Why Business Leaders Should Solve Problems Beyond Their Companies

Rosabeth Moss Kanter, professor at Harvard Business School, believes the world demands a new kind of business leader. She says so-called “advanced leaders” work inside and outside their companies to tackle big issues such as climate change, public health, and social inequality. She gives real-life examples and explains how business leaders can harness their experience, networks, innovative approaches, and the power of their organizations to solve challenging problems. Kanter is the author of the book Think Outside the Building: How Advanced Leaders Can Change the World One Small Innovation at a Time .

CURT NICKISCH:  Welcome to the HBR IdeaCast from Harvard Business Review. I’m Curt Nickisch.

There are hard business problems in the world: operating global supply chains, scaling fast, and managing complexity.

And then there are just plain big problems in the world: poverty, climate change, partisan divides, social injustice, violence, drug abuse – you name it.

Today’s guest says truly innovative leaders – what she calls “advanced leaders” work on both: solving problems at their organization and beyond it.

Who are these advanced leaders? For one, she points to the former grocery store executive.  Frustrated by the amount of nutritious food his company was throwing into dumpsters, he opened a restaurant and market in a low-income neighborhood.

Or the lawyer duo who created an online platform to matched skilled refugees with talent-hungry companies. Advanced leaders, she says,  are people who see a need, and then leverage their experience and organizations to fill the gap.

Our guest is Rosabeth Moss Kanter. She’s a professor at Harvard Business School, and the cofounder of the Advanced Leadership Initiative there. She’s also the author of the new book Think Outside the Building: How Advanced Leaders Can Change the World One Small Innovation at a Time.

Rosabeth, thanks for being here.

ROSABETH MOSS KANTER:  My pleasure.  Thank you.

CURT NICKISCH: I was just reviewing the intro to the book where your first two words are irritation and impatience. And you call your book “a manual for moving leadership to a whole new level,” which is simple, but also audacious maybe. Why does there need to be a call to action like this?

ROSABETH MOSS KANTER:  We have such big problems in the world.  Some things are clearly getting better, but they’re getting better unevenly and these problems are effecting the ability to do business.  Forget about whether business has anything to do with the problems to begin with.  And these are issues that come inside companies and they become things that everybody has to deal with.

And of course climate change, anybody who lives on or near a coast has to deal with that and that risk is a big risk for businesses.  So, these are big problems.  And when I said irritation, I was irritated at the passivity.  That is, people like to talk about the problems, they don’t necessarily want to get up and do something about it.  And I’m impatient for action and solutions.  Because in all the decades we’ve been talking about some of these things – and by the way, I did find that a famous change guru, 50 years ago, an impossible time to even think about, 50 years ago was listing the same problems –  partisan divides, political conflicts, the environment.  So, with those problems around such a long time, it’s time to do something about them.

CURT NICKISCH:  What you’re hearing now is this chorus for businesses to take action, for CEO’s to be activists.  But I kind of get from the title of your book, Think Outside the Building, that you think it takes more than within what we’ve been hearing lately.

ROSABETH MOSS KANTER:  Well, I think CEO’s certainly can take action.  I think middle managers can take action.  Professionals can take action.  But when you take action you have to think beyond the silos and divides and walls.  Because you cannot take action all by yourself.

For a big problem, even the biggest company in the world can’t do it by themselves.  So, IBM wants to take on the problems of primary and secondary education and they do it globally.  They’re a global company.  They have various innovations that they deploy in just about every geography of the world.  But they don’t do it by themselves.  They have to do it partnership with the public officials, the governments.  They do it in partnership with other companies that they need to join them.

So, this art of building coalitions outside the things you directly control are the art of solving problems in general.  That’s what innovation has always been about.  When I started out my career and I was just looking at smaller innovations, modest innovations, now we need big innovations.  Industries are being disrupted.  They have to be transformed.

And so, when one thinks about these bigger change problems, you’re always thinking beyond the boundaries.  That’s what I mean about outside the building.  It’s not literally whether it’s outside the walls of your company, although it might be.  I think going out for a little fresh air from time to time and traveling and seeing new things becomes very important.  But it’s outside the boundaries of convention, the walls that restrict us from change because they’re the walls in our minds.  They’re the walls that make us say, nothing could ever be different.

CURT NICKISCH:  Do you think it’s the job of business and business leaders to do this now?

ROSABETH MOSS KANTER:  I do think that business leaders have a special responsibility because they’re under attack, because credibility and legitimacy are waning.  I mean it used to be that people were extremely proud to work for certain companies.  And when that starts declining, some people don’t want to go home and tell their neighbors what they do.

So to win back trust, business has a big role.  But so do elected officials.  I talk about a mayor, I talk about many lawyers.  Lawyers feel that acutely because many people went into law in the first place because they cared about justice and then they started to work for a corporate law firm and that isn’t what they were doing.  They were helping those businesses with their securities lawsuits, or their mergers and acquisitions.

CURT NICKISCH:  Or, scientists nowadays who find the academic career pretty tough and they end up working for companies that are building algorithms or systems, right.

ROSABETH MOSS KANTER:  The other reason I think business, besides the fact that people like scientists are employed by them, is that business has an awful lot of power and I first became interested in business and in improving the quality of management and creating more leaders because of that power, that institutional power.

People do listen to business executives and I think everybody listening to this podcast who works in a company should think about the automatic resources available to them that aren’t necessarily available out in the community, and how they can take advantage of those resources to tackle a problem like climate change, do an educational campaign, mount a little effort to create an innovative product that helps people with say, keeping the lights off a little bit longer.

I mean there are so many things that for which business can be a solution.  And so even if a manager, an early career person isn’t necessarily the CEO, but can start attending meetings, rallying the community, you can begin to have a voice and make a difference.

CURT NICKISCH:  So, just to put a point on this, at a time when people feel like they’re helpless and they can’t change these big things that are happening in the world, if you work at a company, you have a piece of that power.

ROSABETH MOSS KANTER:  I don’t think we’re helpless.  I think it’s easy to feel helpless.  And when you feel helpless, you feel a little depressed, you don’t do anything.  You say the problems are so big, that’s a typical sign of a losing streak.  That’s what happens when companies start declining.  Everyone says oh, it’s somebody else’s responsibility.  We need a turnaround, but there’s nothing I can do about it because it’s inevitable.  We’re losing customers.  And that’s depressing.  And so, when you’re depressed you lose energy and then nothing happens.  It’s a vicious cycle.  But if you find even one action and get started, you just have to get moving.  Just try it.  If it doesn’t work, fix it.  Try something else.  And that is an enormous source of energy.

CURT NICKISCH:  To use that action analogy and of course combine it with the image of thinking outside the building, why is taking a small step outside the building important?  What what does that set in motion?

ROSABETH MOSS KANTER:  Oh, if you step outside, I mean first of all you see the world differently.  There are many executives and managers who are insulated.  They live in little bubbles.  I went to Brazil once and I never saw the street because I was picked up at the airport in a helicopter, helicopter to the top of a corporate headquarters, went down in an elevator, but I thought if you’re insulated from the streets, if you’re not out with the people you often don’t see possibilities.

And in that same bank in Sao Paulo by the way, there was a leader that I talk about in Think Outside the Building who pointed out to the bank, the bank was about to take a stance on climate change, on the environment.  They were going to be known as a green bank.  And this leader pointed out to them that’s all very good in theory, but right next door was an alley that was full of drug dealers and trash, and maybe they could start by cleaning up the alley, doing something about the alley next door.  And they did.  And that alley is now filled with artwork and people and street vendors.  It’s a very pleasant place to go and it’s a transformation.  And the people that worked on that transformation felt so empowered and so positive, they began to feel that they could do even more.  And the bank did very well with this reputation for being the green bank.

CURT NICKISCH:  You use this example of Sesame Street, which I love.  How is that a good model for business leaders today?

ROSABETH MOSS KANTER:  I love Sesame Street too.  Who in the world doesn’t love Sesame Street?  If you do you’re Oscar the Grouch, if you don’t love them.  Sesame Street took over the audience and had big audience share and then went into decline because of the rise of pay TV, cable TV, because of new media and they were very complacent and didn’t really see that.  Because what happens when you get successful?  Is you start going inside, pulling down the shades, locking the doors and you never really see change happening outside, or you ignore it.  You say we’re powerful.  We’re successful and so, companies get complacent.

And they got complacent.  And they needed fresh thinking.  And so they brought it a new CEO whose background was in commercial television, the money side, and so there was a little concern.  The money side, we don’t want to corrupt Big Bird.  But he brought in fresh thinking.  He got them to think outside the sector and create a partnership with a commercial cable system.  He got them to think outside the industry, including new partners for their educational material including IBM and their Watson artificial intelligence work; small startups who had digital education of various kinds.

So he opened up the thinking much more broadly and he opened it up also to say how do we solve some of the world’s biggest problems?  Just a little while ago, Sesame, now called Sesame Workshop, the parent organization won $100 million contest for one organization that was going to have the highest impact on the world, MacArthur Foundation.  And Sesame in collaboration with the International Rescue Committee won that prize.  So by thinking even more broadly, and they’re doing early childhood education now, in the Middle East, and for Syrian refugees, and they’re going to have a huge impact.  Think about all the kids languishing who actually could be a source of talent for companies.

CURT NICKISCH:  So you’ve given a couple of examples there of a bank leader, a leader of Sesame Workshop, and these are the types of people you call advanced leaders.  So, I’m just curious, what was it that those people did that other leaders aren’t doing?

ROSABETH MOSS KANTER:  Many of the leaders are people who by their values, by their sense of purpose in life, and by the way, we know that companies that want to retain talent had better make the jobs more meaningful than they are now because they’re losing a lot of talent.  That’s why this thinking outside the building becomes part of fixing many of the things that companies need to fix.

But what these leaders have in common, sometimes they have experience in a career and they’ve had a chance to reflect, but not entirely.  They are just reflective people.  They are curious.  They’re interested in the world around them.  They travel.  They therefore get access to new ideas just because they see new things.

Verizon, the big telecom company has a new CEO.  He’s formerly CEO of Ericsson.  And he now has his top executives tell him what they’re doing differently every week.  He wants them to do one new thing every week and go to one new place.  Think about that.

So these are all people willing to go to new places.  They have curiosity.  It helps to be at different ends of life, either early, earlier in your career before the demands of family are so great, or a little later in your career when you’ve already made it to high levels and your kids are grown.  That helps to have the time, but really what they have in common is their values, their desire to make a difference and the curiosity to learn about the world.  Plus I guess a feeling that they can do it.

CURT NICKISCH:  They seem rare, these advanced leaders.

ROSABETH MOSS KANTER:  I don’t think advanced leaders are necessarily rare, but we haven’t emphasized it, that is we have not honored enough, the people who have much broader interests.  They are getting honored now.  If you want to get an award from a major business association, it helps to have done something important for the community.

And many CEO’s of major, major global companies will talk first and foremost about their company’s efforts in the community.  Ginni Rometty talks about what IBM is doing for education.  Jamie Dimon talks about what JPMorgan Chase is doing in Detroit.  So, this has become a source of respect and reputation for established business leaders.

But there are a lot of people who get a little narrowed by their career and their job.  They become accustomed to living in a bubble, to nobody disagreeing with them.  They like problems that can be solved easily and quickly.  I was struck by the fact that when Amazon was looking for its second headquarters and New York City, Queens in New York was selected as one of two locations, how quickly Amazon pulled out at the first sign that the community wasn’t totally united behind the idea.

And I thought, my God, if one of the richest people in the world and one of the most prominent companies can’t stand a little community turmoil, then we’re in trouble.  Because they didn’t even bother to try to convince them to try to win them over.  And they would have done so much for New York.  Had they done that they would have had a whole set of loyal relationships.

Uber, also turned its back for a long time, it’s changing now, but turned its back on the interest of government and regulators and taxi drivers and, but those companies that really take into account these problems and say we’re going to do something about them, they get credit.  Johnson & Johnson got incredible credit when they had a scandal about tampering with Tylenol, one of their lead products.  They immediately took it off the market.

And what a difference that is from Johnson & Johnson having to pay big fines now because of the opioid crisis and we don’t value pharmaceutical companies as great corporate citizens anymore, even though they think they’re trying to bring health.

So, we need people who see the larger consequences of their actions.  And that’s outside the building thinking.  As well as outside the building thinking is the only way you get innovation because inside an industry, inside a way of doing things, the temptation is to always repeat what you’re already doing and not really challenge your own assumptions.

CURT NICKISCH:  It sounds like while you want people who understand how to manage up and build coalitions and develop influence and use it in positive ways, there’s also this element of hustle that you want from people, like a good entrepreneur who’s trying to be innovated or launch something new.  People have to get out of kind of their regular comfortable job, career track and just put themselves at risk some more.

ROSABETH MOSS KANTER:  Yeah, well change is always a risk.  But that’s where purpose and meaning, having a big dream of which fixing some of these big problems plaguing the world certainly counts as a big dream.  Because it’s got to be, it’s got to be big and meaningful otherwise why would you stick with it?  And how would you ever convince anybody else?

You can’t go to them and say, oh there seemed to be some problems out there.  Let’s set up some committees.  That’s not inspiring.  You have to say, we’re going to a place where nobody’s gone before.  And sure it’s a little risky, because of what I call Kanter’s Law. Kanter’s Law is that everything can look like a failure in the middle.  So, OK, you get started – whatever it is, you start out and you hit obstacles you didn’t know were there because you had never been down that road before.  So, you get a coalition of backers and supporters and they all say, sure we’ll invest in you a little, or we’ll show up at a meeting, and then they don’t, or they back off, or it turns out they don’t all agree.

So, I say it’s like crossing the desert looking for the next oasis.  That it can be a long dry spell before you ever get to a place where there’s an accomplishment and you can rest.  And so what keeps you going during those times?  What keeps you going is the sense of purpose and meaning.  What keeps you going is that you do have some allies and you can’t let them down.

This kind of change, this kind of leadership is all about people that you don’t control.  That’s the difference between advanced leadership and typical corporate hierarchical leadership.  You don’t control any of those people.  They’re all volunteers – even when people are working for a paycheck, they’re still volunteers.  Because if they don’t want to do it they have all kinds of ways to slow you down.

And so, if they’re volunteers you have to keep making it worthwhile, making it meaningful and you can’t let them down.  One of my lessons is we all need other people.  And change is all about not just persuading them so you can do your thing, it’s about building a community of people who believe the same thing.  And after you build a big enough community, the whole ecosystem can start to change.  That is lots of other organizations look at what you’re doing and say, hey that’s a cool idea.  We could do this too.  Soon you have an industry.

CURT NICKISCH:  Are there companies out there that you see poised for this kind of change?  Where you look out and you think they have the potential, they should be doing something.  They have the power and you are just waiting for advanced leaders and advanced leader initiatives to come out of those companies?

ROSABETH MOSS KANTER:  The companies that are already doing have lots of advanced leaders inside, but I’ll give you two examples.  One is a U.S. company, CVS that you could say well, they’re a pharmacy company, but they have been transforming themselves into a health company.  And already they have projects and ventures that are so different.  They’re still within a company framework.  I mean I’m not saying you have to actually abandon being in a company.  But they now have clinics.  They use part of their retail space to be clinics.  So they’re kind of hospitals now, not just pharmacy companies.  They do the insurance.  They banned tobacco from the stores.  That was a courageous move.

CURT NICKISCH:  Right.  That had effect on the bottom line.  Yeah.

ROSABETH MOSS KANTER:  Yeah because tobacco is, brings in a lot of money, but it wasn’t part of health.  So, now the opportunities for people to think about how do they use stores differently?  What else can they do that effects the health of communities and the nation?  It’s a big opportunity.  The other example is a Chinese company called Haier.

CURT NICKISCH:  That’s Haier spelled H-A-I-E-R.

ROSABETH MOSS KANTER:  H-A-I-E-R. Haier makes appliances.  Haier bought General Electric appliances in the United States.  And Haier is trying to make everybody an entrepreneur.

And to see that in Louisville, Kentucky for a U.S. company bought by a Chinese company, is really pretty dramatic. They’re helping their employees, and in fact insisting that some employees start a business based on a Haier platform and create an ecosystem around the business.

These sound like technical words, but for example, they’re not just selling refrigerators.  They’re creating a food ecosystem.  They’re not just selling washing machines.  They’re developing a clothing ecosystem in which they can partner with lots of other companies to make sure that the effects on the environment are benign.  That they tie in types of clothing to what a washing machine can handle well.  They’re starting to think much more imaginatively.  And that’s the kind of thinking I think we need inside businesses as well as outside.

CURT NICKISCH:  Rosabeth, thanks so much for coming in to talk about this and I hope you’ve inspired some people.

ROSABETH MOSS KANTER:  Thank you.

CURT NICKISCH:  That’s Rosabeth Moss Kanter.  She’s a professor at Harvard Business School and she wrote the new book, Think Outside the Building.

This episode was produced by Mary Dooe.  We get technical help from Rob Eckhardt.  Adam Buchholz is our audio product manager.

Thanks for listening to the HBR IdeaCast.  I’m Curt Nickisch.