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How to Lead Your Boss so You Both Win

Wharton Workshop, Feb. 15, 2004 Michael Useem

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Leading Up:

Leading Up

1. Leading up when it is really needed: Meg Whitman at eBay on September 11, 2001 2. When does leadership make greatest difference? 3. What are the leadership capacities that make the difference: Michael Eisner defends Walt Disney 4. Protecting your company: John Meriwether faces a problematic securities bid at Salomon. 5. Taking charge when you're not in charge: Sandy Hill Pittman ascends Mt. Everest.

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Books on Managing Up (not Leading Up)

Managing Up: 59 Ways to Build a Career-Advancing Relationship with Your Boss When Smart People Work for Dumb Bosses: How to Survive in a Crazy and Dysfunctional Workplace Brutal Bosses and Their Prey: How to Identify and Overcome Abuse in the Workplace I Hate My Boss!: How to Survive and Get Ahead When Your Boss is A Tyrant, Control Freak, or Just Plain Nuts!

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Upward Leadership Questions

1. What challenges have you faced when trying to lead up?

2. How well do you think the organization supports upward leadership?

3. What enables or encourages leading up? What creates obstacles?

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1. Leading Up When It's Really Needed

eBay on September 11, 2001

Margaret Whitman, CEO, eBay 1) Check on employees 2) Secure website 3) "Auction for America"

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2. When Does Leadership Make Greatest Difference?

A study of 48 firms among the Fortune 500 largest U.S. firms -asked two direct reports of CEO to assess the extent CEO was... a visionary showed strong confidence in self and others communicated high performance expectations and standards personally exemplified the firm's vision, values, and standards demonstrated personal sacrifice, determination, & courage These leadership capabilities make greatest difference in company performance when the firm faces an uncertain and fast-changing environment. Other research reveals that the quality of management TEAMS are better predictors of company performance than the CEO alone.

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3. What Leadership Capacities Make the Difference?

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Michael Eisner Defends Walt Disney

Michael Eisner, Chairman and 8 Chief Executive, Walt Disney Co.

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The Board of Walt Disney Co., 1997

COMPANY OFFICIALS Michael D. Eisner, 54: Chairman and chief executive. Roy E. Disney, 66: Vice Chairman, head of animation department. Sanford M. Litvack, 60: Senior executive vice president and chief of corporate operations. Richard A. Nunis, 64: Chairman of Walt Disney Attractions. FORMER COMPANY OFFICIALS Raymond L. Watson, 70: Disney chairman in 1983 and 1984. E. Cardon Walker, 80: Disney chairman and CEO, 1980-83. Received $609,826 in 1996. Gary L. Wilson, 56: Disney chief financial officer, 1985-89; now co-chairman of Northwest Airlines. OTHER DIRECTORS Reveta F. Bowers, 48: Head of school where Eisner's children attended. Ignacio E. Lozano Jr., 69: Chairman of Lozano Enterprises, publisher of La Opinion newspaper (LA) George J. Mitchell, 63: Washington, D.C., attorney, former U.S. senator; received $50,000 for his consulting on international business in 1996, and his law firm received an additional $122,764. Stanley P. Gold, 54: President and chief executive of Shamrock Holdings Inc., which managers $1 billion in investments for the Disney family. Thomas S. Murphy, 71: Former chairman and chief executive of Capital Cities/ABC Inc. The Rev. Leo J. O'Donovan, 62: President of Georgetown University, where Eisner child attended; Eisner sat on Georgetown board and has contributed more than $1 million Irwin E. Russell, 70: Beverly Hills attorney whose clients include Mr. Eisner. Sidney Poitier, 69: Actor. Robert A. M. Stern, 57: New York architect who has designed numerous Disney projects; 9 received $168,278 for services in 1996.

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Dear Michael (Ovitz):

This will confirm the terms of your agreement with the Company as follows: 1. The Term of your employment under your existing Employment Agreement with The Walt Disney Company will end at the close of business today. 2. By our mutual agreement, the Michael Eisner and Michael Ovitz total amount payable to you under your Employment Agreement, including the amount payable under Section 11(c) in the event of a "Non-Fault Termination," is $38,888,230. 3. This letter will further confirm that the option to purchase 3,000,000 shares of the Company's Common Stock granted to you ...will vest as of today.

Sincerely, Walt Disney Company December 27, 1996

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Michael Eisner, Walt Disney Co. Directors, and Disney Investors

"I don't know whether pension funds and law professors really know how these companies are run.... I don't have any great desire to have an old-boy crony network of CEOs [on my board] that just share the same old war stories." -- Michael Eisner, Chairman and Chief Executive, Walt Disney Co. "I would say that [the Disney board] is living in the Dark Ages of good corporate practices." -- John Nash, National Association of Corporate Directors How should Michael Eisner respond at this annual stockholders meeting to the pressures of his major owners to restructure Disney's board of directors? In discussion with several others, develop what you will say and how you will say it, and be prepared to answer questions 12 from angry Disney shareholders.

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4. Protecting Your Company

Salomon Brothers is a primary dealer (1 of 39) for U.S. bonds. Dealers may not bid > 35% of total (Mozer/Basham rule) but on Feb. 21, 1991, Paul Mozer submits 35% bid in SB's name and unauthorized 35% bid in Warburg's name; receives 38%. April 27: Mozer informs John Meriwether of Treasury's letter; Meriwether tells Mozer it's "career threatening"; Mozer says its the only time he has so acted; Meriwether informs Strauss. April 29: John Gutfreund, Thomas Strauss, and Donald 13 Feuerstein agree to report to Treasury

U.S. Government Treasury Auction February 21, 1991

Interest rate offered

Amount offered ($bil.)

Bonds sold ($ billions)

Sold as % of offer

7.50% 7.51 7.52+

$3.9 9.4 15.8

$3.9 5.1 0

100% 54 0

Total

29.1

9.0

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Salomon, April, 1991

John Meriwether (left) Paul Mozer (below)

John Gutfreund Chairman Thomas Strauss, President Donald Feuerstein, General Counsel John Meriwether Vice Chairman Paul Mozer Managing Director Head, Bond Trading Thomas Murphy Managing Director

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Warren Buffett

Nicholas Brady Treasury Secretary

Gerald Corrigan Chair, Federal Reserve of New York

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5. Taking Charge When You're Not in Charge

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Mount Everest, 29,028 ft.

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Scott Fischer and Sandy Hill Pittman

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Summit ridge of Mt. Everest, 7 AM, May 10, 1996

Just above Hillary Step, 4 PM

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Summary

Leadership makes greater difference in fast changing and unpredictable environments -- and is thus very important in the years ahead, as confirmed by Wharton research. Mobilize those below ­ and above ­ with a vision, strategy, and honoring of the people, as seen in Martin Luther King, Margaret Thatcher, and Michael Eisner. Protect your company even if your superiors are not, as seen in John Meriwether at Salomon. Take in charge even when you're not in charge, as see in in Sandy Hill Pitman on Mt. Everest.

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SUGGESTED LEADERSHIP READINGS

Norman R. Augustine and Kenneth L. Adelman, Shakespeare in Charge: The Bard's Guide to Leading and Succeeding on the Business Stage. Hyperion, 2001. Warren Bennis, On Becoming a Leader (expanded edition). Perseus, 2003. Arlene Blum, Annapurna: A Woman's Place. Sierra Club Books, 1998. Larry Bossidy and Ram Charan, Execution: The Discipline of Getting Things Done. Crown Business/Random House, 2002. Ram Charan and Noel M. Tichy, Every Business Is a Growth Business. Times Books/Random House, 1998. Jim Collins, Good to Great: Why Some Companies Make the Leap...and Others Don't. HarperBusiness, 2001. David H. Freedman, Corps Business: The 30 Management Principles of the U.S. Marines. Harper Business, 2000. Howard Gardner, Leading Minds: An Anatomy of Leadership. Basic Books, 1995. John Gardner, On Leadership. Free Press, 1993. Bill George, Authentic Leadership: Rediscovering the Secrets to Creating Lasting Value. Jossey-Bass, 2003. John F. Kennedy, Profiles in Courage. Harper and Row, 1964. Jim Lovell and Jeffrey Kluger, Lost Moon: The Perilous Voyage of Apollo 13. Houghton Mifflin, 1994. Norman Maclean, Young Men and Fire. University of Chicago Press, 1990. Mukul Pandya, Robbie Shell and Nightly Business News, Lasting Leadership: What You Can Learn from the Top 25 Business People of our Times. Wharton School Publishing and Pearson Education, 2004 David S. Pottruck and Terry Pearce, Clicks and Mortar: Passion Driven Growth in an Internet Driven World. Jossey-Bass, 2000. Ed Ruggero, Duty First: West Point and the Making of American Leaders. HarperCollins, 2001. J. Edward Russo and Paul J. H. Schoemaker, Winning Decisions: Getting It Right the First Time. Doubleday, 2002. Jason A. Santamaria, Vincent Martino, and Eric K. Clemmons, The Marine Corps Way: Using Maneuver Warfare to Lead a Winning Organization. New York: McGraw-Hill, 2004. Michael Shaara, The Killer Angels. Random House, 1974. Noel M. Tichy, The Leadership Engine: How Winning Companies Build Leaders at Every Level. Harper Business, 1997. Michael Useem, The Leadership Moment: Nine True Stories of Triumph and Disaster and Their Lessons for Us All. Random House, 1998. Michael Useem, Leading Up: How to Lead Your Boss so You Both Win. Crown Business/Random House, 2001. Michael Useem, Jerry Useem, and Paul Asel, co-authors and co-editors, Upward Bound: Nine Original Accounts of How Business Leaders Reached Their Summits. Crown Business/Random House, 2003.

Also see or subscribe to the free monthly electronic Wharton Leadership Digest at <http://leadership.wharton.upenn.edu/digest/index.shtml>. Michael Useem, Center for Leadership and Change Management, Wharton School, University of Pennsylvania, Philadelphia, Pa. 191046370, USA. E-mail: [email protected] Tel. 215-898-7684. Fax 215-573-2122.

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