Image: Amit Verma
Four titans who defined a new era in business during the past decade recently concluded their terms: PepsiCo’s Indra Nooyi, Unilever’s Paul Polman, Mayo Clinic’s John Noseworthy, and US Bancorp’s Richard Davis.
When they became CEOs, the Great Recession of 2008 was consuming the world’s attention. Many speculated about the possibility of a new depression, a collapsing stock market, and extreme unemployment. Some observers even began to question the foundations of capitalism, arguing it needed to change in order to endure.
Nooyi, Polman, Noseworthy, and Davis recognized that business had to contribute to society in meaningful ways, not just profit from it. They believed that organization had to benefit all stakeholders: their customers, employees, shareholders, and communities and that this approach would result in sustained increases in revenues, earnings, employment, and shareholder value. Through their leadership they encouraged other corporate leaders to embrace this multi-stakeholder approach. Harvard Business School’s Michael E. Porter called this idea “creating shared value” in January 2011.
Let’s examine how each of these leaders refined their organizations’ missions and created sustained success.
The Visionary: PepsiCo’s Indra Nooyi
India-born Indra Nooyi immigrated to the United States in 1978 to study at Yale University. She joined PepsiCo in 1994 and rose rapidly through its ranks. When she was named CEO in 2006, Nooyi recognized the growing obesity crisis and saw how food and beverages were impacting consumer health.
In early 2007, she launched PepsiCo’s new mission, “Performance with Purpose.” She committed to reduce the sugar and sodium in PepsiCo’s core snacks and sodas, which generated most of the company’s revenue, and created the Global Nutrition Group to add healthier products to its lineup.
When soft drink sales declined in 2010, shareholders criticized PepsiCo’s execution. Nooyi responded by beefing up PepsiCo’s marketing and strengthening her leadership team—but held firm to her strategy. By 2012, Pepsi was producing excellent results, which continued unabated through 2018. In 2013-14 Nooyi had to fend off activist investor Nelson Peltz, who called for breaking the company in two, never wavering from her strategy.
Nooyi may have been ahead of her time, as America’s obesity crisis has only recently started to impact consumer behavior, which has given rise to many new healthy food companies and forced all food and beverage companies to adapt. Nooyi will always be remembered for recognizing the importance of food and beverages on consumers’ health.
The Statesman: Unilever’s Paul Polman
Netherlands-born Paul Polman spent 30 years in leadership roles at Procter & Gamble and Nestlé before becoming CEO of Unilever in 2009. Observing the dangers of global warming, Polman focused on sustainability, introducing Unilever’s Sustainable Living Plan and applying it to Unilever’s products and supply chain.
Polman is a strong advocate for the multi-stakeholder approach. In 2011, he told shareholders, “My job is not to serve shareholders, but to serve Unilever’s customers and consumers.” He then suspended quarterly earnings reporting, enabling executives to concentrate on long-term transformation. His advocacy for sustainability earned him the United Nations Foundation’s Champion for Global Change Award in 2014.
Polman faced his toughest test when Kraft Heinz launched a hostile takeover bid in 2017. Within 48 hours, Polman rejected the bid and convinced Kraft Heinz to withdraw its offer. Then he outlined a seven-point plan to improve shareholder value, never wavering on his commitment to sustainability. Since then, Unilever stock is up 20 percent from pre-bid levels, while Kraft Heinz stock declined 50 percent.
Some consider Polman an enigma. One day he’s hailing the benefits of sustainability and long-term focus at the World Economic Forum, and the next day he’s demanding improved performance from Unilever’s senior executives. In my view, Polman isn’t an enigma at all, but a world statesman who exemplifies all the qualities CEOs require in this era.
The Healer: John Noseworthy
When John Noseworthy became CEO of Mayo Clinic in 2009, the world-famous medical center was struggling financially. Congress would soon be negotiating the terms of the Affordable Care Act (ACA), the Obama Administration’s signature health care legislation.
From the outset, Noseworthy built on the values of the Mayo brothers and Mayo Clinic’s historic mission of putting patients first. He prioritized Mayo’s focus on the most complex diseases patients faced, using its research to develop new treatments for many diseases. He reorganized Mayo into a single system of patient care at three major sites to deliver the highest quality care at lowest cost. Noseworthy also took the leadership in Washington to ensure ACA gave priority to patient outcomes.
Noseworthy’s focus on superior quality and patient outcomes elevated Mayo to No. 1 on US News & World Report’s “Best Hospital” list the last three years. He has restored Mayo to financial strength, increasing annual revenues to $12 billion while reducing costs. A $3.6 billion fundraising campaign further strengthened its balance sheet. With the help of a skilled team of physician leaders and administrators, John Noseworthy will be remembered for elevating Mayo as a great healer for millions of people.
The Servant Leader: Richard Davis
Richard Davis started his career as a bank teller, and became the most successful commercial banker in America after US Bancorp named him CEO in 2006.
Under his leadership, US Bancorp became America’s seventh-largest bank with the highest return on equity. He guided it through the 2008-09 financial crisis without a glitch by avoiding high-risk subprime mortgages and derivatives that felled so many other banks. Concerned about the crisis’ impact on bank reputations, Davis stepped up to chair the industry’s Financial Services Roundtable, working with President Obama and congressional leaders on solutions to restore the industry, including the 2010 Dodd-Frank Act.
Described by a fellow CEO as having a “banker body, preacher soul,” Davis believes that bankers must be community leaders, not just profit makers. He frames its civic mission in broad terms, “We’re bankers, and it’s our role to get into the community and give back."
Davis walks his talk. In Minnesota, he has chaired the Minnesota Business Partnership, the Minnesota Orchestral Association, and Greater MSP. He also led the Minnesota Super Bowl LII Host Committee, and serves on the Mayo Clinic and American Red Cross boards.
Davis leads with unimpeachable integrity. When arch-rival Wells Fargo encountered its problems with three million unauthorized customer accounts, he told his leaders that anyone who tried to take advantage of Wells Fargo’s difficulties would be dismissed.
Richard Davis will be remembered as a true servant leader who always puts others’ interests ahead of his own, making him a role model for all bankers. He was recently named CEO of Make-A-Wish America foundation.
A legacy takes shape
Nooyi, Polman, Noseworthy, and Davis ultimately set the new standard of leadership in this era, never wavering from their purpose and values. They became role models for the business community by serving society through their organizations, strengthening their companies and communities at the same time. With their collective breadth of experience and perspective, these leaders will influence business and society for decades to come. Now global leaders such as General Motors’s Mary Barra, Merck’s Ken Frazier, BlackRock’s Larry Fink, and Salesforce’s Marc Benioff must now carry that mantle for the next generation.
Bill George is Senior Fellow at Harvard Business School, former Chair & CEO of Medtronic, and author of Discover Your True North. He serves on the boards of Mayo Clinic and Goldman Sachs.
[This article was provided with permission from Harvard Business School Working Knowledge.]