Business & Economic Outlook

Event 2016

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Allied Executives Business & Economic Outlook Event 2015

William W. George

Author &

Former Chairman & CEO of Medtronic

Allied Executives Business & Economic Outlook Event 2016

“Discover Your True North”

Allied Executives

Annual Business Outlook

Bill George

Senior Fellow, Harvard Business School

and former Chair & CEO of Medtronic

February 23, 20164

Challenges in Leading Businesses Today

• In an era of high volatility, how can business leaders stay on course to achieve sustained success?

• Can clarity of leadership, focus and strategy overcome the uncertain economic environment?

• How can business leaders stay on track while overcoming investor pressures for short-term gains?

• How can organizations adapt rapidly to serving Millennial customers and engaging Millennial employees? 5

Your Leadership Challenges

#1: How can you become a leader that makes a difference in lives of your customers and your company?

#2: How can you take your leadership to the next level as an authentic leader?

#3: How can you sustain your leadership by continuing your development?

6

7

Becoming A Leader

LEARNINGKNOWLEDGE

CRITICAL THINKING

BECOMING AN AUTHENTIC

LEADER

DEVELOPING SKILLS

Leadership Is Changing

Hierarchical > Empowering

Bureaucratic > Interdependent Units

Limited Information > Transparency

Charisma & Style > Authentic & Openness

Self-interest > Service to others and greater cause

Impact of: Globalization

Technology & Social Media

Millennials

Diversity8

Why Leadership Matters

• Leadership makes the difference between success and failure of your organization

• The root cause of numerous corporate meltdowns and failures in the last decade is failed leadership

• Many failed leaders focused on short-term over long-term, placing their self-interest ahead of their institution’s interests.

9

Why Leaders Fail

• Failed leaders did not fail due to lack of IQ

• Rather they lacked emotional intelligence (EQ)

– Lacked self-awareness

– Unable to face reality & admit mistakes

– Lacked passion for company’s mission & values

– Lacked compassion and empathy for people

– Lacked courage to transform organization

10

Definition of Authentic Leadership

Authentic leaders align people around shared mission and values

and empower them to lead,while serving all stakeholders, and collaborating with others

to sustain superior results

11

The New 21st C. Leaders

20th C. View 21st C. View

Maximize short-term value Build for long-term

Shareholder-driven Customer/values-driven

Multi-national structure Global orientation

Tops-down leadership Leaders at all levels

Internal focus External focus

Rules & processes Empowering culture

Pay for individual results Pay for company results

12

Warren Bennis’ Leadership Premises

• The most dangerous leadership myth is that leaders are born. That’s nonsense; the opposite is true. Leaders are made rather than born.

- On Becoming a Leader, 1989

• Leadership is character. It is not just a superficial question of style. It has to do with who we are as human beings and the forces that shaped us.

• The process of becoming a leader is much the same as becoming an integrated human being.

- Learning to Lead, with J. Goldsmith,1997

13

Leadership is Serving Others

“The servant-leader is servant first. One wants to serve first; then one aspires to lead.

This is sharply different from one who is leader first, perhaps because of the need to assuage an unusual power drive or to acquire material possessions.

A servant-leader focuses primarily on the growth and well-being of people and the communities to which they belong. The servant-leader shares power, puts the needs of others first, and helps people develop and perform as highly as possible.”

- Robert Greenleaf, The Servant as Leader (1970)

14

Your True North

“Your True North is the internal compass that guides you successfully through life. It represents who you are at your deepest level. Your True North is based on what is most important to you, your most cherished values, your passions and motivations, the sources of satisfaction in your life.”

- True North, Introduction

15

16

What Is Your True North?

Your Most Deeply Held Beliefs, Values and Principles

How do you stay on coursein spite of pressures and

seductions to deviate?

Your True North

• Your Life Story

• Your Crucibles

• Your Defining Leadership Experience

17

Steve Jobs’ Best Advice

• You cannot connect the dots of your life looking forward, but you must connect them looking back.

• Your time is limited, so don't waste it living someone else’s life.

• Don't let the noise of others' opinions drown out your inner voice.

• Most important, have the courage to follow your heart and intuition.

18

19

Your Leadership Development Plan

– Develop your self-awareness

– Test your values under pressure

– Find your “sweet spot”

– Build your support team

– Integrate all aspects of your life

– Know your leadership purpose

Your Life

Story

Self-Awareness

Self-Compassion

Self-Acceptance

Your Crucible

Gaining Self-Awareness

Feedback

Reflection

Self-Actualization

20

21

Johari Window

Others

Self

Known to:

Yes

Yes

No

No

OPEN

BLIND SPOTS UNKNOWN

HIDDEN

22

Values are shown by what you do when you think no one is looking

New York Times Transparency Test

Prior to taking an action, ask yourself:

Would you feel comfortable if a transcript of this conversation was published in the New York Times?

20

Your “Sweet Spot”

ExtrinsicMotivations

IntrinsicMotivations

Strengths

SweetSpot

Weaknesses

24

Your Support Team

Your support team consists of the following:

• One person in your life with whom you can be completely open: your spouse, significant other, best friend, or therapist.

• Mentor(s) who can guide and counsel you and keep you from going off-track.

• A support group of your peers.

25

True North Groups

• 6-8 peers who meet regularly to talk about the most important issues in their lives

• Following prescribed program of discussion topics

• Keys to success:OpennessTrustConfidentialityHonest feedbackCandor

26

The Integrated Leader

Personal Life

FamilyLife

Work Life

TheIntegrated

Leader

Community Life

27

Your Leadership Purpose

• What is the purpose of your leadership?

• What in your life experiences and your passions is it derived from?

• To what extent is your purpose aligned with your company’s purpose?

• How could you bring it in closer alignment?

28

Johnson & Johnson Credo

• We believe that our first responsibility is to the doctors, nurses, hospitals, mothers and all others who use our products.- Our products must always be the highest quality.

• Our second responsibility is to those who work with us – the people in our plants and offices.

• Our third responsibility is to management.• Our fourth responsibility is to the communities

in which we live.• Our fifth and last responsibility is to our

stockholders.29

Medtronic Mission

• To contribute to human welfare by application of biomedical engineering (to) alleviate pain, restore health, and extend life.

• To direct our growth in the areas of biomedical engineering where we display maximum strength and ability. . . to avoid participation where we cannot make unique and worthy contributions.

• To strive without reserve for the greatest possible reliability and quality in our products; to be recognized as a company of dedication, honesty, integrity, and service.

• To make a fair profit on current operations to meet our obligations, sustain our growth, and reach our goals.

• To recognize the personal worth of employees by providing an employment framework that allows personal satisfaction in work accomplished, security, advancement opportunity, and means to share in the company's success.

• To maintain good citizenship as a company. 30

28

Sustaining Growth and Performance

Innovation and

Superior

Customer Service

Mission-Driven

Values-Centered

Organization

Shareholder

Value

Increases

Motivated

Employees

Profit

Growth

Increases

Revenue

Growth

Increases

Increased

Customer

SatisfactionReinvest

Nobel Peace Prize Albert Schweitzer

“I don't know what your destiny will be, but one thing I do know:

The only ones among you who will be really happy are those who have sought and found how to serve.”

32

Jeffrey M. Ettinger

Chairman & CEO

Hormel Foods Corporation

Allied Executives Business & Economic Outlook Event 2016

Allied ExecutivesAnnual Business and

Economic Outlook Event 2016

Innovate Don’t Imitate

Our LegacyOur Innovative JourneyOur Social InnovationOur Outlook

IntegrityCulture of QualityContinuous Improvement

Innovate Don’t

Imitate

Our founder’s legacy

Established to provide continued support to the local communityOwns 48% of the company

Hormel FoundationA Vision for the Future

Small Town to Global Stage

Fortune 500 CompanyAustin, MN

$9.3 Billion Net Sales 60 Countries21,000 Employees40+ Plants

$220,000

20151891

Outstanding Growth

Our people Fostering careers, growing talent

PROFIT SHARING 1938 MULTI GENERATIONS MINIMUM WAGE LEAD AVERAGE TENURE OF SENIOR LEADERSHIP,26 YEARS

THE RAMLO’S114 YEARSDad – Dale, 40 YearsBrother – Mark, 39 Years

Scott Ramlo35 Years

Our Innovation JourneyBe the Bridge “It’s not the strongest or the most

intelligent who will survive but those who can best manage change”

CHARLES DARWIN

DiverseThinking

OurPeople

Survival and strength lies in differences not similarities.

Change – Lifestyles, Tastes

MULTICULTURAL

GLOBAL

ON THE GO

HEALTHYHOLISTIC

MILLENNIALS GEN X BOOMERS MATURES

Lifestyles and Demographics

Diversely Balanced

OUR INNOVATION OUR ACQUISITIONS

Hunger & Malnutrition

Cancer PreventionResearch and Nutrition

Community Support

Social InnovationMaking a real difference

Founder’sForesight

The Hormel Foundation gives millions of dollars each year to the local community with a focus on education, parks, arts, science and the Hormel Institute.

HormelFoundation

Eliminate Cancer

RecoveryRebuildStrength

Community Outreach$11.9 Million

IN FY 2015

· Feeding America

· Disaster Relief

· United Way

· Volunteerism

· Community Support

· Education and Scholarships

· Military

Hunger, Malnutrition,

Cognition

Inspire Dreams,

Education

Real Difference,

One Child At A Time

PROJECT SPAMMY LEARNINGS

INSPIRING SOCIAL INNOVATION, IMPACT

Consider turning your talent loose for a “pro-bono” cause.

Look for hands-on, in-the-trenches experiences.

Set the vision, then let the folks run with it.

"I hope corporations will

consider dedicating a

percentage of your top

innovators' time to issues that

could help people left out of

the global economy.

This kind of contribution is

much more powerful than

simply giving away cash, or

offering your employees time

off to volunteer. It is a

focused use of what your

company does best."

Bill Gates -- Davos -- 2008

Evolve.Change.Grow.

Our Journey Continues

Doug Loon

President

Minnesota Chamber of Commerce

Allied Executives Business & Economic Outlook Event 2016

2016 Legislative Session: PRIORITIES

graphicadvocate. . grow.

MEMBERS

2,300 members

500,000 employees

78% members have fewer than 100 employees

Diverse membership – every industry represented

120 local chambers

Trade associations

VISIONStrengthening the business environment to improve the lives of all Minnesotans

Economic Opportunity

Business Climate

Build on Strengths

Minnesota Ready

VISION

Positive Economic News

• Dynamic & Diverse Economy

• Innovation & Investment in MN

• Minnesota business optimistic

• Want to grow in state

% OF COMPANIES ADDING MN JOBS: 2006 - 2015

53%

41%

0%

10%

20%

30%

40%

50%

60%

70%

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Metro Greater MN

Adding Jobs: TC’s & Greater MN

BUSINESSES PLANNING NEW INVESTMENTS

48%

59%

63%

0%

10%

20%

30%

40%

50%

60%

70%

2013 2014 2015

New Investments: Up

% OF COMPANIES: FASTEST GROWING MARKETS = INTERNATIONAL

15%

9%

0%

5%

10%

15%

20%

25%

30%

35%

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Metro Greater MN

Exports: Metro Greater MN

BUSINESSES CREATING NEW PRODUCTS, LAST YEAR

Innovation:

74%

70%

0%

10%

20%

30%

40%

50%

60%

70%

80%

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Metro Greater MN

Economic Headwinds• Global economies & markets

• Strong U.S. dollar

• Greatest impact on manufacturing, mining & agricultural

• Workforce/demographic changes

More trouble finding workersWORKFORCE

13%

70%

25%

72%

0%

10%

20%

30%

40%

50%

60%

70%

80%

2008 2009 2010 2011 2012 2013 2014 2015

Metro Greater MN

% of Companies Reporting Trouble

2008 - 2015

MN growth in labor force slowing WORKFORCE

MN 1.4%

U.S 2.2%

0

0.5

1

1.5

2

2.5

3

3.5

4

2010 2011 2012 2013 2014

%

Annual GDP Growth- MN and U.S.

BUSINESS CLIMATE

Minnesota’s National Rankings

3rd highest

Income TaxRates

2nd Best> 2 year degree

5thhighest

minimum wage

#1labor

participation

4thbest

Healthiest

state

3rdworst

small business

tax climate

8thlowest

poverty level

2nd highest Business

property

tax

MINNESOTA BUSINESS BENCHMARKSSizing up Minnesota’s business and economic climate

IN A NUTSHELL

• Short session, starts March 8

• Bonding year

• Large surplus…$1.2 billion

• Election year

• Work unfinished from 2015

• Taxes

• Transportation

2016 Legislative Session Priorities2016 SESSION

Business tax relief

• PRIORITY: Business Property Tax

• Estate tax

• R&D credit

2016 Legislative Session PrioritiesTAX COMPETITIVENESS

2016 Legislative Session PrioritiesTRANSPORTATION

Three Legged Stool:

• Roads

• Bridges

• Transit

Minnesota Ready

To Change, To Grow, To Lead

advocate. . grow.

Allied Executives Business & Economic Outlook Event 2016

Sue Hawkes

CEO

YESS!

John P. Palen

Founder & CEO

Allied Executives

Kurt Theriault

President

Allied Executives

Allied Executives Business & Economic Outlook Event 2016

0 10 20 30 40 50 60 70 80

Speed of technology change

Overregulation

Lack of innovation

Rising customer demands

Corporate brand/reputation improvement

Operational excellence

Improving customer relationships

Competitive threats

Succession planning

Growing the top line

Leadership team ineffectiveness

Achieving work/life balance

Staffing/talent gap issues

Availability of capital

Of the challenges listed below, please choose up to 5 of the topics that

represent the biggest concerns you face in 2016.

12.36%

70.79%

12.36%

5.62%

10.11%

15.73%

13.48%

56.18%

30.34%

28.09%

29.21%

62.92%

35.96%

29.21%

Allied Executives Business & Economic Outlook Event 2016

How do you really get to know

yourself and your business?

Allied Executives Business & Economic Outlook Event 2016

What is authenticity?

Allied Executives Business & Economic Outlook Event 2016

What are the differences between

companies that consistently perform

well and those that don’t?

What is your end game?

How do you make decisions?

Allied Executives Business & Economic Outlook Event 2016

How do you prepare for an economic

or industry downturn?

How do you define, assess and

effectively manage risk?

Allied Executives Business & Economic Outlook Event 2016

How do we create more memorable and

meaningful experiences vs transactions?

Allied Executives Business & Economic Outlook Event 2016

The convergence of humanity with

technology, how do we respond,

leverage or adapt?

Allied Executives Business & Economic Outlook Event 2016

• How do we organize and implement our planning

process?

• Does the execution of our planning work?

• How do we create an accountability culture?

• How do we motivate employees to do more and

prevent burnout?

• What is our culture and how do we create and manage

the one we want?

• What could put us out of business?

Allied Executives Business & Economic Outlook Event 2016

• What could our competitor do that would scare the

crap out of us?

• Who is a good partner?

• How do we hire well?

• Who is a good client for us?

• How do we do a better job of shifting to meet the needs

of all generations?

• What do we do about the intersection of IT and

traditional marketing/branding?

Allied Executives Business & Economic Outlook Event 2016

• How do we manage risk, but not choke innovation?

Must risk to grow, be creative or innovate.

• What are we maximizing? Profit, Growth, Opportunity,

Our Offering? Why? How?

• Why are we in business?

• How do we get all the right people in the right seats?

• How do we balance Cost vs. Value?

• What’s the “right” experience for our client?

Allied Executives Business & Economic Outlook Event 2016

• How can we be inclusive-age, color, gender-all of it?

• Who will run the company after the current CEO

retires?

• Is leadership development and succession part of the

culture?

• What’s the purpose of our company?

• How do we increase the value of our company?

• What is the highest and best use of our talents?

Allied Executives Business & Economic Outlook Event 2016

• How will our HR adjust to an aging, diverse, dense,

mobile population?

• Are we equipped to deal with change?

• What aspects of our business are at risk?

• People want equity in gender, race, and income.

What’s our company policy?

• Do we create trust? Do we do what we say and say

what we mean?

• Why should anyone trust our company?

Allied Executives Business & Economic Outlook Event 2016

• Balancing efficiency, convenience, and safety is

getting harder. How do we do it?

• Have we identified what Big Data can do for us?

• How will we protect our company and brand from

security threats?

Allied Executives Business & Economic Outlook Event 2016

What if we do nothing?

Thank You!

Allied Executives Business & Economic Outlook Event 2016