Dealing with Crisis: Five Leaders Speak Out
For one CEO, the challenge was to use the company’s near bankruptcy as a catalyst to emphasize customer service, set up new partnerships and recommit to R&D. For another CEO, the first test of leadership was firing the top management team and whole board of directors. For another, it was initiating a strategy that flew in the face of traditional industry practices. A fourth CEO talked about missing the critical feedback he got from colleagues early in his career, while a fifth said she makes a point of identifying 25 junior people in the company who will be the next generation of leaders.
The five leaders mentioned above — Anne Mulcahy, chairman and CEO of Xerox, Edward Breen, CEO of Tyco, Aditya Mittal, president and CFO of Mittal Steel, Arthur Weinbach, CEO of Automatic Data Processing (ADP) and Michelle Peluso, CEO of Travelocity — spoke to Wharton students and/or to Knowledge at Wharton during recent visits to campus. Their thoughts on management clearly reflect their own personal journeys up the leadership ladder, but, as is often the case, they agreed on some of the skills necessary to run a company in 2005: a constant focus on the customer, a commitment to globalization, the importance of finding and motivating the right mix of employees, and a willingness for both corporations and individuals to take on risk.
Anne Mulcahy, chairman and chief executive of Xerox, calls pressure from Wall Street for short-term performance “one of the most dysfunctional things going on in the marketplace today,” and said she “applauds companies that have pulled back from setting earnings expectations and are trying to reshape the rules of the road. If I could take Xerox private, I’d do it yesterday.” Speaking last week as part of the Wharton Leadership Lecture series, Mulcahy talked about the challenges she faced trying to bring Xerox back from the brink of disaster. In an interview with Knowledge at Wharton after the presentation, she stressed key components of the turnaround, including a constant focus on the customer, new partnerships and an unwillingness to cut back on R&D.
Edward D. Breen understood that he was taking on one of the toughest jobs in corporate America when he agreed to become chairman and chief executive officer of Tyco International in July 2002. After all, the former CEO had resigned and was under investigation for stealing hundreds of millions from the company. Then, hours before Breen was to announce his new position, CNBC reported that Tyco might file for bankruptcy. The company’s stock fell 18% that day. “I knew I was going to be in the fire,” Breen recalled during a recent talk on campus as part of the Wharton Leadership Lecture Series. “But you never know the intensity until you are really there.”
Five years ago, Aditya Mittal, then head of mergers and acquisitions for his family’s company, Rotterdam-based Mittal Steel, wanted to acquire a steel mill owned by the Romanian government, even though the plant was losing $1 million a day. After long and arduous negotiations, both sides eventually agreed to the deal. That transaction, one of many over the years, illustrates what has made the company the world’s largest steel maker — a commitment to consolidation, globalization and risk-taking. Aditya Mittal, now president and CFO, talked with Knowledge at Wharton about the company’s strategy and future plans for expansion.
Arthur Weinbach’s goal in every job he ever held was “to have nothing to do.” One of the most satisfying periods of his career came when people were free to ignore his suggestions. And if one measure of a great CEO is his or her ability to hire and fire people, he has excelled only in the first. Yet Weinbach somehow managed to become CEO of $8 billion Automatic Data Processing, based in Roseland, N.J. During a recent presentation as part of the Wharton Leadership Lecture Series, he talked about taking risks, hiring the right people and the importance of delegating authority.
Top managers should recognize their own weak spots and make up for them by hiring strong, capable people who are encouraged to take risks, Michelle Peluso — CEO of the online travel booking service, Travelocity — said during a recent Musser-Schoemaker Leadership lecture at Wharton. Peluso, who ranked 4th in the Wall Street Journal’s list of 50 Women to Watch in November 2004, focused much of her talk on the importance of finding and motivating the right combination of employees.