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August 2004 CEOs, Invest Your Ego in Your CompanyDozens of CEOs have been willing to sacrifice the well-being of major corporations over the past 10 years for the sake of their own egos and short-term gains, Bill George, former chairman and CEO of Medtronic, told a Business School audience. George lamented that his generation—the bright and idealistic men and women of the Kennedy years—had somehow dropped the famous "torch" that had been passed on to them. "Corporate executives destroyed $7 trillion of shareholder value and lost people's trust to the point where CEOs are now ranked below politicians and attorneys" in public esteem, George said. What went wrong? "We have to be honest and admit that stock market dominance and the market for corporate control had a big role," he said. "We're now plagued by the fear of takeovers and increasingly intense adherence to quarterly results. People are no longer investing in companies; they're just looking for trading vehicles. We've stopped attending to the fundamental things: how you build the earnings per share of your company, what's the cash flow, what's the ROI. Today, if you beat the analysts' numbers by a penny every quarter, you're a hero." Boards are also partly to blame, he said. "They started looking for CEOs to come in overnight and save them by manipulating a few numbers," he remarked. "They chose charisma over character." George called for a new kind of leader to emerge, one who checks his ego at the door and maintains an attitude of serving others. "If you do that well, you'll have people following you to the ends of the earth, buying your products and services, and investing in your company." |
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