Values-Driven Leadership

Richard Taylor:
Welcome to the Executive Insights podcast. I got to sit down with Harry Kraemer, ex-CEO of Baxter and professor of Kellogg University of Leadership. And in a world that is changing so rapidly around us today with the advancements of technology like generative AI, the importance of leadership and values-based leadership is even more critical as we look forward to leading large organizations. This is going to be a great episode. Please enjoy.

Harry, good to see you. Thank you so much for being with us today on the podcast. It's great to have you join us.

Harry Kraemer:
Great to be with you, Richard.

Richard Taylor:
So we're here today to talk about value-based leadership.

Richard Taylor:
You literally write books on leadership and are a professor of leadership at Kellogg University, but you're also an experienced leader in your own right. So I'd like to initially separate those two things if I can. And I'd like to start with Harry the leader rather than Harry the professor. And we'll come back to Harry the professor later on.

Harry Kraemer:
Sounds great.

Richard Taylor:
But what early experiences shaped your leadership style and your career? What sort of formative experiences led you to where you are now?

Harry Kraemer:
Yeah, a couple fold. One, I had the opportunity early on to go on a retreat and part of the retreat really was to slow down and ask yourself a lot of questions. What are your values? What's your purpose? What matters? And it became sort of clear to me that by taking a little bit of time to slow down and think about that, then I realized I'm on this Earth for a short period of time and the more people I can relate to and influence I could lead. And maybe over time, maybe I could be a manager, maybe I could be a director. I didn't think I'd be the CEO of a $15 billion company with 55,000 people. But when people ask me about it really does come down to that ability to relate.

Richard Taylor:
That's outstanding. To be silent for three days, reflect and ask yourself some questions.

Harry Kraemer:
Yeah, questions like what kind of a leader do I want to be? What kind of example do I want set? Depending on your individual circumstance, what kind of a father, what kind of a spouse, what kind of a person while you're on this Earth, has an enormous impact on your ability to relate, influence and lead other people.

Richard Taylor:
What was your early stage of leadership? How did you think about the leader you wanted to be?

Harry Kraemer:
My overall thought was, and this is interesting, Richard, when you're an individual and you're at the beginning, it's kind of all about you. But at the day you become a leader, and I tell the Northwestern Kellogg students this, even if you're a first-level manager with five people, that first experience, it's no longer about you. It's about can you develop those five people to their full potential? And what that means is you've got to provide feedback. And of course people say, oh yeah, feedback. No open, honest, continuous feedback where I demonstrate to you, if you work for me, I care enough about you. I care so much about you, I'm going to treat you exactly the way I'd like to be treated, and I'm going to help you reach your full potential.

Richard Taylor:
And so when it's a small team, like you stated, when you're the manager of five people to kick off, that sounds relatively easy to be close to those people and care about them and nurture their careers. How do you scale that to an organization to the size of Baxter.

Harry Kraemer:
So as you move up, I now no longer have five junior analysts as a manager. Now if I'm the CEO, I've got eight executive vice presidents. Well, if I'm providing feedback to them, if I'm explaining to, let's say you're one of them, I'm expecting you to do the same thing for your next group of people. And by the way, if I've got, pick a number, if I've got 10 senior people and every one of those 10 people have 10, I am not just communicating to those 10. I'm communicating and giving feedback to that next level a hundred because somewhere in that a hundred is the next level of 10. And I will also find ways, in my case, to communicate with all 55,000 people. Town halls, seminars, you name it. I'll visit facilities all over the world and have what I call these open Q&O sessions. “Question and Opinion”. I don't do Q&A, I do Q&O. Okay. I don't have a lot of answers, but I have many, many opinions.

Richard Taylor:
And Baxter, when you became CEO of Baxter, 1997, I believe it was?

Harry Kraemer:
Very good.

Richard Taylor:
I did my research. Obviously a huge organization across I think 103 countries.

Harry Kraemer:
103 countries, yeah.

Richard Taylor:
And you stated that you made it your job to know somebody in every corner of the organization.

Harry Kraemer:
Yeah.

Richard Taylor:
Why did you do that?

Harry Kraemer:
I actually started doing that very early on because I realized, as you well know, Richard, in most organizations, and your listeners can look at it, you can almost draw an organization, it's a series of vertical, parallel lines. Divisions, business units, functions, geographies. Some people call them silos, but I'm sure you haven't seen those. And the whole idea in my mind was instead of thinking yourself in one of these, how do you draw a circle around the entire, how do you figure out no matter what you do, how does that relate to the organization overall?

Richard Taylor:
And how did you balance the time between being Mr. CEO, running the organization, obviously caring about the profits, the direction of the organization and leaning into people? Did you give a percentage to it?

Harry Kraemer:
The way I think about this is here's a little formula for you. I think as a leader, there's two terms people and communication. People plus communication in my mind as a leader is 90% of the job.

And I've had CEOs say to me, "Well, wait a minute, you said we could challenge, Harry, if you're spending 90% of your time on people and communication, when do you get the job done?" And I always say the famous if again, if I've got all the right people and everybody knows exactly what we need to do, what else is there to do?

Richard Taylor:
I read something fascinating that you put in place, and that's that you got teams to report on their superiors to actually provide a report. What did that drive in the business?

Harry Kraemer:
Well, as you can imagine, there are some managers, maybe you've run into them, they manage up real well, they managed up real well. But they do not treat their people very well. Okay. They're not respectful. They're yelling at them and screaming at them. Well, guess what? I don't want to just see if you work for me how are you doing, I want to know how you're doing with the heteams that you're supposed to be developing because your primary job is to develop the next generation of people. So I don't really care how good you may think you are, I want to find out what those people believe. And that upward feedback that we did for every senior manager had an enormous impact because there's a pretty big difference between just leading up and literally being a leader.

Richard Taylor:
So Professor Kraemer, as we're going to move on now into, so you were approached by Kellogg School of Management to teach a course initially in leadership. Can you teach leadership?

Harry Kraemer:
I think so. Well, it's funny, Richard, because often they'll say, "Well, hey, this leadership thing, can it be taught? Is it nature, nurture, born, developed?" Well, I have a couple responses. One is I hope you can, that's what I do for a living, so I hope you can. But second, I really believe, and you should challenge this, Richard, I really believe that every person, can get better. Now everybody has a different level of full potential, right? Joe's full potential may be here, you're, Richard. I'm sure you could be here, right?

Richard Taylor:
Of course.

Harry Kraemer:
But everybody has a limit. Everybody's not going to become a CEO, but I think everybody can improve. And I think then you look at it and say, “Alright, what can I do to help every person that works for me reach their full potential? And is there full potential in the job they're in? Is it above that? And could they do more?” That whole process in my mind is what we try to do and teach and leadership.

Richard Taylor:
Diving into the four pillars of value-based leadership that you write about and obviously that you teach about. You may have answered this already, but I'm going to ask you anyway, which is the most important?

Harry Kraemer:
Super good question. I always come back to self-reflection. And I think the reason I do, Richard, is that if I'm not self-reflective, I'm not so sure I'm going to take the time to develop a balanced perspective. And that's a big one we ought to talk about. If I'm not self-reflective, am I willing to admit what I don't know? And if I'm not willing to admit what I don't know, I don't know if I can have true self-confidence. And if I'm not self-reflective and I've done really well, do I realize that every single person's important or do I start to feel like it's all about me? So if I were to rewrite the first book again, which by the way, I've just started to write the first book again, I'm going to spend a lot more time on self-reflection, being self-aware.

Richard Taylor:
And how do you build that into your life?

Harry Kraemer:
I spend 15 minutes a day, believe it or not, doing a personal self-examination. Now, some people do it in the morning, some people do it at night, some people can do it when they're running, whatever. I take 15 minutes, I'm kind of a night guy with five kids, and I go through this personal self-examination every night. Mine goes a little bit like this, Richard. What did I say I was going to do today? What did I actually do? What am I proud of? What am I not proud of? If I lived today over again, what would I have done differently? And then the last one is, if I have tomorrow, being fully well aware that sooner or later by definition I won't, but if I do have tomorrow based on what I learned today, how will I operate differently in my case, as a father, as a spouse, by faith, my ability to lead and to teach? And that ability to think about that every day keeps me on course. Because it's very easy, people tell you how great you are, oh, I'll exercise next week, or I'll spend time with my spouse three weeks from now. Well, as you well know, you can get way out of joint and that keeps me grounded because if I start to detour a little bit, it brings me back.

Richard Taylor:
I'm stealing this from another podcast, but I heard a fantastic thing the other day about this idea of a well-done list.

So many people have a done list or a to-do list that they tick off throughout the course of the day but this idea of a well-done list is when you reflect on your day and you look at things that you did well that you might not get any credit for.

Harry Kraemer:
Exactly.

Richard Taylor:
Where you didn't respond to somebody in a meeting or where you did take a certain approach that maybe was the one you didn't think you would take and reflecting on that as a well-done list rather than just a to-do list that you're ticking off, which I thought was quite a nice thing to do.

Harry Kraemer:
I love that idea. It's, you look at the day, what went well? Pat yourself on the back. What didn't go well? Okay, how could I improve?

Richard Taylor:
Yeah.

Harry Kraemer:
When I was in that meeting and I probably got a little carried away, I'm going to call that guy in the morning and apologize.

Richard Taylor:
And the things you don't do that you don't get credit for, but giving yourself credit for those things that you managed to get through the day are important to have.

Harry Kraemer:
Yeah, and I think that impacts your attitude because some people say, well, the glass is half full, glass is half empty. I like to think of the glass is overflowing. can do better, but it's a journey and I'm going to get better.

Richard Taylor:
do you mean by true self-confidence in oneself?

Harry Kraemer:
Yeah. So very often when I talk about true self-confidence, the first topic goes, what's the true? You're either self-confident or you're not. Well, no show of hands, but we've all worked for people who can act very self-confident. They have no self-confidence at all. The macho, “do what I told you to do I've never made a mistake” crowd. And the way I get leaders to ask themselves if they have true self-confidence, I just ask them two questions. Question number one, are you willing to say you don't know? I'll get you an answer pretty quick, but I don't know. Are you willing to admit you don't know? Second question, have you reached a point in your life where you're willing to say, I was wrong. Forget what I said, what Richard said makes more sense, let's do that. Are you willing to admit that you don't know?

And what I find very, very interesting is very often, people are like, "Oh, well, what's Richard going to think if I say, I don't know?" We'll go back again, leadership, influence, relate. Interesting, Richard, people don't relate well to people who know everything. People don't relate well to people that never make a mistake. I don't know how to relate to those people. And you may say to yourself, oh, Harry doesn't know, but he's going to find out pretty quick, I can relate to him, then I can influence and I can lead you.

Richard Taylor:
What it's really about is listening. And it's saying that I might have an opinion and I'm going to form that opinion strongly, but I'm going to hold it loosely, listen to other people's data points and be willing to change my mind if that data disagrees or disproves my hypothesis.

Harry Kraemer:
Yeah, Richard, that's perfect. And in fact, that leads a lot into this second principle about having a balanced perspective. And when I say balanced perspective, and this is a very key thing for me as a leader, is you develop a balanced perspective. What I mean by that is that you take the time to understand multiple perspectives or I like to quote supposedly St. Francis, "I seek to understand before I'm understood."

If I feel we ought to go north on a topic and you think we ought to go south, I want to understand exactly why you think it's south, because I'm going to listen to that. And if that makes more sense, I'm just going to say, "Hey, you know what, Richard, forget about north. We're going to go south." I have absolutely no need to be right. I'm fanatically focused on trying to do the right thing and that has an enormous impact.

Richard Taylor:
Seek to understand.

Harry Kraemer:
Before you're understood.

Richard Taylor:
Before you understood.

Harry Kraemer:
Yeah.

Richard Taylor:
Have you got a good example where taking a balanced perspective helped you make the right decision in business or make a decision at work?

Harry Kraemer:
All the time. We ended up making a lot of acquisitions, and there was one company I was very high on that I thought really made a lot of sense, but I sat down and two of my people said, "Okay, Harry, I know you want to do this but really think about this a minute. Based on our skill set, is that a logical thing for us to do? Is the risk return on that really make sense?" And I just listened and I thought, “No, I thought this is something that I want to do.” And then the more I listened, why do you believe that, and I always will say, "If you were me, what would you do?"

Well, if I've got two or three bright people that I've got the right people and they think I shouldn't do it, why would I do it? Why would I do it? I have no need to be right, as I said, I'm very focused on doing the right thing. And I just told them,” Alright, I've changed my mind. We're not going to do it.”

Richard Taylor:
So finding the right data to be able to make informed decisions.

Harry Kraemer:
Exactly.

Richard Taylor:
And you are teaching future leaders and current leaders, et cetera at Kellogg now, what's the one question that you wish they asked you more?

Harry Kraemer:
Oh boy. Probably along the lines of something you started off with was, "Harry, how do I become more curious? How do I relate to people more?" Because a lot of people, they're in their little box, they've got their way of thinking, they're not very, very open. And very often they're saying, as you were saying before, “How do I relate to people in multiple countries with very, very different backgrounds when I'm kind of used to doing things a certain way?” And developing that curiosity. And as you said, a lot of it is just being quiet, listening, getting a piece of paper out and a pencil, taking some notes and demonstrating to people that you care enough about what they say that helps you relate, influence, and lead them.

Richard Taylor:
And it goes both ways. It's curiosity in other people, but also yourself. And that comes back to the self-reflection piece as well.

Harry Kraemer:
Absolutely.

Richard Taylor:
What role do luck and support from others play in being a good leader?

Harry Kraemer:
Yeah. It's funny, Richard, you really do ask great questions because you've just now hit on this whole fourth topic of genuine humility because I really do believe having genuine humility is really key. I've asked people all over the world, junior people under me, even CEOs, how did you get to where you are? I mean, you've had a great career and you were at EY and AWS and so on, how did you get to where you are? The two top responses, it doesn't matter who I talked to end up being "How did I get to where I am? Harry, I worked very, very hard, number one. And number two, I have certain skill sets and the combination of working hard and skill sets, that's where I got to."

But not me, I'm self-reflective. And if you say, "Harry, how did you get to where you are?" I say, "I'll give you five things. Number one, luck." Let's pause a moment on luck. I was pretty lucky. "Number two, timing being in the right place at the right time."

So you got luck, timing, the team, which we've talked a lot about. I've got to have the right team. The fourth one is mentors, sponsors. I had people like Don Jacobs, Mr. Graham, if it wasn't for those people, there's no scenario I would've been at these jobs. Luck, timing, the team mentors. The fifth one, a little more personal, your faith, your religious perspectives. In my case, these are talents I've received from the man upstairs. It's not about me. If any of those work for you, could be luck, timing the team mentors, you start to realize it's not about me.

Every single person matters. And the reason I say genuine humility is because, Richard, we run into a lot of people who can act humble and they have no humility at all. Faking this you look like an idiot. You look like an idiot, and I think that that ability to think that way and everything you do... In fact, it's kind of funny, Richard, I had a class the other night, we had a hundred students and you don't need to raise your hand, but I did this with a hundred students.

I said, "How many of you really want to be value-based leaders?" They raised their hands. "How many of you think you truly relate well to people?" They raised their hand. I said, "Don't raise your hand this time, I don't want to embarrass anybody. How many of you, when you walk in the building, say hello to the receptionist and ask her what kind of day she's having? How many of you, when you're in the cafeteria know the names of the people in the cafeteria and their favorite sport team? How many of you, if you're late at night, sometimes we're working late, and the cleaning crew comes in, how many of you take the time to empty out a trash basket, thank them for what they're doing, and maybe give them a ticket to a sporting event you're not going to use a ticket anyway?"

And I tell the students the reason I love to empty a trash basket once in a while… I'm not being a nice guy, it's actually pretty selfish because the reason I do it gives me a moment to realize what do I know for a fact? If it wasn't for luck, timing, the team, mentors and the man upstairs, I could at least be part of the cleaning crew. You never forget where you came from. And it's a win-win. It's the right values thing to do, and it's exactly what you want to do if you want to build a team. Care about people and they'll do anything for you.

Richard Taylor:
Yeah. Brilliant. So building on that then, large organizations and you're approaching leadership from a value-based perspective, how does a leader go about cultivating a culture across a whole organization that could be values-based?

Harry Kraemer:
Yeah. Well, my opinion, it starts with you as the leader. It starts with the example that you set. If you're listening to people, if you're willing to admit what you don't know, if you're willing to change your mind, if you're truly listening and you'll be willing to change your opinion, if you demonstrate you care enough about every single person, your example sets, in my mind, a great standard, number one. And then number two, you set a clear example, but you set a clear expectation, you communicate it, you hold people accountable and there's consequences.

So your example, the example you set, and the expectations you set, and it's constant. By the way, when people say, “Why is it a value?” The two things, if it's a value, one, you'll never compromise and you will not negotiate If you're willing to compromise and you're willing to negotiate, it may be a preference, but I don't think it can be a value.

Richard Taylor:
You're not holding true to it as a value. And what role does value-based leadership or an organization that exhibits those traits, what role does that play in innovation and risk-taking?

Harry Kraemer:
I think it has an enormous impact because if I've got that in place and I'm running the organization and you know Harry cares about you, Harry knows we're going to take risks. Harry knows that we're occasionally we're going to fail, but we'll fail early and we'll learn a lot from it, that I'm going to encourage you to reach your full potential, to think out of the box and come up with something new just the way AWS is constantly doing. That ability for people to unleash their talent because you trust them, you relate to them, you're curious about them, and you're all together and you're meeting with as many people as you can rather than thinking about a hierarchy.

Richard Taylor:
Shifting gears a little bit, what are the themes or the recurring themes that most people approach you to talk about in your position as professor?

Harry Kraemer:
A whole series of things, Richard, starting from some of the things that you've already brought up. How do I become a better leader? What does that look like? How do I develop the people in my organization? There's been a tremendous amount of discussion in a lot of my talks ever since Covid of how do I live a value-based life? Because I'll talk to many organizations, I'm sure, Richard, where we'll talk about work-life balance. And I always tease them and say, work-life balance, it seems like you're either working or living and some of us are working and that's not living. So it's like, okay, no, it's life balance. And so we'll do a lot of talks on what does that really mean? How do you balance your career, your family, your health, your spirituality, desire to make a difference in your career? How do you do all of that?

Richard Taylor:
And you're an acclaimed business leader. You are a professor, you're an author, published author. How do you measure success?

Harry Kraemer:
For me, I think of rather than success, I think of it as significance. What kind of example am I setting? How many people can I share my values with that'll impact their values and their leadership and the impact that they're having? I don't get involved really in the whole material kind of goings-on because once again, from these retreats, I'm realizing I'm here for a blink of an eye, as you and I have talked about. And the reality of life is a lot of folks that are into collecting all this materialism, they can't take it with them when they die. So I don't know what they're doing with all this stuff. So every time I hear the word success, I turn to significance.

Richard Taylor:
Yeah. And the old cliche that change is a constant is really being lived right now. I feel like change is exponentially moving on a rapid pace with technology, generative AI, whatever it may be. Does leadership change with that? What's your view of leadership in the future?

Harry Kraemer:
I actually think leadership doesn't change in terms of the major pieces of it, but to your point, with the increasing level of change, what I think that requires is more communication, more people focus, and an ability to constantly think through, how do I figure out a way to reduce some of the uncertainty? Think of it this way, you work for me and we're going to go through a certain amount of change and I'm going to ask you to be part of that change. Well, if I just mention it and stop there, there's certain things you're going to be wondering about as an individual. How does this affect my family? Will I have to move? Does it affect my job? Do I have a different boss?

But if we can lay out, “Hey Richard, here's what those impacts are going to be and here's why they're going to be manageable.” Then you can say, “Okay, the uncertainties reduce. I can deal with that change.” Because change is increasing at an incredible rate. I mean, I can watch what's happening as I'm just sitting in some of these seminars here. I mean, it's incredible, but as long as we're being open, we're relating to people, we're helping them understand what the impact that's going to be, how AI can actually help them get their job done, as opposed to, “Oh my goodness, it's going to replace me.” I think that that constant communication becomes unbelievably important.

Richard Taylor:
So that's still within the pillars of value-based leadership.

Harry Kraemer:
Exactly.

Richard Taylor:
So not much change there. And does AI play a role in your mind in leadership at the moment?

Harry Kraemer:
I actually think AI will help you with all four of the principles because why are there a lot of people that aren't doing a lot of self-reflecting? Well, they don't have time. Well, just listening to the seminar right before you when I walked down here, I mean, boy, oh boy, it's going to be able to reduce the amount of time I spend. And guess what? Rather than jumping into more activity, I'm going to use some of that time to do my self-reflection, go on my three-day retreat so AI, done the right way, will help me. What's the problem with balance? And not enough people are seeing multiple perspectives. Well now with AI and some of the things that you and I have talked about, it'll actually help me very quickly say, yeah, that's the reason why that makes sense. Here's the reason why it doesn't make sense. So it helped me all along the way.

Richard Taylor:
Fantastic. You've just released your fourth book.

Harry Kraemer:
Yeah.

Richard Taylor:
Congratulations.

Harry Kraemer:
Thank you.

Richard Taylor:
What do you want somebody who reads that to walk away with?

Harry Kraemer:
I want them to walk away with the idea of what does legacy really mean? It isn't necessarily about the money or setting up a foundation, it's how can you, every day of your life make an impact, by yourself, with your family, with your children, with your organization, and what can you be doing so that there is a overall something that'll be there beyond the life you're living now?

Richard Taylor:
What's one daily habit that you think people should take as they think about moving into leadership positions?

Harry Kraemer:
More than anything else, Richard, I think it really comes down to what I just call a little bit of self-reflection. Any leader, as you know has got so many things to do, nonstop, keep going, go, go, go and since we got more to do, and time to do it, we'll just go faster and faster. And I really do believe that all leaders should take the time, a short amount of time, to be self reflective. What do I mean? Turn off the devices, get off by yourself and ask yourself a series of questions. Thinking about things that way enable you to be a much better leader.

Richard Taylor:
Harry Kraemer, it's been a pleasure. Thank you very much for being with us.

Harry Kraemer:
A lot of fun, Richard.

Richard Taylor:
Thank you.

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