How to Lead
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For any succession plan to work, you need a cadre of people prepared to lead. Can leadership be taught?
CEO, Hawaiian Electric Industries
Matayoshi: There’s actually quite a bit that can be taught. But I don’t think that you can teach the desire to lead. Not everybody wants to lead. There are some characteristics that make it easier to lead. One is that most really great leaders are reflective. They think about what they’ve done. They think about how something came out. Maybe it’s part of that continuous learning thing. If you have that nature, you’re going to be constantly looking for ways to improve and do it better next time. Again, a lot can be taught, but not the desire.
Lau: There’s a whole industry based on talent development and executive development. There are batteries of online tests that, much like the SAT test, measure things like your leadership style. Are you a participatory leader or dictatorial? How do you solve problems – i.e., what is your thinking style? Are you more intellectual about your analysis, or do you rely more on intuitive or soft data? What kinds of people and characteristics do you value the most? Do you value people who are more social, who have a higher EQ than IQ, or do you value the expert who’s strong in analytics? How high is your tolerance for ambiguity? When you try to solve problems, how much complexity can you deal with? It’s like the difference between playing a 3-D chess game versus a 2-D checkers game.
For other parts of the program, we look at the profiles of senior executives and ask, “What do they need to develop the full skill sets around the table?” Do they need more financial skills and to be rotated into the finance group? Do they need more line experience or operating experience? Then, part of the plan might be to rotate them into operations. Business is about people, so it’s important for them to learn how to develop the workforce. Maybe they should do a stint in HR or organizational development. It’s probably good for them to learn about contracting. In other words, you try to identify what skill sets would be desirable for them to have, and then rotate them through the positions that can give them the full panoply of skills.
Then, as they say, you only know if they’re ready if they’re actually given the jobs to do. So you put them in senior positions and see how they do. Sometimes, when we have to put somebody in a position that’s a stretch, we also try to design support systems, so there’s a senior person to mentor them. That was the benefit for me being at Kamehameha Schools with those very senior guys. We were actually doing it, leading the organization and making decisions, and I had these four very experienced guys who could tell me how they would do it.
What’s extremely valuable to remember is that leadership today is much more about running great teams. Therefore, as CEO, it’s really useful to have been in the shoes of the different members of the team. It’s really great to have been in the CFO slot, to have been in operations, to have been in the legal position. Then you have a much better understanding of the perspectives of each team member and that makes it easier to help the team craft the optimal solution to a problem. Hopefully, though, you’re also deep in at least one area – probably the track you came up through – but you also like to have the breadth to synthesize all those viewpoints.
That’s even more important in Hawaii, because, while in other places, the financial aspect would rule, here, you have to have a balanced solution. One major exception: You can’t do anything good for anybody if you don’t stay in business. So, as a starting point, you have to make sure you have good, solid business skills and can actually run a healthy business. If you can’t do that, nobody has jobs, you can’t help customers, you can’t do anything.
Ariyoshi: My view is, leadership is not a quality that’s inherited or given to you by the Almighty. Leadership, many times, is learned. The organization has the responsibility to try to train and develop that leadership skill. Nobody’s born with leadership experience. People like to say, “Oh, you need experience.” But somebody has to give those people the experience so they can develop the qualities that make it possible to become good leaders.
What you have to do is look for a person who’s bright, willing to learn, has a vision or can develop that vision. When I was governor, the core of the work in my office was done by five or six young people, some of whom were still at the university. They did a really good job. They went to the departments, but I told them, “You’re not going to go there and throw your weight around and say you’re from my office and tell them what to do. Go in there, find out what’s happening, find out what needs to be done in order for the government to function properly.” Some of those people are still leaders today.
How do you identify those young leaders?
Lau: The nice thing about life, starting from when you’re in school, is that you can usually tell which people are natural leaders. Even when they evaluate kids for admission to schools, even before they know their ABCs, they do things like observe them on a playground and how they interact with other children – whether they naturally attract other people. So, in a large corporation like HEI, you automatically see those people who naturally rise. My husband likes to use the old expression, “Cream rises.” Well, leaders appear.
You don’t necessarily know who is going to be the leader who makes it all the way to the top, but that’s what our talent-development and executive-development programs are about: taking and developing those who distinguish themselves. Early in their careers, it’s largely about individual effort; hard workers who want to make a difference in the workforce. They start appearing through them normal performance evaluation systems. Then, we take those who look like they have potential and we start to develop them. We gradually give them more responsibilities and broader responsibilities, expanding their experiences and the skills they must develop to deal with those experiences.
Dods: The best way to identify leaders, I agree, is to give them assignments outside of their normal responsibilities. Don’t identify them publicly; identify them in ways like providing cross-training opportunities. That’s the best training of all: Move them around so they learn both staff and line functions. And provide them with education and mentoring.
It can change. You don’t pick that person and it’s cast in stone. You might pick two or three people. But the one cardinal rule that I see companies break – and it always destroys them – is to pick (multiple heirs apparent). First Chicago Bank did that famously way back. At one time, a local company, Amfac, announced five heirs-apparent. It was a horrible thing to do. Each one formed cliques, and people were on one guy’s team or another guy’s team. What happens is, one person wins and the others either leave or become disgruntled.
Take a look at what happened with General Electric (when it had a very public competition among top leadership to succeed Jack Welch). All those top guys left. Some of them did well after they left, some didn’t. But it was all a loss to GE. If it had been handled differently, they could have saved some of those people. While they point GE out as the model of great leadership, personally, I think it destroyed a lot of shareholder value by losing a lot of key people. And the jury’s still out whether the one they picked was the best one, because some people who left have done better. (Alan) Mulally at Ford, for example. GE’s performance has been mixed.
How early can you start to identify these young leaders?
Lau: I loved being an operating officer, so my favorite job was running American Savings Bank. When I was there, I used to go to every single orientation. You ask how early do you want to start looking for talent: I attended the orientations because I wanted to know what talent was coming into the corporation. And after every orientation, I would make notes about who was particularly impressive and I would kind of track them or make a mental note to watch their careers to see if they distinguished themselves. So, it’s never too early. It’s like watching those kids on the playground: You can spot the natural leaders.
But you always try to develop everybody, because you never know who’s an early bloomer and who’s a late bloomer. You also never know what else might be going on in their lives. That’s particularly true of women, because women tend to have most of the burden of raising families. So, there are times in a woman’s life where she has to spend more time on family issues and can’t spend as much time on the job. But, when the kids are grown, that might be her time to bloom, from a career standpoint. Now that there’s more sharing among spouses, that can be true for the guys, too. We have some guys who’ve turned down promotions because of their choice to spend more time on the family side.
How important are mentors during transitions?
Matsumoto: It’s important for leaders to have role models. You could have a role model based on a third-party relationship, someone you read about in a biography, for example. But, ideally, you want to have actually worked with people who have outstanding leadership skills so you can learn directly. If your models for leadership are just people in biographies or who you see in movies, there’s a tendency for them to be idealized. It’s important for people to recognize that great leaders are just like ordinary people in a lot of ways – probably more ways than not. It’s important for somebody who has the potential to become a leader to recognize that. They have to appreciate that fact to become outstanding leaders themselves.
When you have the opportunity to work with somebody who has good leadership skills and is a good mentor, you learn two things. You learn about how great the person is and how they have such outstanding qualities. But you also have the opportunity to learn about their faults and limitations. You realize they’re just human, but, in spite of that, they’re able to achieve great things. If you can see and appreciate that, then, as flawed as each of us are, you can still aspire to leadership and make a contribution.
Is there an adequate pool of young, potential leaders in Hawaii today?
Former chair and CEO of First Hawaiian Bank
Dunkerley: The distribution of gifted, smart people is every bit as high here as anywhere else in the world. So, I don’t think there’s any shortage of bright people. I think one of the challenges for Hawaii in general is that we’re in an increasingly global marketplace, and to be a leader in businesses that are increasingly global requires that people have experience of the world, have experience outside any one location. That’s not just for Hawaii; the same would be true, for example, in Washington, D.C, or any other place. So, we have many talented young people here in Hawaii. My ardent hope is that they continue to enter the workplace and have high aspirations for leadership. But it’s also my hope that they go out and see the world and see the kinds of societies and cultures that are inevitably going to shape our world here in Hawaii in the generations to come. And if they buy their tickets on Hawaiian Airlines, so much the better.
Matsumoto: One thing that frustrates me about the younger generation is their reluctance to step up into leadership roles. I think the current generation of young people – people in their 20s and 30s – are probably a lot brighter and more knowledgeable than my generation was. But I see a certain lack of willingness to lead change. That’s why, when I talk to a lot of young people, I say, “John Mayer sings the anthem of your generation when he sings about, ‘Waiting on the World to Change.’ ” The first time I heard that, I thought, “What’s with this song?” Yet, the more I think about it, the more I realize it’s characteristic of this younger generation. Maybe they’re just too comfortable. I’m a child of the ’60s. We had civil rights. We had the Vietnam War and the antidraft movement. We had the war on poverty. We had the beginnings of the environmental movement. Young people were the ones that led all of that and basically asserted themselves to bring about change in society. I don’t see that same fire with the younger generation.
Dunkerley: I don’t think that’s a problem, frankly. When you’re young and just starting out, you often don’t have much scope to exercise an interest in leadership. Certainly, when I started out, I didn’t say to myself, “One day, I’m going to be fortunate enough to be running an airline.” When I look back on myself, I can’t say, when I was in my 20s or 30s, I had a clear plan. I can hardly be critical of people in their 20s today who haven’t totally found out their track. I would also say the pressure is much greater on this generation than it was in my day. I’m always staggered by the quality of the resumes I look at compared to my own resume at the same point in my career. It’s not enough, these days, to have gone to a fantastic school and done well. It’s not enough to list your hobbies as “travel” and “reading history.” There’s an expectation that you’ve done something as a person to meaningfully contribute to your community. That’s a very different standard than the one we grew up with. I think we can all agree on that. It’s staggering. So, I think it’s unfair to talk about younger people today not being interested in leadership.
Matayoshi: I think this generation is different, even if you just look at employment patterns. The days when people stayed with one company, when the majority of people looked for long-term stability, are gone. More people are willing to change jobs. They’re not thinking they’re going to be somewhere for 20 or 30 years. There’s also a certain impatience about where they are and what they want to accomplish. For them, it’s a lot more about doing what they want to do than what other people tell them to do. So, for a leader, motivating them becomes a different experience.
Speaking of differences, is there a difference between leadership in normal times and in a crisis?
Ariyoshi: It depends on how you define crisis. Almost every day, you have problems. Every day somebody protests, somebody doesn’t like what’s going on. You’ll find that, when you put a policy in, it will be very good for some people in Kahala, but for the people in Waianae and Nanakuli, it may not be very good. That’s because the communities are so different – a difference in education, in jobs and the things that we need to do, a difference in our culture. So, every day, when you want to do something, you have to deal with this vast, diverse impact on people and find a way to make it possible.
Dods: Sometimes there can be a difference in normal leadership and in crisis leadership; sometimes they can be the same. The old example I like to use is the Mafia, with the wartime consigliore and the peacetime consigliore. Those were terms actually used by the Mafia. You might have a guy who was a great general/legal counsel during peaceful times, and then you had guys that were built for war. In the U.S. military, it’s the same way. I’m not sure you’d want George Patton to be your peacetime leader – in fact, I’m sure you wouldn’t – but, in time of war, he was one hell of a general. So, there are times when companies go through crises that you need a certain kind of leader. Today’s term for that would be a restructuring kind of leader. There are times when that kind of a leader is very good at slashing costs and canning a lot of people to save a company, but couldn’t grow a company if their lives depended on it. There are others who can do both, so it’s not always one or the other. But there are clearly people who are good at one skill, and not the other.
Matayoshi: The times matter. You need a little bit different kind of leader in a crisis. Part of it is being able see the opportunities that a crisis brings. I’m talking mostly about big, long-term things, but even one-time things like fires and natural disasters can suddenly change the paradigm within which an organization operates. It can be a catalyst for positive change, if you view it that way. It doesn’t make it any easier, but it’s a more positive way of looking at crises. That’s a different kind of person than one starting off with a blank slate, trying to build something.
Matsumoto: Crises are the best opportunity to test a person’s leadership. When a person is confronted by a crisis, the first quality I would want to see in that person is whether or not he has the ability to be calm under those circumstances. Because, if a leader cannot maintain calmness in a crisis, he or she cannot evaluate the situation properly and respond correctly. So, the ability to maintain your composure as things are collapsing around you is a key quality a leader needs to have to deal with a crisis.
But how does all this change the way you lead in a crisis?
Matayoshi: At DOE, a lot of it has been around the downturn in the economy. Oddly, that’s what I’ve always faced when I’ve been in government. So, there’s a strong element of being very strategic, very focused on the things that make the most difference. In a fiscal crisis, you don’t have the luxury of spreading resources to a range of things; you have to say some things are more important than others, or, at least, more strategic than others. That’s why strategic planning keeps being our focus. It’s allowed us to say, “These are the things that are important.”
Dean: In a crisis, you never have perfect information because you don’t have sufficient time. So, you have to be more authoritarian, and less collaborative, in a crisis. At least, that’s been my experience. I shouldn’t judge for others, but that’s my style, typically. That doesn’t mean you don’t treat people with respect – I think in both situations you do – but you don’t have the luxury of weeks or months to develop an idea and make a decision. So you make a lot of decisions, some of which you find were not the right ones, and it affects people, but you move quickly. At least, that how it’s been for me – not just here, but in the other banks in which I was involved in turnarounds.
Matayoshi: Many years ago, when I was at Hawaiian Electric Co., we had a group that was supposed to help define “Leadership in the 21st Century.” We asked Dan Williamson, who was CEO at the time, “What do you think is the most important attribute of a leader?” He said, “The ability to deal with ambiguity.” It was about making decisions without all the facts. He thought that was going to be one of the most important characteristics of leadership in rapidly changing times. And I always remember the ambiguity part. It always made a lot of sense to me. You don’t always know everything, and sometimes if you wait, it’s too late.
Dean: Then, the question becomes: “When you’re not in a crisis, what’s the approach?” My style – and I think people here will tell you this – is to empower people. To collaborate and empower and push decision-making down as far as you can within the organization. Because there’s more buy-in and ownership of those decisions when people get to participate in them. I think great organizations are built not on a dictatorial, command and-control model, but by pushing decision-making down into the organization. And that’s what we’ve done at CPB. Now, I would say that, in either situation, the crisis or the normal or good times, you still need what I call core values – how you treat people. Even in a crisis, you should try to treat people with respect.
Lau: I think the basic principles remain the same in a crisis; it’s just that you have to lead in a heightened atmosphere. What becomes really critical in a crisis is to be able to think clearly and act clearly. You have to process massive amounts of information in very little time, identify the root causes and triage the problem. You don’t have time for longer-term strategies. But, as soon as the crisis is over, you need to move to a longer-term approach to address whatever caused the problems.
In a crisis – and this is another important leadership trait – you must be able to look inside and find strength within. Because, very often in a crisis, everybody is in a panic and, lots of times, people are looking for someone to blame, and you have to know whether you really are at fault or not. If you lose that ability, you can’t lead.
Also, in a crisis, you have to be more action-oriented than in normal times. Consensus is a characteristic of managing in Hawaii. The workforce here expects leadership to be more inclusive and to really care about a lot more aspects to a problem than other places might. An easy example is that, in other places in the country, people might be more clearly financially oriented. For them, the bottom line translates into financial success. Whereas, in Hawaii, we talk much more about double- or triple- or even quadruple-bottom lines that also value culture, our cherished aloha spirit and the environment. We, as the people of Hawaii, tend to value things more broadly. We’re not so strongly financially oriented; we also care about quality of life, balance of life and preserving what’s special about Hawaii.
When you ask, “What happens to all of those values in times of crisis?” I think you still try to do the same thing, which is sort through all the different values, but you have to do it much more quickly, and you probably can’t do it with as much input. But you still need to try to solicit as much input as you can. I was talking earlier about positional power. Well, you need to know when to exercise that positional power, and when not to. I think you want to try to not exercise it as much as possible, and rely mostly on building consensus and accommodating as many views as possible – allowing a group to lead itself, with the right guidance. But, in times of stress, you need to exercise the authority you have. Those are not easy judgment calls: when to hold back, and when to exercise authority. That’s the skill of leadership.
I must say, running a large corporation, especially in the format we’re in – a holding company, where I have very capable CEOs at the operating companies – you want to allow people to make their greatest contributions. If I’m always mandating what should be done, I’m not going to be able to gain the benefit of their creativity, views, vision and abilities. It’s a funny thing: Leading is really an art. It’s definitely not a science. And it differs depending on the circumstances. I always say leaders have very wide skill sets, which they can bring to bear in the appropriate combinations for particular situations.
Dunkerley: When I was at a previous company, at one point we did one of these temperament assessments, like a Myers-Briggs test. I remember one detail of the test was that it divided people into categories like “fundamentally emotional” or “fundamentally analytical,” etc. The assessors made the point that, wherever people start in that spectrum of attributes, they tend to become more like themselves under pressure. So, whatever sort of innate biases they have, they tend to go to the extremes of that spectrum under pressure. That sounds highfalutin, but, frankly, we all know that. We know, from the people we’re close to, that, if they’re under a bit of stress, they tend to exhibit more prominently the characteristics they have sort of inherent in them.
So, the best crisis management really is about people who are relatively balanced between the emotional and the analytical, the here and now and the long term. Because, if you’re not relatively well balanced and in the middle, as the stress builds, you’re likely to go increasingly towards the corners of the two biases. So, you’ve got some very good leaders for sunny days who aren’t as good for rainy days.
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