Podcast: Need to Make a Point? Tell a Good Story.

Harry Kraemer often dropped them into his company-wide communications when he was the Chief Financial Officer of Baxter International, because they helped him make a bigger point about something work-related.

“I actually believe that’s probably one of the most powerful things, is the ability to educate people, train people, develop people through stories,” said Kramer, a clinical professor of leadership at Kellogg.

On this episode of Ask Insight, Kraemer shares one of his more memorable stories. Plus: How should you manage fights in a family business when you aren’t family?

Podcast Transcript

Laura PAVIN: You’re listening to Kellogg Insight. I’m Laura Pavin.

How do you manage the family in a family business … when you are not blood-related? And how can you leverage a good story to add some sparkle to boring information and really make it stick with people?

Welcome to Ask Insight—the segment where The Insightful Leader brings a smorgasbord of business questions to a professor, and they answer them.

Once again, we’re bringing back Harry Kraemer to help us out. He’s a clinical professor of management and organizations at Kellogg. He’s an executive partner with the Chicago private equity firm Madison Dearborn Partners, and he’s the former chairman and CEO of the global healthcare company Baxter International.

Okay, let’s get to it!

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PAVIN: So say you work for a family business. Maybe you’re not a member of the family and the people that you lead are underperforming, they’re members of the family, you’re not a member of the family. How do you handle that?

Harry KRAEMER: One of the tremendous benefits of self-reflection is it literally minimizes a surprise. You can predict most things that are going to happen if you take the time, you just don’t know when it’s going to happen. Okay, let’s get specific. I joined a company and it’s a family business. Now, on my first day, what do I know for sure? I’m the outsider. It’s a family business, and somebody in the family is going to do something they shouldn’t do. The problem is, they’re going to be the daughter or son of the owner of who’s the CEO, and that is going to create a potential problem. Okay? I’m going to have to figure out how to deal with that. So rather than, well, let’s just assume it’s not going to happen. Let’s assume it’s definitely going to happen. Okay? Two brothers are going to be fighting.

Well guess what? Brothers fight, except in this case, they’re both vice presidents. So what could I do? I got a great idea. Let’s make a list of all the things that could go wrong before they go wrong. And let’s figure out, let’s set the expectation. So what would I do? What I would do is if I now have several family members reporting to me, before anything goes wrong, I’m going to sit down with the CEO, and I’m going to say, “Hey, Charlie, guess what? I’ve got several of your sons or daughters. Now, I’m sure it…,” throw a little humor, right? “I’m sure it won’t happen. I’m sure it won’t happen. But if I tell them to do some things and they’re not doing them, okay, and they need to be, there’s an impact of that. Is that going to be okay with you? Alright. Is that something that you expect that I’m going to be able to deal with?”

“And by the way, if there’s somebody working for us—sure it won’t happen—but if somebody’s working for me, and they’re not really capable of doing the job, but it happens to be your niece, okay, I mean, is that alright that I end up removing them from that job and putting them someplace else?” Laura, what I’m doing is I’m literally going through what could happen beforehand because there’s no emotion involved. See, there’s no emotion. By the way, actually, I said I want to do that on the first day. Interestingly enough, what I should say is I would do this during the interview process before I take the job. Because, think about it, if in the interview I talk about this, and you say to me, “well, wait a minute, Harry, there’s no way you could remove my …,” well, then I have to ask myself, do I want to be in this company? You can’t predict everything, but being self-reflective and self-aware, you can minimize the surprise.

PAVIN: So it almost sounds like Murphy’s Law: anything that can go wrong, will go wrong. And a lot of the advice that you’re giving sounds like you need to anticipate a lot and preempt things.

KRAEMER: Exactly. Exactly.

PAVIN: That’s a lot of work!

KRAEMER: Yeah. Yeah. Well, it’s some work. It’s some work. But I think if you’re a reasonable person and you slow down enough to think about what the possibilities are, I think it puts you in a good place to start, number one. And then number two, you’re right, because there’s work involved. Now, I better surround myself with some pretty good reflective people most times in my leadership roles, even being a CEO, most of the time I have found the leader is not the one who comes up with the answer, but they recognize it when they hear it. And by the way, I’m only going to hear it if you’re open enough to think I really want to know, right? Because if you don’t think I really want to know, you’re not going to tell me. That’s why the relationships that you set up and the expectations you set up become so important.

PAVIN: Okay, so plenty of leaders speak in data, facts, stats. They love a number, and they present a PowerPoint presentation about earnings in a very rote way. And everyone’s falling asleep whenever they get up to talk. How can leaders leverage the power of storytelling to get a message across?

KRAEMER: I actually believe that’s probably one of the most powerful things, is the ability to educate people, train people, develop people through stories. People remember stories 10 times more than they remember facts, A slide, a PowerPoint slide, and a number. And I’ll tell you a little story that was a little, kind of, fun when I first became the CFO of Baxter. Well, first of all, I never had my business card read Chief Financial Officer. I had it read CFO, Cash Flow Officer, because I wanted people to understand, what is this job? What is this guy doing? It’s all about cash flow. And so when I first got in the job, I thought, you know what? We have all these different divisions, all these different countries, how do you really bring the organization together? So I thought, you know what I’m going to do? I’m going to do the CFO cash-flow update, and I’m going to send it to originally the top 50 people.

And my assistant, Kathy Strauss, wonderful lady, she said, “I read this before we sent this out; I think you should send it to everybody.” And I said, “who’s everybody?” I think I’d send it to all 50,000 people. And I thought, well, wait a minute. Is that a good idea? And I thought, well, wait a minute. That’s an interesting idea. If I’m really trying to spread the culture, if I’m really trying to get us to work together, okay, maybe I can fine-tune this, take the stuff out that I don’t want to see in The New York Times tomorrow, whatever. But I thought, well, if it’s going to everybody, remember I say, “leadership, influence, relate,” but you know what? I better do this in a way…. If I was the accounts receivable clerk in Tokyo, how would I look at this? If I was a sales representative in Sao Paulo?

And so I thought, I’m just going to include a little story about one of the five children. But I thought, you know what I’ll do? I’ll tie it to something we need to do in the form of a little story. And so I started to do this. Well, I ended up doing that. I thought I’d do it once in a while. I did it every month for I think 12 years when I was a CFO, when I was a president, when I was the CEO. And 20 years later, I’ll be at O’Hare Airport, and somebody comes to me: “I remember the story that you told me,” whatever. And I’d say, “well, what was it?”

So I’ll give you a good example. I can’t give you a lot of examples, but one of the fun ones was in an organization, as you well know, you’re always trying to tie incentives. You want people to do things, but did you really incentivize them the right way? Or I said, we’d give you a bonus, but it wasn’t really tied as best as it could be. So I thought we need to encourage people to tie the incentives. So the best example I could come up with was my son at the time, who was, I think he was four years old or something, and his seven-year-old sister had a bead set. And you guys get these beads and you’re making a necklace. But he took one of the beads and he stuck it way up his nostril—I mean, way up his nostril. And he’s crying, and I thought, Hey, I better figure out…. And my next door neighbor was a doctor, and he was mowing his lawn. He said, “Harry, not a problem. Not a problem. Get him over to Evanston Hospital, and they’ve got a suction machine.They’ll suck it right out of his nose, and that’ll be it.” So I race over to Evanston Hospital. I’m ready to drive in. I’m ready to go in the door. But now being the CFO, the cash-flow guy said, “Andrew, daddy loves you very much. We’re going to go in the emergency room. It’s probably going to cost daddy $500. That’s okay, not a problem. But here’s the deal: before we go in, if you can figure out a way to blow that out of your nose, we’re going to Baker Square, we’re not getting a slice of pie. We’re going to get the entire pie. Then we’re going to Blockbuster,” which shows you how long ago this was. “We’re not renting a tape, we’re buying any two tapes in the store you want.” And he blew it out so hard. He almost cracked my front windshield. And I sent this out.

I got emails. It was amazing. The people with children said, “that happened to me, and it cost me $500.” Then one guy who was I guess in our research lab in Vienna, Austria, very serious intellectual R and D guy, said he sent me a copy of his PhD thesis in German on removing obstacles from the nasal cavity. Said, “Harry, this may be helpful to you sometime in the future.” And I did that every month. And then when you go out…. I visit the locations. “Oh, Harry, how are the kids doing? And what’s happening?” And it wasn’t like, oh, he’s the CFO, he’s the C…. No, he was one more guy who was trying to balance all this stuff.

PAVIN: So this is not as much about how to jazz up a presentation that’s very numbers heavy. This is about finding a way to relate to people so that they don’t just see you as this person that’s disconnected from real life.

KRAEMER: Exactly. You’re somebody they can relate to. And when there’s a particular issue, there’s two benefits. One is what you just articulated. The other one is, it really ought to tie…. Do I really want what I really want people to do? By using examples of things that occurred, not only are you able to relate to people, but they can say, “yeah, I think I get what they’re talking about.”

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That does it for Ask Insight with special guest Harry Kraemer. We hope you found it insightful. By the way, if you have a leadership question you want answered, you can email us at insight@kellogg.northwestern.edu.

[CREDITS]

The Insightful Leader is produced by me, Laura Pavin, Jessica Love, Susie Allen, Fred Schmalz, Maja Kos, and Blake Goble. If you want even more The Insightful Leader episodes, you can find us on iTunes, Spotify, or our website: insight.kellogg.northwestern.edu.

Thanks!