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John Baldoni
Leadership author

John Baldoni

John Baldoni is a leadership consultant, coach, and regular contributor to the Harvard Business Review online. His most recent book is Lead Your Boss: The Subtle Art of Managing Up.

Out with the hero label, in with a lunch bucket attitude

Q: Tony Hayward, once credited for BP's "green" turnaround, is forced to resign in disgrace. Michael Dell, the revolutionary high-tech entrepreneur, is sanctioned for misleading investors. Wall Street titans, once lionized, are now reviled. Where have all the CEO heroes gone?

In December 1995, Fortune magazine conducted an interview with two titans of American business that defined those heady times: high growth, high return, and high rewards; Jack Welch of GE and Roberto Goizueta of Coca-Cola.

Both became CEOs in 1981 when their companies were underperforming. Welch transformed GE from a slow-footed giant into a sleek juggernaut that dominated a variety of market segments from jet engines and locomotives to finance. Goizueta shook up the culture to focus more on the customer and in the process increased Coke's market capitalization more than 30-fold.

That was then, and this is now. In the mid to late 90s, a tidal wave of economic good fortune buoyed the fortunes of many companies. CEOs were like rock stars with mega salaries and mega reputations. Today in the wake of the recession companies have slimmed considerably and CEOs are likened more to scofflaws and villains than celebrities.

Truth is, neither depiction was accurate. CEOs like Welch and Goizueta did their shareholders proud and delivered strong returns. As many business analysts point out, managing a company in good times is a lot easier than doing it in tough times and with that comes a great deal of blame.

Neither Welch nor Goizueta had it easy. In their Fortune interview, Welch said he was always "scared" that GE would not be nimble enough and Goizueta confided he slept like a baby. "I wake up every two hours and cry."

This gets to the heart of leadership. Leadership, like character, is what you do when the choices are hard. When things are booming, it can be fun to grow the business, introducing new products and services, hiring new employees, and reaping strong profits. Tough times mean facilities closings, layoffs, and bearish earnings.

Savvy leaders prepare for tough times always. They delegate leadership to the front lines. This not only makes for greater engagement because people feel more in control of their jobs, it is great preparation for tough times like ours. So when I am asked where all the leaders have gone, I say nowhere. What has changed is the depiction of them as heroes.

Any company that has survived the last two years is likely to survive years into the future because it has weathered the worst of the worst. Survival may have meant downsizing, resulting in the loss of more than eight million jobs. But equally so, tens of millions more kept their jobs. Those companies that did survive did so because their executive teams figured out how to manage a business in the worst economic times since the Great Depression. No one had a game plan for it; they like all leaders before them figured it out as they went along.

What I have seen lately is the rise of a savvier middle manager. One who understands the challenges of the day and is doing what she can to think big picture and act departmentally to position her company to survive. This means HR managers are using scarce resources to train, develop and coach their colleagues. Engineers are either developing new products or re-thinking old ones to make them more efficient as well as more environmentally friendly. Finance folks are finding new ways to leverage capital across functions so that line executives can be smarter about the way they use corporate funds. This is not revolutionary; it is pragmatic and resourceful.

While may not see the likes of Welch and Goizueta who earned fortunes for their respective companies, we see more lunch-bucket style CEOs: smart, tough, and resilient who can eke out steady earnings year in and year out. These execs won't make headlines but they will make stakeholders - employees, vendors and shareholders - happy!

By John Baldoni

 |  July 27, 2010; 10:37 AM ET
Category:  CEOs , Corporate leadership Save & Share:  Send E-mail   Facebook   Twitter   Digg   Yahoo Buzz   Del.icio.us   StumbleUpon   Technorati  
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Welch and Goizueta deserved the fortunes they made. There are thousands of CEO's who make a fortune and run their companies into the ground. When CEO's earn thousands of times what the workers make and there is no correlation between how well a company does and how much they make you have a broken system. Look at the top brass at AIG, they made a fortune, bankrupted the company, were bailed out by the government and many made even more after the bailout.

Posted by: gvelanis | July 27, 2010 2:14 PM
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I really liked your article. It made a lot of sense. However, one of the things that you forgo to mention when companies are going through tough times is that the leadership should not walk away or receive millions of dollars in bonus compensations, during tough times.

Why should CEO's, Senior VP's, et al be rewarded million of dollars in compensation during times of economic uncertainty? This has never made any sense to me.

Posted by: lcarter0311 | July 27, 2010 2:06 PM
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