Steve Goldstein was the former Chairman & CEO of American Express Bank and the President of the Credit Card Division at Sears and he is here to discuss managing for culture. He is also the author of the upcoming book, Why Are There Snow Blowers in Miami? – set to be published in September 6, 2016. Steve is a masterful storyteller and shares key insights as to where companies often fail the most. He also talks on how you can create a company culture with engaged and passionate employees.
Managing for Culture, Snowblowers and Conversation with Steve Goldstein
Hello, I’m Roddy Millar and I’m delighted to have Steve with us today to discuss managing for culture. Steve, thank you very much for sparing some time to be with us.
Great to be with you this morning, Roddy.
You’ve had lots of big corporate experience at a high level in your career about managing for culture, as we’ve just covered. What made you want to break free from that and write a book?
I broke free quite a while ago. I had, as you said, a lot of large company, big experience. Then I went sort of to the other end and got involved in venture capital businesses, startups and smaller companies that were in need of money and management assistance; and then moved into the private equity arena where I now am. I’ve always had this itch to write a book and it never seemed the right time to do it. About two years ago after speaking with a lot of people, they said, “You seem to have some really good ideas about what works and what doesn’t work and you should write your book.” After I heard enough people telling me, who were not relatives, by the way, that I should do this, I decided that I was going to commit to writing the book. About a year and a half ago I really sat down in earnest to write the book on managing for culture.
Okay. Is it drawing mainly from your experiences as an investor in private equity, or is there a heavy focus on your experience from being in American Express and other large organizations?
I think it’s a bit of both. I’ve been very fortunate that I’ve had a number of very diverse experiences in terms of large companies and small companies, growth situations, turn around and troubled situations, startups. That’s given me a number of different perspectives of how to look at things. I decided that if I was going to write a book … I read a lot of business books as I’m sure you do. If find most of them to be pretty flat and sort of boring, at least to me. They’re full of charts and graphs and case studies and tend to be a bit theoretical. I decided that if I was going to write a book I wanted it to be a little bit more like me, so to have some humor and sarcasm in it, to have real, hard‐hitting stories that actually happened. I realized that I didn’t want the book to be about me, I wanted it to be more generalizable.
The book is a compendium of stories. As you know, stories are, since the history of man, have been the best way to communicate at least generationally from one to the other. I think when people hear stories the impact of what they take away might be more compelling. The book is basically a combination of my stories, and I’ve also interviewed I think 16 CEOs, both from the for‐profit and not‐for‐profit arena. I think the collection of their stories plus my stories, interwoven with these five principles of engagement that I’m sure we’ll talk about on this chat, creates a quilt, if you will, of my view as to what it takes to be an effective leader and run a strong and results‐oriented organization.
Sure. I think that story telling aspect is critical in leadership as well. Leadership is, to a large extent, around learning and getting messages across to people, and how to be managing for culture, so communication too. Story telling is a really neat package way of transferring those messages. Is that something that you’ve used anyway in your leadership roles?
Yes. I’ve been told by friends and others that I’m a really good story teller. I don’t know that I have a lot of other skills, but I apparently am a very good story teller and I find that, whether I’m dealing with friends or family or business situations, that it’s really helpful to tell a story. The story doesn’t have to be long, it could be short. I think people take away the essence of the story in a way that they can take the concept you’re trying to teach them, take it onboard more fully and less a matter of rote memorization than really understanding the essence of what the message is.
I know that that’s the way I learn. I think most people if given a choice would rather have a method of teaching and learning that has greater stickiness. The way you get stickiness is you really have to get it. One of the things that I’m really happy about with the book is, because I’ve shown some chapters to certain people, and the reaction is, “Not only have I seen this movie, I’ve actually been in this movie.” That helps them realize in some cases the craziness of a situation and the fact that you could be blind to the situation but you have find a way to get out from under your own comfort zone if you will and try to see some things that … People describe things as looking around the corner, under the table. It’s more important to see what’s not right in front of you than it is to see what is staring you right in front of your face.
Hidden in plain sight, often as well.
Hidden in plain sight, exactly, exactly.
Stories are a great way of revealing things. I’m interested about leader’s use of stories. Are they something that you actively practiced in managing for culture? It sounds to me like you’re a natural storyteller anyway from what you’re saying, so it probably comes easily; but do you have a repertoire of stories that you draw on for different occasions, or is it just they occur to you at the right moment?
They occur to me at the right moment. I was just in a meeting earlier this week and there was an issue in the company about people not being forthcoming. There was a question of, is there a culture of fear of retribution, is it a culture where people are not encouraged to speak up? I’m not even talking about whistle-blower types of things, I mean just calling it for what it is. I used the current example of Volkswagen, which has obviously been in the news for the last 60 to 90 days. It’s very clear and the story is coming out drip by drip, but it’s very clear that they made a decision to promote and grow diesels both in the United States as well as in other markets as their primary engine of growth, no pun intended.
When they did that, they didn’t have the technology to do that and so they made all these commitments, they spent a fortune in R&D. The truth of the matter is, as it’s coming out, they did not have a commercially viable technology to achieve the emissions standards that they needed to make the product claims they were going to market, or they did market. They’re focusing on who knew and when did they know and who told whom, but the reality is that there was so much pressure on people to make these deadlines that you can imagine how impossible it would have been for someone to raise his hand for fear. The question is how far up the line did it go, and who knows. There’ll be investigations going on for years and this is going to cost VW tens of billions of dollars, both in real money and reputational risk and other things.
I used this story to describe in a very graphic way, here’s what happens when you get it wrong. This is a real consequence of not creating an environment where people are comfortable throwing a flag on the field to say there’s a foul.
Absolutely, you have to be managing for culture – one that is not rooted in fear of speaking up.
Right? That’s an example of … That’s not my story, that’s just a story … I frankly don’t know where these stories come from, they sort of just come. Some of them come from my own experience, obviously, some of them are happening real time in the news, some of them I’ve been told by others. I’m a very keen observer of people so when I look at people’s eyes and I see are they really getting it, are they listening? You can see lights going on, you can see the inside of their brains turning, really trying to digest what you’re trying to communicate. Then they have a decision to make: do I understand it, and then do I agree with it, and then am I going to act accordingly? It’s sort of a progression like that, but I think you can’t get to the last step unless you get the prior steps really ingrained and understood.
That’s that bit about connecting and creating engagement, isn’t it.
It’s interesting, but I just want to dig a little deeper on the VW story and it’s … Clearly it’s changing day by day at the moment. I think VW announced earlier in the week that it was less prolific, less widespread than it had been originally anticipated; but the story, as you say, continues to unfold. What you’re saying there, and this is the wider message, is it’s really a culture issue and that is directed by people at the top of the organization presumably who are not managing for culture, a culture of truth.
Absolutely. I think to take your point a step further, everything in a company starts at the top, good and bad. People follow leaders and so they look to see what their leaders do, not what they say. I can’t tell you how many companies I’ve gone into where I’ve worked, where I’ve consulted, where I’ve advised, and I’m talking everywhere in the world, where you walk into the headquarters and somewhere in the central hallway or the lobby is, for want of a better term, our values. Our mission statement. It’s a series of eight to ten bullet points about how we treat our customers, how we treat our people, how we treat each other. It brings tears to your eyes how wonderful these things are.
When you speak to employees, and one of the things I always do when I go into companies, is I speak to employees at the lowest levels of the organization because they actually know what’s going on. It’s not uncommon for one of these folks to say to me, “What really pisses me off is I see these values everyday when I walk into work and nobody practices them. Why do they even put this on the wall?” It actually has the unintended consequence of engendering the exact opposite reaction that the sign is supposed to create. It’s because it’s only words, it’s not what people are actually doing or how they’re behaving.
When you’ve had senior positions, as we said in large organizations, and that inevitably brings an enormous amount of work, it’s hugely stressful. There’s presumably lots of firefighting going in because large organizations bring up their own challenges the whole time. How much were you personally, and do you think others, your peer group of people at that kind of level, think of themselves as leaders managing for culture and therefore needing to project those kinds of values? Do you have the time to do that, or is it you’re too busy getting the job done to have that external self‐awareness of yourself?
That is a great question and it’s several questions. I think people … and I’ll tell you a story in a second. I think people in those positions think of themselves as I’m an executive vice president, or I’m a senior vice president, or I’m a division president, or I’m a CFO, and that’s my job and I have a set of responsibilities and accountabilities I have to do. I don’t know that they think of themselves as leaders, and it’s funny that many companies don’t refer to their people as leaders. GE does, they really stress leadership. They call their executives leaders, they don’t call them executives; but many companies don’t do that. They call them “this is our team”, “this is our executive team”. I think at some level these people really think of themselves more as executives than they do as leaders. I think it’s not just a semantic difference. That’s number one.
Number two is, and I talk about this a lot in the book, it is always the case … That’s too broad. It is often the case that people use lack of time as a way to explain why they’re not doing a lot of different things, ranging from, “I don’t have time to take a vacation,” to, “I don’t have time to do this,” to, “I don’t have time to do that.” The reality is these guys are really busy, I mean make no mistake, these guys, it’s like my uncle used to say, “You’re working half a day from eight to eight.” That was my first indoctrination to business. I thought a half a day was a half a day. He meant it’s 12 hours out of 24. That was sort of a rude awakening for me.
It was a baptism of fire, that one.
A baptism of fire, exactly. If you’ve got a big job at a big company, you’re working 70, 80 plus hours a week, including the weekend. To the outsider it might seem glamorous, but on the inside it’s a grind. It’s hard work. There are a lot of pulls and tugs on you, there are a lot of demands on you, and time is probably one of the most precious commodities we have. Unfortunately in large organizations time just gets wasted for so many things. In fact I have a chapter in the book about meetings and how meetings really have gotten out of control and take up so much time from leader’s days and accomplish so little. It would be one thing if there was some value add coming out of most of these meetings, but it’s sort of a … The more time you spend in meetings the less gets accomplished. I’ve got some approaches in how to change the whole meeting model.
I think the problem is that, at the core of your question, is I don’t believe that a lot of leaders assume it’s their responsibility to lead their organization as opposed to just manage it through a set of requirements to let’s hit our year end target, let’s make budget. Let’s achieve this goal. Which tend to be more static metrics, they don’t have to do with the way the organization runs as much as it is how they need to accomplish specific end results. Of course you’re in business to generate results, but my contention is how you get those results makes a huge difference as to whether they’re sustainable and repeatable over time as opposed to just working your butt off just to satisfy this requirement and then you’re out of gas. There’s nothing left in the tank for you to do the next thing, but of course tomorrow morning there’s a whole new set of things you have to do.
It’s sort of like getting fit and being in shape. You have to run at a sprint pace for a marathon distance.
You’ve seen, you obviously worked in large organizations in your private equity career you’ve seen lots of organizations. How many put metrics around that leadership managing for culture emphasis? Because we know what gets measured gets done and if that’s the output you’re being bench marked against, that’s what you’re going to drive for in managing for culture. That presumably takes us back to the VW story, that’s presumably what was happening there.
Yes, and I think increasingly more companies … It goes by different names and labels, but more companies are doing what is commonly called 360 reviews where you’re reviewed not only by your boss, but you’re reviewed by your colleagues, your peer group, and you’re reviewed by your subordinates. Getting the feedback from those different constituencies can provide a picture as to what you’re doing well and what you don’t do so well. For instance, some people are very good at managing up, right. Their boss thinks they’re doing a great job, but they may have very even be more successful if you do that, you’ll have sharp elbows dealing with their colleagues and they may be brutal with their subordinates. In that context this 360 review, 3/4 of the review wouldn’t be so great.
You get those metrics, that’s the easy part. The hard part is what do you do with them? What’s the actionability of those results? To what degree does the leadership of the company hold accountable the leaders who have been reviewed to make real, meaningful changes to their behaviors so that the next time the review is done there is significant improvement. That is where I think the process tends to fall down. It becomes more of a box checking exercise than one which creates … Here’s a program, here’s Roddy’s plan for next year. He’s got to do these three things with his colleagues, he’s got to do these four things with his subordinates, and he’s got to do these two things with his boss. He’s got to take this seriously and we expect next year when we score this again there will be improvement. If there’s not, what happens? What are the consequences of that?
Unfortunately what happens in many cases, if you hit your financial targets, that tends to be the holy grail. You may not have done such a great job on your 360 follow ups, but if you beat your targets you probably got a pretty nice bonus.
That’s still good enough.
It gives you a very … In the best of cases it gives you a mixed message because on the one hand I’ve told you I want you to work on this stuff. Let’s say you didn’t, but you really crushed your financial results and I give you a fantastic bonus, what I’m basically telling you without telling you is, “Just keep hitting your numbers and the rest of this stuff I’m not really that worried about.” You don’t say that, of course, but that’s …
Yeah, no, that’s the implication.
That’s effectively what it means, right.
What is the solution to that; because it’s going to be pretty difficult for a superior, a boss, to turn around and say, “You met all your numbers, but … ” What can he do to change that behavior, be managing for culture, that has some power over them?
It’s both simple and hard, but it starts with the leader and it’s incumbent on the leader to decide that he wants to … Let’s take this as an example, he wants to take this seriously. Let’s say in the example we just discussed you’ve got serious issue with your 360 feedback from last year and you beat your numbers better than anybody else and you’re due to get a whopping bonus. What I have done is I have said, “Okay, Frank, you should have gotten a bonus of X. I was actually going to give you 1.5X because you absolutely just crushed the numbers, but I’m going to give you .7X. I’m basically cutting it in half of what I would have given you for one reason: you did not address these leadership issues.”
You crushed the numbers but you’ve crushed your team as well.
“You’ve crushed your numbers and you’ve crushed your team and next year I expect you to not only hit your numbers, but I expect these scores to go up and I’m going to be talking to your folks and making … I’m not going to wait until the end of the year to see what the survey says, I’m going to talk to your people and essentially that … he’s critiquing my leadership team, how it’s going. Not in a threatening way, you’ll even better results.” He’s going to look at you like you’re crazy, and you’re going to have a difficult conversation, and then he has a decision to make. He has to decide are you really serious, and if he wants to stay with the company and continue to grow, he’s going to have to get onboard.
Change his behavior, exactly.
Change his behavior. By the way, his behavior affects hundreds and thousands of people below him, so there’s a leverage factor here that works both ways. If he doesn’t get it, neither does everybody else, and if he does get it, so does everybody else. Yeah, exactly. As I was writing this book on managing for culture, I said to myself, “Is this too simplistic?” Because I’ve come up with these five principles and I’ve come up with all these prescriptive things to do and I said, “Is it that simple?” I concluded it’s that simple, but that’s why it’s so difficult. It’s not rocket science.
Managing for culture, it’s not rocket science, but you’ve done this though, have you? You’ve seen it in action?
It presumably does, managing for culture sends a really loud message, doesn’t it. To an extent it’s unexpected, it’s not traditional behavior, it’s not how people think they’re going to be treated and so it really reinforces that message around the culture part, the leadership part. That’s ultimately what sustains organizations in the long‐term.
Exactly. It’s really funny, I was living in London quite a while ago with American Express, and I was brought in to basically turn around our business there and I was there for about three or four days. This is before PCs and everything; I’m dating myself, but this is before PCs so I’m actually looking through a pile of letters, mail. I felt a presence in the office and I looked up and it was the window washer with blue overalls, with his suspender untucked, with the newspaper tucked in with a cigarette or a fag in his mouth hanging down. He startled me because it was 7:30 in the morning or so.
I looked up and I saw him and I said, “Oh hey, how you doing?” He said, “Uh, okay.” I said, “My name’s Steve. What’s your name?” He goes, “Uh, John.” I said, “Oh you’re the window washer?” He goes, “Yeah.” I said, “How long have you been doing this?” He goes, “About 25 years.” Then he says to me, and the guy is totally in … I could see by his face he’s in shock because no one talks to him. He says, “You’re the new governor?” And I said, “Yeah, I guess I’m the new governor.”
He goes, “No, governor.” I said, “OK, I’m the new governor, yeah.” He said, “What happened to the old govster?” I said, “He’s gone.” He goes, “Well that’s good.” And I said, “Why is it good?” He says, “He was a bad man.” I said, “Well, what do you mean, he was a bad man?” He starts talking and said, “Hey, I’m going to get a cup of coffee. Would you like to join me for a cup of coffee?” This guy was in complete shots so we walked over to the kitchen area, there’s nobody else in the office, by the way, because they all came in like at 9:30 or 10. We walk to the kitchen area, we make 2 cups of coffee, we walk back, we’re sitting at my table and for the next 45 minutes, we’re having this amazing conversation where he’s telling me by name. I said, “How do you know this?” And he said, “Every other day, I’m in their office. I’m washing the windows, you know. I hear how they talk on the phone, I hear how they talk to people, I hear how they talk to their wife or their girlfriend.”
He points to his head and he said, “I got a picture of all of how they work.” By the way, this guy didn’t go beyond the third grade but he had such an innate sense of right and wrong, good and bad and he had his own terminology. It obviously wasn’t business terms and everything so he looks at his watch and he says, “Oh, sorry, I have to get back to washing the windows or I’m going to be fired.” I said, “Yes, I don’t want you to get fired and I got a lot of work to do too.
Would you be willing to have coffee with me every couple of months, just to stay …” he said, “Absolutely.” He leaves and we start meeting and occasionally he would take me to his pub, his special pub. We’d have a couple of pints and my guys, who were all basically Uxbridge graduates, wanted to know why this crazy American was having coffee, going to the pub with the window washer. One day, one of them had the guts to ask me. We were in a meeting, he said, “With all due respect, sir, why are you spending your time with him?”
I looked at this fellow and I said, “You know what? I learned more from him than I’ve learned from all of you because he actually knows.” I said, “You should talk to him.” They looked at me like, we would never talk to him. I invited him to the Christmas party and because to me, he was a person first who happened to be a window washer. He was not a piece of furniture as he thought of himself to be. That was like in the late 80’s and as I’m telling you this story, it’s like I’m seeing his face. That’s how vivid it is. It’s that kind of thing that really, to me, is an indication of the degree to which you’re committed to lead. It doesn’t mean you have to go meet with the window washer but it means you have to get out of your cocoon, you’ve got to get out of the fancy office, you’ve got to go talk to people.
I think it’s a fantastic story on managing for culture, but it’s getting right under the skin of the organization, isn’t it?
There is this real problem for people high up in organizations that the bad news gets massaged and filtered out as it travels up through the organization.
I think being able to find that conduit down to the base level of things are actually happening, the front line is fundamentally important. I imagine again, it’s really difficult for leaders to do.
I think it is. I think part of it is some people are … because I’ve given this a lot of thought in terms of why don’t people do this and I think one argument to be made that some people are naturally extroverted and some people are naturally introverted. Obviously it’s more difficult for someone who’s shy, insecure or introverted to go out and approach people. I get that part. I think there’s another piece of it that people believe that if I’m a senior person, I’m better than you. I don’t need to deal with you. I don’t think it’s malicious but it’s almost like the caste system in India where you don’t marry out of your caste because you don’t want your family to be insulted so I think part of it is that. I think part of it is you are afraid what you might find out because if you do do this and you find out bad stuff.
Like if the VW guys found out about this 5 years ago, then they would have had to put the brakes on the program, face a huge embarrassment, figure out what to do but that would have been an easier problem. That would have just been a financial problem to deal with. It wouldn’t have been a customer or legal or regulatory or reputational problem. It would have just been a money problem. I’m not minimizing the fact that the money problem wouldn’t be a problem but that would be inherently more manageable than what we now see them having to fix.
They’ve got a money problem now as well, though, haven’t they?
Well, they got a money problem plus all the other ones. Inarguably, it’s a heck of a lot worse. I think that there are lots of reasons or excuses why people don’t do this. What I have found is that when I’ve encouraged people to do this, and to do it in baby steps, just like you sort of have to learn everything else that you’ve never done before. Once you see it works, then of course you’re going to do more of it. Then you realize, it’s actually a good use of your time. It’s not a waste of time because if you come away with something after spending 45 minutes with somebody that you could never have figured out yourself, you’re way ahead of the game.
It’s very leverageable.
That plays beautifully to the first of your 5 points in your book, doesn’t it? The fresh eye is one which really appeals to me as a publisher of information, that bringing in new concepts and getting people to look at things through different lenses and different perspectives seems like a valuable thing to do but you’re very specifically, sort of highlighting that as well as how to be managing for culture.
Yeah and the way this hit me most profoundly was when I was at Sears, which is based in Chicago and it was a terrible winter, there were snow storms and everything. I had to go give a speech at ‐
There are always terrible winters in Chicago, aren’t they?
Yeah, it’s always terrible winters in Chicago, exactly, that’s not a unique thing, but this was particularly bad.
I had to go give a speech in February in Miami to some group and I always made it a point when I visited a city, to go into the local Sears store just to see what was going on, talk to people, see what was working, what wasn’t working and in any event, I go into the store a few blocks away from where I had to give this speech and I walked into the garden center. Mind you, this is Miami in February, it’s like 86 degrees outside and I see what you’d expect in a garden center, lawn mowers, patio furniture, barbecue grills, shovels, rakes, wheelbarrows, all that stuff, right. And then at the corner of my eye I see 4 snow blowers. I think I’m like hallucinating so I walk over there and I see that they actually are snowblowers.
I ask the salesman who was an older gentleman who looked like he was about to retire, he said, “Hi, my name is Pete.” I said, “Hey, Pete, what’s the deal with the snowblowers?” He said, “Well, they ship them to us every year. We don’t sell any. We ship them back in April and then they come again in October.”I said, “Well, does anybody do anything?” He said, “My boss calls the head office, his boss calls the head office, but it doesn’t work because we keep getting them.” I said, “Well, what do they tell you?” He says, “Well, it’s part of a national allocation.” I said, “Do you know what that means?” He goes, “I have no idea what that means. All I know is we keep getting them.” I said, “Did you ever sell one?” He said, “We sold one. A couple of years ago, a couple was going to visit their children in Minneapolis, they bought one, they put it in their minivan and they drove up to Minneapolis to give it to them for Christmas.” I said, “That’s it?” He goes, “That’s it.”
We were in the middle of a terrible storm and I had to go back 2 days later or a day later and we had our weekly executive leadership meeting. Of course, the topic of the day was this incredible snow storm, what it’s doing to the supply chain and distribution system, everything’s screwed up and the biggest problem is we’re out of stock in snowblowers. We have them but they’re stuck in a warehouse somewhere in Minnesota or something. Everybody’s figuring out, what are we going do? I go, “I know where there are 4. Here’s this guy Pete’s business card. Call him in Miami and at least you’ll have 4.”
They look at me and they start laughing and I said, “Why is this funny?” They said, “No, it’s funny that they’re in Florida.” I said, “Actually, it’s not funny that they’re in Florida. How could there be snowblowers in Florida? It never snows there.” The meeting ends, that’s it. I walk back to my office and I say to my assistant, “Stop what you’re doing. I want you to find out … I want you to call anybody you can call. I want to know since the history of recorded weather, how many times has it snowed in Miami. Don’t do anything else.” She comes back and she says to me, in about 45 minutes, it snowed once, 7 years ago, a third of an inch. I said, “Thank you.” I went back to the guy who was the big shot, the hard goods guy, who was the loudest laugher and I said, “Here’s this.” Obviously there was a big problem that nobody was consciously deciding. They were just basically sending inventory, 5 to you, 3 to you, 10 to you, with no care or tracking as to whether it made sense. This was going on forever.
My concern was, what other products and SKUs were they doing this with? But the problem, I walked in with fresh eyes because I was shocked. The problem is, the people who worked in the store, they stopped seeing the … Pete stopped seeing the snowblowers because you know, they were just there. It was utter futility and his managers gave up, the senior leadership from the merchandising departments probably never were in the stores and if they did see them, they obviously didn’t do anything about them. This notion of fresh eyes is really critical because it really is a sort of outside‐in perspective as opposed to an inside‐out perspective and it’s fresh. It looks at things as they are or as they should be, not necessarily as they appear, where all the allowances and probably did learn some things along the way. Those justifications for why something is not right have become accepted.
But I mean it’s difficult to bring fresh eyes to something in your normal environment. You were outside of your normal environment.
Is there a trick to trying to look at the world around you as you’re familiar with it, through fresh eyes or does it require you to break out and go to different places and have other people come to your environment to do that?
I think it’s both. I think you have to step out and see things yourself. I also think as a leader, if you meet with individual or groups of employees and ask them questions like how’s it going? What’s working? What’s not working? They know. They know. They will tell you. And not only will they tell you, in many cases they’ll tell you what needs to be done to fix it. But of course, if you don’t ask them, if they don’t believe that you value them, or value their opinions, this notion of putting things in a suggestion box, that doesn’t work. You really have to roll up your sleeves and sit elbow to elbow or shoulder with these folks. They need to believe that you’re serious and that you’re committed.
Which means if you do this, you have to be willing to follow up with some actions. But again, once they realize you’re serious, then they’ll start contacting you and saying, “Hey, I just noticed this. This stuff doesn’t seem right, can you address it?” Then you’ve got … you’ve begun to empower many, many people in the organization who actually do want it to be … Nobody really wanted those snowblowers to be there but they were there.
Yep, yep. That goes back to managing for culture, one that you want to create, again, doesn’t it?
I’m just sort of interested around how you can foster this sort of culture of innovation. A lot of it, I think, is around that freedom of expression, removing fear, is that right?
I was just going to go on to say that going hand in hand with fear is obviously how you react to failure as well.
When things inevitably do go wrong, and in an innovative environment, things will not work because that’s part of the experimental nature of it. I was just wondering if you had got an approach around that?
I do and I think that if you don’t try anything, you don’t fail with anything but you also don’t accomplish anything. The way I look at this, there are good failures and bad failures. Bad failures are where you are sloppy, you’re unprepared, you haven’t thought things through, you miss steps and you’re just sort of lackadaisical. As a result, what you think should have happened doesn’t happen. That to me is a bad failure because it could have been prevented. A good failure is where you’ve thought everything through, you’ve done everything right but you don’t get the right answer. But it’s not because you were sloppy, it’s just because you didn’t get the right answer and you are good and should be encouraged because through that, you ultimately will find some things that do work and so separating good failures from bad failures. I’ve always been someone who is willing to take calculated risks and that’s what you’re really talking about. What is your propensity for change, for taking risk.
It’s like going to play roulette and betting black and red. You could sit there all night. You’re not going to win any money, you’re probably not going to lose any money, you can have a couple of drinks and you can go home. But that’s now how ‐
You’re playing the game but you’re not in the game.
Right. Exactly. You’re playing the game but you’re not in the game. That’s a great way to explain it. I encourage people to reach and to get out of their comfort zone and to think … if you think of something with fresh eyes and it starts to look bold, well of course there’s some risk attached to it, right? You try to minimize the risk by doing extensive planning and talking to lots of people and figuring out as well as you can, what the upside and downside is. Ultimately you have to make a decision as to whether you do it or not but if you don’t try doing that, I call this playing not to lose. If you’re in a sports team or any sort of competitive activity, you’re playing to win. You want to win the Super Bowl, you want to win a rugby match, you want to win a car race, whatever it is. You want to win. And you don’t enter this process to get second place or to be in the final 4. You want to win.
But a lot of companies play not to lose which basically means playing it safe and if you play it safe, you can sit around at the table for a while, just like the roulette guy but then what happens is you become a Radio Shack or a Kodak or a Blockbuster. You’re not a Netflix who continually has reinvented it’s business model to reflect the fact that technology is changing, distribution channels are changing, people’s gadgets are changing and we need to embrace and be part of that change or we’re going to become fundamentally irrelevant. Yeah, they make mistakes but they catch them quickly and they recover and they move on. The market’s rewarded them fantastically.
Sorry, sorry but I was just going to say that assessment of risk, is from a private equity point of view, from my understanding, in private equity you have … you’re expecting quite a few to fail but you need, what, 10, 15% of the companies you invest in to come good so there is that playing the ratios aspect of it.
Just in the interest of precision, what you describe with the proportions, really relates to venture capital, where you’re starting with a venture capital fund that might have 40 investments and they need 2 Googles and the rest can blow up and they’ve made a fortune. So that’s sort of the venture capital arena. Private equity is not exactly, is not that way.
A typical private equity firm might have 10 to 15 active investments of a much ‐
They’re more mature.
… greater value and they want every one of them to make money. Now they all won’t generate the same incremental returns but they don’t want any of them to blow up, partly because they’ve got a lot of equity invested in each company. I just wanted to clarify that.
Good point. I stand corrected. I’m really aware and this has been a fantastic conversation, I’ve really enjoyed it. We’re fast running out of time and there were a couple of things I wanted to just touch on before we finish other than managing for culture.
You mentioned fleetingly, earlier your new meeting model. I didn’t know if you got an opportunity to just quickly take us through how that works.
The problem with meetings is that they become a free for all. Anybody can request a meeting, anybody can invite people or they can invite themselves. There’s typically no advance materials delivered. There’s typically no definition of what the purpose of the meeting is and what the outcome of the meeting should be. It’s just … it’s brutal. It is probably the biggest time suck in an organization, by far. If you ask leaders, what is the single biggest problem they have, it’s that, “I’m in meetings all day.”
I have developed a model to put some structure around this, to make sure that … to give you an example, it’s not uncommon to have 4 people from 1 department to go to a meeting. Well, why do you need 4 people? Why can’t 1 person go to represent the department and report back to the other 3 what happened? That in itself saves 75% of that time for those 3 people, right? If you had materials distributed in advance, then you don’t have to spend your time reading things to each other as if you don’t know how to read. Right? If you read the material up front and you were told what the purpose of the meeting is, then the purpose of the meeting is to ask questions based on what you read or questions you may have, and then to move on. Make a decision and move on.
A lot of these things are very simple prescriptive tools. There’s some definition about how to lead these meetings and who has to be in charge of them, but the object of the meetings model is to dramatically reduce the number of meetings, increase the decisioning coming out of meetings and to free up an enormous of time for leaders where they can spend that time with their employees, with their customers and doing things that are really constructive.
Interesting. Yeah. I relate to that completely and I’m sure thousands of others will do too.
Do you think, are we then saying that meetings should ideally be, I don’t know, it depends obviously how long your agenda is but that you should be able to get through them in 15 minutes, half an hour if it’s a question of just achieving decisions from the debate?
In this chapter in the book, I mean there are different types of meetings. Obviously certain meetings require more time than others but I think the default mechanism today is let’s put an hour for the meeting.
One of the reasons is thats the box in Outlook, you know? I’ll see you from 9 to 10. It would never be from 9 to 9:20. No one thinks like that. No one even thinks of a 30 minute meeting so if you just cut the meeting time, that would save a lot of time.
Then you have the newer phenomenon that people call in on conference calls and while they’re on the call, they’re doing their mail and people are texting each other during the meeting and you’re there but you’re not really present. It’s really, it’s like anything else. If you focus on meetings as a problem and you apply legitimate business techniques and solutions to meetings, like you would do to launching a new product or opening a new facility, and do it with that level of rigor. What I did is just created a lot of easy shortcuts to do that, you will find an amazing … and I’ve already seen this many times, an amazing amount of time is freed up. Amazing. It’s not just the time. The quality and speed of your ability to make decisions is greatly accelerated.
And everyone appreciates it, presumably.
Everybody appreciates it because part of the reason … a big complaint is, what’s your biggest concern? I can’t get to speak to my boss. Why? He’s always in meetings.
Well, guess what? If he wasn’t in meeting, you could talk to him. I mean there’s a circularity to … it’s funny but it’s not funny. When you talk about it, you laugh. I don’t mean you personally but it’s not funny. It’s like a disease.
It’s because we all recognize it as well, isn’t it?
Exactly. Exactly. It’s endemic.
That seems to be how life works but I think that’s … your reflection on allocating an hour because that’s what Outlook has in the calendar is so true, I should imagine. That’s the box ticked and so now we’re in the meeting for an hour. We’ve got to stay here for an hour and there’s no reason for that whatsoever. It’s totally arbitrary. Brilliant.
One last thing, you know, it’s funny because once I started writing the book, my antennas of looking for this stuff have really been much more acute and I don’t like take out a stop watch or anything but I’ve noticed that if, like for an hour meeting, normally the first 10 minutes I would describe as kibitzing. It’s like how are you doing? How was your weekend? What about the football game? Getting ready for Thanksgiving. How was your turkey? Did your son’s … it’s all … and by the way, there’s nothing wrong with that except that it’s chewing up 12 people’s time, most of whom are not interested in this little conversation. Right? Even that 10 minutes times all the meetings could be an hour and a half a day. And I’m not saying be brutal like okay, I’m calling the court to order, state your business and leave. It’s got to be a little social but …
You’ve got to have some humanity in there too.
Yeah, it has to be humanity. It’s not like a machine but it’s out of control now.
Yeah. Well, we’re out of our time as well. I do have one last question which I like to ask people. I’m springing it slightly upon you but what advice would you have now for your 30 year old self or 25 year old self, setting out on a career? Is there nothing spring to mind?
Well, I have a son who’s 32 so it’s not too far from your question and you know, a lot of people say to young people, this is not going to be a short answer but a lot of people say, “Trust your dream.” Or “Do what you want.” Or things of that nature and the reality is, some people don’t know what they want. Some people are in a position they’re in because they got there, they’re not even sure how. To me, it’s unrealistic to assume that you decide you want to do something and you can be good at it and make a lot of money and fulfill your life’s wishes. I mean, I think for those people who have been able to do that, I applaud them but I think that’s the minority. I think if you’re in a position, you’re in your position, I think you really have to think about the 5 principles in the book and I’m not just saying this to plug the book. I think if you look at your world clearly, if you use fresh eyes, if you connect with people, both your employees and your customers, if you’re fully transparent, if you have strong values, if you adopt those kinds of principles, you will be successful. There’s no doubt in my mind you will be successful and you will, unfortunately, shine above everybody else because unfortunately most people don’t do that.
I think you can be great at what you do, in whatever it is you do. You may like it more if you’re more successful and you might be happier and that’s what I would tell people. To do … to be the most effective you can be where you are because that also gives you other opportunities. If you’re successful, that also opens up opportunities to potentially do something else. Building on success as opposed to leaving from disappointment and lack of fulfillment. I don’t know if that makes sense to you but that’s how I sort of …
Yeah, it’s all about following that curiosity, though, isn’t it?
I’m a big champion of that too so I think that’s great. Superb. Thank you very much indeed. Lots of really interesting points that you raise there that I think will be great food for thought for everyone listening. I really appreciate it. Thank you very much indeed Steve Goldstein.
Thank you Roddy, I really enjoyed spending this time with you. Great. Thank you. A little pause there that we can do the cut but Steve, no, that was brilliant. Is this sort of what you were looking for?
Yeah, that’s … we’re experimenting to an extent at the moment to see but I think these conversations are fantastic. I for one, am really enjoying doing them because it’s great to get these insights. I start off thinking, help, how are we going to fill an hour? And then I go, I wish we had 2 1/2 hours to explore these things.
You’re exactly right because when I did the interviews for my book with these CEOs, I had the same experience. You talk to someone you don’t know and you start out asking them 1 or 2 questions and before you know it, you’re having this conversation and the hour’s up.
And neither person wants to leave, they both have to but that’s a good conversation when you get to that place.
That is, absolutely. The hour zipped past for me. I hope it did for you too.
It did. It was great. It was great, I enjoyed it. I really enjoyed it.
I’ve got all sorts of other questions here as well around FinTech and European‐US cultural differences and stuff but maybe we have to do that for another time. I’m happy to do it.
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