We often think of boundaries as limits on what we can do, but they aren’t always a block. What about if we thought about boundaries as the parameters that help define who we are and where we want to go?
I got into this in my interview this week with Reid Hoffman in his podcast Masters of Scale. The fact is you can’t change behaviour without changing the boundaries people see and feel around them. This is leadership. At its most powerful, the art of redrawing boundaries can reinvigorate your organisation with a new sense of purpose, unlocking ambition and innovation. And it starts with seeing and redrawing your own, personal boundaries.
I tend to be someone who looks forward rather than back, and it’s not very Dutch to spend much time talking about yourself. But one of Reid’s great skills is getting us to think back over our own lives and stories, and our conversation threw up three boundaries leaders must know how to recognise and redefine – and, in some cases, blow up.
- Who you are, and who you are not
- What your company’s purpose is
- How your company intersects with the world
1. Push the boundary of who you are …
Early in my career, as I made my way at Procter & Gamble, I was focused on my family, my career, the company. It took a move to Newcastle, England, to discover that there’s more in life than what we see immediately in front of us.
Newcastle then was home to a lot of hardship. You may have read the expression “bringing coals to Newcastle,” but, by the time I arrived there, coal, ship-building, steel, all their major industries had gone, and the communities that once depended on them had been hit hard.
I moved there to take on a role as general manager at a firm called Thomas Hedley that P&G acquired. The previous GM had been a local, and he had gotten the firm heavily involved in the community, working with schools, with drug programs, educational programs, and so on. I had to keep it all going — we were the biggest employer there.
And this became a pivotal moment for me. I found community involvement, at times, even more rewarding than running the company itself. And I discovered: one feeds on the other. Your involvement is reflected not only in your company’s standing in the area, but also in the engagement of your employees and the support of the communities that house you.
I look back on my life before Newcastle and think: I was only half a person. It was an awakening, and not a day too early, that I could expand the boundary of the things I cared about.
… and draw the boundary around who you are not
Someone wise once said to me: if you don’t understand something, don’t do it. So when Peter Brabeck called and asked me if I would be the CFO at Nestlé, it surprised me, because I am not a finance expert.
But that’s not why he wanted me in this role. He wanted to change Nestlé’s finance department to become an active driver of the business. He told me: I don’t expect you to do all the jobs of tax or treasury; we have very good people in the company who are experts. But if finance is a service department and just closes the books and avoids the risks, it can act as a brake on the system. By enlarging the scope of finance so it becomes a co-pilot in the business, you move from stifling growth by over-managing risk, to creating engines of intelligent growth by leveraging risk.
So that became my job. And I was indeed blessed to be supported by a brilliant team of specialists. You have to have humility and modesty to recognize what you don’t know — and to champion the specialists who do know it.
2. Redraw the boundary around what your company does – and how it thinks
When I came to Unilever, the company was aware that it needed to change. The business had come down from revenue in the low $50 billions to $38 billion. All the ingredients for success were there, Unilever had strong global brands and very good people — but the performance didn’t match it. And for me to stand on the soapbox and say, “Run faster and set your goals higher” was not really the way to get results.
So I studied the company and its history. As Jim Collins says in Good to Great: “Nurture the core before you stimulate progress.” We went back to that core of Unilever at the end of the 19th century. The founder, William Lever, didn’t start his company for the shareholders; he wanted to address the issues of hygiene in Victorian Britain, when one out of two babies didn’t make it past year one. It was about making hygiene commonplace. He was the first business leader in the UK to offer pensions; in World War I, he guaranteed jobs back for volunteers and kept paying those people. This was an unusual man who believed in what he called ‘shared prosperity’.
And the more I studied him, the more I thought: Why not go back to these values that underpin the success of the company, and make people proud to be part of that? We started talking about sustainable living and how to make it commonplace. We started to call ourselves a multi-stakeholder business model, and to think longer-term.
You cannot change people’s behaviours if you only work on values and purpose, though. You must also change the boundaries that drive people’s behaviour. Think of it: Lots of CEOs are good people. They don’t want more unemployment or more people going to bed hungry or more climate change, but yet they’re behaving as if they are indifferent, and it’s because of the boundaries around them, the short-termism of the financial market, the pressure of their boards. If we don’t incentivize the financial market to invest for the longer-term instead of beating the quarterlies, or if we don’t incentivize the CEOs in the right way, nothing will change. That boundary has to change from the top.
At Unilever we worked to widen the boundaries around us to promote a long-term view. I call it working on the forest, not in the forest. It’s a key responsibility of leaders. As an example, we changed the bonus system to encourage longer-term behaviour. Our longer-term bonus could only be earned if the short-term bonus was put into shares. And these shares had to be held for five years before they would pay out. And after the payout, you then still had to hold them for two years. We also made everybody a shareholder in the company; they are key stakeholders in the company’s success. We had a 300% shareholder return over those 10 years, but more importantly, it helped everyone feel long-term ownership when they made every decision. Our boundaries had widened.
3. Push the boundary of how your company impacts the world
Business should be there to solve the world’s problems, not to create the world’s problems. I think today many more people believe this than when I was earlier on in my career. When we started our practice of longer-term thinking at Unilever, putting sustainability at our core and driving a truly multi-stakeholder model, it was an act of faith, because we didn’t have the data. Now, today, the data proves us out. You can see that a more gender-diverse company has a more engaged workforce. A company that internalizes the threats of climate change and takes mitigation actions is more resilient. A company that has stronger relationships with its partners in the value chain is more aligned. All this translates into better results.
But I remember when Ban-Ki Moon, the Secretary General of the UN at the time, added me to a commission of 27 people to develop the Sustainable Development Goals, some of whom were heads of state. And I remember the first meeting. I walked in, everybody was sitting there, and I was seriously impressed with them — these are all people you see on television every day and you look up to. And I know some looked at me as if, “Here is the problem walking in. The private sector has arrived.”
Meeting after meeting, we worked. I learned more than probably the rest of my life before, and also had to unlearn a lot. But I saw the power of business and the private sector and how we could develop these goals. So we translated those 17 goals and the 169 targets into business language — because the more we looked at it, and the more we shared it with other CEOs, we saw the enormous opportunities of using the SDGs as a blueprint for business. That’s what we did at Unilever. All of our brands got a mission to fulfil some of the needs expressed in the sustainable development goals. And we saw that, the more we did that, the more we saw that these purpose-driven brands were growing faster and more profitable.
In the last few years at Unilever we wanted to push our boundaries further, using the size and scale of this company to drive even more transformative change. How could we leverage the fact that we were in 190 countries reaching three billion consumers every day? We worked with our partners, including for instance John Ruggie, an amazing man, to help us drive human rights standards in our value chain, defining what living wages were, striving for gender equality throughout our value chain, creating jobs for smallholder farmers that were decent jobs, or working on slavery and corruption with the UK government and passing laws, getting out of this devastating deforestation that we see, tipping markets to sustainable sourcing. You have obligations that extend beyond the company, I believe. Draw your boundaries as widely.
To hear my full interview with Reid Hoffman, head over to the Masters of Scale podcast. And for more lessons at my time at Unilever and beyond, my book Net Positive: How Courageous Companies Thrive by Giving More Than They Take is available now at your favourite bookseller.