October 15, 2004 | Volume 1, Issue 2
Leading Like a Maverick: The Unique Approach of Paul O'Neill
Leadership is the lifeblood of business, government, and community, but it is also an elusive concept. What motivates a leader? Is it a desire for power and wealth or a sense of duty and responsibility? Do a leader’s motives determine the extent of his or her success? Is a leader’s motivation self-serving or is it altruistic? What does it take to be a leader?
“Leadership is not management,” asserted former Treasury Secretary Paul O’Neill during a lunch hour Convocation at the H. John Heinz III School of Public Policy and Management at Carnegie Mellon University. Having led two global corporations, Paul O’Neill is one of the most successful public and private sector leaders. He emphasized the following points about leadership:
- Leadership is a privilege that bears a weight of responsibility.
- Leaders must accept responsibility for every action taken by the organization, especially the
mistakes.
- Leadership is the same across all sectors.
- Leadership is not about having knowledge that others do not possess.
- Leaders need to create a condition so that others in the organization can realize their own
potential.
Mr. O’Neill also explained what he believes are the three most critical elements that a leader must work to create in order to achieve greatness in an organization. First, an employee should be treated with dignity and respect by everyone they encounter. Second, they should be given the resources they need — education, training, equipment, encouragement — to make a contribution that gives meaning to their own lives (not that earns more money for a private institution or more accolades for a great academic institution). Finally, each employee should be recognized for their contribution to the company.
He went on to state that fostering a successful environment for one’s employees takes away any excuse for failure. Further, he asserts,
Mr. O’Neill tells the story of how ALCOA was able to reach what he calls, the “theoretical limit.” During the time that he was CEO and chairman, he made a commitment to achieving 100% safety and would tolerate no acceptable risk. He instructed his managers, “Don’t budget for safety. As soon as we know there’s a risk, we should fix it immediately.” He then turned to the hourly employees and said, “Here’s my direct home phone number. If they don’t do what I just told them, I want you to call me.” Mr. O’Neill attributes ALCOA‘s overall success to its commitment to employee safety. “I don’t care if we made metal or not. That was secondary. First we had to make sure our people were okay, every day, and in every way. I’m not going to really know if I was a leader or not until after I’m gone, because if these ideas don’t survive me, I’ve failed; I wasn’t a leader—I was just another ‘presider.’”
Paul O’Neill believes that a leader must speak and live a coherent set of values and this has earned him a reputation as a straight-talker in circles that sometimes prefer discretion. “I think one of the great skill shortages is a leadership skill shortage, and so I want all of you to be leaders in the sense of values first. Values are the foundation for achieving great things.”
HSR: How was your recent experience in Washington DC?
PO: I come away from DC disappointed in the media. And the reason I’m disappointed in the media is because I thought the media would be interested in ideas, especially in different ideas. And what I found instead was that there wasn’t much interest in the media in ideas. There was interest in conflict. And I’ll give you an illustration of that: You know, when I had been there not very long, a reporter came in and wanted to talk about foreign exchange rates. And I explained how in the global financial world we live in now that there are hundreds of millions even billions of decisions made everyday that end up establishing exchange rates and the rates are influenced most substantially by the view of people in the market about the future relative rates of productivity growth. But instead of the media writing stories about how O’Neill explained to us how interest rates are set, they wrote about O’Neill is changing foreign exchange policy; he is not for a strong dollar anymore. They are still doing follow-up stories where people are saying, “O’Neill changed the US policy on foreign exchange.”
Another example was when I was observing that corporations don’t really pay taxes. You know, they didn’t really want to write about that. They wanted to say that I was not espousing administration policy. They didn’t want to write about whether that was right or wrong. They wanted to say that I had a different position than the president. So, I came away really disappointed with the media. Because I had thought that the reason the media wasn’t doing more substantive, fact-based stuff is because nobody offered it to them. That was wrong. They really want to write about conflict. They want to make it a conflict between personalities or parties. That’s a huge disappointment to me.
HSR: What’s next for you?
PO: Well, I’ll tell you the things that I’m doing and some I have the urge to do. Right now I’m spending what feels like 10 days a week working on health and medical care, which is something I’ve been working on one way or another for forty years. I’m the CEO of the Pittsburgh Regional Healthcare Initiative which has its own website, www.prhi.org. I believe if we were able to use and deploy all the ideas that we already have in health and medical care that we could reduce the cost by 50% and simultaneously have a huge improvement in outcomes for people. And this consortium of 42 hospitals, and the medical societies, and the big and small employers, and the insurance companies and the state Attorney General is a demonstration vehicle to try and prove that. And if you look at this website, you’ll see the cover story on the April report is in the last 24 months the incident rate for bloodstream infections caused by so-called central lines that hook you up so that they can give you nutrients and blood have gone down 45%. So we’re beginning to demonstrate that ideas can make a huge difference without costing more money. This is saving money.
HSR: Are these things, the current work with the private sector, RAND Corporation, and the Healthcare Initiative, what you really want to be doing?
PO: Well, it’s consuming and there are some things that I’m not getting done that I need to find time to do, including one that’s mentioned in the book, which is Water for Africa. I’ve done some organizational work to get going, but so far I have not sounded the starting gun because when I do, I’m going to have to spend a fair amount of time in Africa and I’m not going to be able to do as much with all these other things I’ve been involved in, in order to get water going in Africa. But I think it is a really interesting thing. Almost every day I get emails, letters, and telephone calls from people volunteering to help me with Water for Africa. It’s really quite lovely, in a way, that there are so many people that are reading the book and saying, “O.K., I want to help with water.” That’s kind of feedback is nice to have; that the American people want to do something that will make a difference.
HSR: Are you frustrated? How do you keep yourself from feeling so frustrating that you decide that this is no longer worth fighting?
PO: I don’t know, I guess you just keep slugging away. Once in a while, I spend time with the CIA, at their request. They’re interested in what I think about how we deal with complicated intelligence issues, so I spend some time with them. I don’t think that I’m ever going to get to the point where I give up. Sometimes I really get angry about not being able to get things done that seem so obvious to me that we ought to be doing.
HSR: Similar to the philosophy of Immanuel Kant, do you believe there is a tie between human dignity and the push for reason for the basis of all decision making?
PO: I always remember something that a graduate school professor in economics said, about Price Theory: Put a tinker toy web or structure in your mind, and everything that your encounter, figure out a way to put it in that structure, so that you can refine ideas as you put them in storage and relate them to each other. And I found that was a really powerful idea that’s caused me to think really hard about what do I believe in, and does it square with what I am actually doing or is it just a conceit? So I find that was really a wonderful piece of advice for me. I keep working at it, challenging it. How good am I being about actually acting on what I say I believe?
HSR: In Ron Suskind’s book,The Price of Loyalty: George W. Bush, the White House, and the Education of Paul O’Neill, there were a couple of places where he referred to you as a “maverick.” A lot of the words in the book aren’t yours, but I wondered if that was a term that you would put on yourself, and if so, what does that mean? It seems like it was applied to both your stance on issues and your rational-based approach.
PO: In some ways, I really like the idea of a maverick in a sense of not being tied down by conventional wisdom. I think so much of conventional wisdom is wrong. And it might serve someone else’s interest, but not in the interest of the general public. And so, I’ve spent a lot of time sort of kicking the slats out of conventional wisdom. And people say, “Well, that’s a Maverick position to take.”
There are an awful lot of people involved in the political process to who it’s about winning. They don’t care about the substance. They don’t really know much about it. They really don’t know much about what is right or what’s wrong about health care, about education, about how our roads are built or anything else. To them, success is getting elected or maintaining an appointed position. I think one thing that people didn’t understand about me is that I didn’t need that. I didn’t care. And that’s partly a function of having worked in the White House for ten years before and having seen all the important people for a generation and ate two or three meals in the White House. I wasn’t impressed by any of that. And I didn’t care about the position for its own sake. If I couldn’t do something that made a positive difference for the world, I didn’t want to be there anyway. I think people didn’t understand that. You ask most people, “If you could be the Secretary of the Treasury, wouldn’t you do everything possible to keep it as long as possible?” They would, but that’s not what I wanted.