Authentic Leadership: Rediscovering the Secrets to Creating Lasting Value

by Bill George

Former Medtronic chairman and CEO Bill George wrote this book following a series of corporate scandals, including Enron, Sunbeam, Tyco, and Worldcom—just to name a few. These companies imploded because management was fixated on maximizing short-term shareholder value.

To paraphrase my favorite line in the book: you are running a business, not a stock. That said, the compound annual growth rate of Medtronic split-adjusted stock price was 28.5% during George’s 12-year tenure, according to my calculations. Not too shabby!

The first part of the book deals with the character, values, and sense of purpose required to inspire employees. George also shares his wisdom and personal experiences regarding customers, quality, market share, growth, innovation, acquisitions, FDA approval delays, Wall Street analysts, and corporate governance.

“It is impossible to legislate integrity, stewardship, and sound governance… Leaders are defined by their values and their character…  Unfortunately, the media, the business press, and even the movies glorify leaders with high-ego personalities. They focus on the style of the leaders, not their character.”


The Five dimensions of an authentic leader:

  • Understanding their purpose
  • Practicing solid values
  • Leading with heart
  • Establishing connected relationships
  • Demonstrating self-discipline

“This doesn’t just happen by listing your values. Only in the crucible will you learn how to cope with pressures to compromise your values and deal with potential conflicts between them. You have to put yourself in situations in which your values are challenged and then make difficult decisions in the context of your values. This is not easy when the outcome is uncertain and there is a lot at stake… Nonetheless, it is in these situations and not the easy ones that you find the ‘true north’ of your moral compass.”


“In my experience, motivating employees with a sense of purpose is the only way to deliver innovative products, superior service and unsurpassed quality over the long haul. Competitors will eventually copy any innovative idea for a product or service, but an organization of highly motivated people is very hard to duplicate. The motivation will last if it is deeply rooted in employees’ commitment to the intrinsic purpose of their work.”

“There are many examples of highly successful mission-driven companies outside health care. 3M… Intel… Microsoft… Target.”

“The question is, Do the organization’s norms drive performance or do they undermine it? The latter is what I found at Medtronic when I joined the company. The company’s long history of success had led to a soft underbelly that manifested itself in a lack of discipline. The company was extremely values-centered, but its internal norms of consensus decision making, conflict avoidance, and lack of personal accountability all undermined the company’s performance… Medtronic’s culture had to change if we were going to be an effective competitor and realize our vision of being the global leader in medical technology.”

“When you talk about empowerment, you really mean ‘empowerment with responsibility.’”


“In contrast to what shareholder value advocates argue, the purpose of any company boils down to one thing: servings its customers. Ultimately, its success will be measured on how well it serves all its customers, especially powerful one. If it is superior to everyone else in its field and can sustain this advantage over the long term, it will create the ultimate in shareholder value. This is true across all industries and all types of businesses.”

“My predecessor encouraged me to get into the field with physicians to observe implant procedures and let them teach me the business. It was the best thing I ever did.”

“Not all of the early experiences were positive. I vividly recall an angioplasty case where the doctor was using a Medtronic balloon catheter to open up clogged arteries. The product literally fell apart in the doctor’s hands as he was threading it through the patient’s arteries…  After the case the sales rep told me he had seen this happen several times before. He had filed reports on the defects, but heard nothing back. We counted seven organizations his reports had to go through before it got to the people who designed the products in the first place. Something was terribly wrong here… As well-intentioned as they were, the engineers were not spending any time with customers and were insulated from product problems.”


“Companies that devote themselves to maximizing shareholder value will ultimately fail to do so… This short-term orientation results in a failure to invest in long-term opportunities. Inevitably, the short-term opportunities to increase shareholder value taper off. At this point top management usually turns to financial restructuring to achieve its financial goals. Nonstrategic acquisitions, divestitures, consolidations, layoffs, and cutbacks generally follow.”

“By the time these financial moves are completed, the corporation has lost its capacity for growth… The list of victims of this philosophy is long and growing: ITT, Litton Industries, Polaroid, Sunbeam, Kmart, USX, Westinghouse, to name just a few.”


“Passion begets innovation. As organizations get larger, the natural tendency of managers is to control the business with rules, processes, and procedures. A growing bureaucracy is a huge barrier to innovative ideas and dampens creativity, no matter how much it spends in research and development. Leaders committed to innovation have to work to offset these tendencies, giving preference to the mavericks and the innovators and protecting new business ventures while they are in the fragile, formative stage.”

“We were fortunate to have leaders who were skilled at developing new ventures and were very flexible, creative, and patient. Some of the best operating managers exhibit just the opposite characteristics. For this reason new ventures need a protective sponsor until they can stand on their own.”

“The nature of new ventures is that they are very high risk. To succeed, management has to have a high tolerance for failure and not punish the leaders of unsuccessful ventures just because the hoped for therapy did not materialize. One or two big winners can easily justify a dozen opportunities that did not pan out.”


“Why is sustainable growth so important? Growing companies attract the most important customers and the most talented employees. Growth provides the funds to reinvest in R&D and market expansion and still increase profits. In the process, all stakeholders can be satisfied simultaneously and growth sustained by reinvesting a significant portion of profit increases.” The book describes 7 pitfalls to growth.


“Acquisitions can complement organic growth and, in some cases, accelerate it through the addition of new technologies and augmented capabilities. Therein lies the danger. If leaders rely on acquisitions rather than internal growth for expansion, or to bail themselves out of a jam, eventually they will wind up in trouble. Unlike internal initiatives, the availability and timing of acquisitions cannot be planned or even predicted. No amount of analytical work will ensure the readiness of the right company to join your organization.”

“In my experience acquisitions often fail, not because of the financials or lack of a strategic rationale, but because of cultural clashes. For a vivid real-time example, look at the current tribulations of DaimlerChrysler.”

“The Sofamor Danek acquisition has proven to be the best purchase Medtronic ever made—both financially and in terms of establishing the neurological and spinal business as a major growth vehicle for Medtronic… Very few companies would have stepped up to the challenge of acquiring Sofamor in the face of the pedicle screw litigation. We saw it as a problem to be managed… The key lesson here is that you cannot be timid in the face of known business risks. Taking risks that others fear can result in larger returns than anyone believes possible.”


“Transparency is an integral part of integrity. The truth, both successes and failures, must be shared openly with the outside world… Avoiding the media results in letting someone else tell your story for you, usually securities analysts, competitors, or media personnel… When we had bad news, we broke the full story immediately and were treated fairly by the reporters covering us. This approach gave us exposure and credibility and was far more cost-effective than advertising.”


“Simply stated, we must restore the power of boards of directors to govern corporations. It is the board’s responsibility to preserve and build the institution by establishing ‘a bright line’ between the role of governance and management. In so doing, the board provides the oversight to make sure the management is doing its job and acts as an essential check against executives who take excessive risks or cut corners in search of short-term gain.”

“At a minimum the board must have a majority of independent directors, people with no association with the company as an employee or former owner of a subsidiary. My preference is that two-thirds of the directors be independent. Diversity of directors’ experience is essential to ensuring that the CEO gets a broad range of input on important decisions. It is important to have other CEOs on the board, but it is not good to have an all-CEO board as this can lead to too much commonality of thought and reluctance to challenge one another.”

Bill George was CEO of Medtronic from 1991 to 2001 and chairman of the board from 1996 to 2002. He has also served on the boards of Target, Novartis, and Goldman Sachs. His other books include 7 Lessons for Leading in Crisis (2009) and Discover Your True North (2015).

George, Bill. Authentic Leadership: Rediscovering the Secrets to Creating Lasting Value. San Francisco: Jossey-Bass, 2003. Buy from

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