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Cisco CEO's Leadership Lessons

1. There's almost nothing a leader cannot accomplish if they do not care who gets credit.
2. Leadership is about getting tough issiues, not only on the table, but driving to resolution without it ever becoming personal.
3. Leaders have the courage to try new things and if it works, build a strategy around it and then integrate it into our technology and business architectures.
4. Leaders support other leaders especially during tough situations. If they disagree with other leaders' decisions, and only if it's important enough to continue the disagreement, do it peer-to-peer.
5. Leadership is about the ability to communicate the V / S / E objectives of a focus area, while still being realistic with ourselves and our group about the challenges that the V / S / E must overcome.
6. Leadership is about driving the culture and really walking the talk, including transparency about mistakes and what we need to do better.
7. Leadership is out Cisco Family.

About John Chambers:

John Chambers is Chairman and CEO of Cisco. He has helped grow the company from $70 million when he joined Cisco in January 1991, to $1.2 billion when he assumed the role of CEO, to its current run rate of $40 billion. In November 2006 Chambers was named Chairman of the Board, in addition to his CEO role.

Chambers has received numerous awards for his leadership over his past 16 years at the helm of Cisco, including Time Magazine’s "100 Most Influential People," one of Barron's'"World's Best CEOs," the "Best Boss in America" by 20/20, one of BusinessWeek's "Top 25 Executives Worldwide," "CEO of the Year" by Chief Executive Magazine, the Business Council's "Award for Corporate Leadership," and "Best Investor Relations by a CEO" from Investor Relations Magazine three times. During his tenure as CEO, Cisco has been named to Fortune's "America's Most Admired Company" list seven times, BusinessWeek's "Top 50 Performers" list six times, Forbes' "Leading Companies in the World," and is one of the top 10 places to work in the United States, China, Germany, France, India, UK, Australia, Singapore, and several other countries.

In addition, Chambers has been widely recognized for his and Cisco's philanthropic leadership, recently receiving the U.S. State Department's top corporate social responsibility award (ACE) from Secretary of State Hillary Clinton as well as the first-ever Clinton Global Citizen Award from former U.S. President Bill Clinton. He has also been awarded the Woodrow Wilson Award for Corporate Citizenship, and the prestigious Excellence in Corporate Philanthropy Award, an award given by CEOs to their CEO peers.

Chambers takes an active role in corporate social responsibility initiatives worldwide, which most recently include forming a public-private partnership to help rebuild healthcare and education models in the Sichuan, China region impacted by the May 2008 earthquake. Chambers also cosponsored the Jordan Education Initiative, which Cisco has worked on in partnership with His Majesty King Abdullah II of Jordan and the World Economic Forum. Additionally, in late 2006, Chambers co-led a delegation of U.S. business leaders, in partnership with the U.S. State Department, to form the Partnership for Lebanon, helping provide critically needed resources for ongoing reconstruction in Lebanon. Chambers has also spearheaded several other education initiatives, including the 21st Century Schools initiative, to improve education and opportunity for children in the Gulf Coast Region affected by Hurricane Katrina.

He has served two American presidents, most recently as Vice Chairman of the President George W. Bush National Infrastructure Advisory Council (NIAC), where he provided industry experience and leadership to help protect the United States' critical infrastructure. He also served on President George W. Bush's Transition Team and Education Committee, and on President Bill Clinton's Trade Policy Committee.

Chambers joined Cisco in 1991 as Senior Vice President, Worldwide Sales and Operations. He assumed the role of President and CEO in 1995. Prior to joining Cisco, he spent eight years at Wang Laboratories (1982-1990) and six years with IBM (1976-1982). He holds a law degree (1974) and a bachelor of science / bachelor of arts degree (1971) in business and a law degree from West Virginia University and a master of business administration degree in finance and management (1975) from Indiana University.

3 Ways to Leverage Your Best People

Too often managers unintentionally hinder or discourage their star performers. This counter-productive behavior is not ill-intended. It's often because the manager isn't sure how to motivate someone who is so exceptionally talented. If you are lucky enough to have such high-performers on your team, try these three things to make the most of them:

1. Push them to the next level. Stretch and challenge stars. Find out what they are good at and what they need to learn and craft assignments accordingly.

2. Let them shine. Don't hide your stars. Give them visibility. Let others know what they are doing. When they look good, you do too.

3.Let them go. Top performers need room to grow. If it makes sense for their development, let them move on.

Qualities of a Successful Leader

Personal initiative heads the list of qualities a successful leader must possess. These qualities are:

• Personal initiative
• The adoption of a definite major purpose.
• A motive to inspire continuous action in pursuit of a definite major purpose.
• A master mind alliance through which you may acquire the power to attain your definite purpose.
• Self-reliance in proportion to the scope and object of your major purpose.
• Self-discipline sufficient to insure mastery of the head and the heart, and to sustain your motives until they have been realized.
• Persistence, based on the will to win.
• A well-developed imagination, controlled and directed.
• The habit of reaching definite and prompt decisions.
• The habit of basing opinions on known facts instead of relying on guesswork.
• The habit of going the extra mile.
• The capacity to generate enthusiasm at will, and to control it.
• A well-developed sense of details.
• The capacity to take criticism without resentment.
• Familiarity with the ten basic motives that inspire all human action.
• The capacity to concentrate your full attention upon one task at a time.
• Willingness to accept full responsibility for the mistakes of subordinates.
• The habit of recognizing the merits and abilities of others.
• A positive mental attitude at all times.
• The habit of assuming full responsibility for any job or task undertaken.
• The capacity for applied faith.
• Patience with subordinates and associates.
• The habit of following through with any task once begun.
• The habit of emphasizing thoroughness instead of speed.
• Dependability, the only requirement of leadership that can be stated with one word – but no less important to success on that account.

There are qualities of minor importance which leadership in many fields of endeavor may require, but those listed above are on the must list of all able leaders. Measure any successful leader by the list and observe how many of the traits he applies, although he may do so unconsciously.

Source: PMA Science of Success Course. Pgs. 201-203.

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Economics Degree is Best Route to CEO Job

A business major's chance of becoming CEO of an S&P 500 company is 34% lower than an economics major's, according to a study of U.S. degrees by Patricia M. Flynn and Michael A. Quinn of Bentley University. In fact, economics beats all other majors, including physical sciences and political science, as a path to the corner office, their research shows.

Source: Social Science Research Network

Most Overpaid CEO's

I came across a great article in Bloomberg on CEO pay. 

Graef Crystal, a pioneer in compensation consulting, analyzed 2009 CEO pay of 271 executives and found that "companies don't pay for performance." Crystal found that no matter how he analyzed the data the results were always the same: there is no correlation between CEO compensation and shareholder returns.

In Crystal's analysis, he created a "fair pay" model that redistributed the $2.7B aggregate payroll of all the CEO's according to each company's shareholder return, adjusted for company size. Under this model, Lesile Moonves would have taken a$28M pay cut and Google's Eric Schmidt would have seen an increase to $17.4M.

10 Most Overpaid CEO's:

1. Leslie Moonves: CBS, $43.2M
2. Phillipe Dauman: Viacom, $34M
3. Ray Irani: Occidental Petroleum, $31.4M
4. William Weldon: Johnson & Johnson, $30.8M
5. Thomas Ryan: CVS Caremark, $30.4M
6. Glen Senk: Urban Outfitters, $29.9M
7. Randall Stephenson, AT&T, $29.2M
8. James Hackett: Anadarko Petroleum, $27.5M
9. Brian Roberts: Comcast, $27.2M
10. Rex Tillerson: ExxonMobil, $27.1M

10 Most Underpaid CEO's:

1. Vikram Pandit: Citigroup, $128,751
2. Eric Schmidt: Google, $245,322
3. Donald Graham: The Washington Post, $472,997
4. Lloyd Blankfien: Goldman Sachs, $934,425
5. Willard Oberton: Fastenal, $945,092
6. Douglas Berthiaume: Waters Corp, $1,010,393
7. Ian Cumming: Leucadia National, $1,011,850
8. Jamie Dimon: JP Morgan Chase, $1,322,094
9. Harris Simmons: Zions Bancorp, $1,373,352
10. Gary Kelly:Southwest Airlines, $1,559,431

Graef Crystal's breakdown between CEO pay vs. shareholder returns:

Overpaid CEO's vs. Shareholder Return:

Frank Baldino Jr: Cephalon, $11.15M pay vs. -19% return
Paul Evanson: Allegheny Energy, $12.59M pay vs. -28.9% return
Antonio Perez: eastman Kodak, $12.63M pay vs. -35.9% return
Brian Roberts: Comcast, $27.2M pay vs. 1.7% return
Rex Tillerson: ExxonMobil, $27.1M pay vs. -12.6% return

Underpaid CEO's vs. Shareholder Return:

John Mack: Morgan Stanley, $1.92M pay vs. 87.9% return
Jeff Bezos: Amazon, $1.78M pay vs. 162.3% return
Jamie Dimon: JP Morgan Chase, $1.3M pay vs. 34.4% return
Lloyd Blankfein: Goldman Sachs, $934K pay vs. 102.5% return
Eric Schmidt: Google, $245K pay vs. 101.5% return

Original Authors: Jessica Silver-Greenberg and Alexis Leondis

Jack Welch's 4E's + 1P

Jack Welch, former Chairman and CEO of General Electric, exercised an inspirational, innovative leadership style that can be seem in some of the top CEO's today. He embraced change and had an uncanny ability to hire the right people while giving them room to spread their wings under his "Lead more, manage less," philosophy.

"We are constantly amazed by how much people will do when they are not told what to do by management."

He was known to get rid of the bottom 10% of his managers and rewarded the top 20% with bonuses and stock options. Jack Welch took care of his employees by rolling out the stock option program to 1/3 his employees. For employees who did not perform or were not team players, he got rid of them.

So what did Jack Welch look for when he was hiring?

1. INTEGRITY: people with integrity tell the truth and they keep their word.
   
2. INTELLIGENCE: strong dose of intellectual curiosity with breadth knowledge to work with or lead intelligent people in today’s complex world.
   
3. MATURITY: handle stress and setbacks, and enjoy success with equal parts of joy and humility.

It then took years for Jack Welch to create 4E + 1P. A summary of 4E + 1P is below:

ENERGY (positive energy): ability to go, go go - to thrive in action and relish change. Starts the day with enthusiasm and ends the day with it also. Rarely gets tired. Doesn't complain about working hard, in fact, they love to work hard. Loves life in general.

ENERGIZE (ability to energize others): ability to get people revved up. Inspires the team to take on the impossible. People want to work with these people.

EDGE (courage to make the tough yes/no decisions): know when to make tough calls even when all the information is not present. A competitive edge and a will to win.

EXECUTE (ability to get the job done): putting decisions into action and pushing them forward to completion, through resistance, chaos, or unexpected obstacles. Winning is about results.

PASSION: heartfelt, deep, authentic excitement about work. Care about colleagues winning, Love to learn and grow, and love seeing people around them do the same. Tend to be passionate about everything in life.

"We have found that by reaching for what appears to be the impossible, we often actually do the impossible; and even when we don't quite make it, we inevitably wind up doing much better than we would have done."

The year before Jack Welch left, revenues increased to nearly $130B from $26.8B in 1980. General Electric's market value also grew from $14 billion to more than $410 billion at the end of 2004, making it the most valuable and largest company in the world. (Today, General Electric is a Fortune #5 company amassing $183B in sales with $17.4B in profit and market value of $633.48B.)

CEO Pay Cuts AND Pay Raises

Yesterday I provided information on CEO pay cuts from some of the largest companies in the US. I did some research tonight to see what companies are paying their CEO's top dollar even in the midst of painful downsizing and economic challenges.

2008 CEO Salaries:

• Michael Jeffries of Abercrombie & Fitch: 39% increase in pay, though the company's stock fell 72% and he cut 9% of staff.
• Mark Hurd of HP: $42.5M. Laid off 6,000 employees in May. Remaining employees face 5% - 15% salary cuts and Murd is taking a 20% cut in 2009. HP stock is up vs the S&P 500.
• James Mulva of ConocoPhillips: $29.4M and almost $100M the previous two years.
• Larry Ellision of Oracle: $56.8M but recently agreed to a $1 salary for 2009.
• Ron Sargent of Staples: $8.4M.
• Vikram Pundit of Citigroup: $10.8M but taking a $1 salary until the company is profitable. 52,000 jobs were lost at Citigroup.

* Information provided by BusinessWeek, Sept 2009.

CEO Pay Cuts

Over the past year, CEO's pay cuts have become common place.

Here are the 10 largest by revenue.

• General Motors (reduced to $1)
• Ford Motor (reduced by 30%)
• Sears (reduced by $50K)
• FedEx (reduced by 20%)
• American Express (reduced by 10%)
• Motorola (reduced by 25%)
• Eaton (reduced by 6 weeks' worth of pay)
• Continental Airlines (reduced to $0 for Q3 and Q4 of 2008)
• EMC (reduced by 15%
• Cummins (reduced by 10%)

What Makes a Bad Leader?

Every leadership book or article that I have ever come across always focuses on top leadership qualities, probably the easiest way to look at leadership I suppose. Select a handful of top companies and their respective CEO's and see what they have in common. Jack Welch: ex-GE CEO, John Chambers: Cisco, Steve Jobs: Apple, Meg Whitman: ex-CEO EBAY, Jeff Bezos: Amazon, Warren Buffett: Berkshire Hathaway, and Larry Fink: Blackrock. Qualities or traits that most often come up: 

• Clear vision and forward thinking
• Hires the right people for the right roles
• Collaborative in vision development
• Establish benchmarks to measure progress
• Results-based
• Admits errors or mistakes
• Commitment to maintaining integrity across the organization
• Leads by example
• Communicative and persuasive
• Business and financial acumen

It would make sense than that bad leaders would be the opposite of the traits listed above. In a recent Harvard Business Review article by Jack Zenger and Joseph Folkman, they found this to be the case. More specific, the biggest difference between the best leaders and the worst was their energy and enthusiasm. No surprise that some of the best leaders are known for their "charisma" which in many cases can also mean enthusiasm and passion for what they are doing.

What I found interesting is criteria such as inexperience, lack of "proper" education and unproven track record did not appear on the list of worst leaders. Inversely, one could then conclude that experience, an MBA degree from a top program and a proven track record are not the important traits for the most successful leaders. (The one X factor for me would be an MBA. I just think to be a top leader, you need to have an MBA. My case is partially stated below:)

• Jack Welch: BS from University of Massachusetts and MA from University of Illinois-Champaign
• John Chambers: BA and Law Degree from West Virginia University and MBA in Finance and Management from Indiana University
• Steve Jobs: Reed College studying physics, poetry and literature
• Meg Whitman: BA Economics from Princeton and Harvard MBA
• Jeff Bezos: Computer Science and Electrical Engineering from Princeton
• Warren Buffett: a stint at Wharton, then to University of Nebraska at Omaha. Rejected by Harvard Business School. MBA from Columbia University
• Larry Fink: BA and MBA from UCLA

If you want to be a top leader use the list below and do the opposite! Again, everything on the list can be controlled. Nothing states, "Get 15 years of management experience, get an MBA from Harvard or Wharton."

It all starts with energy and passion, believing in what you are doing and exciting those around you to feel just as passionate. Don't accept mediocrity, raise expectations. Have a clear vision of where you are now and where you want to be in 3 months, 6 months, 12 months. Collaborate with others and flatten out your organization. Encourage people to take risks, to innovate and to brainstorm new ideas. Communicate openly and be transparent.

Source: Harvard Business Review , June 2009

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