In Search of Leaders
(cover story)
Whatever their strategy, CEOs are convinced that grooming top leaders is absolutely key to their companies' ability to compete.
Johnson & Johnson has a clear management challenge. The 117-year-old company consists of more than 200 distinct operating units, most led by a president or managing director. That gives each of these leaders operational autonomy. Yet at the same time, J&J needs to ensure that each of them maintains the company's reputation for scrupulously protecting the well-being of customers, as epitomized by how smoothly it handled the famous Tylenol recall case.
Running such a decentralized company allows Chief Executive William C. Weldon to move his top leaders from one challenge to the next, bolstering their development with formal leadership training programs. "You have this wonderful developmental opportunity as an individual," says Weldon, at his office in New Brunswick, N.J. "As a company, you get to develop people."
Another important benefit of J&J's focus on grooming leaders has been management stability. The company, which has $36.3 billion in sales and 108,300 employees, has had only six chairmen in its history, all of whom rose from within the ranks. Weldon, 54, who became chairman and CEO in April 2002, was No. 6.
Not far away, in Armonk, N.Y., another leading CEO is spending a great deal of time on developing his top talent. IBM's Sam Palmisano is determined to push his vision of "On Demand" computing, in which IBM's software, hardware, services and even research units organize themselves to focus on delivering integrated technology solutions to customers.
Palmisano believes that if leadership development isn't connected to the company's strategy, it won't work. "We don't separate out strategy from leadership," he says.
Both Weldon and Palmisano are spending huge amounts of time and resources on leadership training—not because it's another passing management fad, but rather because they increasingly see it as essential to their companies' ability to compete. "I talk to CEOs all over the world and I can't name anyone who doesn't think this is core and essential," says Palmisano, who says he spends 30 percent of his time on leadership development.
Like Weldon, Palmisano moved up the ranks to the top job, rather than parachuting in. J&J and IBM tied for first place in Chief Executive's ranking of the Top 20 Companies for Leaders, conducted in cooperation with Hewitt Associates.
The ranking, and the reasoning that went into it, reflect important changes in thinking about leadership in the post-Enron age. One clear implication is that companies no longer believe they can find a glamorous, outsider CEO to magically solve their problems. "In this era of nervous boards, directors are interested in homegrown talent versus outside messiahs," says Jeffrey Sonnenfeld, associate dean of the Yale School of Management and one of five Top 20 judges.
In third place is General Electric, which is famous for its leadership training, even if some GE "alumni" have struggled to lead other companies. Rounding out the Top 20 are such well-known names as Dell, FedEx, Procter & Gamble and Southwest Airlines, as well as a few surprises, including General Mills, PepsiCo, State Farm and Wells Fargo.
The mess we’ve left behind
At U.S. military bases overseas,
massive pollution and a costly clean-up
Around the globe, the U.S. flag is being permanently furled and the sun is setting in America’s fast-shrinking network of military installations. Some 492 bases, including 463 in Europe, are closing or cutting back operations. And after decades of U.S. armed might projected against the Soviet threat, a new problem is emerging from America’s victory in the cold war: massive pollution that will cost hundreds of millions of dollars to clean up.
Officially, Department of Defense overseas policy calls for strict adherence to either U.S. or host-nation environmental laws, whichever are the most stringent. But that policy has been widely ignored. The national-security mission and the lack of independent oversight have provided cover for years of environmental neglect. The result is serious contamination of soil, ground water, streams and harbors on and around many foreign military installations by a crucible of chemical poisons including jet fuel, used oils, decreasing solvents, PCBs, acids, paint sludges, pesticides, asbestos, cyanide, heavy metals and old munitions.
Attempting to hide its toxic transgressions, the Defense Department has employed evasion and denial when pressed on its pollution record. It also has classified two General Accounting Office reports, one from 1986 and one from 1991, that are highly critical of its overseas environmental practices. Among the major findings of those studies and an investigation by U.S. News:
· The 1991 GAO report concludes that “DOD is not a compliance with environmental laws” at all 10 of the bases examined in Japan, Korea, the Philippines, German, England and Italy. It catalogs several “extremely dangerous” problems involving toxic and explosive wastes and describes hazardous-waste management as “unsatisfactory… inefficient and costly”. The report charges that “DOD has taken only very limited actions to correct theses deficiencies”.
· The same classified report points out that the pentagon employs a common diplomatic fudge, promising to follow environmental laws “when practicable”. The results are predictable. Investigators discovered ground or water contamination at seven of the 10 bases they surveyed…
Living with Nature
All other environmental problems pale beside the ongoing extinction crisis. In the next three decades, fully a fifth of the Earth’s species could vanish forever. Yet currently, little is being done to preserve our rich natural heritage. Ed Wilson, Harvard professor, controversial father of socio-biology and international authority on ants, hopes to change that. He argues passionately that the hemorrhaging of biological wealth not only destabilizes ecosystems and squanders priceless sources of medicine, crops and fuel, but also eats away at the human soul. Human beings, he contends, have a natural affinity and reverence for living things, attachments that are not simply inculcated by culture but deeply ingrained in basic genetic makeup. “If we let too many species go,” he warns, “we face an enormous psychological and spiritual loss”…
Species are slipping into extinction at a stunning rate. The main culprit is habitat destruction. At least half of the world’s species – and perhaps 90 percent – inhabit tropical rain forests, which are being destroyed at a rate of 42 million acres a year. Wilson estimates that in subtropical forests alone 27,000 species vanish each year. Pollution and the introduction of exotic species – which crowd out native plants and animals – are also to blame… About a fifth of the world’s freshwater-fish species are extinct or seriously threatened. Fungi, many of which aid the absorption of nutrients by plants, are on the verge of mass extinction in Western Europe; frogs and other amphibians are declining throughout the world.
And these are just the species known to science. The planet’s biological storehouse is so unexplored that researchers can’t even say for sure how many species exist: The total could be 10 million or as many as 100 million, says Wilson. Marvelous diversity dwells in the most unexpected places…Given such information, some sceptics maintain that a few million species could slip safely into extinction…
Despite limited research, dozens of species already have yielded vital medicines. A drug used to treat rheumatism and contusions, for instance, was derived from the saliva of the vampire annelid worm. Fully one fourth of all prescriptions filled by pharmacies each year are for substances derived from plants, and when drugs form micro-organisms and animals are added in, the total jumps to 40 percent. Wild plants also have helped researchers vanquish countless agricultural pests…
MBA students for God