Carnival Corp. CEO Arnold Donald Works at Righting the Ship ORGANIZATIONAL BEHAVIOR IN ACTION
A few years ago, the Carnival Corp., the world’s largest cruise company, had hit a dreadful stretch. In January 2012, the Costa Concordia , owned by Carnival, was wrecked in Italian waters, killing 32 people. Less than 1 year later, an engine-room fire on its Carnival Triumph disrupted power in the ship. For 5 days, over 3,000 passengers were without air conditioning or hot food, and most toilets were not functioning. Television co-medians used the Triumph as fodder for jokes, and ca-ble news ran dozens of stories about the cruise ship’s power outage. Demand for cruises plunged, and Car-nival slashed prices to find passengers for its 102 ships (spread across 10 brands). Arnold Donald, age 59, who had served on Car-nival’s board for 12 years, was asked to come in as CEO to right the ship. Donald mulled over the decision for several days. He was retired from a full-time job al-though advising a couple of private equity firms and serving on several nonprofit and corporate boards. Re-luctantly, he took the position as CEO. One year later, he said, “I should have been begging for the job. It is a blast.”Donald had been a longtime cruise passenger who took his early cruises as a place to play blackjack. His professional background veered closer to physical sci-ence, technology, and agriculture than the business of leisure. Most of Donald’s career was spent at the chemical company Monsanto, overseeing Roundup weed killer. Later, he and other investors bought Equal, an artificial sweetener, and other brands from Mon-santo. As CEO, Donald was required to evangelize on behalf of his product, including attempts to persuade Sweet & Low users to switch to Equal. From Donald’s perspective, his background in leading chemical prod-ucts was not a poor fit for the cruise industry. He says, “I’ve cruised a lot, and business is business.” After becoming CEO of Carnival, Donald spent months listening to employees at the company’s 10 brands. One of his major initiatives was to encourage leaders across different groups to cooperate better, rather than operate independently, in an effort to trim costs and grow revenue. In his interactions with other managers, Donald is known to be quite analytical and also ask loads of questions.The chief operations officer at Carnival, Alan Buck-elew, said Donald considers it his job to confront hype with fact and present a message of stability to share-holders and vacationers. Buckelew said that a key part of Donald’s role at the company is to be its principal spokesperson who tells the same message consis-tently. He must make sure that people such as inves-tors, passengers, and potential passengers can see him and maybe walk away with a different perspective of the Carnival group.Passengers, in particular, regard Donald as char-ismatic. From time to time he strolls across a cruise ship deck to check in on its passengers. He cozies up, places a hand on the passenger’s shoulder, and asks “Are you having a blast?” Donald has a positive vision of the cruise industry. He says, “Three percent of vaca-tioners actually cruise, and we have a huge upside for those who have never cruised. Once they do, they’re convinced.”Owing to encouragement from his family, church, and schools, as well as inspiration from the civil rights movement and historical figures in books he read care-fully, Donald said he always was self-confident. “I be-lieved that I could do whatever I wanted,” he said.Donald holds a degree in mechanical engineering from Washington University in St. Louis. He attributes much of his career ambition to his days as a scholar-ship student at St. Augustine High School, at the time a prestigious school for black boys. Donald recalls that he and his classmates were told three times a day by teachers, “Gentlemen, prepare yourselves, you’re go-ing to run the world.”
QUESTIONS
1. In what way is Arnold Donald functioning as a transformational leader?
2. Which leadership characteristics and behaviors does Donald appear to demonstrate?