I see many parallels between the corporate world and sports. I have always been a great fan of all sports but especially Manchester United and Barçelona. I’ve been to three Championship finals to watch United and you can learn a lot from Sir Alex Ferguson. Talent is not a problem when you are running a club such as Manchester United or Barçelona, it is the culture. You should get the guys together and working. The difference between a CEO and a club manager is that the manager has absolute control. A manager can decide to drop this player or that player and then he can be held accountable. But when you are a CEO, you have to carry people along hoping that they will change, it’s not easy to sack people. In professional sports there is nothing called hoping they will change; you will be changed, not them.
There was this match at Wembley, Manchester United against Barçelona. At halftime, the score was 1:1 and all United supporters thought we would win. But the final score was 1-3. Barça played very well and Sir Alex said we lost to the best team in the world. As a leader many times you have to recognise that sometimes your best is not good enough. How do you get to be terrific enough to win as opposed to good enough to compete? For that you look at the statistics of this match. I am a great believer in numbers — if you interrogate a number long enough, it will confess to something. You then take the learning forward. When I looked at the stats for the match, I found Barça had 337 passes and the bulk of those were between Messi, Iniesta and Xavi who were the forwards. United, by contrast, had 170 passes and the bulk of the passes were between the goalkeeper and the defenders. The bottomline — If you are not playing to win, you will never win. That day, I think, United was playing not to lose. Many companies do the same.
I have been to the British Open regularly and a couple of times I walked with Tiger Woods’ coach, Hank Haney. He told me that the thing with high quality talent is that you don’t need to tell them anything; especially when things go awry, they tend to recognise it themselves. Haney recalled a conversation where play had not proceeded as planned. He and Woods just sat in a room. No conversation. And after about 40 minutes Woods said, “I think I made a mistake at the 6th.” Haney said that’s when the conversation begins. He said anybody who works for you, who is high value talent — let them open up, then the conversation is very different and both of you will learn from it. Basketball coach Phil Jackson must have realised that much earlier. That is why he said to Michael Jordan, “I am not going to teach you basketball, but I’ll make you a better basketballer.”
Sport teaches you more about teamwork than anything else. But, no matter how talented you are, you have to practice endlessly. I went to watch golfer Vijay Singh when he was world No.1. He practised at 7 am and even at 6 pm, after the game, he was practising. When he was interviewed by Channel 4, they asked him, “You are world No.1, why do you practise so hard?” He pointed to the entrance and said, “People walking through that gate are paying £50 to see me, I don’t want to disappoint them.” Vijay was emotionally invested. That’s how it works in business as well. Many leaders forget that the livelihood of so many people depends on them. As a CEO you have to invest a lot of emotion and your personal space and, many times, neither your employees nor your bosses will value it. They don’t see the emotional equity you are investing, but it is that emotional equity that builds legacy.
Someone looking at me from the outside may think here is someone with power. But life at the top is very difficult and lonely. You need to have strong emotional anchors, and typically they tend to be your partner, your parents or very good college friends. If you don’t have that emotional fortitude, you will never leave behind a legacy.
Post script: Some random jottings
I think everything you learn in the B-school curriculum lacks practicality and ignores the emotional side of business. The fundamentals of distribution are very different in the marketplace versus theory and the concept of business models also varies. While HR is a process in the classroom, in real life, people management is full of emotions. Finally, the concept of leadership taught during an MBA course is very idealistic. The MBA degree needs to reinvest its own curriculum to stay relevant in a fast changing world.
There are many times in your career when you lose to a brand that has picked up consumer insights in a much better way. You have to appreciate that and find a new way to outsmart that person or that brand. I think if you don’t fail, you are not trying hard enough. That’s my personal experience and you have to try hard and you have to try many things. A 70:30 success ratio is fine; you should be able to fail 30% of the time and accept and learn from it.
The place where leaders fail the most is while taking decisions. And the toughest challenge for a CEO is to pick the right talent. Despite all the checks and balances, the one thing you cannot judge in an interview is the kind of commitment and energy somebody brings to the table. It all looks good on paper, but how deeply is this guy committed to the company is difficult to judge. Most people end up doing a 9 to 5 job. Leaders can’t do a 9 to 5 job; leadership is a 24x7 job. The other ingredient you will never know on a CV is luck. Some people have luck on their side and as a CEO you need to have some lucky people in your team.
My assistant, Monica, has been working with me for the last 11 years and she is one of the best hires I have ever made. I am 25% -30% more effective because of her. We did make some hiring errors in HLL and Nokia. We promoted some people internally and it didn’t work out because the person did not recognise that the job has changed and he or she needs to do something different and innovative.
When you part ways with people you should have the ability to be honest with them and to say why it is not working the way it should — that counts for a lot. The most difficult thing to do is ask people to leave with whom you have worked closely. Everybody wants to be a CEO at 45, so if you are not able to give him that job and he is getting it elsewhere, you shouldn’t hold him back. In any company a certain amount of attrition at the senior level is good because there is renewal of the company and people are realising their aspirations. The last thing you want is for people to be unhappy working for you because you are not able to fulfil their aspirations.
You also need to jolt performers when they start coasting and start taking it easy. What I do is meet and tell them, on these parameters you are not performing and I want you to know that you have been great guys for the past but right now you are not. That’s a constant challenge you face in an organisation. Second, how do you give tough messages to underperformers? That’s another big emotional dilemma because if you give a very tough message, he could leave the next day and you are not prepared for that. But you still want to give that message. So you discuss the way things have to be done but if they still don’t get it, one has to move on. You have to invest that time and effort because the team below is watching him and you. If they see that you have done the right thing, it builds morale.
I have had a fairly long stint with HLL before I became CEO. I have moved from working for an Anglo-Dutch company to a Finnish company and now an American company. I have been a CEO for 12 years now but back in B-school I did not know there was a company called Nokia. Sometimes people think that you know everything about your future and you planned it but it’s seldom that way. I never set out to be a CEO; all I wanted to do, then, was to be a well-regarded marketing man.
(Shiv did not talk about PepsiCo India citing it has been too short a stint).