James Heskett

[00:02:47] Sean: James Heskett, welcome to What Got You There. How are you doing today?

[00:02:51] James Heskett: Just fine, Sean. Great. And you?

[00:02:54] Sean: I’m doing very well. You know how much your work has impacted me. So the smile on my face, you can tell how excited I am. Where I actually want to start though, is something interesting. I love people who seem to be able to grasp a lot of different things and you have quite a multi-disciplinary approach to life.

 James Heskett Background

I just want to start with a little background here. You’ve been at Harvard Business School since 1965 and at different times you’ve taught courses in marketing, business logistics, the management of service operations, business policy, service management, general management, and entrepreneurial management. You’ve also served as Senior Associate Dean-in-Charge of Academic Programs.Have you always been interested in multiple things, multiple domains because that breadth of understanding is just remarkable?

[00:03:43] James Hesket: I guess so. At least I’ve been interested in a sequential way and in a way that creates a sense of movement. I’ve always liked to be kind of on the move intellectually. The academic world is provided a wonderful opportunity to do that. Sometimes we tend to get pigeonholed, but I’ve been very fortunate in being associated with organizations that valued breadth as much as depth and were willing to allow me to kind of travel across disciplines to some extent, at least three. 

First of all, getting involved in logistics, going back to my doctoral work, and then teaching after that, a transition to managing in the service economy about which I wrote a book in 1986. And then kind of a natural progression from some of the more effective service providers that relied heavily on culture to the whole area of organizational culture that I’ve been working in most recently. I’ve been fortunate enough to be able to teach alongside the research in those areas in ways that kind of fed my curiosity.

[00:05:28] Sean: How much of a positive benefit did the teaching have moving in parallel with the research? I have to assume so. When I teach things, it just seems that I grasp the concept so much better. Is that the case for you?

[00:05:43] James Hesket: Yeah. In order to learn something you really ought to teach it. And I guess that’s been sort of the story of my life. I came out of Stanford with a multidisciplinary doctorate, which was the case at Stanford at that time, you had to have four fields of study. So I guess maybe that was an early influence on me as far as different fields. I had kind of a natural curiosity about what they were doing because the students went wild. I mean, they flocked to the service management courses. And over a period of time, we had a chance to do a lot of work in the service sector.

I wrote a book called Managing in the Service Economy in 1986. And in the process of writing the cases for the service management course, I came across two organizations that just blew me away. One was the Shouldice Hospital in Toronto, Canada that was providing an incredible service and had an outstanding culture within the organization. And the other was Southwest Airlines where I couldn’t get enough of it. I spent time down there. I got to know Herbert Kelleher and Colleen Barrett very well. 

I’ll never forget sitting in Herbert’s office as the clock hits four o’clock and he’s got his bottle of Wild Turkey in the bottom right-hand drawer, and he offers you a drink and you say it’s a little early for it and he says it’s five o’clock somewhere on the system. So, that was a natural transition to the culture, the subject of culture, and becoming more interested in it. John Kotter was at the time also interested in the work that Terry Deal & Allan Kennedy were doing in culture. In 1982 Tom Peters & Bob Waterman had written their book In Search of Excellence, which had a lot to do with organizational culture if you go back and read that book.

[00:08:24] Sean: Well, we’ve had Tom Peters on the show before he’s talked about that.

[00:08:31] James Hesket: Terrific. It was kind of a natural transition. People say, “what’s the connection?” Well, I think there’s a very logical connection. I’ve been fortunate to be able to work in the areas of logistics service, and organizational culture over the years in ways that have left me still enjoying what I do and who knows what the next area of interest will be?

[00:09:01] Sean: That’s one of the interesting things thus far is almost approaching things from that curiosity standpoint. Like, “who knows what this is going to lead to”. I was really intrigued because it seems like early on in your career, you passed on multiple opportunities with “better positions”, or higher-paying salaries. I’m just wondering when those final decisions were made to take that role at Harvard passing up on some other opportunities, what was driving that?

[00:09:31] James Hesket: I think it was the interest that I had in various subjects. And it was the opportunity to work in an area that I was really interested in, as opposed to making money. You make money anyway, it’s kind of hard to convince people of that. But if you’re working in an area that you’re interested in, the money will come. You don’t have to worry too much about that. The real thing that I can’t imagine is someone working in an area that they just hate for the money. It would seem to me that that would be the worst work-life you could ever have.

 James Heskett Mindset

[00:10:21] Sean: Well, I think it’s going to have an even greater impact on the rest of your life if you’re miserable, where you’re working. That’s a very interesting mindset. I’m wondering if there’s a mindset for you that if you could pass this on to anyone young in their career this is a mindset that you have, you would just love to see young people grasp this mindset?

[00:10:41] James Hesket: Well, it would be essentially what we’ve been talking about, follow your interests and try to see the next thing down the road either in the discipline you decide to follow or in some related subject. Preserve a certain kind of personal agility, something that will allow you to move to the next thing because this world is becoming more and faster about the next thing. And you can’t stand still intellectually and enjoy yourself to the maximum. Maybe that’s the wrong way to put it, but that’s kind of the way I think about it. This is enjoyment and we ought to make the most of our careers.

Organizational Culture in a Remote Work Situation

[00:11:57] Sean: I absolutely agree. I don’t know if you’re studying a lot of this recently, but for you, where are you having just kind of a focus on the next thing. What’s capturing your attention? Where are your spidey senses kind of going off on thinking there might be a big change here?

[00:12:14] James Hesket: Well, we’re in the middle of it, but it’s the usual things. Of immediate interest to me, and it’s not the most important thing in the world is what’s going on in the world of remote work and how that affects organizational culture. Because I think we have real challenges ahead of us in achieving the kind of effective competitive cultures that we have seen in the recent past with people working very limited times together in an office. The technology is wonderful. I realize that and it has certain great benefits. We’re saving a lot of transportation talking here today and time, and the like. 

I could drive down to Fort Myers and be with you, but it would take me another hour and a half to get down there. And my day is short and that happens day after day in business. That’s great, but it’s not good for organizational culture, and this going to create some real challenges for organizations. Not that remote work isn’t important. We’ll continue, we’ll grow, but it’s those organizations that figure out how to make it work in terms of an organizational culture that allows these remote workers to represent their company in a way that the company would like to be represented, 500 miles away from headquarters. 

We really need to worry about and understand because it’s the companies that are able to manage to preserve an effective culture that is going to win over the companies that aren’t, even though both of them are supporting a large number of people working remotely. I got into this as I’ve mentioned in my forward to the book that I have coming out soon, the book, Win from Within. I first became intrigued about this when J&J experienced the Tylenol scare, more than a scare, the Tylenol disaster back in I think it was 1982, a colleague of mine wrote a case about it. 

It wasn’t so much about the culture at J&J, but the case was about this incident if you will. It’s more than an incident. When somebody writes a case at the Harvard Business School, usually the first time that case is discussed is when you invite the CEO or a senior manager of the company to come in, meet with the class and take the last 15 or 20 minutes of the class and talk to them about what they’ve been discussing. Usually, it goes something like this, I was really impressed with your discussion and all that sort of thing, but here’s what we did and so forth. 

Jim Burke, who was CEO of J&J at the time, came to Harvard one day to sit in on my colleagues’ discussion of this case. We invite each other to classes every once in a while. So I went over to sit in because I was interested in the whole Tylenol business and what he said really hooked me. He said this event occurred in Chicago. We’re headquartered in New Jersey. I think that’s where it is. I was on a business trip to Tokyo. What happened of course is that somebody had poisoned Tylenol with potassium cyanide and killed seven people who took those pills.

The decision had to be made as to whether to recall the product from Chicago that specific market or the entire United States. The entire United States the bill for that is $100Million at the time. Those were 1982 dollars. And he had to do it fast. He had to get an announcement out there. And the crowd in Chicago got together and said, no question about it, got to bring it all back. We gotta take it all off the shelf, $100Million, and we need to call Jim Burke. He’s the CEO after all, we need to inform him what we’ve done. And so he gets the call and he said, no, I think you did the right thing.

Burke turns to the class and he says, you know why this all happened? It was because of our corporate credo. These guys were living a set of values and behaviors that told them very clearly what they needed to do. So they did it and they knew that I might have a quibble with it, but I wasn’t going to argue very strongly anyway, and they had to get it done. His question was, have you already done it? And have you gotten it out to the public? And everybody said, yeah, we have. And he said, good, I’ll be back in three or four days. Organizational culture in a remote work situation can be very effective, but it requires a lot of nurturing.

And I’m afraid that organizations are gonna forget to do that. They’re going to have to figure out just how you bring people into the organization, how you orient them, how you communicate a set of values, and the way we do things around here behaviors. Somehow, or other, they’re going to have to instill in this crowd of people working remotely those values and behaviors. I think yesterday’s paper, the New York Times had a story on, maybe it was Sunday. People are being hired and quitting without ever having seen anybody from the company that is other than on a screen like this, Sean. They got hired on a screen and they probably quit on a screen and never set foot in a company facility.

[00:20:23] Sean: One thing I love about the story you bring up there with Tylenol is when you have values and you live them, decision-making becomes so much easier, whether it be personal or within a company. And you bring up just a complex, really interesting thing. How do you get people to not only understand these values, these behaviors but start living them? If they’re not part of this, do you have any early ideas, even directionally on what that could look like and how people can become more indoctrinated with a company’s values and behaviors if it is all via remote?

[00:21:00] James Hesket: Oh, sure. I think so. In the book, I include a case study of an organization in Canada called Critical Mass. Their business basically is all about building more effective organizational cultures and the like, and the story is all about the way that they have accommodated a trend that is also affecting them. They were up to 10 or 20% of their workforce working remotely prior to the pandemic and are likely to go back to some percentage of people working remotely. And they’ve thought a lot about how to do this. 

First of all, Sean, I think it’s absolutely critical that an organization build face-to-face contact into what it does whether it’s weekly or monthly or one month a year or one week a quarter or whatever. Nothing happens on the values, behaviors, culture front unless you give people the ability to see each other in the flesh. That maybe sounds kind of like a superficial thing, but we’re human beings and we naturally congregate and the technology allows us to communicate without congregating in any way. I think you have to have some of both. 

An organization that pays a lot of attention to that I think is going to be it’s going to be able to weather the storm. In the book, I’ve said don’t expect any great improvements as a result of remote work in the profitability that an effective culture can contribute to an organization. But those companies that are going to be successful will at least hold the line and win the ties, in a sense. The second thing in addition to this face-to-face contact, and this is a subject of discussion that I think is going to come up more and more. 

I think that middle management actually has an important role here. And that role may well be to absorb the travel that remote workers don’t have to make. It may be getting people together in a regional setting instead of across the entire company. In other words, we might have a South Florida region that meets, and people may be within 30 minutes of their meeting rather than a flight across the country. I think middle managers are going to find themselves with a more important role. Some of my colleagues, a couple of them, have been writing articles about this is the death of middle-management. We’ve been trying to figure out what they do anyway. 

And we’re just gonna let them go, we’ve glorified flattening the organization and doing all those things in the name of speed, by the way, which I think is important. But there are other things that middle managers do rather than approve and stamp things and the like, and take up time. I think it was Brian Chesky, the CEO of Airbnb that I quoted in the book who said that organizations move at the speed of trust. What he’s really referring to is the importance of people trusting each other, which is a direct byproduct of an effective culture. That’s what was going on at J&J in the story I mentioned.

Defining Culture

[00:26:00] Sean:  Yeah, I think Brian Chesky might’ve been quoting Stephen Covey there, who wrote a book. Actually, it’s Stephen’s son who wrote the book, The Speed of Trust. I would love to even set some more foundation here around culture. And starting with, how do you define culture?

[00:26:17] James Hesket: Well, maybe in this regard, I’m a student of Ed Schein; he first created a hierarchy of elements and culture. First of all, start with shared assumptions. A shared assumption might be why do people work. Or do people naturally want to work? There are many managers in the country that don’t believe they do. And that’s a very important starting assumption because if you don’t believe people really want to work or that they’re only working for the money, you’re going to manage much differently than if you believe that there is a higher calling here than just the sort of a Filthy Luker in the job.

So shared assumptions, shared values and then a set of shared behaviors and then something that Ed called artifacts, the company picnic, and those kinds of things. His point was, it is very important to keep those in perspective. People often confuse them. They’ll say what we’re going to eliminate. I remember a classmate of mine, John Young, who was CEO of Hewlett Packard after he graduated from Stanford a while ago, who told me in a telephone conversation once that he had a delegation in his office complaining about the fact that they weren’t going to have a company picnic.

Well, a company picnic at Hewlett Packard, when they had a couple of hundred employees, was pretty easy, but when it got to 15,000 or something like that, he began to suggest that they not have it, big explosion, big problems. That’s an artifact that ought to be fairly easy to change. And they don’t necessarily affect the culture all that much, shared behaviors are something else. How we do things around here, big deal. I think a bigger deal than the shared values if you’d really ever at least be as important if you come right down to it. 

Those were the four elements that Ed sort of set for. What I try to do is put those in a framework that starts with the mission of the organization, because unless I know what the mission is, then it’s a little harder for me to hire people who really buy into that mission. Then shared assumptions, shared values, shared behaviors, and the company picnic. And then unless you measure and take action, none of that really makes any difference. There are, I think, two other elements that really have to be included if not in a model or company culture because these are the things you need to do almost regardless of what you do.

But unless you measure and act on those measures, for example, you’ve got a great terrific manager from the standpoint of numbers. This woman is making her numbers but she wounds people in the process and doesn’t take into account the company’s emphasis on values and behaviors. What do you do? First of all, you’ve got to understand what’s going on. So you have to measure not only the numbers, but you also have to measure the impact of people’s interactions. Secondly, if you don’t act you have acted. 

Inaction is an action because everybody around this manager will assume that this is the way the company operates and they actually condone what she’s doing. Action is really important and what I’ve found and others around me just based on practice is that when you act against those people who are making their numbers but can’t manage according to the values, the organization immediately starts to improve its performance even without that person’s numbers. People come in and they take up the slack. They now have a culture that they can all believe in and whether they work harder or whether they work smarter, something happens and they produce better performance.

Strategy Vs Culture

[00:31:33] Sean: Jim, I’d love it if you could illuminate, I might have this slightly wrong here. I’m mostly thinking of two different things here. We’ve got the strategy, and then we have culture. Are you saying here that the culture can actually outweigh strategy? Meaning a great culture is more adaptable, people can pick up slack where strategy might be missing off?

[00:31:52] James Hesket: Well, I think of it this way, Sean, and I’ve asked hundreds of managers about this whole issue. If you had to allocate a hundred points to strategy and culture and their impact on performance how would you allocate it? You might be surprised that a lot of people really emphasize, they understand the importance of corporate culture. This is something I’d like to get to in a minute. It’s not that people don’t understand it. I think we’ve written enough about it, that they all get it. 

There’s something here that’s really important. But in any event, I think that culture can provide you with much longer-term performance. That is an effective culture rather than a strategy. I like to think of an effective culture as providing a foundation in support of any one of several related strategies, that can’t be too different. If you believe as Rita Gunther McGrath believes that no strategy is appropriate anymore for very long and that in fact, long-range planning is completely obsolete as a result, then you’ve got to believe in an effective culture that supports several strategies. 

Which is basically when you come right down to it it’s the concept of organizational agility, which is such a big deal these days. Then you’ve gotta believe that an effective culture is a very important element of long-term success. Don’t try to deal with the question of which is more important. I think that changing the culture at the time you’re changing a strategy can be a pretty effective way of changing a culture. 

That’s basically what went on at Microsoft when they shifted from an emphasis on Word to the cloud. And had to change everybody’s way of thinking at the same time that they decided that they were going to modify this ineffective culture that had built up by implication and under the first two CEOs that the company ever had.

Changing the Culture

[00:34:51] Sean: I’m wondering if you could dive further into that, or if you have any other case studies around companies’ cultures who started off, we can just call them terrible and make that transition to great. I would love to know what that process is like because I’m sure a lot of people are thinking if they’re in a culture that isn’t great to be a part of, they’re thinking this is impossible. There’s no way to change this.

[00:35:12] James Hesket: Well, my first experiences with culture I mentioned were Shouldice Hospital and Southwest Airlines. Those were not culture change examples because those were two organizations that were started with unique and effective cultures that have prevailed over the years, even though one of these organizations was in the business of performing inguinal hernias, largely on men, and the other one was in the business of flying people around the United States. 

First of all, flying people around Texas and then some neighboring states and then the United States and largely not internationally. Those were cultures that weren’t changed. They were created in a sense, they were shaped. Originally organizations that have had to undergo culture change that I talked about in the book, in addition to Microsoft, certainly Uber, something had to be done at Uber. And it involved more than just replacing the CEO/Founder. There were all kinds of things that had to be done. 

And a colleague of mine, Frances Frei was hired to go in and essentially help them to find out what it was they really wanted, because first of all, you’ve got to ask people, what kind of an organization do you want to work in? And how does that relate to what this organization is like today? How are we going to get from here to there? And you only do it by involving, in her case, thousands of people in thousands of hours of first of all discussions in small groups about what needs to be done. At least in their view and how are we going to do it. But first of all, what needs to be done? 

What are the values that really would be useful to this organization? And here’s my bias again, what are the behaviors evidenced by each of these values? That is, if we say integrity is one of our values, okay, what is it, what are we going to do? How are we going to act that out if you will? So if you get an agreement in a small group on values and behaviors, you at least have something you can float to the rest of the organization and because it’s important to involve the rest of the organization relatively early, not at the beginning, but relatively early in the whole process.

[00:38:51] Sean: We’ll talk about that actually. I would love to know, please dive further into that.

[00:38:55] James Hesket: For example, at IBM Sam Palmisano had this discussion in a small group, but also had what they called the values jam, which was conducted over the internet and 130,000 people provided inputs. This information was then all organized and processed. And actually, IBM’s values were altered slightly, but altered to reflect a more global orientation for the company, and the results were reported back so that everybody had a chance to participate in a process that smelled like change management, you know, we’re doing something. 

And then the behaviors associated with those values were essentially communicated down through the organization and the word was spread. At the same time, the performance management system has to take those changes into account, and this is where things really start to go wrong quite often. If there’s a disconnect between the way people’s performances are being measured and the way they’re being compensated then forget the whole process because you’re not communicating a consistent message at all. 

People down in the organization don’t know what to believe or how to act. And so they continue doing what they were doing in the past. So the whole performance measurement system has to be changed, but the job training has to be changed. We often think we have to change our orientation. If we’ve got new values, we better make sure that’s part of our orientation. And then we don’t go any further than that. We say, well, we did that. Now we’re making changes. You haven’t made any change at all. 

All of these processes have to be altered to reflect what the organization has said it wants to do. And then you’ve got this whole business that I write about, acting the new values, the new behaviors. Managers have to visibly act out those behaviors. It may require changing individuals. It may require 360-degree evaluations of how am I doing as your boss on these particular issues? It’s a multi-step process. I actually spell it out in the book Win from Within, 16 steps kind of arranged sequentially, even though these don’t all happen sequentially. 

And with the idea in mind, that this process, and this is again where the book is going to produce an argument because one of the fallacies, I believe, has discouraged senior managers from doing anything about culture, even though they know it’s important for performance. One of the fallacies is that it takes a long time to change an organization’s culture. You know, I’m only going to be in this job in another year and a half as CEO, or I can’t hold the organization’s attention for that long. 

We’ve got other things to do, and if this has going to be a front-burner, I’m not going to be able to keep it there for very long. You’ve got to have a process that plants the seeds and gets things started within six months, or I would argue you’re going to have a large number of people who aren’t even trying to change the culture, in addition to a large number that doesn’t succeed. At least if you define success as a complete change to an effective culture, which I think we tend to do, management consultants these days tell us, they’re very reputable management consultants, that about one in four efforts to change culture actually succeed.

First of all, I’m not sure they’re measuring it correctly, measuring change. Secondly, they’re scaring an additional number of CEOs away from even trying. So it’s a little like climate change. I know what’s going on and I know we have a problem, and we’ll fix it someday, and someday never comes.

Commonalities amongst Leaders

[00:45:01] Sean: I’m thinking about some of these leaders, over your career, you’ve worked with hundreds and hundreds of different leaders. Of the best leaders you’ve been able to study and research, are there commonalities amongst them?

[00:45:14] James Hesket: I think so. But I haven’t thought a lot about that. I haven’t written all that much about leadership, but I think about two very different leaders that had a real impact on me. I write about both of them in the book. First of all Herbert Kelleher at Southwest Airlines, I spent a fair amount of time with him, as I mentioned earlier. He was a guy who loved the company’s employees. He loved the company and its people, and you always capitalize people. 

If you use it in relation to Southwest Airlines, you always capitalize customers as well, but customers and people or employees. They’ll call them Employees. He spent a lot of time with them but maintained a sense of integrity that a casual observer would say, here’s a guy, he’s a party animal. He loves parties, he got parties and his behavior would probably be unacceptable today if he didn’t carry it out with integrity. He was a favorite of the women in the organization. And they all had a wonderful time together at company parties. 

There are thousands of photos at headquarters, showing various employees with Kelleher, and other top managers. But he knew his limits. He knew his limits. Did he drink? Yes, he drank but a very disciplined kind of guy for sure. He behaved according to some of those stories, but there was not only a business sense but a moral sense about that guy. Another person who recently died as well was Jack Bogle over at Vanguard. Just the opposite. Jack until the day he died was a preppy. 

He dressed like a preppy. He behaved like a preppy. He was proper New England prep school all the way. But he had a little bit of a Maverick in him and certainly a great deal of integrity. He built an organization of people that wasn’t there primarily for the money, just like Southwest Airlines. Southwest Airlines is not the highest paying airline in the country. They were there for other reasons. They were there because the nature of the work was of interest to them. They were there because the company had a set of values that rewarded you if you were able to deliver services to our clients at a lower cost.

Vanguard was all about costs. Frugality, people were still frugal, even though they may not talk about it as much, because that’s just the way you do it at Vanguard. That was the basic element of the company strategy. It still is. There still is no way to invest for the long term, probably at a lower cost than at Vanguard, regardless of performance. And it was, to Jack Bogle, the guy was naturally a proper frugal. Both were generous. Both knew when they’d had enough. Bogle wrote a book titled Enough. 

Enough is when you think you have enough to sustain yourself in life and to help those around you, your loved ones sustain themselves, whatever, that’s enough. Well, what more can you do? An extra $5 billion what does it mean? It doesn’t mean anything. Bogle was not an extremely rich guy. He had plenty of money. He may have had nine figures, I doubt it, but he may have but Hey he didn’t have to have a lot, he had enough. And so there was a spirit of generosity, a spirit of knowing your limits, a kind of discipline involved, which then allows you to release a lot of energy within the organization because people can act on their own. 

At Vanguard they know exactly what will be regarded as effective management behavior. And the story I tell them in the book, which has been told elsewhere, of Mabel Yu who didn’t invest in anything that she didn’t understand. And in 2008, 2009 with the derivatives, she didn’t understand those at all and as a consequence, didn’t invest, and on Wall Street, people made fun of her. Nobody made fun of her at Vanguard. And as a result, Vanguard was hardly touched by the 2008, 2009 financial disaster. 

Her reward, as I described in the book, is lunch with Jack Bogle. And she goes for lunch in the company cafeteria, the gallery, Vanguard is all about Lord Nelson, I guess who was a hero of Jack’s. So at the company cafeteria, Mabel ordered a salad, probably a $3 or $4 item in the company cafeteria. She came up and people said a great meal there, and she said she had a salad. What, you had a salad? She said I didn’t want to spend too much. I didn’t want to take advantage of this nice invitation. 

You do something really great at Vanguard and you get a $5 certificate to go to the company cafeteria. This whole idea for the gallery is important. It’s important at Southwest as well. People write about Southwest going to great lengths to service customers. That’s all money well spent. You don’t spend money foolishly at Southwest. And so there are common values in leaders of that sort that when taken altogether seem to inspire people while communicating to them exactly what’s expected. 

And what is expected is often a certain latitude to do what you think is proper for the company that you’re working for. I tell the story at Southwest Airlines, of the agent who has to decide in a split moment, whether to put a foul-smelling guy in rags sitting in a wheelchair in front of her, on the plane or not, even though he’s got a valid ticket. If she turns him down, it’s an immediate public relations disaster. On the other hand, how is she going to get him on the plane? 

That’s her decision to make at Southwest because the shared behavior is to do whatever you feel comfortable doing for a customer. And the same is true at Vanguard. That is not a profitable way of managing because people will not overstep their boundaries. You asked me about leaders. Those are two that I’ll never forget.

[00:55:05] Sean: I love the stories. And one of the things that I really appreciate about those stories, two completely different types of leaders, similar to the different types of cultures, right? Like there’s not one, this is not the mold for great culture. They’re different, they’re varying, and different people succeed in different cultures, which is one of the reasons I appreciate your work so much.

And you understand some of those things. You’ve worked with so many great leaders, so many different companies, obviously you have an enormous bookshelf behind you. Are there any other books or ideas that have really influenced you or your thinking? I know how much your work and your books have influenced me, I’m wondering about you.

[00:55:46] James: In the area of organization culture?

 James Heskett Foundational Books 

[00:55:50] Sean: Now I’m thinking about foundational books that probably have fundamentally shifted the way you approach things or view or view the world. Just a nice late question here.

[00:56:02] James Hesket: Over a long period of time that list gets pretty long in each of the areas that I’ve worked I probably was inspired by certain people. My guess is that there were a couple of guys that I admired going way back to the logistics era. And they were doing their work up at Michigan State where a lot of work was being done in a field that they called physical distribution management. Ed Smykay, Don Bowersox wrote a book called Physical Distribution Management that was quite influential in my early days.

The book I wrote called Business Logistics came out at almost the same time, but it was a little later but I always regarded them as valued colleagues. Don and I actually did a three-week speaking in Japan back in those days. As far as service management goes, my colleagues at Harvard had written a case book that was influential to me. Earl Sasser and Daryl Wyckoff, that influenced my work, and that came up about the same time I wrote this book called Managing in the Service Economy. 

At the time it really wasn’t a lot of work going on in the service sector and we were still infatuated with manufacturing. And so some of my inspiration there was just from the field of general management, I think going way back to the time of my doctoral work. These are the days at Stanford when you had to learn two languages for research purposes. You had to take a reading exam for these languages.  I took the two easiest I could think of were French and Spanish. 

I read Henri Fayol’s 19th-century book on management, which I will never forget because I had to learn French to be able to read it and understand it. And he wrote a lot about the span of control and getting organizations to march in the same direction, and the like. That would probably be one of my foundational works. I mentioned the Deal & Kennedy book on Corporate Culture, but I think a book that influenced all of us was Peters & Waterman’s book: In Search of Excellence.

I never met either of them but I can imagine that both of them could have been very inspiring people to work with and to think with. As I mentioned Ed Schein’s book is foundational in the area of organizational culture, even though it appeared it came out two or three years after Peters & Waterman’s book. I can’t believe it now, but that’s the sequence as it happened. And then John Kotter’s work. John and I worked together, but he’s done a lot of work in leading and managing change. 

And to the extent that we all work in the field of managing change his work has to be very influential for me. John was kind enough to write a forward to this book Win from Within. John and I did a piece of work together that was published in 1992, I believe, that essentially showed by numbers inverse that strong cultures can be just as damaging as they are rewarding unless you emphasize values that will support what we called at the time adaptability, today it would be agility I’m sure.

But then we were looking for adaptable values. And we found that companies that had strong and adaptable cultures could earn as much as several hundred percent more than their counterparts over a 10 year period which we measured for some 200 odd companies at the time. It was really the first major effort to put numbers around this whole notion of the corporate culture. 

To me, it is quite fitting that 30 years later, John and I have had a chance at least to sit down and talk about those issues, to the extent that he was willing to write a forward for my book which really traces over time what we’ve learned about the impact of culture on performance. We know a lot about it now. A number of studies have been done, and I think we’re going to find out a lot more as we go forward. 

[01:02:57] Sean: In what you guys have been able to uncover there in terms of company performance over time, I have to imagine there’s a lot of investors who want to bring you on to understand different companies in what their trajectory is going to be like looking forward.

[01:03:10] James Hesket: It’s just strange you mentioned that. I do have a group of investment managers. One group of investment managers has been very helpful to me. They’re California-based, they come to visit me in Florida every once in a while. An important element of their investment strategy has been corporate culture and they are very diligent in allowing culture to break all ties when it comes to alternative investments. 

Long-form Conversation with Anyone Dead or Alive

[01:04:00] Sean: Jim, I noted the new book Win from Within, we’ll have the details lined up with that so listeners can pick that up. Also, I want to just highlight once again the culture cycle because of the impact it had on me. I’m wondering for you though, as we round this conversation out, is there anyone dead or alive, just not a family member or friend that if you could sit down with, have a long-form conversation like this, you would love to just ask them anything?

[01:04:29] James Hesket: Oh, man. About corporate culture?

[01:04:34] Sean: No. Anything in general.

[01:04:37] James Hesket: Well, I don’t know. You always think about, there were a lot of things I never had a chance to talk to my father about that that you wish you could explore. Wow. That’s a tough one. I wouldn’t single out any one person. It depends on a lot, you have to be a good conversationalist, first of all. But they’re there. In addition to the people I’ve mentioned, there are managers that have influenced me a great deal. I think Lou Gerstner, would it be one former… 

[01:05:39] Sean: IBM.

[01:05:40] James Hesket: Yeah. Lou is still around. And somebody that I don’t know well, but have had him in a group discussion in the past, is a stimulating and very thoughtful kind of guy. One of my colleagues was a guy named Len Schlesinger. Len has had a varied career. He was a one-time President of Babson College in between stints at the Harvard Business School. Len is somebody that I do converse with every month or two. We get on Zoom just as we are today, and we talk not about, well, for two minutes, maybe how’s the family and all that sort of thing.

But mostly about what’s going on not only at the Harvard Business School where Len is a long-term professor but in the field of management in general. Len is a great student of managers. He has managed several organizations in addition to Babson College and comes with a lot of experience and a lot of interesting ideas. For example in talking about this book that is coming out, Win from Within, Len I’m sure is not certain. And he’s raised the question as to how fast you can change an organization’s culture. 

His field is organizational behavior going way back. And he still is influenced by the complexities of change in organizations rightfully so, I’m sure. And he’s just not quite sure he buys in on that, but it’s the kind of issue that’s important to be able to discuss and it’s important to be able to have somebody to discuss it with. Certainly, Len, he’s influenced me over the years and he’s somebody that I still enjoy talking with, which is he survived the test and so I would include him in the dinner party if that’s what we’re organizing here.

[01:08:31] Sean: Yeah, it works great. Jim, do you have a publication date of when the book Win from Within will be coming out?

[01:08:39] James Hesket: The book will be out, I think in November.

[01:08:45] Sean: Okay.

[01:08:47] James Hesket: The publication date will be 2022, but that’s the publisher’s preference, but there will be physical copies of the book, I think, in early November. 

[01:09:00] Sean: Fantastic. 

[01:09:02] James Hesket: And I’ll certainly make sure you get a copy.

[01:09:06] Sean: The advanced copy is great. I appreciate that. You already know how much your work has impacted me. So, James Heskett, I cannot thank you enough for joining us on What Got You There.

[01:09:17] James Heskett : Thank you, Sean. It’s been a really pleasant conversation.

[01:09:24] Sean: You guys made it to the end of another episode of What Got You There. I hope you guys enjoyed it. I really do appreciate you taking the time to listen all the way through. If you found value in this, the best way you can support the show is by giving us a review, rating it, sharing it with your friends, and also sharing it on social. I can’t tell you how much I appreciate it. Looking forward to you guys, listening to another episode.

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