lead in the personal computer industry. To accomplish this,
she was forced to override a boardroom minority that objected to a merger with Compaq, and she ignored those who
pointed out that mergers of large companies in the high-tech
arena had never worked out.
Today, even her detractors admit that the Compaq acquisition made sense. Despite boardroom tensions that exploded
into a spying scandal, HP is now enjoying a growing lead over
its competitors, including what was supposed to be an unstoppable Dell. But integrating two organizations and boosting operating performance in the core businesses require
very different skills from developing a vision, embodying it,
communicating it, and driving it through – Fiorina’s proven
strengths. Her continued public exposure, even after the battle was won, led to accusations that she was an incorrigible
By the summer of 2003, O’Neal’s efforts had paid off, with
Merrill Lynch posting the best first-half results in its nearly
century-long history. With the firm on solid ground, he began
to think longer term about what he would need to do to ensure that Merrill’s future leaders would not have to face similar problems. He realized that new challenges would require
Merrill’s executives, himself included, to provide a substantially new kind of leadership. In other words, he understood
the need to make a major shift in leadership skills in Act II,
even though Act I had been a great success.
Working with an outside consultant and his senior management team, he led a process of feedback and coaching. Together they created the Merrill Lynch Leadership Model to
clarify what they expected of themselves and other leaders at
the firm. The model focuses on four areas critical to effective
The approaches that worked so brilliantly for a CEO in Act I may be the
very opposite of what is needed to bring Act II to a happy resolution.
publicity hound. In the end, her reluctance to delegate led to
conflict with the board, which lost confidence in her.
Remake your company – then yourself. In 2003, Stan
O’Neal was engaged in deep reflection. He was finishing his
first year as the CEO of Merrill Lynch, and, despite his tremendous success, he sensed it was time for a change.
Two years earlier, in July 2001, he had been named president of the company. Six weeks later, he was managing in
command-and-control mode, regrouping the firm after the
terrorist attacks of September 11, which killed three employees and forced the company to evacuate its heavily damaged
headquarters. Additionally, Merrill Lynch was still feeling the
effects of the bursting of the tech bubble a year earlier (and
it would soon be hit with a wave of negative headlines about
the Wall Street research scandal). The challenges required
immediate action; O’Neal made painful and unpopular decisions that would be criticized by some within Merrill Lynch
and second-guessed from the sidelines.
Between 2001 and 2003, O’Neal worked hard to resize and
reshape the firm, cutting costs to cope with lower revenue,
reengineering parts of the business to diversify revenue
streams and neutralize the roller-coaster highs and lows of
debt and equity trading, and reining in expansion plans that
had failed to deliver.
O’Neal often found himself in a lonely position: He knew
he had to rethink the firm’s entire business model and challenge the “Mother Merrill” culture that had become more
maternalistic than performance based. At the same time, he
had to improve the morale of a shaken workforce and retain
the attributes of the iconic franchise he had inherited.
leadership: strategic thinking, business results, people leadership, and personal effectiveness.
The top 11 leaders (including O’Neal), followed by the next
200, then the next 1,000, received feedback and coaching.
Changes were made in performance evaluation, rewards,
talent reviews, and other mechanisms to support the new
model of leadership. By 2006, objective measures revealed
that Merrill’s culture, which had been homogeneous, lenient,
and clubby, had shifted significantly, becoming merit based,
rigorous, and diverse.
Respect your limitations while growing your company.
Larry Page and Sergey Brin founded Google when they were
PhD candidates at Stanford. The uniquely effective Internet
search engine they invented enabled their company to be
one of the few healthy survivors of the dot-com crash. As
their background might suggest, the founders’ strong suit is
writing computer code. But their ambitions for Google go
well beyond spurring technical refinements of its core technology. Google now offers satellite mapping, digitalized libraries, and its own e-mail service, and its search capabilities
extend to e-mail databases and company intranets. Although
Page and Brin were committed to staying with the company
they created, they knew they weren’t professional managers
or marketers or masters of strategy. So in 2001 they brought
in a “grown-up,” Eric Schmidt, to operate the company.
Schmidt had been the chairman and CEO of Novell for
four years, and before that he was the chief technology officer at Sun Microsystems, where he led the development of
Java. He is a skilled big-company executive, a seasoned marketer, and a renowned technology expert in his own right.
hbr.org | January 2007 | Harvard Business Review 69