Tag: Bauer Leadership Center



Written by Joe Dwyer for the 2019 Olin Business magazine

For Dave Peacock, being values-based and data-driven is key to the success of Schnucks Markets in achieving its higher purpose of “nourishing people’s lives.” Peacock, EMBA ’00, is president and COO of Schnucks, a St. Louis-based regional grocery chain with 15,000 employees. Communicating Schnucks’ purpose is vital to the company’s culture, he said. It’s also important in attracting new employees to the company, which hires as many as 5,000 new workers each year.

“We have regular sessions to talk about  the importance of our Midwest family values and how that fits with our purpose of nourishing people’s lives,” he said. At Schnucks, those values speak to a customer-first mentality, the willingness to try new things, a culture of tolerance and hard work and haste to help those in need.

Anjan Thakor and Stuart Bunderston

Peacock also formed a data-focused unit at the company in January, hiring Tom Henry, a member of the board of WashU Olin’s Center for Analytics and Business Insights, to serve as chief data and analytics officer. Henry now leads a 50-person business unit with the mission of “constructing and maintaining a purpose-built information management environment, governed and utilized by teammates at all levels of the enterprise, where trusted and increasingly intelligent insights are produced.”

Meeting consumer demand

Schnucks’ efforts align with growing consumer sentiment. Nearly 80% of Americans say they’re more loyal to purpose-driven brands, according to a 2018 study by public relations agency Cone/Porter Novelli. The same study said more than three-quarters aren’t satisfied with brands that only make money; they expect companies to positively affect society.

That shift is in step with WashU Olin’s brand positioning—to “champion better decision-making by preparing and coaching a new academy of leaders who will change the world, for good.”

The movement dovetails with the work of Olin professors Stuart Bunderson and Anjan Thakor, who are at the forefront of this advancement in business strategy that could help workers achieve professional success and fulfill values-based ambitions in their professional lives.

Bunderson, director of Olin’s Bauer Leadership Center and the George and Carol Bauer Professor of Organizational Ethics and Governance, has published a book about it, The Zookeeper’s Secret; Thakor, along with Robert E. Quinn from the University of Michigan, published a new book in August called The Economics of Higher Purpose and a cover story (“Turning Purpose into Performance”) in the July–August 2018 issue of Harvard Business Review.

Benefits: Dollar signs and beyond

A common theme of Thakor’s and Bunderson’s scholarship indicates that young professionals, and many others, want to work for companies that articulate a greater purpose—improving the world where they can, whether that’s in their local communities or addressing societal issues worldwide.

In addition, their work shows more than anecdotal evidence that purpose-driven organizations generate more worker and customer loyalty. Increasingly, workers are holding their employers more accountable and demanding to see more examples of executing on purpose, according to Thakor.

Those companies with the most clarity in the pursuit of their purpose frequently perform better financially, according to a 2016 study led by The Wharton School.

Thakor and Bunderson, however, also warn of pitfalls in creating a purpose-driven organization. Leaders of purpose-driven companies can’t take on every charity case and could face backlash from employees when workers’ pet projects aren’t a priority. Further, having a purpose doesn’t guarantee financial success, especially for startups.

“Creating a higher purpose is not a tool or tactic to make more money or achieve better financial performance,” said Thakor, the John E. Simon Professor of Finance and the director of doctoral programs at Olin. “Turning purpose into performance is very hard. Emotionally, it takes a lot of effort.”

He stresses that firms must meet two conditions: First, the identified purpose must be authentic, and second, it must be communicated with clarity. Thakor says being authentic is hardest, in part because it goes beyond putting posters on walls and communicating from HR to employees.

Can purpose have a downside?

“Every company now has a statement of principles that is displayed, and most of the time people in an organization understand it has virtually no meaning for the decisions the company makes,” Thakor said. “So, it doesn’t really affect the employees.”

For a purpose-driven company, that’s not the case. Managers and employees are vested in the core values and make decisions based on what they believe supports those core values. As a result, being purpose-driven will have costs and impose constraints.

“That’s especially significant when a company’s competitors are without purpose and have no restrictions,” Bunderson said. “Those competitors are not restrained in the business deals they will pursue. Purpose has to be backed by actions, mission and commitment. The purpose-driven company will say, ‘We won’t do that.’”

While there are hazards in the purpose-driven organization, Bunderson and Thakor agree that the benefits of being purpose-driven outweigh the risks.

There are a couple of ways purpose can help,” Bunderson said. “It’s not just feel-good, and it can be a competitive advantage.”

For example, millennials seek purpose as much as profit in their work, so communicating about a purpose-driven organization can be an advantage when recruiting 20-somethings or MBA students—or when fielding inquiries from recruiters.

For example, millennials seek purpose as much as profit in their work, so communicating about a purpose-driven organization can be an advantage when recruiting 20-somethings or MBA students—or when fielding inquiries from recruiters.

Sue McCollum, JD ’15, said having a values-based purpose, especially during challenging times, engages employees and keeps them moving in a positive direction. McCollum is chairman and CEO of wine and spirits distributor Major Brands Inc.

One of the ways Major Brands does that is through its Safe Home program, offering thousands of free rides home a year to bar patrons in a partnership with ride-hailing service Lyft. “It’s part of our push for social responsibility and accountability that has become really important to our people here, to our suppliers and to our customers,” McCollum said.

The challenge: Establishing purpose

Workers, customers and investors want to be part of something greater than themselves, research has shown. Having a greater purpose, however, has to be more than a mission statement and jargon about respect, teamwork and shared vision, Thakor said. It’s about creating leaders who are prepared to make, and stick with, difficult values-based, data-driven decisions.

The biggest challenge is for leaders to establish a company’s higher purpose, Thakor said.

“Giving to charity is not higher purpose; every company does that,” he said. “It’s not having a mission statement; most companies have those. It’s about going through a group of exercises to discover an authentic purpose that will guide all future business decisions.”

In his book, Thakor cites Apple and Walt Disney Co. as examples    of companies that successfully established their higher purpose. Disney’s purpose in Disneyland was to create “a place for people to find happiness and knowledge.” For Apple, he offers a Steve Jobs quote: “Great companies must have a noble cause. Then it’s the leader’s job to transform that noble cause into such an inspiring vision that it will attract the most talented people in the world to want to join it.”

Once the purpose has been discovered and established, it should carry over into all aspects of the company, from how meetings are run to the people who are hired.

The concept of business leaders making decisions based on values —as well as data—is growing, but isn’t novel. Olin’s strategic pillar focused on creating leaders who make values-based and data- driven decisions has its roots in the business school’s founding.

“We’re talking about issues at the core of what we stand for,” Bunderson said. “In 1915, when William Gephart was making the case for why the university needed a business school, he cited the need to understand complex information (that’s the data part) as well as the need to consider how our decisions affect the broader society (that’s the values part). Being values-based and data-driven is in our DNA.”

Eight Steps to Organizational Change

Anjan Thakor outlines the steps in his book, The Economics of Higher Purpose: Eight Counterintuitive Steps for Creating a Purpose-Driven Organization, co-authored with Robert Quinn, professor emeritus at the University of Michigan’s Ross School of Business and a cofounder of the school’s Center for Positive Organizations.

  1. Envision a purpose-driven organization
  2. Discover the purpose
  3. Meet the need for authenticity
  4. Turn the higher purpose into a constant arbiter
  5. Stimulate learning
  6. Turn midlevel managers into purpose-driven leaders
  7. Connect the people to the purpose
  8. Unleash the positive energizers

More support for purpose

On August 19, 2019, the powerful Business Roundtable lobby—which includes the CEOs of dozens of major US companies—issued a revised “Statement on the Purpose of a Corporation.” The one-page declaration, with 181 signatures, includes a corporate imperative to support and invest in communities and people: “Each of our stakeholders is essential. We commit to deliver value to all of them, for the future success of our companies, our communities and our country.”




Olin

The Center for Analytics and Business Insights, along with the Bauer Leadership Center, hosted a seminar March 26-27 on values-based/data-driven decision-making. The seminar, which hosted nearly 50 executives from a variety of local data-centered companies—including Wells Fargo and Teradata—was a huge success.

Seethu Seetharaman led the morning session for participants in a March 26-27 workshop on values-based, data-driven decision-making.

Seethu Seetharaman, director of CABI, kicked off the event with a discussion on hypothesis testing.  Seetharaman, W. Patrick McGinnis Professor of Marketing, brought statistics to life with riddles and brain teasers. With a group filled with professionals working with statistics daily, Seetharaman’s brain teasers still expanded their knowledge and truly kept them on their toes. A quick example of a brain teaser to try at home:

“A light flashes red 75% of the time and green 25% of time. You have to predict what the next flash will be. Is it reasonable to use a biased coin weighted to flip toward red 75% of the time to predict the next flash? Or is it more reasonable to just predict red?”

Seethu Seetharaman and Stuart Bunderson teamed up on the March 26-27 workshop on values-based, data-driven decision-making.
Seethu Seetharaman and Stuart Bunderson teamed up on the March 26-27 workshop on values-based, data-driven decision-making.

The answer is actually no. The likelihood of having the coin and the light flash the same color is slim because there are two separate events. The two events will only align 62.5% of the time, so it’s safer to predict red from the get-go with its 75% probability. 

The first afternoon was followed up by Stuart Bunderson, director of the Bauer Leadership Center. Bunderson, George & Carol Bauer Professor of Organizational Ethics & Governance, discussed values-based decision-making, incorporating values and ethics in business, while backing them with statistical evidence.

Bunderson amusingly warned the data-focused audience, “We are now entering the domain of moral philosophy… we answer which outcomes we should be striving to achieve through discussion and mindful reflection, informed by theoretical frameworks.”

Bunderson continued, asking, “What are values?”

Values are beliefs about preferred “end states.” They can be explicit or implicit, but regardless, represent the fundamental building blocks of an individual’s character or organization’s culture.

Values are all about the why of a business: the how represents tactics and execution, the what are objectives and KPIs, while the core why are values and the mission. The why drives the what and the how.

At the end of the session, Seetharaman’s statistics-heavy lecture paired perfectly with Bunderson’s value-based message. The audience collectively resonated with the idea that a business is firmly, at its core, driven by values.

However values must guide decisions made and then must be secondly backed by statistics. You must be able to understand your KPIs while still keeping true to your business’s mission.




Kathy Mazzarella, chairman, president & CEO of Graybar

Kathy Mazzarella, chairman, president & CEO of Graybar, joins the Defining Moments speaker series to share how she rose through the ranks of a Fortune 500 company starting out without a college degree. Mazzarella—who completed an associate’s degree, bachelor’s degree and MBA while working at Graybar—breaks down her success story into the following two life lessons.

Always aim for No. 1

Mazzarella shared advice from her greatest inspiration, her father, “Your only failure in life is if you don’t shoot high enough. If you shoot for the No. 1 position and don’t get it, you haven’t failed, you’ve learned. If you shoot for the No. 2 position and get it, you’ve failed.”

This lesson stuck with Mazzarella throughout her many defining moments. The first was her high school class president election. She ran and lost. Instead of giving up, the following year, Mazzarella didn’t just run for class president, but school president—the No. 1 position.

Acknowledging that it was a popularity contest, she had to strategize how to win using her connections, through sisters, in order to compensate for votes among her own classmates she knew she couldn’t win.

Mazzarella won class president.

The same lesson that initially applied to her class president election carried with her when just a few years later, she dropped out of college. Mazzarella initially went to school with aspirations of becoming a doctor. Realizing this path wasn’t for her landed her back home with two devastated parents.

Mazzarella, hoping to make her own path, went out for a job interview. On her way to the interview, she stepped into a building on the way to ask for directions. The building held the Graybar offices. They were hiring. This was fate.

The interviewer asked, “What role would you like to have?” Mazzarella, recalling her father’s advice, replied, “president.”

Use setbacks to learn, grow and become stronger

This lesson was one Mazzarella had to learn the hard way. She was up for a senior vice president position. As the first female vice president in the company—with an incredible professional track record—she was up against a male candidate who was always one step behind her.

Mazzarella frankly believed she was a shoe-in. Mazzarella worked hard, stayed late every night, worked every weekend, got every award available, and yet her competition got the job.

Mazzarella’s initial reaction? “I’m done.”

However a quick call to her father changed her mind.

This is your defining moment,” he said. “How you handle this will determine your future career. Everyone’s watching.”

Mazzarella swallowed her pride and called the winning candidate to congratulate him.

This blow steered her career toward HR and strategic planning, which ultimately made her a better leader. When Mazzarella was running for the CEO position, a board member recalled that she handled the SVP loss incredibly gracefully, proving that she cared about the company over herself.

Mazzarella truly used this setback to grow and become ultimately stronger, as she now hold the positions of chairman, president & CEO.




Bob Chapman, the chairman and CEO of Barry-Wehmiller

Bob Chapman, the chairman and CEO of Barry-Wehmiller, stepped into the Defining Moments class ready to redefine success and leadership. To many undergraduate and graduate business students, success means money, power and position, while leadership is how well you manage those around you to achieve company goals.

Chapman wanted to change our mind.

To start, he reflects on his MBA: “I learned management, meaning the manipulation of others for your own success. I was never taught how to inspire, how to care.”

In a room full of business students, this may have served as a wake-up call for some. Chapman wanted to open our eyes to a greater understanding of leadership and success.

Leadership

Chapman shared what he believes is the incorrect definition of leadership. He made sure to emphasize the privilege of leadership. Chapman believed “there is no difference between parenting and leadership.” With that in mind, Chapman sees the honor and responsibility that comes with holding a leadership position.

In thinking about leadership, many think that the impact of leadership doesn’t extend much past one’s place of business. Chapman made sure the class knew of the much greater impact a boss can have.

He quotes Jeffrey Pfeffer, author of Dying for a Paycheck: “Just in the US, the excess deaths from exposure to workplace stressors is probably 120,000 lives a year.”

Further, Chapman elaborates that with our current record low unemployment rate comes a record high in stress and anxiety.

So where does leadership come in? Focus on what Chapman refers to as human leadership, which encapsulates “people, purpose, performance.” He expands, “Leadership is the stewardship of guiding the people you have the privilege to lead.”

“Why can’t we make business fun?” he asks. “Why do we call it work?”

He brought this attitude to work one day to create a game: Whoever’s account sells the most parts by the end of the week gets $100!” Revenue rose within the week and, most importantly, people were having fun.

Success

As Chapman mentioned before, success is much more than money, power and position.

“When I look back on my success, it was always about need,” he said. “What I need.”

Chapman shares that the truth is many people with money, power and position are still miserable. So then how do we define success? Chapman asks how the class would want their eulogy written, what you would make us proud to have people say.

Success is living your life with purpose rather than living it as a series of events. Success is having an impact.

“We don’t need to change the laws, the policies, the taxes,” he said, in closing. “You are the future leaders of the world. All you have to do is care.”




Arnold W. Donald

Arnold W. Donald is the CEO of Carnival Corporation and had previously worked his way up within Monsanto to president of nutrition and consumer sector. Donald spoke for our Olin Business School’s Defining Moments series in which CEOs share the moments that shaped their career.

However Donald wasn’t always a powerful force in the corporate world. He started in New Orleans, where he attended an all-black high school. It was not easy growing up in segregated New Orleans.

“I was told and told again to prepare myself, that I could do anything—all at a time when I couldn’t drink from this water fountain or eat at that lunch counter,” Donald said. He put all of his belief and energy into the value of education: “Education is a portal to prosperity.”

Even as a teen, Donald was career-focused: by high school he had decided he was going to be a general manager at a Fortune 50 science-based global company. With a very narrow vision, he set out to achieve that goal. He worked hard to get into Carleton College, but didn’t stop there. Donald plowed his way through a Washington University bachelor of science degree in mechanical engineering and later received his MBA from the University of Chicago.

His goal began to materialize as he scored a position at Monsanto right after graduating from Washington University. This position led to his Defining Moment. Donald, then just a rookie, was assigned an account no one wanted.

Arnold Donald, Carnival Cruise

Arnold Donald, Carnival Corporation

When his boss offered him the losing account, he referred to him as “Nick,” using the name of the only other African American employee. Donald reiterates, “Marketing didn’t want the account because they were judged on sales. Logistics didn’t want it because they were judged on efficiency. My boss didn’t want it because it was an embarrassment.”

Donald, as a rookie and as one of two black employees, was driven to make a profit from this account.

Donald ended up sharing a presentation with his client that saved them a significant amount of money. The client then turned to Donald’s boss and explained how he had just completely saved the account. The boss replied, “I know that’s why we put Arnold on it.” This was the first time the boss had called him by the correct name.

This instance of hard work on Donald’s part—countered by his boss’s ignorance—had defined the start of his career. There will be bumps in the road, but he knew he could count on himself.

From this defining moment, Donald outlined his key takeaways: “Know your heart, find your passion; chart your course, develop a plan; prepare yourself.” These takeaways led him to his current position as CEO of Carnival Corp., a nearly $50 billion corporation.