Click image to view larger version

Moments of truth

Global executives talk about the challenges that shaped them as leaders

When did you realise you had the right stuff to lead? The answer depends, of course, on what you consider the right stuff to be. The editors of Harvard Business Review asked business lea-ders in a variety of settings to identify what they think is the most important leadership quality and how they have personally been tested. They didn't always get the story they expected.

Humility
Olli-Pekka Kallasvuo has been the president and CEO of Nokia, in Espoo, Finland, since June 2006.

In 1990, I was 36 and just been appointed CFO at Nokia. It was a turbulent time in the company's history. Nokia was in a serious financial situation, and each month brought fears that we would not be able to pay salaries the next. I was inexperienced, having come from a legal and strategy, rather than an accounting background.

Humility is a vital quality in a leader, just as it is for a company. Nokia, if it is to continue to prosper, has to be externally oriented. It must have the kind of humility that makes it listen to the customer and seek ideas from outside. It has to be humble in the face of complexity. Especially today, as the convergence of mobility and the Internet has everyone guessing, Nokia can't be so overconfident as to believe its predictions are the best.

Having humility does not mean that you are quiet or that you lack the courage to say what you think. Courage and humility are more complementary than contradictory. People who have been humbled by being down and out can have more courage when things get tough. They've been there already, and they understand that things are not always easy. But having humility does mean that you put your own contribution in perspective. It means that you know, as CEO, that your role is really to serve the company.

Energy
Gary Jackson is the president of Blackwater USA, a private military contractor and security firm based in Moyock, North Carolina.

The crucial turning point in the fortunes of Blackwater USA occurred in the wake of the October 2000 bombing of the USS Cole. Suddenly, the US Navy urgently needed the type of training we provided. In fact, the Navy asked us to train 20,000 sailors in six months at facilities in four locations. Our company at that point consisted of 30 people. I remember thinking, "Oh my goodness." But I had no qualms about saying yes. We had it all, even if we hadn't put it all together. Before those six months were up, the nation suffered the terrorist attacks of September 11, and Blackwater was growing from a small training centre into a major force.

The key to our growth has been our culture. Almost as soon as you set foot on the 7,000-acre campus at our North Carolina headquarters, you feel the energy of the place. A lot of our people are from Special Ops-Green Berets and Navy SEALs. These are people who, when presented with a challenge, don't say "Hmmm." They say, "Let's go."

But it's also a function of how we choose to run things. I've tried to take the best of military culture and structure and keep the chain of command short, so bureaucracy does not overtake us. Everyone who knows me knows about the personal database I keep. I have got 3,500 names tagged with either a T or a D, depending on whether the person is a talker or a doer. I push for the 80 per cent solution that is executable now over the 100 per cent solution we might be able to devise in another three weeks.

Intuition
Franz Humer is the chairman and CEO of the pharmaceutical firm Roche, based in Basel, Switzerland.

People often talk about the loneliness at the top of an organisation. It's true: The balance is not easy to strike when you want to build and work in a team but must make difficult decisions that you cannot always share with the team members. But leaders have to go it alone in another important way. Many times, when opportunities arise to grow the business or to make substantial changes, your internal orga-nisation talks to you only about the risks you run-about all the things that could go wrong. When the evidence presented to you is so unevenly stacked, it's up to you to know how much trust to have in the other side of the deal.

I remember the debates four years ago when Roche bought the majority interest in a Japanese company. It was established wisdom that one could not acquire a Japanese firm and be successful. Western companies that had tried had never really been recognised as Japanese players in Japan. It is true that, given how business is done there, it is difficult to understand and navigate the marketplace, especially if you don't speak the language. It was also true that Roche already had a market presence in Japan under our own brand name. As part of the deal, we would be giving that up, integrating the operations, management, and products into those of the Japanese company. My colleagues weren't at all confident that it was worthwhile to walk away from what had been built over 75 years.

Today, Chugai Pharmaceutical is one of the top three players in the world's second largest pharmaceutical market. But four years ago, I had to trust it would work. How does one learn that judgment? It's a matter of becoming hyperaware of your environment and learning to sense the vibe in the room. Especially in a negotiation setting, I try to have my entire body, my entire mind, all my emotions switched on to ‘receiving’. How are people reacting? How are they behaving? If you can enter this mode, you can be sensitive to small changes that other people wouldn't even notice.

Vision
Arthur Gensler founded Gensler, a global architecture, design, planning, and consulting firm 41 years ago. The firm has grown to 2,400 people in 30 offices.

In 1965, I had just finished a major project for San Francisco's BART public transit system, when an old classmate told me he needed help in tenant development work. This involved meeting potential tenants of an office building and drawing up plans for how they would fit into the facility. It's what's known as space planning today, but back then it was considered below the dignity of a 'real' architect.

The conversation intrigued me. I thought in this ‘tenant work’ there might be the makings of a valuable business. I soon realised that there was an opportunity to professionalise tenant work, to thoughtfully analyse the space requirements of the various business functions and raise that to a new level of service.

In the following decades, we continued to question traditional industry practices. We put in a profit-sharing plan and created in-house management training courses. We adopted a structure based on practice areas. Our structure allows us to welcome both large and small proj-ects, as long as the work is for a quality client. I remember loaning a draftsman to someone for a small project 35 years ago. That was Don Fisher, who was opening his second Gap store, and we have worked with him ever since.

Perspective
Sergey Petrov is the founder and sole owner of the US$2.4bn Rolf Group, Russia's largest foreign car importer and distributor.

My professional life began in the military, and by 26, I was a major in command of a squadron. So one could say that I was benefiting personally from the Communist system, but still it made me sick. By 1982, unrest had flared up in Poland in the form of the Solidarnost movement, and a group of friends and I felt that mass protest could develop along similar lines here. We began to meet, to study market economies and the history of Western democracies, to analyse the flaws of the Soviet system, and to talk about Russia's future.

We felt that it was necessary to prepare trai-ning courses for people who might lead the trade union movement. It was when we started to print flyers that the KGB took notice, as we knew it eventually would. But when you see that something is wrong, you have a choice. Either you convince yourself that everything's all right and become a moral invalid, or you resist.

It is difficult for most people to see the system they are part of for what it is and perhaps that is one test of a leader. The same lack of perspective often keeps people from seeing how their own mentality might be a constraint. After the company I founded, Rolf, began growing rapidly in the 1990s, I had to recognise how the attitudes of some of my Russian executives were creating risks they didn't perceive. The emphasis we put on our reputation has paid off. Last year, for example, we were able to get US$350mn under favourable terms from a syndicate of Western banks, saving us the astronomical interest we would have paid in Russia.

It's one thing to manage a US$10mn company and another thing to manage one that has grown into the billions. You need a diffe-rent approach, and not everyone can make the transition. When I have recognised that and made management changes along the way, people have become upset. "Why did you do this," they've asked me, "when everything was going well? There was no decline in the numbers...." But you can't sit around waiting to go into decline. If you can see the limitations in a situation, you can act to transcend them.

Passion
Alan Klapmeier cofounded Cirrus Design, a Duluth, Minnesota-based manufacturer of private aircraft, with his brother, Dale, in 1984.

In the mid-1980s, I was flying with an instructor and had a midair collision with another small airplane. We were barely able to land safely, and I watched the other guy hit the ground. It turned out to be a friend of mine from the next airport over who died. I was passionate about flying before that. But after that day, I was passionate about airplane safety.

That's probably why, when a company called Ballistic Recovery Systems developed a workable full-plane parachute, we were the one aircraft maker interested. Our company, Cirrus Design, was just beginning to make a name for itself in the industry; the guys from BRS had already called on everyone else. When we said yes, they almost couldn't believe it – but it fit in perfectly with what we were trying to do. Another innovation we brought to market – a more intuitive panel flight display (PFD) – also aims at increasing safety.

The argument for the new PFD – or the glass cockpit – is straightforward. Pilots are much more prone to accidents when they are using instrument flight rules (IFR), when visibility is limited, than when they are using visual flight rules (VFR), on a clear day. Those who have made mistakes usually say they got into trouble when they broke their scan providing the artificial horizon. That constant reference back to the artificial horizon is necessary because it's the only way to know which way is up when the natural horizon is not visible.

We realised that computer technology could replace the quaint little gauge with an artificial horizon spanning the width of the cockpit. That edge-to-edge image, mounted horizontally instead of vertically, is similar to being able to see the actual horizon. Combine that with a big, moving map, and the new PFD relieves the pilot of having to spend so much energy just forming a mental picture of what the plane is doing. The pilot becomes less a data collector and more a decision maker. Bottom line: It's safer.

But as logical as it seems, this innovation would never have made it to market if we hadn't been truly passionate about it. When we went to air shows and told people about the features we were designing and how they would change the industry, people laughed at us – literally. My own board of directors tried to stop me from introducing it.
You have to have passion to do something industry changing – and not only because there are so many sceptics. You also need it to get you through all the setbacks.

In so many businesses, there is a tendency anytime something goes wrong to abandon the whole approach and go in another direction. There is not enough passion, or perseverance, or conviction that the basic idea is right. People just shrug and say, "Well, that didn't work. Let's go and do something different," as opposed to, "Well, that didn't work, but what about it didn't work?"

Conviction
Alexander B Cummings is the president and chief operating officer of the Coca-Cola Company's Africa Group. He is based in Windsor, UK.

When you are a leader, but not the leader, of an enterprise, the tests of your ability come as strongly from above as they do from below. Early in my days with Coca-Cola Africa, I made a decision that I felt was a good one at the time, but unfortunately the short-term results were not proving me right. Quite the contrary, my judgment was costing the company volume and market share. I remember feeling intense pressure to reverse the decision and stem the losses.

Here was the situation: The Coca-Cola Company is a very competitive enterprise. But the focus on volume and share growth was taking a toll on the overall health of our business system, especially for one of our indispensable partners – our bottlers. In a market with high inflation and currency devaluation, we had held price for several years to maintain our growth momentum. As a result, our bottler was struggling to make adequate returns. In the interest of overall system profitability, I made the unpopular decision to increase prices.

We all knew that the decision would lead to a decline in volumes – but I hadn't anticipated how dramatically they would drop. I was an experienced manager, having come from a company where I had served as CFO for the international business. But until that point in my career, I can honestly say I had never felt so much pressure to reverse a decision – to roll back prices. I was in somewhat of a quandary; I would be putting my career at risk if the declines in volume and market share persisted.

Despite the pressure, I was convinced that in the medium to long term, the decision would prove to be the right one, both for the company and our bottler. We just needed the fortitude to ride out the short-term effects. Finally, I trusted my instincts and knew that my company was in fact paying me to make calls like this.

Fortunately, things did work out in the end. After six tough months, the declines finally bottomed out. And just as I underestimated the short-term negative effects, I also underestimated how much our relationship with the bottler would also change for the better. We at the Coca-Cola Company had demonstrated that we understood the bottler's challenges and were supportive of them. In the eyes of that important business partner, and for my growth as a leader, seeing this tough decision through was indeed a defining moment.