Conviction: The Leader’s Differentiator
In August, the Business Roundtable revised its Statement on the Purpose of a Corporation. They defined a fundamental commitment to all of their stakeholders, putting customers, employees, suppliers, and communities on the same level as shareholders. One hundred and eighty-one CEOs of the largest companies in the United States signed the document.
Time will tell if this is just words on a page or if these CEOs are really committed to what they created. We will learn how committed they truly are by observing the actions of each of these CEOs and their companies. I’m betting most of them mean it, and I’m rooting for them to be successful. I’m glad that they have come to this conclusion. Clearly, they are listening to what’s happening in the world.
However, I believe that it shouldn’t have taken this long, and it shouldn’t have been the result of seeing what’s happening in the world. The role of a leader is to chart a path, not follow a consensus-driven approach to what’s expected of a CEO.
There are many examples of leaders who lead and don’t follow. Here are just a few.
Larry Page and Sergey Brin, Google Founders, in their 2004 Founders IPO Letter put a stake in the ground as to how they will lead the company. It was clearly not what was expected, but rather an authentic expression of what they wanted and believed and were committed to in how they would lead their company. I don’t think I need to highlight the results they have produced.
Marc Benioff, Founder of Salesforce.com, is not leading the traditional way. He has a long track record of being the atypical founder and CEO. Recently, he learned that due to acquisitions, there was gender pay disparity, so he created a project to quantify the issue, which ultimately resulted in creating pay parity. Then a year later, he learned pay disparity occurred again. Again, he created an initiative to correct it. I suspect he will continue this behavior. Salesforce was ranked #1 in Fortune’s 100 Best Companies to Work For in 2018 and 2019.
Herb Kelleher, Founder and former CEO of Southwest Airlines, is also a great example. Unlike the two aforementioned companies, Herb led a company in an industry that is really difficult to make money. He believed that you should put employees first because they will take care of the customers and the customers would take care of the bottom line. Certainly not the model most CEOs operate under. The result, Southwest Airlines’ value recently exceeded more than all other US airlines combined and is the #1 shareholder returning stock on the S&P for the past 30 years. Herb Kelleher wasn’t focused on maximizing shareholder value, but that’s what he delivered by leading his way.
Is there a common denominator? All three were founders. So I wonder, do founders have an advantage, or is it just that CEOs who weren’t founders get caught in a trap to deliver quarterly shareholder value?
The common denominator, I believe, is founders have a conviction that is not tied to maximizing shareholder value.
Conviction is a firmly held belief or opinion. I believe all founders have a conviction about doing something new or different. This is what drives them, to alter the current reality in the domain in which their company operates.
Non-founders grow up as leaders and become CEOs because they learned how to navigate the corporate world and its rules and ways of operating. That doesn’t mean they can’t have conviction beyond the way it’s done, but it takes a lot of introspection and courage to step out of the pack and to lead from conviction that is different from the expected path.
Indra Nooyi, did just that. The former CEO of PepsiCo pivoted the company to healthier foods. Today, we would have said of course, but she started the process 21 years ago, where in 1998 she oversaw Pepsi’s acquisition of Tropicana and later, Quaker Oats in 2000. She wasn’t even the CEO at the time. PepsiCo made quite a number of healthier snack and drink acquisitions during her tenure as CEO. Under her leadership, the company pledged to reduce obesity rates, and she reduced the size of chip packets and soda bottles as well as introducing diet brands as alternatives. PepsiCo thrived under her leadership, growing revenue from $35B in 2006 to $63B in 2017 and by the end of 2017 total shareholder return was 162 percent.
Former Ford CEO Alan Mulally was another one of those leaders. When Bill Ford hired him, analysts were very critical of Bill because Alan wasn’t a “Car Guy.” Well, turns out Bill was the smart one. Alan Mulally was a terrific leader, likely the strongest CEO in the US, if not the world, during his tenure. Why? Because he had conviction about what was needed to turn Ford around, and they did turnaround under his leadership. Ford was the only major auto manufacturer who didn’t need public money during the 2009 bailout. Alan Mulally had conviction.
Clearly, leaders who are not founders can and do lead from conviction. As you evaluate your leadership, look and see, are you following the worn path or are you operating from conviction as a founder would?
You don’t need to be a CEO to have conviction, you just have to have strong beliefs or opinions about that which you are working on. It’s even better if those beliefs are outside the mainstream.
What are your convictions? Do you have the courage to lead from them?