Joel Peterson on Reputation, Trust and Entrepreneurial Leadership

During class today, we had the good fortune of welcoming Joel Peterson — the chairman of Jet Blue and esteemed GSB professor — to discuss his perspective on reputation, trust, and entrepreneurial leadership. Despite having taken Managing Growing Enterprises with Joel (one of the best classes I have taken at the GSB), Joel continued to unlock new wisdom for me during class today. I have always viewed Joel as a mensch in the intersection of strategy, management, and workplace “touchy-feely”, and wanted to encapsulate some of the new lessons I learned from him below.

1) Often, we grow to develop our own leadership style and preferences on how to manage an organization. Joel broadly categorized these leadership buckets into the following five categories:

However, a modern leader must be able to span all five categories and become what Joel calls a “5-tool leader”. The adaptability of leadership style is critical in an increasingly dynamic world.

2) “Culture eats strategy for breakfast” because strategy is more easily replicable. Culture is a way to differentiate in a commodity industry. Joel advocates building a culture that is premised on reward over fear, and trust over power. An entrepreneurial leader’s worst mistake is hiring someone who does not share similar values of trust. Joel advised that aspiring entrepreneurial leaders should intentionally build a high-trust culture and recommended 10 ways one might achieve this:

3) Negotiations should not always be viewed as zero-sum. In negotiations, Joel personally “solves for fairness”, instead of solving for winning. He advocates trying to give your counterparty what they want at a cost that is attractive to you. This is because negotiations are serial and not episodic — over your career, you might want to make hundreds of deals with the same person. Solving for fairness gets you a reputation associated with fair trade, making you someone people want to engage in long-term relationships with.

4) A classmate posed the question of what is more important: being respected, or being liked? Joel advised that the former is more important. Being “liked” tends to be more ephemeral, something experienced in the moment. It makes less of a lasting impression. Being respected, on the other hand, means you are being trusted long-term. In good times, people turn to those they “like”, but in bad times — in the most stressful of moments when they need someone reliable, they turn to those they “respect”.

5) Joel advised that we state our goals, mission, and values upfront when managing an organization. You want everyone to know your position with no doubts. Knowing your values means you can be predictable, and predictable people are trustworthy. This allows you to scale and delegate decision-making, as your lieutenants will more easily make decisions consistent with your values. Great leaders, Joel argues, should only make 51/49 conviction level decisions. Someone else makes the 70/30 decisions.

6) Lastly, Joel gave some advice on how to rebrand your reputation without losing credibility. He suggested that a credible shift in reputation comes across as an evolution, not a random left turn. People need to understand the logic of your evolution and view it as a maturing process instead of an inauthentic one. And of course, your messaging must be consistent with your actions. “You cannot just talk your way out of things, you need to behave your way out of it.”