208: The CEO Mindset | Tom Monahan

I'm great, Adam. How are you?

It's fabulous. As you and I have talked about, in all roles there are things you have to do and things you get to do, and this definitively falls in the things you get to do. We—you and I and our colleagues at Heidrick & Struggles, along with our clients—are co-creating what it means to be a leader. And you know, this is kind of catching an evolving dynamic. Having a conversation around what we're seeing, how we're seeing leadership change, how we're seeing that grow impact, is really exciting.

Sure. You know, I've had the privilege of serving a couple of different leadership roles, usually in businesses that combine—you know, the first ingredient is always exceptional people, and then supporting them with great content, great data, great technology. I joke that I'm a bartender, but I'm a bartender in a bar where there's only really three ingredients to the value we create for clients: one is fantastic elite professionals, second is data and intellectual property that they create or can leverage, and third is technology that supports all of that coming to life for clients.

You know, what I like to say is I came by my deep interest in leadership authentically. I didn't start saying, 'Gee, I want to go be a student of leadership or support the great work of people who make leadership happen.' I began with an interest in corporate performance: what distinguishes great companies, high-performing organizations, fantastic institutions from merely average ones? And no matter how you take on that problem, how you tear it down, you look for explanatory variables of A versus B or outlier performance. Invariably, it comes down to the fact that leadership—great leadership, the right people in the right roles leading in the right way—is the single most important driver of high-performing organizations. You can look at any other characteristic, and it comes down to—we talk all the time about this—these are 'who' questions, not 'what' questions. Have two companies that have the exact same strategy, allocate capital in the exact same way, and one will significantly outperform the other because of the leaders in place and the culture they create. And so the chance to work among people who practice that every day and maybe, on balance, help us grow a little faster, have a little more client impact, was just too exciting to pass up.

I was probably a student of it before I was—if you go back to a prior company I had the privilege of leading, a company called CEB, whose entire reason for being was taking a look at great performance at the organizational level and also great performance at the functional level. What characterized a great company? What characterized a great marketing department? And really trying to understand, working backwards from the outcomes—who at the company level grew faster, was more profitable, whatever outcome you wanted to look at—and then continuing to peel back that onion to say what explained that. And then you could take it down to the functional level: what makes a great operations organization, what makes a great customer success organization, what makes a great marketing organization, what makes a great finance organization? Again, you set an objective and then you peel back to say, 'Well, what accounts for it?' And invariably, the answer—there were certainly things people could do: you could choose technology A versus technology B, you could choose market A versus market B. But even when you hold all that constant, there were companies, organizations, departments that outperformed others. And that was where you saw the almost residual, which is leadership—the most powerful explanatory variable. So I got interested in it coming in first as an analyst and student, and then over time becoming a practitioner. But you can see the leverage. And look, we do this work every day, right? So we know that you can measure the impact of great leadership in two ways. When we work with a client, either we might help them find a new leader for a group or a company, or we might take a leadership team and get them organized and aligned and performing at a much higher level. It's not only the performance you can look on paper and say a year later, two years later, five years later, 'Look at the great work we did based on earnings or whatever.' But it's also the transformative impact of great leadership on individuals, on people. I joke, but you've been subjected to my stump speech on this: it's not only the great performance that we co-create with clients, it's the fact that when people are well-led, when people are in organizations that are thriving, they themselves are happier. They know why they're doing the work they do, they know how to do the work they do better, they're more excited. My stump speech goes on for hours: 'And then they go home and they're better members of their community, and they're better siblings and children and parents, all that.' That's an overly extreme example, but one of the things I love about the study of leadership and the co-creation of great leadership with our clients is it not only has incredible financial returns, it has great human returns.

I don't know. You and I've talked about the fact that leaders are sort of magpies, right? Magpies in the animal kingdom for building their nest out of whatever they can find. And I think most leaders go looking either within themselves for attributes that they possess which can be put into service of their leadership style, or they go looking for tracks they can sample from other people that work really well and they'll incorporate into their own song, if you will. But I think I've always been a curious person, and therefore have incorporated it into how I work with people. I probably was the really annoying three-year-old who never got out of the 'why, why, why' phase. I just stayed on the 'why'—maybe a stunted growth of some sort. But it's still a powerful question, isn't it? Having a little bit of a beginner's mind from time to time to say, 'Well, why do we do this?' Once in a while, the answer is we've got some proof that it works. Sometimes the answer is because we've done it this way since 1942. And just asking unearths the opportunity to take a look at organizations, at dynamics, at opportunities in new ways. So I think I always was curious, and I think it therefore sort of brought it with me as a way of working.

Not at all.

Mom was a teacher, so that probably inspired some curiosity. My dad was in public service. And we had a family business on my mother's side—still have one—which was actually a carnival. That sounds like the front end of a joke, but it's actually a terrific business to be in because you kind of roll into town and make people happy.

I had the chance to work in it a little bit growing up. From a practical leadership standpoint, it's a fascinating space because you have both—think about the games that you'd play, that's more of a services business. Those are exceptional people who interact with people to say, 'Hey, come play this game versus that game, come do this.' And then you have the rides—they're almost more like manufacturing, right? They're capital equipment, they have to be safely maintained, properly taken care of. So it's an interesting business in that you have lots of stuff going on. It's more complex than some multinationals because you've got very different things going on. It's a great business. It's the first business I sort of knew of. I grew up around it. And so, back to the magpie thing, you take a little bit of what you saw work there and try to implement it.

There's something kind of funny. I don't know when this light bulb went off in my head—probably later than it should have—but you start thinking about any organization and all the different ways you can allocate resource and all the different resources you have stewardship over. The best thing about people is they're kind of the only thing inside an organization you suddenly realize can be worth a lot more next year than this year. This is an absolute state-of-the-art microphone, and it will never be worth more than the day it was purchased. In five years from now, there'll be a better one and there'll be a conversation about whether this needs to be upgraded or can we get one more year out of it. It's depreciating from the moment you buy. And every piece of software that you install in your company, by definition, at some point in the future someone invents a better platform and then you're looking at it saying, 'Boy, do we need to upgrade that?' But if you do your job with people, they can grow faster than the organization. They can grow in capacity. They can have multiplicative impacts on people. And at some point as a leader, you wake up and you're like, 'Wow, that's pretty cool.' Of all the ways I can spend my time, helping the human capital that I have the chance to influence compound its value is exciting. Because you're mentoring people. You hope half the time you're just helping them find the resources they need to be successful. Often you don't have the answer, but you might know who has the answer. And you get excited about that and say, 'Okay, I want to help that happen.' The title of the podcast is absolutely correct in that leadership is an enigma, but you can make progress on it. So you start to look and say, 'How do I help people grow?' It can begin with a crass question: 'How do I get more out of people?' But then once you say, 'Well, it's not just about getting more out of people, it's about getting more out of people and having them be twice as valuable and twice as energized and twice as committed next year at this time,' that's when you start to say, 'Well, how do I do that? Who's done that for me? What have I seen? Who else does it?' You start that magpie process of looking around to say, 'Well, what can I draw from that that's part of me? And what can I try out and steal and borrow and adapt that I've seen other people do to be successful?' Working backwards from that insight—which is, 'Wow, if I do this right, the people I'm working with can do even more next year. We'll be able to accomplish more as an organization next year. They'll have impact on the people around them, and the value of what we collectively do can go up pretty meaningfully.' Once that penny dropped for me, I said, 'Oh, that's something worth spending time on.'

When I read 360s or look at feedback, one thing that comes back again and again is framing conversations, framing problems—not solving them, but being able to say, 'Okay, what exact problem are we trying to solve? Let's get really specific around what we're talking about so we can channel all the collective energy of a group into solving this problem.' It's ironic: in almost every type of situation I've been in—whether it be in business services, data and analytics, even leading a university—fast starts matter. A student who gets off to a fast start is much more likely to thrive. A client who has a great first experience is much more likely to grow across time. Taking that insight, which is a data point, and dimensioning it out a little bit—going really deep into what exactly we are solving for here—is it they don't have time for us? Is it we're competing with time? Is it hard to figure out how? Getting the collective energy and brainpower of a team to focus in on the highest value part of a problem or opportunity seems to be a thing that people value. There are probably two parts to that. One is making sure that we're—I'm going to misquote Einstein here with a quote that says something like, 'If I'm given a problem to solve, I spend 50 minutes on defining the problem and 10 minutes solving it.' I think to some degree, if there's a thing I spend a lot of time thinking about, it's saying, 'Before we jump to doing, let's actually figure out what problem we are exactly trying to solve. How will it look different a year from now if we really break the back of this problem? What would twice as good look like?' Done right—and I'm not saying I always do it right by any stretch—but done right, you get a whole bunch of people working together on a very specific problem as opposed to ideating. 'What would it look like to create a solution that absolutely, in perpetuity, was three times as valuable for this client need as anything else?' That's a very different question than 'What could we do for clients?' because that can be a long conversation. So I think that's a—I joke sometimes that the most important job a leader has is the shrink ray in their tool belt, to say most huge problems have a highly leveraged part that really requires some focus, or most huge opportunities have some very specific thing we have to get 100% right. So if we put our energy there, it will have huge value. And it's one of those places that can help galvanize people. I wish I could say I'm usually the one to solve it; I think the data would suggest I'm actually just about never the one to solve it, but I create the conditions sometimes for a solution.

And maybe to some degree, and then there's probably something about the old Bob Rubin thing: does it need to be solved now? Or is this something where we want to take the time? Because I find there are problems where you say, 'Gee, maybe it is five weeks, maybe it's ten weeks because we have to get data, we have to go talk to 20 clients to figure out what's going on, we really need to understand it.' Or it can be, we got a—like Lorne Michaels, the person who conceived and still leads Saturday Night Live, always says, 'The show doesn't go on because it's ready. The show goes on because it's Saturday night live at Saturday night at 11:30.' To some degree, is this one of those problems where with whatever set of resources we've got, we need to make a decision? Or is it one where we say the caliber of decision goes up materially if we can obtain this information? I forget who said this, but I'm also a believer—it was Jim Clark, a legendary tech CEO, who used to always say, 'If we're going with opinions to solve a problem, I'm the CEO, let's use mine. But if we have data or client feedback, maybe we could also use that.' So asking yourself, is this one where more time helps us, or one where more time hurts us? But I think whether it's a skill or a discipline or just a way of working, I don't know that I'm uniquely capable of it. I know that teams say, 'Hey, when you do that, that's helpful.'

I'd almost flip it around. At a prior organization, I joined when we were very, very small and we grew, and that was exciting. I went through probably a phase as we grew of being the person who, from time to time, was the expert in how we did things. And that really—I had to almost—what I was an expert in was the way we used to do things, not the way we should do things going forward. I could actually feel that I was sort of getting in the way. So I think, what is your job in leading experts? And by the way, as a side note, most everyone who moves from manager to leader is leading—I think about the number of CFOs who are tax experts and accounting experts and treasury experts and M&A experts. There's limits. By definition, you're always going to have things you've done and things you haven't done. And every day that goes by, you're out of date on every dimension of that, because whatever the latest and greatest was when you did the job is no longer the latest and greatest. And AI must be compounding that—it compounds that absolutely. And none of us keep up with that exponential learning. So what tools do you bring to leading experts? You try to listen, try to figure out how we define impact in our business, how we define impact in success with clients, and what are the ways we can do more of that and have bigger impact. And start to get a sense of what leverage points there are that collectively lift the whole. I'm not going to make anyone better at what they do, but I can make us better at leveraging the collective ability of the firm. The other thing you think about in leading a people organization is you want to be the place where the best people come to do their best work. What characterizes that environment? If it's a culture conversation, it's a culture conversation. How does it feel to work there? Do you have the right tools to do your job? All those things.

It's an interesting—look, we're a public company, so you can develop some hypotheses, questions you want to ask or think about. You're recognizing many leadership assignments don't have 20 years' worth of financials you can go through. Whether it's an accurate predictor of what you're about to find, at least it's an aged treasure map, if you will. It's sort of there's something there. So you can start there, just get a picture. Probably the most—Will Rogers famously said, 'It ain't the things we don't know that get us in trouble, it's the things we know that just ain't so.' So making sure you really come to it not presuming you know anything about the work, and being okay to be—the humility point is absolutely right because you have to be almost courageously humble to say, 'I have to admit I don't really understand this. I have to admit I don't. Can you take me a level deeper? Can you slow it down? I don't know what that acronym means.' There's both value to me from asking those questions, but once in a while people will say, 'Now that I think about it, there may be a different way.' If you really are just creating space for people to share with you, sometimes they'll create insight by virtue of stepping outside their work and looking back at it with me. You can create some value. But I think the first thing is that humility to be courageously curious and to risk looking silly, and to risk not reading the thought bubbles over people's head which is, 'This person's kind of a dope because they don't understand what we do and they're theoretically a grown-up.' So that's the first thing. The second thing is to learn as much about—and I had a little bit of a cheat sheet at Heidrick because I had been a client, that's going to help. But there's also—one of the most dangerous things a CEO can do is be a focus group of one. That's even worse than the HIPPO principle. Now it's, 'I'm the highest paid person in the room and I'm the client voice.' Tom Murray and I, as we stepped into our leadership roles, were really careful to remember though we had been clients, we had been but two of literally thousands of clients with thousands of situations, not the perspective. But making sure you actually get a little—if you sort of look at what you're probing for as a new CEO, you have some group you serve and a set of needs they have. What are they trying to get done? What do they want to do? And you have a whole group of talented people who are trying to meet those needs, and you happen to have a current set of ways of doing that. But you almost want to pull all the way back and say, 'What are clients—what do they need?' Let's take our search business as an easy example. A client comes to us and says, 'Hey, I need a new CFO,' or 'I need a new Chief Marketing Officer,' or 'I need a new Chief Revenue Officer.' That's not what they need. When you start talking with our teams and our clients, what they're saying is, 'I need to grow faster. I need to grow more scalably. I need some broader need.' I think that is probably the second step. The first step is just really understanding what we do. The second is trying to get really close to not just how clients use us, but what needs they have and how they happen to meet them today, because there may be other things we can do for them. There may be ways that they use other things besides us to get those done. So spending time on that is really important. I think just really understanding both how clients' needs manifest in our system—what do they buy, what do they use—but also just what are they trying to get done in their job. So I think those are two disciplines. I think a third discipline is just trying to keep beginner's mind throughout, and always being able—my joke is the CEO is always, to some degree, the ambassador from reality to the company. Your job is to, as much as is humanly possible, help the organization ingest external perspective and act upon that, to sort of say, 'Here's what's really happening in the world, and how do we adapt to that?' Most organizations don't get to make the weather; they have to respond to and be built for the weather they encounter. Making sure you're always keeping an outside view of what's going on in the outside world, because we're going to have to thrive no matter what comes our way. And the fourth thing you do is you try to get a sense of just—I think like any—Oscar Wilde said, 'Experience is the name we give our mistakes.' One mistake I have definitely made is making sure I understand what makes—particularly in people businesses, but I think all businesses are people businesses—what makes them tick. What's the cathedral? I always say, 'Work is mostly about lugging rocks up a hill, but having a really good clear picture of the cathedral we're building actually makes lugging the rocks a little bit more interesting.' The mistake I've made has been—you can safely assume no one cares—well, save our finance team, but even our finance team at the end of the day—none of us can escape. Does our earnings per share next year need to greet everyone every day on their screen? No. Does our stock price? No. Those are lagging indicators to some degree. The score takes care of itself if you play the game really well consistently. But trying to figure out what it is that does motivate people—because I made the mistake of, like every everyone who took a company public in the early 2000s, there was a screen with the stock price on, and then you realize, 'Oh, that goes down too,' and people aren't attached to it. So figuring out what is it that we try to attach to collectively, what's a definition of success that calls out the best in all of us, and how do we measure that? In an organization like Heidrick & Struggles specifically, that's impact on clients. How would we not only measure that individually day in and day out, but what might it collectively look like? If we did that even better every day for the next five years, what would that look like? Because that would motivate people, would have great impact on our brand. But trying to figure out what unifies an organization and pulls it forward—because I've tried, and at earlier stages I picked things that didn't actually call out people's best work, that didn't bring the best culture forward.