Eduardo Braun on “People First Leadership” Part 2 of an interview by Bob Morris

Eduardo Braun is a leadership expert, keynote speaker, and author. For more than 15 years he has traveled the globe and engaged in conversation with world-renowned management leaders, heads of state, and top academics and entrepreneurs, including personalities such as Jack Welch, Bill Clinton, Tony Blair, Gary Hamel, Richard Branson, and Pope Francis, among others.

His new book People First Leadership: How the Best Leaders Use Culture and Emotion to Drive Unprecedented Results, is the result of these conversations, where he shares intimate stories and practical life lessons of successful leaders who use culture and emotion to drive unprecedented results. Eduardo introduces a new vision of leadership where the new CEO — or Chief Emotions Officer — establishes stronger connections that get better results and create a culture of inspiration and success.

An industrial engineer from the University of Buenos Aires, Eduardo has an MBA from the Wharton School, University of Pennsylvania and a vast work experience in the US, Europe and Latin America in companies such as Booz Allen & Hamilton, Etex Group, and The HSM Group -global multimedia management company and organizer of the World Business Forum.

An in-demand speaker on leadership and culture management, Eduardo lives in Buenos Aires, Argentina.

His aforementioned book, People First Leadership, was published by McGraw-Hill Education (October 2016).

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Now please shift your attention to People First Leadership. For those who have not as yet read it, hopefully your responses to these questions will stimulate their interest and, better yet, encourage them to purchase a copy and read the book ASAP. First, when and why did you decide to write it?

Writing a book is a personal journey. For almost 15 years, I shared stories of my encounters with global leaders with my close friends, and I always found great interest in my experiences and anecdotes. Years later, I decided to write a book to assemble and share all anecdotes and lessons learned from the world’s greatest leaders.

Were there any head-snapping revelations while writing it? To what extent (if any) does the book in final form differ “significantly” from what you originally envisioned? Please explain.

At first I was not sure how to structure the book. One option was to select a dozen leaders and talk about their views and messages, but by doing so, I would have lost their common messages — which ultimately have enormous value. So I decided to go back to my notes and interviews, re-read or listen to all this material and find the key messages from each leader. Then I put together all those messages trying to find the overlaps and shared messages. To my surprise, the strongest correlations appeared in the leadership roles, further more, I discovered something hidden in the language or even the energy with which these great leaders spoke… the importance of emotions! So it was at the early stages –but well after I had started— that I found the key message of the book.

You suggest in the Prologue, with regard to Michael Porter’s Five Forces Framework, we could call this paradigm that makes strategy a central tenet the ‘business-as-usual’ model.” Does that model still have validity? Please explain.

Sure it has! This model is key and at the core of business success. I like to use phrases like “Culture eats strategy for breakfast” — attributed to Peter Drucker or “Culture is more important than strategy” — to wake up people to the potential of managing culture. The vast majority of executives have been trained in strategy or any subset of “hard variables” and devote most of their time to manage those same topics: Enough! You have probably tapped all of the potential to create value through those dimensions. But how much time, energy and resources do top executives spend on people and culture issues? There you have the untapped potential. It is there that you have the opportunity to boost results!

I’m aware there are businesses where your strategic competitive advantage might be huge, and therefore render your culture impact apparently irrelevant. As an example: in the cement business the distance from the quarry to the market is key as transportation costs are a significant part of total costs. If you are the only cement producer to have a quarry near a big city, then your strategic advantage is huge and you’ll have high levels of “guaranteed” profitability. But a strong and healthy culture will certainly have an additional impact on profitability through innovation, service and other profit levels.

When are culture and strategy mutually exclusive? Why? When are they interdependent? How so?

Great question! I would say that culture and strategy could be totally independent, there is no intrinsic relation. But to be most effective, they need to be interdependent. The values and behaviors that are embedded in culture should reinforce the behaviors your strategy needs. This is the reason I call them “strategic behaviors”. If your strategy and value proposition are axed on cost –like in the case of Walmart –, then values and behaviors in your culture should be oriented to save costs. If your strategy is based on superior service, then so should your culture be.

To what extent (if any) can the impact of culture on the bottom line be quantified? Please explain.

It is undoubtedly hard to isolate the impact of culture on profitability, but there are studies and examples that prove that it is significant. In his book Firms of Endearment Professor Raj Sisodia shows that firms that are generating value by caring for all their stakeholders through passion and purpose have accumulated results –from 1998 to 2013— that are 14 times higher than the S&P 500 in the same period. That is 1400% higher! The elements that distinguish “firms of endearment” are embedded in their culture.

In another study by Professor Sisodia, he shows the 18 publicly traded companies out of the 28 consciously capitalist companies he identified, out-performed the S&P 500 index by a factor of 10.5 over the years 1996 to 2011. “Conscious Capitalism” is based on four primary principles: Higher Purpose, Conscious Leadership, Conscious Culture, and Stakeholder Orientation. Each of these elements is part of a unique culture centered on people and the well being of all stakeholders, including the planet.

I would like to mention just one example directly from my book. “A very interesting case through which to evaluate the tremendous impact of culture on performance is Herb Kelleher’s Southwest Airlines. Who among you would like to acquire a company in a sector that has faced decades of serious profitability problems, as well as the bankruptcy of leading competitors? My first reaction would be, “Not even if they gave it to me for free!” But what a terrible mistake that would be if the company were Southwest.

According to Money magazine, of all the companies featured on the S&P 500 Index between 1972 and 2002, Southwest Airlines enjoyed the highest return to shareholders! For instance, $10,000 invested in Southwest in 1972 was worth $10,200,000 in 2002, an average increase of 25.99 percent per year! I think we would all agree that’s a pretty good return on investment! And if you consider that Southwest had the best return to shareholders not only in the floundering airline industry, but among the biggest 500 companies in America, then you really can grasp the scope of Southwest’s achievement.

Was it the strategy that made it so successful and profitable? Kelleher, cofounder and former Southwest Airlines CEO, attributes only part of his company’s success to a 10-word strategy: Southwest is a “low-fare, high-frequency, short-haul, point-to-point carrier.” The airline kept the same strategy for over 40 years. As such, it is hard to differentiate and ends up being, from a purely strategic perspective, a commodity type, and it is hard to make healthy margins in a commodity business. We, then, have to look for the cause of such profitability elsewhere. During an interview at his office in Dallas, I heard Herb’s amazing story of success and had the opportunity to ask him what, in his eyes, was the source of Southwest’s competitive advantage. He explained: ‘I always thought that our esprit de corps, the attitude of our employees, was one of our biggest competitive advantages. You know, people like to be treated nice; they like to be treated well, and our people do that from the goodness of their hearts. And that is our advantage over other carriers.”

Most of the companies annually ranked among those that are most highly admired and best to rower for are also annually ranked among those that are most profitable and have the greatest cap value in their industry segment. In my opinion, that is not a coincidence. What do you think?

I certainly agree, behind admiration lie several characteristics of what I would call “a strong culture” such as the sense of purpose, caring for people, so definitively, culture could be through these studies, highly correlated with profitability.

There are “five key roles” in the New Leadership Model that you offer. Which role seems to be the most difficult to fill effectively? Why?

I think people naturally fill in more one or another; it is unlikely that people can fulfill all five, equally well. But I’d say the single most difficult role to fulfill is the one called communication that really means to “connect through communication,” to create bonds and trust through communications. I’m not certain why communication is so difficult, perhaps because we are not generally aware of the importance of creating bonds and trust, and so we don’t focus and work on those dimensions and only naturals fulfill that role.

Years ago, Maya Angelou observed: “People will forget what you said, people will forget what you did, but people will never forget how you made them feel.” What is the relevance of that statement to people first leadership?

This statement actually fits perfectly well, because the message in People First Leadership is that you have to fire up people’s hearts, you have to make them feel certain emotions, such as sense of purpose, sense of belonging, trust, pride, or similar positive emotions, and if you do, people will follow, if you do people will join you in reaching any goals.

As a CEO or company owner, once you’ve already learned the previous roles you can focus on creating and managing a positive and high performance culture by creating a culture plan where you identify the key values and behaviors, and plan to have those communicated and lived throughout the organization and the culture plan.

Which question had you hoped to be asked during this interview – but weren’t – and what is your response to it?

When I was finishing my book I realized the strong connection between culture and brand, between culture and brand positioning, value proposition. In a company structure these two aspects are generally treated separately; the marketing director deals with branding and positioning, and culture is taken care by HR or the CEO, in the best of cases. But culture is the heart of a brand, and culture should reflect the values and behaviors that are drivers of brand positioning. How so?

My response is that leaders create a company culture that has a dream, a vision, that genuinely cares about people, with values, that communicates, connects, and builds trust, that is a guide for decision-making, that generates emotions such as pride, sense of belonging, passion, hope. If we replace the word “culture” for the word “brand,” the characteristics of a good culture are the same characteristics of a good brand: Leaders create BRANDS that have a dream, a vision, that genuinely care about people, with values, that communicate, connect, and build trust, that are a guide for decision-making, that generate emotions such as pride, sense of belonging, passion, hope. Great brands have great culture, inspiring the same emotions in employees and customers!

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To read Part 1, please click here.

Eduardo invites you to check out the resources at these websites:

His website link

Twitter link

Facebook link

YouTube video link

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