Thought Leader Interview: Rosabeth Moss Kanter

As we speak [in April 2020], businesses around the world are shuttered due to the global pandemic. What are some of the key leadership lessons from this unprecedented moment?

First of all, my heart goes out to everyone who has been affected by this unprecedented pandemic. At the very beginning of my latest book I discuss some of the big unsolved problems we currently face, and I mention the fact that pandemics can travel from place to place at the speed of an airplane. Sadly, that is exactly what happened.

Perhaps the biggest lesson is that we need to recognize and learn to deal with the interdependencies between countries, levels of government and levels of the business ecosystem. We need to see greater cooperation on all fronts. There is a lot of reliance right now on global organizations like the World Health Organization, due to the need for comparative data across countries. Going forward, leaders across sectors need to think long and hard about how to deal with our interdependence.

For businesses, interdependencies in the supply chain are also increasingly clear. There will have to be a lot more attention paid to where supplies come from and some concern for what is happening in those countries. For instance, I would hope that North American businesses will think twice about only having suppliers in China and look at getting some of their supplies from, say, Vietnam. They should also think about the welfare of the people in those countries and how they are living. This is an ‘end to end’ world where the fate of business is not simply about who is right behind you in the supply chain and to whom you’re distributing your products or services. There needs to be widespread awareness, if not responsibility, for what is happening much further down the supply chain.

If we don’t solve the problems of the world — or at least take steps to contribute to their solution — businesses will continue to be hit hard in times of crises. And unfortunately, the number of crisis appears to be growing. I don’t want to be dire, but

between climate-related crises like wildfires and drought and health crises like this pandemic, our interdependency has become all too clear.

What are some of the key things business leaders need to be focusing on right now?

Businesses must become more aware that they are dependent upon the communities in which they operate. To put it simply, the local ecosystem matters. It matters because your employees need to be able to get to work safely and they need to have their health concerns taken care of. Businesses need specific connections to those organizations, whether it be hospitals or civic associations or their local government, because they are going to make a difference as to whether or not they can operate in times of crisis.

I would hope that out of all of this comes a greater sense of why responsibility, innovation and what I call ‘thinking outside the building’ — beyond your narrow silo to the entire context you operate in — are so critically important. No one business will be able to solve any of these problems by themselves. Leaders need to collaborate with partners, suppliers, customers and distributors to tackle the issue of interdependence.

I want to accelerate the idea that we need to rethink institutions for the 21st century. Health is not about the hospital. We are far too dependent on our hospitals. Health is also dependent upon things like the level of air pollution in a neighbourhood, and on access to services well beyond hospitals. Right now, in the United States, the military is setting up alternative hospitals in convention centres and college dormitories because we don’t have enough space in our hospitals. Equating health with a particular physical structure is no longer viable.

Likewise, as we are seeing, education is not contained to physical classrooms. At the moment I am teaching my classes on Zoom. It’s not the same, of course, but it works, and it is enabling us to keep our programs going. We have to reinvent every institution out there. We simply can’t continue to do things the way they have been done in the past, and this is going to require a lot of creativity. I see it as a tremendous innovation opportunity for businesses, social enterprises and leaders at top levels — but also for many grassroots leaders and bold thinkers. As we speak, there are probably a lot of people working at home remotely who have ideas for improvements in how we connect to service all of those critical human functions.

The third important thing for leaders to consider carefully is how and when trust in business will be restored. For years, business as a social institution has been losing public confidence. Whether you’re a small business or a large enterprise, your customers must feel that they can count on you, that you are reliable, and that you care about them. Much of that will come from how companies treat their own people in the midst of this crisis. The ones that are putting their people first, that are giving people the option to return to work, even if they have to lay them off for a while; that are giving people tools and support to work remotely; and that are concerned about the children of their employees — these are the businesses that are going to come back even stronger than before. The trust they have exhibited in their people will be returned, and customers will sense and react to this.

Sadly, crises like COVID- 19 are likely to happen again. What can leaders do to prepare?

There is a saying that ‘fortune favours the prepared mind’, and in such cases, this applies in spades. No matter what industry you work in, worst-case scenarios have to be discussed and prepared for. In most cases, it won’t come to pass, but something resembling it might happen. Discussing what could go wrong and whether you are prepared to deal with it is very important.

I also believe in ‘the optimism of activism’. Businesses and organizations of all kinds that have empowered their people to take initiative and action will fare the best. That means creating a setting where people don’t have to wait for a command from above to try something. In such organizations, people at all levels begin to think like the CEO. They feel responsible for the whole company, they contribute their ideas, they know how to rally teams and lift people’s spirits and they are willing to take action beyond what is expected of them.

A while back I wrote about a temporary crisis that affected airlines across North America, when the power grid went down. Across the continent, airlines were grounded and airports were closed. But the company that was then known as Continental Airlines fared far better than the rest. Its people had already been working in teams looking for small innovations, so they had been granted permission to have a creative mindset — a thinkoutside-the-building mindset. They were not bound to simply follow the rules. As long as safety wasn’t jeopardized, they were allowed to improve upon things.

When the crisis hit, Continental was the first airline to have responses in place in their airports, including the use of backup generators on planes to get the computer systems in the airports up and running so it could move passengers. It was amazing to see, and it was all because of local actions taken by internal innovators.

The fact is, your business will be much better prepared if your people know how to assume responsibility. We live in a world where we need more hustle than hierarchy. Of course, for that to work, we also need the people in top positions to tell us the truth — particularly when times get tough.

You write that another key aspect of thinking-outside-thebuilding is ‘dreaming big and seeing more’. Where should leaders be looking in order to ‘see more’?

Again, you have to look well beyond the people and groups that you are normally in contact with. For example, the CEO of Verizon has tasked his executives with doing one new and different thing every single week. They have to go one place they’ve never been or do something they’ve never done before. This is the CEO’S attempt to shake people out of their complacency. Unless you explore the world on a regular basis, you are limiting yourself in terms of how much you can aspire to.

The fact is, many great innovations have come from people who were exploring well beyond their own industry. I know of many mergers that have taken place because the CEOS happened to be seated next to each other in premium areas of air travel and had lots of time to talk, and they discovered they had lots of things in common. I’m not saying that all of life is random — because it isn’t. The idea is to think about a wider set of experiences to trigger new ideas.

It’s also about how you frame what you’re doing today. For example, if you’re a manufacturer of light bulbs, instead of viewing what you do as ‘making light bulbs’, you could choose to frame what you do as being in the ‘life-enhancement through lighting’ business. When you choose to see your activities in a different way, you might see gaps that need to be addressed. That’s what innovators who start new ventures do: They see a gap that no one is currently filling and set out to address it with their innovation. But you can only see these gaps if you step back from the current business and open up your mind.

Can you provide an example of some companies that embrace thinking outside the building?

One great corporate example is CVS Health, which began life as Consumer Value Stores. It reframed its mission away from being a retail pharmacy to ‘innovating to promote better health’. Through a series of acquisitions and some very creative thinking, it has been at the vanguard of helping to reinvent access to healthcare in the U.S.

Under the leadership of CEO Larry Merlo and Chief Medical Officer Troyan Brennan, one of the first things they did was to remove tobacco from their stores and start offering smoking-cessation classes. Then they opened walk-in clinics within their stores to give people basic non-emergency healthcare. And now they’re thinking about other ways to use their retail space. They recently bought a pharmacy benefits company and a health insurance company. They have continuously redefined the business they’re in by thinking outside the building to improve societal outcomes.

One of my favourite entrepreneurial examples is Talent Beyond Boundaries, which was started up by two lawyers from Washington. They are matching skilled people from Syrian refugee camps with employers in the West. It’s sort of like an Uber for linking skilled talent with employers. One of their biggest advocates is a mid-size manufacturing company in Ontario. The owner was finding that young, skilled workers didn’t want to move to his remote part of Ontario to work. He now has access to highly skilled people, and he is advocating for this service across Canada.

Companies like this are able to look at a very serious issue and see that there can also be an economic dimension to it. They have reframed a negative situation as a positive, and in so doing they are going to have an influence on governments, which will begin to modify the ways in which people are admitted into countries for work.

Many people struggle when they try to tackle a disciplinespanning institutional challenge. What are some of the common traps they fall into?

One is a feeling that given their position in life, they already know it all. In many cases, the higher a person rises in a hierarchy, the more they begin to believe that they possess all the necessary knowledge and should be imparting it to others. The

three hardest words for these people to utter are, ‘I don’t know’. Rather than admitting to not knowing, they make pronouncements. But as I like to say, what people know in the suite might not translate to the street.

Another common trap is ‘bubble wrap’, or insulation from disagreement. One perk of success is the ability to join a circle of people who never have to talk to anyone who disagrees with them. This is why diversity is such an important topic in organizations right now — the quest to get many different kinds of people and, hopefully, many different perspectives around the table. I’ve worked with companies that are bringing Millenials in to top executive meetings to challenge them. However useful this is, much of this dissent is still ‘inside the building’. The rest of life often remains in the bubble wrap, because affluent people go home to places that are cut off from the turmoil outside.

What kind of people are most qualified to take on institutional change challenges?

The people who are most qualified have what I call the three Cs: capabilities, connections and cash. Unfortunately, these are the same people who are often the most constrained by their positions and handicapped by their success. They need a fourth C: courage. They need courage to break out of the building and build a new identity as a social innovator.

Sadly, leadership courage is often in short supply. For every Paul Polman, who was an environmental activist while he was CEO of Unilever or Howard Schultz, who tried to educate his employees and customers about discrimination while at the helm of Starbucks, there are hundreds more who don’t speak up about controversial topics.

You have said that what we need right now is “an army for change”. What would this look like?

Right now, in the midst of the pandemic, the emphasis tends to be on federal governments and state or provincial governments. But the fact is, we need innovation everywhere.

Think about all of the things we need, just within this crisis itself: We need to speed new drugs to market. We need to develop new vaccines. We need to figure out how to feed the hungry in our communities. We need to figure out how to better educate young kids, whose attention wanders when they are learning remotely, and to augment their learning with new remote tools. We need ways to keep small businesses afloat and we need to find better ways to organize their finances. The army of innovators we need includes people dedicated to democracy itself, to identify better candidates who truly have the public welfare in mind.

Am I optimistic at this particular moment? I do believe that we are too dependent on big institutions. But just around the corners of those big institutions — just outside all those big buildings — are so many innovators who are taking initiative. They make me optimistic because there are so many of them, particularly in the U.S. and Canada — countries that place a high value on innovation.

Rosabeth Moss Kanter holds the Ernest Arbuckle Professorship at Harvard Business School. She co-founded the Harvard University-wide Advanced Leadership Initiative, serving as Founding Chair and Director from 2008 to 2018. She is the author or co-author of 20 books, including her latest, Think Outside the Building: How Advanced Leaders Can Change the World One Smart Innovation at a Time (Public Affairs, 2020).