McKinsey’s John Lydon shares his leadership tips
As he concludes his term as McKinsey & Company’s managing partner, the consultant with the most powerful CEOs on speed dial talks imposter syndrome and self-awareness with Kirsten Galliott.
How do you define good leadership?
Good leadership has changed. It’s no longer the hero leader taking the hill and everyone has to follow. I like the term “servant leadership” and I like “engaging leadership”, where a good leader is one of the most curious people in the company and certainly the most committed to improving how it’s performing.
When you talk about servant leadership, who is the leader serving beyond a shareholder?
To serve a shareholder well, you have to serve far more stakeholders well. At McKinsey, servant leadership is being a servant to the partners and to the next generation.
You have defined corporate reputation as being key but you’ve also said that only 20 per cent of Australian companies are clear on their purpose and the need to contribute to society. What’s the other 80 per cent doing?
Last month, I had a quiet, confidential chat over lunch with some CEOs and chairmen and I’d say there was a lot more interest in and understanding of the need to not just have a purpose but to actually act in line with that purpose. As a leader you can walk the talk – and that’s going to have a role-modelling impact – but you also need to think about how the company is run, what people’s targets and goals are, how they’re compensated and paid, how you deal with customers, what the processes and procedures in that company are and how they’re serving broader society and the community, as well as optimising for the company itself.
And what role does social responsibility play in that?
Plenty of people have a CSR [corporate social responsibility framework] but it’s not enough. Enron probably had social responsibility and gave a lot of money to charity but it’s not enough. How is the company actually acting in its leading? My challenge to banks, for example, is how can they incentivise the things that are important for the community, like job creation or skills development? Or if you’re running a business that buys from small suppliers, how do you incentivise your purchasing people to help those suppliers grow and create jobs? You have to change the way the company operates.
Consultancy has long been in the shadows. Is that changing?
We’re a bit more open these days about what we do and we’re also evolving and changing. We don’t talk about our clients – we observe strict confifidence – but I think we could talk a bit more about ourselves.
What’s your greatest strength as a leader?
It was once innovation and always striving for the new but it’s become curiosity and listening and learning – not having the right answer but consciously looking for what’s changing, what’s new. You can’t rely on the assumptions that you’ve always relied on.
If you’re a leader who’s used to having all the answers, how do you then shiftft to stepping back?
I joke that it’s a bit easier for me because I’m not as smart as all the other guys – I have imposter syndrome. Last year, a client asked us to do some work and our natural instinct would have been to show three case studies from around the world where great companies have done this and we’ve helped them. But the opportunities are so vast, the disruptions so rapid, that we didn’t think just bringing something that’s worked somewhere else would be right. So it was quite humbling to write a proposal that said, “We don’t actually know the answer – we don’t even know if there is one – but we will commit to being curious with you and we will open our whole set of global experts and our alumni relationships and we’ll ask the questions, do some tests... ” We thought there was no chance we’d be hired but now, less than a year later, the new product has launched and it’s disrupting the industry. And I love that.
Do you really suffffer from imposter syndrome?
Less now because I’ve found I can be who I am but for some years I think I was trying to be something I thought I should be.
And is there a lesson for other leaders in that?
There’s a lesson for all of us, particularly as the skills you’ll need in the future are possibly difffferent to the ones that have made leaders great in the past. I had a difffferent background – it was probably more entrepreneurial and less intellectual than most of the people at McKinsey. All the people around me who were successful were very smart, very intellectual and a bit nerdy, to be honest. You know, I tried to be like them but it wasn’t me.
And when did you have the light-bulb moment that you had to be yourself?
Aftfter some feedback from clients and also because I’d become a partner and been able to do things difffferently – to take risks and the risks had worked. I’m sure I benefifited from the apprenticeship I went through to learn to dot every “i” and cross every “t” and do the most complicated fifinancial analyses. But being myself has helped me have more balance, more meaning and purpose.
Now, of course, you have the ears of many very powerful CEOs around the country. What are the most common problems they come to you with?
They’re changing. One thing I think Australia has done very well in is our trade and export sectors. I’m thinking about big mining companies, oil and gas – they’ve gone through a transformation in the past fifive years. When the oil price goes from $100 to $50, you’d better do something to make your company more effifficient, more creative, progressive, productive and competitive – and they’ve done that. The way mining and oil companies are using automation, robotics and digitisation – as well as their engagement with communities – makes them some of the most sophisticated companies on the planet. And now more of the consumer-facing industries are going through the same shiftft, where their industries are being disrupted and they don’t know what’s around the corner. Their transformation is difffferent. They have to lead with data, analytics and digitisation.
Is there a hot topic that keeps coming up over and over again when it comes to leadership?
How to deal with complexity has been a big thing, particularly when your assumptions of what has worked in the past can’t be depended on. There are still some problems you can solve based on pattern recognition or judgement but with others you have to experiment and be prepared to be bold. It doesn’t need to be a big risk but you have to learn from it and then maybe take another one. It’s okay to fail sometimes, as long as we learn. I like to say it’s okay to learn.
“ALL THE PEOPLE AROUND ME WHO WERE SUCCESSFUL WERE VERY SMART, VERY INTELLECTUAL AND A BIT NERDY, TO BE HONEST. I TRIED TO BE LIKE THEM BUT IT WASN’T ME.”
How often do you find leadership teams have the courage and willingness to change?
Probably 60 or 70 per cent are up for the journey but there’s lots of much-quoted research that only 30 per cent of transformations succeed. So what’s the gap? Sometimes it’s the whole organisation that needs to go on this journey. The leaders don’t just have to craftft and own it and do it themselves – they have to repeat that process within the organisation. And some of them aren’t bold enough. So sometimes we hold the bar a bit higher and help them to be more bold, which requires them to be a difffferent business.
Where or when do you do your best thinking?
With people. I love being with a diverse group of people throwing ideas around. It might be in a boardroom or it could be over dinner with a chief executive. My best clarity comes when I exercise; I run most mornings.
When have you genuinely been scared?
Early in my career, I was put into a situation where I was in front of a hostile client – an audience who didn’t really want to be there – and they were asking me a lot of questions I felt I had to answer. That was scary. But you don’t have to answer the questions; you have to engage with the group. The McKinsey consultant I was aspiring to be – who has the answer for everything – was not me. But I could help that audience understand why they were there. I’ve also been scared with some professional development, in which I’ve felt more vulnerable.
In what way?
Going back to some formative experiences in my past and exploring them a bit more. Leadership development isn’t simply saying how you should act or teaching you new skills. I found it hugely helpful but it was scary at the time – a week with a group of people I didn’t know that well. My father died when I was young and understanding the impact of that has helped me to better understand myself.
What did you learn?
I was in a hurry because you never know, every day might be your last and you need to get stuffff done. I’ve achieved a lot but I’ve missed smelling the flflowers a bit. It’s driven me to take risks because what’s the worst thing that can happen? My dad died when I was 13 and I’m still here and alive and I’ve done all right. So if I do this course that’s really hard at university and I fail, it’s not as bad as my dad dying, therefore I’ll do the hard thing. I think that’s been quite positive.
Is this kind of soul-searching and self-awareness something you’d like more leaders to do?
If they’re ready then we can help them or they can fifind other people to help them. Mostly, leaders have a coach – I have a coach – and you can always learn.
Do you think most leaders have a coach?
Maybe there’s a selection bias here – if people are asking me for help then probably they’re good at asking for help. But, increasingly, leaders are being coached and it’s not seen as a remedial problem. A top sportsman will have a coach so why shouldn’t a top business or government person?
You’ve just handed over the reins as managing partner. What’s next?
I’ll still be at McKinsey [in Australia]. We have a rotational leadership role so we need the next “S” curve. We’ve had an amazing fifive years and I hope we’ve done some good. I’m looking forward to serving clients – I’ve always served them and I’m going to do more of that.
And what advice would you give a brand-new CEO?
Take the opportunity to step back and consider difffferent perspectives. It’s good to seek advice and guidance from other people, including those you don’t necessarily agree with or whom you think will be more provocative and challenging. Companies and organisations are typically around for a long time but they do need to keep evolving. As a leader, you have a role not only in introducing change and innovation but also in creating the culture so the organisation can continue to evolve. Make sure you’re listening to and learning from the next generation, as well as the current one. And keep fifit and healthy. Have a balanced lifestyle and invest time and energy in personal development as well as, of course, your family and community.
“INCREASINGLY, LEADERS ARE BEING COACHED AND IT’S NOT SEEN AS A REMEDIAL PROBLEM. A TOP SPORTSMAN WILL HAVE A COACH SO WHY SHOULDN’T A TOP BUSINESSPERSON?”