Systems Leadership 2020: Bringing it Home
This post first appeared on May 20, 2020 in Systems Leadership.
As we wrapped up the last three sessions of our course, we witnessed three very different leaders who showed contrasting styles and were facing unique challenges for their companies. Some were calm and decisive and some were passionate and enthralling. All were meticulously following external trends and seeking competitive opportunities, but most interestingly, all found reasons for optimism for their companies in these trying times.
Session #8 — Margaret Keane, CEO Synchrony
April 23, 2020
Some of Margaret Keane’s biggest customers are under duress. Her company, Synchrony, runs the credit card businesses for many of the country’s largest retailers. With the global economy shutdown and people staying home, the entire physical retail market is suffering as greatly as any sector in the economy.
When we started the session we asked the students if Synchrony was a compelling business and the students overwhelmingly responded with an emphatic, “Yes!” When we then asked if they would want to go to work for Synchrony after graduating, the enthusiasm was more reserved. Perhaps it was the “behind-the-scenes” nature of Synchrony’s business, or a lack of brand awareness in Silicon Valley, but the enthusiasm for the company and its performance did not match where the students said they wanted to take the next steps in their careers.
That sentiment began to change when Keane took over the room. She shared interesting details about various aspects of Synchrony’s business, including its work within the healthcare industry, specifically through its CareCredit offering. She also talked about how the pandemic was creating opportunities in her business. While some of Synchrony’s customers are struggling, she highlighted that the pandemic may create clarity in the sector, even creating space for reinvention for both incumbents and disruptors. She suggested that there might be M&A opportunities for struggling organizations who do not have a strong balance sheet. Despite the struggles of the retail environment, Keane was closely watching the trends during the crisis and looking for opportunities based on her learnings. She was, perhaps, our best example of a legacy leader challenging traditional thinking and driving toward innovation.
Perhaps just as powerfully, Keane encouraged the students not to overreact in times of stress. While this is not a normal crisis, she pointed out that experience matters and can serve as a guidepost in difficult times. She highlighted that as a CEO you are not allowed to “have a bad day” in front of your employees, and that her role is to be calm and decisive to help her team move forward. As class neared its end, I was given a unique advantage from our online medium — one of the students sent me a private chat message through Zoom which read, “While I still need to learn more about their business, I’d go to work for HER in a minute!”
Crisis Lesson #8 — Communicate with Empathy: In a crisis, leaders need to “explain the unexplainable.” There are frequently times when the needs of your team diverge from the needs of the company. This calls for a maximum of transparency and sincerity. Announcing a layoff is not poetry; but you need people to see the logic and that you care. And that you will try to help.
Session #9 — Anne Wojcicki, CEO 23andMe
April 28, 2020
No matter how many times Anne Wojcicki comes to my classes at Stanford, I always know the students are going to see a passionate leader. Wojcicki, whose company is now entering its 14th year in existence, is on a mission to remake the healthcare industry. And while she knows her ultimate goal is to empower individuals to own their health information and personal care, she simultaneously has to balance disrupting from the outside while seeking ways to work within the system.
At her core, Wojcicki believes that companies do not want to change in healthcare or otherwise. As organizations grow in size, whether they are companies, governments or even universities, they seek to perpetuate their incumbencies — sometimes at the expense of those they serve. Wojcicki believes that the United States’ healthcare system has stopped serving the people receiving care, and the only way to disrupt the system is by doing things that others can’t — such as with the single click of a button asking 100,000 of her customers to call the FDA in support of a particular policy. Anne’s passion came out when she used language of wanting people to “tear down the Berlin wall” and “rise up” as people did in the early days of the AIDS epidemic.
Wojcicki asserted that the existing parties in the healthcare system don’t trust individuals; no one believes that people can make changes to their lifestyle to improve their health. While she strongly disagrees with this sentiment, she thinks the only way to get the systems to change is from the outside. As she points out, in today’s system if individuals stay healthy, no one in the existing healthcare industry would make any money.
And, yet, in a highly regulated business like healthcare, Wojcicki has had to perform some delicate jujitsu. After being shut down by the FDA once, 23andMe has had to learn how to work with government and manage regulatory oversight. The company’s recent collaboration and investment with GSK has shown that while Wojcicki would like to upend the existing healthcare system, she needs partners to execute to her plan. Within her own product-line Wojcicki has to balance the commercialization of the company’s DNA kids (the source of its data advantage) with the drug development team — requiring a very different set of skills and competencies.
Perhaps Wojcicki’s greatest challenge is trying to thread the needle where historically healthcare companies have not understood tech companies, while the reverse has also been true. Her strategy has been to use speed and disruption where possible, patience when needed, and doing so as a great storyteller with a strong point of view.
Crisis Lesson #9 — Listen to People You Trust: In every crisis there will remain people who say, “If only they had listened…” But life is not that simple. Mistakes are equally distributed between not listening and listening too much. The important attribute is to surround yourself with a diverse team whose thoughts you trust. You will listen to them; and they won’t second guess.
Session #10 — Tom Gentile, CEO Spirit AeroSystems
April 30, 2020
At some level Tom Gentile must feel like the Biblical character Job. Just when it would seem that things can’t get worse for his company, something even more outrageous confronts him and his team.
Last year the company had revenues of almost $8B as a key supplier of aerostructures for Boeing and Airbus, amongst others. The organization had been riding a 20-year super-cycle with the growth of global travel and a low penetration across the globe. The sales backlog extended out seven years and things were going unbelievably well.
Then the Lion Air crash of the Boeing 737 MAX happened; initially, the accident was thought to be an anomaly. But after the second accident with the same aircraft, and the corresponding global grounding of the plane, everything changed. While this was a major setback for Spirit, the company worked with Boeing to shuffle deliveries and adjust schedules. But when the global pandemic hit this year, everything changed. Job #1 became preserving liquidity, and Gentile’s experience, including his time as President and COO of GE Capital, allowed him and his team to quickly shift into survival mode.
But even while struggling with having to layoff thousands of employees due to the collapse of the global air transportation network, Gentile discussed the importance of keeping portions of the inner-workings of the global supply chain viable. He stressed the need of having the supply chain moving, because if it shuts down completely it might have difficulty restarting — and this is acutely important as some suppliers have limited access to capital markets. And given the heavy concentration of two large customers (Boeing and Airbus), fundraising risk is seen as high by the financial community, forcing issues of liquidity requirements, challenging covenants for loans, etc.
Similarly to Ken Washington of Ford shared in the context of automobiles and trucks, Gentile raised the mega-trend that China will have an indigenous aircraft industry long-term, and that will change the global dynamics of his business.
Like all good Systems Leaders that we have seen, Gentile moved seamlessly back and forth between knowing the details of his business but also scanning the horizon for the long-term implications for his company.
And through it all, Gentile also exemplified one thing we saw in all of our guests show this year: optimism. “This will come back,” he asserted — not with a wistfulness or naiveté, but with a calm confidence that he and his company will have the opportunity to come out the other side and see a brighter future.
Perhaps that is the strongest takeaway in our third year of our course. All 10 of our leaders were very in touch with the challenges of their companies — the normal upheaval of blending physical and digital as well as the unprecedented global crisis that we are all confronting. But in their own ways and in their unique styles, they all exuded the belief that there will be a brighter future on the other side. None of them ignored or downplayed the challenges of layoffs, tens of thousands of people working from home, or the financial struggles to keep things moving forward. But all exuded confidence in their plans, and that they and their companies would make it through these tough days.
And they also seemed to acknowledge that these difficult times will make the good days on the other side that much better.
Crisis Lesson #10 — Absorb Fear: Good leaders don’t pass on fear or the notion that “things are terrible.” They know that is not “authentic.” Rather, they build plans. They know what their teams are capable of and make progress. They are optimists. Sometimes there is a sense that optimism is silly and pessimism is reality. Optimism is not putting your head in the sand. It is the courage to see the future in the darkest days and the willingness to hold your team together.