CONTENTS 

Leading with Creativity and Conviction:  Wharton Leadership Conference in San
   Francisco on February 2, 2005 
Learning to Lead:  Acquiring and Applying Project Leadership Skills 
Vioxx and Merck:  Leadership During Crisis   
Uncertainty and Trust: Leadership Lessons at High Altitude 
Marketing Leadership:  Dell’s Chief Marketing Officer 
The Systems Coach:   Bill Belichick
 

Leading with Creativity and Conviction:  Wharton Leadership Conference in San Francisco on February 2, 2005 

The Wharton School’s annual leadership conference in San Francisco will be held on February 2, 2005.  With a focus on “Leading with Creativity and Conviction,” conference speakers include 

Mark Bernstein, President, Palo Alto Research Center
Michael Crooke, President, Patagonia, Inc.
John Goldman, President, San Francisco Symphony
Nancy Higgins, Executive VP, Ethics and Business Conduct, MCI
Ann Livermore, Executive Vice President, Technology Solutions
    Group, Hewlett-Packard Co.
Vivek Paul, President, Wipro Technologies

Ann Livermore, HP

Information on the conference and online registration for the conference are available here.
 

Learning to Lead:  Acquiring and Applying Project Leadership Skills 

Researchers Giles Hirst and four colleagues predicted that those appointed to lead special project teams would become better by doing.  Project leaders who reporting learning from the experience should improve their facilitative leadership skills, and those in turn should improve team performance.  And that should be especially evident among those relatively new to project leadership.   

By interviewing 50 research & development teams in information technologies, chemicals, and other areas – and also interviewing their project customers – the researchers found that leaders who reported an improved understanding of how teams and organizations operate were indeed viewed by their team members as more effective at facilitative leadership, including their capacity to build respect among team members, resolve conflict, and foster dialogue, and that consequently improved team performance.  Moreover, the researchers found that the learning effect was greatest among those managers with least prior leadership experience, defined as those with less than two years of project leadership (versus those with more than five years’ experience).   

One of the managers new to the leadership role described his learning experience:  “I went from being fairly junior in the organization, not [being] highly-regarded and not an expert in the area … to coming out at the end with a lot more expertise and confidence.”  At the same time, even veteran leaders reported some improvement in their own capacities.  One with 25 years of leadership experience offered:  “Each project involves new technology, new partnerships, and different individuals with different styles and personalities. As a consequence, even the most experienced leaders must continue to update their skills.” 

The study’s evidence points to the value of experiential, hand-on learning for developing leadership, especially among those relatively new to the role of team leadership.  

Source:  Giles Hirst, Leon Mann, Paul Bain, Andrew Pirola-Merlo, and Andreas Richver, “Learning to Lead: The Development and Testing of a Model of Leadership Learning,” The Leadership Quarterly, June, 2004, pp. 311-327. 
 

Vioxx and Merck:  Leadership During Crisis

By Thomas Ward 

On the morning of Thursday, September 30, 2004, Merck and Co. made a blockbuster announcement – the voluntary worldwide withdrawal of its widely prescribed and highly profitable arthritis and acute pain medication, Vioxx.  The withdrawal was in response to results of a study designed to test the effectiveness of Vioxx in preventing potentially cancerous colon polyps, but which had also shown that the medication doubled patients’ risk of heart attacks and strokes.  The action followed six rapid days of new research reviews, executive decisions, board notification and concurrence, and communication with regulators.  

“We are taking this action because we believe it best serves the interests of patients,” said Merck Chairman and CEO Raymond V. Gilmartin in a statement on the firm’s website.  While he believed it would have been possible for Merck to continue to market Vioxx with labeling reflecting the new findings, “we concluded that a voluntary withdrawal is the responsible course to take.” 

Peter S. Kim, Ph.D., president of Merck Research Laboratories, added that the research results “suggest an increased risk of confirmed cardiovascular events beginning after 18 months of continuous therapy.  While we recognize that [Vioxx] benefited many patients, we believe this action is appropriate.”   Food and Drug Administration officials were surprised by Merck’s move but agreed with it, the New York Times reported.  Dr. Stephen K. Galson, the acting director of the F.D.A’s Center for Drug Evaluation and Research, said, “We think Merck did the right thing.” 

Some independent researchers were far more critical of Merck, believing Vioxx had caused an unacceptable risk of heart attack and stroke from the time of its 1999 launch.  Erich J. Topol, chairman of the department of cardiovascular medicine at the Cleveland Clinic, writing in a New York Times op-ed article titled “Good Riddance to a Bad Drug,” noted that his 2001 research showed that “Vioxx has a five times greater heart attack risk” than a common over-the-counter anti-inflammatory drug with similar benefits, and he called for more testing to be done on all COX-2 inhibitor drugs, including Pfizer’s Celebrex and Bextra.  In a letter in the October 21 issue of the New England Journal of Medicine, Dr. Topol further called on the U.S. Congress to conduct a full review of the case.   

The financial markets responded quickly, and also critically, to the withdrawal of a drug that amounted to 11 percent of Merck’s sales.  By the end of the day of the announcement, Merck shares had fallen nearly 27 percent and the company’s equity market capitalization had declined by some $25 billion.  Bloomberg News quoted a number of money managers calling for Mr. Gilmartin’s replacement as Merck CEO.  By the following day, the first class-action lawsuits against Merck had been announced.    

On a very difficult Thursday morning, Mr. Gilmartin certainly could not be accused of hiding behind a website press release.  He appeared early on CNBC’s “Morning Call,” affirming the withdrawal announcement on the basis of patient safety.  Mr. Gilmartin’s support from the Merck board was made evident by an appearance on CNBC later that same morning by board member (and former Honeywell CEO) Larry Bossidy, who confirmed support for the Merck CEO and approval of the actions taken regarding Vioxx.   

Mr. Gilmartin continued to practice open communication with two further appearances on CNBC on October 13, nearly two weeks later.  In a mid-day interview, he spoke frankly about Merck’s succession process relating to his own position and the pending FDA review of the Vioxx successor drug, Arcoxia, while touting Merck’s financial strength and its commitment to innovation and the development of novel medications.  Later that day, on CNBC’s famously incisive “Kudlow and Cramer” show, Mr. Gilmartin responded effectively to pointed questions about Merck’s product pipeline, the company’s aversion to large mergers but preference for numerous small biotech acquisitions, Merck’s commitment to research, and the difficult issue of exposure to litigation.  Mr. Gilmartin’s forthrightness earned him an appreciative “Good luck” from Larry Kudlow – though tempered by a follow-up, “You’re in the hot-seat.”   

The Merck/Vioxx situation is a developing story.  The Vioxx withdrawal has already cost Merck the product line’s revenue and profit contribution and over one-quarter of the firm’s equity market value.  The outcome of litigation is unknown but its cost could be very significant.  Merck faces other challenges from patent expiration on cholesterol drug Zocor and uncertainty regarding regulatory approval for Arcoxia. 

Amidst the negatives, an evident culture of communication at Merck speaks well for the company and its CEO.  Dr. Kim, Merck’s research chief, immediately reported the negative findings to Mr. Gilmartin, who, following a rapidly conducted research review, concurred with the decision to withdraw Vioxx.  Board notification followed quickly, and the company immediately informed the FDA and foreign regulators.  Mr. Gilmartin has made himself widely available to the media following the withdrawal announcement.     

Whatever the eventual impact of the Vioxx withdrawal on Ray Gilmartin’s tenure as Merck CEO, his immediate and open communication may have at least mitigated the effect of this very negative development on a venerable and now-embattled pharmaceutical company. 

Note:  Tom Ward is a Wharton MBA Graduate can be reached at TGWard718@aol.com. 
 

Uncertainty and Trust: Leadership Lessons at High Altitude 

By Chris Maxwell 

Jack Turner, author of “Teewinot: Climbing and Contemplating the Teton Range” and veteran mountain guide, suggests that a variety of experts have come to help protect us from personal and financial uncertainties.  Career counselors, property agents, and investment managers reduce our risks by guiding or even making critical decisions for us.  But when venturing up a mountain, Turner observes, the uncertainties become more directly experienced. 

With the many protective layers of expert guidance stripped away, mountaineers learn to face and manage uncertainties themselves.  And since mastering decision making in a challenging environment is essential for effective leadership, we have developed a program that uses mountaineering to prepare future leaders for making decisions under duress.  The annual program is designed around ascending the Grand Teton, a mountain of 13,770 ft. in Wyoming.  As part of the Wharton Leadership Ventures program, we arrange for twelve undergraduate students at the University of Pennsylvania to attempt to reach the Grand Teton summit via a challenging climbing route.   

In 2004, under adverse weather conditions including fresh snowfall, six of the participants did achieve the Grand Teton summit.  And along the way they came to appreciate that reaching a summit, whether real or metaphorical, requires trust among those working to get there.  That in turn depended upon openness, reliability, respect, and integrity.  

Stephanie Buswell, a university nursing student, recalled in looking back on her experience on the mountain:  “I wanted to be removed from my comfort zone in order to fully challenge myself both physically and mentally.  I found I had to focus on trust: trusting my feet, the equipment, the individual belaying me, the weather, the rock, our guides, and trusting each other.  I found I could not have any reservations about any of these factors or else I simply would not get up the mountain.”  She did get up the mountain.   

Note:  Chris Maxwell is Associate Director of the Wharton Undergraduate Leadership Program and can be contacted at maxwellc@wharton.upenn.edu.   Information on the Wharton Grand Teton Mountaineering program is available by clicking here and on the other Wharton Leadership Venture programs here.
 

Marketing Leadership:  Dell’s Chief Marketing Officer 

By John Joseph 

Mike George is setting a new strategic marketing agenda at Dell (formerly Dell Computer) with what he calls a “light touch.”  As the company’s first Chief Marketing Officer (CMO), he’s working to raise the bar of Dell’s marketing efforts and ensure a coherent brand for the customer.  He’s done it, he reports in my recent interview with him, not by centralizing marketing initiatives, but by building an internal marketing community and mobilizing them through a common vision, training and technology.  

The CMO role at Dell was created three years in response to increased competition, international expansion and a broadening product portfolio which now includes plasma TVs, LCD TVs, printers, music and PDAs.  As George notes, “Without some guidance of what the brand stood for – each business area could modestly interpret the brand which could cause confusion for the customer.  We were at risk of fragmenting the brand.”  In addition, Dell was going to market in a somewhat unsophisticated way – relying on mass marketing and “feet on the street.”  The rapid evolution of process and technologies such as sales force automation and CRM drove the approximately 20 business units to create their own standards and processes.  The result was a patchwork of technologies across the enterprise. 

As the CMO, George was charged with a change effort designed improve knowledge sharing and bring greater attention to strategic marketing.  Yet key staff roles were not in the Dell DNA.  George adds, “Our core culture is built around the general managers who own the results.”  The marketing function at Dell is fairly decentralized.  Business units are organized along customer segments such as consumers, government, and corporate and along product lines including PCs, servers, and storage.  Units are headed by general managers and have functional reports including marketing managers.   

So rather than centralize marketing, he created a collaborative corporate marketing team with a dotted line to the marketing teams in the business units.  As a result, he’s kept the corporate staff lean and developed competency centers.  Currently, there are 25 competency centers throughout the company working for a single marketing mission.  In this way, the business units still own the headcount and accountability for results, but George and his team can work behind the scenes to influence the efforts of those managers, building buy in and demonstrating value.  George explains, “I keep them involved and aware.  The marketing people can become heroes to their general managers.  And the general managers can become heroes to their bosses.”   

George and his team focused on setting a clear brand vision and strategy and guiding key internal processes.  The brand efforts meant creating a common road map with a brand strategy, guidelines and identity standards.  In this way, the many business units could communicate a coherent brand.  George also managed the evolution of processes and technology.  Dell has long been an online innovator, but over time Dell.com amassed an assortment of websites with different underlying technologies.   George notes, “We’ve globalized the platform and created common metrics…we’re doing the same for a variety of CRM tools.”  Through this community of practice, George also offers training and job rotation to build a new cadre of marketing pros. 

George credits his success to career experiences which include both consulting and marketing.  George spent much of his career at McKinsey and Company where he worked in consumer facing industries including retail, consumer package goods, banks and utilities.  George notes, “As CMO, it’s important to have a fairly strategic perspective on the marketplace and competitive positioning.”  In addition to CMO, George also serves as Dell’s VP and General Manager of U.S. Consumer Business. 

His advice to aspiring CMOs:  They should seek out a diversity of experiences, and develop a solid foundation in key functional areas as well as getting broader general management experience.  “Don’t get too narrow,” George says, “Maintain a happy medium between my background tied to business strategy and a classical marketing background.”    

Note:  John Joseph is a Wharton MBA Graduate and currently a doctoral candidate at the  Kellogg School, Northwestern University, and he can be reached at john-joseph@kellogg.northwestern.edu. 


The Systems Coach:   Bill Belichick 

By John Baldoni 

One of the most heralded coaches in American professional sports today is a man who does not shout, scream, or intimidate his players.  His coaching style is more in keeping with middle managers than celebrity executives.  In college he studied economics; he uses logic and reason, backed by a system of his own creation, to fashion a winning football program.  He is Bill Belichick of the New England Patriots, head coach, personnel director, and chief operating officer. 

A graduate of Wesleyan College, Belichick is a cerebral coach.  In contrast to Vince Lombardi or Bill Parcells, two successful coaches whose powerful personalities brought discipline to their teams, Belichick is low-key.  He has won players to his way not by shouting but rather through thorough preparation, clear communication, and recognition of team effort.  Here are five distinctive features of his coaching style that have implications for managing and leading any high performance team:  

Develop a system.  Belichick ruthlessly exploits his opponents’ weaknesses and methodically places the right players in the right positions.  He makes the most of the talent he has at the moment by dissecting opposition weaknesses and teaching his players how to capitalize on them.    

Teach and adjust the system.  Belichick devotes hours to learning what aspects of his system worked in past games and what did not.  He then conveys his insights to the team, emphasizing the competitive threats and the team’s strengths against them, and adjusting the system to fit the reality.  

Instill discipline.  Belichick traded Lawyer Milloy, a defensive back, to the Buffalo Bills in 2003. Although Milloy had been a key ingredient in New England’s defense, his demands for more money were disrupting team cohesion, and despite an outcry from media and fans, Belichick removed the player from his team.  

Recruit the best within the budget.  The mission statement of the New England Patriots states, “We are building a big, strong, fast, smart, tough and disciplined football team that consistently competes for championships.” Belichick’s looks for the best talent – within his budget.  “What I respect about Bill,” says owner Robert Kraft, “is we have a system in place, and it’s not dependent upon what the marketplace has to offer.”

Support the team. Belichick was fired from his first head coaching job at Cleveland after several  losing seasons.  He took the blame upon himself and offered only public praise for his players. 

Note:  John Baldoni is a leadership communications consultant, speaker, and author; his newest book is Great Motivation Secrets of Great Leaders to be published in January; and he can be reached at john@johnbaldoni.com.  Quotes and football facts are drawn from Judy Battista “Patriots Adhere to Bottom Line to Stay on Top,” New York Times, August 8, 2004.

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 University of Pennsylvania.