My third observation is the one most overlooked by economists: People are looking for meaning and significance in their work. You can offer that to a barista at Starbucks. You can offer that to a Target employee — I was on the board at Target for 12 years — who can delight a customer with fashion-forward merchandise or help create a clean store without boxes on the floor. Medtronic can offer it to employees who feel they play a role in saving lives. It can be offered in any context.
Humanity is timeless. In the 1980s and ’90s, we got so caught up with the short-term pot of gold that we lost sight of what we’re about. But great organizations, the ones that create lasting value for shareholders, tend to follow the kind of approach I’m describing over the long term.
Withstanding Outside Pressure
S+B: What do you tell CEOs of public companies in today’s hyper-demanding environment? How do you advise them to abide by their “true north” and not lose their heads?
GEORGE: Your “true north” cannot be redirected by external pressures. Once you start trying to satisfy one shareholder, you’ll have to deal with another shareholder with a different point of view. Same with board members and all your other constituencies. If you allow yourself to be pulled off course, you’re going to destroy your enterprise.
You have to stay a step ahead. You have to say, “This is what we stand for. This is a long-term growth company. It will give you great long-term returns, because we perform very well. Are you interested? If you’re not, you may want to put your investment somewhere else.” I’m not saying that you have to dismiss your shareholders or your board. But you must remember who you are and what your company is.
And you have to remember the central importance of serving the customer. The companies that don’t do that, lose it. Now, some good companies do hit the wall. Dell Inc. recently lost its grip on customer service. But it’ll come back because it’s reacquainting itself with what makes it, at its core, a fine company.
S+B: Who does this well? What public company leaders are, in your view, sticking to their “true north”?
GEORGE: I’m going to mention a leader who oversees one of the largest organizations in the world, with 5.5 million people associated with it. I’m talking about Andrea Jung, CEO of Avon Products, the cosmetics company, although she doesn’t call it that. She calls it “the company for women.”
Andrea got to her current position by a circuitous route. She had been a superstar at Bloomingdale’s and then at Neiman Marcus, where she was an executive vice president at 31. At 35, when she was clearly on her way to becoming CEO, she stepped down from retailing, without a new job. When she came to my Harvard Business School class, I asked her why she quit. She said, “I didn’t want to spend the rest of my life making luxury goods for the upper class.”
Nine months later, she landed an executive position at Avon and did great work for five years. But then she got passed over for the CEO job. At that point, a board member, Ann Moore of Time Inc., gave her very penetrating advice: “Andrea, follow your compass and not your clock.” In other words, “It’s not important that you’re CEO by 40. Life is long. You need to make sure this is the company you want to be at. You can be CEO somewhere else just like that. Call up Bloomingdale’s and tell them you’ll come back. Is that what you want?” And she said, “No, I’ll follow my compass. I’ll stay on course with what I believe.”