CEOs Donahoe and Thiry Talk Leadership Challenges with Recent MBA Grads

Bankruptcy, layoffs, and other corporate troubles can be opportunities if leaders are clear and disciplined, two CEOs told a large crowd of managers and entrepreneurs who were back at the Stanford Graduate School of Business for their class reunions. The younger alums were also advised to be clear and disciplined

about carving out time for their personal lives.

When John Donahoe, MBA '86, and Kent Thiry, AB '78, agreed to keynote the 2010 spring reunion at the Stanford Graduate School of Business April 30, organizers knew they would put on a good show. Both men faced tremendous challenges when they took over the helms at their respective companies, eBay and DaVita. They're close friends. And as GSB lecturer and moderator Joel Peterson joked, "When's the last time you had two CEOs from Fortune 500 companies on the same stage? Probably testifying before the Senate."

The line drew a big laugh from the high-spirited audience -- young alumni from the MBA Classes of 1995, 2000, 2005 and 2009, as well as Sloan Fellows from 2009. Yet the program also had a poignant side, as the two chief executives discussed lessons learned the hard way, about life, leadership, and work-life balance.

Donahoe was in a particularly reflective mood -- perhaps because he was celebrating his 50th birthday. He said he first met Thiry more than 20 years ago, when the latter hired him at the Boston-based consulting firm Bain & Co. Eventually Donahoe rose to become that firm's worldwide managing partner, overseeing 29 offices and 3,000 employees. He moved to eBay five years ago and was named president and CEO, succeeding Meg Whitman, in 2008.

Today eBay's stock is on the rebound. But as Peterson noted in his introductory remarks, Donahoe's early months as head of the e-commerce giant were "real hell." One of his first tasks was to carry out the first round of layoffs ever at the San Jose-based company. He also decided to revamp the company  to focus less on collectibles auctions and more on new, fixed-price items -- a move that infuriated many longtime eBay community members. At one low point, Donahoe said, he clicked onto YouTube and found a hate video depicting him as a Nazi in Schindler's List.

"I can't tell you it was easy," the CEO told his rapt audience in Bishop Auditorium, "but what I can tell you is that I had some experience. I took over Bain's San Francisco office when the firm was bankrupt, during the dot-com crash, so I had some experience early in my leadership tenure of having a crisis and understanding that crisis is an opportunity. The hardest thing is just having the fortitude to stay with it, and not wish it were better, but to recognize it for what it is, and take advantage of the adversity. You can drive more change in tough times."

Thiry, 54, faced similar challenges in 1999 when he took over as chairman and CEO at DaVita Inc. The company, which provides in-center and home-based kidney dialysis services, is repeatedly ranked among Fortune magazine's most admired health care companies in the United States. But at the time, its operational costs were spiraling out of control, and many of its top managers had been ousted or fled.

Thiry took immediate steps to tighten up the company's billing practices and build a new executive team. He also spent considerable time and energy overhauling the company's culture, giving it more of a community feel. "Creating a sustainably distinctive culture requires the same kind of strategic and operating discipline as figuring out a corporate strategy," he explained. "It takes intellectual clarity; it takes clear allocation of responsibility; it takes meticulous metrics and follow-through. … When I think about culture-building and leadership, one of the phrases I use more and more as I get older is: 'Intentionality rules.'"

The same concept can be applied to work-life balance, Thiry added. "If you do not bring the same type of analytical rigor to engineering your life as you do to engineering a factory or a cost structure or a promotional strategy, then you will almost certainly fail. … So many people get sucked into the abyss, where they're working too much and experiencing too much ad hoc stress, because they've not brought the same intellectual rigor to evaluating the engineering of their life that they have to their business problems. And then once they get married and start having kids, they can never quite catch up."

In a subsequent Q&A session, the two CEOs fielded questions from alumni on subjects ranging from work-life balance -- Donahoe said he and his wife, Eileen, now U.S. ambassador to the United Nations Human Rights Council, officially "canceled" their social life for a few years while their four children were young -- to the challenges of transitioning from consulting to line management. When asked how they find time to reflect, both men said they value the insights gained through journaling.

Donahoe and Thiry's keynote program was the first reunion event ever organized by the business school's Center for Leadership Development and Research. Founded in 2003, the center provides students with opportunities to learn business leadership skills through regular courses, executive challenges, online resources, and speaker series.

--By Theresa Johnston