Claudio Fernandez-Araoz, "author of It's Not the How or the What but the Who", and one of the world's most influential executive search consultants, has been part of over 20,000 executive interviews over his long career. He has worked for over three decades at Egon Zehnder as partner, the founding leader of the assessment and development practice, and a member of its global executive committee for more than 10 years. He speaks with India Today TV's Rahul Kanwal on how to hire right. Edited excerpts:
Some of the world's smartest companies have CEOs of Indian origin. Is that a one off; being in the right place at the right time, or is it a trend?
I don't think it is by chance at all. It is a combination of several things. The first is the fact that, as I half-jokingly say, Indians have been blessed with an extraordinary blend of brilliant Anglo Saxon mind and a warm Latin American heart. So many Indians I have met all over the world had highly analytical and deliberative minds, were inquisitive, had insatiable curiosity, and insight. That's basically IQ. IQ is basically uncorrelated with emotional intelligence-based competencies, which are the key for success. We tend to hire people based on their IQ, which is highly correlated with their academic achievement. But then those people get either promoted or fired because of their emotional intelligence-based competencies.
The second factor is that a significantly large population of well-educated people in India also speak English, which is a huge advantage if you want to make it globally not just in the US. Third, India has been an extraordinary training ground for today's VUCA world: volatile, uncertain, complex and ambiguous. I come from that type of a world, from Argentina, from Latin America. Today, the whole world has become unpredictable. But Indians have been trained in a highly volatile environment, plus they have a multicultural country where they have to deal with people from different cultures, values and traditions.
That some of the world's most successful leaders have come from India is not surprising. Satya Nadella is an extraordinary case at Microsoft. When his predecessor (Steve Ballmer) decided to step down, Microsoft was losing its way. They were making the typical mistake of looking outside. I was watching that search. They were looking for a turnaround manager. Apparently, their preferred candidate was Alan Mulally, who was the CEO of Ford those days. He apparently turned down the offer. I was wondering, "Don't they have one person in Microsoft, which had 101,000 employees?" Finally, they looked inside, something that companies should do more.
Look at Indra Nooyi. She was an extraordinary transformative leader at PepsiCo, and not only in terms of results. She moved away from junk food, and undertook strategic diversifications and acquisitions. Now she has joined the board of Amazon. I am sure she is going to make a terrific contribution, not only strategically but also in terms of purpose.
I hope you have many more excellent executives from India to export to the rest of the world, because they are badly needed.
What are the key things that you are looking out for in 2020 when you go out and hire for the current age?
I am no longer involved in that type of thing. Twelve years ago, after I had published my first book Great People Decisions, which was a global success, I was traveling all over the world speaking about it, but I was putting at risk my own people - my wife Maria and our three children. So I decided to step down from the executive committee and the partnership and had a part-time type of relationship 12 years ago. Right now, I am spending all of my time on research, publishing, public speaking and teaching at Harvard Business School, where I am an Executive Fellow for Executive Education. I don't conduct executive hirings these days, although sometimes I give advice to or even coach some leaders, even some governments.
I believe that in today's world, when spotting leaders, we should continue looking for all the things that were relevant in the past. But in addition,we need to add a couple of things that have become important, not just for success but even for survival. First, believe it or not, physical strength is important, and we focused mostly on it over the millennia, because work was physical. The funny thing is that because we did that throughout the millennia, we became unconsciously hardwired. You see a tall man and you think that person must be more competent. Of course, if you are strong, if you can work 16 hours without getting exhausted. If you can travel around the world fighting jet lag, you accomplish more.
With the Industrial Revolution work became more complex and we started looking at IQ. And while most companies today don't measure IQ, academic achievement is one of the first things you look at in a CV. With industrial revolution, work also became standardised. So, one would look for past experience and performance as a good predictor of future performance, and that is still relevant.
All of that helps. Then, more recently, we moved to the third era for making people decisions. The current code of best practice is the competency approach: You essentially look at the job and decompose it into required skills or competencies. How much 'strategic orientation' is required for this job? It would be huge for Jeff Bezos (founder and CEO, Amazon) or Satya Nadella (CEO, Microsoft) but much lower for someone who is managing a water utility. How much 'change leadership' is required? In many financial institutions that want to completely change themselves in the new digital world, the need is very high. How much 'influencing and collaboration skills' would be needed? A lot, for example, for a staff role as well. So you decompose the job into the required competencies and look for candidates inside and out that have the competency fit. You use the competency approach also to promote people from within, hire people from outside, and develop all of them into the future.
However, you need two more things these days for spotting great leaders: First, you need to have people with potential, which is the ability to constantly learn, change, and fundamentally reinvent. Even if someone today has the perfect competency fit for a job, the job itself will change and the person won't be able to continue performing at a high level unless she or he has the potential to continue changing fundamentally. What got you here won't even allow you to stay here if you don't have the potential to continue growing.
How do you determine someone's potential? There are four hallmarks plus one important addition. The four hallmarks are curiosity, insight, being able to take pressure and determination. The other thing is that you need to look at, in addition to physical strength, IQ, experience, past performance, and competency fit, is potential, which are determined by the four hallmarks mentioned earlier.
Another extremely important factor, so badly needed in many of our political and corporate leaders, and so valued by young generations, is the right type of motivation. David McClelland, who was the father of the competency movement, considered that we have three drives, three needs: the need for power, the need for affiliation, and the need for achievement. So it's achievement (getting things done), power or influence, and affiliation which is socialisation. Now, the need for power comes in two fashions - a personal need for power, and the other organisational or socialised need for power, when you really want to do things to build something larger than yourself. This is highly correlated to what my friend Jim Collins (author of Good to Great) refers to as the distinctive characteristic of the Level Five Leader, the best leaders, which is a paradoxical blend of fierce commitment and deep personal humility. A psychopath can also be highly curious, insightful, engaging and fully determined. So the real high potentials are the social leaders who also have the right type of motivation.
One of the things you mention in your speeches is the luck factor, that luck is the primary determinant. How does somebody make his own luck?
Almost 34 years ago, when I was going through a series of interviews, which included Egon Zehnder himself. During the interview, I asked him what was the No.1 factor for career success, based on his privileged perspective of having met perhaps tens of thousands of the most successful people on the planet. To my surprise, he said, "Luck!" I was kind of surprised because I was looking for something more actionable. But he continued along these lines: "All the great people I meet all over the world are very smart, and they work very hard. They are masters at managing themselves and their relationships with others. But luck is the number one factor for their career success. They were lucky to be born at a certain time in history, in certain countries, to be raised by certain families, to be healthy and remain healthy, to receive the type of education they received, and so on." Egon is right; luck has been and is the most important factor for me.
Jim Collins' book Great By Choice has a chapter titled "Return on Luck". Jim is outstanding at working with the contrast method, as he did in his previous blockbuster "Good to Great". In it he analysed some 1,500 of the largest American companies, identified those that made a leap from good to great (only 11) and sustained a remarkable performance for at least 15 years in a row. He compares them with companies that were in the same sector at the same time, but didn't make the leap from good to great. In "Great by Choice", Jim adds to that a filter of a very volatile, uncertain, complex, ambiguous and turbulent environment. He looked at those companies and leaders who really made the leap and thought, perhaps, luck is the explanation. He first defined luck as something that has serious consequences on you but is basically out of your control. He counted the number of luck events that these great companies and great leaders had, and he concluded that those who were successful had a lot of luck - good luck, and also bad luck! On average, their luck was not significantly different from that of the others, but what they had is a much higher return on luck. You achieve a higher return on luck by obsessively focusing whenever a great opportunity or a big threat appears.
If you are advising a young person on how to prepare for success in the future, what would be your success mantra?
Two or three things perhaps. First, don't fall into the trap of seeing life as linear, where you first learn, then you earn, and then you return. This young generation is going to live at least 100 years. They will likely be in great shape at least until they are 90 and they will work until that age, because work is a blessing, it is what makes our life incredibly adventurous and rich, and second because all the pension systems are broken, so they will need to work anyway. You really need to keep on learning your whole life.
Second, I have personally interviewed more than 20,000 people, I followed many of them. I had intense coaching discussions with more than 4,000 people throughout my career, and I plan to do the same thing over the next 30 years. And the people who have lived happy lives of excellence and impact have also lived lives of genuine purpose. So you cannot wait for the return component until the end. The best way is to return while you are earning and while you are learning.
My advice would be that we don't look at life as a linear process. It is in a sense a circular process where you are constantly checking three C's: building your capability, connectivity and credibility. There are three other C's in addition to these. The first of those is contemplation. From time to time, we need to stop and listen to our heart, to be in touch with our own inner moral compass. To get a high return on luck, look for and develop relationships with special Companions (the fifth 'C'), which can help us envision and develop better versions of ourselves. The final C is Compassion. It is very important to have first self-compassion. I am a committed Catholic, and there is a commandment that says, "Love your neighbour as you love yourself". It took me too long to realise that loving ourselves is very important. We need to learn to laugh at our own mistakes, and not take ourselves too seriously. But also realise that there are so many people out there in so much need. Everyone is poor in a sense and everyone is very rich in another sense.
Richard Boyatzis - author of "Helping People Change: Coaching with Compassion for Lifelong Learning and Growth" - is probably the master in the field of researching and implementing adult change in emotional and social-intelligence-based competencies, which is so key for personal and professional success. He has an outstanding framework for how adults can change. Basically it is built around five conditions, but the first and most important condition for successful change is to come up with your "Ideal Self", to think about who you really want to be, and that would be my advice for those who are growing up... and that should be all of us hopefully!
Listen to the full interview on our podcast here:Leadership expert, Claudio Fernandez Araoz on nurturing leadership potential