10 Minutes with Mats Lederhausen

The Inside View

10 Minutes with Mats Lederhausen

This column is about the people of sustainability. What makes them tick? What’s their unique way to create impact? What have they learned that works? This time, it’s Mats Lederhausen, founder and CEO of Be-Causea long-term value and values-oriented investment firm focused on building transformative businesses committed to a purpose bigger than their product; chair of BSR 2005-15; and senior executive at McDonald’s 1990-2006.

Bob Langert: I like your core set of beliefs. One is, "Only the paranoid survive."

Mats Lederhausen: That’s a direct quote from Andy Grove of Intel, who wrote a book with that name. I like the concept a lot. It comes from everything I admire in successful people. From athletes to business leaders to artists. There's an ingredient of success that has to do with never, ever being satisfied.

Coca-Cola’s early president, Robert Woodruff said, "Life belongs to the discontented." I believe this very profoundly in my soul. That's why I'm so big on purpose. I believe that necessity not only is the mother of invention, it is also where we find the source of our human energy. Somewhere in the distance between what you have and what you want, you will find the genesis of motivation.  

Michelangelo said it the best. It's one of my favorite quotes of all times. He said, "The greatest danger is not that our aim is too high and we miss it, it is that it's too low and we reach it." If we have nothing to strive for, if we don't wake up every day and want to do something more and different than we did yesterday, I think we become bored. We become lethargic. We become not happy.

Langert: Did you learn anything from your formative leadership years as managing director of McDonald’s that shaped your beliefs today?

Lederhausen: First, I saw that when listening to customers and ultimately pay more attention to their needs than your own, you will be more successful. As Jack Welch once said, "It is not that bureaucracies don’t like their customers. It is just that they don’t find them as interesting as themselves."

But what I saw more powerfully than customers buying veggie burgers or applauding our commitment to renewable energy or jumping up and down giving us high-fives when running our distribution trucks on french fry oil, was that the real power of a longer-term, more purposeful strategy was the profound effects it had on our people and our culture.   

This is where I derived my inside-out strategy in this CSR field. If you have a purpose that is bigger than your product, you can create a stronger culture. A stronger culture can deliver better execution.

Langert: You've been around the block a lot with a lot of senior leaders. So, when people in the sustainability field get stymied with senior management, how can they be more influential?

Lederhausen: My general advice on influencing is around tying whatever it is that you want to do, whatever you feel is most important for your company, to the top priorities of our CEO. Because most big companies operate under the paradigm that "What interests my boss fascinates me," meaning it's very hard to get anything done in a big company if it's not tied to the priorities of the CEO.

The good news is that almost anything CSR-like can be tied to the priorities of the company because you and I both believe so passionately that most of those tactics affect your customers, it affects your employees, it therefore affects the bottom line. What else can be priorities for a company, right?

My second one is to pick your fight. There's only so much we can do. Pick one or two topics that you're really going to dominate and be really good at and ignore many other things. You can't do everything. "We are going to be known for X, Y and Z, and that's what we're going to focus on."

Langert: Then how do you say no to the next NGO with a vital issue?

Lederhausen: If you pick your priorities correctly, then you have to deprioritize everything else and say to all of the NGOs that come to you, "Listen, we really respect you. You're a fine organization. But there's only so much we're going to put focus on. So, this is not our core focus right now. We want to make progress on the following initiatives and that's what we're doing."

I think most people respect that if you are indeed focused, and if you are also making progress on commitments made, hence your rhetoric is not perceived as a head fake.

Langert: You recently said we live in a Clark Kent economy where everybody has X-ray vision. How can sustainability leaders leverage this?

Lederhausen: First of all, I think most CEOs and boardrooms understand this today, but if they don't, I think you should remind them. I think it is very clear and it's not difficult to prove to anyone that the price and penalty to be bad has gone up materially in the last 10 years. So, big companies can't really afford to be caught with their pants down.

You simply can't be caught doing something bad. This is part of the CSR responsibility in any company. Your job is to manage processes that both identifies where we're weak and therefore vulnerable and what we are doing to make sure our risks are well managed and well reported on. Transparency and honesty are the currencies of solid CSR practices.  

Langert: I know you mentor younger people. For those breaking into this field, what advice do you have for them as they try to make a social impact in business?

Lederhausen: A lot of these people that come to me don't need a lot of advice, really. They need confirmation because they come to me with this bias that they want to spend their life at the intersection of profit and purpose. So, I simply try to get them inspired. I typically get very philosophical.

One of my favorite sources of inspiration is Soren Kierkegaard, the Danish philosopher. He always reminded us that we can only live our life forward, but we can only understand it backwards. I've always tried to live my life with thinking about what I wanted to be when I'm at the end. A lot of people don't think about it that way, and then they have strong regrets.

I try to impart on people the responsibility as well as the joy of doing something that you really love doing and that you are really proud of. That beats almost anything in life.

Langert: What concerns you most about those in the CSR field?       

Lederhausen: Karl-Henrik Robert [The Natural Step founder] taught me something years ago when he was giving talks. People always asked him, "What are you most worried about? What do you lose sleep over?" Most people that loved Karl-Henrik, they were expecting things about the environment or will we all be flooded or whatever. But he always answered the same way. He said that his biggest worry is that "the good guys don't win."

I think that is my primary responsibility. I feel like I want to help the good guys. By good guys, I mean people that devote their life to help companies do the right thing and be better tomorrow than they were yesterday. Particularly people who take on bigger challenges and also take on bigger risks. If they don’t "win," we're all in trouble.

Langert: Is it a waste of time to try to get the consumer engaged?

Lederhausen: No, it's certainly not a waste of time. I think early in the '90s that the environmental movement's biggest mistake was that they had the right idea but they gave the impression — rightfully, wrongfully, intentionally or unintentionally — that if I'm going to live the way they suggest, I might as well shoot myself. It would be a horrible life with no sex, no alcohol, no fun and no rock 'n' roll. I know that is not what they suggested but to many people it sounded that way.

I think you have to lead with the functionality and the emotionality of the product versus the holiness and heartiness of the product. When you get that right, it's one plus one equals three.

The way I look at these CSR activities is that they can act as the exponential power to a brand. So, if your base functions are poor and it's less than zero, the exponential function doesn't give you a lot of power. But if everything else is great, you add this on top of it and it really amplifies your strength.

Langert: One of your core beliefs is "Minding the mind: Placebo works in business as well as in medicine." What does that mean?

Lederhausen: If you believe more than you can, you can do more than you believe. I believe so passionately that your attitude is incredibly important for anything you do. There are days when you play tennis and you feel like you're invincible. You can beat anybody and those days you play better. Then there are days when your attitude is poor and then you lose the game. It is unbelievable.

In most medical research, the placebo effect is actually often more significant than the real effect of the medicine or procedure you are controlling against. This is incredibly powerful stuff.

Perhaps the most important qualification of a transformative leader is the inevitability of success. Some people just don’t have the capability of doubt. They are the ones succeeding, while some others are so cynical they even doubt the sincerity of other cynics.