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WHARTON
LEADERSHIP DIGEST
January,
2003, Volume 7, Number 4
CONTENTS
Leading
with Integrity: Agenda for
Wharton Leadership Conference on June 4,
2003
Building
Leadership Capacities: Specialty
Chemical Company Degussa AG
The Influentials:
Those Who Create Waves
Seven
Golden Rules of Leadership: AT&T’s
President Betsy Bernard
Board
Ownership and Company Refocusing: Board
Vigilance Make a Difference
in the Wake
of a Failed Takeover
Building
and Leading Teams: U.S.
Naval Academy 2003 Leadership Conference
LEADING
WITH INTEGRITY: Agenda for
Wharton Leadership Conference on June 4, 2003
The
seventh annual Wharton Leadership Conference scheduled for 8 am to 5:30 pm
June 4, 2003 at the Wharton School in Philadelphia.
Focused on "Leading
with Integrity," the
conference speakers include:
   
Chief executives:
Edward
Breen, Tyco International (above left)
John Brennan, Vanguard Group (2nd from left)
William
George, former CEO of Medtronic, Inc.
Patricia Russo, Lucent Technologies (3rd
from left)
Author:
Sherron Watkins, former Enron vice president and author of Power
Failure (above right)
Firefighters:
James Cook, National Interagency Fire Center
Larry Sutton, National Interagency Fire Center
Fortune
Magazine Editorial Director: Geoffrey
Colvin
University
of Pennsylvania:
Peter Cappelli, Professor of Management, Wharton School
Thomas Donaldson, Professor of Legal Studies, Wharton
School
Patrick Harker, Dean, Wharton School
Judith Rodin, President, the University of Pennsylvania
Clifford Stanley, Executive Vice President, the
University of Pennsylvania
Michael Useem, Professor of Management, Wharton School
Information
on the conference can be found here,
and online
registration for the conference is available here.
An
online reservation form for the Inn at Penn, a Hilton-managed hotel one
block from the conference site, can found here.
Building
Leadership Capacities:
Specialty Chemical Company Degussa AG
The
world’s largest specialty chemical company is German based Degussa.
With annual revenue of €12.9
billion, 300 manufacturing plants worldwide, and more than 54,000
employees, Degussa established a leadership development program after its merger of five specialty chemical companies in 2000-01.
 Managed
by Ulrike Steinhorst of Degussa’s Corporate Resources, the leadership
program established a competency model based on the company’s vision,
mission, and guiding principles. The
program asked where the company is going, and then what kinds of leaders
are needed to reach those strategic goals.
Interviews with 4 directors, focus groups with 8 executives,
interviews with 18 line managers, and study of 75 top performers lead to
the creation of a “Leadership Profile.” As described by Ms. Steinhorst:
The Leadership Profile will serve as a common basis
for our group wide Executive Development Process:
o
Creating a common understanding and a common perception of what
successful executives should show in their leadership behavior.
o Providing
the appropriate criteria to assess candidates capable of filling executive
positions.
o
Establishing priorities for executive development.
o
Contributing to ensure that we have the right people in the right
jobs.
It is a common platform for identification, assessment, selection and development
of Degussa executives and their successors:
o By identifying the qualities that, when combined, make excellent
leaders who will deliver success in the Degussa organization. In this
context, it is about behavior, not about technical management and skills.
o By helping individuals and their teams to improve substantially their
performance. It can help
every individual in Degussa to be a better, more effective leader who
creates a climate for success.
o By providing a reference
for focusing people on the behaviors which will achieve the defined
vision, and mission, and give life to the guiding principles. It contributes to build a common and unified
culture.
Eleven competencies are clustered in five major themes:
1) Passion
for performance:
Successful leaders in Degussa are restless in their entrepreneurial
drive and highly motivated to realize mission and strategic targets. This
driver enables Degussa to seize opportunities and to make improvements in
increasing the capability to deliver value and innovational solutions to
the customers. This is the engine that makes the wheels turn.
Related
competency: entrepreneurial drive.
2) Making
sense of the business world:
Successful leaders understand the complexity of the environment in
which they operate: customers, markets, competitors, politics. Involving
systematic approaches to getting the right information, digging beyond the
obvious, successful leaders redefine markets, products or processes
through new and innovative ideas.
Related
competencies: Customer Focus, Innovative Thinking.
3) Making
sense of the people:
Successful leaders in Degussa know how to value diversity, both
cultural and other aspects of managing a global business, on an
individual, interpersonal and organizational level. They have excellent
insight into the organization and they know best how to use the
organizational resources. They know about the importance to act
always in line with the principles, beliefs and values of Degussa.
Related
competencies: Understanding People and Cultures, Understanding
Organizations, Living the Principles.
4) Courage
and determination:
Successful leaders in Degussa have a strong belief in their
capabilities to face highly challenging situations, to take the right
decisions and stick to their opinions even in conflict with powerful
others. They have a strong “backbone."
5) Delivering
change, and a climate for success:
Successful Degussa leaders are able to translate their insights
into markets and organizations, into energizing people and teams, and
thereby deliver actual performance. They position themselves as team
leaders ensuring that their teams know and support the targets.
In leading others, they empower people, support and develop them in
their roles to build up the required human resources to be a strategic
asset for Degussa. They are capable of flexibility, reacting to new
situations while keeping the overriding targets in mind.
Related
competencies: Building Capability, Team Leadership, Persuading Others,
Adaptability.
The Leadership
Profile as a universal platform will be integrated into a number of key
human resource processes such as:
o
Identification and assessment of potential
o
Definition of the talent pool
o
Talent review processes
o
Assessment for executive development
o
Succession- and career planning
The
Profile will give Degussa on a world-wide basis a common language and
understanding and perception of what top-performing executives should show
in their leadership behavior. Because the Profile provides a clear and
transparent language about the competencies, it will facilitate
communication and discussions across borders. It is meant to be a pragmatic and easy to use tool.
Note:
Ulrike Steinhorst can be
reached at Ulrike.Steinhorst@Degussa.com,
and Degussa’s home page
can be found here.
The Influentials:
Those
Who Create Waves
By
Kate Faber, Coordinator, Wharton Leadership Center
 How
do trends develop? What causes one candidate to experience extreme
political success and another to fail? When
does “word of mouth” really take place, and, whose mouth is leading
the pack? It’s easy to consider trends as having a life of their own,
but, as The Influentials shows,
there are real people leading these waves. According
to authors Ed Keller and Jon Berry, 10 percent of the population serves as
influential -- individuals who drive trends, mass opinion, and,
ultimately, products and services. Who
are these people? More importantly, how are they leading public opinion?
Influentials
are the
proverbial Jones’ that everyone else is trying to keep up with. They’re the first family on your block with cable
television. They’re the
people who, after they discover you’re looking for a new car, flood you
with insurance ratings, safety assessments, and consumer feedback on the
latest models. They are the
comfortably-educated, hyper-committed, and the ultra-informed. Influentials
are the id and ego of contemporary culture sought by marketers and
advertisers alike.
Keller
and Berry work for Roper polls. They argument is based upon six decades of
research and periodic profiles of the elusive influentials. Going against traditional marketing paths, the influentials cannot be pegged to a single demographic, or norm. Influentials
do, however, share a set of five characteristics: activism,
connectivity, influence, active learners, and trend-setting.
Rather
than stand as witnesses to community development, Influentials seek out
active roles in society. They
enjoy affecting change and making their opinions known. While they are less likely to hold political office than the
general population, Influentials
are involved behind the scenes -- on a committee, attending public
meetings, or serving as officers within local organizations.
Instead
of focusing on one venue for change, influentials
are involved in a number of communities. The
neighborhood, a religious center, and the workplace top the list of groups
influentials feel most connected with. By
engaging with these outside groups, influentials
are exposed to different points of view and encounter new sources of
information. Crossing these community spheres creates greater relationships
for the influentials
to both glean and share information.
Influentials
are unofficial experts on a breadth of topics. A
community values influentials for their
opinions on politics, health problems, or how to handle a disgruntled
adolescent. Without posting an “Advice: 5 Cents” sign, people simply
approach influentials for their opinion on a multitude of topics. Influentials
are distinguished by the breadth of communities they traverse. It
is this breadth that makes them especially attractive as dependable
resources.
You would be
hard-pressed to find an influential
at a Saturday matinee. Influentials are attracted to active engagement, choosing to learn through
experience and people rather than more passive vehicles. Interested
in social and environmental culture, influentials
learn best when interacting with others. They
love to be engaged and social, whether attending a dance party or hosting
a hiking trip. If they do
watch television, it is typically for the news or as an inspirational
adjunct to their more active hobbies.
Finally, influentials are trendsetters. They notice new products, services, or
technologies and then assess their relative value. Among the first to
champion personal computers and cell phones, influentials
also contributed to the demise of electronic books and the finessing
of Internet banking. They
serve as barometers for public acceptance and as early adapters of
relevant products.
Note:
Kate Faber can be reached at kfaber@wharton.upenn.edu.
Seven
Golden Rules of Leadership:
AT&T’s President Betsy Bernard
What happens when a hostile takeover attempt is
repelled? Three academic
researchers -- Sayan Chatterjee, Jeffrey S. Harrison, and Donald D. Bergh
-- studied 76 companies that successfully resisted a takeover effort.
They theorized that companies targeted for unwanted takeover were
viewed by the pursuer as requiring strategic redirection.
But when the target defeated the hostile attempt, did the target
view the experience as a “wake-up call” from which it subsequently
restructured to prevent future takeover bids?
The researchers predicted that it depended on the
vigilance of the governing board. They
theorized that companies with vigilant boards were less likely to refocus
in the wake of a defeated takeover. These
boards presumably had actively challenged top management prior to the
takeover threat, and top management in turn had already refocused its
strategy or fine-tuned its operations.
Less vigilant boards, by contrast, had arguably allowed top
management the latitude to drift in less optimal directions.
The investigators gauged the governing boards’
vigilance as the extent to which the board was dominated by independent
directors (no current or past employment by the company), independent
directors held a high fraction of the company’s stock, inside directors
(the CEO and other top executives) held a low fraction of the firm’s
shares, and whether the board chair was not the chief executive.
They measured restructuring as the extent to which the company
refocused its operations through spin-offs or sales of divisions or
plants.
The results point to the importance of board
vigilance. Companies with
relatively low levels of stock ownership by the independent directors and
high levels by inside directors significantly more often refocused their
operations after the hostile bid than other companies.
The fraction of independent directors and separation of the CEO and
chair positions, however, were found to have no impact on the likelihood
of refocusing.
The shock of the takeover attempt thus more often
jarred companies with less vigilant boards into action than at firms where
the independent directors exercised a stronger hand compared with inside
directors, at least as measured in their relative stock holdings.
This points to the importance of ensuring that the independent
directors acquire substantial stock holdings as part of their board
service. The results also
suggest that whether the CEO and board chair are the same person or
separate people has little bearing on board vigilance, a finding
consistent with other research indicating that the separation of those
roles has relatively impact on company performance, at least in the U.S.
Source: Sayan
Chatterjee, Jeffrey S. Harrison, and Donald D. Bergh, “Failed Takeover
Attempts, Corporate Governance, and Refocusing,” Strategic Management
Journal 24 (2003), pp. 87-96.
Building
and Leading Teams:
U.S. Naval Academy 2003 Leadership Conference
By Chris Maxwell, Associate Director, Wharton
Undergraduate Leadership Program
The U.S. Naval Academy hosted the 2003 Leadership
Conference in Annapolis, Maryland on
January 15-17, 2003. Students
from the U.S. service academies and the Royal Military College of Canada,
and undergraduates and faculty representing leadership programs from
eleven civilian universities, came together to learn from distinguished
speakers and to exchange innovations in leadership education.
Deputy Secretary of State Richard Armitage, reminded
the assembly that leadership was more than a subject to study, and that
“it’s in the gap between management and leadership that battles are
fought and won.” Armitage
emphasized the principles of duty, honor, and loyalty, and cited Sen. John
McCain’s celebrated upholding of these principles during captivity in
North Vietnam: “This will
be noticed by others, even if you think no one will ever know.”
Rodrigo Jordan, President of Vertical, S.A., Chile,
and world-class mountaineering expedition leader, described high
adventure, leadership, and teamwork during the climbing of Everest and K2.
Jordan reminded participants that in climbing teams, as in the
workplace, technical skills needed to be complemented by strong social
skills.
Following the presentations and a panel discussion,
combined teams of service academy and civilian students tackled a
teambuilding simulation, while faculty members attended a faculty
development seminar and best practices exchange, led by David Campbell,
Center for Creative Leadership.
The opportunity to learn more about leadership in a
new and challenging environment was not lost on Danielle Qi, a Wharton
School undergraduate who attended the conference.
She said, “Ultimately, my deepest impressions from the conference
stem from its facilitation of experiencing perspectives different from my
own. I was truly awed by the
talents and cultural richness of the people that I met.”
Note: Chris
Maxwell can be contacted at maxwellc@wharton.upenn.edu
Copyright
© 1996-2002, Wharton Center for Leadership and Change Management
University of Pennsylvania
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Betsy
Bernard, the new president of AT&T, sees seven main principles as the
foundation for