksto the wisestdecision.” the response,beyondsanctions, knowledge thananysingleleader the globein2008,acommonrefrain the economiccrisisthatenveloped tions havecontributedmightilyto the business. decentralization cloakedinadiffer- local landscape. leaders ineverystrategiccornerof ganizations getbiggerandbecome globalization andtotheburgeoning could contain,tapormanage.As- charges, mightbetoconsiderWein- ent garment.Thisisaboutembrac- stricter regulationandcriminal sion ofignorancecertainbehav- “The networkcontainsfarmore What itallmeansisthatthere In anerawhenhugecorpora-

Q2.2012 71 Ppartingarting Tthoughtshoughts

what is self-interest, anyway?

by Joel Kurtzman

Self-interest is what gives the world its shape. That’s a view first promulgated by Adam Smith, and hardly any economist disputes it. Self-interest is what infuses people with energy and gives them an appetite for risk. People’s overwhelming motivation by self-interest is what constitutes the invisible hand. It’s the way the world coordinates itself.

So, the question is, What exactly did Smith mean by self- neurs started companies to have fun, work with friends or interest? work with people they admired. Some years ago, I conducted a study of 600 start-ups Self-interest may be what gives shape to the world, but around the world. The young companies we studied were it is not self-interest in the narrow sense. I think Adam Smith located in the places where most of the world’s start-ups are would agree since most companies in his day were private found — the United States, Canada, Britain, the Scandinavian family-run operations. The goals of the founders were to do countries and Israel. Most of the companies were in the soft- something new, something important, and to create some- ware, telecommunications and biotech fields. Interestingly, thing that would last. we did not find a single entrepreneur out of more than 700— Nothing exemplifies these broader goals more than when many companies were started by a team of more than one an entrepreneur returns to a company that he or she started person — who was in it for the money. when it is struggling. When Michael Dell, Howard Schultz Don’t get me wrong. No one in our sample turned down and, most famously, Steve Jobs returned respectively to Dell options, shares or money. No one mortgaged his or her house Computer, Starbucks and Apple, it was not because they indifferently or wanted to go broke. needed money. All of them were flush. They returned because But that was not why they went to all the effort of start- their own sense of self-interest was very much identified ing a company. In fact, since many of the entrepreneurs were with the interests of the people they had worked with and serial entrepreneurs, and already very rich from having had hired. They wanted to make sure that the companies they started other companies, we believed them when they said had started lived up to their promise. that money wasn’t what motivated them. This suggests Adam Smith was right, but not in the way In a number of instances, the entrepreneurs who took it’s commonly recounted. It’s not self-interest as in part in our study said they took on the risks and ef- greed or selfishness that motivates people. It’s fort of starting a company to prove a point. They self-interest in the sense of the bigger self, wanted to show the world that their software as in us. or hardware or molecule was superior to what I’m not suggesting that entrepreneurs others had developed. They wanted to show are selfless, or that they don’t have egos. Far that their business model would succeed. from it. I am suggesting that people start They wanted to demonstrate they had a solu- companies for reasons bigger than them- tion no one else had thought of. selves — for the team, the group, the world. In other cases, these entrepreneurs We make a mistake when we think wanted to change the world. They believed about self-interest in its narrowest sense. It what they were doing was so important and so demeans the concept. And while there might different that the world would be better as a be a few entrepreneurs whose dream is to result of their efforts. This was particularly true drive cars made of solid gold and light cigars among the biotech companies, but it wasn’t with $100 bills, I have yet to meet one. Most of limited to them. Some software pioneers the entrepreneurs I’ve met have been focused on felt exactly the same way. goals that are bigger. I can’t help but believe

And, finally, some of the entrepre- that’s what Adam Smith meant. Michael Witte

72 Q2.2012 The Korn/Ferry Institute

Carlos Ghosn, CEO of Renault 70 “Too Big to Know” and Nissan Motors

Carlos Ghosn, CEO of Renault 70 “Too Big to Know” and Nissan Motors