Stanford

Business
LEADERSHIP
ADVICE
HOW TO BUILD AND RUN
A COMPANY
GSB.STANFORD.EDU/INSIGHTS
 L

LEADERSHIP ADVICE FOR...

EDITOR ...STARTUPS ...MATURE COMPANIES

Steve Hawk
Marc Andreessen: LinkedIn CEO Jeff Weiner:
3 Why Founders and Investors 14 Don’t Stray Too Far from Original
COPY EDITORS
Should Be “Ruthlessly Open-Minded” Values — or Markets
Heidi Beck, Joyce Thomas
Mistakes of commission often hurt less Companies that grow too fast and chase
than mistakes of omission, which can “shiny new things” risk losing their core
ART DIRECTION & DESIGN
scar for life. customers to competitors.
Tricia Seibold
Lindred Greer: How to Build a Pepsi CEO Indra Nooyi: Break from
COVER ILLUSTRATION 5 Better Startup Team 16 the Past, and Don’t Play Too Nice
Brian Stauffer
In the founding stages, recruit slowly, Leaders need to be “lifelong students” who
fire quickly, and make sure every hire examine their markets at ground-level and
is a cultural fit. keep up with trends.

Six Startup Lessons Every Founder

8 Should Know ...STAYING IN THE GAME
The people behind Netflix, Instagram, How the Lessons of Improv
Kiva, and others explain what they learned 18 Theater Can Improve Your
on the way up. Leadership Skills
A Stanford lecturer describes how to
ride “feedback loops” to authentic
You have to be ...YOUNG COMPANIES
William Barnett: Leaders Must
self-expression.

ruthlessly open-minded 10 Learn to “Savor Surprises”

and constantly willing
Successful firms are often discovered rather
than planned, so there’s risk to an
unwavering vision.
Brian Lowery: Beware the Dangers
20 of Power
Powerful people can be too willing to take
chances that might get them hurt.

to reexamine your Kathryn Shaw: Three Things All

12 Good Bosses Do
Jeffrey Pfeffer: Why the Leadership
22 Advice Industry Has Failed

assumptions. A strong leader shares a vision, teaches

well, and helps employees meet their
Management training is too often based on
an idealized world rather than the one we
career goals. really live in.
 MARC
ANDREESSEN :
Why Founders and Investors Should
Be “Ruthlessly Open-Minded”
Mistakes of commission often hurt less than mistakes of omission,
which can scar for life.

W
BY IAN hen Marc Andreessen wants to think about During a View From the Top talk with students at Stanford
CHIPMAN deep issues like the state of the economy and Graduate School of Business, Andreessen shared insights
technological change, he mentally spars with and advice about the role of technology in a changing
Photograph by
Joe Pugliese the likes of Peter Thiel, Elon Musk, and Larry Page — the economy, how to capitalize on the opportunities that
people he says are the most audacious people present themselves throughout a career, and why the
who have worked in Silicon Valley. “I have a little best ideas are likely already out there waiting to happen.
STARTUPS

simulation of Peter Thiel. He lives on my shoulder

right here. I argue with him all day long.”
Imaginary arguments, he says, allow you to
sharpen your thinking against people smarter
than you. “You want to kind of construct a model
of how they think and be able to be very objective
and fair — where you can think things through
from their standpoint,” he says. “Then you have
your own view on things. Then you try to run
through in your head what you know of them and
say, OK, here are the conclusions that they would
reach. If you put enough time into that, you start
to be able to have these conversations with
yourself. People might look at you funny while
it’s happening, but you get to engage in this dialogue.”
Tech Isn’t a Job-Killer
“There are more jobs around the world than ever before,”
Andreessen says, and income levels have never been
higher. “So if technological change were going to cause
elimination of jobs, one presumes we would have seen
it by now.”
The more pressing question, Andreessen says, is how
to harness the constant state of flux in the economy.
Self-driving cars, for example, could potentially put 5
million people involved in transportation jobs out of
work. And creating 5 million new jobs for them seems
impossible with net monthly job gains typically in the
hundreds of thousands. “Five million jobs seem like a lot
of jobs. It is a lot,” Andreessen says. But looking at the big

3 LEADERSHIP ADVICE: HOW TO BUILD AND RUN A COMPANY

 picture shows that “every year in the U.S. on average about
21 million jobs are destroyed and about 24.5 million are
created,” Andreessen says. “So the real answer to how do
you replace 5 million jobs is, we already replace that in
less than a quarter [of a year] today.”
Starting from the point of view that jobs are going to
change — rather than disappear — means you can focus
on more important questions. “How do we set people up
to be able to take advantage of the change? How do we have
change work for people? How do we expand opportunities?”
he says. “The conversation I think we ought to be having is
on the things we could do to have more people have access
to all the opportunity that the new technology in many
cases is creating.”
Be Ruthlessly Open-Minded
Over the course of a career, you’re going to make a sequence
of bets, Andreessen says: “You’re going to make those bets
of the places you choose to go and the people you choose
to work with. You’re going to screw some of those up.”
And just like in the VC business, it’s wise to understand
the difference between two types of errors. Mistakes of
commission — losing everything you invest in a company
— can be tough, but you’ll get over them in time. Errors of
omission — not investing in the first place — will scar you
for life. “Every highly successful VC has made mistakes of
omission, really big
ones, of companies that
they had the chance to
You have to take invest in, they should’ve
invested in, they didn’t
the ego out of ideas, invest in,” Andreessen
says. “Take the bet, lose
which is a very hard 1X. Don’t take the bet
and possibly miss
thing to do. on 1,000X.”
Why do we make those
mistakes of omission
so often? “It’s almost
always because we have
some theory for why something’s not going to work,”
Andreessen says. “You develop an idea, and then you look
4 LEADERSHIP ADVICE: HOW TO BUILD AND RUN A COMPANY
for all the evidence that supports it and ignore all the
evidence that disproves it. You get locked into your ideas.”
That mindset works against you, Andreessen warns, because
what didn’t work in the past might work now. “Just because
MySpace didn’t reach Facebook levels of scale didn’t mean
Facebook wouldn’t be able to. So you have to be ruthlessly
open-minded and constantly willing to reexamine your
assumptions,” Andreessen says. “You have to take the ego
out of ideas, which is a very hard thing to do.”
Predicting the Future
Most of the good ideas are obvious, Andreessen says. They
just might not work right away. Before Apple’s iPad was a
huge success, for instance, the Newton was a dud. Instead
of spending time overanalyzing whether something will
work, he advises, try asking what happens when it does.
“Let’s just assume for a moment that self-driving cars
actually work,” Andreessen says. “What are the conse-
quences of that?” Cars fundamentally changed our idea of
the geography of home and work. Before cars, people lived
in the city to be close to their jobs. Then cars created the
suburbs, and hence the commute. “We all sit here 80 years
later wishing that nobody had thought of that,” Andreessen
says. “We all hate it. It’s all a waste of time.”
But self-driving cars can reclaim that time. “All of a sudden
you can have the idea that an hour-long commute is actually
a big perk because instead of driving and having to sit and
focus and lurch through traffic, what if your car is a rolling
living room? What if you get to spend that hour playing with
your kid or reading the news or watching TV or actually
working because you don’t have to worry about driving?”
This opens up a whole new set of questions. If you can grab
a chunk of your sleep time in a car, the geography of daily
life changes and urban environments can become much,
much larger, Andreessen says. If a car can be a rolling office,
“what would be the consequences of that in terms of how
these companies get built? What would be the infrastructure
to support that kind of thing? What kind of early signals
show that that kind of thing is starting to happen or not?”
Start seeing those questions, Andreessen says, and you can
begin to “chart some view of how the future will unfold.”
 LINDRED
GREER :
How to Build a Better Startup Team
In the founding stages, recruit slowly, fire quickly, and make sure every
hire is a cultural fit.

E
BY STEVE ven in the biggest, most stable corporations, Much of this course-related fieldwork has made its way
HAWK putting together a small team can be a perilous into Greer’s scholastic studies and even directed her future
process fraught with personality clashes, research. “It’s a nice feedback loop, because there isn’t a lot
Photograph by
Amy Harrity hierarchical imbalances, and conflicting visions. of good research on the people side of startups,” she says.
But in a startup, the challenge of assembling a “There’s a lot on product and strategy and structure and
funding, but not a lot looking into the social interactions.”
STARTUPS

solid team — and then keeping its members

inspired and focused — carries the added stress She recently sat down with Insights to share what she’s
of being potentially fatal. When a company learned about how startup founders can assemble strong,
consists of a half-dozen people, a single recruit- motivated teams.
ing misstep can topple the house.
What are the key differences between creating a
Stanford Graduate School of Business professor team for a startup versus creating a team for an
Lindred Greer has been studying and teaching
ongoing business?
the art of team-building for 12 years, with an
First, there’s the intensity of interaction. If you’re on a
ever-increasing focus on startups. In Greer’s
project team at a big existing company like, say, Google,
course The Psychology of Startup Teams,
you’re not really married to the people on your team.
students spend time outside of class analyzing
But if you’re starting a business and choosing co-founders
the interpersonal dynamics at a nascent
and making your first hires, you’re looking at one of the
business, report their findings to the class
most intense relationships you’re going to have in your life.
and visiting experts, and then return to the
startup to offer advice. It’s similar to marriage.

5 LEADERSHIP ADVICE: HOW TO BUILD AND RUN A COMPANY

 At Google, there’d be more room for error, because the
team is more likely to be a small cog in a huge machine.
Yes. But with a startup, it’s more of a life-or-death situation.
Issues around power and fairness are bigger, because your
entire life is probably vested in the business. You might be
living hand-to-mouth while waiting to get funded. With so
much at stake, little obstacles are harder to navigate.
It’s essentially a hiring challenge?
It’s hiring decisions, and it’s having a clear culture and
clear statement of values even before you go looking for
a co-founder. And then when you start the first phase of
hiring, it’s making sure that you and your founding team
have an aligned vision, so it’s clear who’s going to be a
cultural fit. One of the things that can really break an
early-stage team is bringing in the wrong person and then
not having any idea how to fire them. That can be a train
wreck, especially if there’s equity involved.
You might not even have an HR team in place.
You usually don’t, so you’re doing it on your own. And
that’s rough because most people aren’t trained in this.
Would you go so far as to actually sketch out a dream
team and then go find them?
Definitely. You don’t want to just be grateful for the first
decent coder you find. You want to be intentional about it.
That’s the main takeaway from my course: Be as intentional
about your people as you are about your product.
Does that mean looking beyond personality
and experience?
It means looking at everything. Make a list of your own
competencies. What are you great at? What are the skill sets
you need to have in other people? And, just as important,
what common values are you looking for?
Can you define values in this context?
Things that you hold dear to your heart. Things that you’re
not willing to compro-
mise on if you get into a
You need to find people conflict over them.
So that’s a squishy,
who are excited by ethereal thing?
Not necessarily. The
the company’s mission best value systems for
startups are directly
statement. Like Disney tied to the product.
One startup that I know,
they have a 3-D printing
makes families happy. company, and their
value system is, “We
love to build things,
and we love sharing
what we build.” So there’s a passion for building things, but
also some gregariousness and intellectual playfulness.
6 LEADERSHIP ADVICE: HOW TO BUILD AND RUN A COMPANY
You should also ask, “Am I in it just for myself, to make a
million bucks, or am I in it to make the world a better
place?” That’s a fairly big, basic value decision.
That would seem to be one core value where you’d
definitely want people aligned.
You need to find people who are excited by the company’s
mission statement. Like Disney makes families happy.
Adidas is competitive.
Would you consider that a primary filter?
I would apply an ability filter first and then choose between
my top five candidates based on who is the closest fit in
terms of values. It’s easier to siphon out people based on
ability — you can do that with their resumes. And then
once you have them in for interviews, that’s when you start
thinking about values and culture. Is this person going to
be happy here? Are they going to fit in with you?
So maybe you’ll end up selecting someone who’s a
slightly less talented coder.
If they’re a cultural fit, absolutely. But there’s a caveat. You
want them to have similar values, but they don’t need to be
your best friend. Too often, founders think, “Oh, I need to
get along with them.” We overrate that. It’s important to
have a diversity of personalities. Risk aversion, for instance,
is more of a personality preference than a value. And that’s
actually a really good thing to have diversity on.
I know one founding team that has a CEO who’s extremely
risk-prone. If it were only up to him, he would scale way before
his company is ready. But he’s paired with a great CTO who’s
very good at putting on the brakes. And together the two of
them balance out. So it’s also knowing yourself and your
personality. And then finding complementary teammates.
But when it comes to personality traits, how do you
narrow it down? There are dozens of personality types.
Whatever is more salient to you. If you had to describe
yourself in five words, what pops into your head? Like I
said, risk aversion is a big one. Optimism and pessimism
are also important.
Do you actually want a pessimist on your team?
Yes. There’s research on that, showing that too many
optimists can be bad for startup performance. Having a
contrarian can be a great thing, especially at startups,
where people tend to have such rose-colored goggles about
the future. Having someone who’s more realistic can help
turn around some pretty bad decisions.
How do you make sure that you’re asking the right
questions and doing the right research on someone so
that you get to know their personality?
Take your time. My favorite advice I’ve heard from VCs to
founders is, “Hire slow, fire fast.” That one rule alone could
 save a lot of startups, because people are often far too quick
to jump into relationships. If you meet a new coder who’s a
friend of a friend, a one-day interview isn’t sufficient to say,
“OK, you’re hired.”
You need to go slow because it’s really hard to fire
someone after you bring them on board and get to know
them. Beyond the legal issues, it takes a lot of emotional
gumption to make that decision, especially if you’re an
early-stage founder and you haven’t done it before. Some
startups will take six months to fire someone who doesn’t
belong. But in six months, the wrong person can corrupt
your culture.
Because, like you said, it’s a marriage.
And it’s really hard to end a marriage. Emotionally,
financially. You just don’t want to go there. That’s why it’s
so important to take your time before you hire. You want to
engage with them in a lot of different contexts. If you’re
hiring a CTO, give them a task similar to what they’d be
doing in your company. Give them two weeks to work on it,
and see how they do.
Also, spend time with them one on one and in groups. Look
at them across a variety of social situations, and look for
indicators in behavior and personality. Just asking someone
questions doesn’t tell you everything you need to know. It’s
very easy for smart people to appear socially desirable.
There’s a startup I know where they really value having a
positive, kind culture. The CEO has arranged his office so
that when he’s at his desk, he looks out at his secretary.
When people come in for an interview, his big thing is to
watch how they interact with his secretary. If they’re kind
and courteous or dismissive and abrupt, that’s a strong yes
or no indicator for him.
Taking your time must be especially important when
choosing co-founders.
Definitely. You want to spend months with someone before
you formally commit to a partnership. We’re actually doing
new research now in the realm of close-relationship
analysis, looking at the benefit of prenuptial agreements
between founders.
With my students, one of the big things I ask before they
commit is, “Have you had a fight yet? Do you know what
this person is like when things get stressful and ugly?” And
if you haven’t seen that yet, then you need to find ways to
gently explore how this person will react if you disagree
with them or stress goes up.
Really?
Yes. Push back on something much harder than you usually
do, and see their reaction. That can reveal a lot. I’ve had
students come back to me saying, “Oh, my gosh. I’m so
happy I did that. That was terrifying.”
7 LEADERSHIP ADVICE: HOW TO BUILD AND RUN A COMPANY
Have you ever heard any stories of people who feel
like they’ve been falsely seduced during the
founder-dating period?
Oh, yeah. It can happen.
Are there ways to guard against that?
References. Talk to people who’ve worked with the person
before. See how they are with other people.
Once you’ve hired a new team, how do you keep them
marching in the same direction?
You have to put more effort than many founders realize
into communicating your mission and your vision.
What’s your distinction between vision and mission?
It’s something that we talk a lot about in my class. Mission,
to me, is a very brief statement of purpose. “What’s our
reason for existence?” So, again, for Disney, it’s “we want to
make families happy.” For Stanford, it’s “bring knowledge
to the world.”
A vision, on the other hand, is, “Where are we going with
that? How are we going to do it?” It’s action-oriented. The
best ones usually also have a timeline and goals that you
can benchmark against.
Richard Branson has a great saying: “A good mission
statement should fit on a coat of arms.” And that mission
statement should not only dictate your hiring decisions, it
should also be embedded in your rituals. How you celebrate
success. How you decorate your office. What you do with
your off-sites. That mission should be everything. And the
vision should be, “Where are we going?”
Do most of the companies you study succeed at that?
Actually, no. When my students go in to study startups, the
single biggest problem they see is lack of alignment around
the mission and vision. We usually look at companies with
about 10 people. They’ve done their first round of hiring,
and they’re often still in Series A funding. My students go
through and ask people, “As a company do you know where
you’re going? Do you know how to contribute?” And most
employees say, “No, we really don’t.” And you tell that to
the CEO, and he or she will say, “Well, I told them six months
ago what the vision was.” It doesn’t work that way, especially
in startups. Things change so much and so quickly. Six
months is forever. You have to keep emphasizing in all your
internal communications: “Who are we and what are we
doing right now? What is our goal?”
Is building a team something that you can get better at
with training?
Second-time entrepreneurs are astronomically better than
first-time entrepreneurs in building teams and creating
startups that succeed. The number one reason startups
fail is people problems, and the second time around,
entrepreneurs realize this.
 PANEL:
CELEBRATING FOUNDERS
Six Startup Lessons Every
Founder Should Know
The people behind Netflix, Instagram, Kiva, and others explain what they
learned on the way up.

S
BY BILL SNYDER tanford faculty, students, and alumni have founded • Kiah Williams of SIRUM, a nonprofit that redistributes
more than 39,000 companies and nonprofits since unused, unexpired drugs to clinics
the 1930s, ranging from tech giants like Hewlett-
Photograph by
Elena Zhukova Packard and Cisco Systems to retailers like the Gap, and • Mike Krieger of Instagram, the popular photo-sharing
much newer nonprofits such as Noora Health service
and Embrace.
STARTUPS

• Reed Hastings of movie streaming service Netflix

How does Stanford foster innovation? “You
create an environment where creativity flourishes,
where innovation can happen. You create an
incubator, a place that inspires students and
faculty to reach for the stars and do something
different,” outgoing Stanford President John
Hennessy said at a February 2016 symposium
on entrepreneurship held as part of the yearlong
commemoration of the university’s 125th anniversary.
“Celebrating Founders” featured a panel of
five founders or co-founders of innovative
companies:
• Jessica Jackley, MBA ’07, of microlending website Kiva
• Tristan Walker, MBA ’10, of Walker & Co., which
distributes health and beauty products targeted at
consumers of color
They spoke about why they became entrepreneurs, what
it means to fail, and the job of the CEO. Here are some
highlights of that discussion.
Know Who’s the Boss
Silicon Valley loves “flat” organizations and touts its
egalitarian ethos. But when an idea becomes an actual
company, “someone needs to be the CEO,” said Mike
Krieger. That’s true of any company, but it takes on a
particular urgency when two or more people wear the
mantle of co-founder. “Somebody actually needs to end up

8 LEADERSHIP ADVICE: HOW TO BUILD AND RUN A COMPANY

 deciding and moving forward. I’ve seen a lot of relationships ProFounder aimed to bring crowd-sourced funding to
go south where they weren’t able to do that,” he said. early-stage startups. As they prepared to launch, the JOBS
Act, which eased restrictions on funding and disclosure of
Celebrate the Small Wins
new public companies, rendered ProFounder much less
Entrepreneurship can be lonely, and difficult times come to
relevant.
every startup, said Kiah Williams. “You better celebrate the
small wins and the small victories because there are dark Jackley and her co-founder had to either pivot to a different
times. And I think in those dark times, you want people business plan or let the company die. “The goal is to see
who you can have a beer or several shots with,” she said. what’s going on and stay alive,” she said. “And we sort of
had this come-to-Jesus moment where my co-founder and
But Look for the Next Win
I looked at each other, and we’re like, ‘Are we ready to do
When a company hits an important milestone, a bit of
this?’” The co-founders realized that the odds were too
celebration is in order, said Reed Hastings. But it’s the
long, and that was the end of ProFounder.
leader’s job to set the agenda and look to more improve-
ment. “And the thing I remind people, employees, all the Do What You Love
time is, ‘We’re really good compared to five years ago, but Time is your most precious asset, Williams said. “You
we suck compared to what we’re going to be in five years,’” should just do stuff that you enjoy, do stuff that you love,
he said. and don’t waste your time on things that you just know
aren’t going to make you happy or aren’t going to meet
The job of the CEO is
whatever life goals that you have. Be an entrepreneur for
also to be critical, said
your own life,” she said.
Williams. “I’m like
Debbie Downer. I Hastings said his vision of a product that excited him was
literally get called the the motivation to start Netflix and Pure Software. “And for
Be an entrepreneur Debbie Downer of our me, it’s like what they say about being a writer, that you
team because I’m the should only do it if you can’t imagine any other thing.”
for your own life. one who pokes holes in
stuff all of the time,” she
Profits and Idealism Are Compatible
Entrepreneurship and social impact seemed incompatible
said.
to Jackley. Indeed, entrepreneurs seemed “like gang
Know When to Fold leaders, the worst of the worst, because they were starting
No one likes to admit companies for profit,” she said. But she realized that
defeat, said Jessica separating for-profit and nonprofit ventures was “a false
Jackley, who has dichotomy. It took me a while to come around to the idea of
founded two companies in her young career: Kiva, which entrepreneurship being something that could help
is thriving, and ProFounder, which did not survive. individuals living in poverty.”

9 LEADERSHIP ADVICE: HOW TO BUILD AND RUN A COMPANY

 WILLIAM
BARNETT :
Leaders Must Learn to “Savor Suprises”
Successful firms are often discovered rather than planned, so there’s risk
to an unwavering vision.

T
BY MARTIN he tech landscape is lush with entrepreneurs whose operating in 4,566 organizations in 456 different market
J. SMITH success blossomed only after the founders had categories over 12 years.
modified or even abandoned their original vision.
Illustration by They focused on the software industry because it’s filled
Gracia Lim Facebook became something quite different from the
with producers and investors constantly racing to identify
Harvard-specific social connection site created
the next big thing, and studied how big successes and
by Mark Zuckerberg. Airbnb? That short-term
COMPANIES
YOUNG

spectacular failures affect the willingness of entrepreneurs

housing rental juggernaut started as a way for
to dive in. They also analyzed how those budding business-
people to find roommates. What eventually
es eventually fared. Did they exit the market? Did they
became the ride-sharing app Lyft originally
offered carpooling software for large companies. generate investor financing? Did they go public?

“It’s almost always the case that the greatest firms
are discovered and not planned,” says William
P. Barnett, a professor of business leadership,
strategy, and organizations at Stanford
Graduate School of Business.
That’s one conclusion from a study Barnett
co-authored with colleague Elizabeth G. Pontikes
of the University of Chicago. They decided to
gauge entrepreneurial success rates by research-
ing the early choices made by software entrepreneurs
Barnett and Pontikes found that entrepreneurs who were
willing to adapt their vision and products to find the right
market often did the best. They also found that those who
followed the herd into perceived hot markets, or “consen-
sus” entrants, were less viable in the long run than those
who made “non-consensus” choices by defying common
wisdom and entering markets that were tainted by failures
and thus regarded as riskier.
“We know from studies of human behavior that, as social
beings, we want to resolve uncertainty,” Barnett says. “We

10 LEADERSHIP ADVICE: HOW TO BUILD AND RUN A COMPANY

 do that not by doing objective research but by looking at
each other.”
That has clear implications for business leaders, he says.
“They need to ask if the people who report to them are
being quiet about their non-consensus ideas. If the answer
is yes, then a leader has to wonder what that says about
their leadership if people are afraid to suggest counterintui-
tive strategies.”
Barnett also says that many of the tech world’s most
historic success stories can be traced back to entrepreneurs
who pursued a vision that ran counter to accepted wisdom.
“If you want to find a unicorn,” he says, “listen for the buzz Bill Barnett | Photograph by Amy Harrity
and run the other way.”
For example, Barnett says Apple continued to pursue
handheld technology despite the failure of the Apple
Newton, a balky handwriting-recognition device that was
being a fool is stronger than the hope of being a genius,”
released in 1993 to general mockery, including in cartoonist
Barnett says. “So we tend to shy away from non-consensus
Garry Trudeau’s “Doonesbury” comic strip. Barnett notes
moves, because we understand the world will look at our
that “the Newton’s failure quickly stigmatized the market
errors as if we’re a complete idiot.”
for smart, handheld
devices, making similar But if humans are bad at predicting, he adds, we’re great at
innovations taboo for a “retrospectively rationalizing” to explain why a business or
If you want to find number of years.” product succeeded or failed. He says Jobs was particularly
good at this, paraphrasing Jobs’ 2005 Stanford commence-
Apple’s Steve Jobs killed
a unicorn, listen for the Newton in 1998 but
ment address in which the Apple co-founder said, “You
can’t connect the dots looking forward, only looking
saw potential in the
backward.”
the buzz and run concept, which eventual-
ly led to the 2007 Nearly every move Jobs made at Apple turned out to be

the other way. introduction of the

industry-changing
iPhone and the 2010
introduction of the iPad.
Of course, when
non-consensus ideas fail, they often fail spectacularly,
which in turn can inhibit risk-taking by others. “The fear of
different from what he intended, Barnett says. “These
‘geniuses’ — we think they knew, but they didn’t.”
One thing that wildly successful entrepreneurs like Jobs
and Zuckerberg did understand, Barnett says, is how to put
together systems “that could discover the future, that
allowed for uncertainty, that ferreted out possibilities.
Then they doubled down on those discoveries.”

11 LEADERSHIP ADVICE: HOW TO BUILD AND RUN A COMPANY

 KATHRYN
SHAW :
Three Things All Good Bosses Do
A strong leader shares a vision, teaches well, and helps employees
meet their career goals.
M
BY STEVE SHAW ost leadership advice is based on anecdotal
& BETH RIMBEY observation and basic common sense. Stanford
Graduate School of Business professor Kathryn
Photograph by
Damian Maloney Shaw tried a different tack: data-driven analysis.
Through research done in collaboration with a
COMPANIES
YOUNG
very large, undisclosed technology-based
company that has a penchant for collecting data,
Shaw found that employees who work under
good bosses were more productive. “There are
bad bosses out there,” she says, “but what’s not
talked about as much is that there are also good
bosses.”
Shaw, along with fellow Stanford GSB professor
Edward Lazear and Harvard Business School’s
Christopher Stanton, published a 2015 paper
titled “The Value of Bosses,” in which they
gathered data from the tech company in an
attempt to see whether they could show that
bosses matter and, if so, how much. As part of
their research, the authors asked company employees and
12 LEADERSHIP ADVICE: HOW TO BUILD AND RUN A COMPANY
managers, “What are the traits of a good boss?” They found
that bosses matter substantially.
Shaw pursued this same topic separately in a Stanford GSB
case study of the Royal Bank of Canada (RBC), which had
developed an in-house analysis of this same question as
part of a drive to develop people analytics. In addition, she
examined similar research from Google, which also tried to
quantify the impact of good (and bad) managers.
Shaw recently sat down with Insights to discuss her
findings, and to share three keys to effective employee
management.
Track Records Matter
At the unnamed technology-focused service company,
workers’ performance was gauged by the number of
customers they served per hour. Shaw and her co-authors
found “an enormous range” of productivity levels, depending
on the quality of a worker’s boss. “If you have a change in
bosses and you get someone who has a history of being a
good boss, you become more engaged in your work and
your productivity goes up,” she says.
 Shaw notes that RBC has looked at their “employee
engagement” data, which is based on questions like, “Do
you feel motivated on your job? Do you identify with your
company?” Better managers, RBC found, have more
engaged employees.
As expected, employees who were motivated and who more
strongly identified with their company were also higher
performers. Which led to the next logical question: “What
are their bosses doing differently?”
Three Things Good Bosses Do
The first thing an effective manager does is to vividly
describe the company’s vision and mission, and to explain
in detail how each employee fits into that vision, Shaw says. be a burden for company leaders, who found themselves
“The next thing they do is drive results,” she says. To ensure besieged by rank-and-file employees asking them to
that individuals (and teams) are productive and have a perform routine tasks. “They found out they really needed
sense that their contributions are valued, attentive bosses low-level managers,” she says. “So they needed to find out,
set aside time to coach, guide, and motivate. ‘What makes a good manager?’”
Because Google is used to making decisions based almost
The third and often overlooked aspect of strong people
exclusively on data analysis, it applied the same process in
leadership is to help employees achieve their personal
trying to identify the traits that make up a good boss. The
career goals. Shaw says it’s “incredibly motivating” when
characteristics they identified largely aligned with the
an employee’s long-term
traits that Shaw found among the best bosses at RBC. “You
career vision and values
A willingness are aligned with those of
pay attention to your employees,” she says. “You give them
a vision. You motivate them. And you set out career goals
the organization. “A
for them.”
to serve as a teacher good boss will share that
vision with them and An Effective Boss Has Lingering Impact
Shaw also found that high-performing workers who have
is one of a good give them guidance and
feedback to help them been trained well by a good boss continue being productive
along the path.” even if they start working for someone who’s measurably
boss’s most important A World Without
less effective.

Bosses? It turns out that a willingness to serve as a teacher is one of

characteristics. Not long after Google
was founded, its army of
self-driven engineers
bristled at the idea of
even having bosses, so the company began to cut back on
the number of managers. But, Shaw says, that turned out to
a good boss’s most important characteristics, because once
a worker has learned something, she carries it into her
future work. “The lesson could be how to do your job
correctly, or it could be something like how to be motivated
about your career goals,” Shaw says. “One way or another, a
good boss teaches something that lingers.”

13 LEADERSHIP ADVICE: HOW TO BUILD AND RUN A COMPANY

 LinkedIn
CEO JEFF
WEINER :
Don’t Stray Too Far—from Original
Values—or Markets
Companies that grow too fast and chase “shiny new things” risk losing their
core customers to competitors.

W
BY BILL SNYDER hen Jeff Weiner discussed taking the job as Focus on the Core
LinkedIn’s CEO in 2008, he asked founder Reid Defining your company’s core value — the value you’re
Photograph by
Hoffman what decisions each of them would be going to bring to customers — is essential, Weiner says.
Stacey Geiken making. Recounting that conversation to a group of
But companies that have defined their core value proposition
Stanford business students recently, Weiner
sometimes move away from it when they experience what
recalled that Hoffman said: “This is easy. It’s your
Weiner calls hyper growth. “They draw resources away
MATURE
COMPANIES

ball. You run with it.”

So he did. Under Weiner’s leadership, LinkedIn
has grown from 338 employees to over 10,000
and revenue increased from $78 million to over
$3 billion. LinkedIn was acquired by Microsoft
in 2016 for $26 billion. The company stayed at its
Mountain View headquarters, though, and
Weiner remains CEO.
Prior to joining LinkedIn, Weiner, who is just 46,
served as a senior executive at two venture capital
firms, Warner Brothers, and Yahoo.
In his View From the Top discussion, Weiner
discussed the growing importance of company
values, the next worker revolution, and why he has
modeled his management style after the Dalai Lama.
from the core too quickly in pursuit of the next bright shiny
object,” he says.
As a result, the company becomes vulnerable to competi-
tors that go after its core: “And you’re in a position where
you have to react to the competition now, and you have to
draw resources away from that growth opportunity back to
your core.” Not only does that dynamic damage a company’s
market position, it makes employees feel stressed and
“whipsawed,” Weiner says.
Expect Growth to Slow
Too many companies fail to make a realistic assessment of
the size of their addressable market and the prospects for
saturation, Weiner says. When growth inevitably slows,
they find themselves in the position of reacting to the news
instead of having anticipated it.

14 LEADERSHIP ADVICE: HOW TO BUILD AND RUN A COMPANY

 To avoid that dangerous situation, he says, companies
should be proactive in “laying the groundwork and
layering in investment” that enables them to move to new
opportunities before growth in the core market slows.
Customers and Prospective Employees Will
Judge Your Values
It’s obvious that a customer will judge a company’s
products and services when deciding whether or not to buy.
But with social media becoming ubiquitous, customers
quickly learn how companies operate, Weiner says. “And
increasingly they’re interested in making purchasing
decisions not just by virtue of the quality of a product, but
what the company’s all about, what the company’s trying to
accomplish, and how they’re trying to accomplish it.”
Part of managing with compassion is knowing that you’re
That’s also true of many younger workers who now tend to not going to get the best out of your people if you’re constantly
judge a prospective workplace on its values, Weiner says. holding them up against a lens or a bar of what you yourself
“Increasingly, both are capable of and precisely how you do things, he says.
purpose and the idea of
culture and values is Prepare for the Fourth Revolution
what attracts people to The World Economic Forum has predicted that technolo-

It’s your ball. join organizations.” gies such as robotics, artificial intelligence, and automated
driving will create 2 million jobs by 2020, but will eliminate
Manage 7 million jobs in the same period, notes Weiner.
You run with it. Compassionately
Weiner cites the Dalai The U.S., he says, has placed a tremendous emphasis on
Lama as the inspiration degrees from prestigious four-year universities and
for his management graduate programs. And while that’s important, it doesn’t
style, which he calls speak to the needs of workers being displaced today.
“compassionate We need to go all-in on vocational training, Weiner says.
management.” Manag- “It’s important for people who are going down a different
ing compassionately is path to have access to an education where they can develop
about putting yourself in another person’s shoes and seeing a skill and a trade that they can utilize to earn a living and
the world through their lens or perspective, Weiner says. create a career path,” he says.

15 LEADERSHIP ADVICE: HOW TO BUILD AND RUN A COMPANY

 PEPSI
CEO INDRA
NOOYI :
Break from the Past, and Don’t
Play Too Nice
Leaders need to be “lifelong students” who examine their markets at
ground-level and keep up with trends.

S
BY BILL SNYDER oft drinks and snack foods don’t get the best press by Apple’s late CEO Steve Jobs: “Don’t be too nice.” Nooyi,
these days, but that hasn’t slowed Indra Nooyi’s named by Fortune in 2014 as one of the most powerful
campaign to restructure PepsiCo, one of the world’s women in business, spoke at a View From the Top session
Photograph by
Stacey Geiken largest food and beverage companies. Since she became this month, where she was interviewed by Walmart CEO
CEO in 2006, the company’s global revenue has Doug McMillon. Here are six key insights into management
increased from $40 billion in 2007 to more than she shared during that conversation:
MATURE
COMPANIES

$63 billion last year. Hallmarks of her management

style include a tough-minded willingness to uproot
a legacy culture and a laser-like focus on the
customer experience. In Nooyi’s case, this
included following trends in eating habits by
offering more water and low-calorie drinks. “In
many ways, you’ve got to make a break with the
past. If you don’t, you’re spending more time
appeasing the heritage employees” than making
the necessary changes, Nooyi said during a recent
discussion with Stanford Graduate School of
Business students.
Nooyi disagrees with management theorists who
advocate ignoring short-term results in favor of
the long haul, and approvingly quotes advice given to her
Break From the Past
Conventional business thinking suggests that leaders
of a turnaround need to preserve the history and culture
of the company. But Nooyi said it’s a maxim that’s often
overused and she sometimes wonders if old culture
“is a ballast.”
Looking back on PepsiCo’s turnaround, Nooyi said she may
have been a little too respectful of her company’s past.
Rather than appeasing conservative, long-tenured
employees, the CEO may need to say, “Guys, we don’t have
the time. We have to make the change. And guess what? It’s
going to be painful,” she said.
“I think if I had to do it all over again, I might have
hastened the pace of change even more,” she added.

16 LEADERSHIP ADVICE: HOW TO BUILD AND RUN A COMPANY

 Don’t Be Too Nice
Steve Jobs, a famously short-tempered executive, told
Nooyi that losing one’s temper isn’t always wrong. “Don’t
be too nice,” she recalled his advice to her. “When you
really don’t get what you want and you really believe that’s
the right thing for the company, it’s OK to throw a temper
tantrum. Throw things around. People will talk about it,
and they’ll know it’s important for you.” Nooyi called that
guidance “a valuable lesson.”
Be Personally Conservative
More than one CEO has gotten in trouble recently for
broadcasting a controversial personal statement. “We’ve
just got to be careful about putting out personal messages,”
invest in the long term,” she said. Investors in legacy
Nooyi advised. But “personal conservatism versus taking
companies won’t tolerate a manager who tells them to wait
risks with the business are two different issues. If you really
three to five years to see huge results.
want advantage, you’ve got to be the first mover. So I think
on the product side and the product experience side, we Be a Lifelong Student
can take as many risks as Managers who depend upon the traditional planning cycle
we want,” she said. or the standard set of consulting reports are doing their

Learn how to read widely, The Short Term

walk the market, look at
trends in the marketplace,
make connections that
don’t seem obvious.
term. That gives you the breathing room and the fodder to
Matters
Finding a balance
between long-term and
short-term initiatives is
key when managing a
large business, Nooyi
said. “You’ve got to look
at the investments you
make in the company as
a portfolio. There’s a
bunch of stuff that
delivers in the short
companies a disservice, Nooyi said. “Our CEOs and leaders
have to be lifelong students — not just students in the sense
of attending courses or reading a book or two. You’ve got to
learn how to read widely, walk the market, look at trends in
the marketplace, make connections that don’t seem
obvious,” she said.
You Are the Consumer
Twenty years ago, side tables at PepsiCo meetings were
replete with full-sugar beverages, Nooyi said. A few years
later, diet beverages appeared and now people are drinking
bottled water at those meetings. “The point I make is,
‘Guys, you don’t need to hire a consultant to tell you where
the trends are. You just have to look at our side table,’”
she said.

17 LEADERSHIP ADVICE: HOW TO BUILD AND RUN A COMPANY

 RICHARD
COX :
How the Lessons of Improv Theater
Can Improve Your Leadership Skills
A Stanford lecturer describes how to ride “feedback loops” to
authentic self-expression.

F
BY MARTIN or more than a decade, business expert Richard Cox true to themselves, says Cox, one of the course lecturers. “It
J. SMITH has been using improvisational theater techniques gets labeled as soft skills, but it’s really a hard business
to teach aspiring corporate leaders how to become driver,” he says. “And there’s hard science underneath it, so
Illustration by
Abbey Lossing more authentically powerful. we understand how it works. It’s a critical piece of being an
effective communicator.”
“You can’t afford to not be good at this,” says Cox,
IN THE GAME
STAYING

whose management design firm, People Rocket, He shared some of these lessons during an interview with
has worked with executives, leaders, and teams at Stanford Business.
such firms as Google, Cisco, and JPMorgan Chase.
You’re Already an Expert
“You depend on your job as a leader to get other
Cox says most people subconsciously rely on nonverbal
people to take actions. You need to be skilled in
communication to get through the day. “Just navigating the
relationships, in influence, and in communica-
line at coffee and traffic and walking on public transit,
tion. There’s no getting around it.”
you’re speaking that language of power in negotiating who
Group dynamics and body language are among moves out of the way, what gestures you do, and who takes
the concepts covered in Acting with Power, a what seat.”
course at Stanford Graduate School of Business
For example, consider how a tight knot of people at a
led by Deborah Gruenfeld, a professor of
cocktail party react when someone new approaches. “That
organizational behavior and the author of many
circle is either going to open up and invite that person in, or
articles on the psychology of power and group
it’s going to close ranks because it’s not, for whatever
behavior. This is “the secret language of power”
reason, OK for that person to enter,” he says. The group
that will help students project authority while remaining
reaction is nearly instant and without discussion; they do

18 LEADERSHIP ADVICE: HOW TO BUILD AND RUN A COMPANY

 not hold a vote to determine what to do. “It’s just six or
seven people reacting to small verbal cues and nonverbal
cues, simultaneously.”
Be the Person You Project
Cox says many people assume acting involves pretending,
but actors who are just pretending are usually easy to spot
— because they’re not very good. “Acting is about finding a
truthful place,” he says. “And when we see that, it’s
believable because it’s authentic. Authentic means being in
tune with your true emotional state, not something you are
‘putting on.’” The good news is that it doesn’t require you to
be anything other than who you truly are. “Everyone can be
authentically authoritative, or authentically approachable,”
he says. “My authentic authority, my authentic power, is
different than yours, which is different than everyone else.
But it’s truthful.”
Master the Daily Improvisation
Effective business communication is all about acting and
smiling.” That’s the nature of improv, he says: We’re
reacting in a sort of
constantly making it up, all the time. “That’s why it’s a
emotional feedback
really useful tool, because nobody gets a script to start
Everyone can be loop, Cox says. “Every
social cue, every
their day.”
It’s Not Just About Work
authentically nonverbal behavior,
every gesture, is an offer, The same techniques can improve life at home as well as at
and then you get to the office. Cox cites that moment when you’re about to
authoritative, or respond to that offer, enter your house after a long day of stress, traffic, and
and that becomes an assorted aggravations. He urges people who are returning
authentically offer back to me.”
Humans are hard-wired
home from work or school exhausted to spend 30 seconds
outside the front door consciously shifting gears. “Think

approachable. for that kind of commu-

nication. “We have
about what’s on the other side of the door — how much you
care about them, how you want to show up for them,” he
mirror neurons that help says. “And that will start to change you. You can put a smile
us synchronize. If I just on and change your body.” The person who walks through
start smiling a little more, you’re likely going to start the door is still an authentic, truthful you.

19 LEADERSHIP ADVICE: HOW TO BUILD AND RUN A COMPANY

 BRIAN
LOWERY :
Beware the Dangers of Power
Powerful people can be too willing to take risks
that might get them hurt.

I
BY SHANA LYNCH f life focuses on the pursuit of happiness, work focuses group of strangers influence others? Lowery cites six
on the pursuit of power. We angle for those promo- sources of power.
tions, negotiate for raises, or eye the corner office.
Illustration by • Reward: We give people what they want.
Nishant Choksi
But success extends beyond pursuing power —
• Coercion: We use fear to get people to do what we want
we must also learn how to manage it, says
them to do.
IN THE GAME
STAYING

Stanford GSB professor Brian Lowery.

“You have to be careful with power,” he says.
“Think of it as fire. It’s useful, but it’s also
dangerous.”
As part of a Stanford Executive Program course,
he describes different sources of power, simple
ways people can obtain more of it, and the
fallbacks of mismanaging that power.
Sources of Power
Society naturally orders into hierarchy, Lowery
says. Some is pre-established: We know from a
business organizational chart who’s in charge.
But hierarchy also develops quickly among
complete strangers. How does one person in a
• Information: We earn power when we know something
others don’t.
• Legitimate: In formal legitimate power, we have power
because we’re the CEO, for example, and our subordi-
nates do what we tell them to do. For informal, consider
how children have power over their parents because
responsible parents must feed and take care of them.
• Expert: If we are the only engineer in a new organiza-
tion, for example, we wield a lot of power.
• Referent: We gain power through fame, status, and
charisma — people like us and want to follow us.
Reward and coercion are sometimes the least efficient,
Lowery notes. Law enforcers coerce people by threatening

20 LEADERSHIP ADVICE: HOW TO BUILD AND RUN A COMPANY

 jail, but they can only enforce that power through surveil-
lance. That can be time-consuming and costly. And reward
can backfire if goals aren’t aligned. If you offer more money
to an engineer to encourage her to code faster, for example,
you may get more code, but it may be worse quality. Her
goal — to make more money — conflicts with your goal —
to have more high-quality code.
Increasing Your Power
An easy way to increase the likelihood that people will
perceive you as powerful is through dominance moves:
• Look large. When someone seems large or imposing, they
seem more powerful. Take up more physical space.
• Gaze directly at others, especially while
talking. Avoid tilting your head.
• Use strong hand gestures.

Illustration by David Foldvari

• Furrow your brows.
• Interrupt others.
• When something goes wrong, react with
anger rather than sadness. Anger is seen
as the more powerful emotion of the two.
• Speak loudly.
• Reduce interpersonal distance. Walking into someone’s
personal space is considered a high-power move.
• Physically connect with lower-powered people in an
appropriate way. Asymmetrical contact — the CEO
patting you on the back,
for instance — seems optimism and control. But they’re also more likely to see
friendly and inviting, as people as tools and lack perspective outside their own.
You have to be careful well as powerful. This
doesn’t work in reverse,
“When you put these together, you can get inappropriate
behaviors as a function of power,” he says. The powerful
with power. Think of it however.
Managing Power
might rely on their own sense of morality in a decision,
but if they’re already less inhibited and more inclined

as fire. It’s useful, but Power doesn’t always

have a positive effect,
to think optimistically, they can run the risk of doing
something illegal or dangerous, hurt negotiations, or

it’s also dangerous. Lowery says.

On the one hand, the
harm their reputations.
“What I would strongly suggest is, as your power grows,
powerful feel action you have people to help you check your own behavior,”
-oriented, are less Lowery says. “Don’t rely on yourself as a good person to
inhibited, and have check your behavior because you could end up missing
heightened senses of what’s going on.”

21 LEADERSHIP ADVICE: HOW TO BUILD AND RUN A COMPANY

 JEFFREY
PFEFFER :
Why the Leadership Advice
Industry Has Failed
Management training is too often based on an idealized world rather
than the one we really live in.

C
BY EILENE orporate training in the U.S. is a $70 billion market, “The leadership industry has failed,” he says. “There is
ZIMMERMAN and 35% of that is spent on management and little evidence that any of these recommendations have
leadership training. Over the last several decades, had a positive impact.” Pfeffer’s book points to the ways in
Illustration by
John Ritter the industry has produced a recipe for how to be a success- which those prescriptions have actually been problematic
ful corporate leader: Be trustworthy and authen- for leaders and proved themselves to be invalid. Many of
tic, serve others (particularly those who work for them come from the inspirational leadership success
IN THE GAME
STAYING

and with you), be modest, and exhibit empathetic
understanding and emotional intelligence.
But here’s the problem, says Stanford Graduate
School of Business professor Jeffrey Pfeffer: None
of that is working. Despite the tens of billions of
dollars we pour into training-related books,
attendance at inspirational speeches, workshops,
conferences, and training sessions, the workplace
today is as dysfunctional as ever. Organizations
are filled with disengaged, dissatisfied employees
who don’t trust their leaders, and those leaders,
in turn, face shortened job tenures, career
derailments, and dismissals. Pfeffer confronts
this paradox in his new book, Leadership BS:
Fixing Workplaces and Careers One Truth at a Time.
stories we love. As a culture, we’re fascinated by the
legends — think Richard Branson, Steve Jobs, and Mark
Zuckerberg — but those are just stories, says Pfeffer, and
nothing more. People generally want to see and hear only
good things about their leaders, so they tend to ignore
contradictory evidence and failures. “There’s all this
mythologizing that besets leadership, as people try to
generalize and learn from exceptional cases,” he says.
“But that has resulted in this enormous disconnect
between what actually makes individuals successful
and what we think makes them successful.”
In Leadership BS, Pfeffer argues that one reason the
leadership industry has not been successful is that its
recommendations are based on an ideal world, rather
than on the real world. Among the prescriptions for better

22 LEADERSHIP ADVICE: HOW TO BUILD AND RUN A COMPANY

 leadership, for example, is that leaders need to be truthful, depending on their situation at work — whether they are
when in reality, the ability to lie can be very useful for rank-and-file employees or managers, for example, or
getting ahead. Skill at manipulation, writes Pfeffer, “is a whether they are members of a union. Research has also
foundation of social power.” In fact, he says, there is a shown that a person’s personality can be affected and
reciprocal relationship between power and lying: The changed by his or her job and workplace conditions.
powerful deceive more often, and the ability to deceive
In the end, says Pfeffer, we would all be better off accepting
effectively creates social power.
that our leaders are generally not truthful, authentic,
The same is true for authenticity, which Pfeffer says is just modest, or trustworthy, largely the opposite of the message
another leadership development prescription that isn’t we get from the popular motivational leadership stories we
useful — or, for the most part, even possible. To be hear. “All those stories and the inspiration we get from
authentic means to be in touch with and express one’s true them change nothing,” he says. “The fundamental problem
feelings, and although that may sound good, he says, in with this industry is the disconnect between what we say we
reality it doesn’t make sense. “Leaders don’t need to be true want from our leaders and how they actually manage
to themselves; in fact, being authentic is the opposite of organizations.”
what they should do.”
Pfeffer says the quality of our leaders in corporate America
It’s far more important for leaders to understand what a won’t change until we start evaluating them and our
particular situation leadership development practices with a more clinical eye,
requires and to act in an
Leaders don’t need to appropriate way, says
using useful, objective metrics, rather than simply handing
out questionnaires at the end of leadership development
Pfeffer. “Leaders need to
activities and asking participants if they enjoyed it. “The
be true to themselves; be true to what the
situation demands and
leadership industry is so obsessively focused on the
normative — what should leaders do and how things ought
in fact, being authentic what the people around
them want and need,” he
to be — that it has largely ignored asking the fundamental
question of what actually is true and why,” Pfeffer writes.
says. “Each of us plays a
is the opposite of what number of different Without data that permits us to make accurate assessments
roles in our lives, and of leaders, we can’t make meaningful improvements in how
they should do. people behave and think
differently in each of
they are developed. And until leaders are measured by
what they actually have or haven’t accomplished — and are
those roles, so demand- held accountable for improving both their own behavior and
ing authenticity doesn’t workplace conditions — nothing is likely to change, says
make sense.” In his book, Pfeffer cites sociological research Pfeffer. “The leadership industry gives people what they
that has shown how the attitudes of employees change want,” he says. “We want nice stories, so that’s what we get.”

23 LEADERSHIP ADVICE: HOW TO BUILD AND RUN A COMPANY