Bill George, CNBC Contributor and former Medtronic chairman, discusses the news that President-elect Donald Trump is taking credit for creating 8,000 jobs in the U.S.
Monthly Archives: December 2016
Boston Globe: Business Leaders Are Anxious To Avoid An Angry Call From The President-Elect
Bill George knows all about pressure from big government.
When he was chief executive of medical device giant Medtronic Inc. in the 1990s, he decided to close a plant in France and move jobs to more cost-efficient sites in eastern Europe. He was promptly told by French political leaders that he would have to continue paying wages to idled workers in France for a year. It hurt, but that’s the price he had to pay.
Today, from his perch as a senior fellow at Harvard Business School, he is watching Donald Trump strong-arm and threaten companies. And like others at the business school, he is trying to gauge how to handle a president-elect who has castigated Carrier for moving jobs to Mexico, ripped into Boeing Co. for making too much money on an Air Force One contract, and rattled drug makers by vowing to bring down prices of medicines.
George’s advice to today’s chief executives? “Right now, you just want to stay out of the line of fire,” he said. “Carrier was willing to absorb a noneconomic decision for a period of time by keeping jobs in Indiana. I see this as more of a symbolic move by the president-elect to make a statement. There’ll be two or three more of these moves. Then we’ll get back to business.”
Others see Trump’s bluster as part of his personality and longer-term strategies, and say captains of commerce should learn to adapt. Some believe the downside could be offset by Trump’s proposal to lower taxes which, if enacted, would prove a boon to business.
“You have to decide how important the presidential crankiness is going to be to your company’s future,” said Harvard Business School professor Joseph Fuller, former chief executive of the global consulting firm Monitor Group. “When the president-elect of the United States calls and says, ‘I need a favor’ — and it’s not material to your business and you know he’s going to be cutting your corporate tax rate — I’m going to say, ‘Yes sir, I’ll do everything I can.’ ”
Still, the former business leaders say chief executives will resist proposals that would force their shareholders to lose money, or thwart a company’s business strategy. One test could come soon, they say, if Trump follows up on his stated opposition to the merger of AT&T Inc. and Time Warner Inc. and tries to block the $85 billion deal.
“CEOs aren’t going to be cowed by being called out in tweets,” said Kevin Sharer, another Harvard business professor who was chief executive of biotech Amgen Inc. “If they think a move is fundamental to the company, they’re going to go forward with it.”
At the same time, Sharer said, business leaders should recognize Trump’s tweets carry a message — US jobs will be valued by the new administration.
“He is certainly laying down a marker to the country, saying he cares about jobs in America,” Sharer said. “He’s saying one of his priorities is saving jobs. He’s not doing it in a skillful or elegant way, but he’s saying it’s a priority. Companies will think harder about moving jobs out of America. And there’ll be policies that will make it attractive to keep business here.”
On Wednesday night, Trump expanded the ring of his business wrath beyond the executive suites. After Chuck Jones, head of the Indianapolis local of the United Steelworkers Union, said Trump had “lied” in talking about how many Carrier jobs had been preserved, the President-elect tweeted that the union should “spend more time working — less time talking.”
Trump’s use of social media has amplified his messages, but there’s a long history of presidents pressuring businesses or wading into the marketplace, Fuller said. He cited President John F. Kennedy forcing steel makers to roll back prices in the 1960s and, more recently, President Barack Obama’s bailout of Chrysler and General Motors Corp.
“You can go back to Teddy Roosevelt and see frequent interventions by political executives in business decisions,” Fuller said. “We used to call this jawboning. The president would use the bully pulpit to cajole both employers and unions in the national interest.”
While Trump’s focus has been on outsourcing and foreign trade deals he says have sapped American jobs, ex-Medtronicchief executive George said the larger issue is technology advances that have made many manufacturing jobs obsolete. George said the new administration should focus on German-style industrial policy to upgrade the skills of US workers and prepare them for jobs in fields like robotics and computer programming that match the needs of domestic businesses.
Manufacturers in Massachusetts appear to betaking a wait-and-see attitude toward the incoming administration.
“My guess is that he might continue doing this from time to time, parachuting into these situations,” said Christopher Geehern, executive vice president at Associated Industries of Massachusetts, a trade group concerned with costs and regulations. “It won’t solve the problem, but it focuses attention on manufacturing issues, and that’s OK. Manufacturers are pleased he’s shining a light on some of the issues that are driving companies overseas.”
Christopher Anderson, president of the Massachusetts High Technology Council, which represents computer software, hardware, medical device, and robotics companies, said no company wants to be singled out — but Trump’s actions appear to be purposeful.
“I don’t know who he’s going to be tweeting about tonight or tomorrow,” Anderson said. “But when people see 1,000 jobs [at Carrier] not leaving the US, they say he’s off to a good start, and he’s not even president yet. There’s a high expectation that there’s going to be a reduction of barriers and regulations in the Trump administration. And that’s going to make it easier to bring cash back into the country and expand the manufacturing base here.”
This article was originally published by Boston Globe on 12/9/16
The past year has been a painful one for many Americans. Our political differences have separated us into two camps, with angry and hostile words thrown at each other. Long before Election Day, it was clear that regardless of who won, the new President would face a deeply divided nation. Today, weeks after the election, many people are still focusing on the political scene, feeling angst over the ldatest Cabinet appointment.
For myself, I have decided to adopt American Theologian Reinhold Niebuhr’s “Serenity Prayer”:
“God, grant me the serenity to accept the things I cannot change,
courage to change the things I can,
And wisdom to know the difference.”
This prayer challenges us to be serene amid turmoil and chaos, while using courage and wisdom to make a difference in the world. This isn’t easy, but is a goal worth pursuing. Such equipoise is the mark of authentic leaders.
Accepting the things we cannot change is difficult for anyone with the passion and belief that he or she can change the world for the better. When I was young and naive, I thought I could tackle the world’s greatest problems – from war to health to poverty – and have a leadership role in eliminating them.
The reality is that none of us can independently eradicate poverty, eliminate disease, ensure quality education, guarantee rewarding jobs for everyone, or ensure all people have financial security. Even Bill Gates must feel humbled by the vastness of the world’s challenges as he applies his vast resources. But if we focus our energy and our efforts on specific goals that are within our grasp, we actually can change the world – the world in which we live.
Accepting our limits in dealing with intractable problems requires serenity – the quality of being calm and tranquil. When we get caught up in our 24/7 society and upset by the outrage on social media, it is all too easy to become stressed out, discouraged, and angry at the world. When we are too reactive, we lose perspective that our actions are part of the long arch of human progress, and their impact may not be immediately apparent.
When I feel anxious about the world, I have found my meditation practice helps me regain that sense of tranquility and serenity. It also enables me to focus on the most important things in my life and be grateful for my blessings. In this way, I have learned to accept the things I cannot change. Then I can put aside my frustrations with the world and set more modest goals for things that I can change.
Courage is the quality of the spirit enabling people to face difficulty, danger, and pain without fear. Courage cannot be learned in the classroom; it must be experienced in real world situations.
At Medtronic, we focused on restoring health for patients struggling with chronic disease and discovering ways to help more people. Our proudest accomplishment during these years was increasing the number of people restored annually to full health from 300,000 to 6 million per year. Today, some 14 years after I retired, that number stands at 30 million people annually.
In retrospect, growing this number demanded a great deal of courage from my colleagues. They took risks to discover breakthrough therapies, challenge the approval process of the U.S. Food and Drug Administration to get them released, and ignore Wall Street’s short-term pressures and invest for the long-term.
When I retired from Medtronic in 2002, I searched for a new purpose in my professional life. After exploring leadership opportunities in government, business, and non-profits, I went on a working sabbatical in Switzerland to learn and teach at two leading Swiss institutions. It was there that I realized I was most passionate about helping develop a new generation of authentic leaders. I recognized this purpose required a high level of humility about the limits of this goal. There was no chance we could eradicate all the poor leaders, nor claim any credit for the success of the authentic ones. But an emerging new generation of authentic leaders gave me great hope for the future.
Since 2004, I have pursued that goal by teaching at Harvard Business School (HBS) and applying those ideas through writing books and articles, as well as mentoring many emerging leaders. This took a surprising amount of courage as all my 30 years of experience had been in running large organizations. In Switzerland and at HBS, I was all alone in creating new courses for which I had no training or experience. While my colleagues at HBS were extremely helpful, in the classroom I was on my own with 90 challenging students with very high expectations. When I proposed a new course called Authentic Leadership Development that included a small group format (a radical change for HBS), I was required to go to the dean for approval.
As a first-time author, I also faced monumental challenges in getting a book published on authentic leaders. My first book draft was rejected by a dozen publishers. Thanks to my mentor, Warren Bennis, I was able to write Authentic Leadership, which was published in 2003 and became a modest best-seller. That gave me the courage to conduct research on 125 authentic leaders and publish True North in 2007, which is widely read today and used by corporations and academic institutions in developing leaders.
My grandfather, a Dutchman who came to the U.S. in 1878 at the age of two, had a plaque in his home that read: We grow too soon old, and too late wise.
Wisdom requires discernment and the insights that come from experiencing life’s challenges. It took me decades to recognize how long it takes to acquire wisdom. In my younger years, I thought I was a lot wiser than I was. This was especially true in accepting the limits of my ability. It was only by processing the pain of disappointments and acknowledging my limitations that I gradually accumulated a modest amount of wisdom.
In college, a wise mentor told me, “Bill, you can’t change human nature,” but I didn’t believe him. It wasn’t until my forties that I accepted just how hard it is to change other people to behave authentically and ethically. You can only have a modest impact on those people you are in direct contact with, and limited impact on others. When I finally accepted this reality, I have found great satisfaction in taking vicarious pleasure – but no credit – in the accomplishments of authentic leaders.
When we have the wisdom to acknowledge our limits and the limitations of our impact, we can focus our energies on making a difference in our immediate world. Only then can we find the serenity to accept the things we cannot change. This in turn gives us the courage to change the things we can – and realize the fulfillment that comes with it.
MSNBC: Fmr. ExxonMobil board member: ‘Tillerson is a patriot’
Former ExxonMobil board member, Bill George, joins MSNBC’s Ali Velshi to share his experience working with Rex Tillerson at ExxonMobil.
CNBC: George: I Don’t Know Rex Has Any Personal Friends In These Areas
Bill George, former Medtronic CEO, weighs in on on Exxon Mobil Corp CEO Rex Tillerson as President-elect Donald Trump’s leading candidate for U.S. secretary of state.
NYT: Wary Corporate Chiefs Keep an Ear Tuned to Trump’s Messages
It started with Carrier. Ford was next. So by the time Donald J. Trump singled out Boeing for a Twitter taunt on Tuesday, corporate executives across America had read the writing on the wall: It was time to hunker down.
Initially aiming to pressure companies like Ford and Carrier to keep factory jobs at home instead of moving them to Mexico, Mr. Trump has upped the ante in recent weeks, forcefully reminding business leaders of his campaign vows to impose painful tariffs on companies that ignore him.
Fresh off a deal intended to keep roughly 1,000 Carrier jobs in Indianapolis, Mr. Trump took aim at Boeing on Tuesday with a complaint that it was overcharging the government on a potential $4 billion contract to replace Air Force One. “Cancel order!” he wrote in a Twitter message.
Unlike the earlier factory-focused attacks, Boeing’s turn as a target of Mr. Trump’s ire caught big business off guard, especially since Boeing is among the bluest of the blue chips and is not just a substantial employer in the United States but the single largest American exporter.
For all of Mr. Trump’s theatrics, the fear in the executive suites of ending up in the cross-hairs of the president-elect is real, according to Bill George, a former chief executive of Medtronic, a large medical equipment maker based in Minneapolis with over $30 billion in global revenues.
And it is not just those who do a lot of business with the government. More broadly, the country’s chief executives find themselves in an unusual and unexpected position with an incoming Republican administration — on the defensive. And whether they like it or not, current and former business leaders said Mr. Trump’s Twitter messages and other statements will filter through corner offices and boardrooms and influence decision making.
“Not that they didn’t think about it before, but C.E.O.s are going to think harder about the consequences for the economy of moving jobs overseas,” said Kevin Sharer, who ran biotech giant Amgen for more than a decade beginning in 2000 and has served on the boards of Chevron, 3M and Northrop Grumman. “What the president-elect is trying to do,” he said, is send the message “that his priority is jobs and the economy.”
But Mr. Sharer said Mr. Trump’s methods so far are limited and relatively easy for big business to accommodate. “This is a very, very minor move,” he said, referring to how United Technologies, Carrier’s parent, agreed last week to keep roughly 1,000 jobs in Indiana from moving to Mexico following pressure from Mr. Trump. “If a new president says please don’t, it’s a no-brainer.”
Blair Effron, co-founder of Centerview Partners, a leading independent investment bank in New York, echoed Mr. Sharer’s analysis.
“All in all, this is probably more important in terms of symbolic impact than it is in terms of substance,” said Mr. Effron, a prominent Wall Street Democrat who strongly supported Hillary Clinton for president. “But symbols matter.”
Mr. Trump’s targets are not just chief executives. On Wednesday evening, he went on Twitter to fire at Chuck Jones, the president of Local 1999 of the United Steelworkers in Indianapolis, which represents Carrier employees working at the Indiana plant, saying Mr. Jones “has done a terrible job representing workers.”
The Twitter message followed a Washington Post article on Tuesday in which Mr. Jones criticized Mr. Trump, saying that the president-elect “lied” unnecessarily when talking to union members about the jobs he had saved.
Mr. Trump said he intended to continue his crusade. In an interview with Time magazine, Mr. Trump said he would ask his newly appointed chief of staff, Reince Priebus, for a list of companies that have announced plans to leave the United States.
“I can call them myself,” he told Time. “Five minutes apiece. They won’t be leaving. O.K.?”
Still, for all the sturm und drang, the underlying message from the president-elect’s cabinet appointments is that he is building an administration of business-friendly veterans of government and Wall Street who favor a wish list of corporate goodies like tax overhaul and deregulation.
Mr. Trump, and the vice-president elect, Mike Pence, have made clear that in addition to sticks like public shaming and the threat of tariffs, they would push for these carrots for big business as well. “I don’t blame the companies,” Mr. Trump said in an interview last week on the floor of Carrier’s Indianapolis plant. Washington, he said, “has been taxing and regulating companies to death. We’re untaxing and unregulating.”
Hopes are already running high among leaders of the biggest public companies that the Trump administration will relax what they see as burdensome regulations, along with overhauling the corporate tax code. Mr. Trump’s taunts, after all, may be a small price to pay for looser regulations or being able to pay only a modest tax when repatriating hundreds of billions of dollars now parked overseas.
“I don’t think anybody wants to be shamed,” said Mark Sutton, chief executive of International Paper, in an interview with CNBC. “If it created a dialogue, if taxes were your problem and that’s why you made some decisions and that created dialogue, then I think maybe it could be for the good.”
At the same time, though, Mr. Trump has been highly unpredictable, more reminiscent of a European or Latin-American-style populist, said Mr. George, who currently is a professor at Harvard Business School.
“Boeing is building a brand new 747 Air Force One for future presidents, but costs are out of control, more than $4 billion,” Mr. Trump wrote on Twitter on Tuesday morning. “Cancel order!”
At almost the same moment, he publicly thanked SoftBank, a Japanese company, for investing and creating jobs in the United States. Earlier, Masayoshi Son, SoftBank’s chief executive, met with Mr. Trump at Trump Tower.
Although Mr. Trump claimed credit for SoftBank’s decision to invest up to $50 billion in the United States, those plans predated the election, and Mr. Son has owned a controlling stake in the mobile phone carrier Sprint, among other companies, for several years.
Since the election, Sprint shares have risen 40 percent, partly on hopes that it could be acquired by its rival T-Mobile. While antitrust officials under President Obama have been wary of deals in the telecom sector, Mr. Son and investors are hoping the Trump administration might look more favorably on any potential deal.
Mr. George, who has served on the boards of several Fortune 500 companies, acknowledged that Mr. Trump’s threats on Twitter will force chief executives to think twice before moving production overseas, at least initially.
“It will act as a short-term deterrent in terms of closing factories and moving overseas,” he said. “It won’t change the long-term trend but he clearly promises to be an activist president who will use the bully pulpit throughout his presidency.”
Taking on individual companies raises the risk, some say, of potential abuses by those who might have advance knowledge of Mr. Trump’s actions. Boeing’s shares, for example, initially took a dive after his Twitter message on Tuesday before subsequently recovering.
“If you knew about the tweets beforehand, that would be insider trading,” said Adam Pritchard, a University of Michigan law professor who served at the Securities and Exchange Commission in the 1990s. “You could make small sums of money, I suppose, but if you are buying in large enough volume to move the market or make a lot of money, that would be enough to alert the surveillance units of the exchanges.”
While some chief executives may be rattled by Mr. Trump’s off-the-cuff style, others, especially in the manufacturing sector, say they welcome the idea of a businessman in the White House and his focus on keeping jobs in the United States.
“I didn’t vote for him but I can’t overstate what a bunker mentality most businesses have after eight years,” said Frank Sullivan, chief executive of RPM International, an Ohio manufacturer of paints, sealants, and specialty chemicals with over $5 billion in sales. Mr. Sullivan said that he had supported Gov. John Kasich of Ohio in the Republican presidential primaries; even though he did not vote for either main-party candidate in the general election, he said that he now looked forward to working with the new administration. “We’re not looking for a fight,” he said.
This content was originally posted on NYTimes.com on 12/07/16.