What is your True North?

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Navigating the path to the top tests anyone's character. Here's how Howard Schultz, Anne Mulcahy, and other business leaders found their way.

An excerpt from True North, by Bill George
March 1 2007

NEW YORK (Fortune) -- Being shunned by former boss Jack Welch was what made one executive realize he was "adrift." Another up-and-comer quit a blue-chip job to sell coffee brewers. Careers gone off course? Hardly: Those two now run Fortune 500 companies: Amgen and Starbucks. What's more, such circuitous career paths are the norm, according to a new book by former Medtronic CEO Bill George. In talks with 125 business leaders, George found that most endured some daunting career twists and turns. Those who prevailed found an "orienting point" to help guide their decisions.

Nobody is born a master navigator, but the following journeys show how four stars got ahead - without losing sight of what matters.

Howard Schultz, Chairman, Starbucks

In the winter of 1961, 7-year-old Schultz was throwing snowballs with friends outside his family's apartment building in the federally subsidized Bayview Housing Projects in Brooklyn.

"Howard, come inside," his mother yelled down from their seventh-floor apartment. "Dad had an accident." What followed would shape him for the rest of his life. He found his father in a full-leg cast, sprawled on the living-room couch. While working as a delivery driver, Schultz's father had fallen on a sheet of ice and broken his ankle. As a result, he lost his job - and the family's health-care benefits. Schultz's mother could not go to work because she was seven months pregnant. The family had nothing to fall back on. Many evenings Schultz listened as his parents argued at the dinner table about how much money they needed to borrow. If the telephone rang, his mother asked Howard to answer it and tell the bill collectors his parents weren't home.

"I was surrounded by people who were working hand-to-mouth trying to pay the bills, who felt like there was no hope and they just couldn't get a break. That's something that never leaves you - never." Though Schultz's mother constantly urged him to make something more of his life, his past influenced his whole approach to shaping - and leading - a company. "I wanted to build the kind of company my father never had a chance to work for," he says.

After attending Northern Michigan University on a football scholarship - he was the first person in his family to earn a college degree - Schultz landed at Xerox. But the environment there was too bureaucratic and rigid for him. In a new job selling coffee brewers, he discovered a tiny coffee retailer in Seattle's Pike Place Market.

He campaigned to join the retailer, became its director of retail operations and marketing, and eventually raised enough money to buy the six-store chain.

Under Schultz's leadership, Starbucks (Charts) extended its benefits to provide access to healthcare coverage for qualified employees who worked as little as 20 hours per week. "Offering health care created unbelievable trust with our people," says Schultz, who spent 13 years as CEO of Starbucks and is now chairman. Today Starbucks employs 145,000 people, all of whom earn more than minimum wage, receive stock options, and get other benefits his father never saw. "Starbucks is the quintessential people-based business," he says. "Everything we do is about humanity."
Build on Failure

Kevin Sharer, Chairman and CEO, Amgen

It was 1989, and Kevin Sharer was facing failure for the first time. A Naval Academy grad and McKinsey alum, he had been a rising star at General Electric (Charts) but had recently jumped ship to join telecommunications company MCI, betting the top job in sales and marketing would lead to the CEO job within two years. "The CEO race is wide open," MCI's vice chairman assured him. But once he started work, it became clear that the chief operating officer was in line for the top slot - and didn't welcome competition from the ambitious young hotshot from GE.

Sharer wasted no time in developing his strategy to transform MCI - and position himself. Within six weeks "I marched into the chairman's office and proposed a restructuring of MCI's sales organization," he recalls. "I was at the zenith of my arrogance at that time." No surprise, Sharer's proposal threatened senior executives who had spent their careers building MCI.

Moreover, he lacked experience in telecom, so he had little credibility within the organization. "MCI was a crucible for me," Sharer observed later. "I learned that right or not, there is a price to be paid for arrogance." The job was taking a personal toll too. "It was grinding me down, and I began to retreat emotionally. My wife could not understand what I was going through because she had no corporate experience. She feared I would be fired, which only added to my feeling of isolation."

Desperate to escape MCI, Sharer telephoned Jack Welch about returning to GE. Welch wasn't happy with the way Sharer had bailed out of the company. "Hey, Kevin, forget you ever worked here," Welch replied. "At that moment," Sharer recalls, "I knew I had been cast adrift in a lifeboat." During that "gut-wrenching" time, Sharer received a letter asking if he knew anyone who could be president of Amgen (Charts).

Having never heard of the company, he went to the public library to learn about it. He decided to nominate himself for the job and was offered the position, under the tutelage of CEO Gordon Binder. This time Sharer cast himself as student instead of know-it- all. He worked in Amgen's labs, got tutored by its scientists, and accompanied reps on sales calls. He put off headhunters and remained Amgen's No. 2 for seven years before the board gave him the CEO job. One of his first gestures as CEO was to meet individually with the top 150 people in the company and ask them for their ideas.

Sharer's searing experience at MCI enabled him to recognize that leading was not about his own success but about empowering others to lead. "These interviews were the single most important thing I did," he explains. "They gave me the mandate to create a shared reality for the company. That enabled people to align around the new vision and strategy for building Amgen."

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Ask for help

Anne Mulcahy, Chairman and CEO, Xerox

Back in 2000, becoming CEO of Xerox (Charts) was the furthest thing from Anne Mulcahy's mind. One day, as she was preparing for a business trip to Japan, chairman Paul Allaire came to her office and told her he planned to recommend that the Xerox board terminate its current CEO and promote her to COO and eventually CEO. She was so shocked that she asked for the evening to discuss it with her family. The next day she accepted the job.

Mulcahy had always been a consensus leader, and stepping into this top job at a company on the verge of bankruptcy forced her to really reach out for help. With no background in finance, she asked executives in the treasurer's office to tutor her. Though she had never met Warren Buffett, she flew to Omaha and sought his advice over a steak dinner. She also decided to get into customers' offices and ride with field salespeople. "I will go anywhere, anytime, to save a Xerox customer," she told her sales force. Her customer engagement contrasted sharply with that of her predecessor, who had rarely been seen outside the headquarters building.

Asking for help made Mulcahy feel less alone at the top, particularly in her most difficult moments. "One day I came back to the office from Japan and found it had been a dismal day," she recalls. "Around 8:30, on my way home, I pulled over to the side of the Merritt Parkway and said to myself, 'I don't know where to go. I don't want to go home. There's just no place to go.' " She picked up her voicemail and listened to a message from then-chief strategist Jim Firestone. "This may seem like the worst day, but we believe in you. This company will have a great future," Firestone told her in the voicemail. That was all she needed to drive home and get up the next day.

Aligning with her team also helped Mulcahy stave off bankruptcy. She recalls telling Xerox's external advisors, who wanted to file to relieve $18 billion in debt, "You don't understand what it's like to be an employee in this company - to fight and win. Bankruptcy's never a win. I'm not going there until there's no other decision to be made." Mulcahy adds, "I was so angry because they could not comprehend the impact of bankruptcy on the company's employees. Our people believed we were in a war we could win."

Although some view consensus leaders as less powerful, the opposite is the case. Leaders like Mulcahy who have the ability to gain agreement around their point of view have great influence over others. When they ask for help, people are more than willing to respond.

And in the end Mulcahy did win, staving off bankruptcy by cutting billions in operating expenses without touching R&D or field sales.

Be who you are

John Donahoe, President, Ebay Marketplaces

In the fall of 1983, when he was an energetic 23-year-old, John Donahoe was enjoying a relaxing dinner with his fiancée, Eileen, in Boston. Just a year out of college, Donahoe had already earned an excellent reputation as a consulting analyst at Bain. His eyes lit up as he talked about his career prospects.

Yet as dinner wore on, Eileen became worried about the toll John's career could take on his life. She expressed concern about how the long hours, constant travel, and stress might limit his ability to have close relationships. Then she asked him pointedly, "Is that really what you want in life?" John answered adamantly, "No!" He reached into his wallet to find a piece of paper and wrote on the back of a Shawmut Bank receipt, "I will not live the life of a management consultant." He signed his name.

He recalls, "Her challenge to me was, 'Be who you are.' " To Donahoe that meant acting the same whether he was in a personal or professional setting. "The world can shape you, if you let it," Donahoe notes. One of his first tests came during his first year at business school. On the eve of finals, Eileen went into labor with their first child. When Donahoe asked himself what was more important, the birth of his child or his grades, the answer became obvious. As finals approached, he spent more and more time with Eileen. To his surprise, he earned the highest grades possible that quarter - because he was relaxed. "I remember watching the inefficiency that kicked in when people stressed out," he says.

A few years later Donahoe faced another difficult set of choices. After graduating from law school, Eileen received an offer to clerk for a federal judge, but her schedule required John to reduce his travel and take their two kids to school every day. Donahoe went to Tom Tierney, managing director of Bain's San Francisco office, and told him that he had no choice except to quit. Tierney just laughed and said, "John, we can find a way to work around this." He reassigned Donahoe to a local client who, to Donahoe's amazement, was happy to work around his limited schedule. "That was my best year of client work. Our client understood, and I became more relaxed."

Continuing his unusual path to the top, Donahoe one year later became head of Bain's San Francisco office. After six years in that role, he took a three-month sabbatical to spend time with his family. Upon his return, feeling recharged, he got promoted to the No. 1 position at Bain. Donahoe moved to eBay (Charts) in 2005; he now heads eBay's flagship business and is in a prime position to succeed CEO Meg Whitman. Although more than 20 years have passed since their conversation that night in Boston, Eileen Donahoe has not forgotten the signed Shawmut Bank slip. "I still keep it inside my purse," she says.

Excerpted with permission of the publisher, John Wiley & Sons Inc., from True North: Discover Your Authentic Leadership. Copyright © 2007 by Bill George. This book is available at all bookstores and from the Wiley Web site at http://www.wiley.com. You can visit the True North Web site at http://www.truenorthleaders.org.