Where Leadership Starts
In May of last year, as I was sitting on an airplane flying to the West Coast, I thought to myself,“What have I done?” I had just quit my job at Kraft Foods—the only company I had ever worked for—where I had enjoyed a long and successful career and had made lifelong friends. Now I was moving not only myself but also my family from Chicago to Los Angeles, where I was about to become CEO of a troubled company in an industry I didn’t know anything about.
The company I was joining is the world’s largest toy maker, and its power brands—Barbie, Hot Wheels, American Girl, and Fisher-Price—are household names. Despite these strengths, however, Mattel had lost its focus. It was losing up to a million dollars a day on the Learning Company, a software firm acquired during my predecessor’s reign. Mattel was borrowing money to stay afloat, and several top managers—including the CIO, head of operations, and head of communications—had left. The company had been without a CEO for five months. Morale was at an all-time low, and the stock price wasn’t far behind. Mattel no longer knew what it was or what it stood for. It was time to refocus.
The company’s turnaround is now in full swing, and while there will undoubtedly be bumps along the road, we have made solid progress. The Learning Company has been sold. Costs are down, and revenue is up. Market share has increased both in the United States and abroad for the first time in three years. And investors have rewarded us. According to the feedback I’ve received, stockholders, the investment community, our board, and our customers are encouraged by Mattel’s progress. Indeed, Wall Street is starting to consider how we’ll spend the cash we’re generating—not how long we’ll stay afloat. Best of all, Mattel’s 30,000 employees—the company’s most important asset—have a renewed sense of dedication to Mattel’s mission: to create and market the world’s premier toy brands for today and tomorrow.
Like any new CEO who walks into a struggling company, I was facing unrealistic expectations from all kinds of people who’d never met me, not just Wall Street analysts and customers but also Mattel’s employees around the world. On the one hand, employees hoped for someone who could single-handedly turn the company around; on the other hand, they feared someone who would initiate sweeping and unilateral change. As an industry outsider, I found myself in a particularly tough position. I had anticipated some likely questions: “What does this ‘food’ guy know about toys? What does he know about Mattel?” (See the sidebar “Jumping Industries: Ten Tips.”) Of course, I had done my homework. I had read everything there was to read about Mattel, including hundreds of analyst reports, articles, and press materials. I had scoured Web sites and visited chat rooms. And I had formulated a clear and concise plan of action that included three components I believed would get Mattel back on track: Build brands. Cut costs. Develop people.
You might assume that the first two steps were most critical to Mattel’s survival. But for me, focusing on people proved to be the most crucial—and challenging—task. In this case, the emotional intelligence I’d developed over the years was even more important to my success than my traditional, analytic managerial skills were. As the new guy, I realized that every first encounter with a Mattel employee had the potential to be fraught with tension, and I felt it was my responsibility to do everything possible to reduce it. Surprisingly, I found that in each situation, recognizing my own lack of knowledge about the company’s people and culture—in effect, allowing employees to be the “boss” in certain situations—actually helped me lead.
To gain my colleagues’ trust, I had to practice what I call “setting the table.” By this I mean preparing the atmosphere for honest, collegial dialogue by drawing on a set of tools—utensils, if you will—designed to quell any sense of apprehension. These tools include naming the source of tension and calling for honesty; deferring, when appropriate, to the other person’s realm of expertise; and recognizing common experience.
I used most of these approaches consciously, but others were unconscious; it became clear to me that I had used certain tools only in retrospect or when people pointed them out to me. I’ve found all of them to be effective in demonstrating to people that despite the change in leadership direction my arrival represented, the company was about to change for the better.
Knives, Forks, and Spoons
Hailing as I do from the food industry, the concept of “mealtime” provides a good set of metaphors for the style of management I like to practice. When people gather together to share a meal, they are nourished not only in body but also in spirit. They become face-to-face equals who exchange opinions, ask questions, receive answers, and share ideas. As I thought about various interactions during my first days at Mattel, I realized that many meetings that set the stage for our company’s change of direction occurred during meals. My goal coming into Mattel was to make others comfortable enough to share their metaphorical meals with me. For these meals to be a success, however, the table had to be set properly.
After completing my talks with the search committee and finishing my extensive research on Mattel’s product lines and business practices, there was one thing missing: I hadn’t laid my eyes on any Mattel employees. I could not even think of accepting the position until I got a sense of the people and the culture. So before I was hired, I found myself sitting across the table from Alan Kaye, senior vice president of human resources. The recruiter and the board had agreed that I should meet Alan privately, so we met in Tucson, Arizona, for breakfast. As you can imagine, we were both apprehensive. I was wary of giving up a good job to head a company facing enormous problems. And I sensed that Alan was equally anxious about meeting his prospective boss.
In this case, “setting the table” required me to use the important tool of verbalizing the source of tension and asking for honesty in an effort to reduce it. As we began our meal, the atmosphere was friendly, but vaguely awkward. At one point in the conversation, Alan confessed to me that the company had never had training or employee-development programs—something in which I fervently believe. I was surprised by his admission and sensed that, in the back of his mind, Alan was wondering whether I’d blame him for the lack of such programs.
“Alan,” I said over my raisin bran, “I know this is strange for both of us. I want this to be a good conversation—to get everything on the table as truthfully as we can. As far as I’m concerned, you are my HR guy. That means we have to have a very honest, two-way conversation about what’s most important—that is, about Mattel.” Having vocalized the discomfort inherent in the situation, I saw Alan relax. He now felt comfortable enough to open up.
In retrospect, I realize that in setting this particular table, I also used another tool: focusing the discussion not on my opinions or myself but on the other person’s area of expertise. I picked an area in which Alan, not I, was the expert—and that was Mattel’s human-resources function. Certainly, I could have asked about the company’s balance sheet and cash flow, but finances were not Alan’s strong suit—nor was that the kind of information I needed. Had the conversation focused on numbers, I would never have heard answers to critical questions like, How would Alan describe the current culture? Who were the important players? What was their state of mind? What did Alan think needed to happen?
After I accepted the position, I hopped on a plane and set off to meet the other 29,999 employees. When I arrived in Los Angeles, I had a chance to dine with Mattel’s senior-management team, and I found myself setting the table again. At that dinner, I could only assume that most of the team members were actively wondering about their future with Mattel. Though the meeting was friendly and open, it was also highly charged. After all, I was an interloper about to assume the reins from a team of brilliant, talented people who, in the absence of a CEO, had run the company superbly.
I listened carefully to the words and tone of these managers as they spoke to me and to one another. As usual, I invited everyone to ask me very direct questions, and they took me up on the offer. There was one particularly telling moment when a senior manager laid everything on the table by saying, “So, Bob, what are you going to bring to the company?” I thought for a moment and looked at her carefully. “Look,” I said, “if Mattel turns around, it will be because of your efforts as much as mine. But as the CEO, I will be the one to get all the credit, because that’s how Wall Street works. I want you to know that I will try to deflect that credit and recognize the contributions you and your teams have made.” In this case, I used the tool of deferring to my colleague, which disarmed the situation.
Leading from the Lunch Line
The next morning, I had to cross another Rubicon: the first day of work and my public introduction to Mattel employees. At that meeting, I had to accomplish several things. I had to reassure people that better days were in store, lay out a new vision and mission for the company, and build momentum for the changes ahead.
I needed an icebreaker—a simple yet symbolic story that would help me demonstrate that I was one of them. The story presented itself in the form of my company badge, which was made just before the general meeting. Like every new employee, I’d been marched unceremoniously to the security office, where I had to sit on a stool in my suit and tie for a DMV-style photo. As with all such bureaucratic experiences, this one was vaguely undignified—especially since everyone in the room knew who I was, though I had yet to be introduced. The badge, it seemed to me, provided an opportunity to use another tool: the appeal to common experience.
I needed an icebreaker—a story to help me demonstrate that I was one of them.
Coincidentally, the meeting was held in the employee cafeteria. As Alan led me in, I saw 700 or so people sitting in chairs arranged theatre-style and video-conference cameras trained on the podium to transmit my remarks live to similar rooms in Mattel’s offices around the world. The moment I was introduced, I took the cordless mike, walked off the platform, and waded out into the audience, where I launched into the story of getting my badge. For five minutes, I poked fun at the entire process: the stool, the camera, saying “cheese,” the photo, the plastic badge, and my new friend Alan, that king of all the bureaucratic processes in the company. Though I didn’t fully realize it at the time, the badge story offered an ideal symbol for the change that my arrival represented. Besides showing employees that I’d been humbled by a banal process, it also made the badge a focus of my newfound identity—my first step from “food” guy to “toy” guy.
Following the badge story, I set about articulating management’s plan to re-focus the company by building brands, cutting costs, and developing people. Of course, this last item interested employees most, and as I went on to explain my ideas for an employee-development program, their eyes widened. I didn’t know that this was the first time in many years that the CEO had talked about the importance of helping people build careers and rewarding them for a job well done. Having described these plans in some detail, I opened the floor to questions. To my surprise, nearly all of them focused on my personal life—my wife and children’s names, the kids’ ages, how our move from Chicago was going, where we planned to live, and so on. It was apparent from the nature of the questions and the gracious atmosphere that these employees were hungry for a leader who was down-to-earth. I knew right away that these were my kind of folks.
It was during that first employee meeting that I decided to eat lunch in the cafeteria at every opportunity. For me, the cafeteria is an excellent place to repeat that tried-and-true practice of Management 101: Management by Walking Around. MBWA sends positive messages to employees by revealing your interest in them and their work. At Mattel, where employees had long felt out of touch with management, MBWA has made a difference. I still make an effort to stand in the lunch line instead of having lunch sent up to my office. At first, employees seemed puzzled to see me in the cafeteria, but eventually they became accustomed to my presence. Today employees make appointments to meet me there for lunch; at other times, I arrange group lunches with various departments or teams to talk about what’s on people’s minds. And whenever I find myself without a lunch partner, employees approach me just to say hello. Sometimes they ignore me—and that’s good, because it means they really do see me as a coworker.
I have witnessed several positive effects of eating in the cafeteria. First, it has broken down the barriers between managers and their subordinates; some other managers and executives from the upper floors of the building now eat in the cafeteria, too. Second, it’s a great place to test new ideas. I’ve tossed around what I’ve thought were great ideas only to have them reshaped and improved by my colleagues. Third, it’s where I can assess the general mood. I am convinced that I end up learning more from people’s questions than they do from my answers. And although I can’t eat lunch every day in every Mattel cafeteria around the globe, I communicate regularly with all employees through an e-mail titled “What’s on My Mind,” in which I share things I’ve been thinking about and invite employees to respond. I read every one of their messages.
The cafeteria is the ideal place to wield all my favorite management tools.
Finally, the cafeteria has proven to be the ideal place to wield all of my favorite management tools at once. The casual feel of the place seems to encourage the frankness, humanity, and honesty I’m attempting to foster. Standing in the lunch line, I can defer to others by asking for their thoughts, observations, and opinions, thus allowing them to teach me. And the cafeteria is one of the few sites in the company where I have an opportunity to share a common, quotidian experience with every other Mattel employee: the noontime meal.
Table Manners
For a new CEO, these metaphorical and actual meals teach important lessons about how to fit into the strange, new world of another company. These lessons hit home early on, when I twice confronted my own false assumptions about Mattel’s culture and once confronted an assumption about myself.
My first lesson occurred during my first month on the job, at an off-site meeting with senior management. Before we began the two-day meeting, I wanted to clear the air and answer any questions they still had, so I explained that I would leave the room while questions were gathered, which could then be asked anonymously. When I returned, I said, I would answer every question. I thought we would be finished in half an hour. Several hours later, I was still answering such pointed questions as, “I’ve heard you are an in-the-trenches manager who listens to the lower levels. Does that mean you’ll go around us and make decisions without involving us?” To my chagrin, I discovered that I had completely underestimated not only their wariness but also their ability to read between the lines. I also realized that they had done as much homework on me as I had done on Mattel, which told me I was walking into a sharp team of managers.
Another lesson occurred six months into my tenure, when I was hoping to fill some open positions with talented people I’d worked with over the years. I was absolutely certain that these people could do the job, but whether they would fit into Mattel’s culture was another question and not my area of expertise. Enter Alan, who spoke with each candidate. Alan agreed with me about two of my choices, but he explained that the third person was not a good match. I was surprised and disagreed with him, but I deferred to his judgment. Today I realize that Alan was right: My candidate didn’t demonstrate a “Mattel first” set of priorities. Moreover, I came to understand that despite my confidence at the time, six months at Mattel wasn’t long enough to understand the culture fully.
A third lesson occurred when I realized that even the most important management principles must occasionally bend for the greater good. One of my first tasks at Mattel was to review the annual incentive plan. Though employees expected and deserved an annual bonus, the sales targets had been set so high that there was no way the company could meet them. Given these targets, it was obvious that we would be unable to pay out any bonuses.
This put me in a tough position. On the one hand, it’s been my philosophy never to change financial targets once they are set. But on the other hand, I knew that employees needed a bonus—it had been more than two years since they’d hit the targets for one, and if they failed again, they’d feel as if they were being punished for problems that they didn’t create. I spent a sleepless night struggling to make a decision. Should I stick to a principle I’d followed strictly throughout my career, or should I make a one-time exception and lower the sales targets, thereby accommodating the small bonus employees needed? If I chose the latter, I ran the risk of appearing to be fiscally undisciplined, which I was not. But if I chose the former, I’d risk losing the faith of the people on whom Mattel’s success—and mine—most depended. In the end, I opted to lower the sales goals—and for the first time in two years, employees received bonus checks. In retrospect, this turned out to be the right decision. The employees realized I was on their side, and they redoubled their commitment to our turnaround.
All of these lessons taught me that regardless of whatever talent or management experience I might have developed over the years, the most important thing I could bring to Mattel was a sense of humility and obligation to others. I am certainly obliged to our customers and shareholders, but I am especially obliged to our people.• • •
In the early days, of course, there were critical business issues to deal with—not the least of which included selling the Learning Company, tightening capital spending, slashing the dividend, and convincing the financial communities that Mattel was getting back on track. Looking back, I realize how important the people issues were, too. I know now how essential it was for everyone at Mattel to feel, hear, and reach out to me in a human way. Today whenever I mingle with employees—in the elevators, in the hallways, on the grounds of our offices across the country, and in our manufacturing facilities around the world—I rely on my “utensils” of honesty, deference, and recognition of common experience. And I call on all these tools at mealtimes, whether at team-building dinners with senior vice presidents or over sandwiches with employees in the cafeteria. I’m convinced that Mattel’s success in pulling out of the dark days has been due to employees’ renewed commitment to the company.
This conviction became clear—again—not long ago, when a board member came to Mattel for a visit. As our morning meeting came to an end, he asked me, “Where shall we go for lunch?” When I replied, “Let’s go to the cafeteria,” he raised an eyebrow. Nevertheless, he followed me downstairs. As we stood in the sandwich line, he had time to take in not just the good food but also the friendly atmosphere. “Great cafeteria you have here, Bob,” he said. I smiled at him and thought to myself, “You have no idea.”