Paul Leinwand is a Partner at Booz & Company based in the firm’s Chicago office. He advises organizations on the topic of strategy, growth, and capability building, with a focus on the consumer product and retail sectors. He also serves as chair of the firm’s Knowledge and Marketing Advisory Council. Paul has coauthored a number of works on capabilities-driven strategy, including the book The Essential Advantage (with Cesare Mainardi, Harvard Business Review Press, 2011), the e-book Cut Costs & Grow Stronger (with Shumeet Banerji and Cesare Mainardi, Harvard Business Press, 2009), as well as the Harvard Business Review article “The Coherence Premium” (with Cesare Mainardi, June 2010) and several articles in strategy+business. Paul earned a bachelor’s degree in political science from Washington University and a master’s degree in management with distinction from the Kellogg Graduate School of Management.

Cesare Mainardi is Chief Operating Officer at Booz & Company, Managing Director of its North American business, and a member of the firm’s Executive Committee. Since joining Booz & Company in 1986, he has worked with large global companies to help them achieve major business transformations, typically through multiyear strategy-based efforts spanning functions and geographies. Consulting magazine named him to its list of the Top 25 Consultants in 2005. Cesare is a coauthor of the books The Essential Advantage (with Paul Leinwand, Harvard Business Review Press, 2011) and Cut Costs & Grow Stronger (with Shumeet Banerji and Paul Leinwand, Harvard Business Press, 2009), and several articles on business strategy published in Harvard Business Review ( “The Coherence Premium,” June 2010) and strategy+business (“The Right to Win,” Winter 2010). He holds a master’s in management from the Kellogg Graduate School of Management and a master’s in manufacturing engineering from Northwestern, where he was awarded a Whirlpool Fellowship in Manufacturing.

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Morris: To what extent (if any) are the challenges that CEOs now face significantly different from the ones CEOs faced 3-5 years ago? Please explain.

Mainardi: The challenges faced today by CEOs exist in many dimensions – particularly in creating a sustainable path of growth in an environment where either growth has greatly slowed or competition has intensified. Growth often garners the most focus today; while undoubtedly absolutely critical as a metric, it should not be pursued at the expense of answering more fundamental questions that CEOs must address: How will we win? How are we different? What do we want to be?

Morris: To what extent (if any) has Booz & Company significantly changed what it does and how it does it in response to those challenges?

Leinwand: We firmly believe that organizations that follow a capabilities-driven strategy create more value over time – we’ve seen this in our work with clients and in our research of the most successful companies. As a result, we place great emphasis not only on helping our clients identify the most important system of capabilities for their business, but also on working with them to build and integrate these capabilities.

Morris: I will now share three of my favorite quotations and ask you to respond to each. First, from Peter Drucker: “There is surely nothing quite so useless as doing with great efficiency what should not be done at all.”

Mainardi: I love that one…. And we have talked quite a bit about this in our book Cut Costs & Grow Stronger. The problem is that many companies are not clear about what is truly essential for their success versus what are “table stakes” activities versus what is not required at all. Very often, they have a list of 20 to 30 things they consider absolutely critical and these things are defined in such a broad way that, in fact, they sometimes describe the entire company with all of its activities. Without a clear statement of the few — say, 3 to 6 — things that the company needs to be really great at, a company won’t be able to determine what it can stop doing or do with much less effort.

Morris: Next, from Michael Porter: “The essence of strategy is choosing what not to do.”

Leinwand: Choosing what not to do is clearly an important outcome of a good strategy. Although most companies intuitively know this, they still wind up with many incoherent paths – in fact, companies regularly report that they are chasing too many different avenues of growth. The essence of strategy must be focused on what you should do – based on the very simple idea of what you do better than anyone else. Too often, organizations look for growth opportunities and find a way to reach them – and neglect to understand the market and what they uniquely bring to the table. This shows the importance of “choosing what not to do” as Porter has put it, but it also highlights how much companies are still struggling with this.

Morris: Finally, from Lao-Tzu:

“Learn from the people
Plan with the people
Begin with what they have
Build on what they know
Of the best leaders
When the task is accomplished
The people will remark
We have done it ourselves.”

Mainardi: There’s a lot of truth in this one. What resonates with me is to leverage what people know, what they are good at, and build the direction forward on these strengths. What I consider absolutely key, too, is to involve the people in the organization in defining the path ahead and in shaping the transformation journey. Without this involvement, the change program is set for failure. We often say that every individual should come to work each day understanding how he or she contributes to the company’s way of creating value.

However, good strategy also requires solid top-down direction. Unless the company has defined a clear direction, has articulated how it is going to add value, and the few capabilities that it needs to excel at, every unit will optimize for itself, every function will try to be world-class without making sure that its improvement program fits the identity and strategy of the enterprise at large. Good strategy requires focus to become coherent – and that will mean saying no to many areas that might be good or to many creative ideas that individuals have developed but which are not in line with who the company is and needs to become.

Morris: Now please shift your attention to The Essential Advantage. When and why did you decide to write it?

Leinwand:  We wrote The Essential Advantage because we saw the result of decades of strategy efforts that did not create value – of a diverse set of rather good ideas in strategy that often addressed specific issues (for example, strengthening market-back thinking when companies were too internally focused), but which did not fundamentally change the value creation potential of an enterprise. At the same time, we were noticing companies that followed a capabilities path; these companies did not just have a capabilities agenda, but they understood that true differentiation comes from what they did (their capabilities) rather than what they had (their products and services). We at Booz & Company had been doing strategy for many years, if not decades, with this philosophy – that strategy needs to start with a company’s differentiating capabilities, with what it is great at and identify market opportunities that leverage those capabilities. We were surprised, again and again, by how many companies were screening the marketplace for attractive opportunities and choosing “blue oceans” without being able to swim.

Mainardi: We had written an article in strategy+business about our views on strategy and the importance of capabilities for value creation and lasting success.  This article was shared with Harvard Business Review; their perspective was this was a big idea in strategy, and together we agreed to write a book that articulated the argument and the path to build a capabilities-driven strategy. Given the economic situation in 2009, we first applied the concept to cutting costs and budgeting with a capabilities lens; this led to the publication of Cut Costs & Grow Stronger. Given the success of that book, we then wrote The Essential Advantage, which goes deeper into our approach, applies it to a broader set of managerial situations (including growth, M&A, portfolio choices), and has a wealth of tools that make it a hands-on guide for every manager interested in positioning his or her company for lasting success.

Morris: Were there any head-snapping revelations along the way?

Mainardi: We were continually impressed by how relevant this approach was to executives from all sectors and all parts of the world. Similarly, we were amazed at how confused strategy had become over the years – with conflicting approaches often existing in the same organization. We also were surprised at how often companies avoided some of the toughest – yet most important — questions of strategy: Who should we be? How will we uniquely create value for our customers? What are we great at doing? How should we think about growth, M&A, our portfolio, our investment (cost) through this lens?

Morris: To what extent (if any) does the book in final form differ from the one you had originally envisioned?

Leinwand: The process of writing the book definitely helped to clarify our thinking on many issues. It also provided the impetus to complete some research that had been started on the coherence premium, as we call it: the value that companies that follow this logic create in excess of their market. Given that Harvard books are peer-reviewed, the final product benefited greatly by the comments and contributions of the process itself, as well as the countless members of Booz & Company who helped make the book a reality.

Morris: For those who have not as yet read The Essential Advantage, how does a capabilities-driven strategy differ significantly from other types of strategy?

Mainardi: A capabilities-driven strategy starts from what a company is great at, its differentiating capabilities. These are not people skills, but combinations of processes, tools, knowledge, skills, and organization that allow a company to do something. These are not 10 or 20 things, but a few, usually 3 to 6 very precise things that a company does better than anyone else, and does so in a system (we call this a capabilities system) that is nearly impossible to copy. Companies then set out to identify attractive opportunities that leverage these capabilities. Capabilities-driven strategies are not agnostic to the market – rather, they are incredibly market-focused – but they originate from the perspective of which markets will respond to those capabilities.

Leinwand: This is very different from how strategy is often done. It’s not that companies don’t consider capabilities – they often do. But sometimes these capabilities are considered after the “market-back strategy” has concluded which markets to pursue. Sometimes the capabilities are defined at too generic a level (e.g., “We will be innovative”), which makes execution quite difficult.   Sometimes the inherent incoherence of the portfolio makes focusing on a few capabilities challenging.

Morris: What is the “coherence premium” and how does it create value?

Leinwand: Companies that have implemented and sustained a capabilities-driven strategy are coherent. By this, we mean that their way to play (how they create value) and their portfolio of products and services all draw on and benefit from the same capabilities system. Coherence creates value in four ways:

First is an effectiveness benefit, which is realized simply in doing what you’re exceptionally good at over and over, day in and day out. The companies that “sweat” their capabilities continuously improve them and sustainably capture the top-line growth in their industries and, ultimately, market leadership. A coherent, focused, and aligned capabilities system creates not only value but also a lock on value, because it is enormously difficult for competitors to replicate. Second, a coherent system focuses strategic investment on what matters. Coherent companies direct capital, time, and other resources to those activities, products, and businesses that will extend their lead. Third, there is the simple efficiency or scale argument. Organizations that are clear-minded about where and how they participate in a market spend less on those capabilities that are not competitively differentiating.  For those capabilities that are important, they are able to lower costs as they amortize large fixed capabilities costs (e.g., hiring talent, major IT processes) across their entire business.

Finally, a capabilities-driven strategy forces alignment between strategic intent and day-to-day decision making. In a messy, incoherent world, those companies that can look through a capabilities lens set a straighter and more sustainable course and avoid costly missteps. These organizations move in lockstep, because everyone understands what’s important. They execute faster and with more force. And they attract people who excel at the capabilities they wield with such mastery.

Mainardi: We’ve also been able to measure the coherence premium, the uplift in performance that coherent companies generate. We’ve examined a number of industries (e.g., consumer products, utilities, healthcare, media, telecom, automotive, financial services) and mapped the level of capabilities coherence in the portfolio of each of the major players against their operating margins over the past years. We have confirmed that coherence in capabilities correlates strongly with greater profitability (as measured by EBIT margin over the same period) and shareholder value. Our research shows that companies that invest mindfully in a capabilities system that supports their way to play and their product and service portfolio outperform the competition in their industry.  This, of course, is not surprising given the value created through the four benefits that Paul described.

Morris: Please explain the symbiotic relationship between capabilities and value creation.

Mainardi: We believe that capabilities are at the heart of value creation. In order to generate sustainable value, companies need to have a clear way to play, a capabilities system that supports that way to play and a portfolio of products and services that thrive within that capabilities system. This is what we call coherence – and we have discussed above how coherence creates value, through effectiveness, efficiency, focused investment, and alignment.

In order to create and capture value on a sustained basis, companies have to identify those few things they need to be really great at to win in their markets and then focus the bulk of their energy and resources on building and integrating these differentiating capabilities. A strategy thus isn’t sound or complete unless or until it is grounded in capabilities.

Leinwand: The Essential Advantage contains number of examples of coherent companies. Walmart and Pfizer’s former consumer healthcare division are a couple of great case studies in capabilities coherence.

Walmart wrings maximum efficiency from its supply chain by integrating four capabilities – aggressive vendor management, expert point-of-sale data analytics, superior logistics, and rigorous working-capital management – that together deliver “everyday low prices” to consumers. It’s a “sharp pencil” capabilities system rooted in superior information. Because of its world-class point-of-sale analytics, Walmart can rigorously tailor its assortment to local consumption trends and go to vendors with better information than the vendors themselves have. This, in turn, increases the company’s leverage with suppliers and allows it to be extraordinarily efficient in moving inventory and managing working capital.

Pfizer’s consumer healthcare (PCH) division offers a great start-to-finish case study of capabilities-driven strategy development and the returns it affords. After absorbing the much larger consumer healthcare divisions of Warner-Lambert and Pharmacia in the early 2000s, PCH was looking to develop a focused growth strategy. Based on the breakthrough insight that consumer healthcare was more a healthcare business than a consumer products business, PCH restructured its entire business and product portfolio around six healthcare-oriented capabilities: pharma-like innovation, regulatory management, new product development, claims-based marketing, channel management, and the “Rx-to-OTC switch” (adapting prescription pharmaceuticals into over-the-counter products). It divested a number of personal care and confectionary lines (e.g., Schick razors and Trident gum) and acquired other products (e.g., Purell hand sanitizer) consistent with its chosen way to play. In 2006, Pfizer directly redeemed the value built by PCH by selling the business to Johnson & Johnson for an unprecedented US$16.6 billion, or 20.6 times EBITDA (compared to average multiples of 15 at the time).

Morris: Which preparations must first be completed before a company’s leaders undertake the task of developing the elements of strategy?

Mainardi: A capabilities-driven strategy is the beginning of a strategic transformation journey, one that could significantly change the company. The company’s top team thus needs to be behind this initiative – its leaders need to understand and be committed to the capabilities concept, be ready to visibly lead the change and hand-pick a team to lead the effort. It’s also important to note that the idea of capabilities-driven strategy doesn’t necessarily have to be undertaken in a huge, all-encompassing strategic reset. Sometimes this just isn’t realistic. We have seen many companies applying these concepts to specific businesses only as a way of starting, or using the capabilities lens as they make new decisions, such as those about M&A. M&A is a particularly interesting example: through our research, we have found that consistently successful acquirers make M&A deals that either enhance their distinctive capabilities systems, leverage those capabilities systems, or do both. These companies have been rewarded with deals that average shareholder returns that are 12 percentage points higher than those created by M&A deals that ignore capabilities.

Morris: Once what you call “the journey” has begun, what are the most common – and most formidable – barriers that await?

Mainardi: The implications from such a capabilities-driven strategy are potentially very large. What will happen if you find out that the current portfolio is incoherent and that some business units require capabilities that are different from what the rest of the organization needs for success? We have worked with clients that spun off part of the company or sold some business units as a consequence of their new strategy. These are tough decisions that require a lot of courage and foresight from management.

Leinwand: Sustainability is another huge challenge. How do you make sure that the company remains coherent and that coherence continues to drive all its decisions? Leadership needs to be very clear about what is core to the company and what is not – clear in defining and equally important clear in communicating this to the entire company. Management needs to lead the change. Before taking any strategic decisions, they always need to ask: “Do we have a right to win? Is this move coherent with what we’re doing? Does this initiative strengthen our system of differentiating capabilities?”

This is a formidable task and requires a huge change program.

Morris: How best to overcome these barriers?

Leinwand: There’s not one single right way to overcome these challenges, but there are some general criteria that we have identified over the years. A key one is to bring relevant stakeholders on board early and be open about the potential magnitude of the change. Another is to ensure that the entire leadership group is aligned to the reason that this change is critical for the organization’s future.

Mainardi: Changing behaviors is absolutely critical, and this is as true for the management team as it is for employees on the front line. In general, such a transformation program will hardly be successful without working on — and, importantly, with — the culture of the organization. The culture of a company can be incredibly helpful in accelerating the transformation program – or, if not leveraged properly, it can slow it down or fight it altogether. In fact, one of the lenses we use to choose the right strategic path is how it will fit with the company’s culture. We’ve seen great strategic ideas fail because they tried to take the culture in a direction that simply wasn’t possible in the short term.

Morris: What specifically does “a more coherent way of thinking about [one’s] corporate portfolio” involve?

Leinwand: A company evaluating its corporate portfolio needs to look beyond financial considerations (e.g., market size and attractiveness, product performance) to take into account coherence, in other words, the fit of the product (or business) with the company’s capabilities system.

If the product or service draws on the company’s capabilities system, it adds to the company’s coherence. You’re most probably the right owner, because you have the potential to use what you’re great at to make that business more successful than any of your competitors could.

If a business is performing well – it often receives the gold star of portfolio evaluations – but is not coherent with the company’s way to play and capabilities system, it is likely to be worth more to a company that does have the right capabilities system. It is also very likely that this business drives significant cost, given that it reduces the company’s focus on its most important capabilities.

Mainardi: The story of the rise and fall of Listerine PocketPaks illustrates well how a breakthrough product or service can fail if the right way to play and capabilities system aren’t there to support it. PocketPaks were the first breath-freshening dissolvable film strips produced in the U.S. Rolled out in the early 2000s by Pfizer, Listerine’s mouthwash-releasing breath strips were a runaway hit with a blockbuster brand, genuine appeal, and an immediate business success story. As the first to market, Pfizer realized $160 million in sales in the product’s first full year. However, Pfizer’s differentiating capabilities, such as claims-based marketing, conferred no major advantage to a product that was, in the end, a confection. In needed to be sold in the racks near the cashier, alongside gums and candies, and it relied on constant flavor innovation to maintain its popularity.

Thus, Pfizer’s commanding market position proved brief. By 2004, competitors had introduced more than a dozen new breath-strip brands. The most prominent rival was Eclipse Flash Strips, produced by the Wrigley gum company. They put out four flavors before Listerine could get its second flavor to the shelf. Eclipse rapidly overtook Listerine to become the number one breath strip on the market.  Many companies have such products or services, offerings that are too innovative or cherished to give up, but not aligned to their capabilities system. What should they do? They should test them to see if they are equipped to take them to the customer in a way that gives them a meaningful and sustainable right to win, and decide their fate accordingly.

Morris: In Part III of The Essential Advantage, you examine different forms of growth. Here’s a two-part question: “What are they?” and “What unique challenges does each one pose?”

Mainardi: If you look at it through a capabilities lens, there are basically four forms of growth available to companies.

1) You can grow the core of your business, getting more from your existing customers within the “headroom” of your current products and services.

This is the least risky form of growth, the one that allows you to leverage what you’re great at with the customers you know. An example of this is what Walmart did with its electronics department. They changed their merchandise mix to attract more switchers from other stores: In suburban locations where there were many competitors selling personal computers, Walmart deemphasized  those products and focused on consumer electronics. But it kept the personal computer line strong in rural areas, where customers had access to fewer technology retailers and valued the guidance that Walmart could provide. By reapplying its powerful customer insight and pricing capabilities in a category where they fit so well, Walmart created a distinctive electronics department that could compete effectively even against more specialized chains.

We’re often surprised by how quickly companies claim they’ve used all their headroom and need to consider more risky moves, when we still see plenty of room to grow with their current capabilities system and target customers.

2) You can look for capability adjacencies.

These are typically products and services that you haven’t offered before and that allow you to apply your existing way to play and capabilities system in new market domains in ways that complement your existing offerings. Walmart achieved this with its new offerings of pharmacies and of fresh fruits and vegetables. The challenge here is to be really careful about what is a true adjacency versus what may look like an adjacency but, in fact, requires new capabilities to succeed.

3) You can expand your geographic footprint, moving to new places where your capabilities system applies, as Walmart did successfully in the United Kingdom.

Many Western companies struggle with scaling their operations in China because they have underestimated the capabilities that are required to win (e.g., the need to build new supply chain capabilities, facing different HR and retention challenges, having to manage multiple JV partners, working with regulatory bodies, etc.)

4) You can build new capabilities that expand (or replace) your existing way to play, potentially giving yourself a whole new platform for growth.

This is by far the riskiest growth approach given that building new capabilities from scratch often takes many years. Walmart has tried this too, with its neighborhood markets, which have about one-fourth the floor space of a regular Walmart store. There are times when this is appropriate, if the fundamentals of sales and profitability are changing or if there are large, new opportunities.

Morris: What’s the “adjacency trap”?

Leinwand: The adjacency trap is what Cesare referred to as a cautionary tale when he talked about growing by extending into adjacencies. The adjacency trap is an opportunity that looks like an adjacency but requires new capabilities.

Companies often extend their product lines, looking for untapped markets that seem close to their existing businesses, but they misjudge the capabilities they will need and assume that they themselves are naturally equipped to enter that new market. Consider, for example, the no-frills second brands offered by several mainstream air carriers in the 1990s and 2000s. Most of these, including United Airlines’ TED, Delta’s Song, and Air Canada’s Tango, failed. The parent carriers spent hundreds of millions of dollars on new branding, processes, and routes, but could never match the cost model of the original low-cost carriers such as Southwest Airlines and Ryanair. The unsuccessful airlines might have made different decisions if they had looked more closely at the capabilities needed for running this different form of airline.

Morris: How best to avoid it or escape from it?

Mainardi: To avoid the adjacency trap, you need to do more than just consider either the market potential or your capabilities in isolation. If your company is looking at expansion into an adjacent category, you should first look at your proposed way to play and your capabilities system in that context. How does this combination give you the right to win in this new market? What effect will this investment have on the rest of your company?

Morris: Here’s another two-part question: “How best to leverage coherence through mergers and acquisitions?” and “What are the most important do’s and don’ts to keep in mind when doing so?”

Leinwand: You can build coherence through mergers and acquisitions only if you use a capabilities lens in the process. In our latest research on the topic, we have analyzed the top 40 deals in eight industries over a 10-year-period (in total, 320 deals). The analysis has shown very clearly that deals that are done with a capabilities lens (either extending the acquirer’s capabilities to the target’s products and services or acquiring the target’s capabilities system to benefit one’s own portfolio) are by far more rewarding than those that “ignore” capabilities.

Mainardi: In order to select the most rewarding deals, companies thus need to be very clear about what their own and what the target’s capabilities system are – and how they fit together. Will the deal add products that will then benefit from the target’s capabilities? Or is it about strengthening the target’s capabilities system?

They will also need to be clear about how to integrate the capabilities in the post-merger phase. Where in the target organization do these capabilities reside? How does the acquirer avoid a simple takeover that may weaken or even destroy the target’s capabilities system? How does it keep the critical people from leaving?

Coherence is a very helpful lens through which to make acquisitions. It greatly enhances the chances for success, but mergers will always remain very difficult and will need a lot of attention.

Morris: In Chapter 9 of The Essential Advantage you suggest that there is a direct causal relationship between cutting costs and achieving growth. How so?

Mainardi: The important point we made in Cut Costs & Grow Stronger and in The Essential Advantage is that cost cutting must be thought of strategically, and when it isn’t, it impacts your strategic positioning anyway. In fact, we argue that every strategy project must have a cost (or as we refer to it, investment) outcome.  And every cost project needs to be done in a way that strengthens who you are, instead of weakening the entire company.

Unfortunately, most cost initiatives do just that: they take cost out without evaluating what the company’s most important capabilities are. After all, nearly all discretionary cost sits in capabilities. If you aren’t clear on what the most important ones are, you will wind up making the company weaker. The best cost projects actually take a portion of the savings and reinvest in those very important and select areas.

Our Cut Costs & Grow Stronger approach is pretty simple and deeply rooted in capabilities-driven strategy. Companies that know what their differentiating capabilities are and what is truly critical for success also know which areas of the business are less important. These are the areas in which to focus cost cutting: Look at what is the bare minimum expense to keep the business going in the “lights-on” areas; determine your “table stakes” capabilities that anyone in the industry needs, and work toward making them the most cost-efficient; and be very critical about all other expenses as they may not be required at all.

By cutting costs in these non-differentiating areas and redirecting spend to further strengthen your differentiating capabilities, you will become even stronger in those areas that truly matter and realize the coherence premium.

Morris: Of all the organizational changes, informal practices, and talent-related approaches that can enable a company to bring a capabilities-driven strategy to fruition, which are most important? Why?

Leinwand:  We believe that a capable company must have its organization and culture clearly lined up with the strategy, and in fact, as discussed earlier, a company’s culture should be an important lens in making strategic choices. We also believe that there are four pairs of elements that determine an organization’s DNA (Decisions & Norms, Motivators & Commitments, Information & Mindsets, Structure & Networks). These all need to be considered when aligning the organization to the strategy.

Morris: What are the defining characteristics of a “capable leader”?

Mainardi: A capable leader is one who helps his or her company develop and sustain a capabilities-driven strategy. As we’ve said, the transformation of a company into a capable one is a difficult journey that can’t be mastered without having the right leadership in place.

Capable leaders need to make choices – choices about what is core versus what is a distraction, choices about what to invest in versus what to keep at a lights-on level, and so on – and ensure the organization executes accordingly. They also need to give people further down in the organization a framework so they can make their own decisions in line with the company’s direction.

Capable leaders need to be clear in their communications. They are neither confused nor confusing. They say “no” clearly to incoherent requests, and say “yes” even more clearly when they remind the organization about what the destination looks like and what is the value of getting there.

There’s a huge benefit that CEOs and leaders describe having gone this journey. Once the organization understands how the company creates value  and knows what its capabilities system is, decisions actually become much easier and more directed. Great ideas are focused around the company’s purpose, and the tension over incoherence and conflicting priorities reduces greatly.

Leinwand: One of our models of coherent leadership is former Procter & Gamble CEO A.G. Lafley, who is credited with driving P&G’s remarkable performance comeback in the 2000s. “Most importantly,” he told the Academy of Management in his speech when he accepted the 2007 Executive of the Year Award, “we’ve built discipline into the rhythm of the business…. It’s human nature to want to avoid choices. But strategy is all about choices. And making and sticking with those choices is the responsibility of leadership.”

Morris: Please share your thoughts about what you characterize as the “most powerful legacy” in business?

Leinwand: There are many forms of great legacies – but none greater in our view than empowering an organization to create meaningful value for a long period of time. That value is often described in financial terms, but a capable company also performs an important role in society at large. The simple idea of a “way to play” is really the value that is created for the world, and is fundamental to why that company exists. Employees understand what they individually and collectively are contributing and human capital is critical in every winning capability that we know. The empowerment, energy, and enthusiasm that great legacies leave behind is clear when you see it, and unfortunately far too rare in today’s business environment.

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