Managing for Culture, Snowblowers and Conversation

Roddy Millar interviews Steve Goldstein

Hello, I’m Roddy Millar and I am delighted to have Steve Goldstein with me today. It’s great to have you with us, 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; 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 experience. Then I went to the other end and got involved in venture capital businesses - start-ups 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.

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, start-ups. That’s given me a number of different perspectives of how to look at things. I read a lot of business books as I’m sure you do. I find most of them to be pretty flat and 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; 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 generalization.

The book is a compendium of stories. As you know, stories, 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, about learning and getting messages across to people, 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, 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 on board the concept you’re trying to teach them 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. 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 leaders’ use of stories. Are they something that you actively practiced? It sounds to me like you’re a natural story teller 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 60-90 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 reputation 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.


Right? 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 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?

Correct, exactly.

It’s interesting, but I just want to dig a little deeper on the VW story. 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.

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 to 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 every day 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 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 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 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 accountability 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 don’t call their executives leaders executives; but many companies don’t do that. They say “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 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 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+ 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 leaders’ days and accomplish so little. It would be one thing if there was some value add coming out of most of these meetings, but 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 have worked in large organizations in your private equity career and you’ve seen lots of organizations. How many put metrics around that leadership 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. That presumably takes us back to the VW story, and what was happening there.

Yes. 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. Their boss thinks they’re doing a great job, but they may have very 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: 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.

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.

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 that has some power over them?

It’s both simple and hard, but it starts with the leader. 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 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 see how it’s going. Not in a threatening way, you’ll even be more successful if you do that, you’ll have 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 on board.

Change his behavior.

Change his behavior. By the way, his behavior affects hundreds and thousands of people, and if he does get it, so does everybody else.

But wait…there’s more?!

This post has been adapted from The Innovation Ecosystem podcast. Listen here for the full interview and the story of Steve Goldstein and to download a PDF version of this entire conversation.

Subscribe to The Innovation Ecosystem via iTunes and connect on Twitter.

About Mark
Mark has spent much of his 20+ year career seeking out people and resources to help him innovate and grow businesses. He has worked at BP, The Hay Group , and most recently Syngenta, where he led the creation and development of a $2B Specialty Crops business unit. Wherever possible, he tries to learn from other people’s experience, especially if they bring a fresh perspective to a situation. Follow Mark on Twitter at @markehb.

About Roddy
Roddy Millar is the Co-Founder and Managing Editor of IEDP (International Executive Development) and has managed the editorial content and direction since its inception. He oversees the development of the website and has helped design and launch Developing Leaders magazine, as well as managing the financial aspects of the business. In 2000 Roddy took over as editor of the original International Executive Development Programs directory from Philip Sadler CBE, the former Chief Executive of Ashridge Business School. Follow Roddy on Twitter at @RoddyMillar.

Like what you read? Give Innovation Ecosystem a round of applause.

From a quick cheer to a standing ovation, clap to show how much you enjoyed this story.