- Professor of management, Sydney Finkelstein, talks about the importance of developing talent within business.
- He notes that to be an effective leader, both trust and an effective work environment is crucial.
- These ideologies are nowhere more important than now, where businesses are acting to try to survive the economic fallout of COVID-19.
What is common between leaders like San Francisco 49ers head coach Bill Walsh, Oracle cofounder Larry Ellison and California cuisine pioneer Alice Waters? They, and scores of others like them, “generate and regenerate talent on a continuous basis,” according to Sydney Finkelstein, a professor of management at the Tuck School of Business at Dartmouth College.
Finkelstein discusses this leadership trait, among others, in his recent book The Superbosses Playbook, a sequel to his earlier book Superbosses. In his research, he aims “to find people who have that track record and then do deep dives into them and all of their proteges and colleagues” to try to see what makes them tick. (He speaks with such individuals on his own weekly podcast, The Sydcast.)
“In literally every industry I looked at, I was able to find the one, sometimes two people that have this outsized influence on talent,” Finkelstein said in an interview with Wharton management professor Peter Cappelli, who is also director of the Center for Human Resources at the school. The coronavirus pandemic has raised the leadership bar in nurturing talent, he added. The interview was part of a virtual event series titled, “Leadership in the Wake of COVID-19: What Enterprise Leaders Will Need to Survive and Prosper in the Years Ahead.” The series is hosted by Knowledge@Wharton in partnership with the 2020 Wharton Leadership Conference, the Wharton Center for Human Resources, and the McNulty Leadership Program.
An edited transcript of the conversation follows.
Peter Cappelli: Sydney, you spend a fair amount of time in your book Superbosses and in your classes talking to leaders. Could you tell people a little bit about why you wrote this book?
Sydney Finkelstein: I had written earlier a book called Why Smart Executives Fail, which is about failure and what goes wrong. One of the things that came out of that research is I went to work with a lot of companies and gave speeches around the world – you know, “This is great, we understand what can go wrong, but what do you really need to survive and thrive into the long term as an organization?”
It got me thinking about what really the most important thing is. I came up with a hypothesis, which was: To survive and thrive, to be successful into the long term, you need to be able to generate and regenerate talent on a continuous basis.
I set out to find people who have that track record and then did deep dives into them and all of their proteges and colleagues to try to see what is it that they did that’s different than typical leaders, even successful leaders, and what we could learn that maybe we didn’t know before.
Cappelli: It’s a really interesting hypothesis and I think, in the past generation, one that probably didn’t get a lot of attention. When you talk to people about leading and being successful in business you get a whole lot of discussion about strategy, about managing financial markets, and you don’t really hear that much about developing talent from within. What kind of reaction did you get from your publisher or other people when you first started to do this? Did you get a sense that people said, “Yeah, that’s really important,” or did they say, “What the heck are you talking about?”
Finkelstein: It was almost like they were waiting for this deep dive. If you ask any CEO, “What keeps you up at night? What are you worried about?” — it’s always the same thing, right? How do I find the world’s best talent, how do I develop them, how do I retain them? And they keep having the same problem year after year, decade after decade. Why is that? Because we haven’t come up with solutions that really move the needle very much.
People said, “Okay, some of these ideas around ‘superbosses’ are not standard, but maybe that’s what we need.” And so the reaction was, “Wow, this is a different way to think about things.”
Cappelli: When you look at these surveys of CEOs, they say exactly what you say, that the top concerns are about talent. But that perception never gets passed [along], never seems to get out there. My guess is if we polled our listeners right now about what they thought was keeping executives up at night, talent would probably not be top of the list. But as you say, in practice it is. Why do you think that is? Why is this topic not more broadly appreciated? Is it just not as much fun to talk about this as it is to talk about strategy?
Finkelstein: The idea that people count, that people are our most important asset – we’ve heard that forever, and people’s eyes glaze over. And because work is just not easy and there’s been more and more pressure put on managers, and senior managers, I think many people say, “Yeah, they might say that, but they don’t really believe that. What they really believe is hitting the numbers and pushing us harder and making us work hard and give up more.” There’s a lot of cynicism. I think that could be what’s behind this.
Tracking Down Superbosses
Cappelli: Maybe you could tell us a little bit about the people that you interviewed and how you picked them, because there’s a huge list that one could draw from when you’re trying to find some best players here.
Finkelstein: I started off small, looking at one or two industries that I care about, that I’m interested in – the high-end foodie industry, chefs and restaurants. I looked at the National Football League – that’s another thing I’m interested in. So it was just playing around at the beginning, to tell you the truth.
The NFL is a good example. I was interested in head coaches and the development of head coaches and who was good at it. The NFL is a great example also because there’s good data. I looked at the Super Bowl winners and losers – the winning team and the losing team each year, or the two best teams. I looked at their head coaches, and I did a genealogical study of them. Not, of course, of their parents, but who they work for. And I created these trees of talent.
You discover that there’s one or two names at the very top over decades. The name at the very top is Bill Walsh, the legendary, longtime coach of the San Francisco 49ers [football team], now passed away. I was able to actually quantify it in that industry really well. In other industries I had to do a lot of grunt work, a lot of hunting, and a lot of qualitative research. But it turned out in literally every industry I looked at, I was able to find the one, sometimes two people that have this outsized influence on talent.
For example, in hedge funds, Julian Robertson from Tiger Management and Tiger Cubs. In high-end foodie restaurants – Alice Waters from Chez Panisse, the creator of California Cuisine and many of the trends in food that we see today from farm-to-table and organic local sourcing. For endowments in universities and other nonprofits – David Swensen [chief investment officer at] Yale University, who’s legendary, and has many of his proteges involved in running funds and endowments now. In the American fashion industry, Ralph Lauren. In the comedy industry, Lorne Michaels from “Saturday Night Live.” It goes on and on.
You look at these people and you say, “Wow, they have a track record of generating and regenerating talent on a continuous basis.” And the other thing you discover about them is not only do they create these opportunities for people and help people be more successful in their own lives and careers, they actually perform much higher than everybody else.
Sometimes people tell me, “Syd, we don’t have all this time to try to develop our people. I went to the school of hard knocks. They’ve got to figure it out.”
And I say, “Can you imagine a situation when your team is getting better and better and better, where you yourself won’t benefit from it?” Is there such a situation where you will be punished for helping the people around you get better, and as a result, make you better? It doesn’t make a lot of sense but that’s what happens. So it’s not only [about] developing talent, but also being among the highest performers in their industry.
Cappelli: One point you made is that your legacy matters a lot. And presumably you identified these people because their descendants, people who had worked for them, were willing to say, “This is the person who really helped me,” which is a really important thing at the end of our careers. But let’s move back to the book to get to the heart of this. What did these folks do to develop talent?
Finkelstein: Let me highlight two or three things. Number one is how they source talent, how they find talent. They’re very open-minded, these ‘superboss’ leaders. They’re looking for talent all the time. I call them almost entrepreneurial in how they think about talent. Anywhere they go, everywhere they go, their antennas are up to look for potential talent. As a result, they often find people that have been bypassed by others, which creates opportunities for people. There’s a lot more I could say about that, but they cast a wide net and they’re very open-minded.
They’re also creative. They value creativity. They unleash creativity in the people around them. This is particularly important for millennials, but it’s important for everyone. What do we want? We want a seat at the table. We want to have a chance to have an impact – the best people think that way. High-aspiration people think that way. You don’t have to be an MBA graduate from a top school to think that way. ‘Superboss’ leaders will give you that seat … and therefore expect a lot from you, and that goes hand-in-hand. You don’t get tenure in that seat. You have to produce and you’re expected to keep coming up with new ways of thinking, along with doing whatever your day job happens to be. It’s kind of standard in how they think about things.
Cappelli: They get some responsibility and accountability.
Finkelstein: They really do. Related to that is, when you talk about motivating people, there are two major things we found among ‘superboss’ leaders. Number one is they push you hard; they raise the bar. It’s not an easy place to work with respect to the demands and the expectations – it’s not for everyone. But if you’re a high-aspiration person that wants that opportunity, are you going to jump at it? The second thing they do is inspire you. It’s a word we hear all the time, but they really do. They inspire you to believe that you’re the person or the team that can accomplish this, and that with you we can do these great things.
It maybe sounds a little soft, but if you combine both of those – the hardcore “We’re going to be tough, we’re going to have these high demands,” and at the same time “I’m inspiring you to feel like and really believe that we together can do anything” – it turns out to be pretty powerful.
Cappelli: Can you tell us who these folks were?
Finkelstein: I mentioned a couple – Bill Walsh, the head coach from the San Francisco 49ers, and Ralph Lauren. People know the name Ralph Lauren, but the number of people that worked for Ralph that went on to tremendous success in their own careers is really unbelievable – Vera Wang, Tory Burch, [Joseph] Abboud and John Varvatos. It goes on and on.
In the high-end food business, I mentioned Alice Waters – it turns out that there are more than 250 people who worked in her restaurant at some point that have become significant players in that ecosystem. I don’t mean just a sous-chef becoming a chef, but someone who may have been baking that creates a big baking company, or those who were involved in running her restaurant and are now involved in private equity and venture investing in food business. It’s really amazing.
So it’s lots and lots of industries. For instance, health care is another good example. Larry Ellison at Oracle, which a lot of people give me grief over because there’s no tougher executive that we know of – CEO or former CEO. But if you could survive working for Ellison, the upside was unbelievable. Many of his top people ended up running gigantic companies.
Cappelli: I wanted to ask you about my favorite category out of your personality types for these folks, and that’s the “Glorious Bastards.” Is Ellison one of those? Tell us, what’s a Glorious Bastard?
Finkelstein: Larry Ellison is my poster boy for the Glorious Bastards. This is something to keep in mind – the word “glorious” is in front of “bastard.” There are plenty of bosses that qualify for the latter adjective. But what makes these people glorious, like a Larry Ellison, is they understand that to be successful they need to have the world’s best talent around them and they need those people to keep getting better and better. So while they might not care a lot about you interpersonally, if you can handle that pressure, they’re just going to accelerate your career. Somebody I think said this to me in one of my interviews: “Working for Larry, we count it in dog years. One year of working for Larry is like seven years working for somebody else.”
Leadership Challenges During the Pandemic
Cappelli: Let’s switch topics a bit. You’ve been watching this world for a long time, and in the last year – particularly with respect to the pandemic — it looks like the context of business is changing quite a bit. Can you tell us about what you think business and business leaders will be like from now on?
Finkelstein: This is obviously a watershed moment. We can also talk about the racial crisis that has come in front of the country and cannot be denied anymore. Leaders – and CEOs in particular, but leaders more generally – are really expected to step up and do things differently than they have. That starts with transparency – being completely transparent about what it is you’re saying, as opposed to, you know, we’re in an era of fake news. But the stand-up leader has never been more important. That’s why so many people resonate with Governor [Andrew] Cuomo from New York – he’s become such a star. He’s been far from perfect, but he’s up there day after day with a message that conveys action and seriousness of intent, and maturity. What’s the result? It generates trust and boosts the confidence of the people around you.
To be an effective leader, gaining the trust of others has always been important, but now it’s going to be even more important. The other thing is, how is business changing and going to change because of this? I’m talking to you and everyone from my dining room right now. People are working from home, and that’s not going to disappear when we eventually get back to work as normal. What does that mean for managers? How do you manage a team when they are much more likely to be virtual some or all of the time? Learning how to do that I think is going to become more important.
And then there are some nuts-and-bolts things – supply chain management, [for example]. We’ve discovered because of the problems with PPE (personal protective equipment), that these long, complex, highly efficient supply chains didn’t give us any flexibility to be able to step in and produce what we needed in real time. That turned out to be a big problem. Speed of work is really important. The pace [at which] decisions are being made is tremendous. We don’t even have to talk about the pace of antibody treatments and other treatments, and vaccines.
So, we’ve knocked away a lot of bureaucracy and a lot of, “Oh, we better study this and study this and study this.” Well, now the alternative is something really, really bad. We’re doing less study and more action. Many CEOs I’ve talked to over the years have said something like, “I don’t have to be right all the time. Nobody is right all the time. But if I’m right more than half the time, that’s pretty good. As long as I know when I’m not right, I step in and do something about that and try to fix it.” That’s going to be, I think, a central part of what makes for an effective leader moving forward.
Cappelli: If you think about the CEO today and a lot of challenging social questions – the ‘Black Lives Matter’ issue is on the table right now – what do you think about CEOs who are in a position where maybe their personal beliefs and what’s going on in society are not particularly well balanced?
For example, we saw this earlier on gay rights and LGBT community issues. Not all the CEOs were in favor of those but maybe their employees were. What do they do there? Is it better to keep their mouth shut or do they have to articulate positions that make sense for the organization even if it’s not their personal positions? What do you see happening?
Finkelstein: This is a big challenge because it puts in conflict two core things that every leader is told. One is you’ve got to be authentic; you’ve got to be true to yourself. The other, which is even bigger, is customer focus. We’re all about customer focus. We’re not going to sell our customers what we think is the right thing to do, the right product, unless we believe customers really want it, and we have to convince them. Steve Jobs created this stuff – nobody knew we needed an iPad or an iPod. Well, there’s one Steve Jobs and there’s probably 100,000 others that will fail trying to do the same type of thing. We can’t make leadership practice based on these ultra-exceptions.
So, to follow your own beliefs, when that’s not what your ecosystem is demanding, is going to be a real problem. It might fall on boards of directors to start to think about value systems at a very personal level when they start hiring and evaluating CEOs. If employees are in revolt, if the managers are not happy with the way the CEO is running the business because of certain values that are out of touch, that’s not going to work.
Knowledge@Wharton: We’ve got lots of good audience questions about talent development and attracting talent. One is, how can leaders develop talent effectively during this crisis? Should talent development be sidelined for the time being?
Finkelstein: First, the answer is absolutely not. To sideline talent development is to send a signal to people around you that your future is actually not that important now. How do you motivate people? You motivate people when they feel like they’re part of something, they’re contributing to something. So I don’t think I would do that.
That’s not just about spending money, which is sometimes what motivates that type of mindset – that we’ve got to cut back, we don’t have money. Training budgets are often the very first things that get cut when times are tough. The best way to develop talent is for an individual boss or individual leader to work directly with the people that work for her one-on-one. That’s what ‘superboss’ leaders do.
Knowledge@Wharton: Does the fact that people are working remotely pose more of a challenge for talent development?
Finkelstein: Well, it does. The fact that that is the way we are doing work, and will continue to do work, just raises degrees of difficulty. I always said before all of this happened, “When everyone’s working from home, or almost everyone is working from home, there will still be times when you’re face-to-face.” And when you’re face to face, that becomes golden. That’s an asset. That’s really valuable, and you’ve got to leverage that time. So for example, you don’t want your PowerPoint presentations, you don’t want the updates from teams when you finally have a chance to be face-to-face. That could all be done offline. You just got to be smart about it. When you’re face to face, it’s about talking. It’s about learning, it’s about interacting, it’s about pushing and challenging.
I’d say [it is about] using your time much more effectively and thinking about all the things that we do – what could we actually push offline and what do we absolutely need to be doing face to face? Even though it’s more difficult, it doesn’t mean that it’s going to go away. It just means it’s got to get done. The managers and the leaders that figure out how to do this more effectively are going to have a competitive advantage. [It makes] good sense to try to put your energy into that.
Knowledge@Wharton: Do you have any advice for how managers can best lower employee anxiety while they work remotely? I think that it’s a very anxious time, not only because of what’s going on in the world, but because things have changed dramatically.
Finkelstein: There are two things. One is communication on a more general level. The best leaders, and the best managers know that they need to be communicating, and communicating often and effectively. The bar has been raised on that, too. You don’t want to use up everybody’s time all the time — people are working and their kids are running around the house, and not everybody has childcare, et cetera. But communicating what you’re doing and what people are up to and where you’re going, and inspiring people a little bit is important.
The second thing is more of an individual idea, which is for each individual on your team to carve out some time to have that one-on-one conversation, not the big Zoom meeting or the BlueJeans meeting or whatever it is. One of the best ways you can signal that you really care about somebody – and this will help alleviate their anxiety – is if you try to understand what it is they need and what they want in their own careers at this point in time.
That could be starting to think about, “Well, within a year hopefully we’re on the other side and here’s what I’d like to do.” Or, “I have an aspiration to be a senior VP or a C-suite executive here” — to actually spend the time partnering, where you’re not only providing advice, but you’re actually helping them execute on this. For example, if somebody needs certain skills to get to the next stage, you help them figure out how they can get those skills. If that means a new assignment, a new opportunity, you do that.
That’s just good management of people. But when you do that, especially now, you’re demonstrating in a real way – not just with words, which are important – that you care about each individual person and you want them to succeed, and you want to understand what’s going on in their lives now, and work together to try to get them to the next stage, whatever that happens to be.
Knowledge@Wharton: One issue that does come into play in remote work scenarios is micromanaging, or a tendency to micromanage. What effect does that have on employees?
Finkelstein: The definition of a micromanager is someone who does your work for you, or tells you so much detail that it’s as if you’re just connecting the dots. In some jobs, that makes sense. Automation actually does that, to some extent. But for managerial jobs, for leadership jobs, for people who want to have a bigger impact, and want to have some of their own personal capability, it’s the last thing you want to do. I found that ‘superboss’ leaders were hands-on. It’s one of these paradoxes. I call them hands-on delegators. They were very big delegators, which means they’re not micromanagers. But they’re also hands-on. They were involved with people. They did some of that partnering that I just described.
But if you fall into this trap, it’s a losing formula. If you’re going to start doing other people’s jobs for them, how are you ever going to survive? The number one thing, when people tell me, “I don’t trust my team,” or, “I’ve run out of time,” or, “I’m working day and night,” it gets down to trust, doesn’t it? If you don’t trust your team, you’re not delegating enough. And usually – not always – it’s self-inflicted.