Management

Summary

Athletic CEOs: Leadership in Turbulent Timesis a book about high-performing transformational leaders operating in turbulent environments. These CEOs do not lead by the book: they may not praise their subordinates, provide positive feedback or regularly celebrate small wins. Yet they have created formidable enterprises that deliver sustainable growth, have elevated their companies’ employees to new levels, have set new standards for their industries and have advanced their regions. Most remarkably, in spite of their prominence, these leaders continue to reinvent themselves. The focus of this book is not on what effective leadership should look like but on how it looks like in a specific context. It follows an approach advocated by Jeffrey Pfeffer in his recent book Leadership BS: ‘If we want to change the world of work and leadership conduct in many workplaces, we need to act on what we know rather than what we wish and hope for.’

In 2007, when Herman Gref, ex-minister of economic development and trade of the Russian Federation, became CEO of Sberbank, the largest and arguably the most inefficient bank in the country, no one believed that the former bureaucrat, who had never worked in business, could transform this cumbersome organization that had become a byword for poor customer service and inefficiency. Almost ten years later, even outright sceptics admit that Sberbank has risen from the half-dead. Client managers have begun to smile, queues have disappeared and 30 per cent of customers access all the bank's services via their smartphones or computers without ever setting foot in a branch. Financial results have followed the clients: during Gref's tenure, Sberbank's assets have increased more than sixfold, and net income – eightfold. In the year 2016/ 17 alone, Sberbank's capitalization grew from US$30 billion to US$62 billion dollars.

The scale of the 300,000-strong organization's transformation is breathtaking. Gref and his team have created a world-class IT platform, launched shared-service centres and built Sberbank Corporate University to educate employees about cutting-edge management practices. Sberbank has become the trendsetter for the whole country's banking industry: it was the first in Russia to implement a lean production approach, to introduce agile innovation methods and to address the blockchain revolution. All of this was achieved against the backdrop of a global financial crisis and two local recessions.

Summary

I play to win, whether during practice or a real game. And I will not let anything get in the way of me and my competitive enthusiasm to win.

– Michael Jordan

Progress comes to those who train and train; reliance on secret techniques will get you nowhere.

– Morihei Ueshiba, Aikido founder

Alexander Dyukov, the CEO of Gazprom Neft, is the least typical of our athletic leaders. He is an introvert – meticulous, extremely polite and quiet. ‘When we first started working with Alexander,’ recalls Kirill Kravchenko, one of his deputies, ‘it was hard to decipher his reactions – whether he approved or disapproved of a particular proposal. We tried to “read” his feedback, even got together [to discuss it] in small groups, but still couldn't succeed.’ Yet Dyukov is as tough as can be, his ambition for winning is unparalleled and his adaptability is enviable.

No other protagonist of this book typifies the ‘Cool Head’ dimension of athletic leadership as well as Dyukov. When oil prices dropped and the Russian economy plunged into a sharp depression in 2008, members of his team called for a swift revision of business strategy and drastic measures to cut costs, pointing to other companies that had already launched such measures. Dyukov stayed cool. He explained that he did not see any fundamental reasons for prolonged low oil prices and did not want to be led in his decision-making by temporary factors. Gazprom Neft cancelled some projects but remained committed to its growth strategy. Oil prices rebounded in less than 12 months. In 2016, in the second year of another Russian recession, when oil prices started to pick up, some of Dyukov's subordinates suggested that the time had come to curtail Gazprom Neft's drive to improve operational. The CEO answered with a firm nyetand explained, ‘The 50-dollar prices are there to stay and the only way to win is to become more efficient.’

Among his subordinates Alexander Dyukov is famous for never being satisfiedwith results, people, plans and actions. One of his deputies shares his view: ‘From time to time I ask myself the same question. Why don't we pause for a while? Why not celebrate success and praise those who achieved it? But then I continue pursuing a new goal and I feel good. I think Dyukov understands that we need to be challenged on a continuous basis.

Summary

I am an expert at adaptation and overcoming adversity. We win or we learn, that's what my coach John says, and that's what we do.

– Conor McGregor

I love competition, so when you talk and tell me what you're gonna do, all it makes me wanna do is work harder.

– Usain Bolt

Eugene Kaspersky is an unconventional leader. When you enter Kaspersky Lab HQ you feel as if you have stepped out of Moscow straight into California. Employees wear colourful T-shirts, shorts and sandals. Sunshine floods through enormous windows into a vast open space. The CEO occupies a small glass-walled corner office filled with Kaspersky Lab memorabilia, while software programmers working on new endpoint protection products sit right next to his suite. The message is clear: these guys are the most valuable resource of the company. ‘And they are fun to talk with,’ confides Kaspersky.

Dressed in a green Hawaiian shirt (‘We are a green company’), jeans and sneakers, and talking fast in heavily accented English, Kaspersky looks more like a programming genius than the CEO of a global company. ‘I don't give a damn about how I am dressed. I have a cheap watch and I adore jeans. I only care about comfort,’ he says. With unbridled passion, Kaspersky explains that the world is full of bad guys of different types – hackers, thieves, organized crime, rogue businesses and governments. They are becoming more and more sophisticated in the ways they conduct their dirty business, and their negative impact on the global economy is becoming more and more tangible. It is not possible to eradicate them altogether, but his mission is to make their lives very tough indeed – and he is confident he knows how to do it. Kaspersky Lab is engaged in developing and distributing antivirus protection software, which creates positive cash flows. However, the company also assists national governments and international security bodies (such as Europol and Interpol), actively participating in joint investigations of cyberespionage or cybersabotage malware and providing technical expertise. These activities require cash disbursements but give the founder even more moral satisfaction than his highly profitable products.

Summary

I hated standing on that third-place podium. Hated it, hated it.

– Michael Phelps

My father says that if I hit 2,500 balls each day, I'll hit 17,500 balls each week, and at the end of one year I'll have hit nearly one million balls. He believes in math. Numbers, he says, don't lie. A child who hits one million balls each year will be unbeatable.

– Andre Agassi

Leadership is too complex a phenomenon to be measured easily. One very experienced CEO said that ‘you cannot seriously talk about a particular leader's effectiveness until after ten years after her departure’. Although we see the point, we cannot wait that long and would like to offer our view on the athletic leaders’ effectiveness in this chapter.

For many decades leadership effectiveness was equated with the business results of the organization being led. If your company had gained market share and was more profitable than the industry average, you were doing great as a leader. Today this approach looks simplistic and one-dimensional. Organizational performance is influenced by many factors, and some of them are beyond the leader's control. Current results are to a large extent determined by past decisions, while the decisions a CEO makes today will have an impact on the company's results for years to come. We therefore need to add a time horizon when measuring the leader's impact on business results. We also have to differentiate between current performance (results that have been achieved) and contribution to future performance, that is, the creation of a platform for sustainable organizational development. It is important to note that sometimes current performance will reduce an organization's ability to win in the long run and vice versa. Effective leaders balance short-and long-term perspectives.

As early as the 1950s, Philip Selznik argued that, while business performance is a very important outcome of a leader's work, the primary function of leadership is to infuse purpose and meaning into the lives of individuals. Since leadership is the process of achieving goals through the actions of other people, leaders – whether they like it or not – leave an impact on their followers. Leaders change how these people work, think and live, creating new meaning for them and (intentionally or not) teaching them new behaviours.

Summary

Originally this book was planned as a sequel to The New Russian Business Leaders(Kets de Vries, M. F. R., Shekshnia S., Korotov K. and Florent-Treacy E., 2004). We wanted to see how the Russian business leadership landscape had evolved during the ensuing decade.

Our first finding was that the country's business context had undergone tremendous changes. On the one hand the Russian economy had caught up with the rest of the world during the growth years of the early 2000s, and global trends – such as digitalization, knowledge obsolescence, turbulence, climate change, terrorism and others – had made a much stronger impact on the work of Russian business leaders than previously. On the other hand Russia as a country had become more assertive in international affairs, more nationalistic and more protectionist. The role – and the direct participation – of the government in regulating the economy had increased dramatically. The crisis of 2008– 9 was a strong blow to the Russian economy and only reinforced the government's activism.

These discoveries sharpened the focus of our research: we decided to find out what kind of leadership produces superior results in this turbulent context with its heavy government participation. Specifically, we wanted to address the following research questions:

Summary

I have short goals – to get better every day, to help my teammates every day – but my only ultimate goal is to win an NBA championship. It's all that matters. I dream about it. I dream about it all the time, how it would look, how it would feel. It would be so amazing.

– LeBron James

I don't fold under pressure, great athletes perform better under pressure, so put pressure on me.

– Floyd Mayweather

In the spring of 2014, Vitaly Saveliev signed his second five-year contract as CEO of Aeroflot, Russia's flag carrier. In the fall of that year a crisis struck Russia. Following a collapse in oil prices, the rouble lost almost 50 per cent of its value, Russia's Central Bank raised its benchmark one-week repo rate from 10.5 per cent to 17 per cent, and the fourth-largest Russian airline (Utair) defaulted on its bonds – all in a matter of weeks. Continuing Western economic sanctions added a few dark brushstrokes to an already bleak picture.

‘Bad luck?’ asked the 60-year-old executive who, in the previous five years, had turned Aeroflot from the ‘airline to avoid’ into a rising star of the European aviation industry, increasing yearly revenues from under US$3.3 billion to almost US$9.1 billion and net income from US$86 to US$230 million, lifting passenger figures from 11.1 to 31.4 million and improving labour productivity by a factor of 3 (see Table 4.1). ‘Opportunity!’ answered the seasoned leader, who had managed through many crises in his 30-year career. And he turned out to be right.

In the two years that followed, Aeroflot improved its market share and profitability – and strengthened its position as one of the most dynamic airlines in the world. Under Saveliev's leadership Aeroflot did what most businesses refuse even to attempt – reduced costs and raised the top line. In the fall of 2014, Aeroflot quickly adapted its strategy to the new economic reality by withdrawing seven planes from action, delaying the delivery of new aircraft, cutting administrative expenses and letting staff go. In 2015, Saveliev categorically refused the Russian government's request to acquire a defunct Transaero, the second-largest Russian carrier, for 260 billion roubles (US$4.5 billion) – but negotiated a deal.

Summary

The purpose of training is to tighten up the slack, toughen the body, and polish the spirit.

– Morihei Ueshiba, Aikido founder

You miss 100% of the shots you never take.

– Wayne Gretzky

Leadership Agenda

The goals and objectives of each athletic leader are highly specific – and to a large degree determined by the company they lead and the industry it operates in. Alexander Dyukov wants Gazprom Neft to be the best in class in terms of operational efficiency and health, safety and environmental (HSE) protection. Vitaly Saveliev strives to make Aeroflot one of the top 20 airlines by number of passengers and the most profitable in terms of return on equity. Herman Gref is building a digital organization that will provide a whole range of services to hundreds of millions of private and corporate customers, including banking. Yet there are some striking commonalities in their leadership agendas: the ambitions and major themes that guide their leadership action.

The agendas of athletic leaders are complex and multidimensional, with many different overarching themes, time horizons and specific projects. However, there are two central leitmotifs in all this diversity: winning and transforming(see Table 2.1).

Like top-performing athletes, athletic leaders are determined to win. We will see later how this goal (or, rather, attitude) translates into specific leadership practices. For now, it is enough to note that these leaders are very competitive and want to win on multiple fronts. First, they want to beat specific competitors – companies and leaders that they recognize as such. Some are open about this, while others keep the names and criteria to themselves, but they all have such rivals – which may not necessarily come from the same industry. In fact, some of our protagonists compete with each other. One of their deputies told us, ‘Sberbank is both a benchmark and a rival for us. Our boss constantly follows up on what's going on there and feels good when we do something better.’

Second, athletic leaders work hard to beat their own records. They want their companies to constantly outperform themselves. Vadim Yakovlev, vice president at Gazprom Neft, says, ‘Dyukov sets the bar higher and higher for himself and the organization, even if market conditions or the board of directors do not require that to happen.’

Summary

I think I am difficult to satisfy, because when I win something, I'm already thinking about the next step, and that is maybe a problem for me. I'm not enjoying the moment. I'm already on the mission to win the next trophy.

– Zlatan Ibrahimovic

If I could be really good at other sports, I'd want to pitch to Barry Bonds, guard Michael Jordan, sidestep Ray Lewis, or stop Wayne Gretzky when they were at their best. I might not succeed, but I wouldn't want to spend my career training every day without measuring myself against the best.

– Michael Phelps

Herman Gref, the CEO of the Russia's largest bank, is probably the closest match to the model of the athletic leader among the protagonists of this book. The scale of his work is unprecedented. In less than ten years, he transformed a clumsy, old-fashioned, gigantic bank into one of the country's most innovative companies – a change that is visible to literally every Russian citizen.

Herman Gref: Profile of a Leader

In 2007, to the big surprise of the international financial community, the former minister of economic development and trade of the Russian Federation, Herman Gref, became the new CEO of Sberbank. At age 43, Gref had a spectacular government career behind him but had never worked in business. Born into a family of ethnic Germans in a small town in Northern Kazakhstan, he graduated from the prestigious St Petersburg University with a degree in economics and became engaged in social and political life during the perestroika years. After holding government jobs at district and city levels in St Petersburg, he went to Moscow to head a ‘centre of strategy’ that had been set up to create a blueprint for the economic development of Russia. There he assembled a team of experts from different spheres of life and engaged various organizations to contribute to the centre's work. The ideas thus developed formed the foundation of President Vladimir Putin's initial reforms in early 2000, which are recognized for having given a significant a boost to Russian economy. Gref then became a minister and earned a reputation as a committed liberal reformer who could push his agenda through the corridors of power.

Summary

I start early, and I stay late, day after day after day.

– Lionel Messi

Don't let anybody work harder than you do.

– Serena Williams

You only stop learning when you quit playing.

– Ruud Gullit

Athletic leadership is not a universal model of business leadership. It is highly contextual and situational. The athletic CEOs described in this book operate in turbulent contexts with a high level of government intervention and vertical leadership tradition. They started with a relatively low base – their companies lagged behind competitions or did not exist at all in the industries with lucrative domestic and international markets. However, its implications go beyond superambitious, curious, highly energetic chief executives operating in rapidly changing, turbulent environments with high levels of government participation. We believe that ‘non-athletic’ CEOs, aspiring leaders, politicians and most of us living in today's world can learn a lesson from the protagonists of this book and borrow some of their practices. In this concluding chapter we present key insights for each category of readers and outline some avenues for future research.

Lessons for Business Leaders

The practice of athletic leadership on a daily basis is a challenging and highly demanding task. It may not suit everybody's tastes or abilities. However, other leaders can benefit from it by using the following approaches.

Borrowing Some Elements and Instruments of Athletic Leadership to Complement Current Leadership Practice

While working on this research project we presented the model of athletic leadership at a workshop for CEOs. Our participants recognized a pattern that they had previously seen in some of their colleagues but generally dismissed athletic leadership as aggressive and egoistic. None of the seven attendees wanted to be an athletic leader. A few months later, three of them told us that they had started using some of the tools we discussed, specifically the metapractice of ‘slack rope’; the setting of a leadership agenda with financial and transformational goals; and the practice of ‘going out, going down, and going deep’. The CEOs had found these experiences positive, even though they had not turned into fans of athletic leadership.

We have repeated throughout this book that business leadership is highly situational: it is up to business leaders themselves to choose the elements of athletic leadership that will work in their contexts.

Summary

Success is no accident. It is hard work, perseverance, learning, studying, sacrifice and most of all, love of what you are doing or learning to do.

– Pele

If you don't have confidence, you'll always find a way not to win.

– Carl Lewis

As demonstrated in the previous chapters, athletic leaders can be extremely successful in turbulent, government-dominated environments with rapid knowledge obsolescence – conditions that are met in contexts other than Russia. In search of non-Russian athletic leaders, we first took a look at the BRICS (Brazil, Russia, India, China and South Africa). We tried to identify companies that had achieved world-beating status and examined whether their CEOs possessed the attributes of athletic leaders. We were especially interested in finding a woman CEO to test our hypothesis that, even though athletic leadership may seem quite masculine, it is independent of gender and can be successfully practiced by female executives.

What if athletic leadership could be effective in developed economies too? Rapid change and knowledge obsolescence, turbulence and heavy government interference need not be characteristics of the market as a whole but of a specific industry, such as technology. If you were asked to name the greatest business leader in this sector, you would probably say Steve Jobs, Elon Musk, Bill Gates or Jeff Bezos – all of them from technology companies, all of them from one of the world's most developed markets (the United States), all of them quite different from the identikit portraits painted by the leadership literature and all of them bearing a striking resemblance to athletic leaders.

In this chapter, we focus on three athletic leaders from different parts of the world: Roger Agnelli, former CEO of Brazilian Vale; Dong Minzhu, CEO of Chinese Gree Electric; and Jeff Bezos, president, CEO and chairman of United States-based Amazon. All three not only exemplify the mindset of athletic leaders (mental toughness, adaptability, super-sized ambition etc.) but have also used the same metapractices in defining their company's path, obtaining new knowledge and dealing with followers, media and government.

Brazil: Roger Agnelli

A member of the BRICS, Brazil is one of the major emerging economies and the seventh largest in the world, with GDP of 3.2 trillion international dollars (PPP) in 2016.

Summary

Overpower. Overtake. Overcome.

– Serena Williams

My mother thinks I am the best. And I was raised to always believe what my mother tells me.

– Diego Maradona

Why AthleticLeadership?

Viacheslav Fetisov played his first professional hockey game at the age of 17 and his last at the age of 40. In his 22 seasons on ice, he had a distinguished career in both the leading hockey leagues of the time: the North American NHL and the USSR Top League. He won two Olympic gold medals and seven more at the World Championships as well as the regular season title of the NHL, the Stanley Cup and the Canada Cup. He was captain of the famous ‘Red Machine’, the USSR ice hockey team of the 1980s and leader of arguably the most powerful and creative quintet in ice hockey's history: Larionov-Krutov-Makarov-Fetisov-Kasatonov. Fetisov explained to us what distinguishes athletes and teams that consistently win at the highest level: ‘If the next minute after listening to your national anthem and stepping down from the top of the podium you don't start thinking about how to beat your competitors again, you are finished as a champion.’ His words resonate with those of Saveliev, CEO of Aeroflot: ‘I am not interested in celebrating old victories; I want to win new ones.’ The metaphor of ‘athletic leadership’ emerged at an early stage of our research. We noticed that all the leaders in our study shared an exceptional desire to win and to improve their performance – just like top-level athletes.

This observation made us look into the research on world-class athletes and led us to interview some of them. Our deep dive into the world of top sport yielded a number of interesting discoveries that reinforced the initial hypothesis about similarities between the leaders we studied and top-performing athletes.

Following the logic of Albert Bandura's triadic concept of human agency, we may look at athlete performance through three lenses: the athlete's behaviour, his or her personality and environmental events. These factors interacting and influencing each other bi-directionally define performance. Performance is thus a function of three variables. First, what elite athletes do: how they train, compete and recover. Second, who they are: what cognitive, emotional, and personal abilities and traits they possess.

The scholarship on political skill documents that it is a social savvy, personal style construct, associated with positive personal and organizational outcomes. However, this study takes a counterintuitive view and demonstrates that despite being a positive resource, political skill also has the potential to be used as a self-serving device to achieve one's personal agendas in the form of self-serving counterproductive work behaviors. Borrowing insights from the trait activation theory, this study demonstrates that a context, high in political perceptions, acts as an incentivized condition for politically skilled people to execute its dark side. The results supported the hypothesis and revealed that under high perceptions of organizational politics, political skill will have a significant, positive relation with self-serving counterproductive work behaviors. The study discusses important theoretical and practical implications of these results and extends the domains of political skill and counterproductive work behaviors.

Is liquidity better when a trade counterparty’s brokerage firm is unknown (anonymous) or known (transparent)? We examine a quasinatural experiment where some firms switched from transparent to anonymous trading and then, 1 year later, switched back. Our results for inside spread, price impact, and limit order book depth suggest that liquidity improves when anonymous post-trade reporting is introduced and liquidity worsens when anonymous post-trade reporting is reversed.

Does international investor sentiment improve when a crises-ridden country participates in an International Monetary Fund (IMF) program? I argue that merely participating in an IMF program may not revive the sentiments of investors. Rather, investor sentiment would improve when governments enhance the credibility of their commitment to reforms by accepting severe conditions imposed by the IMF, which incur ex ante and ex post political costs. Using panel data on 166 countries during the 1992–2013 period (twenty-two years), I find that countries participating in IMF programs, with conditions attached, specifically prior actions and performance criteria conditions, after controlling for endogeneity concerns using exogeneous instruments, are associated with an increase in long-term investor sentiment. These results are robust to using alternative data, variables and estimation methods. My findings are in stark contrast to those who argue that IMF conditional programs are akin to swallowing a bitter pill. In fact, my results demonstrate that the so-called bitter pill may act as a palliative.

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Introduction to the Second Edition

Summary

List of Illustrations

6 - Alexander Dyukov: Quiet Transformation of Gazprom Neft

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5 - Eugene Kaspersky: Saving the World

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3 - Effectiveness of Athletic Leadership: Outputs and Outcomes

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Appendix: Research Methodology

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4 - Vitaly Saveliev: Passion and Innovation at the Old Airline

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Contents

2 - The Agenda and Practices of Athletic Leaders

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7 - Herman Gref at Sberbank: Entrepreneurship in the Least Likely Place

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9 - Athletic Leadership for Non-Athletes

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8 - Athletic Leadership in Other Regions: Roger Agnelli, Dong Mingzhu and Jeff Bezos

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1 - Athletic Leadership Explained

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Frontmatter

Gergely Baics. Feeding Gotham: The Political Economy and Geography of Food in New York, 1790–1860. Princeton, NJ: Princeton University Press, 2016. xv + 347 pp. ISBN: 978-0-6911-6879-1. $39.95 (cloth).

Political skill and self-serving counterproductive work behaviors: Moderating role of perceptions of organizational politics

Does Trading Anonymously Enhance Liquidity?

Can IMF program design resurrect investor sentiment? An empirical investigation

28 - Deliberate and Emergent Strategies

1 - Three Stages, Three Questions: a circular process

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