Five Questions for Bill George

Originially Posted by Charisse Jones, USA TODAY

Bill George is the former CEO of Medtronic, a global leader in medical technology. During his tenure, the company’s shareholder value rose from $1.1 billion to $60 billion. George, 67, is now a professor and an author, teaching management practice at Harvard Business School and offering budding corporate leaders the types of guidance contained in his latest best-seller, 7 Lessons for Leading in Crisis. He sits on several boards, including those of ExxonMobil and Goldman Sachs.

Q: Why did so many CEOs seemingly fail during the economic crisis?

A: I think they were playing the short-term game and not looking at the long-term health and survivability of their institutions. And when the crisis began, the reality was so horrible they just couldn’t face it. The firms that went down, like Lehman Bros.,Fannie Mae, even AIG, the CEOs just failed to face the reality because they were so caught up in a short-term game.

Q: What are some lessons for leading in a crisis?

A: The first one is to face reality. You may have led your organization in this crisis and have to face the reality that things are in trouble, and now you have to go in a whole different direction. The economists now are saying the recession is over. Don’t believe that for a minute. We have huge unemployment, and no one’s creating jobs. Get ready for the long haul.

In a crisis, you can make fundamental changes, and I think it’s incumbent on us to make those fundamental changes in our companies and ultimately in our country to get away from being an instant-gratification society to much more of a job-creation, value-creation society. Like Steve Jobs at Apple, (transforming) the whole way of thinking about cellphones and recorders.

Q: Why are so many economists and business leaders saying the recession is over?

A: They’re looking at the wrong definition. They’re looking at the stock market. Stocks have gone up. They’re looking at corporate profits. They’ve gone up, not because of growth but because of cost-cutting. It’s a bit like Hurricane Katrina: “This hurricane came through, and now it’s over.” No, it’s not. Now we have to deal with the devastation. With the aftermath. That’s what we have in this country.

Q: Banks aren’t doing much lending. Does the government need to prod them?

A: I think the government has trouble forcing banks to do things, but they can change the incentives. I’d like to see investment tax credits get increased, so we invest in things that create sustainable jobs.

Saving General Motors was the right thing to do, but 70% of all jobs come from small businesses and new company start-ups. That’s where we need to focus. The General Motorses of the world are not going to add more jobs. Google started with two people.

Q: Is this the end of the U.S. as the world’s dominant economic power?

A: It is if we don’t do anything about it. We’ve got lots of competition. You can’t just invest in financial instruments and invest in things, we need to invest in people, because that’s our strength.

This is our greatest opportunity to transform ourselves so we can continue to be the world’s greatest economic power. There’s been too much focus on saving companies. We’re not trying to save jobs. We’re trying to create jobs. There’s an enormous difference.