Episode 57: Harry Kraemer – From Values to Action

Episode 57: Harry Kraemer – From Values to Action

What are the values of a great leader? Are you a value-based leader? You can (and should) be, says Harry Kraemer, author of From Values to Action: The Four Principles of Value-Based Leadership. He argues that strong values are the key to real leadership. To influence others, you must relate to them, and to relate to them, you must first relate to yourself. Discover the four values that all great leaders have, how to develop true self-confidence, and find out what separates a good team from the best team.

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Website: HarryKraemer.org
Book: Values to Action: The Four Principles of Value-Based Leadership
Bio: Harry Kraemer, Jr. is professor of management and strategy at Northwestern University’s Kellogg School of Management, where he teaches in the MBA and the Executive MBA programs. Additionally, he is an executive partner with Madison Dearborn Partners (MDP), one of the largest private equity firms in the United States where he consults with CEOs and other senior executives of companies in MDP’s extensive portfolio. Harry is the former chairman and chief executive officer of Baxter International Inc., a multi-billion-dollar global healthcare company. He was voted by the students at Kellogg as the Professor of the Year in 2008 and was a finalist for the award in 2014.

Transcript

Peter: Welcome to the Bregman Leadership Podcast. I’m Peter Bregman, your host and CEO of Bregman Partners. This podcast is part of my mission to help you get massive traction on the things that matter most.

Harry Kraemer is on the show today. He’s a professor of management and strategy at NorthWestern Universities Kellogg School of Management. He’s an executive partner with a private equity firm, and he was also the chief executive and former chairmen of Baxter International, which is a multi-billion dollar global healthcare company. What is always interesting for me is when we have guests who both think about these things, and practice them. Harry is one of those. Harry, welcome to the Bregman Leadership Podcast.

Harry: Great to be with you Peter.

Peter: The book that we’re talking about, I have two books from you. The book that I want to start talking about is, “From Values, to Action. The four principles of value based leadership.” Everybody talks about values, and the importance of values. It’s a little motherhood and apple pie. You have actually written a book that drives the point home in practice, I thought in a very elegant way. You start with principles. Tell us what these four principles are, and also what is the difference between a principle and a value?

Harry: Great. Okay, and great to be with you Peter. The four principles for me are really self-reflection, balance, true self confidence, and genuine humility. The simple model that I think of, based on all my experiences at Baxter, and now at Madison Dearborn, a private equity firm Peter, is that if you really take the time to think about it, leadership has nothing to do with titles and work charts. It has everything to do with the ability to influence people. The only way I know how to influence people, is you have to be able to relate to people. I back the truck up one step further, which is hard for me to relate to you Peter, if I can’t relate to myself. In my mind it really all starts with self-reflection.

The way I sort of describe it is we’re very busy. We’re very, very busy. People have got millions of things to do, and conscientious people sometimes think, “Well I’ll just go faster and faster. If I can go fast enough, maybe I can get everything done.” I always ask folks to think about Peter, “Have we confused activity and productivity?” We’re unbelievably active, amazingly active. How productive are we? Are we moving so fast we don’t even know? I get to the first principle of self-reflection. Turning off the noise, turning off the gadgets, getting off by yourself, and asking some pretty basic questions. What are my values? What do I stand for? What’s my purpose? What kind of a leader do I want to be? What kind of example do I want to set?

It’s not possible for me Peter, to be thinking about those things while I’m doing 10 other things at the same time. Being self reflective and self aware, I sort of view as the first principle and the first step.

Peter: Let’s unpack that just a little bit. I think it’s very important, and I also see people sometimes having a hard time with it. Not just finding the time for it, because that’s a problem in and of itself. Sometimes self reflection can lead to spinning.

Harry:Yes.

Peter: People can go around in circles, they can think too much without actually moving forward. Do you have any thoughts about how to create some structure, or context, or decision making process, or something that can help people think in a way that leads to productive post thinking action?

Harry: Sure, so a couple things Peter, and great, great question. First of all when people say they don’t have the time, which is the first one I usually get. I always asks folks, “Is it we don’t have the time, or is this something you really don’t want to do?” This could get Peter, a little sensitive. There could be a pretty big difference between what you say is important, and what you’re actually doing in your life. I always find it very helpful in my classes at Kellogg, to always explain that it’s sometimes helpful, Peter, to define what something is not.

When I say, “self reflection,” this is not self absorption, this is not spending hours contemplating your navel. This is what are your values, and what do you want to do, and where do you want to live? In a very practical way Peter, the practice I’ve had for almost 38 years now is I take 15 minutes. It’s 15 minutes, it’s at the end of the day. It’s what gets referred to as a, “Personal self examination.” Having 5 kids, having a lot going on, for me it’s usually midnight. I take 15 minutes Peter, and I literally go through a series of questions or myself. 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? If I have tomorrow, being fully well aware of the fact sooner or later I won’t have tomorrow, if I do, and based on everything that I’ve learned today, how will I operate differently tomorrow on every dimension of my life that has any significance? It just puts it all together.

People say to me, “Well Harry, do you do it every day?” I do it every day. It’s a little bit like most of us Peter, before we go to bed, brush our teeth. If I was going to spend hours contemplating my navel, this wouldn’t work. It’s in a very disciplined way that I do every day for 15 minutes.

Peter: That’s great. I encourage that in my book, “18 Minutes.” I talk about this sort of self-reflection at the end of the day. I call it, “5 Minutes,” because I’m so super efficient. No, but I think 15 minutes is actually much more realistic in terms of what I would spend on it. This idea of looking back and saying, “What worked, what didn’t work? What do I have to learn from it? How do I want to act differently?” That’s a great structure I think, for self-reflection.

Harry: One other piece of this Peter, may be helpful, is that the second part of this is that once you start to do this Peter, you gotta find a few people to bounce this off of, right? As my wife Julie would say, “Harry, left to your own devices you could convince yourself of anything. Do you want to know what I think?” After being married for 36 years the answer to that one is very clear Peter. It’s always, “Yes. Yes Julie, I want to know what you think.” Whether it’s a colleague, whether it’s a significant other, whether it’s a sibling, finding people Peter, so you can hold yourself accountable so that there is a connection between what you think of yourself, and who you really are.

Peter: That feels important to me when you bring this to the connection of values, which is that … You said this earlier, that there’s the values that you think you have, and then there’s the values that actually reflect the way you live your life. I imagine that getting someone else’s perspective who knows you well, could shed light on what your real values are, versus what your hopeful values are.

Harry: Peter, excellent, excellent. In fact, let’s do a little role play on this one. Let’s assume you and I know one another well, I respect you, you’re a good guy. I’m going to take you to lunch and I’m going to say, “Hey Peter, let me run some things by you. These are my values. These are things Peter, that are very, very important to me.” Now, look at the range of reactions I could get from you Peter. At one end of the extreme it could be, “Harry, thanks for sharing it with me. I’ve been working with you for three years. Based on your actions, I could have guessed those were your values. It’s so clear where you’re aligned.”

Now, the scary part Peter is it could be the other end. You could say to me or think, “Boy, based on your actions I’m amazed that you think those are your values. You’re like Dr. Jekyll and Mr. Hyde.” Getting some clarity on that, as to the difference between what you think in reality, I think becomes pretty important.

Peter: Well that brings us to your second principle of balance.

Harry: Yes. The way that I describe this one Peter, is you want I on this podcast, we could talk about virtually any topic. The Middle East, South Korea, you name it. Usually people have very, very strong opinions. The problem in my mind with very, very strong opinions, is that sometimes these are folks who don’t take the time to understand other perspectives. The second principle Peter, is a value based leader in addition to being self reflective, takes the time to understand all sides of a story. I slow down to say, “All sides,” cause the mistake that I first made when I started teaching at NorthWestern was I said, “The value based leader takes time to understand the other side.” One of the students said, “Does that make the assumption there’s only two sides?” I said, “I’ll never say that again. There are multiple sides.”

You may hear it Peter, as, “A value based leader seeks to understand, before they’re understood.” If you and I are having a dialogue Peter, I truly want to understand your view before I even begin to talk, for really two reasons. One, I’m going to learn a lot and maybe my view is wrong, and I’m not going to let my ego get in the way. Second, if I end up feeling pretty strongly that I have a better perspective, I got a much, much better chance of convincing you of something if I can demonstrate, I respect you enough to really understand your perspective.

Peter: Is it understanding the perspective in order to persuade you?

Harry: Well, it could be. It could be that, or it could very well be I want to understand because what I thought was wrong. I always tell my students, I always tell executives, people at Baxter this, and Dearborn, “Among my issues I have absolutely no need to be right.” I’m unbelievably fixated Peter, on trying to do the right thing. If you and I are in a business situation and I think we ought to go East, and I’m pretty confident it’s East, I want to know exactly why you think it’s West. I’m going to listen so clearly … By the way, the way you train yourself on this one Peter, to be very practical. If you and I are having a discussion, I am going to try to never say to you, “Peter, I don’t understand where you’re coming from.” That in my mind is ignorant.

If I take the time, I can understand where you’re coming from. Then I’ll decide whether I agree or disagree. By doing this I would say half the time, I end up changing my mind based on the fact that I’m surrounded by people that are a lot brighter than I am. The other half of the time, to your point, I’ve got to nail a much better chance of persuading you of my view.

Peter: How do you help people who really lean towards one or the other? I think most of us are either very connected to ourselves and can often give up on other people, meaning we’re so focused on us being right that we don’t see the other person. Then there’s a lot of us who connect deeply to the other person, and give up ourselves and don’t set the right kinds of boundaries, and just do whatever people want and then regret it afterwards. You’re really describing two sides of a very important coin that many of us are out of balance with. How do you help people come into a deep balance of these two things?

Harry: Well I’m smiling Peter because you ask, you really ask great questions. You just gave a perfect lead in to the third principle. Which is, true self confidence. Let me walk you through this one real quick, and then tell me if this helps. I say, “Okay, I want to be self reflective. I want to be balanced.” Well, a big part of that is going to be developing true self confidence. Immediately somebody says Peter, “Well it’s true. You’re either self confident, or you’re not.” I remind people that many of us, I don’t know about you Peter, many of us have worked for people who can act very self confident, who have no self confidence at all. The macho, “Do what I told you to do, I’ve never made a mistake,” crowd.

I try to get people to get very fixated on, do you really have true self confidence? By that I mean, in my case I say to myself, “What do I know to be obviously true?” That is there will always be people brighter than I am, more athletic, more articulate, but I’m okay. I know what I know, I know what I don’t know, I’m a learning person. I can get better each and everyday.

Peter: I think that would be the difference between confidence and arrogance.

Harry: You got it, well. Again Peter, you’re ahead of me. Perfect. The way I think about it is, let’s define what true self confidence is not. It’s not arrogant, it’s not obnoxious, nor by the way is it complacent. I’m good, but I’m going to get a lot better. I’m going to honestly say I can learn more each and everyday. It’s okay for me to have strong opinions, but I’m never going to allow myself to think, “I’ve got the answer.” This whole concept of … Actually, I’ll give you another practical example. A student the other day said to me, “Harry, how do you know if you got true self confidence?” I actually realized Peter, there’s two questions that your listeners can really ask themselves that will help them determine this.

Two questions you can ask yourself. Question number one, have you reached a point yet in your life where you’re comfortable to say, “I don’t know. Peter, I don’t know. By the way, I’ll get an answer for you really quick. I’m not going to wing it, but I just don’t know.” Question number two, have you reached a point in your life where you’re comfortable saying, “I Was wrong. Forget what I said, what Peter said makes more sense.” What I love about this topic is you ask yourself Peter, “Why is it that a lot of people don’t want to admit they don’t know? Why do a lot of us not want to admit we were wrong? I think it’s because I worry, what’s Peter going to think of me if I tell him I don’t know, or I was wrong?”

Well, go back to the model again. If leadership is about the ability to influence people, and the only way you can influence people is relate to people, most people Peter, do not relate well with people who know everything. Most people don’t relate well with people that don’t admit they make mistake, or that they don’t know something. I actually think if I’m going to dialogue with you … I say, “Peter, I don’t know but I’ll find out pretty quickly,” I actually think you may say, “You know what? Harry’s kind of a regular guy. I can relate to Harry. He’s a human being. Boy, if I can relate to you, I can influence you, and I can lead you.”

Peter: Which makes so much sense when you think about it intellectually. When you try to be that person, the challenge is I think the vulnerability that you have to end up expressing, and experiencing in saying, “I don’t know,” or, “I may be wrong.” My question to you is, how can you help people develop that true self confidence? You gave us a test of it. Which is if you’re willing to be wrong, if you’re willing to say, “I Don’t know.” I think that’s a great test. The question is, if you fail that test, and you’re self aware enough to say, “I’m kind of failing it,” meaning I’m working harder at being right than I am at getting to the right answer, which is this distinction that you gave earlier. What advise do you have to people to develop this true self confidence?

Harry: Okay, so I’ll tell you Peter, now you’re on one of the top five questions I get asked everyday by students. Here’s the idea now, and a practical, practical example. A woman comes up to me and says, “Hey Harry, I heard your lecture,” whatever. “Harry, I gotta honestly tell you, I don’t have true self confidence. You know what? I’m aware of that, and I’m just not sure what to do about it.” My formula for this one is to take the time to be self reflective. To actually ask yourself, “Okay, the fact that you can admit that you don’t have it, that’s the first stop, first step to getting better.”

Now, let’s go through an example. What is that? Here’s one that young people bring up almost every week to me. They’ll say, “Harry, I’ve got to make a presentation to the board. Every time I make a presentation to the board, or senior management, or even my boss, I get really, really nervous. I get really nervous.” I said, “Okay, good. Let’s analyze that. Why is that? If the reason you’re nervous is because you’re not prepared, you should be pretty nervous. If you are prepared, what are you worried about?” “Well, I’m worried that they’re going to ask questions that I don’t know the answer to.” “All right, well let’s think about that. They wouldn’t be having you make the presentation if they didn’t think you knew quite a bit about it. If you did your homework, you probably do know quite a bit about it. What do you think the issue is?”

“Well Harry, you maybe right, but they may ask me one question I don’t know the answer to.” I said, “Okay, but let’s think about that. Does your boss, or does the management expect you to know the answer to everything? If you’re in that meeting and somebody says, well what about the current population of Arkansas? You say, well you know what? How fast do you need an answer? If you need an answer in three minutes, let’s take a break, I’ll get you an answer.” Then you realize, “Wait a minute, well what am I nervous about? By the way, I’m a pretty gifted person, I’ve got some pretty good characteristics. Hey, this is a journey. I’ll get better and better.”

In my mind, if one can actually be self reflective, if you can actually take the time to understand what you’re good at and what you’re not. By the way Peter, here’s another one that comes up all the time. I had an executive a couple weeks ago, he said, “You know, this self reflection balance … Yeah, they’re pretty deep. That could be helpful. Harry, this true self confidence, I got a real problem. I got a real problem with this.” I said, “What’s that?” “Well, I’ve got 850 people working for me, and I do not want them to know what I’m not good at. I hold my cards very close to the vest, I don’t think I want to divulge what I’m not that good at. What do you think about that?”

Of course since I’m in the professorial phase of life here Peter, I’m the person whose got to explain to this guy, “They already know what you’re not good at.”

Peter: Exactly, exactly.

Harry: “In fact George, the only person who they’re wondering whether they know they don’t know is you, okay? You might as well admit what you don’t know.” Have you ever had a boss … You couldn’t write a book on what they didn’t know.

Peter: Which brings us to this other question, which is working with someone who lacks true self confidence.

Harry: Ah, well this is a bigger topic Peter, maybe we could have another podcast sometime. This all falls under the topic of what I refer to as, “Leading up.” What is your ability … If your my boss Peter, if we role play this. If you’re my boss and you’re not self reflective, you’re not balanced, you’re not any of the things we’re talking about. How do I make an impact on you? If you actually believe that leadership is not about titles and org charts, it’s about the ability to influence, do I have the ability to influence you? Do I have the ability to demonstrate to you, far beyond words, that Harry Kraemer has no personal agenda, other than to be helpful to you Peter? Is it through my example? Is it through my motivation? Do I sit down with you and say, “Hey Peter, I’d really love some more feedback. I mean Peter, what could I do to be better? Are there things that I could do?”

Then somehow sort of sneaking into that discussion, “Hey Peter, would it be helpful if I gave you a couple thoughts? Would that be okay Peter?” Obviously as you know, you have to figure out how to do that. It actually reminds me, I was very fortunate. My grandfather lived with us for quite awhile when I was a kid. One of the things that he always used to say that I remember Peter, almost everyday. He used to say, “Harry, you don’t want to be political. You don’t want to be political because if you’re political, you can’t look at the mirror and feel good about yourself. Harry, you don’t want to be political.” Then he’d pause, he’d smile, he’d get that little Irish twinkle in his eye. He’d say, “Harry, but you better be politically sensitive, cause if you’re not politically sensitive, you won’t be alive to look in the mirror.”

How you do that becomes important, but it’s all about that ability to lead up. To realize that if you’re going to make an impact on somebody who doesn’t have true self confidence, can you help them develop it? If you can’t, how are you going to operate within that organization and get anything done?

Peter: I think one of the answers to that might actually be your own true self confidence. Meaning, can you be confident enough to work with people who are arrogant, or work with people who have to be right all the time, and hold your ground to be right sometimes, be not right other times, be willing to not know, be willing to rethink your own perspective. That, that kind of true self confidence is necessary. It’s the higher bar to maintain that true self confidence when you’re working with people who are in fact not truly self confident, but maybe come off as arrogant. Which actually brings me to your forth principle of genuine humility.

Harry: Yes, and I would say one other comment that you just mentioned, which is such a good one. Your ability to decide, “You know what? It isn’t about me at all, and to the extent that it makes sense. I feel I really need to convince you something.” Guess what? I will let it be your idea. Even though it may have been my idea. “Hey Peter, would this make any sense?” Even though I think it does. What can I do by buying my ego and allowing it to be your idea, and to be able to deal with you because it isn’t all about me?

Now, genuine humility, forth and final principle. The way I think about this one as a great, almost test for your audience Peter. That is, when I say, “Genuine humility,” here’s a great way to think about it. If you asked all the listeners, “How did you get to where you are?” You got a lot of people that have achieved a bunch of good things in their life. Whatever their title, whatever their role. I often folks when I’m giving talks, “How did you get to where you are?” Fascinating to me Peter, the typical response. They can be junior people, intermediate, executives, different countries. “Harry, how did I get to where I am?” Top two responses. “Harry, I worked very hard, and by the way I have certain skillsets. The combination of working hard and skillsets, that’s how I got to where I am.”

I always tease folks to say, “Okay, well I work pretty hard. I have a couple skillsets …” but at least in my case I’ll give you four more things that are part of it. I don’t know whether it’s applicable to you. I’ll give you four more things that happen to me. In no particular order, but math majors, we number things.

Number one, luck. Hello, luck. Number two, timing. Being in the right place at the right time for me, was huge. Number three, the teams. If I didn’t have the teams of people, there’s no scenario. I wouldn’t have been the CEO of a 12 billion dollar company. I mean who’s kidding who? Forth, this one Peter is only applicable for some of us, but for some of us there’s a spiritual dimension. These are all talents and gifts I’ve been given, I’m supposed to use to the best of my ability during my life.

Now, if any of those four worked for somebody, luck, timing, the team, a spiritual dimension, I actually think what happens with a value based leader Peter, is people start to realize A, I’m not going to forget where I came from because most of us start off with very little, or nothing. B, I will keep everything in perspective. C, I will absolutely make sure that I realize how important the team was. If I didn’t have those teams, I would never get there. Forth, very, very important, the higher up you go, the higher up you go, there better be a few people that you know who knew you before you became a big shot. As you well know Peter, the higher you go up in an organization, there will be people coming up to you and saying, “Harry, you’re remarkable. Harry, you’re fantastic.”

If Harry’s not careful, Harry could actually start to believe it. Once I believe it, then I can’t get my head through doorways and go back to the model one last time Peter. If leadership is about the ability to influence people by relating to people, most people do not relate well to egomaniacs. Most people do not relate well to people where it’s all about them. I kind of finish this cycle then Peter, by saying, “If,” and it’s a journey. “If I can become a little more self reflective, a little bit more balanced. Develop true self confidence, and develop more genuine humility, I think I’m in the position to start to lead myself. If I can lead myself, I can lead others, and I can actually then become a value based leader.”

That was really Peter, the whole focus of the first book. What ended up happening is a lot of the students said, “Well let’s assume I’m developing those four principles. Well then, what do I then do?” That’s when I realized, “Maybe I could think of those four principles Peter, if I’m living those, I’m becoming my best self. If I become my best self and a value based leader, then maybe I can start to develop a value based organization.” Which is what the second book, “Becoming the Best,” is all about. I’m starting off with being best self, I develop the best team. We can talk about that at some point. How do I become a best partner, how do I become a best investment? If I got those four things going, I’m still not there yet because I’m a value based leader. I think I do the short time we’re here, need to make a difference in the world as an individual and an organization.

Some people call it, “Social responsibility.” I actually think of it as being a best citizen. Being sort of a mathematical guy, I thought this book was going to be, “The 5 Best,” but the marketing people said, “Harry, you’re way too much into numbers. It’s not The 5 Best, it’s Becoming The Best.”

Peter: When I think about what you’ve said in this whole call, and what I know about leadership. There’s this piece that I think the second book touches, that you’ve assumed a little bit in the first book, that it’s great to have accented. Which is that you said at the beginning of this call, “Look, in order to lead you have to be connected to yourself. You have to be connected to others. You need to do both of those things, and it’s often hard for us to do.”

There’s this third piece, which isn’t explicit, but I think needs to be. Which is, “You have to be connected to something bigger than both you and them.” That if you’re working in a team, or an organization, or you have a partnership, or there’s an investment involved. That it’s not only am I really reflective, and understanding, and connected to myself. Not only am I really reflective, and balanced, and connected to you. There’s this other thing, that we are both connected to. The work that we do is for the sake of that.

Harry: Well said, well said Peter. Well said. In fact, there was a colleague of mine at Baxter, a guy named Frank LaFasto who did a tremendous amount of work on exactly what you’re talking about, of building teams. It was a guy named Frank LaFasto. He wrote a book called, I think it was called, “TeamWork.” To your point Peter, his whole focus was what is it about really great teams, versus okay, or average. What is it about?” He said, “These are folks that have a clear elevating goal. It’s beyond them, it’s beyond the team. There is something that they are incredibly passionate about that’s going to make a difference in the world.” When you can actually get people to realize there’s a clear elevating goal. It’s above and beyond any of us. It has an enormous impact on people’s willingness and ability to really make things happen. It has to be clear, it has to be something that every single person understands.

Peter: Harry, thank you. His two books are, “From Values to Action. The four principles of value based leadership,” and, “Becoming the Best. Build a world class organization through value based leadership.” Harry Kraemer, thank you so much for being on the Bregman Leadership Podcast.

Harry: Peter it was great being with you.

Peter: If you enjoyed this episode of the Bregman Leadership Podcast, please subscribe and leave a review on iTunes. For more information about the Bregman Leadership Intensive, as well as access to my articles, videos, and podcasts, visit PeterBregman.com. Thank you to Claire Marshall for producing this episode, and to Brian Wood who created our music. Thanks for listening, and stay tuned for the next great conversation.


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