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THE MORAL LEADER
Doing well and doing good are not mutually exclusive.
—Marc Benioff, CEO, Salesforce
In this final chapter, we propose a challenge for your leadership: to be a moral leader who upholds your values, exemplifies integrity, and demonstrates courage to make a positive impact on the world.
Aristotle postulated three qualities of great communicators: logos, ethos, and pathos. Though logic and empathy are required characteristics of today's leaders, what is most necessary is ethos, or morality. In today's era there is a crying need for moral leaders. Think of Mahatma Gandhi, Abraham Lincoln, Mother Teresa, Nelson Mandela, Winston Churchill, and Martin Luther King Jr. as great moral leaders. They set a standard that few of us believe we can achieve.
Yet the virtues they demonstrated are within our grasp. You can become a moral leader by discovering your True North, behaving authentically, and following your North Star to pursue your purpose. When you do so, you inspire people to follow your leadership, and you become a role model for others.
Dov Seidman, business leader, foremost thinker, and advocate for moral leadership, observes, “Leadership is how leaders touch hearts, not just minds, how they enlist others in a shared and significant endeavor, and create the conditions where everyone can contribute their fullest talent and realize their deepest humanity.”
Moral leaders are driven by purpose and animated by courage and patience as they wrestle with issues of right and wrong and inspire others. Moral authority must be earned by who you are and how you lead. No longer can you have power over people; you only can have power through people.
Dov says that wrestling with these issues requires reframing them in moral terms and pausing for deep reflection:
To be a moral leader, you need to pause and reflect on the world you're in, the dilemma you're facing, and how you are handling it. That pause is essential to ensure your behavior is aligned with your values by framing the issue in moral terms.
Chip Bergh: Levi's Moral Leader
Levi Strauss chief executive officer (CEO) Chip Bergh is an example of today's moral leader. Prior to becoming CEO in 2011, Chip attended Lafayette College, served in the U.S. Army, and worked for Procter & Gamble. When he took over, Levi's had declining sales, high debt, and a weakened 168‐year‐old brand that was losing its relevance. Never one to flinch from challenges, Chip believed he could reinvigorate the brand and restore the company's financial strength by leading through his humanitarian values and principles. In 2019, he brought the company back to public markets after 39 years of private ownership. In 2021, despite the COVID‐19 pandemic, the company reported multidecade record revenues and profitability.
When I spoke with Chip as he passed the 10‐year mark as CEO, he was ebullient about how he could make a difference and how he was addressing today's most challenging issues. Chip believes Levi's iconic brand stands for authenticity, and that must be reflected in its leadership and employees.
If a brand doesn't act—if the words and pictures don't go together—that brand is in trouble. We believe in taking stands on important issues and those stands have an impact, not just on the company but on the Levi's brand.
Our brand, one of the most iconic in the world, had a near‐death experience a decade ago. For me, making this company great is a noble cause. Enabling people to be their true authentic selves is what the Levi's brand is all about.
Chip models authenticity in his interactions with Levi's employees. For example, he hosts a monthly “Chips and Beer” session that is webcast globally. After a brief update on company news, he shifts to an open‐mic format that enables employees to ask about anything. He believes his high level of transparency builds trust among employees: “People recognize I'm approachable.”
Chip wants Levi's to be a company where employees bring their authentic selves to work every day. He explains, “The COVID‐19 pandemic had such an epic impact, so I want people to tell their grandchildren someday how the company treated them during this time, especially when we had to close our stores, and gave everyone who got laid off 12 months of health care.”
He also believes leaders must be authentic in how they speak out about important public issues, observing that social advocacy has always been the Levi's way. “In a world that is increasingly divided, CEOs have an obligation to weigh in. We have clout, and we have a voice. If we stand on the sidelines, we're not fulfilling our roles as leaders,” he says.
In recent years, Chip has been outspoken about hot‐button issues like ending gun violence, climate change, and paid family leave. He notes, “Young consumers today are socially aware and read through the B.S.”
We target Gen Z consumers, so we must understand their mindset. Climate change and gun violence are very important to them, so we take clear stands. We can't stand for everything, or we stand for nothing. So we try to stand for things that matter most. My lens in deciding on where to take stands is, will we be on the right side of history 30 years from now?
Chip believes, “A diverse organization will outperform a homogeneous one every time.” Following George Floyd's murder, he had a moment of reckoning when his team took a hard look at Levi's diversity and realized, “The ugly truth is we aren't where we need to be.” Chip responded by meeting with Black employees to understand their experiences working at Levi's, pledging to share annual updates on diversity, equity, and inclusion (DEI) statistics, conducting wage equity audits, and appointing a Black leader to the company's board.
He is also working to strengthen voting rights, giving employees time off to vote and donating $3 million to provide fair access to the polls. When Georgia legislators passed more restrictive voting laws, he called them “racist.” Today, he works with legislators in other states to prevent passage of similar bills.
Chip is a big believer in the “pause principle” he learned from Dov Seidman. In addition to keeping a daily journal, he pauses to ask:
- Did I make a difference in someone's life today?
- Was I helpful to my team today?
- Am I thinking about where we're going and looking around corners?
- Am I living my values?
- Am I leading by example and making a difference in how I lead?
Do you take time for a pause each day? Ask yourself these probing questions, and you will find your days are aligned with your desires and they will help you become a more moral leader. Alternatively, you may find that mindfulness or meditation accomplishes this as well.
Through his actions and his voice, Chip Bergh is a role model for all of us to be moral leaders. He has passion for his purpose of making Levi's a powerful force in the world. He is courageous in taking on politically charged issues, as he inspires and elevates his employees. He concludes, “This company has driven profits through principles, as we manage for the long‐term.”
The New Stakeholder Capitalism
The courage and vision of moral leaders like Chip Bergh provides a refreshing contrast to the transactional, short‐term mindset that has dominated the business and financial world since the 1980s. As short‐term traders, hedge funds, and activist investors gained power—compensated with high fees and 20 percent of gains—they had an insidious effect on capitalism. Focused on driving short‐term gains and share buybacks rather than investing in companies for long‐term returns, they created a frenzy to maximize short‐term shareholder value.
By influencing companies to cut research and other long‐term investments, this pressure impacted the economic value and the future viability of firms like General Electric (GE). In 2001, GE was the world's most valuable company. Under the management of CEO Jeff Immelt, its shareholder value declined by $300 billion, the largest decline in history. With no mission and no clear values, GE is a vivid example of the pitfalls of Milton Friedman's doctrine that “the social responsibility of business is to increase its profits”—and of the failures of 20th‐century leaders who adhere to it.
Though publicly held corporations are legal entities chartered by society for serving society, such fierce shareholder pressures over the past 30 years convinced many businesspeople that their role is solely to manage assets to maximize near‐term returns. In 2019, the Business Roundtable (BRT), composed of the top firms in America, took a momentous step when it shifted from shareholder primacy to stakeholder capitalism.
Led by J.P. Morgan's Jamie Dimon, 181 CEOs in the BRT committed “to lead their companies for the benefit of all stakeholders—customers, employees, suppliers, communities, and shareholders.” Jamie notes, “Major employers are investing in their workers and communities because they know it is the only way to be successful in the long term.” Johnson & Johnson's (J&J) Alex Gorsky, a principal author of the new statement, adds, “It reflects the way corporations can and should operate today, affirming the essential role corporations can play in improving our society when CEOs are truly committed to meeting the needs of all stakeholders.”
This change was met with skepticism by some in the financial community and media, but it has been widely embraced by CEOs and their leaders as the way they have always wanted to operate—absent short‐term shareholder pressures. They are convinced that serving all stakeholders creates greater long‐term value for everyone and avoids debacles like GE.
In my experience, many proponents of maximizing shareholder value never understood how companies create sustainable shareholder value—or they don't care because they are simply short‐term traders of stocks, not long‐term investors in companies. Creating sustainable value must start with the alignment of all stakeholders around a shared mission and values in service to a corporation's customers and all those who have a stake in its success.
An organization's purpose and values engage employees and provide the inspiration for them to innovate and to provide superior service to customers. This creates satisfied customers, which in turn increases revenue. Growing revenues increases profits and provides opportunities for reinvestment in employees, innovation, and customer service. That creates sustainable shareholder value, creating a virtuous cycle as all stakeholder interests are aligned (Figure 13.1).
Leading an organization with a multistakeholder model is not easy, as leaders must make difficult decisions and trade‐offs in attempting to meet the needs of all their constituencies. It is difficult to satisfy all stakeholders as their goals are often conflicting. Investors, employees, customers, social activists, and government leaders will inevitably apply pressure on decision‐makers for their interests to take precedence. Sustaining value creation over long periods of time requires wise judgment and deliberate action from leaders operating with a moral compass. These decisions were especially difficult during the pandemic when rapid changes had to be made with limited information.
Figure 13.1 Sustaining Growth and Performance
Best Buy CEO Hubert Joly catalogues five approaches that different leaders use in decision‐making:
- Just perform.
- Do no harm.
- Be a “net positive” contributor, doing more good than harm.
- Be a force for good in the world.
- Address some of society's greatest challenges.
The first three approaches were typical of 20th‐century business leaders. Today's leaders are committed to contributing through the last two ways. In pursuing their North Star, moral leaders like Chip Bergh are taking on the great issues of our time.
When Should Leaders Take on Public Issues?
Increasingly contentious media coverage and pressure from shareholder activists and social activists raise a vital question: When should CEOs speak out and take action on public issues? These decisions are extremely complex as usually there is no clear “right” answer.
When Russian President Vladimir Putin invaded Ukraine in February 2022, dozens of companies such as BlackRock and Apple pulled out of Russia immediately. Others like McDonald's and Starbucks needed a public nudge and then withdrew. Some drug companies such as J&J and AbbVie elected to continue to provide their lifesaving products. Finally, some companies threaded the needle; PepsiCo withdrew its beverages but continued to manufacture in its dozen plants that employ thousands of people. While the pressures to decide are immediate, the consequences last for many decades.
Deciding to get involved in a public issue is not an easy choice for leaders, as inevitably you will be criticized regardless of what you do. You cannot speak out on everything, or you lose impact. Even if you decide not to be involved, there can be serious consequences. Disney's Bob Chapek found this out by ignoring the Florida legislation restricting discussion of sexual identity issues in public primary school education, which upset his LGBTQ+ employees and many others. Although he later came out against the bill, the damage was done. Meanwhile, his predecessor, Bob Iger, who ran Disney for 15 years, took a public stand against the legislation.
Moral leaders should focus on issues that relate directly to their purpose and values. When Merck's Ken Frazier resigned so publicly from the President's Council following the Charlotteville unrest, he did so from his moral convictions, but he also gave up his seat at the table to influence the president.
To make these difficult decisions, you need the framework of your own purpose and values as well as those of the company. Does being involved violate my deepest values or my organization's? Is it contrary to my North Star or the company's purpose? How can I do the least harm? How can I do the most good?
Let's look at some moral leaders who are addressing important issues through their leadership.
- Making capitalism work for everyone (Marc Benioff)
- Sustaining our environment (Paul Polman)
- Ethical banking that helps people and communities (Richard Davis)
- Building inclusive communities (Glen Gunderson)
- Reimagining health care (Brad Smith)
Will you take on one of these issues, or perhaps you will address educational opportunity for all, women's rights, or income inequality? You cannot change the whole world, but you can have a powerful impact by picking an issue that calls to you and using your voice and your position for the greater good.
Making Capitalism Work for Everyone
Marc Benioff is the quintessential example of how a moral leader uses the duality of “doing well by doing good” to lead his company. He sees his role in leading Salesforce as using capitalism to serve everyone who has a stake in the company, even the homeless on the streets of San Francisco.
Marc's career started at software giant Oracle where he entered with a bang, winning the company's Rookie of the Year award his first year. At work, he thrived with his high energy, extreme drive, and customer focus. Outside of work, he volunteered in the community. He says this separation was disorienting: “I was working in schools, doing philanthropy, and giving back, but I was two people, businessperson Marc over here, and spiritual philanthropist Marc over there.” He says Oracle was “too much Milton Friedman—only about shareholder return.”
Then Marc took a sabbatical to visit an Indian ashram. He had an epiphany when guru Mata Amritanandamayi challenged him to give back to others.
I said to myself, “I want to be one person—the same Marc everywhere and totally integrated. When I start a company, philanthropy, giving, and generosity are the company's values from Day One.” That was a powerful moment.
When Marc founded Salesforce in 1999, he saw a market opportunity to transition software to the cloud and envisioned customer relationship management (CRM) software that could tailor one‐to‐one digital customer relationships. He made values of trust, customer success, innovation, and equality central to Salesforce's culture. Then he baked service into Salesforce's DNA through a 1–1–1 model, where the company donates 1 percent of its stock, 1 percent of its product, and 1 percent of employee time to volunteerism.
Marc has built Salesforce into an incredible success, worth $250 billion. The company is the clear leader in customer relationship management (CRM); it is Salesforce's culture that stands out. Marc explains,
Research shows companies that integrate a broader mission into their corporate culture outperform their peers, grow faster, and deliver higher profits. Salesforce is living proof that new capitalism can thrive, and everyone can benefit. Doing well and doing good are not mutually exclusive.
Marc has the courage to make hard decisions when Salesforce's values are tested. Values are just words, he says, until you turn them into consistent behaviors. When then Indiana governor Mike Pence signed a bill discriminating against LGBTQ+, Marc publicly said Salesforce—which was Indiana's largest tech employer at the time—would disinvest from the state. Other CEOs followed his lead, including Cummings and Eli Lilly. When Pence called him, Marc threatened the business community would issue “rolling economic sanctions” against Indiana. Shortly after, Pence changed the law.
In his hometown of San Francisco, Marc advocated taxing large technology companies to address homelessness. Criticized by other tech CEOs, Marc said, “This is a small amount to help clean up our city, and we are making billions.”
Our female and LGBTQ+ employees, homeless, public schools, and the planet are key stakeholders that form the company's fabric. You're knitting a beautiful quilt. If you bring it together, you can have great shareholder return and fabulous stakeholder returns. We're here to improve the state of the world and love each other, not just make money.
Marc constantly wrestles with issues of fairness and justice, such as inequality. He wrote “We Need a New Capitalism” in the New York Times:
To my fellow business leaders, we can no longer wash our hands of responsibility for how people use our products. Profits are important, but so is society. If our quest for greater profits leaves our world worse off, we teach our children the power of greed. It's time for a new capitalism—fair, equal, and sustainable capitalism that works for everyone where businesses give back and have positive impact.
By design, Marc's outspokenness challenges other CEOs to keep pace. He believes business is the greatest force for change and thinks the business community must play a larger role in addressing great issues while humanizing business. Through his leadership, Marc is having an impact by demonstrating how the multi‐stakeholder approach to capitalism works for everyone.
Sustaining Our Environment
For the past decade, Unilever's Paul Polman has been the leading business voice for sustainability. Early in his tenure, Paul recognized sustainability is Unilever's North Star and published the “Unilever Sustainable Living Plan” as the basis for Unilever's strategy. He made bold commitments and tracked them rigorously, holding his leaders accountable for individual commitments and making them publicly available. In doing so, Paul built on the company's roots and the legacy of cofounder Lord Leverhulme, who used Sunlight soap to help eliminate malaria in Britain.
Paul transformed Unilever by making sustainability commonplace in every product, which in turn created competitive advantage. He also acquired sustainable brands like Seventh Generation and Sir Kensington's. To transform his leadership team, Paul created the “Unilever Leadership Development Program” that trained thousands of leaders in authentic leadership.
Completing his decade as CEO, Paul left in 2019 and formed an organization called IMAGINE with Valerie Keller as cofounder to galvanize industry leaders around the United Nations' 2030 Sustainable Development Goals. Paul and Valerie are working with CEOs to make sustainability core to their business strategies, starting with the food and apparel industries.
Through personal relationships, Paul is influencing CEOs and other leaders to pay greater attention to environmental issues and make firm commitments for change. Paul's recent book, Net Positive, advocates that organizations contribute more to the environment than they use.
Most emerging leaders are believers that we must change our behaviors to reduce the impact of climate change. What actions will you take to address these challenges?
Ethical Banking That Helps People and Communities
Richard Davis is the one of the most ethical bankers of the past quarter‐century, never deviating from his principles to make more money. He avoided the high risk, high reward transactions that created the 2008 banking crisis. His U.S. Bank came through it unscathed.
Richard had an unusual career philosophy early in his U.S. Bank career. He stayed at lower levels within the organization, making lateral moves in frontline jobs and turning down several vertical promotion opportunities where he would have made more money. That background led to his love of being with frontline employees in the bank, especially tellers. “My strong suit in leading people is knowing whom to listen to,” he says. “When you're on top, it's hard to understand the working lives of frontline people—the people talking to your customers—unless you're out there personally with them.”
As CEO of U.S. Bank, Richard faced his greatest challenge when he chaired the banking industry association during the 2008 and 2009 Great Recession. He met with President Barack Obama to explain the importance of only making creditworthy loans. He welcomed Dodd‐Frank banking legislation and tighter Federal Reserve regulation, saying, “They created a fair playing field.”
Richard envisions the local banker as the community leader, who knows the community's needs and brings people together to improve outcomes. As CEO, he was the business leader of the Twin Cities community, taking on leadership of the YMCA, United Way, Minneapolis Orchestra, Art Institute, and Minnesota Business Partnership. He led efforts to build the city's new football stadium, which now bears U.S. Bank's name, and brought Super Bowl LII to Minneapolis. He says, “You can't have a healthy bank if your community is falling apart.”
Richard limited his time as CEO to 11 years, “so I could finally do my service mission that I dreamt about as a teenager.” Now as CEO of the Make‐A‐Wish Foundation, he transformed the organization during the COVID‐19 pandemic by envisioning alternatives to airplane travel for very sick children.
Banking and finance are critical to everyone as “the fuel in the tank” that enables us to create financial stability and security as well as using our net worth to enhance our lives and create healthy communities. What is required are ethical bankers like Richard Davis who put their clients' needs ahead of just making money.
Building Inclusive Communities
Glen Gunderson spent his early years in for‐profit enterprises. He passed up more lucrative opportunities to lead YMCA of the North because he was inspired by its mission to “put Christian principles into practice through programs that build healthy spirit, mind, and body for all.” He has built the Y into the third largest in the world, serving 400,000 people, many of whom are socially disadvantaged.
The COVID‐19 pandemic and George Floyd's murder forced Glen to rethink the Y's role in the community as locations had to be closed and team members were laid off. Taking on issues like food insecurity, evictions, and job losses, he used the Y's locations to distribute food to needy families and provide childcare while reaching out to isolated seniors and offering classes virtually.
Now Glen is transforming the Y from swim and gym facilities into programs that foster well‐being in spirit, mind, and body for everyone. He is a visionary who created the Y's Equity Innovation Center in 2018. Following George Floyd's 2020 murder, it became a vital site for honest dialogues among community leaders about how to address the community's pain and develop solutions to these issues.
Nonprofit leaders like Glen are essential in bringing people together to build inclusive communities and address challenging issues like race relations and the pandemic. If you are working in a for‐profit company, you can learn a great deal by serving on community boards, as I have throughout my career.
Emerging Leader: Brad Smith Reimagining Health Care
After graduating from college, Brad Smith turned down a high‐paying job at McKinsey to be the driver for U.S. Senate candidate Bob Corker. Why take one third of the pay? “It seemed more interesting,” Brad says. That led to stints as a White House staffer and running an education think‐tank in Tennessee.
When his ailing grandmother was suffering from a serious illness, Brad discovered inequities in how care was delivered. His experience inspired him to create Aspire Health, a palliative care company that takes responsibility for outcomes rather than just fee‐for‐service billing, with former Senator Bill Frist as board chair. Brad expanded the business into 25 states, serving hundreds of thousands of patients.
After selling Aspire Health to Anthem for $440 million, Brad was asked to return to Washington in the Department of Health and Human Services. “The timing wasn't ideal, but I realized I might never get this call again.” He was just two months into his new job when the COVID‐19 pandemic hit, and Jared Kushner asked him to move to the White House to help tackle the pandemic's challenges.
Brad says, “I went from problem to problem, setting up a structure and solution before moving onto the next thing. I realized that by staying behind the scenes, there were tremendous opportunities for service.” Even while leading COVID‐19 briefings from the White House podium, meeting regularly with the President, and serving as deputy director of the Domestic Policy Council, Brad kept a low profile—due to his humility and his desire to get things done.
Now back in Tennessee, Brad is starting a collection of new health‐care businesses. He says,
Health care has a tremendous impact on people's lives. We're focused on the most vulnerable patient populations. I've served in government, founded a company, and run a nonprofit. You can help people in all those sectors—the question is, where can you have the greatest impact?
Brad says, “Moving between sectors gives you humility about how much you have to learn.” His career illustrates the benefits of going where you are called and doing every job well, no matter how small or how great. It also shows that taking the unconventional road can lead to opportunities you never dreamed of.
Bill's Take: Your Leadership Makes the Difference
Believing that innovative organizations need new leaders every decade, I imposed a 10‐year limit on my tenure as Medtronic CEO. I was 58 when I turned over the reins to my successor and completely unsure what lay ahead. It reminded me of rappelling down a rocky cliff wall with no end in sight.
For 8 months, I considered everything—including government service, another CEO role, or running the Aspen Institute. Then I moved to Switzerland to teach at two great Swiss institutions. While there, Enron, WorldCom, and Tyco collapsed, creating the corporate governance crisis.
That's when I saw the vital need to transform organizations with authentic leaders who lead with a moral compass. I recognized the enormous impact that leaders can have on millions of people by addressing society's greatest challenges. I decided to devote myself to developing emerging leaders dedicated to building sustainable organizations that make the world a better place. By contributing to this leadership transformation, I believe I can make a greater difference than by focusing on any single organization.
This leadership transformation requires moral leaders to step up to leadership in organizations and throughout society. Moral leaders are introspective and cultivate high levels of self‐awareness and emotional intelligence. This doesn't require religious faith, although many moral leaders are inspired by religion and spirituality. They pursue causes that inspire them with an energizing life force, giving them the courage to take on difficult challenges.
Moral leaders don't require position power. Anyone can become a moral leader by using their voice and writing to inspire others, as Warren Bennis and Jim Wallis have done. Their character and their actions set such a powerful example that people follow them, as they teach and coach people to develop their moral character. Since retiring from Medtronic, my satisfaction comes from the accomplishments of the emerging leaders like you whom I have taught and worked with—some of whom tell their stories in these pages.
Now the torch of leadership is passed to you as the emerging moral leaders who take on the challenges of leading in today's complex world. My clarion call is to lead with your heart as well as your head to make this world better for everyone. Start with your organization by acting with moral clarity as you discover your True North and follow your North Star. Your reward will be the satisfaction of knowing you used your gifts to leave a legacy of which you can be proud.
Idea in Brief: The Moral Leader
Recap of the Main Idea
- Moral leaders in business, government, nonprofits, and other walks of life are vitally needed to address society's greatest challenges.
- Today's business leaders recognize their responsibilities go beyond the bottom line to use their organizations to make positive contributions to society.
- Creating sustainable value must start with the alignment of all stakeholders around a shared mission and values in service to a corporation's customers, employees, shareholders, and all those who have a stake in its success.
- You cannot solve all the world's problems, but you can have meaningful impact when you focus your leadership on one or more major issues.
Questions to Ask
- Do you meet the criteria of a moral leader? What areas of your leadership do you want to develop?
- What great challenges are you taking on?
- How is your organization focused on making a positive impact on society's challenges?
- How can you serve all your stakeholders? What trade‐offs will you have to make?
Suggestions for Development
- Make a list of the different stakeholders in your business. Underneath each, list out tangible ways you're creating value for each of them.
- Survey your employees on the impact they think the business has on the world, using their feedback to reframe the purpose of the organization:
- In what ways does our purpose address the world's problems?
- How inspired are you by our purpose?
- How would you change the purpose to be more meaningful?
- How important is it that our business is sustainable?
- What steps could our company take to be more sustainable?
- How should we measure the impact our company has on improving the world?