Smart Steps

What smart steps should business leaders be taking to deal with Act II of the new economy? Maybe the smartest thing to do is to take stock of Act I: What lessons did we learn in the first five years of the new economy?

Smart Steps


Michael Bloomberg

Founder and CEO
Bloomberg LP
New York, New York

I’ve learned that change is always evolutionary and is virtually never revolutionary. There are no simple solutions to complex problems. The fashion of the times changes day in and day out: Everyone has invented the perpetual-motion machine, everyone has a get-rich-quick scheme, and everyone says that they’re going to revolutionize the world with a little piece of software. The press writes about such things because they’re interesting. And the public would like to believe that you can get something for nothing — but that’s just not the case.

Product matters. Marketing is useful, but you must have the best product out there. And that product is not technology; it’s not data, it’s not anything physical — it’s service. Our customers don’t care about what their suppliers sell, they only care about what we have that can help them. Our focus has always been to explain how we can improve their lives — make them more efficient, more pleasurable — as opposed to selling what we produce.

I don’t think there is a new economy. I think there are new tools for the economy. The basics of commerce remain: You’ve got to have something that people need, something that they can’t get elsewhere. And the more they can’t get it elsewhere, the more they need it. Adam Smith said it all: With a small supply and a big demand, you have a business. Everything else we do is along that continuum.

Michael Bloomberg ( is the founder and CEO of Bloomberg LP, a financial-news service that provides users with 24-hour, real-time business news, market data, and analysis through over 140,000 proprietary terminals. The company also publishes books and magazines, runs a TV and radio station, and manages a syndicated news service. Bloomberg previously appeared in FC 1, November 1995 (“The House That Bloomberg Built”).


Dawn Gould Lepore

Vice chairman and chief information officer
Charles Schwab Corp.
San Francisco, California

It’s about customers and profitability, stupid. Both are nonnegotiable, even in the new economy. It’s a lesson that everyone needs to learn and relearn. What’s good for your customer is good for your business.

During Schwab’s early foray onto the Web, we made some wrong assumptions about customers. We thought that customers with online accounts only wanted to deal with us electronically. Our mistake was thinking that customers wanted to choose between people and technology — or that they would be willing to make that choice. We quickly learned that they wanted both. Since then, the click-and-mortar approach has become the Rock of Gibraltar of our strategy.

In the end, a customer-centric culture sustains itself during times of great change. What we must have — and I do mean “must” — is a core competence in reinventing ourselves as the needs of our customers change with the marketplace. We can’t make assumptions anymore. The velocity of change in today’s economy requires a steady commitment to your fundamental values. If you don’t have something that your employees can hold on to, everything is up for grabs and people lose their way. We constantly tell our employees, here’s what’s changing — and there’s always something changing — and here’s what isn’t changing: who we are and what we stand for. Without exception, the lesson always comes back to delivering on our customer promise.

Dawn Gould Lepore ( is responsible for Charles Schwab’s worldwide information technology and has been a leader in the expansion and redesign of the company’s information systems. She joined Schwab in 1983. Lepore previously appeared in FC 22, February 1999 (“Balancing Acts”).


Joe Liemandt

Founder, president, and CEO
Austin, Texas

Since 1995, we’ve grown from fewer than 200 people to more than 1,300. We’ve faced the serious challenge of weeding out those who were energized more by the idea of a quick public offering than by our built-to-last philosophy. Our success is the direct result of sticking to our core values: great people, great technology, customer success, and integrity. I’ve learned that it’s more important to hire people who stand behind your core values than it is to feed a growth rate with people who don’t share those values.

When Trilogy comprised a mere 40 people, we were like most startups. We simply hired driven people who were great executors; we didn’t have the time or the resources for large teams. Throughout the high-tech industry, but particularly at small companies, structure and leadership have been euphemisms for bureaucracy. And bureaucracy stifles both creativity and innovation. As Trilogy grew, one of the most important lessons we learned is that hiring for raw talent isn’t enough. We had to build leaders. I believe that you should always work to replace yourself. Teach your leaders that their main priority is to energize and grow their team around themselves.

It’s not an easy task, but we’ve never been about doing the easy task. So what keeps our people coming to work every day? It’s not the kitchens, the speedboats, or the high salaries. It’s our environment. Employees get energized around a goal — and that energy is contagious. Today, as we move into our second decade and continue on a steep growth path, we are hyperaware of maintaining our culture and of finding the best ways to reconcile speed and innovation with long-term vision.

Joe Liemandt is founder, president, and CEO of Trilogy, which offers e-business products, software, and solutions to companies. Liemandt previously appeared in FC 21, January 1999 (“Insanity Inc.”).


Lorraine Monroe

Founder and executive director
The School Leadership Academy
New York, New York

Over the past five years, I have been unpleasantly surprised at the number of people who come forward to lead but who lack the skills. The job of a good leader is to articulate a vision that others are inspired to follow. The definition of good leadership always comes back to what the leader says we stand for and how that leader makes everybody in an organization understand how to make that vision active. A lot of people write mission statements, but their words don’t come off the page. Leadership is about making a vision happen — what I call “vision acts.” If you say you’re about something, then what activities in your company indicate the reality behind those words?

The challenge of the coming economy is to teach people to be leaders. You teach them that a really great boss is not afraid to hire smart people. You want people who are smart about things that you’re not smart about. You don’t want “yes people” — and you certainly don’t want people who don’t understand your mission.

Then you teach them how to be specific. Ask them, What are you going to put your eyeballs on first? What kind of timeline do you have for reaching your dream? Does your staff understand how that dream will become real? Sometimes a dream is so broad, so wonderful, that it’s overwhelming. To be a leader, be a teacher.

In 1991, Lorraine Monroe opened the Frederick Douglass Academy, an experimental public high school in Harlem. In 1997, she founded the School Leadership Academy, a nonprofit organization that fosters creative educational leadership. Monroe previously appeared in FC 28, October 1999 (“The Monroe Doctrine”).


Pam Alexander

Alexander Ogilvy Public Relations Worldwide
San Francisco, California

Ideas will only get you so far these days. Count on personal relationships to carry you farther. The new economy is not just about the exchange of information, it’s about the exchange of relationships. Relationship management is nothing new, but with the advent of the Internet as a communications infrastructure, it’s more important than ever — particularly at a time when there’s more noise than ever. To break through that noise, to get your message out, count on personal networks. Relationships are the most powerful form of media.

With the information glut, it’s tougher to know what’s for real — and who’s for real. It comes down to trust. If you cultivate relationships with thought leaders in your industry, you can reach their network of relationships. And in today’s environment, that can be the most reliable way to reach an influential audience.

To build trust, invest in your relationships constantly. Don’t sweat the ROI; help people, whether or not they can return the favor. Connect them to appropriate opportunities whenever you can. If you know about something that might interest someone in your network, shoot that person an email. And always give thoughtful feedback, not just a rant or a rubber stamp of approval. The extra attention is a compliment. By nurturing your personal relationships to help people excel, you build exponential impact in the marketplace. Ultimately, their success is your success.

Pam Alexander ( is the CEO of Alexander Ogilvy, a public-relations firm focused on the global information-technology market. In 1987, she founded Alexander Communications, which was acquired by Ogilvy Public Relations Worldwide 11 years later. Alexander has been widely recognized as a thought leader in reinventing how to get your message out. Alexander previously appeared in FC 14, April 1998 (“The Power of Public Relations”).


Thomas Davenport

Institute for Strategic Change at Accenture
Cambridge, Massachusetts

Five years ago, a lack of material and financial assets limited success in business. Today, ideas and human attention are the limiting factors. People talk about a frictionless commerce, but the information glut has made human inattention the friction in commerce. Like everybody else in our society, I am suffering from information anxiety. I am overcome by the knowledge flow, and to keep up with it, I’ve practically had to learn how to be less reflective. We’ve lost focus in the current economy, and it’s only going to get worse. So pay attention; the ability to concentrate is the most valuable resource in business today.

You only have so many seconds of attention to give to your work and to your personal life. Think seriously about what you think is worthwhile, what isn’t, and what difference it all makes. Be engaged — don’t just let waves of information wash over you.

We live in a browsing society that focuses on the shallowest, most hype-oriented aspects of life. Nobody goes deeply into any topic. It’s bound to mean that we’re not making the best decisions in the areas that matter most to us.

Thomas Davenport ( is the director of the Institute for Strategic Change at Accenture, formerly known as Andersen Consulting, and is a distinguished scholar in residence at Babson College. His book on attention management, The Attention Economy, is scheduled to be published in April by Harvard Business School Press. In FC 1, November 1995, Davenport wrote “The Fad That Forgot People.”


Mike Abrashoff

Grassroots Leadership LLC
Boston, Massachusetts

More than ever, it’s critical that leaders figure out how to motivate and energize their workforce. You have to work at creating the right climate for your organization. Ultimately, your people will produce the results; you need to produce the vision and put the mechanisms in place to support those people.

Before I took command of the USS Benfold, I decided to focus my full attention on my people. I wanted to treat everyone the same by genuinely engaging whomever I talked to. By working at what I call “being here now” for that person, I began to understand the awesome power that I hold. I fully realized my impact on my people. Today, if someone doesn’t comply with my wishes, I want to figure out why. I first look inward and ask myself three questions: Am I clearly articulating the goal? Am I giving that person enough training to accomplish the job? Am I giving that person enough time and tools to get the job done? When I don’t get my desired result, I’ve found that 80% of the time the answer to one of those three questions provides me with a reason why.

Recruit your people every day, even though your crew is already on board. You have to grow your people to grow your business — especially in sluggish times. I’m not some charitable organization. Growing my people is a cold, hard business decision to compete in today’s rapid-fire economy. We play to win.

Mike Abrashoff ( recently founded Grassroots Leadership LLC, a leadership-consulting firm. Previously, he was the deputy director for Global Information and Network Systems. In 1997, he served as the commander of the USS Benfold, which was deployed to the Persian Gulf in support of contingency operations with Iraq. That same year, the ship won the prestigious Spokane Trophy for having the best combat readiness in the fleet. His book, It’s Your Ship: A Lesson in the Art of Grassroots Leadership, is scheduled to be published later this year by Warner Books. Abrashoff previously appeared in FC 23, April 1999 (“Grassroots Leadership”).


Eric Schmidt

CEO and chairman
Novell Inc.
Provo, Utah

The most powerful thing that I’ve learned is how incredibly communications-centric and network-centric people are. As we have increased our ability to build networks, we have exploited those networks more quickly — and in more interesting ways — than anyone could have ever forecast. The rate at which fiber-optic capacity increases, the rate at which disk drives improve, and the rate at which Internet traffic and Web sites propagate doubles about every year. Compound that for even a few years, and you have enormous interconnection. It seems destined to be.

In general, the benefits overwhelmingly outweigh the costs. The most obvious advantage is that people with specific affinities can find one another around the world. For example, scientists who weren’t able to communicate easily with one another can now exchange ideas and move their research forward more rapidly. As CEO, I can make a comment in Australia and get a response almost instantly from someone in the United States. It’s odd to be on the global stage constantly, but the speed of communication does hold you more accountable.

At the same time, there are serious red flags for society. The Internet is less controllable than governments might like, which threatens certain assumptions. Now we can be completely anonymous — essentially licensing speech without responsibility. We’ve never had that in the world; it’s always been possible to find out who said what.

What comes next? Here’s a thought experiment: We’ve seen a tremendous increase in the production of Webcams, in the number of personal Web sites built, and in all things related to personal online publishing. When everyone is a Web publisher, what will they publish?

Eric Schmidt is CEO and chairman of Novell Inc. Prior to joining Novell Inc. in 1997, he spent 14 years at Sun Microsystems Inc., where he was chief technology officer. He has also been a member of the computer-science research staff at Xerox’s Palo Alto Research Center (PARC). Schmidt previously appeared in FC 25, June 1999 (“How to Manage Geeks”).


Bill Shore

Founder and executive director
Share Our Strength
Washington, DC

I’ve learned that charitable intentions are not enough. We won’t solve our problems that way. You can’t just redistribute wealth — you have to do more, teach more, grow more. You have to create new wealth: community wealth.

The first five years of the new economy have demonstrated that in striking ways. For our organization, it’s been like being the only ones not invited to the party: The economy was booming, stock options were everywhere, the markets were open, and we weren’t part of it in any way, shape, or form. The benefits didn’t even “trickle down,” in the old sense of the phrase. The new economy proved the notion that nonprofits have to find a place at the table by creating wealth and by gaining access to capital markets on their own. Nonprofits do have valuable assets. They have unique expertise, valuable proprietary knowledge, intellectual property — all with commercial applications related to fields beyond what they’re working on.

Money is a tool for building capacity. But wealth is only one path toward solving our problems, and creating wealth is only one lesson of the new economy.

Bill Shore ( is the founder and executive director of Share Our Strength (SOS), a Washington, DC – based antihunger and antipoverty organization founded in the wake of the 1984 famine in Ethiopia. In 1997, Shore launched Community Wealth Ventures, a for-profit subsidiary of SOS, to provide strategic consulting services to corporations, foundations, and other nonprofits interested in creating community wealth. Shore previously appeared in FC 2, April 1996 (“The New Prophet of Nonprofits”).


J.T. (Ted) Childs Jr.

Vice president
Global workforce diversity
IBM Corp.
Armonk, New York

In the past five years, I’ve realized that customers are the most powerful arbiters of workplace diversity. My effort to diversify the workforce has moved from being a moral imperative to being a strategic imperative — shifting the conversation away from affirmative action and toward the marketplace. Morality yields goodwill, not good outcomes. Ultimately, promoting diversity is good for business.

I recently made this statement to government workers: “You’re not the most powerful influence on equal-opportunity enforcement — the marketplace is.” I want managers to be driven primarily by the fear of losing customers who won’t spend their money on a company with a reputation for unfair treatment. When driven by the almighty dollar, executives will do what’s right. Don’t underestimate the sound of “cha-ching.” More than ever, your customers need to be able to look into your company and see people like themselves. Not just in the mail room or at the reception desk but at all levels of the organization. If your company’s people don’t look like your customers, then your customers might conclude that you’re excluding people like them. Don’t let them entertain that idea.

Ted Childs ( joined IBM in 1967 and is responsible for the company’s workforce-diversity programs and policies. Childs previously appeared in FC 36, July 2000 (“Difference Is Power”).


Paul Wieand

President and founder
Center for Advanced Emotional Intelligence
Ottsville, Pennsylvania

Six years ago, when I started my company, I didn’t realize that leaders could be so self-destructive, so deceiving, and so alienating. Then my colleagues and I started working with dozens of senior executives from major companies. Most of those leaders had lost their identity because they didn’t know how to be authentic. At the same time, they didn’t know how to build trust within their organization.

While today’s sophisticated world has raised the bar for leadership, we’ve forgotten a basic rule about what makes us most human. It’s not intellect, it’s values. The most powerful force on Earth is knowing how to be yourself.

My advice? Obsess about your human architecture. Many companies worry about quality in just about every area of the company except their own people. Yet relationships matter now more than ever. Social capital breaks down when you don’t have role models across every level of the organization building trust.

Companies that lack high-quality social relationships are self-destructing, because the people within those companies are being pushed beyond their limits.

For many leaders, life in the go-go boom times was so good for so long that they never became very sophisticated at managing their social capital. When distracted by greed, excitement, and the powers of Wall Street, how can you reflect on the human stuff? Hard times test people; people get real or get lost.


In 1995, Paul Wieand ( founded the Center for Advanced Emotional Intelligence, a 12-month leadership-development program for top executives and entrepreneurs, six years after stepping down as president and CEO of Sovereign Bancorp. He was one of the banking industry’s youngest-ever CEOs. Wieand previously appeared in FC 25, June 1999 (“A Leader’s Journey”).

Peter Solvik

Senior vice president and chief information officer
Cisco Systems
San Jose, California

The Internet is changing every bone in our body, and we assess our leaders today by how well they understand the enormous scope of that lesson. You either get it, or you don’t. The new economy is about reinventing how business is conducted — in every single job, in every single corporation. There’s a revolution going on, and we have to rethink every single relationship within the company and beyond.

In the early 1990s, when we launched our Internet initiatives, we had been focused on our customers. We knew that the Internet was going to change how we deal with our customers in terms of commerce and support, but we weren’t as quick to jump on another concept: The Internet also requires a major internal transformation. It wasn’t until 1997, when we took our first step toward Internet supply chains, that we realized that we had to change completely how we operate — inside and out. Now we’re changing the way we communicate, the way we make decisions, the way we think about productivity, and the way we interact with our employees, customers, suppliers, partners — and with other corporations. And in the past five years, we’ve reduced the cost of Cisco’s finance function as a percentage of revenue by 50%. We’ve also cut the time that it takes us to close our books — from two weeks to one day. When most people think about the Internet, they think about commerce, customer support, or B2B and B2C plays. They don’t think about closing their books faster. This is not a one- or two-year transformation. Try a decade. But we’re already one-third of the way through this revolution, and most companies still don’t understand that they need a new backbone.

Peter Solvik joined Cisco in 1993 and is responsible for the company’s worldwide use of information technology. He also oversees Cisco’s Internet business solutions group. Solvik previously appeared in FC 7, February 1997 (“Two Billion Reasons Cisco’s Sold on the Net”).

Mimi Silbert

Delancey Street Foundation
San Francisco, California

I’ve learned to put all of my faith in people, rather than in the dollar. That’s the way we run our businesses. Our bottom line is how much the business teaches people and how much those people grow and develop their talents. The exciting lesson of the new economy has been about learning to embrace a new creativity and a willingness to take risks.

But sometimes, when you take a lot of risks, you bump your nose. So you need time to take a hard look at those risks — and to experience the most telling time of all, the time when you try to retain or maintain that original excitement, creativity, and risk-taking orientation, but combine that feeling with the grounding lessons you’ve learned.

I don’t think that the new economy is falling apart; it’s just grounding. I hope that we will be able to strike a new balance that not only keeps the energy, excitement, and creativity but that also includes some pragmatism. It all depends on how you look at failure. I live in a world where everyone has failed miserably. We build our businesses with people who are failures. We’re experts in failure. But I’ve learned that strength and depth of character are demonstrated by how you handle your failures. If you take a lot of risks, you’re going to have a lot of failures. It doesn’t mean that you should stop taking risks. My job is to teach people that failure is just a step along the way to success.

Mimi Silbert is the founder of the Delancey Street Foundation, a nonprofit rehabilitation organization for former convicts and drug addicts. As a residential facility and entrepreneurial incubator, Delancey Street hosts more than 1,500 residents who learn to operate its many businesses, including a nationwide moving company, a Bay Area restaurant, a bookstore, and a café/art gallery. Silbert previously appeared in FC 15, June 1998 (“She Helps Them Help Themselves”).

Anita Borg

Founder and president
Institute for Women and Technology
Palo Alto, California

I was recently diagnosed with cancer. It has made me realize that a rat race without value is pretty foolish. Struggling with cancer has taught me to bring my values into my work now. I’ve learned how important it is not to say, “I’ll just do this to make a whole lot of money now, and then I’ll put my values in later.”

I’ve been very disturbed by the past five years in the high-tech world. We’ve seen folks just sitting around saying, “I bet we could sell this.” Particularly in the dotcom world, where products are built so quickly, we’ve seen technical folks coming up with technology for technology’s sake, without thinking about whether it has value.

I love technology. I love creating it. It’s wonderful, and it’s fun. I’ve worked with it for 30 years, and I want to find ways for future technology to help create a better world — not just a greedier hierarchy of haves and have-nots. It’s taken this new-economy slowdown to make us say, “Oops, what have we missed here? Maybe being fast isn’t quite enough.” We’ve got to get beyond fast. If you’re going too fast, you’re not listening. You miss out on vision, on value. We have to engage people in the whole process of defining the future. People have the right to think about technology for themselves, to express what they need technology to do for them and to help create that future.

Anita Borg ( is the founder and president of the Institute for Women and Technology (IWT), a nonprofit research organization dedicated to increasing the impact of women on all aspects of technology. She is also the creator of Systers, one of the oldest global electronic networks of women in computer science, and the cofounder of the Grace Hopper Celebration of Women in Computing, a prestigious conference for women in the computer-science field. Borg previously appeared in FC 27, September 1999 (“Sisterhood Is Digital”).

Steve Miller

Chairman, president, and CEO
Shell Oil Co.
Houston, Texas

Over the past five years, the new economy forced me to relearn learning and to redefine leadership. None of the historical references on understanding the world, the marketplace, and work apply anymore. Dump the time-honored absolutes on their heads, because the power source of management — information — no longer costs big bucks. Speed is the Holy Grail. To make sense of such a rapidly changing environment, I had to draft an entirely new competitive framework for how we do business.

From 1996 to 1999, I was obsessed with learning. That time was the greatest learning period of my life. In today’s world, proprietary knowledge is fickle: You can quickly leapfrog from one idea to the next, but continuous learning is enduring. It requires ego management. And I’ve adjusted my attitude to fit a grassroots definition of leadership. Five years ago, my job was to provide answers; today, my job is to create ways for frontline workers to find solutions. For me, learning used to be one of those things that is nice to do — with the casual concession that the more removed you were from the front lines, the more likely you were to neglect that learning. But today, no matter what your title is, continuous learning is your job.

Steve Miller ( became chairman, president, and CEO of Shell Oil Co. in 1999. Previously, as a group managing director of the Royal Dutch/Shell Group, he launched a grassroots leadership approach to transform the corporate giant, worth $128 billion at the time. Miller previously appeared in FC 14, April:May 1998 (“Grassroots Leadership”).