P&Q’s MBA Professor Of The Year: Jeffrey Sonnenfeld

by: John A. Byrne on January 12, 2023 | | 4,763 Views

MBA professor of the year Jeff Sonnenfeld

Jeffrey A. Sonnenfeld at one of his Yale CEO Summits
(Yale School of Management)

AFTER EARNING THREE HARVARD DEGREES, HE BEGAN TEACHING AT HARVARD BUSINESS SCHOOL

Yet, that is exactly what this 68-year-old professor has been doing for decades. Born in Philadelphia in 1954, Sonnenfeld’s father, Burton, was a men’s clothing retailer, while his mother, Rochelle, was a healthcare and community leader. His mother immigrated to the United States from the former Russian Empire in the 1920s. Sonnenfeld’s intellect was obvious early. Invited to study at Harvard University, he stayed there through his AB, MBA and PhD degrees, joining the faculty of the Harvard Business School at the age of 26. Sonnenfeld taught at HBS for nine years before moving on to Emory University’s Goizueta Business School as a fully-tenured professor from 1989 to 1997.

He moved to the Yale School of Management in 1999. bringing with him a CEO College launched at Emory and a mind overflowing with ideas. At Yale, he quickly founded and became president of the Chief Executive Leadership Institute, a nonprofit educational and research institute focused on CEO leadership and corporate governance.

While disavowing his role as an advocate, Sonnenfeld has racked up impressive academic cred. His work has been published in 100 scholarly articles and he has authored eight books, including The Hero’s Farewell, an award-winning study of CEO succession, and another best seller, Firing Back, a study on leadership resilience in the face of adversity. But his latest work on the economic boycott in Russia harks back to his very first book in 1981 entitled Corporate Views of the Public Interest: Perceptions of the Forest Products Industry. “That is what I was studying when I launched my career,” says Sonnenfeld.

That first book carried a weighty endorsement from none other than Reginald Jones, the General Electric Co. CEO who selected Jack Welch as his successor. A corporate statesman alert to the government’s increasing regulation of business, Jones coined the phrase corporate responsibility. He was among a small group of highly influential CEOs which included DuPont’s Irving Shapiro, IBM’s Tom Watson, and Exxon’s Cliff Garvin who helped to shape and give voice to the Business Roundtable, formed in the early 1970s.

THE BUSINESS ROUNDTABLE LOST ITS WAY AND HAS NOW COME FULL CIRCLE

To Sonnenfeld’s way of thinking, the soft-spoken but firm corporate gentlemen of that era gave way to a different breed of leaders who ran companies largely for shareholder return. “A succeeding generation of Business Roundtable leaders lost their way but it has really come full circle,” he says, noting that in 2019 the Roundtable came out with a new statement on the purpose of a corporation. Signed by 181 CEOs, the document committed the CEOs to lead their companies for the benefit of all stakeholders: customers, employees, suppliers, communities, and shareholders–not merely investors.

A test of sorts occurred in November of 2020 when on Nov. 5 Trump falsely declared himself the winner of the Presidential election. Most CEOs recoiled at his language,” says Sonnenfeld. “They were alarmed. CNN asked if we could do something the next day. We pulled together a pop-up CEO Summit that led to a five-point position paper.”

It made clear that the CEOs believed that Biden had won the election and that the election itself was the largest and most transparent in American history. “While they are very diverse politically, that was surprising and really effective,” recalls Sonnenfeld.

SOME BRANDS ‘ENDORSED THE SAVAGE SLAUGHTER OF PEOPLE BY PUTIN’

A year later came the invasion of Ukraine. Early on in March, Sonnenfeld wrote a commentary that called out McDonald’s Corp. and several other prominent companies for staying in Russia. He then went on CNBC to amplify his views. The following day, McDonald’s announced it would temporarily close its 847 Russian locations and “pause” all operations in the country. In mid-May, it pledged to withdraw from Russia entirely, with a $1.3 billion writedown of assets.

“Late to the party were consumer goods companies and some of it was caught up in Tom Friedman’s misguided ideas that countries would not go to war against each other if there was a McDonald’s there. It was the embrace of McDonald’s and Coke that was the spirit of perestroika that capitalism could be a bridge to social harmony. Those brands then looked like they were endorsing the savage slaughter of people by Putin. They did a 180 pivot quickly after we called them out. When Coke moved, it put pressure on everybody else.”

Sonnenfeld gathered his research director and a group of volunteers including undergraduate and graduate students who started going through the public pronouncements and SEC documents to examine what companies were saying vs. what they were doing. “As I went public with that, the companies that weren’t doing what they purported to do saw their stocks crash from 15% to almost 60%,” he says. “The only thing that happened was the market responded to the fact that these companies were exposed to financial risk, reputation risk, and operations risk in Russia. To my amazement, it had a catalytic effect. Government sanctions can be read as victimization by the West. When individual business leaders pull out it is a much stronger statement. The economic blockades only work when they are fully international. This became a six-times multiple on business exits. We have never seen in world history such a mass exodus of business interests from a country.”

‘PUTIN IS RUNNING OUT OF CARDS TO PLAY AND RUSSIA IS LOSING ECONOMIC RELEVANCE’

People took notice. There have been 70 million hits to the website with the list and grades, almost crashing Yale servers. Sonnenfeld’s list went from 12 U.S. companies initially to 1,300 companies worldwide. “We had to stare down 22 legal threats largely from Europe,” says Sonnenfeld, “but we held our ground. This had effects on company sales and market valuations. The students were incredible. MBAs and undergraduate students helped. Physicians from our Executive MBA classes took on life science companies.”

Tracking the corporate involvement in Russia is aided by a network of 200 whistleblowers that bring Sonnenfeld and his team information. “The students and I try to validate the evidence they bring us,” he says. The group often works late into the night to verify data.

Other than the Z implanted on his driveway two months ago, Sonnenfeld says he has faced little backlash over his active crusade. “So far, knock on wood, there has been no blowback or resentment,” he says. “There are some who try to come along and critique it but no one has shown anything to be wrong. We work hard on updating the list. The truth is Putin is running out of cards to play and Russia losing economic relevance.”

DON’T MISS: P&Q’s DEAN OF THE YEAR or MBA PROGRAM OF THE YEAR or MBA ADMISSIONS DIRECTOR OF THE YEAR

Questions about this article? Email us or leave a comment below.