Call them change makers. Call them rule breakers. We call them redefiners.
Hi everyone and welcome back to another episode of Redefiners. I'm Marlo Oats, a leadership adviser at Russell Reynolds. We're in for a real treat today, not only with our admired guest, but also with my special co-host, our very own Constantine Alexandrakis, CEO of Russell Reynolds.
Constantine Alexandrakis
0:32 ↗
Hello, Mara. And hi, everyone. Great to be with you all today.
We're so happy to have you, Constantine. Before we get started, just a quick reminder that you can find all episodes of Redefiners and Leadership Lounge on YouTube. If you're watching Redefiners, please hit that subscribe button so you don't miss a single episode. And for our audio listeners, please don't forget to rate Redefiners wherever you get our podcasts. We love to see your feedback. Constantine, welcome. You joined Redefiners last year and talked about transformational leaders. I know you've been laser focused on that topic over the last 12 months. I also know you have a new book coming out in September titled The Catalyst CEO: Why CEOs Can't Lead Transformation Alone and What the Best Do Instead.
Constantine Alexandrakis
1:18 ↗
That's right, Mara. In our search work and our consulting work with leaders around the world, transformation is a very consistent theme. In no time in recent memory has there been more of an urgency around the topic of transformation, whether it's in boardrooms or the C-suite or really at any level within an organization, as leaders are challenged like never before to adapt, and that includes AI transformation, which is at the top of almost every leadership agenda.
That's so right. I mean, we certainly do see this across our client base, but the research also backs this up. You know, in fact, our research on transformational leaders with CEOs across the world, nearly 75% believe that their organization risks going out of business without significant and fundamental transformation in the next decade. But perhaps more tellingly, only 30% of leaders believe that their organization has been successful or extremely successful in its transformation efforts. That's quite a large gap.
Constantine Alexandrakis
2:21 ↗
That gap is a big problem, Mara. Most leaders understand that transformation is necessary, but the harder question is how do you actually make it happen, especially at a time when disruption is no longer episodic, but really a constant theme. That's what inspired me to write the book, to set out how CEOs can activate transformation at scale. And the good news is that even if the challenges are new, the way to successfully transform an organization remains constant. And the premise is simple: you can't do it alone. Instead, you need to spark a chain reaction, engaging your board, engaging your leadership team, and the organization at large to co-own that transformation and all work together to make it happen.
I imagine that you experienced that challenge when you took on the CEO role in 2022, and I recall you launching a major transformation initiative here at Russell Reynolds, and really were continuing to push the envelope on how we can serve clients more effectively. I watched this as an observer, but please tell us what that was like for you personally.
Constantine Alexandrakis
3:33 ↗
Well, you've also been a participant, Mara, because as you know, we're still transforming. There's no foreseeable end of the change cycle. But similar to our guest today, our firm was doing really well, but we needed to think about how we stay ahead rather than stand still in order to best serve our clients now and into the future. And one of my earliest learnings from that was adjusting from thinking about my transformation agenda to thinking about our shared path forward as a firm and catalyzing that team effort rather than commanding a top-down approach.
Yes. You and our guest certainly have a lot of shared experience in that regard. So I'm really looking forward to talking with him about how he transformed the company.
Constantine Alexandrakis
4:19 ↗
Me too, Marla. Our guest today is Jean-Pascal Tricoire, chairman of Schneider Electric. Prior to his current role, Jean-Pascal served as chairman and CEO and held several executive positions over his four-decade tenure at the company. Under his leadership, Schneider Electric transformed from a 19th-century industrial manufacturer into a global technology leader in software and sustainability, in digitization and electrification. He quadrupled revenues from around 9 billion euro to 40 billion euro and rebalanced the company's geographic footprint. He also today serves on the boards of several organizations including Qualcomm, EQT, the Asia Business Council, the World Economic Forum, and several others. Jean-Pascal, welcome to Redefiners.
Thank you, Constantine and Mara. Thank you for having me on this program.
Constantine Alexandrakis
5:21 ↗
Before we dive into your transformation efforts, in case some of our listeners don't know Schneider Electric, could you please give us a brief overview of the company, what you do, where you operate, how long you've been there, and just a little bit more about your journey?
Well, Schneider is very often not well known. We are an energy technology company. So, very often we partner with our customers to make their system, their machines, what they operate, more efficient, more sustainable. But what people see are the installations of our customers. We do that by combining two technologies: electrification and digitization, which at the moment is on steroids with AI. And we are in the middle of two major revolutions: the energy transition to electricity and electrification, which you can see everywhere around you, from cars to data centers, and the application of AI everywhere. So speak about smart homes, smart buildings, smart manufacturing, smart cities, and all the data centers to digitize all this. These are the places where Schneider is leading globally. We originated in Europe, but today 40% of our business is in North America, 30% in Asia, and Europe comes only number three. For my journey, very boring 40 years in the company. So I'm a disaster for Russell Reynolds in terms of mobility, as I decided to focus my journey on this technology mission, well, that I would have to transform the company to find it exciting every day, and this is what we did.
Constantine Alexandrakis
7:07 ↗
When you stepped in the CEO role, Schneider Electric was by all definitions a successful company. Revenue was good. Growth was consistent and steady. There was no existential crisis from competitors. But you saw change coming on the horizon and decided to transform the company around energy transition and digital transformation. We talked about this for the book, and I learned we had similar experiences with this type of transformation. Talk a little bit about what you saw and why you and the team felt an urgent need to transform Schneider Electric.
I was appointed when I was 40, and I had pretty strong concerns for the future of the company. So I would say we are doing well, but we are not future-proof. We are too small, far too small. We are one-tenth of our largest competitor. We are not a leader anywhere, really. We were a player in multiple places. We had no digital, which for me, as an electronic software engineer, having seen the internet revolutionizing our lives, was a real concern. We are very strong in slow geographies like Europe and France, but we were small in the fastest-growing geographies like North America, but more so emerging countries. We are not positioned on the most advanced segments, the ones which are adopting the fastest digital services solutions, which are pushing the boundaries of energy and digitization. And I think a key role of a CEO is to define an identity: why would people choose you, right? And at that time, we didn't have that identity. So for all those things, I had a sort of burning conviction that we needed absolutely to change.
Constantine Alexandrakis
8:57 ↗
You were this young leader, if we go back, right, 40 years old. You had clearly this burning agenda, but how did you get others to see and feel the urgency to change? A lot of times when leaders come into a role, a new CEO, you know, there's this sense of complacency. How do you get people to challenge the status quo? What did you do to get the board, the leaders, and the team aligned around you about this new sense of urgency?
The first thing is to have strong convictions. So I had strong convictions: electricity would be the energy of the future. Everything would be connected, digitized, and it would go from IoT to digital twin, and you are speaking about 25 years ago. So none of those had happened yet. Right? I was very convinced that the world will pivot through new economies because they are the center of gravity of urbanization, digitization, and the leapfrog of a lot of things. So to create the momentum, first thing is to be very, very clear and simple about your strategy, which I did: electrification, digitization, efficiency, sustainability, that would drive the execution and the direction for the next 23 years. I had to change the team. Those were mostly people from the inside. The average age of the team was 40, which for a French blue chip at that time was very, very unusual. For the first time, an international team, they were bringing conviction, perception, and sensibility from very different angles. And I mobilized my best all along the transformation. It's a customer. But our customers wanted more efficiency. They wanted more digital. They wanted more low-carbon solutions. They wanted more capacity for us to follow them internationally. So I really mobilized the customer at every level to justify all of those transformations. So clarify the strategy, mobilize your stakeholders, change the team, and bring the customer as your best advocate. And then I empowered the field, because very often your corporate is a guardian of the past, because they dominate the present balance of the company. If you empower the field, R&D and sales, you have people facing the customer, and they identify much better where the future is going. So power to the customer and power to people inside the company.
Love that. That's a great setup for what happened next, Jean-Pascal. I mean, in our research, we've found that many transformations fail due to a sense of inertia and underestimating how much change a team and an organization can absorb. And we found that 87% of leaders cited two examples of inertia as major challenges to transformation: the psychological inertia, which is the comfort of always reverting to the status quo, which I imagine you've seen once or twice, and action inertia, which is the gap between intention and actual execution. You had shared an interesting approach to this challenge at Schneider Electric with me in our conversation for the book, where you created these sort of micro movements to move things along. Could you describe that a little bit more and how you use them to create the transformation at scale?
My experience of the 20 years is that you have to get your organization to change all the time. There are the changes coming from the environment, and the years where it seems to be more stable, don't be happy with the stability. Then it's a time for you as a leader to push all the changes. You have to be able to jog the change all the time if you want your organization to sprint the changes in front of big transformation or big disturbance. That's number one. Number two, you can have a very long-term vision, but you have to dice it into steps which are digestible by the organization. I take our example: 60% of what we do today, we didn't know how to do that 20 years ago. So I couldn't say I've got the recipe. We had to learn it. We had to do it. We had to manage it. We had to ingest it. Give precedence to customer and people. They are the ones who can really make it happen, the closest to the field. And then when you try new things, do it in small pockets where you can succeed fast or fail fast. Don't try to move the whole company at the same time. And once it works somewhere, scale it with the people who made it work. I've always been of the opinion that fast beats big in companies, that big is not an objective. Fast is the objective. And finally, maybe facing the reality all the time. I mean, companies have an incredible capacity of denial about what's happening. So installing a culture of facing what works, what doesn't work, without compromise, is really important.
Thanks, Jean-Pascal. Constantine, I'm curious, does any of this sound familiar to what you experienced as you stepped into your CEO seat?
A lot of it does, Mara, especially the last point about facing the reality, because I think, like Schneider Electric, it's hard to face that reality when things are going well. You're in your comfort zone, right, Jean-Pascal? And there's a fear about driving change. So really making it a constant theme to find ways to really open colleagues' eyes, open key stakeholders' eyes to not only the challenges ahead but the opportunities that can be achieved and realized if one really faces that reality.
Look, we've talked about strategy, we've talked about execution, but as your book says, Constantine, you can't do it alone. So I want to talk a little bit about leadership and really your top team as part of the transformation that you were leading at Schneider Electric. You replaced a lot of your leadership team to deliberately bring more diversity of experience into the company. As we understand, you weren't building your leadership team for consensus, you were building for tension and friction and bringing those into the decision-making process. That's quite a bold choice. Why did you take that approach? And how did the leadership team and dynamic change from that tension?
And I remember, Jean-Pascal, you told me how you often hired what you called pains in the neck. Tell me a little bit about that. And as you know, it's not often at the top of the list of hiring criteria.
In our case, we are on a journey of big transformation, right? Zero digital to today 70% of digital. Most of the geographies are new geographies, new culture, new ways of doing business. So there was in the plan a lot of M&A, a lot of development outside of our comfort zone. So first priority for the team is to have a deep culture of inclusion. People come at Schneider, new companies that we acquire, or people joining us because they love to discover new people and different people. That's the basic condition to be successful in M&A, in acquisitions, in development of new business and new geos. Second point, really push on diversity of all sorts, right? I inherited a company that was speaking French in executive committee, in boards, and everything. We moved that to English or whatever language which is the most relevant in any sort of meeting. But more so, we diversified all elements of the company, board to executive committee, to reflect that and to create a welcoming and relevant environment for all to face reality. I always made sure that the team was made of diverse profiles, and among those, spiky profiles. And I got a lot of flack and criticism for that because, of course, for the mainstream, it's a pain, right? That person who is always reminding that this doesn't work, or this could be done differently, or that we have this new company, startup, or competitor doing things better. But those people, they are very demanding and they push. They are the thorn in your side that pushes you to question and to progress, and they are the people questioning the established order all the time. As a leader, it's also a pain to manage that balance, but managing that positive friction and tension is really important because this is what pushes you to do things that you wouldn't do otherwise. And then I would add one thing: competition, emulation. So we went far in our model of organization to structure it by regions, inclusive of R&D, marketing, sales, production, suppliers, network, and everything, which means that people know at Schneider that number one, for everything we do, they can compete with other parts of the company. And if that other part of the company that's going to be a factor of emulation, they will have to show that they are better. As you know, in 2011, I dissolved the headquarters in one place, which at that time was Paris, and spread the leadership team around the world, which means that at Schneider, if you are the best, wherever you come from, from whatever geography, and you still want to stay close to your family, you can get access to the highest level in the company. So it's emulation and meritocracy, and you don't have to go necessarily to one place in the world to succeed in your career.
Constantine, what about in your book? Any of these principles resonating? What did you find were kind of the key levers for the leadership team?
Well, from speaking to Jean-Pascal and many others in our research, it's exactly what he said. It's about sort of flattening the hierarchy, valuing that tension across the top team, and seeing it as a feature rather than a flaw. And also what I assume Jean-Pascal did many, many times and is still doing is modeling courage around the change, right? I mean, do you have a reaction to that, Jean-Pascal?
It's a major factor of choice of the people surrounding you that they have the courage and they are brave to drive the change. When you launch a company in the data center and it's not recognized, or you start software, or you dissolve the headquarters, then you have to drive that change personally, and people have to see you at the front of the battle, not at the back of a room, of a remote room. So those are the moments where people feel brave. If you are brave, if you want to transform, you have to be the first transformation agent in the company. And I tell you, it's very uncomfortable, and you get a lot of criticism for it, but it's probably a sign of leadership, right? If you lead, you have to be criticized.
Well said. Yes. Well, how about the flip side, Jean-Pascal? As we all know, transformations rarely go according to plan, and certainly the path is messier than what many of us expect. Could you tell us a little bit, Jean-Pascal, about how you navigated that reality and what you learned from it?
I believe people and even customers don't expect you to succeed on everything you do. They expect you to be honest and humble, and they expect you also to be thoughtful about the level of risk you will take. You have to privilege decisions which are two-way decisions where you can come back, rather than one-way decisions that would put the whole company at risk. People appreciate transparency, honesty, and also common sense. They trust you as a leader if you don't lead the whole company on big ideas which make no sense. Persistence is important, and number two, a culture of learning when you failed and not punishing people, giving a chance to start again or try again when they have tried hard but unfortunately didn't make it.
