Walker Webcast: Learning mindset! Carolyn Dewar, Senior Partner at McKinsey & Company on the traits of the world’s best leaders


On this episode of the Walker Webcast, we were joined by McKinsey & Company Senior Partner and Co-Author of CEO Excellence, Carolyn Dewar. She and Willy discussed key topics from the book including the six mindsets of the world’s most successful CEOs, methods for managing time and energy, how to successfully lead high-performing teams, the importance of humility, advice for young professionals, and much more. 

This “guidebook on how to be the best CEO” all started on the eastern shore of Maryland, Carolyn explains. During a leadership retreat at the Inn at Perry Cabin, she and her co-authors noticed something about the speakers. “Each had slightly different, yet fascinating, talking points and advice.” 

To create CEO Excellence, the team first drew up a list of the top 200 CEOs. While many were household names, “I was most excited about those who were equally impressive, but lesser known.” 

The next step was to narrow this list down to 70, focusing in on these leaders’ unique talents and gifts. To make it to the list, CEOs needed to outperform their peers and be in the role for at least 6 years, Carolyn says. Three out of 10 CEOs don’t make it past their third year, she points out, and that’s a huge cost for everyone involved. 

What stood out most from her interviews? Willy asks. The commonalities, Carolyn replies, like having the courage to reframe things. She describes how Cincinnati Children’s Hospital CEO Michael Fisher reframed the concept of a to-do as a “to-be” list, reminding leaders that how they show up to different meetings as CEO is as important as anything they say or do. “The implication effect of CEO moods is massive and sets the tone for the whole company.” 

One of the most surprising characteristics among the CEOs, Carolyn reveals, was their humility. Microsoft CEO Satya Nadella is one example. “He has spent the last five years relentlessly trying to bring his humility and learning mindset deep into the organization,” she says.

Willy and Carolyn also talk about Ecolab CEO Doug Baker. “He has excelled at connecting with stakeholders for the company, taking to heart this external pressures around environmental sustainability and then making them real,” Carolyn says. 

Carolyn talks about how the role of stakeholders is changing. For example, employees and consumers increasingly base their employment and buying decisions on whether a company aligns to their sense of values. CEOs who navigate these changes well are guided by their company’s purpose and “why,” she declares.

The conservation then shifts to mergers and acquisitions. Carolyn and Willy talk about programmatic M&A, where companies make many regular smaller acquisitions over time rather than wait around for a few huge mega deals. Exit strategies also matter. “CEOs have a unique hand over resource allocation and can make the decision to roll off projects that no longer make sense,” Carolyn notes, adding that scenario-planning and resilience-building are important throughout “in the case that things go awry.”  

Willy and Carolyn wrap up the episode with Carolyn’s advice for aspiring CEOs. “The best time to start thinking and acting like a CEO is in the job you are in now,” she says. “Adopt a learning mindset and be inquisitive about all the things there for you to learn.” 

Key Ideas:

0:51 - Willy welcomes guest Carolyn Dewar. 
4:33 - The genesis of CEO Excellence 
8:10 - Three criteria for identifying top CEOs 
11:28 - Reframing what winning means for your company 
19:30 - Consistent mindsets across the CEO cohort 
31:44 - Connecting with stakeholders
35:50 - Managing personal effectiveness 
51:54 – The correlation between ownership and success 
55:20 - Carolyn’s advice for aspiring CEOs 

Webast Transcript 

Willy Walker: Good afternoon, everyone, and welcome to another Walker Webcast. It's a real joy to have Carolyn joining me today. Her book, CEO Excellence, is truly excellent, and I would recommend it to anyone who wants to learn what makes talented CEOs and outperforming companies so special. Whether you are an investor, an employee, a leader, a manager, or someone just beginning your career with the aspiration of being a CEO one day. One of my questions to Carolyn in a little bit will be any advice to aspiring leaders on what to do and how to work and live to have a shot at a C-suite role someday?

But before I begin with Carolyn's bio, thank you and one request to our listeners. The thank you is to Carolyn's and my mutual friend Gary Pinkus, who is a fellow partner of Carolyn's at McKinsey and put the two of us together. Thank you, Gary. And the request of our listeners – not to the several thousand live listeners today, nor the podcast listeners, but to the 50,000 to 100,000 people who will watch this on replay on YouTube, if you go to the lower left-hand corner of the screen and just give us a thumbs up or thumbs down, it'd be helpful. We have a net promoter score at Walker & Dunlop of 89, which is exceedingly high, and it's due to getting feedback from our clients after every transaction we work on to see if they would recommend us to either a colleague or to another company to work with Walker & Dunlop, and that feedback is what makes us better and better. And so, any feedback on the Walker Webcast by a thumbs up or thumbs down would be greatly appreciated. 

So let me dive into Carolyn's bio. Carolyn Dewar founded and co-leads McKinsey’s CEO Excellence Work, coaching many Fortune 100 CEOs to maximize their effectiveness. She also works extensively with clients to drive organizational effectiveness at pivotal moments—such as merger, strategic shift, and crisis—and lead large-scale performance improvement programs integrating strategic, operational, and cultural initiatives. In addition to her direct work with clients, Carolyn conducts ongoing research. Among her many articles are two of the most read McKinsey Quarterly articles of all time, “The CEO's role in leading transformation” and “The irrational side of change management.” She has also authored two foundational publications: “Performance culture imperative: A hard-nosed approach to the soft stuff” and “Breaking new ground: Making a successful transition into your new executive role.”

Carolyn regularly gives keynote speeches and hosts CEO and senior executive roundtables on topics related to leadership, executive transitions, and change management. Carolyn serves as faculty for McKinsey’s executive programs: The Bower Forum, The CEO Excellence Forum, and Executive Transitions Master Class.

She is a co-author of the New York Times bestseller CEO Excellence: The Six Mindsets That Distinguish the Best Leaders from the Rest.

Carolyn is a Canadian and British citizen, and currently lives in San Francisco with her two children and husband. She is a board trustee of Bay Area Discovery Museum and has a master’s degree in economics and international relations from University of St. Andrews, Scotland.

So, there we go. Let's dive in here, Carolyn. You created very specific parameters for how to determine the best CEOs in your book, CEO Excellence. And in a moment, I'd like you to briefly outline how you determine that excellence. But to start, you and your colleagues, Scott, and Vic, identified the top 200 CEOs and then interviewed 70 of them for your book. Who is the most impressive and why? 

Carolyn Dewar: That's a super question. I mean, it was an incredible privilege to sit down one on one for several hours each with these unbelievable leaders. Many of them are household names and, of course, impressive. We had Satya Nadella, Jamie Dimon, Mary Barra, all of these household names. I think some of the ones that stuck out for me were the ones who were equally impressive but lesser known. I'm thinking of Doug Baker at Ecolab or some of the other leaders. And those hidden gems are what got me excited as well. 

Willy Walker: So, I want to back up to where this book began, because the genesis of your book and the fantastic shareholder returns of Walker & Dunlop both come from the same place, which is the Inn at Perry Cabin in St. Michael's, Maryland. I'm going to quickly give you my anecdote, and then I'd like you to rewind back to your anecdote of how you and your colleagues Scott and Vic came up with the idea for this book and then what the criteria was to get into the book. But really quickly on mine. 2007 Young Presidents Organization Retreat, a gentleman named Jack Daly, was there to give a speech to us, and he was talking about all these things that CEOs need to think about. And the one thing he said was, “If you are not telling your team where you are going, you are failing as a CEO.” And he said you can manage the company well, you can do this and that, but if you haven't said and articulated a clear vision for where the organization goes, you're not doing your job. So, I left that retreat. I went back to Washington, D.C. I sat down and I wrote a memo to my board, and I said, “I failed you.” and Walker & Dunlop had been doing plenty well, from 2003 to 2007 when I had this moment. But I said I haven't clearly articulated where we're going. And that began a process of setting five year, what Jim Collins would call BHAG (Big Hairy Audacious Goals) strategies, for Walker & Dunlop, which we have not only had a reputation of setting and meeting, but as a public company, since we've set them and put them out there for shareholders and then tracked to them almost to the dollar. It's allowed our shareholders to have a really good sense of what we're building the company towards and what their company will look like three years, five years forward, once we've clearly articulated that plan. So, that's my story about St. Michael’s Inn at Perry Cabin. Why don't you go back to the idea of writing this book?

Carolyn Dewar: I love it. I can go right back to that moment. It's fascinating you were there, too. Ours was very similar and so, McKinsey brings together leaders for small off sites every once in a while and one of the landmark events is called the Leadership Retreat. We bring kind of next generation CEOs, folks that might be one, two years out from being CEO together for three days to really soak in what's happening in the world, macroeconomic trends, but also to hear from seasoned CEOs on what is that role is like. We had had one of these sessions in St Michael’s, Scott [Keller], Vikram [Malhotra] and I were there. And each morning we had kind of a legendary CEO address the group. Like you shared in your story, each of them had incredible wisdom to share. But as we looked across the three days and compared notes on what day one said, here's what the next person said, here's what the next person said. Each of their answers individually was very compelling. You could see people writing it down and taking it away like you did. But they were all slightly different. And I think in the car ride back to the airport (you know it's kind of several hours to get back up to the airport) we're saying, “Well, if I was a participant coming out of this, I would have written a lot of notes. But it would also be a little confusing.” What really is the answer to being a CEO or not? So, we started testing this question in conversations we were having, and we realized that there was a hunger or a thirst out there for almost a guidebook, a little bit of lessons learned. First of all, what is the job anyway? What actually does it mean to be a CEO? What's the job? And then for those who do it well, what are some of those common traits? Things like setting your five-year vision. It turns out there were six of them that we came up with, but it was really a chance to gather that input and give it back to a broad audience so that we could all learn and pretend like we were at St Michael's at the Inn.

Willy Walker: So, give us a quick summary of what it was to be included in the book, to be one of those 200 CEOs that you all determined were excellent. 

Carolyn Dewar: Absolutely. There has been some research done on CEOs. You'll see research on calendar analysis and things like that. But it tends to be just the average, right? It's just playing back, here's what CEOs in general do. We wanted to take a slightly different take and say, for those who do it exceptionally well, is there anything special or different that they're doing and how do we glean from them? And so obviously you had to figure out what does excellence mean? We used three filters. The first was performance, as you would imagine. We took the list of everyone who'd been a CEO of the Fortune 1000 in the last 20 odd years. And there's a few thousand of those because companies have had more than one. And we said, first, you had to have outperformed your industry peers and be in the top quintile of performance. And so again, by industry, we accounted that tech dynamics are different maybe from industrials. You have to be in the top quintile of performance. 

The second filter was you had to have been enrolled for at least six years as CEO. The reason we wanted that was to make sure that the track record could actually be ascribed to you and your tenure, and you weren't just jumping on board and thankfully, you'd been around long enough that you had to eat your own cooking. Some of the decisions you made in the early days you were now living with and how did that work? And then the third filter was slightly more qualitative, but just as important around reputational risk, some of the behaviors and expectations we would expect of an excellent CEO. And so that took the list from several thousand down to 200. With that, we were able to interview, I think we asked 70 and we got 67. And a pretty good turnout in terms of folks that we were able to talk to. 

Willy Walker: You put some stats in your book, Carolyn, that are quite eye spinning as it relates to performance of this group. The CEOs who rank in the top 20% return 2.8 times more return to shareholders. So, $1,000 in the S&P index fund gets you $1,600 dollars over ten years, $1,000 invested of the top 20% CEO gets you $10,000 over that same whole period. You've got lots of other statistics that show that. And so, I guess if you were an investor, do you invest in an industry or do you invest in an individual CEO? 

Carolyn Dewar: I think the answer is likely both. But the big piece that struck us was being excellent as a CEO, to your point, really matters. It makes a meaningful difference. And gosh, I mean, these are hard rules. I'm not going to say that anyone who's playing the role is doing a trial. I mean, these are complex roles, but the step change of those who really do it well and the breakout performance they're able to drive for their company is accretive not only to their shareholders, but their employees, their customers. It really, really makes a difference. And I think that's why we wanted to say, well, what are those folks doing that's different even from the average CEO? You know, 30% don't make it past the first three years. There's a huge frictional cost to everyone involved of cycling through CEOs. I think it serves us all well to have folks do the job well and be able to do it over time. 

Willy Walker: I think one of the things that you wrote about, Carolyn, was that you were struck that top performing CEOs reframed what winning meant for their companies. Can you go into that a little bit further about what winning means to these breakthrough CEOs versus the not elite CEOs? 

Carolyn Dewar: Absolutely. There were six parts to the CEO role that we really dove into. This first one on your role in setting direction. One of the big differentiators is to be bold and to reframe what winning means. That might sound trite, of course you need to be bold, but what do they actually do? The first one you named, which is from the CEO seat, you have almost a unique opportunity to give the organization permission to dream big and to understand what could be possible. If I take an example, Ajay Banga, when he took over at MasterCard and in his decade as CEO, they went from $12 billion to over $300 billion, in market cap, so a massive step change. When he walked the halls, when he took over all the coffee cooler chat was about how do we beat Visa, how do we beat Amex? That's the game we're playing. We're trying to incrementally eke out a market share. And that time, you have to remember ten years ago where we were as an economy, he stepped back and he said, “Look, most of the world's transactions, 92%, were not happening in credit cards. They were actually still happening in cash.” It's like, why are we all over here playing this game of stealing market share in 8% of the market when the real market is all the world's transactions? And he came back and reframed with his organization, “our job is to kill cash.” Now, that's sort of a funny phrase coming from him when the decency quotient is also something but killing cash was their mantra. But what that did was as CEO, he didn't have to prescribe all the ways they were going to do that. But all the ideas, all the latent opportunities that people had wondered about but thought, oh, we don't do that. That's not okay for me to think about, we're unleashed. And they went into online and debit and all these other things and it gave permission to the organization to think big in a different way. 

Willy Walker: So, take that into the anecdote or if you will, the strategy that Herbert Hainer put in at Adidas, because I think what you just talked about that happened at Mastercard is very analogous to the way that Hainer reset the vision for Adidas as it relates to building great products rather than just branding a brand. 

Carolyn Dewar: Yeah, absolutely. You can imagine when he took over at Adidas, there's these other titans in the industry. There's Nike there, there's Puma, there's all these other companies. And they're each taking their own tack for how to win in the market. And again, he decided, let's not try to compete in the way they're doing it, right around branding and apparel or all these different angles. He brought it right back, and a number of the CEOs did this, to their deep sense of purpose. Why do we even exist? We exist to help incredible athletes excel and the way that we do that is by delivering product and science and technology to them to enable them to breakthrough. And he brought the focus, not the current equivalent, not Instagram, to follow you all these various things. He's like, we are about amazing products. And again, it really focused the organization and helped them differentiate. 

Willy Walker: So, the outcome of that strategy was, I believe he was CEO for 15 years and over those 15 years the market cap of big ideas went from $3.5 billion to $30-32 billion. 

Carolyn Dewar: Absolutely. In an incredibly competitive market! 

Willy Walker: Incredibly. I read that, the way you all described that was so insightful, I thought, because the way you frame it up, as you just said, was, okay, we should cut costs and produce, manufacture for a cheaper price than Nike or we should go hire Lionel Messi to be the spokesperson. We're going to pay him a huge amount in endorsement contract because it's all about branding. And instead, he went to let's just make products that our clients want, put customer service at the top with great products. And then the rest sort of happens after that, rather than thinking, if you will, shifting the focus from an internal focus of what we can do at Adidas to what will our clients do for us if we meet their needs? 

Carolyn Dewar: Absolutely. What's the need in the world? Why do we exist? What are we trying to get done and help our clients with? And then all of our strategies just in service to that. 

Willy Walker: So, take that to Hubert Joly at Best Buy, to “why do we exist?” Because his, if you will, four circles in the can centricity that created what Best Buy did. I thought the way he framed what they did was a really interesting thing you outline in the book. 

Carolyn Dewar: He actually really led a whole turnaround of Best Buy. And you think about at the time there was Best Buy and there was Circuit City and then they've just gone on very, very different paths. And what was it that he did? He had to put some foundational things in place. But again, he came back to the customer. What is the customer experience? The customer needs that we're trying to create. So, for example, they did away with commission sales staff, which was essential to the model of that kind of retail. So that doesn't serve the customer, right? This is about us working collectively, not even just as individuals, but as a store and across regions to deliver things that their customers really need. And they did some pretty, pretty innovative and shocking things at the time, at a time where you could have easily said electronics are going to Amazon, big bucks, retail is dead. Right. What are you going to do about it, well he’s like: we're going to deliver value in-store for our customers that others can't deliver? 

Willy Walker: As you outlined his four circles: he has what the world needs, what you're good at, what you're passionate about, and how you can make money. 

Carolyn Dewar: Finding the intersection.

Willy Walker: How do we get in the middle of those four circles and say, we're passionate about this, we're good at that, we'd make money there. But then the other one, I think that goes back to the Adidas example is what the world needs? I mean, in other words, that customer centric focus, I mean what you underscored in Best Buy was that up until he stepped in, they really felt like they were the brand and yet they figured out that their real estate was something that retailers wanted and if they could sort of outsource the real estate side to it to Best Buy, and then they set up sort of an Apple area, an HP area and they allowed Samsung to have their own kind of kiosk inside of Best Buy, which was a significant strategy shift from them, sort of saying, well, we are Best Buy. It was really we're kind of just a reseller for HP and Apple, correct? 

Carolyn Dewar: Absolutely. For these other incredible brands that didn't have an onsite presence, they didn't have a brick and mortar at the time, and so they became that. Amazing. By the way, those four concentric circles are an interesting lens to use on all kinds of things, including your career decisions, right? If you think about yourself as a leader, ask: what am I good at? What do I love? What can I get paid for? What does the world need? Finding things at that intersection, it's just a great filter for a lot of things. 

Willy Walker: But go on that for a moment because I think one of the things that you write about is the fact that one of the qualities that you saw in these great CEOs was that they were really good at identifying what only they uniquely could do. 

Carolyn Dewar: These jobs are of such tremendous scale and complexity that there is an unending list of things you could get involved in. Part of this is what's your filter as a leader on what's the work that only I can do that, frankly, you're the scarcest resource. There's one of you. There's 24 hours in the day. What's the highest and best use of your next hour for your shareholders, your customers, your employees, and not feeling selfish or timid about having those criteria. And what does that look like? And similar filters, right? Where can I add the most value that if I don't do it, no one else can and everything else, I should be empowering others. Yes, I might be coaching them, bringing it along, but it's such an important filter as you juggle all of the balls in the air as a leader. 

Willy Walker: You talked at the beginning as it relates to in St. Michael’s, people were sort of taking notes on what I would call micro strategies or micro habits of the CEOs. So, someone gets up and says, this is what I do every day. I've got this list; this is the way I use my executive team. We have a dial in call every morning to share the strategy, and it's 15 minutes. And I think, I mean, everyone has sort of their way of managing, but we're there, as you did your research on these CEOs, what are certain qualities or certain micro habits that were consistent across that entire cohort?

Carolyn Dewar: Absolutely. I think that's why we ended up anchoring somewhat to our surprise that there are six mindsets that underpin this success. People operationalize them differently. And I'm happy to give examples of micro habits. But these mindsets are what was consistent. So, when they think about setting direction, it was the boldness and the courage to reframe. As they think about all of the organizational things, talent, culture, org design – it was the mindset of I treat that soft stuff as if it's the hard stuff. So, they were treating it with real rigor, they were measuring it. They knew whether they were on track with their talent and culture. It wasn't something outsourced to HR and so yes, there was that mindset and there's one of those for each of these. On the board one and we can come back to it is this was probably the one that had the biggest difference between prevailing wisdom as CEOs and truly excellent ones. It was this mindset of how do I help the directors help me in the business? Which frankly is very different from “I've just gotta get through the board meeting and I got to go back to running my business.” Very different. There's a bunch of behaviors that come from that. I think each of them held these mindsets and then had quite a lot of intentional discipline about what they did to make sure those were happening in their organization. 

Willy Walker: When you talk about engaging the board, which was number four on your six qualities, one of the CEOs that you kind of underscored who took a distinct tact from his predecessor was Satya Nadella at Microsoft and how he viewed his board as a real resource and how he's used the board. Just go into that a little bit more if you would, Carolyn. As I have a board which I love and as I read your book, I sat there and said, “Am I using our board at Walker & Dunlop enough?” And I pushed it a little bit and I said, I can actually probably go and ask this person to help me on that and that person help me on that. And while I think we have a very engaging board, which has lots of transparency, and that's one of the things that you underscore as it relates to management teams and CEOs who have that trusting, transparent relationship with their board of directors. What did you see Satya do at Microsoft that might be distinct from the way that Microsoft board engaged previously? 

Carolyn Dewar: Absolutely. And I would say this board piece is the one when we talk to newer CEOs, they're the most surprised by it. Like, “I could never do that. That's not the way my board works.” Folks who've been in the role for a while realized, as you say, this level of transparency really helps everyone over time, but it feels different. You think about Satya, he was sort of a surprise CEO in many regards. Not to mention he had both Bill Gates and [Steve] Ballmer on his board. So, the past two CEOs and frankly, founders. So, imagine having the two of them over your shoulder as well. You're the brand-new CEO in many ways he considers himself the first non-founder CEO because even Ballmer was sort of regarded that way. How do you make a mark? How do you show confidence that you have a vision but also tap into it? I think my favorite quote from him in all of this was when we asked, “Why is the CEO job lonely?” He cut through in this very specific way, he's like, “It's an information asymmetry problem. No one underneath you, meaning your team and your organization sees everything that you see. You're the ultimate integrator that sees all the pieces. But no one above you, meaning the board and shareholders see everything that you see. You're this single note of integration and that's lonely and that's really hard.” And so, as he thought about his board, he very much was in the mindset of how do I bring them into the tent? How do I make sure that they have enough relevant information about all the pieces going on so that they understand all what I'm juggling? And they can be together in that same perspective. But what does that mean? It means you need to be transparent. You need to share things. Not the huge board binder, but the very transparent. I mean, Jamie Dimon does this to the first hour of his meeting, by the way, not the last, the first. He goes in: “No notes,” pulls out the little handwritten piece of paper. “Here's what's keeping me up at night. Here's what has happened since we last met.” Very unfiltered. “I might not need a decision from you yet, but I need you to know. So, if it hits the fan and I'm back to you in three months, you know where it was coming from.”

Satya did the same. He is also very thoughtful about who are the experts who you may have on your board that can be part of your extended thought partnership. If you're doing a big deal or you're expanding into Asia or you're doing this, do you have people on your board that bring relevant expertise that's actually helpful for where you're going? You don't want to be sitting in a small town with everyone on your board in the same town, and you're doing a global expansion strategy, right? It's not going to help you. 

Willy Walker: I was really interested in the book as I was reading that about Satya and not only the way he works with his board, but also his overall leadership and management style without throwing Steve Ballmer under the bus too hard because he's an incredibly successful and wealthy person. But if you look at the performance of Microsoft under Ballmer and then the performance of Microsoft under [Satya] Nadella, one of the big things that comes back to me is Nadella's humility, his attitude of “I am in this seat. It's not me. It's the seat that I sit in that people come to.” So do exactly as you so accurately frame it up. There's this funnel above you that the board doesn't know everything and there's a funnel below you that everyone doesn't know what you know. And you're that integrator which I thought was a fascinating kind of frame of all of that. But then, the way that he carries himself of “I don't know all the answers, and I'm willing to tell you that I don't know the answers.” I can't think of Steve Ballmer (I don't know him personally). I can't think of him walking into a board meeting or a management meeting saying, I don't know the answer to this question. Talk for a moment about his humility in the way that he leads. 

Carolyn Dewar: It was perhaps one of the more surprising traits we noticed across almost all the CEOs we interviewed was this humility. Maybe that the scale and complexity of the roles has gotten so big as well that people just realize you can't possibly know, right? You need to lead through leaders. I think for Satya in particular, he took it not only in who he was, but he scaled that to Microsoft, which has been one of the massive shifts he's driven. As the cultural change and the embracing of growth mindset, because the organization he took over had some really disruptive behaviors, very siloed, a lot of infighting getting in the way of innovation. And he has spent three, four, five years now relentlessly trying to bring that humility and learning mindset deep into the organization. He talks about the shift from it being a know-it-all culture, where the smartest person in the room is who won a and who had all the credibility to a learn-it-all culture. How do we actually celebrate learning, humility and asking questions? And he was very, very articulate about these shifts that they would need to bring. Yes, he embodied it himself and I'm sure part of that was just naturally who he is. But he's also been very deliberate in role modeling it. He admits he had a big bit of a screw up early days as a CEO where he was sitting on an external panel and they asked him, it was about pay equity, and he gave an answer that wasn't a great answer, and it was blown up in the media and all these things. He came back to both his board and his team and the organization and said, “Look, I messed up. I have a lot to learn on this topic. Help me learn.” He has one of the most disciplined learning agendas as a CEO I've ever seen. Every month he has his chief of staff, and he brainstorms a list of ideas of things he wants to learn about. The chief of staff goes out into the world and gathers who are the best thinkers. Now you can do this if you're Satya, right? They all write up little memos for Satya. He reads them all, he writes notes and says, “okay, these three were helpful. This one, I'd love to meet with her. This one I have a few questions about the footnote of their research.” And once a month he blocks a half day or a day just to learn. I mean, pretty huge, huge investment. 

Willy Walker: You talk in the book about one of the common features not as much as a to do list, but a to be list. 

Carolyn Dewar: I love this one. Any leader, anyone watching, or viewing can think about. The phrase came from Michael Fisher, who led the Cincinnati Children's Hospital, but there were a number of them who had something similar. Now, Michael took it very literally. He prints out (little old school) his agenda every day. He looks at all the things he has coming up and the amount of channel switching the CEOs have to do. You might be going from a tough regulatory or legal meeting where you're finding out you're battling litigation to having to walk into a town hall and inspire 3,000 people, to maybe go meeting with the customer and closing a big sale. I mean, the code switching you're doing all day. He looks at his agenda and next to each of the items he writes, “Well, how do I need to show up in that meeting? I need to be inspiring. This one, I really need to listen. This one tells me to have humility.” It's not about being disingenuous. He's an incredibly genuine guy, but it's about reminding himself that how he shows up in the meetings as CEO is as important, frankly, as anything he says or does. And you've probably all experienced Willy, I'm sure you have. If you walk down the hall with the grumpy face, past everyone working away, suddenly everyone's like, “Oh no, business is going bad or something's happening.” The amplification effect of your mood is massive when you're a CEO. And so, managing that and thinking about who I need to be at this moment, this day, this month, will set the tone for the whole company. 

Willy Walker: I love your book, as I hope is evident. But I was in a meeting yesterday and I had an incredible team talking about an investment we've made that isn't going great. I was surprised that it's not going great. It's a small investment and nothing that I ought to stay up at night over. But I was disappointed to hear that it's not going great. And they were asking for more capital, and they were asking also for some more resources. I had inside of me this sort of I want to make sure everyone knows how disappointed I am that we are where we are. And as the meeting kind of went on, Carolyn, I was thinking back to exactly what you wrote about in your book as it relates to how to be rather than the to do list. And I said, you know, at the end of the day, it's not a big deal. We've been here before on investments. We'll figure out how to give it either the capital or the resources to get through it. And I kind of rewound the clock and said to the team at the end, “We've been here before, we'll figure this out.” And it was, to be honest with you, a very different framing of the issue from the beginning of the meeting, where I sort of felt like I need to show everyone that I'm really pissed off that we are where we are to getting to I want them all to leave this meeting saying we're going to get through this. Yeah, it's not great where we are. But that sort of shift in framing of the issue, I'm sure had the team, I hope, I haven't spoken to anyone after the meeting, but I think this is what came through was we'll get through this. It's not that big a deal rather than just, man, he's really pissed off and I'm kind of bummed out that we got ourselves into this position. 

Carolyn Dewar: I love that. And you think about the energy that that creates to go and actually want to go and hey, we can do this. I bet there was a lot more productive activity that came after that. 

Willy Walker: Very much so. So, the next one is connecting with stakeholders. And I think that Doug Baker at Ecolab is a great example of how to connect with stakeholders. And if you would, Carolyn, talk a little bit about how the list of stakeholders has broadened dramatically over the past several years, but clearly over the past several decades where it used to be, as long as I meet my shareholder needs, I'm good as CEO. That stakeholder list has gotten a lot bigger and a lot more complex. 

Carolyn Dewar: Absolutely, and a lot noisier, right? It's funny, I was actually with Doug two weeks ago for dinner in Minneapolis and he was even talking about this and saying, he retired just a year ago and what the CEOs are facing now is even different from a few years ago. So, I'll tell his story quickly. And then let's talk about the broader piece. Ecolab is a fascinating one, they are an industrial cleaning company. They go in and clean, fast-food companies and warehouses and factories and all these kinds of things. That's what they do. And when he took it over, it was a much smaller remit company. They were very focused on just a few products. And he saw the broader opportunity. But when you think about the growing pressure of environmental sustainability. He was at the crossroads of a company that could have gotten on the wrong side of that right. But they clean for a living, and they spent real time as a leadership team saying, “Well, if our job is to clean for a living and we really are serious about that, the broader extension of that is we would actually help the world be cleaner.” Which wasn't just a cute poster on the wall, but something they came to truly believe as a company. And think about if we took that seriously, again, a purpose around creating a cleaner world. That's not just something for recruiting and for marketing, right? What would we do differently in our operations? And it drove very meaningful differences in terms of the materials they were using, their water usage, and how they were thinking about it. It actually transformed how they delivered and what they delivered for their customers and opened up a huge amount of opportunity. They scaled the company many, many fold during his tenure. But it was this taking to heart both the external pressure and stakeholder around environmental sustainability in his action but making it real. He has another fabulous quote: he's a fun guy, kind of provocative. “You can't do evil from 9 to 5 and then write big checks in the evening.” He believes that deeply. If you really are going to stand behind things, that has to be part of your daily work. Now, the broader stakeholder piece is a huge one that I think has changed incredibly over the last few years. We've talked a lot about stakeholder capitalism. And I know Business Roundtable has and it was sort of good in theory. I think in the last few years people have had to figure out what does that mean to operationalize? You think about the pandemic. You were making decisions on employee health, the health and welfare of your community's supply chain. All of these decisions, then at least in the U.S., a lot of the racial and social unrest. Do I weigh in on George Floyd or not? What's my stance? Same sex? I mean, tons of social issues. And then you've got Ukraine and Russia. These CEOs are sitting there going, I'm not a geopolitical expert. I'm not a public health expert. But increasingly and this is why it becomes relevant, employees and consumers are making their employment decisions and buying decisions, especially in younger generations, based on whether their company is aligned to their sense of values. And so even if we think, hey, that's not our business, your people are sort of getting dragged into it and I think really struggling to think about what is that line? I mean, you see Disney in Florida, and everyone is spooked by that and they're like, okay, well, maybe that wasn't the line. But I think this is the biggest unknown that CEOs are navigating. Those who are doing it well come back to their purpose. They come back to their why? Why do we exist? What are our values? Who are we trying to be in the world? And they're using that as a rubric, but it's not easy

Willy Walker: So, number six on the list is managing personal effectiveness. And I was just curious, having studied, identified the top 200 and then met with 67 of the 70 that you asked to meet with. What did you learn about managing Carolyn's personal effectiveness from having interfaced with all these people? What's the thing that you change in the way you run your practice at McKinsey that you learned while you've been studying all these people?

Carolyn Dewar: I think both at work and frankly even just in life. There were two main learnings, probably one we talked about a little bit, which was the idea of your to be list. Really being thoughtful about who I need to be both in this moment but also in this role. If you're stepping into a new executive role, you know, what does your organization need of its leader for this next period of time or this next era? Some of those will be your strengths because it's why you were picked for the job, but some of them might be a real stretch. Do you know the three or four attributes? And so, I've been thinking about how do I navigate some of that? How do I help scale things? What does that look like? And those are things that are newer for me, right? I think the second part is managing both your time and your energy. So, like the tactics of your calendar and you know, this notion of it’s not a sprint, because you want to be in the job for a while. It’s also not a marathon because you need to be showing wins along the way. So, we talk about this notion of managing a series of sprints, and that's something I've really been taken to heart. In the next 90 days, what am I hoping to get done? What will I spend my time on? What does that look like? What are my priorities? And then reassessing that over time, I was struck by how deliberate the CEOs were about that. They had their calendars mapped out a year or more in advance with the big rocks.

Willy Walker: So, talk about those sprints, you call them heart paddles, I believe in the book where these S curves. You use the Banco Itaú CEO as an example in the book to describe those. Talk about how they used Banco Itaú, the ability to sit there and set these sorts of sprints that come one after the other, but you can't. It isn't a marathon in the sense that people do build the rest. We'll loop this back to the pandemic because that's a kind of a good segway to how people are recovering from the pandemic and changing strategy post-pandemic. But talk for a moment about these heart paddles and these sprints. 

Carolyn Dewar: Absolutely. And I think the heart pedals in sprints at the company level end up being even more scale. So sometimes these are multiple year sprints. But if you're going to be CEO for ten years, there's probably a series of three or four steps along that way. And both Itaú, Lego, a bunch of these folks did this well where they'd say, okay for the next 2 to 3 years. The timing depends on the industry. Here's what we're going to be focused on. You know, in this case, they needed to rebuild a foundation, right? They actually needed to come back to their core business and earn the right again to grow and get their house in order. Once they did that, then there was a next set of things you could do to, okay, now we're going to extend and we're going to think about what the more differentiating things are we’re going to do in the market. Where are we going to take products? Now we’ve done that for our country, now we’re going to go to the rest of LatAm or the rest of the world. 

DBS in Singapore is a great example. They went from being a middling Singaporean bank to the best in Singapore, to the best in Asia to one of the best in the world. What they did and when they first started out and said, we want to be the best in the world, people thought they were crazy. Right? But as they go through these series of multi-year sprints, you earn the right, and the organization builds the muscle to be able to take on that next journey. 

Willy Walker: One of the things I found interesting when you describe Moonshot Strategies, you talked previously, Carolyn, about CEOs to almost a person who were bold, kind of ambitious, were able to make that kind of a moonshot strategy, how we're going to get there. But one of the key components to being successful in Moonshot Strategies was M&A. The great CEOs on average did one deal a year. That surprised me. I think a lot of people would sit there and say, oh, you know, these great companies just grow organically, and they are in the technology space and they're just creating new products. But to your research, these companies that successfully did it, they've got a very significant sort of M&A muscle of buying companies in integrating those companies. What are the key pieces to having a successful M&A strategy? 

Carolyn Dewar: When you think about the bold moves to get there, M&A is a really key component in there in a programmatic way. So, what is programmatic M&A? They weren't betting the whole firm on some huge mega deal. I mean, occasionally they were, but it was actually having a clear vision of what are the new capabilities or business areas we're trying to build and constantly having a filter out for what potential acquisitions we can do along the way. Again, many, many smaller acquisitions, but regularly every year over time, rather than kind of waiting for some big hockey stick mega-deal for the most part. It's something that CEOs were quite involved in personally. So, setting the parameters for what are the kinds of things we're looking for, what would the criteria be? And then making sure they had the built-in resilience and reserves and flexibility to take advantage of those deals when they could. It comes to this point as CEO, one of the things you uniquely can do is resource allocation. Yes, your CFO is part of that. But as the CEO, you're the one who can say we're actually pivoting meaningfully a bunch of our dollars and we're going to put them here either for an M&A deal or for a big investment. Mary Barra did this at GM as she pivoted towards electric vehicles and green technology. Fifty percent of her R&D budget got pivoted towards that from a standstill for when they had nothing, and also a huge portion of that towards M&A. So as a CEO, you can make those pivots and you can also say, what are we not going to do? Because part of freeing up the resource capacity to do this is to say no and put a pause or roll off projects that no longer make sense. 

Willy Walker: I think one of the stats from the book was that those successful companies that executed on their moon-shot strategy going back to Mary Barra and the amount of CapEx that she put to electric vehicles, they invested 1.7 times more than the industry average in CapEx, is that correct? 

Carolyn Dewar: Absolutely. And so, they put meaningful amounts and even resource allocation across to be used. Average companies tweak just a couple of percent a year on the budget. It's like plus or minus, these folks would take almost a clean sheet approach and we're not afraid to swing double digit percent resources around from one BU to the next. 

Willy Walker: So, when you talk about M&A strategies, one of the other things that I thought was really interesting was culture and how really successful M&A companies understand the importance of culture. And you highlighted one company, I can't remember the name of it, but basically the two companies came together and if you looked at their mission statement, it said people are competitive advantage and you sort of said, oh, these are similar cultures, but then if you actually peeled it back, one of the people are competitive advantage, in one instance was we trust the employees to go do what they need to do to create great shareholder returns. And the other was more of a we're going to create the belts and suspenders around everyone to make sure that we don't fail. And that if you really kind of dive into that a little bit deeper Carolyn, you can understand how those are two dramatically different cultures, even though the poster on the conference room wall actually had the same mission statement of people as competitive advantage. 

Carolyn Dewar: I remember that one vividly. It's such a good example of when you're thinking about cultural integration, you've got to dig into it. Because you're right, the words on the page were shockingly the same and meant completely different things, and they didn't realize it at first, which meant as you were starting to get into their merger, they both thought, oh, we're the same, this will be fine. And then they started making decisions about how they were going to set up teams, how they'd hold people accountable, what it would do, and they were coming up with very different answers. And at first, it actually led to a little bit of bad blood because people thought that they were not living by their word. It's like we thought you believed people were your competitive advantage. You clearly weren't telling the truth because you're doing all these things that aren't what we would do. And there were a whole bunch of assumptions happening. It turns out they just operationalize those principles very differently. It was only when they talked about it otherwise, it really was going to erode trust, frankly. A bunch of dysfunctions was starting to happen because they didn't talk about what we actually mean, and it comes back to this notion of mindset. And in a merger, it's not just comparing processes, notes and how we do things and technology – it’s how we actually think. If you can align on here's our approach to management, here's how we think about what excellence looks like, all the behaviors will flow from that. And it's at that mindset level that it's really important to align. 

Willy Walker: In the book, you talk about Abraham Wald working with the U.S. military in World War II, looking at the planes that returned from fighting. Would you describe for our listeners, I thought that was fascinating, the work that he did and how relevant it is to not be looking where all the eyes are going, but where the eyes aren’t going. 

Carolyn Dewar: Yeah, I love this. This is a great lesson for any leader when you think about the value of you being able to pop your head up and see where things are going. So, the airplanes were coming back from battles during the war and the ones that had survived the battle were coming back. And so, all the technicians would look for the damage on the plane to get clues about how we can help the planes be better. And so, they noticed the damage was in this part of the wing or this part. Okay, so we need to reinforce that. They started putting extra reinforcement in all the places where the returning planes had holes and it sort of didn't really make a big difference and they were trying to figure out why. And that was when they stepped back and said, maybe we're looking at the wrong data, maybe we shouldn't be, because all those planes, they came back with holes, but they were still able to come back. They still survived. So clearly, those holes maybe weren't life or death. We've got to find out the planes that didn't make it back, where did they get hit? And that's what we need to reinforce. It's such a great and it made a huge difference and saved thousands of lives when they did that. It's a good example of are you confirmation biased and are you looking at just the data you want to look at to prove your point? Or is there some other angle, some other way of looking at things that will reveal an insight? And I think as a senior leader, everyone else is so busy in the day to day that you have a chance to pop your head up and be like, wait, is there a bigger picture here we're not seeing? 

Willy Walker: I love that anecdote and I love how you frame it as it relates to how leaders and management teams ought to think about looking at not where the bullets are, but where the bullets aren’t, if you will, for reinforcement. It reminds me of Sean Foley, who is coming on the webcast next week, he was Tiger Woods’ coach. Sean talks a lot about the fact that Tiger famously plays this game of worst ball. So, he'll tee off with two balls and he plays the worst of the two, then he hits two more balls and plays the worst of the two. And Foley talks about the fact that around the green chipping, Tiger would never put the ball on a good piece of grass. He always would go find the worst place to put the ball, a divot or whatever else, so that he was practicing for the hard shot, not for the easy shot. And it sounds obvious when someone is as good as Tiger, but I do think many people, including lots of CEOs, like to play from the easy shot. They sit there and say, I can do this over and over and they're not looking for that weak spot and testing the team to look at those weaknesses, because invariably we're all going to be tested on those weak spots. 

Carolyn Dewar: Absolutely. Especially when you think about the amount of volatility right now in the market. Everyone's thinking about how I plan for next year. What's happening with inflation, what's happening with geopolitics, all these things? I do think this is where some scenario planning can be really important to your point. Yes, it's great. Hopefully, it'll all go with your plan A, but what's our Plan B? Our Plan C? Our Plan D? Are we building resilience now and anticipating what we would do in some of those situations so that we have a game plan when they come up? Some people don't want to be the downer to raise that stuff, but it's good work to do as a leadership team so that you've thought those tough shots through. 

Willy Walker: Carolyn, you talk about the average tenure of a public company CEO, I think is now six years. It might be seven, but I think it's six. Those who get beyond the six years, if you look at their shareholder returns, they're off the charts and it sort of makes sense. You said 20% fail within the first three years, the average tenure is six years. You find a CEO who's been in the seat for ten, fifteen, twenty years. Typically, they've gotten over that hump, if you will, and the shareholder returns just start to go. Is there anything that the longer tenured CEOs did or thought that was very distinct from the early end of the spectrum CEOs?

Carolyn Dewar: Some of them are quite long tenured. I mean, Ed Breen, who we interviewed, has been a CEO for 26 years across three different companies. So, some of them are also these kinds of serial CEOs, by the way, he claims he says he's only made 15 decisions that have really mattered in those 26 years, which is fascinating. I'm sure there's lots in between. But to the notion of what's your role that only the CEO can do, part of this is knowing when to intervene. I do think this is a natural selection bias. If you've done well enough to last six plus years, you're probably doing a pretty good job. But I also think these folks have learned a lot. So, most of them looked back and they said, yes, these are my mindsets now, here's what I do now, but show yourselves a little grace, because I certainly didn't have those when I started. So, this learning mindset, I would say learning to be really transparent with the board, learning to be ruthlessly filtered on what they get involved in and what they don't from a personal time point of view, really working through their team and leading through leaders trying to do everything versus doing everything themselves. These are all things that they've learned. The ones who didn't learn it kind of don't make it that far because at some point that's what you need to be able to do this sustainably over time. I think the other piece that many of them raised, though, is knowing when it's time to go and actually being okay with that as well. Okay with that in two dimensions: one is having a really clear-eyed view of what the company needs its CEO in the next era and am I the right person for that? And having conversations with the board about that from year one or two of your tenure. Don't wait, this is a constant conversation with the board. And the second piece may be a little bit more personal, is making sure that you don't get so wrapped up in the job that you personally are afraid to not have it anymore. You'll still be relevant in a life beyond. There’re some people who hang on because they don't know what else they would do. You've got to stay human. 

Willy Walker: Reminds me a lot of what Arthur Brooks has talked about in his book, From Strength to Strength. He talks about these people who have this huge success early in their life and then they're hanging on to it too late. When you get to 75 years old, there are these two massively divergent paths. One of those people who can sort of jump to the upward trajectory of letting go of what made them so successful and gave them such joy, and then there are those people who hold on to it and they take this downward spiral because they're not as relevant. They don't have the job, they don't have the brand that they used to have, and they hold on to it and it essentially ruins their lives. 

Carolyn Dewar: So, I'm in the midst of reading that book. There is a ton to learn.

Willy Walker: It's so good, I have to tell you. It's so good! Arthur is an incredibly insightful writer, lecturer and what have you. 
Carolyn, you also talk about acting like an owner and that sort of mindset of I'm an owner of the business, but is there any correlation to ownership and success? Let me just give one quick anecdote before I have you answer that question about what the data tells you. The investment bank that had more partners as owners of the company, to my knowledge, was Lehman Brothers. So, everyone sits around and goes, oh, align interests between management and ownership, and you're never going to have any sort of problems because they act like owners. As we all know, the greatest failure on Wall Street ever was Lehman Brothers going down. For Dick Fuld and the other managers at Lehman Brothers, a massive loss to them. They had every incentive to manage it well, they didn't. The question I have is understanding the mindset of acting like an owner. But does actual ownership amount, percentage, personal net worth invested in the company actually produce greater returns? 

Carolyn Dewar: It's a fascinating question, I'll admit I haven't done the analytics on that. It's a good one, so I'm going to take that away as a to-do. But we did get into it with several of the CEOs. One thing by design, we didn't over index on founder CEOs. We have a few in there, Reed Hastings and a couple of others. We purposely didn't because there's an extreme version of ownership, which is you're the founder, the owner, disproportionately own most of the stock, control the board, which frankly gives you an amount of control that is just not relevant for other CEOs. So, we kind of didn't include them. When you think about it in that way, the risk is that they become so powerful that no one's telling them the truth anymore and that you can get a little bit into your own head, in your own bubble. Do you actually have enough feedback loop to know whether what you're doing is right? 

I think in terms of broad ownership, again, I haven't looked at the incentive numbers, but this notion of whatever role you're in and maybe this is the tie back to your broader audience, all these CEOs said the best time to start thinking and acting like a CEO is in whatever job you're in now. So, there is this notion of whatever executive role you're in now, there's no reason why you can't start thinking and acting like a CEO, which may or may not be the same as owner. But thinking boldly about the group or function you're leading, really being thoughtful about your team and the culture and its ability to deliver, thinking about your stakeholders, thinking about your own leadership – all of those mindsets and lessons learned can apply to any leadership role. And if that's what acting like an owner looks like, I think that can produce tremendous results. The incentives can produce all kinds of separate, perverse things. But act and think like an owner, think like a CEO, I think gets you to a good place. 

Willy Walker: So, take that one step further, someone who is in the beginning of their career and is aspiring one day to be in the C-suite to have the big job. What advice, having studied these leaders, would you give him or her as it relates to what to do in their career, as it relates to either maniacally focusing on getting there one day, not focusing on it, how they would act with colleagues, how they would learn, what would be kind of the cheat sheet for you're just coming out of undergrad or business school and you're bounding into your career you want to understand how you can get to that corner office? 

Carolyn Dewar: Absolutely. I mean, maybe two different lenses. One is obviously job number one is to excel in whatever your current role is. And it seems obvious. 

Willy Walker: I thought you're going to say, join McKinsey and become a consultant. I will hold off on the public service announcement there. Anyway, sorry I jumped in. Keep going. 

Carolyn Dewar: I think doing an excellent job in your current role with some of these CEO mindsets, thinking boldly, navigating, and aligning and mobilizing your stakeholders, thinking of all of these pieces as a resource to help your organization live its purpose. Whichever function or team you're driving, I think that's job number one. There's no reason you can't start now. 
I think the second parallel piece, if you have aspirations beyond, is definitely not to get completely distracted and obsessed with that. Frankly, it's a distraction and other people don't love it if they know that that's what you're trying to do all the time. But I do think there are some smart things you can be doing. The learning mindset that we talked about, right? What are all the things you can be learning? Are you seeking out opportunities? If you're a senior leader, but not yet CEO, you could join a board. You could learn what it's like to be on that side of the table. You can be part of a cross enterprise initiative team that's getting you out of your silo. Anything you can be doing to broaden your perspective, because I think the biggest surprise that new CEOs have is not the setting the business direction, strategy team stuff. It's the other three, it's managing the board or whatever your senior folks are. Right? It's thinking about all your stakeholders. It's elevating your own leadership. Those are all things that you can start to practice and find opportunities for but learning mindset all the way through and it never stops. 

Willy Walker: Well, it's very clear that you have an incredible learning mindset. You and your colleagues, Scott, and Vic, have written an incredible book in CEO Excellence. I'm deeply appreciative of you spending an hour with me and talking about all this, and I am going to take you up on your offer for me to look back at some point and talk about some of the stuff that I've learned personally from reading your book and trying to start to implement some of that at Walker & Dunlop. So, thank you, Carolyn and I really appreciate you taking the time. 

Carolyn Dewar: You're so welcome. What an energizing start to the day! I love this series that you're doing, and I've learned a lot from you. So, thanks so much. 

Willy Walker: Thanks, Carolyn. Thanks, everyone, for joining us today. We'll see you again next week with Sean Foley, Tiger Woods’ former golf coach who now coaches a bunch of other PGA players. I will tell you that if you show up thinking that Sean has the answer for your particular golf swing, you will be greatly disappointed. He will talk about what the mindset of a winner and a winning golfer is and it's a fascinating discussion. So, thanks, Carolyn, and have a great day.

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