Under Attack – Leaders

I refer not to political leaders. Not, say, to the American president, who in the last several hours set off a firestorm of criticism against him. I refer to corporate leaders, who in the last several years have been under assault as never before in the history of big business.

The attacks against chief executive officers have come from several directions – the press and the people among them. But at the top of the list of aggressors are investor activists. Activists who take aim at the highest levels of corporate leadership and management.

Such attacks are increasing not only in quality – they are notably more effective in the present than in the past – but in quantity. The Wall Street Journal reports that during the first half of this year, activists spent $40 billion targeting 136 companies with market values of more than $500 million. This is by far the most since 2013, when the data was first collected. And, it is up significantly from the same period last year. Moreover we are talking here attacks not only against small companies, with names you’ve never heard of. But attacks against big companies, with household names such as Xerox, Procter & Gamble, and Microsoft.

When activists get into the act, CEOs are, inevitably, without exception, themselves under attack. Their performances are being openly and aggressively questioned. Their professionalism is being obviously and antagonistically judged. Boards become edgy, stockholders become judgmental, the press and the public become aware that blood is being drawn.

What are CEOs to do? How to defend themselves without humiliating themselves? Without permanently, ruinously undermining their reputations? Most of the time the answer has been … compromise. Reaching some sort of settlement in which CEOs give up some of their power and authority in order not to surrender all of their power and authority.

During the first half of this year activists won a record-setting 119 board seats – over 85% of them through settlements. CEOs seem generally to have  concluded better to give up part of the loaf than risk the whole of the loaf.

 

Followers and their Foes

Most followers have foes. Leaders’ top task is to protect their followers from their foes. When leaders fail to protect their followers from their foes, leaders fail their followers, period.

For the forty-year period from the late 1940s to the late 1980s the Soviet Union and the United States of America were declared enemies, locked in a Cold War which ended only when the Soviet Union collapsed, in 1991. During the most of the nearly three decades that followed, Russia and America have continued much more combative than collaborative. They have not been and are not now, friends. To the contrary, Russia and America are foes. Not simply competitors, but adversaries.

  • Historical adversaries
  • Ideological adversaries
  • Military adversaries
  • Political adversaries
  • Economic adversaries
  • Technological adversaries

Every president from George Herbert Walker Bush to Barack Obama has understood this geopolitical truism. This is not to say that every president has had an effective response to Russian aggression. In 2014 when Russia seized Crimea from Ukraine, Obama stood by and effectively did nothing. But it is to say that no president has failed to understand the fundamentally adversarial nature of the relationship. Until now.

No need to reiterate President Donald Trump’s curious, chronic, subservience to President Vladimir Putin. Suffice to say here it has now been proven that Russia launched a cyberattack against the United States. Against the American electoral system, the beating heart of its democracy. If President Trump does not do everything in his power to protect the American people from this existential threat – that persists as I write – he will betray his oath of office. An oath that reads in part, “I … will to the best of my ability preserve, protect and defend the Constitution of the United States.”

 

“Dangerous Ignoramus”

Some of you might’ve noticed – I love alliteration. So, wish I could take credit for the above phrase, but I cannot. It’s Martin Wolf’s, who a few days ago applied it to – guess who – Donald Trump.

I don’t write often about Trump. He is the most arduously and assiduously covered political animal ever – and, generally, enough is enough. But, when something changes, he’s worth a few words. This time what’s changed, if only slightly, is not him, of course, not the leader, but his followers. For the first time during his time in the White House, Trump’s being a dangerous ignoramus has roused his sleeping subjects. It has roused Republicans. Even Republicans – heretofore nearly entirely servile and silent – have felt obliged to go on record against their president who is trying, though he will fail, to overturn some 75 years of post-World War II history.

The two resolutions are nonbinding. Nevertheless, both the House and the Senate did, finally, contradict the president. While Trump was in Brussels demonstrating yet again he was a dangerous ignoramus, Congress affirmed with only a few dissenting Republican votes U.S. support for NATO.  Paul Ryan went so far as to open his mouth. “NATO is indispensable,” he said, proving he could speak. “It’s as important today as it ever has been.”

Additionally, Secretary of State Mike Pompeo, who has tried his level best to carry out the president’s policies in North Korea as well as in Europe, started publicly to choke on his boss’s bile. Dissed and embarrassed just a few days ago by North Korean leader Kim Jong-un, in Brussels Pompeo was reduced to being mute while Trump confronted America’s NATO allies and lashed out at Germany particularly. But, this time the Secretary did not stay silent. Not long after Trump’s tirade against NATO, Pompeo tweeted it was nothing less than “the most important alliance in history.”

Trump tempts. He is an old hand at tempting you and me to focus laser-like on him – him alone. But, when the history of his administration is written, it will be clear that blame lies elsewhere. Responsibility for his miserable presidency rests with those among us who let him get away for as long as he did with what he did.

 

Poland’s Problem

Liberal democracy is in trouble worldwide. Times are tough for those of us who believe in old fashioned virtues such as the rule of law and divided government. But nowhere in the world is democracy in decline so painful to watch as in Poland.

Poland is large – its population is nearly 40 million – and it is exceedingly important strategically. It straddles the line between East and West Europe –  Germany to the West; Ukraine, Belarus, and Lithuania to the East – with Russia not far in the distance. It has had, moreover, a history, if only rather a brief one,  of democracy. Unlike, say, Russia, which has no experience with democratic governance, Poland has. In fact, during the decades between the collapse of the Soviet Union (1991) and now, Poland has been more democratic than not. Not long after the fall of the wall, democracy, and capitalism flourished in Poland, making it by most measures the single most successful country of the former Soviet bloc.

But, in recent years, it’s been straight downhill. Rightist, some would say fascist governments have prevailed in Poland,  and though there have been predictable protests, large ones, in fact, they have, so far at least, failed to stop populists and nationalists from having their way with their country.

This week things came to a head. Poland’s rightist government brazenly ordered a sweeping purge of the country’s Supreme Court. In response, many members of the judiciary said, in effect, “no, no, we won’t go,” while people without power took to the streets to protest people with.

Poland’s judicial system is in total turmoil. Still, it’s not clear which way the country will go. What is clear is that Poland’s problem is Europe’s problem. If Poland quits democracy, as recently have several smaller European states, such as Hungary, several things will die on the vine. Much the most prominent among them, much the most important among them, is the European dream – the idea that out of the bloodlands of World War II could grow a continent with a measure of unity and a measure of security. It seems obvious to me that if the first, unity, turns to dust, so, inevitably, will the second, security.

 

Strongman Sycophants

What first got me interested in leaders were followers. Specifically, followers of leaders who were bad. More specifically, followers of leaders who were very bad. Such as Hitler. Such as Stalin. How, I wondered years ago, and still do, do single individuals get legions to follow their lead when their lead is clearly corrupt and even malevolent?

Let me be clear. I am not here correlating America’s Donald Trump or Hungary’s Viktor Orban or Turkey’s Recep Tayyip Erdogan to Hitler or Stalin. But the degree to which followers in these countries (and others similarly centralized) are ready and willing to fall into line with leaders who want nothing so much as to abrogate the freedom and independence of anyone other than themselves, remains, even after all this time, astonishing.

Turkey, which, just a decade ago, was becoming more democratic, is now clearly autocratic. At some political risk, Erdogan, who has already held power for over a decade and a half, called for early elections, which were held on Sunday. But, instead of denying him additional powers, a solid majority supported the president’s wish to further extend and harden his reign.

To be sure, the election was not fair. Erodgan has suppressed and oppressed his opponents for years. Moreover, there is evidence that the desire for democracy in Turkey is not dead. But, let’s get real. For the moment, sufficient numbers of Turkish followers have given the Turkish leader just what he wanted: near total control over a system of government that places unprecedented power in his hands.

Sigmund Freud wrote even before Stalin and Hitler that we have a “thirst for obedience.” It’s a thirst that apparently is deeply rooted and never completely quenched.

 

 

B-School Blues

Traditional two-year MBA programs are not threatened with extinction. Those in the top tier particularly will continue to be attractive to those with the time, the money, and the credentials to qualify.

However, their appeal has diminished. And their claim to provide a product that in no other way is attainable has been called into question. In recent years, applicants to B-Schools have voted with their feet. In 2016, 74% of one-year MBA programs in Europe reported growing numbers of applications. And, in the same year, applications to traditional two-year MBA programs fell in 53% of US business schools.

Other signs of change and challenge are in evidence as well. Not only are one-year MBA programs continuing to threaten two-year MBA programs, there are growing numbers of options even in addition to these. Some are alternative degree providers, such as Hyper Island, which offers Masters degrees to those who want to be media savvy. Others are so-called “corporate universities,” in-house providers such as Apple University in the US, and ArcelorMittal Leadership School in Luxembourg. In fact, large numbers of organizations – especially but not exclusively in the private sector – now provide in-house leadership and management training of some sort.*

There’s another indicator as well: the high number of B-Schools currently looking for leaders. As the Wall Street Journal recently reported, an unusually large number of even some of the best business schools in the US are currently conducting searches for new deans. “Through the start of June, job listings for 28 business-school deans were advertised…. up nearly 50% from this time last year.”

Why this striking increase? Partially probably statistical anomaly. Still, there have also been some unanticipated early exits, and some searches that have gone on notably longer than usual. In other words, there are indicators that being a B-School dean is less rewarding than it used to be – even at the best institutions. As the dean of Yale University’s School of Management, Edward Snyder, put it, “Being the dean is becoming harder. The expectations of the various constituencies you serve have all dialed up, and it keeps getting a little more difficult to meet those expectations.”

Of course, some of the dissatisfactions are endemic to the context and culture within which B-Schools are embedded. Leadership generally is harder than it used to be. And most leading institutions as well as leading individuals are far less trusted and admired than they were even a generation ago.

But other of the dissatisfactions are specific to business schools particularly. Since their inception in the 19th century, they’ve had a problem being precise about their purpose. Originally, they were intended to professionalize management – to make managers professionals. However, once it became clear that this mission was not being realized, they’ve struggled to define themselves. In fact, leadership became an industry about forty years ago only in response to the failure to professionalize management.

Though the word “leadership” appears in most B-School mission statements – for example, the Harvard Business School states its mission is to “educate leaders who make a difference in the world,” and Stanford’s Graduate School of Business states its mission is to “develop innovative, principled, and insightful leaders who change the world” – there is no metric that conclusively proves or even persuasively demonstrates that they are accomplishing these tasks during the required two-years. If there were, students would not be opting for one-year programs in droves, or even consider any alternative.

One could argue, and I do, that the initial failure to professionalize management, and the subsequent failure to professionalize leadership, is largely responsible for the restiveness that besets business schools generally, and two-year MBA programs particularly. Until traditional B-Schools develop the rigorous curricula that professionalizing leadership would really require, they will prompt applicants to question the investment in time as well as money.

Leadership in Germany

Americans’ obsession with the American president precludes attention to what’s happening elsewhere in the world. But, while the U.S. is burning, other countries are similarly struggling. I refer not only to tightening autocracies, but to wobbly democracies.

Germany is a case in point. For decades it has been an exemplar of democratic liberalism. A haven of stability and security. A bedrock of peace and prosperity.

In the recent past, though, not so much.

Germany’s private sector:

It’s impossible to exaggerate the stain of malignant malfeasance that continues to beleaguer Germany’s heretofore fabled car industry. The emissions cheating scandal that first broke almost three years ago at Volkswagen, ultimately revealed that some 11 million vehicles had been rigged with fraudulent software. Since then Volkswagen has canned its CEO, among other top executives, and has paid some $25 billion in penalties, fines, and compensations. Still the scandals continue. Just this week the chief executive of Audi (Volkswagen’s luxury brand) was arrested. And just this week the German Transport Ministry ordered Daimler to recall 774,000 vehicles, again because of “inadmissible” software related to emissions control. In sum, bad leadership in the German car industry has been endemic – and it continues to pollute.

Germany’s public sector:  

Chancellor Angela Merkel, now in her fourth term, initially enjoyed two terms of nearly unmitigated success. Then she survived a controversial third term to win a fourth. But now, in her last round, she is paying the piper. Merkel initially struggled for weeks even to cobble together what has already turned out a fragile coalition government. And now her ostensible partners are threatening to quit the coalition should she fail to bow to their wishes. In Germany, as in the US, the most contentious issue is immigration. In Germany though it’s gotten so bad that a couple of days ago Bavarian Conservatives nearly brought down the government. Moreover, the chancellor’s interior minister is giving his nominal boss just ten days to come to an asylum agreement with other European countries, lest he go off on his own to act unilaterally. In sum, the heyday of Germany’s most prominent and in many ways most successful post-war leader is over. This means that Germany will now look a lot like other liberal democracies – including the U. S. Germans like Americans and other Europeans will be up against the problem of how to govern when the old rules of cooperation and compromise are largely out the window.

 

When Followers are Enablers

The global obsession with President Donald J. Trump is unparalleled. In part because of changing culture, in part because of changing technology, and in part because of the man himself, never in history has a single individual so dominated our collective consciousness.

For students of leadership this poses particular perils. Given that Leadership Studies and Leadership Development anyway fixate on those at the top, our obsession with Trump seems to confirm this cognitive bias. However, for anyone who takes seriously the subject of leadership – seriously questions how power, authority, and influence actually are exercised – the critical, integral, essential and equal importance of followership has never been as starkly in evidence.

Setting aside policy differences and setting aside chronic violations of individual and institutional norms, Trump and his three oldest children are in any case mendacious, materialistic, and corrupt to the core. How do they get away with it? Because we – enough of us anyway – let them. Their enablers include but are not limited to:

  • Most Congressional Republicans.
  • Most so-called Conservatives.
  • Most past and present members of the current administration.
  • Enough members of the media.
  • Enough American voters.
  • Enough members of Trump’s personal, professional, and political inner circles.

Not all followers – not all enablers – are alike. Some simply stay silent. Others lend modest sustenance. Still others are rabid supporters – lending relentless credence to their cult-like complicity. The point is that Trump does not preside alone. He does so with the sometimes tacit, sometimes explicit support provided by countless others who are indispensable to his capacity to dominate the day.

 

 

Looking for Leaders? Look to Veterans!

There is no evidence so far that veterans have an advantage when they run for political office.  A study of congressional races from 2000 to 2014 showed that a having a military background had “no systemic, measurable effect” on electoral outcomes.

The question though is this: will this time be different? Will running as a veteran in the 2018 congressional elections prove advantageous in a way it has not previously?

I would bet yes. I would bet that the sea change in our political culture, and in our national discourse, will motivate voters to turn to candidates whose leadership skills are proven as opposed to promised. I would bet that in the time of Trump more Americans than not are disgusted with political leaders who are political amateurs.

In Professionalizing Leadership (Oxford, 2018) I wrote about how each of the armed services teaches how to lead in a way that civilians do not. In the military learning to lead is process that is far harder and longer, far better and richer, than it is on the outside.

Americans are not oblivious to this. On some level we understand that leadership, and for that matter followership, in the military are generally superior – which is precisely why the military is the single American institution that escapes our scorn. It is the single American institution that we still hold in consistently high esteem.

No surprise then that the large number of candidates who are veterans – – at least 28 female veterans are seeking House seats; another four are running for the Senate – are playing to their military background. In so doing they are playing to what Americans now see as their strength.

 

Leaders Lacking

What do CEOs lack when the ratio of their pay to the median pay of their employees is, say, 4,987 to 1 (Margaret Georgiadis), or 2,893 to 1 (Michael Rapino), or even 909 to 1 (Steve Wynn)?  Do they lack shame? Do they lack guilt? Do they lack empathy? Do they lack a simple sense of fairness? Or do they lack anything at all – anything in any case with which we should concern ourselves?

Maybe not. Maybe they lack nothing that’s any of our business. Maybe blaming them for charging what the market will bear is blaming the system – blaming capitalism. But… maybe yes. Maybe they do lack something that is our business, that does affect, infect, America’s body politic.

We know at least three big things. First, we know that Americans are as divided now as at any other time in recent history. Second, we know that Americans are split along several fault lines, one of which is class. And third we know that money, Big Money, has all sorts of insidious effects, including exacerbating our divisiveness and distorting our politics.

CEOs whose pay packages are astronomically high are hardly singlehandedly responsible for the economic and political fractionalization to which I allude. But when the few at the top allow themselves to be extravagantly well compensated, while the many at the bottom struggle to make ends meet, the former clearly contribute to our collective dis-ease.

One could argue, then, that too many chief executive officers lack moral outrage at the gross inequities from which they blatantly benefit. And, one could argue that too many chief exective officers lack political awareness – the awareness that by fueling unfairness they are fueling the dystopia that threatens America.