Harry Kraemer: From Fortune 500 CEO To A Favorite Kellogg Professor

Kellogg’s Harry Kraemer

For me, everything started from that: The whole idea of, ‘Can I get the ability to relate to as many different people as possible?’ If you’re going to be managing 100 people or 50,000 people, your ability to uniquely relate to different types of people is critical. Here’s an example: If I am about to be in a general management position, I may have a situation, such as running a plant, where I have to manage 300 to 400 different people, none of whom did more than high school. At the same time, I may have a research and development laboratory with 50 Ph.D.s in fields and areas that I never took an undergraduate class in. Then, I may have 150 wild-and-crazy salespeople. How do I relate uniquely to every one of those groups to be able to lead and get something done? That ability to relate, influence, and lead was a very, very big part.

Here’s another example that had a very big impact on me. Once you realize that leadership has nothing to do with titles and organizational charts, then you realize: ‘Wait a minute! I have the ability, even at a lower level, to influence you as my boss.’ Let me role play this. If I worked for you, the question I would ask myself is, “Is my role to do what you tell me to do to make you happy or is my role such that, ‘Jeff is paying me a lot of money for this role. I think I have a responsibility to respectfully question and maybe come up with a better idea.”

So when you say, “Harry this is what I want you to do,” I can reply, “Jeff, I can do that, but you know what? Looking at what a lot of people in the organization are doing, does this alternative make sense?” By the way, I would’ve done my homework enough to know it absolutely does make sense to do something different than what you are recommending. I’ll relate to you well enough to know that you have a big ego and I’ll let it be your idea. I’ll never let my ego get in the way! I’m focused enough to be able to figure out how to relate to you and get things done.

Here’s another thing I would do. Take out a sheet of paper. Draw a series of vertical parallel lines. On these lines, you can use the word “Baxter,” but it is applicable to any organization. You can think of those vertical parallel lines as divisions, business units, functions, geographies. They’re all components of any company. If you draw an X on the bottom of any one of those vertical parallel lines, that could be you starting out. You could also call these lines silos because you’re really in one silo and you really don’t know people in the other ones or you don’t know how this all fits together.

When you ask, where was I very lucky, I tell my story to students using these lines (or what I call my “favorite chart”). I was at the bottom of one of those vertical parallel lines. I started in finance. One day, I was in a grocery store in Evanston about three months into my job at Baxter. I ran into one of my Kellogg classmates who said, “Hey, you’re at Baxter, right?” After I said yes, he said, “I noticed today that your Division A made an acquisition. Why did you guys make that acquisition?” I was a little embarrassed because I worked for the company and didn’t know about the acquisition. This classmate not only didn’t work at Baxter, he didn’t even work in healthcare. He worked at Kraft! I’m thinking to myself, ‘Wait a minute. It’s OK that I didn’t know about that. I’ll read about that acquisition in the paper tomorrow. The big thought for me was I didn’t even know the acquiring division was even part of Baxter!’

Baxter International headquarters in Deerfield, Illinois

What I tell students — and this seems to have a big impact —beginning the next day, I did three things. The first is that I got to know at least one or two people in every one of those vertical parallel lines. At the time, there were 21 divisions, 19 functions, and we were in 103 countries. That was like 143 vertical parallel lines! Basically, what I wanted to do is if Molly was running a Baxter business in Japan and there was an announcement that they were launching a new product, I could call her up and say, “Why are we launching that product? How does that fit in? By the way, what are the implications of that for finance in the United States and in Chicago?”

Second, I realized that every 90 days in a publicly-traded company, the CFO and CEO have to get on a conference call and describe to security analysts what’s going on and answer questions for an hour. As you know, that’s a lot easier now because you can just stream it on the internet. Thirty eight years ago, I used to sit in my cubicle and would listen to the little cassette tape of that call. Before the CEO or CFO would answer a question, I would shut the recording off and say to myself, ‘If I were the CFO or CEO, how would I answer that question.’ After I thought about it, I would listen to the answer. If there was something happening in Mexico, I’d call someone in Mexico.

The third and final thing is, I realized that I may be in finance, but what I really ought to be thinking about is, ‘How does all this tie together?’ It might be harder to move from one silo to another, but I also realized that I could volunteer for projects. So I would go to the cafeteria and I would say to myself, ‘I am working with finance folks all day, so I don’t have to eat with them.’ There might be three engineers sitting there, so I might ask, “What are you guys doing?” They might say, “We’re going to build an intravenous drug delivery facility in Shanghai.” I’d say, “I was a math major. I could do some modeling for you. A few weeks later, the next thing I knew I was in Shanghai for two weeks. I’m learning about China, manufacturing, and health care in Asia. You do that 10 to 12 times and then go back to your parallel lines and you can now draw a circle around the entire process.

The whole idea is you have to be able to get from the roots to the trees to the forest and you have to understand how every one of these vertical parallel lines fits into what the organization is trying to do overall. Why are we in these businesses and not those? Why are we in these geographies and not those? Why is the company organized the way it is? Those vertical parallel lines with a circle around them, in my mind, represent that you have to get your arms around. They are all different. It all gets back to, how do I relate? How do I influence? How do I lead?  A combination of those things is the reason why I was very, very fortunate.

P&Q: With your focus on reflection, work-life balance, humility, good citizenship, social responsibility and commitment to values, you are very much in tune with your Millennial students. Talk to us about why these areas, particularly self-awareness, are so critical to success for MBAs once they graduate?

HK: I always step and say, “Wait a minute. If I really want to be a leader, maybe the first thing I need to do is be self-reflective.” For me, self-reflection impacts everything. People are conscientious and work hard. There is this view that, ‘If I have a lot to do, maybe I can just go faster and faster.’ As I think about that, I say, “Here’s the key question: Have we confused activity and productivity? Are we moving so fast that we have no idea how productive we are? That would take time that we don’t have.” The first thing that a value-based leader does is that they take the time to be self-reflective. What this means for me is you turn off the noise and gadgets and you go off by yourself and you ask yourself some pretty basic questions. What are my values? What do I stand for? What is my purpose? No kidding around: What really matters?  What kind of leader do I want to be? What kind of example do I want to set?