Wherever I travel around the country, I am asked, why are so many successful Fortune 500 companies headquartered in the Twin Cities? What’s your secret sauce?
My answer is simple: Leadership.
After the Great Recession, my colleagues at Harvard Business School and I looked for successful communities that had restored U.S. competitiveness. Minneapolis-St. Paul came out on top as a role model for competitive businesses, primarily due to the strength of its business leaders. During the governance scandals of 2002-03 and financial debacle of 2008-09, Minnesota’s leading companies were largely untainted by the leadership failures that hit other parts of the country.
Minneapolis-St. Paul has been blessed with the finest business leaders in the nation. They are ethical, mission-driven, values-centered and committed to building both their companies and our community. That’s why their organizations have thrived for the last four decades.
Today’s CEOs of our local corporations are the best leaders their companies have ever had. They fit perfectly with my definition of authentic leaders who have discovered their “True North” — based on their beliefs, values and leadership principles. That’s why I feature several of them in my new book, “Discover Your True North”: Ecolab’s Doug Baker and Martha Aronson, Carlson’s Marilyn Nelson, Target’s Brian Cornell, and Medtronic’s Omar Ishrak and Chris O’Connell.
For example, Ecolab’s Baker built his company from industrial cleaning supplies into a global provider of water, hygiene and energy equipment. Nelson built Carlson into a global hospitality leader. Their vision, integrity and ability to empower employees catapulted their companies to the top ranks of their industries.
Our two leading banks, U.S. Bancorp and Wells Fargo, avoided the financial crisis because their leaders, Richard Davis and John Stumpf, focused on commercial banking and didn’t fall prey to the high-risk dealings of New York banks. That’s why Davis and Stumpf are considered the two finest commercial bankers in the country today.
Examples abound of exceptional leaders: At 3M, CEO Inge Thulin has restored its renowned innovative spirit. Under the leadership of CEO Dave MacLennan and predecessors Warren Staley and Greg Page, Cargill has emerged as a global powerhouse in the food industry, as has General Mills under Ken Powell. With Steve Hemsley at the helm, UnitedHealth Group has become the nation’s leading health insurer.
All these leaders were promoted from within, indicating the strength of their companies’ leadership development. Yet when faced with difficult times, three of our leading companies — Target, Medtronic and Best Buy — went outside their ranks to recruit Cornell, Ishrak and Hubert Joly as their CEOs. In short order, all three have led remarkable turnarounds by restoring their companies to their roots and building on their strengths.
What makes these leaders so successful? They are role models for the authentic leaders I describe in “Discover Your True North”: grounded in their values and commitment to serve others, and aligned with their company’s mission and values. As a result, they have:
• Built ethical cultures committed to doing things right.
• Created organizations focused on serving customers.
• Established positive work environments and opportunities for all employees to flourish.
• Provided consistently good returns for shareholders.
By creating value for all their stakeholders, these leaders have committed to working together to build the quality of life in the Twin Cities through the Minnesota Business Partnership, Greater MSP, Itasca and other communitywide organizations.
In large measure, the sustained strength of these leading companies is attributable to their boards of directors, which are widely known for sound governance. Much credit for that goes to the late Ken Dayton, who set high standards for good governance, and initiated the idea of corporations contributing 2 percent to 5 percent of their profits to philanthropic causes. Dayton used to meet regularly with new CEOs to challenge them to take leadership roles in the community to support education, the arts and health care.
In studying hundreds of companies, I have learned how difficult it is to sustain such a high caliber of leaders through successive generations. Today’s leaders have the responsibility to ensure their leadership pipelines are filled with authentic leaders who will carry on these traditions and sustain their success long after they depart.