Daniel Catalaa

Authentic Leadership

(Authored by Daniel Catalaa on November 18th, 2009)
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In this article I will be reviewing the book "Authentic Leadership" by Bill George that was given to me by my supervisor as a gift to help me along on my own personal journey to greater leadership. In the book George relates his experiences as manager and CEO of different companies and culminates with his ten years tenure at Medtronic, a company that manufactures implantable medical devices. The book is very timely given that the USA is at present experiencing a massive loss of wealth due to the sustained exaggeration and unwillingness to change of its citizens, and short-term vision, greed, and untrustworthy behavior at the level of its leadership.

Initial impressions

From my perspective as a lower level manager at a hospital, the scale and volume of the enterprise and money moved around by Medtronic, the company the author ran as CEO, fell outside of my current experience and felt a bit foreign to me. For example George leads a $9 billion acquisition and merger spree, and later alters public policy by applying pressure on the FDA to shorten its approval process for medical devices. Though the book does not address all areas of leadership, it garners strength and credibility from the author's lessons learned and rites of passage undergone while working at Honeywell, the U.S. Department of Defense, Litton Industries, and Medtronic.

George urges us to embrace our own style of leadership versus trying to emulate individual characteristics of other leaders we may look up to. He also relates how during the initial phase of his career he was more focused on brain than heart and how later he was able to find a better balance by genuinely caring about others. Related to caring, my favorite quote from the book is: "Neither the organization's nor its leaders' ethical practices are established until they are tested under difficult conditions".

Decision algorithm - prioritized and holistic

Anybody in a position of leadership may desire to use an algorithm, a true North, that when followed invariably leads to the optimal solution. George proposes something akin to an algorithm of this type when he explains that the best results are reached when decisions taken benefit all stakeholders: clients (patients and doctors), employees, shareholders, vendors, and the community. He is not the first to propose a stakeholder-focused model, but he does however prioritize the stakeholders placing 1st the needs of the client, 2nd those of the employees, and 3rd those of the shareholders.

Interestingly, among the stakeholders he also lists vendors and the community at large, two groups that could be easily overlooked. However, when a company succeeds or goes under the impact is immediately felt by both vendors whose orders surge or dry up, and the community whose members become employed or unemployed.

Company structure and composition

If you are new to the inner workings and structure of the upper echelons of a complex company, you will enjoy George's anecdotes as they shed light on the interrelations between CEOs, COOs, CFOs, Board of Directors, and shareholders. I found this helpful because I do not often get an inside view of the dynamics that occur at the higher levels of hierarchy of large organizations.

When describing the creative tension between CEOs and their Boards the author stressed the importance of having a diverse Board composed of members with different backgrounds and experiences. In addition to gender, cultural, and racial variety, he also suggests having CEOs from other unrelated companies on the Board. The inevitable richness and friction between these multiple perspectives ultimately leads to better decisions.

Growth and self-investment

George advocates growth both from internal and external sources. He sees value in promoting from within, but also in hiring in talent. Another area of growth he addresses are the acquisition and mergers with other companies. One piece of advice he give that stands to mind is to look for congruence on values and vision first while negotiating a merger, before discussing pricing or stock swaps. The main reason mergers succeed besides the soundness of the companies and the strategic benefits derived from the union, is the compatibility of the cultures.

Another aspect of growth that is highlighted is the importance of investing in research and development. The reinvestment of a company in itself, and in particular in research, leads to failures, promising pilots, the next line-up of products, and a few breakthroughs that revolutionize the company and sometimes the industry. Though it may be tempting to underfund research in order to make the numbers, when an organization loses its ability to self-innovate and transform, it starts to slowly die and forfeits its chances of competing in the future. Following a long-term strategy requires discipline from the leadership because it often entails undergoing short-term pain to make the strategic transformation needed.

Performance from synergy

Medtronic kept it's employees motivated by reminding and showing them in very tangible ways how the work they performed had a direct and significant benefit to real people. There is a multitude of steps required to bring a medical device to market, from the initial conceptual idea, to manufacturing the device, testing it, seeking FDA approval, all the way to implantation into patients. Therefore, it would be very easy for an engineer, manager, or admin to become isolated and disconnected from the patients they have served and how they have transformed their lives.

To reestablish the link between effort and contribution, once a year George flew in several patients for a recognition ceremony where they talked about their lives before and after having the defibrillator or medication dispensing device implanted in their bodies. There was a very moving story of a Parkinson patient who could not dress on his own and was confined to a wheelchair because his limbs shook so uncontrollably. He had returned to full time employment and independent living and, with the help of crutches, took the stage to thank all of the Medtronic employees.

This type of ceremonies in conjunction with the constant communication of the company's mission, to restore individuals to full health, created synergy. Employees felt that the organization's values and their values were one and the same. So they rallied behind the company through thick and thin and felt coherence between their private and professional lives.

Conclusion

Much of the wisdom imparted in the book is scalable downwards. So when reading it, I recommend that you consider the advise applicable not only to your professional life but also to your personal life. Think about it: two companies merging is like two people partnering up, a company that invests in research and development is equivalent to a person going to night school, and a workforce compelled by a sense of mission is as powerful as an individual who lives connected to their passion.