LaVerne:

Welcome to Brilliant and 20. A new podcast from the Scoop News Group and Emerald One, where we celebrate unique brilliance of today’s leaders and share their greatest lessons with you in just about 20 minutes.

Hi, I’m Laverne Council, CEO of Emerald One. Joining me today is Robert McDonald, AKA Bob. Bob has an incredible bio and by the way, he is an incredible person. An army veteran who served with the 82nd Airborne and was awarded the meritorious service medal. Bob graduated the top 2% of his West Point class. He earned his MBA from the University of Utah, and he went on to serve as the chairman, president, and chief executive officer for Proctor and gamble for 33 years. After leaving Proctor and Gamble, President Obama selected Bob to head of the department of veteran affairs, where I had the really privileged opportunity to work with him as assistant secretary, as CIO for the VA.

Bob, this is the short version of your bio. What I really want people to understand is that you’re probably one of the most humble leaders that I’ve ever met. You have an incredible number of awards. You sit on many boards and you have a ton of honors in your name, but we all know you rarely talk about them. You spend a lot of time, however, talking about the idea of values based leadership. That’s what we’re going to talk about today. Bob, tell me about it. What does values based leadership mean to you and why is it so important?

Bob McDonald:

Well, first of all, LaVerne, it’s great to be with you and thank you for the leadership you provided the department of veterans affairs when we serve together. You transformed the IT organization and I will be forever grateful to you for that. Values based leadership to me, is the fundamental foundation of any organization. If you think of a high performance organization, it always starts with the purpose of the organization. You build on that with what are the values, what are the things that cause people to behave a certain way? Then does that organization have passionate leadership? Do they have sound strategies? Do they have robust systems? Do they have a high performance culture and that leads to a high performance organization, but if you don’t have those foundational values right, nothing else matters. That was the problem as you know, when you and I got to the VA.

LaVerne:

Yeah. When you think about this, and especially when you think about values based leadership on a daily basis, especially in corporate environments, you can only control so much and you know there’s a base level of capabilities you have to know and have to have, but how does this really play out? How have you seen it when it’s worked well and when it hasn’t?

Bob McDonald:

Let’s talk first about what we found when we got to the VA. If you remember, in the spring of 2014, there were some veterans waiting for care in Phoenix that weren’t getting the care that they needed at the time they needed it. What was going on was people were, employees were cooking the books and cooking the books, meaning that their guideline was to get veterans in for care within 14 days. Often they wouldn’t note down the need for an appointment until 14 days from the time they could give it, cooking the books. As we later discovered, that was going on in other VA sites, not just in Phoenix. The issue was an objective had been set, 14 days, that was unachievable. The organization was not capable of achieving it. Certainly we had to build that capability.

The number one issue that we had to address from the very beginning was people were violating the values because one of the values was integrity. How can you have employees violate a fundamental value? What we had to do is go in and reassess where we were versus those values, train those values and training values as a continuous exercise, the values were an acronym that stood for ICARE, I being integrity, train those values over and over and over again with scenarios so that it provides that robust foundation for a high performance organization.

LaVerne:

When you think about that, definitely sitting in a government environment, but you also led one of the largest companies in the world in Proctor and Gamble. That was a conglomerate of other products and brands from everywhere. I can remember you talking about your time in Japan and in trying to create a leadership culture there and addressing some issues. Talk to me a little bit about when you’ve had to have values based leadership and engage in the corporate environment like that, especially when you’re crossing cultural divides and cultural norms.

Bob McDonald:

I think you make a great, insightful point there. A little bit of history. When I joined the company in 1980, about a third of our business was outside the United States. When I retired from the company in 2013, two thirds of our business was outside the United States. As we were globalizing, which began in the early 1980s, the mid 1980s, and then accelerated with the fall of the Berlin wall and also the leadership of [inaudible 00:06:03] in China about 1989, 1990. We really discovered that we had values, but we had to communicate those so they would be operable in different cultures. In the old days of Proctor and Gamble, when one of my predecessors was a fellow named John Smale, who I deeply admire and love, they would communicate values by all the leaders getting together for lunch in Cincinnati in our corporate headquarters.

Well, you can’t do that if you’re in 200 countries around the world. In the 1980s, we realized we had to write those values down. We developed a team. I wasn’t part of it at the time. I had just joined the company, but a bunch of our leaders under leadership of John Pepper, another one of our former CEOs, and John Smale worked together, writing them down. Then as I went to different geographies, I had the work to translate them into the local culture language. That was the challenge. When you go to Japan, I don’t speak Japanese well. I took lessons an hour and 20 minutes a day for six days a week for six years. How do Japanese people interpret those values? For example, one of the values in a Procter and Gamble is leadership.

We expect people to take initiative, to be leaders, no matter their position, no matter where they stand in the hierarchy. There is no word in the Japanese language for leadership. In Japanese, you have three different alphabets. One is called Hiragana, that’s for Japanese words. One is called Katakana, that’s for foreign words. The third is Chinese characters called Kanji. There is no word in Hiragana for leadership. Literally, they don’t translate the word, they just take the word and write it phonetically. We had to spend a lot of time talking about, “Well, what does leadership look like in a Japanese context?” I even had to go out and try to find good examples of Japanese leaders and biographies of their leadership in order to communicate that value to the organization.

LaVerne:

That is very telling, Bob, because one of the things that we believe, and Emerald One as leaders oftentimes have to want the culture that they say. They want the culture band vision so they say, “This is our culture.” In reality, having an insight that you had to understand, wait a minute, this might not be translating. We need to do some work to make sure it translate and when it does, it means what we want it to mean, is very important as a leader.

Bob McDonald:

Again, I think you’re making incredibly insightful comment. I think as leaders, we don’t work hard enough long enough on culture and culture may be the most important part of developing a high performance organization. You did that when you led the IT department at VA. I can remember many times coming to your team meetings and I could see you working on the culture. We had to do that. You remember how we juxtaposed the two scenarios in the VA in order to communicate what culture we wanted. The scenario where the veteran drives to the Spokane Washington community-based outpatient clinic calls the desk clerk to help them get into the building because they were disabled and the desk clerk says, “I’m sorry. You have to call 911.” The individual does that and we have a firetruck and an emergency medical group show up. Contrast that with the White River Junction Vermont situation, where a nurse, a terrific nurse, has her veteran not show up for an appointment.

She, to make a long story short, goes out, they break down the door of his house and they save his life because he was wedged between two pieces of furniture. How do we get the culture of the organization to cause people to have enough trust in their leadership, enough trust in the values of the organization that they will take initiative. If the initiative goes awry, break down the door and the guy’s drinking a cup of coffee, the leaders have the back of the people who took initiative, as long as it was consistent with the purpose and values of the company. Culture is everything.

LaVerne:

It really is. People often talk about, “Well, we have a change now let’s manage it.” You don’t really manage change. You manage people. You share and you build trust and culture with people. One of the things I always remember you talking about, Bob, was the importance of our people, the importance of engaging with them, and also the importance of transparency, because it’s a lot easier for that nurse to do as she did when she saved that veteran, when she knows that was the value that the leadership all the way through the organization believe. She knew she was doing the right thing. It wasn’t a question. The concept of value based leadership is really important, not just in what we do at work, but it’s also important in what we do at home and also important at this time with COVID-19 and the quarantine. When we think about it, we’re all having to be leaders in very different ways, dealing with this particular issue.

Bob McDonald:

Yeah. It’s my experience that you really can’t separate the values that you follow when you’re in the office and the values you follow when you’re outside the office. I don’t know of a high performance organization or leaders in a high performance that can compartmentalize values across environments. Generally, people join companies where they’re comfortable with the values and it was always my point of view at the Proctor and Gamble company and at VA, that this is agreed we make those values more and more pervasive in people’s personal lives and their work lives, we’re going to be a better high performance company. How can you care about people? At Proctor and Gamble, how can you make products that improve people’s lives and then go out of the office and pollute the environment? You can’t do that. It’s that inconsistency then in congruency, would drive a person crazy.

LaVerne:

That is so important. At the end of the day, though, you and I have had other leaders that we’ve guided, that we worked with that have tried it. That tried to sort of have this duplicity in how they look at things and great leaders just realize you can’t do that. You’ve got to live it and you got to live it in all places where you stand. If your values are ones of integrity and transparency and accountability, this is sort of how you’re going to be with all things. This embodies what’s great about you, Bob. I have to say that. Your persona is not as the persona because of the roles you had. It’s a persona because this is what you want to be.

Bob McDonald:

That makes me nervous. I’m a work in progress. I still have a lot to do. Life as a, as a book of many chapters and some of my chapters aren’t done yet.

LaVerne:

All leaders know that they’re perfectly imperfect and that they are a constant set of work.

Bob McDonald:

Exactly.

LaVerne:

No leader comes whole. the point that I like to make there is that as people are thinking about what you’ve given us here in value space leadership, that they understand that this comes in time and it comes because you wanted it. It comes because you understood the value of it and it comes because if you’re a value-based leader, it was going to allow your people the freedom to fly.

Bob McDonald:

Yeah. Oftentimes, it results in a behavior which is sacrificial, self-sacrificial where you put the needs of the organization above yourself. What Jim’s Collins calls level five leadership. What we in the army would think of, as an officer in the army, I let the soldiers eat before I did. We never ran out of food, but it’s this important emblematic statement that their lives are more important than your own. If you’re going to be a values-based leader, I think you really have to think about, are you willing to make the commitment, the sacrifice that’s necessary to do that?

LaVerne:

We are often curious about people. I’m always curious about what you’re up to, because you’re pretty serious, but I’ve seen you yuck it up and have a good time periodically, which is nice. I also have met members of your family and they love you. They really love you, and that comes through sacrifice as well. I’m dying to know, and it tells a lot about a person. I know you keep a really clean desk because you were always spic and span, but I got a question for you. What’s on your desk right now?

Bob McDonald:

Oh, I just read a book, which I really loved, which was by Eric Larson about the 1940, 1941 and Winston Churchill taking over the British government. I thought it was unusually good. I’ve read so many books on Churchill, including Martin Gilbert’s biography, which is Seminole, but this one was really good in demonstrating kind of the day to day thought process and day-to-day behaviors of Winston Churchill at a time where Adolph Hitler had literally built the reviewing stands to celebrate their success over Great Britain’s, what he expected to be defeat. It just, again, reinforced in my mind the importance of leadership in how Churchill stuck to his values and was a beacon of hope for the entire population. Interestingly, here’s a guy who was a great wartime leader and then when the war was over, he was thrown out of power. It kind of gets to Stan McChrystal’s point in his book on leadership recently, which is maybe it’s the context when one leader will be great versus a context when their skills may not be as great. All of us tend to have a leadership profile that may fit one context or another.

LaVerne:

Yeah. Your leader for that time and you’re the right leader at the right time.

Bob McDonald:

Perhaps.

LaVerne:

I can relate to that. I think certain people have certain skills that lend themselves to disaster or lend themselves to maintain or lend themselves to great creativity and leaders, just like everyone else, have skills that differ based on that point in time.

Bob McDonald:

Well, this is why, again, our friend, Jim Collins writes, “You got to get the right people in the bus, get them the right seats on the bus.” I remember one of the members of our leadership team who I won’t name, wanted to come work on our team at the VA and wanted a particular job. They wanted to be the veteran experience officer. I said, “No, no. That’s not the right job for you. I don’t want you in that job. I want you to go do this job.” “Why?” I won’t mention it because I don’t want to say the person’s name. In the end, that person led that capability and it rose to great fame and was a great contributor to our progress.

In the end they said, “You know what? Maybe that wasn’t the right choice.” See, you never know. When Proctor and Gamble came to me in 1989 and said, “We’d like you to go to Canada to lead our laundry business.” I said, “What did I do wrong?”, because nobody was going international in those days because the international business was so small. I didn’t have the insight or the prescient that the leadership of the company did that we wanted to develop a cadre of internationally trained managers for the future.

LaVerne:

That’s where the value space comes in. I’ve been in that situation that a leader… I clearly remember. I was at Dell and the leader wanted me to leave a job that I was doing quite well in and it was a big job and it was getting great and put me into an organization that was having a lot of problems. I just thought it was punishment. Little did I know that everything I did beyond that job when they moved me into that job prepared me for everything I could do in the future.

Bob McDonald:

Well, that’s why I think you’re absolutely right. That’s why the value of trust is so important. At Procter and gamble, one of our values is trust and it was a value I learned a lot about in that we had to create intimate relationships with our consumers, with our employees. When I got to the VA, what I discovered was there was so much hierarchy, so much formality that it got in the way of employees really knowing who we were as leaders. How do we create an intimate relationship because in the end, we aren’t going to provide better service to our veterans if we don’t provide better “service” to the employees. It’s easy to hate a bureaucracy, particularly a large, one like the VA, 360,000 employees, where you can’t put a face or a hurt with the organization. When you know who the person is leading the organization, they’ve made themselves vulnerable. They’ve made themselves transparent. They’ve created some kind of intimacy in relationship. Then trust comes more easily.

LaVerne:

I think trust many times, Bob, is underrated and often misused. People will say, “Well, you can earn my trust.” I’ve always been a believer, I have to give it to you for you to understand I value it. I have to give you something of value to let you know that I value it. One of the things that’s so important as we come… We’re in the midst of quarantine right now as we take this podcast and COVID-19, as human beings are now distanced from each other. The way we physically show that we cared or the way we physically engage with people, things will change. Sometimes distance brings distrust.

Bob McDonald:

Absolutely.

LaVerne:

Can you just leave us with a little bit of wisdom about how running global organizations you had to create trust even through distance. Even as we talk now, distance has pushed us into very different working styles and engagement. How can we maintain trust and how can we ensure it even when we have distance?

Bob McDonald:

Well, I think there are a number of things a leader can do to develop trust. One is obviously to create that intimacy. How do you create intimacy? You create accessibility. For example, as you know in the fall of 2014, I gave out my cell phone number nationally. The Washington Post kindly put it on the internet and veterans knew that if they couldn’t get their service from anyone else, they could call me and we dealt with that. Accessibility. Number two is the whole issue that you’ve been just talking about today, which is about values. People like to work in organizations where outcomes are predictable, and it’s the values of the organization, the strength of those values, that leads to predictable outcomes. If I was clear that I was going to lead from a certain set of values and somebody saw me and thought that I wasn’t doing that, they could call me on it.

I want them to call me on it. At first it was getting rid of the hierarchy. As you know, when we got to the VA together, we got rid of the tent cards. We got rid of people standing up when we entered a room. We got rid of people valuing their own jobs based on whether or not they were in a meeting with us. We asked everybody to call us by our first name, which is what we did at Proctor and Gamble. We found that intimacy, intimate relationships are on a first name basis, and that’s different in many cultures, but in the United States is certainly that way.

Those are some of the things that you do to create this intimacy. I like to say that leadership is time inefficient. If you’re going to be a great leader, you never worry about the time. If somebody shows up and they shadow casts through your doorway on Friday afternoon at five o’clock right before you go home and they want to talk to you, you stay there and you talk with them. You talk with them until the job is done and you can’t measure leadership by a time clock.

LaVerne:

Bob, I can’t thank you enough for being my guest. It’s been nothing but an honor to spend this time with you and as always to learn from you. I’d also like to acknowledge the fact that I just heard that you’re getting an article published in Harvard Business Review, Trust in Leadership in the Federal Government, should be in the July issue. Congratulations for that. I look forward to reading it. I know it will be insightful. I know all our listeners will enjoy hearing more of your thoughts. You’re the best example of a leader and someone that I am so lucky to count as a friend and a big brother. Thank you, Bob. Thank you all for joining Brilliant and 20, a joint production of Scoop News Group, and Emerald One. We look forward to sharing our next episode with you. Stay brilliant.