Voices on Leadership: Nancy Koehn
Monday, July 28, 2008; 12:00 PM
Nancy F. Koehn, the James E. Robison Professor of Business Administration at Harvard Business School, was online on Monday, July 28 at 12 Noon ET to discuss business leadership.
Koehn's research focuses on entrepreneurship, leadership, and connecting with customers in the Information Revolution. Her most recent book, Brand New: How Entrepreneurs Earned Consumers' Trust from Wedgwood to Dell, examines six entrepreneurial visionaries who have created powerful brands and in periods of change. Koehn has also authored several other books and has written and supervised cases on leaders and organizations such as Oprah Winfrey, Starbucks Coffee Company, Whole Foods, Wedgwood, Estee Lauder, Madam C.J. Walker, Henry Heinz, Marshall Field, and Dell Computer.
The transcript follows.
Nancy Koehn: Welcome to this online question and answer session on leadership. I am glad you are here and that you are interested in this large, at times, sprawling, and undeniably important topic.
I am a historian and I have been studying effective and less effective leaders for about two decades. Looking back across time, it seems our age is especially hungry for leaders of worth and dignity: men and women who are pursuing an important purpose, one of goodness and positive impact. Individuals who are not for sale, who live and work in the increasingly powerful and fast-moving global marketplace, but who are motivated by more than just the next transaction.
We should be hungry for and seeking such people. Not only in business and on the political and larger world stage, but also in our kids' classrooms and in the newsrooms and in our hospitals and town halls. Leadership comes in many shapes and sizes--with a big L and a small L and every size in between.
We need such people for they engage and motivate and inspire us. As significant, they get things done. And they help us to get on with our own individual paths and our own worthy purpose.
In my own research--past and present--I have encountered a number of these people: Abraham Lincoln, about whose leadership lessons I am writing a book, Oprah Winfrey, who I have studied and written about, John Mackey who founded Whole Foods and who continues to lead that company (and about whom I shall say more later); Milton Hershey, Bono of the rock group U2, Howard Schultz (more to come on this as well), Estee Lauder, Henry Heinz, Ernest Shackleton and still others.
These are individuals who met resistance, skepticism, and other obstacles as they traveled their respective journeys. Their stories are those of men and women with gifts and drive and the fallibilities of being human. But they are stories that, at their essence, when we scrape away the layers, are worthy.
About any of this and more, I am happy to respond.
Bethesda, Md.: What skills separate a good leader from a good manager? or visa versa?
Nancy Koehn: This is a very interesting question. One of the best responses to it comes from scholar named John Kotter (in his book What Leaders Really Do). He defines leadership as the development of vision and strategies, the alignment of people behind the vision and then the empowerment of people to make the vision happen, despite obstacles. This stands in contrast to management which involves keeping the current system operating through planning, controlling, problem solving, staffing and budgeting.
The point is not that one is bad and the other good, but rather that we need both. And that leaders--from Moms to CEOs--need to both lead and manage.
Harrisburg, Pa.: How do businesses best assess what their customers want? Are there particular feedback or survey techniques that work better than others? Do managers talk to customers directly and when they do, does the small sample size compensate for the important direct customer reactions?
Nancy Koehn: My own research suggests that smart, savvy companies use a combination of tools and channels of communication to help understand what their customers want. Some of these involve traditional market research; others are more free-form and creative, such as storytelling, which involves having a consumer speak to a company representative or a third party about his or her life. Through the telling, companies sometimes discover an unmet need. An interesting example of this came about with Pull-Ups, diapers for three and four-year olds. What companies discovered asking Moms and Dads to tell their stories is that parents, especially parents who both work outside the home were toilet-training their kids later--sometimes as late as four--and so needed a product for children who could no longer wear diapers.
Washington, D.C.: Have you explored non-profit leadership? If so, any striking similarities/differences vs. the model leaders you identified in the private sector? Thanks.
Nancy Koehn: I have done some work on leaders from non-profit organizations, and this research suggests that the fundamental aspects of effective leadership are not fundamentally different across for-profit and not-for-profit organizations.
Princeton, N.J.: Economists like to divide the post WW II in two periods, 1946 - 1973 and 1974 to the present. During the first period marginal tax rates averaged 70% (they were 93% under Eisenhower), CEO's received about 50 times what their workers did (it's about 400 times in the second period), real median wages rose 50% (they rose 25% in the second period) and corporations were responsible citizens (Kodak built many of the schools and hospitals in Rochester). As a whole today's executives seem motivated by short term greed compared to those of the first period.
As an example, look at the auto industry. They say they only built what sold, but they didn't spend billions on advertising macho trucks just to help their friends on Madison avenue. They made decisions for short term gain that were not only irresponsible for the country (and the world), but have turned out to be terrible business decisions. Another example is the meat packing industry which left unionized Chicago and moved to Western Iowa and Kansas and switched to easily intimidated undocumented immigrants. And so on.
Nancy Koehn: This is a very important topic---one that takes us into ethics and philosophy as well as business history.
I think there are a couple of large issues to consider on the stage of capitalism as we think about the period from 1946 to 1974 and compare it to the 30 years after that. First, America owned the global marketplace in the 30 years after WWII; America owned the geopolitical landscape as well; third, an important social contract was firmly in place among government, business and households in which mutual obligations were generally agreed on, and the resources needed to meet these obligations--from cheap oil to a solvent Social Security fund to decent schools to company-provided retirement programs-- were available; and fourth, there was a general consensus that a decreasing amount of income inequality was a social good.
Beginning in the mid 1970s and accelerating thereafter, all of these key cornerstones were eaten away. At the same time, a new mentality, fueled partly by the growing importance of the capital markets (in all of our lives), began to take hold that I like to call casino capitalism. And while this is a murky definition for which I apologize, I think a kind of attitude began to set in--at many levels of society--but most obviously at the top of many companies among executives and in the halls of our national government--that one's job was to maximize one's winnings in the larger economic arena.
Now men and women have been maximizing their own interest in the market place since Adam Smith. But they have also, as our questioner points out, felt they had the latitude or ambition or calling to do more than that. To use the the responsibility that came with their authority for something other than ca-ching, ca-ching. We have seen less of this responsibility in the last 20 years than in the preceding 30 or 40. Some of this change is real; but some of it is also driven by some cynical and salacious media outlets who do little to seek out and write about "the better angels of our nature" (as Lincoln labeled our higher selves).
Chevy Ch, Md.: Didn't President Bush go to Harvard Business School? Didn't he have a C average from Yale? What kind of leadership courses do you teach at Harvard Business School?
Nancy Koehn: Well, I can understand your frustration about leadership and the academy, if we focus solely on President Bush. But just as your own journey is not chiefly defined by one instant in it--be that a fine, shining moment or a difficult one--neither Harvard Business School or Yale is defined by a single graduate.
Here is the thing about teaching on an individual or institutional level--it is offered out into the universe of students. It is given up by a teacher or a school to the students. But then it is theirs to make what they will of it. Or to make nothing at all. It's like with our kids. We give them all we can in terms of loving, thoughtful care, and then we send them out into the world. What they do with that love and care is not for us to perfectly control or to be defined by.
I will add one other thing. I have been teaching Harvard MBAs for almost twenty years. And overall, I have found them to be a remarkably decent and well-intentioned group of young men and women who are keen to add their own patch to the quilt of society. And to paint that patch in good, solid colors that make a positive difference on the quilt. Yes, we have our difficult and arrogant folks here and there. But they do not define the institution.
Los Angeles, Calif.: I'm eager to get more involved in leadership and management roles in my company after being here more than 15 years, but I don't have any formal training past my BA. I know some companies require an MBA, but how much of effective leadership comes from actual schooling versus real life working experience?
Nancy Koehn: A huge amount comes from experience. Just look at Lincoln--one year of schooling in total.
Go for it.
D.C.: Hi. It's been my firm belief, especially in light of the past 8 years of the Bush administration, that if you have to keep telling people that you're a leader you are, by definition, -not- one.
Leaders have to have particularly good qualities, whether they are in business or politics. Leaders have to be inclusive, rather than exclusive -- otherwise, the only people following (and buying their products/services) will be the syncophants. I won't buy the products or services -or- invest in a company where the so-called leadership does not pay attention or otherwise diminishes my needs and values as a businesswoman and as a consumer.
Nancy Koehn: I agree. Effective leaders are too busy leading to talk a lot about being a leader...
Yes and another yes on the importance of being inclusive rather than exclusive. And yes on building stakeholders of many shapes and sizes but who are not primarily held together as a group of sycophants. I know a young entrepreneur who founded a company straight out of school who when he put his board together said, "I want to build an ensemble cast of different talents and experiences and attitudes who will constantly challenge me and keeping telling me I am wrong." Ernest Shackelton, the famous Antarctic explorer had the same philosophy when he put together the team for his Endurance expedition.
Ouch! in Washington, D.C.: Starbucks AND Whole Foods? Starbucks is about to close hundreds of stores and fire thousands of people! Whole Foods was just in a corporate scandal - didn't the President get fired? Wow - these are your most admired leaders? Guess I'm not qualified for an MBA!
Nancy Koehn: I promised I would address the questions and comments about Whole Foods and Starbucks. I share your surprise and perhaps anger about my inclusion of these companies given what we read in the papers and hear on much of the news.
But the story in each company's instance is more complicated (and heartening) than many of the cynical, rush-to-build-them-up-rush-to-tear-them-down-rush-rush-rush media channels tell.
Since the founding of both Starbucks and Whole Foods, these companies have treated their employees markedly better--financially and otherwise--than virtually all of their peers in the retailing space. Since their founding, these companies have treated other stakeholders--from the environment to their suppliers to their communities-- markedly better than their peers, and indeed, better than the vast majority of public corporations. (Some of this performance is reflected in the companies' consistent place in Fortune's Best Places to Work; some is reflected in the stock ownership patterns within the company--at Whole Foods, for example, non-management employees hold more than 3/4 of the stock within the company. This stands in unbelievably stark contrast to other public corporations where top management holds an average of over 90%; some of this performance is reflected in John Makey's decision three years ago to take no more stock or options as compensation and to limit his annual salary to $1 for the rest of his time as CEO; some of this performance is reflected in Starbucks commitment to providing full benefits to all employees who work more than 20 hours a week. Say what? Sadly, there are very few companies making this kind of commitment to their people).
Does this sense of responsibility make Starbucks and Whole Foods immune to the competitive logic of the market? No. They play in a for-profit game in an economy subject to many different kinds of shocks, many of which the company cannot control And closing stores--600 of about 16,000--is a response to that.
As for John Mackey's mistakes on Internet chat sites (which, make no doubt about it, was a mistake and a significant one), the SEC and several other legal bodies have investigated his actions and that of the company surrounding the Internet behavior and the Wild Oats merger and both have been cleared of any wrongdoing.
Boston, Ma.: Any suggestions on how unknown brands from developing countries such as India can establish credibility, and get a chance to deliver on the promise of their brands to customers in a competitive market such as the United states?
Nancy Koehn: Find a distinctive, defensible, attractive offering that relies on Americans' growing interest in India and alternative philosophies, approaches to wellness and beauty, and lifestyles.
New York, N.Y.: Talk about ethics and 'wining at all costs.' In our economic system there are always winners and losers.
Nancy Koehn: Ah, but the question is what kind of victory or loss? Toward what end was the victory won or the loss incurred?
The purpose matters. And we kid ourselves and sell our souls if we think it's all about victory, full stop.
Washington, D.C.: Didn't Shackleton lose his sole ship and let most of his crew get killed?
Nancy Koehn: Ship became stuck in the ice and eventually went down. But Shackelton brought the entire crew--all 27 men--home safely through more than 20 months on the ice. No GPS, no cell phones, no lattes and heating pads. It is an amazing story!
Ballston, Va.: I volunteer with the Boy Scouts which, despite its imperfections, I firmly believe is one of the best organizations for developing young leaders. One of the problems I've noticed is that boys rarely understand how to "lead from the front." They seem to think if they just yell loudly enough people will follow them, instead of getting out in front and DOING something themselves. Unfortunately, I often see this same problem at my job. I hope that in some way I can teach these boys so that they don't end up like that.
Are you familiar with any studies on youth leadership or do you have any thoughts to share on the subject?
Nancy Koehn: Another great question. I don't know of studies on youth leadership. But this is because I have not studied this subject. I think effective leadership is like riding a horse (and indeed West Point used to require its first year cadets to take horsemanship toward just such an end). You have to lead from behind, from the side, from above, and sometimes from below. You cannot bludgeon a horse into jumping a jump or cantering faster. You have to give the horse a credible reason to do this, smoothly and safely. And this means you have to have a sense of where both you and the horse is coming from. That leads us to the importance of empathy, a quality critical to essential leadership, but rarely talked about.
New York, N.Y.: Today it was revealed that Wrigley gum paid an R&B star to record a song for them -- but failed to notify the public. A backlash is expected. Are today's leaders prepared for the rapidly changing media environment? More specifically, are business leaders prepared for the scrutiny applied by net-roots "homemade" journalists?
Nancy Koehn: Yowsa. This is a timely question. I don't think most leaders are prepared for the media frenzy and backlash that is quickly becoming part and parcel or public life. ANd they are certainly not prepared for homemade journalists.
But this is what is now. We all live increasingly in glass houses, and leaders--from doctors to politicians to police commissioners--must begin to deal with this. In communicating their own missions and in keeping justifiable idealism alive among their stakeholders.
Washington, D.C.: Hi - what are your favorite current books/materials on leadership ideas and principles?
Nancy Koehn: David Donald's 1995 book titled simply Lincoln is a great place to start. Jim Loehr's book, The Power of Full Engagement is another fine choice. And Tina Packer's Power Plays: Shakespeare's Lessons in Leadership and Management is also first rate.
FC, Va.: This may be a generality but I find a common thread among the exceptional leaders and that is the concept of honor. It's old-fashioned and out of favor in these times. The idea of doing something because it is the right thing to do is missing from many of today's leaders or wanna-be leaders. I think of Shackleford who made many mistakes in his trek but still put his life on the line to save his crew. As a history professor, do you find that difference from earlier times? Thanks for doing this chat.
Nancy Koehn: I could not agree with you more about the importance of honor. I think there are many leaders out there from all ranks of life leading with honor. But we don't see it held up often in our public communication channels. But talk to your child's best teacher, do some research on Oprah Winfrey or AG Lafely of Procter and Gamble or listen to Bono's speech before the prayer breakfast in COngress last year. Honor is alive and well today. Our job is to inspire others to act from the honor within each day, even in the face of cynicism and obstacles.
Dublin, Ireland: Every decade or so, doesn't a certain word in business come into vogue? Is leadership just the vogue word of the moment? What about discussing ways to collaborate better -- why is leading so important?
Nancy Koehn: Leading has something of a flavor of the month feel to it; I agree. But it is much more than a chic term. In reality it connotes something all tied up with collaboration and empathy and endurance and humility and deftness and the power of intention and all these messy, interrelated qualities that go into to acting from our higher selves and motivating others to do the same.
Courthouse: Hi, Nancy-- I'm a first time female entrepreneur starting an independent consulting business. Do you have any advice for first-timers out there?
Also, can you speak to the differences you've seen in how men vs. women approach business. Specifically, negotiation strategy.
I find I find myself not wanting to ask for too much for fear of angering someone (even though I could command it for the market I'm in). My male friends laugh at this and tell me men approach such things as a game.
Any thoughts? Thanks.
Nancy Koehn: Yes, it is different for women and men entrepreneurs. But then, that is not new news is it. I have studied a lot of women entrepreneurs, and all of them grew comfortable with using all of their powers and eventually with being themselves.
I think the biggest obstacle for all entrepreneurs is not sliding into doubt. Is walking through the fear into the dream into the next step into the business plan. All leaders--from Lincoln to Churchill--live with doubt and recognize fear. But effective leaders--and here I include successful entrepreneurs--do not let the doubts define them, do not slide into the doubt. So screw your courage to the sticking post, as Shakespeare would say, and walk on.
Ithaca, N.Y.: Has your research shown any consistent behaviors amongst successful leaders in terms of how they deal with teams? Some leaders (Steve Jobs comes to mind) have reputations as being very mercurial, and are the kind of folks who "have" a team rather than being "on" a team. Others espouse more of a "servant leader" model, where the CEO sits in a cubicle (or on the trading desk) and is an "associate" or "team member" like everyone else.
Has your research or experience shown one to be more correlated to business success than the other?
Nancy Koehn: My research suggests that there are all kinds of leadership styles and thus approaches to teams and teambuilding. Many of these styles can be effective over short periods. But when the issues are long-term or we are talking about the long-run effectiveness of the institution, we are usually talking about leaders, like Lincoln or Shackleton (Or John Mackey) who have led in such a way that they themselves can become obsolete and the mission of the institution or the company or country will go on.
Washington, DC (JD-MBA): Ms. Koehn, my MBA was earned attendant to my JD at New York University; I've practised law for a bit over a dozen years, and I have a curriculum question for you.
Why does not a single US graduate school of business require its students to take an administrative and regulatory law course? While in B-school, I regularly encountered students who had simply never heard of antitrust, ERISA, special-industry regulation, or even what the names of the principal Federal securities laws are. They would regularly propose group-work projects, or make classroom comments, or submit briefing-papers and think-pieces which proposed wildly illegal activities.
A few hours of contracts, torts, tax and employment law simply do not cut it any more; that wasn't enough fourteen years ago, and it certainly isn't enough now.
Nancy Koehn: Good call. This is beginning to change, as you rightly point out, it needs to. Onward and upward. Managerial education, like legal education, need to be more integrated because the world is such.
Norwell, Ma.: Given that skills and experience are necessary for effective leadership in any position, is leadership situational? For example, should a production manager have the same leadership qualities as a sales manager?
Nancy Koehn: Leadership is inherently situational. That is part of what makes it so messy and, at the same time, fascinating. But I don't think it is so much so that a sales manager needs largely different qualities than a general manager.
The key issue of leadership is how one uses one's inherent gifts, the experience one has learned from, the context in which one is called to lead, and finally whether one embraces the cause and decides to get in the game.
Nancy Koehn: It has been a pleasure and a privilege to take these terrific questions. I thank you for your time and energy. Godspeed.
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