ALISON BEARD: I’m Alison Beard.
ADI IGNATIUS: I’m Adi Ignatius, and this is the HBR IdeaCast.
ALISON BEARD: Adi, what are some of the most important skills that you think leaders out there need to be successful right now?
ADI IGNATIUS: If you’d asked me a couple of years ago, I probably would’ve said empathy is the number one skill that successful leaders need. Now I think things are changing so quickly that the number one skill might be an ability to be strategic, an ability to lead a company through a transformation, which is where we are now.
ALISON BEARD: Yeah. I agree. And I’m going to throw out another word that’s related, courage. In periods of deep uncertainty when you do have this rapid technological change, shifting economic conditions, new political pressures, it can feel really hard to be brave but I think history shows that the best business leaders do find the strength to act even when the path forward is unclear, even when it feels scary. I’m thinking of moves like Reed Hastings and Netflix going all in on streaming or at Stack at Dick Sporting Goods who pulled guns from store shelves after the Parkland school shooting. Neither of them knew that what they were planning would be successful, but they had gathered enough information that they were willing to take the leap.
ADI IGNATIUS: Yeah. You put your finger on two types of courage and one is pivoting in your strategy when you don’t know, but where you are trying to divine the future and Reed Hastings is a great example. But then there’s the courage to try to do the right thing when Wall Street maybe isn’t applauding that. And I think of Paul Polman at Unilever who led the company successfully for years in terms of any metric you could measure, but who also decided that Unilever would follow to the extent that they could UN development plan goals, right? So he was leading the company, but also trying to be a steward of the environment in which we all live.
ALISON BEARD: Well, my guest today agrees that courage is key for leaders. He has studied a bunch of managers who acted bravely in difficult circumstances to understand exactly how they did it. He says there are five strategies, and we’re going to go through all of them in this interview. Ranjay Gulati is a professor at Harvard Business School and author of the HBR article, Now is the Time for Courage as well as the book, How to Be Bold, and here’s our conversation.
How do you define courage in a corporate or organizational context? What does a brave business leader look like?
RANJAY GULATI: When you think about the word courage. A lot of times people confuse it as fearless. Actually it’s taking action in the face of fear. Organizations too can become cautious. They can become fearful because as organizations try to create consistency, predictability, accountability, the whole system collectively becomes risk averse and is unable to move. And that’s why you start to see successful companies failing because it’s not that they don’t have resources, they have talent, they have everything going, and they get stuck. And the stagnation comes from this collective fear that starts to permeate an organization. Courage is being able to lean into that fear saying, “This is scary, but we’re still going to do it.”
ALISON BEARD: And why did you think that now was a good time to write about this topic? Is it a difficult time for business leaders and organizations collectively to be courageous?
RANJAY GULATI: So to understand that question, you have to first ask the question, what triggers fear? So what triggers fear is uncertainty. Now let me back up from that. What is uncertainty? There was a very famous essay written by an economist, Frank Knight, who distinguished risk from uncertainty. Risk is where you know the distribution of outcomes and you can put a probability on them. Uncertainty is where you don’t know.
If you look at what’s happening around us today, what do we have? We have geopolitical uncertainty, we have technological uncertainty, we have economic uncertainty, we have health uncertainty, we have environmental uncertainty, and I can go on and on and I’m not the only one feeling it.
In a recent essay, an author talked about how in earnings calls, CEOs mentioned the word uncertainty three times as often in this last quarter than they did the previous quarter. If you look at the VIX index, which people in the stock market loosely call the fear index, it has spiked. So we have manifest uncertainty, which naturally, normally will trigger fear and anxiety, which naturally and normally leads to the classic freeze response. Let’s wait. We don’t know what to do. Let’s not invest right now. We need to just see how these tariffs and whatever else is going to play out. And sometimes that may be the prudent response, but sometimes you need to be willing to lean into that fear.
ALISON BEARD: And your previous research showed that in times of particularly of economic uncertainty because you were focused on recessions, companies that managed to take action were the ones that ended up better off in the long run.
RANJAY GULATI: Yes. It is true. I wasn’t studying courage back then. We were just looking at strategies for down markets, what do companies do in down markets? And we found that 9% of companies lean into recessions as opportunities for growth and come out stronger. They don’t just engage in cost-cutting like everybody else. They do cut costs, but they also invest for growth.
ALISON BEARD: You argue that there are steps one can take to become more courageous or at least feel more courageous. Have you seen or worked with business leaders who weren’t initially courageous decision makers, but grew into it?
RANJAY GULATI: Yes. I think there are many, many examples of this. You’ll see that in actually in small ventures as well, where first time entrepreneurs will say, “I’m new to this. I’ve never done this before, but I took a leap of faith that I decided I had to do this. I felt compelled to do this.” But it’s also true in other organizations where as people move up the chain of command, sometimes they’re able to move pretty far up by just following orders and getting the job done, and suddenly they’re in a position of authority when now the buck stops with them and they have to make gray’s own decisions. The black and whites are made by people below them. And so now the buck stops with me and I’ve got to exhibit courage. Or I’m a P&L leader. This is the first time I’m leading, I’m running my own P&L, or it’s my first time being CEO. And what you see suddenly is how people have to grow into those jobs because sometimes they don’t have those muscles inside them.
I’ll give you an example. Anne Mulcahy, former CEO of Xerox, who led the legendary turnaround of Xerox, was not even a candidate to be CEO. She had been passed over the previous time around. And the company’s dealing with SEC investigations, is dealing with bankers who are furious that they’ve used up their revolver credit. They’re dealing with customers who are furious that their sales force has been reorganized, they’re dealing with morale issues. People are really thinking, this company is going to go bankrupt and you’re CEO and you’ve never done it before.
And you discover some people are able to rise to the occasion. So as I probe these inspiring examples, I had to ask them, how do you resource yourself? What was the internal conversation you were having? How were you processing that? What did you have to do to boost yourself up? To do what you did? And you discover there’s some systematic things that they’re doing.
Some of them were extraordinary people, some were ordinary people who had never done anything bold in their life before. I’m writing a case right now on Boston Scientific, which was a failing company. In 2011 they had done the second-worst acquisition in modern history. They had acquired Guidant. They were a $27 billion company themselves. They bought Guidant for 28, and in a few years they were down to four. Second-worst acquisition after AOL Time Warner. It was a mess.
So how do you come in and take that business and over the next decade do 52 acquisitions and turn it into $150 plus billion dollar juggernaut? This gentleman who comes in, Mike Mahoney, before he takes the job, he hires a consultant to personally advise him. Listen, analyze this company that has made me this offer and I want to know should I take this job? And the consultant comes back after two weeks, says, “Do not take this job. Stay at J&J. You have a great gig going. This company is not something you should do.” He still took the job.
ALISON BEARD: Part of what I really enjoyed about your research was that you do cover CEOs like Mulcahy, but then you also cover people working at much lower levels, managers at the Taj Hotel during the terrorist attack on that facility. Frances Haugen, the Facebook whistleblower. So let’s talk about the strategies that you uncovered that all of these people at all different levels of the hierarchy use to embolden themselves. You point to five strategies. Create a positive narrative, cultivate confidence, take small steps, find connection, and stay calm. And I’d love to just go through each of those one by one to give our listeners some practical takeaways for how they can do the same. So what do you mean by create a positive narrative?
RANJAY GULATI: The first step I think need to understand is courage is a proactive choice we make. And when we think about proactive choices, it starts with a story we tell ourselves, a narrative. Most of our behavior is a result of how we interpret the world around us and how we see ourselves in that world. Academics call that identity, which is how I see myself and meaning, or social construction is how I see the world. So people make a deliberate, intentional choice. Who am I, why am I here and what is going on here? And it can happen in extreme situations. I interviewed a Ukrainian commando who was an M&A lawyer before who volunteered to fight in the front lines. And he said, “I’m Ukrainian, and if I don’t do something, I would never be able to live with myself.” And so he made a choice to do something and he had his own narrative. And sometimes organizations build that narrative.
In the Marine Corps, Semper Fidelis, always faithful. So when you’re leading an organization or when you’re a member of an organization, what’s your story to yourself? I’m here to win. I’m here to make a difference. I’m here to have an impact. And when you encounter situations … So Frances Haugen encounter a difficult situation. She only really fully internalizes it when one of her own friends becomes radicalized by content on Facebook. So she sees it herself firsthand, and then she says, “Well, somebody else should do it. Why should I?” And then she recognizes that if she doesn’t do it, nobody else will. So how do we build that positive narrative and make courage a choice?
ALISON BEARD: The second piece is cultivate confidence, but how do you do that when you aren’t feeling good about your ability to handle all of the uncertainty coming at you, particularly when you are stepping up to that new role division head or running your first P&L or entering the C-suite?
RANJAY GULATI: When I first wrote this idea of cultivate confidence, I’m thinking, oh my God, cliche hell. I hate cliches. And here I am doing that exactly myself. But you have to really get beneath that idea to understand the nuances behind it. And there was a very famous Stanford psychologist, Albert Bandura, who studied this concept and he called it self-efficacy.
He actually had people who were fearful of snakes in two weeks being able to hold a snake and put it around their neck. So the idea was there are two levels of confidence, self-efficacy. One is domain specific. I need to know my task really well. I need to be an expert at it. And the more intentional I am at what I do, the more confidence I have in doing that task. Whether you’re a marketeer or a finance person or mastering your craft. As a researcher, as an editor, we all try to master our craft to the point where we have confidence in our ability to do it, right.
ALISON BEARD: And to make decisions about it. Yeah. Absolutely.
RANJAY GULATI: And to make decisions about it. But that’s superficial still. Beneath that sits this generalized self-efficacy, which is this can-do spirit, which means no matter what, curveballs come my way along the way. I got it. I’ll get it done. And that’s what you have to do when you say, “Let’s take that leap of faith. It might fail. We’ll improvise. We’ll adjust. We’ll find a way forward.” So just because we don’t have all the information, doesn’t mean we need to sit out and wait. That can-do spirit is something that is a much harder thing to instill inside yourself and inside organizations where you are willing to take that first step.
ALISON BEARD: I guess it gets to Carol Dweck’s growth mindset too. Believing that you can learn and grow and get better at anything you’re trying to do.
RANJAY GULATI: Absolutely. So learning becomes part of it, but the other one is the recognition that I can improvise my way through it. I know I’m such a expert at this topic that I can improvise if I have to. I can go beyond the manuals so that you’re now dealing with unknown unknowns. In the Fukushima crisis where the plant manager doesn’t know … There’s no manual for what to do when everything is shut down.
ALISON BEARD: And this is when a tsunami is hitting nuclear facilities in Japan.
RANJAY GULATI: Yes. Where you have a wall that is 20 feet high, having to face up to tsunami waves at 55 feet, completely submerges the plant. So how do you take action in those contexts where he says, “We’ll do it. We will find a way.” And that kind of confidence building is what I think leaders have to understand. As you take your organization into darkness, into fog, into unknown domains, that we’ll find a way. Because the system will want to not go anywhere. The system will want to let’s wait and see. Let’s wait until we have all the data.
ALISON BEARD: And you want to make sure you’re doing that without being overconfident in your ability to handle any situation, right?
RANJAY GULATI: Absolutely. There’s a fine line between courage and reckless. So I think it’s important to understand that too. But having that general confidence I think is somehow organizations go from playing to win where they have a winning mindset to playing not to lose. So how do you jump start that winning spirit in an organization becomes really building up that confidence – I think that becomes very, very important for leaders in organizations today.
ALISON BEARD: Yeah. And even as a CEO or a team manager, even if you aren’t particularly competent in your own individual ability to conquer a challenge, expressing the idea that working together we can all do this is a way to get beyond yourself and make it a team effort.
RANJAY GULATI: So now you are going to one of the other resources that I found leaders pulling together. That we think of courage as a solo sport, courage is a team sport.
ALISON BEARD: And so that’s that find connection piece.
RANJAY GULATI: Exactly. Yeah.
ALISON BEARD: How do senior leaders in particular surround themselves with the right people who are going to encourage them to be brave, think about the collective not their own jobs, and not necessarily just be yes men or women.
RANJAY GULATI: These courageous individuals look for four kinds of support. It wasn’t just having a team around you. They were looking for something very specific from these people. The first was moral support, supporting me saying, “Yes, you got it.” The second was informational support, getting valuable information. The third was resource support, resources that you might need. And the last one was appraisal support. So if you look back at entrepreneurs again, like we were discussing earlier, why do some of them go to venture capital? They’re looking not just for resource support, they’re looking for moral support, information support and appraisal support. And I think this idea that when you have the right forms of support, it gives you courage.
ALISON BEARD: Let’s circle back to the third step that you list in your article and book, take small steps. So could you give an example of how a leader might do that to walk their way into feeling more courageous?
RANJAY GULATI: This idea actually originates from some research by a very famous social scientist, Karl Weick, who introduced this concept called sense making. And he was studying firefighters and other extreme emergency response people. That when they go into a building, they don’t know what’s going on around them. So what they do is they have to act their way into knowing. So instead of knowing everything and then taking action, you walk in, you take cues, connected to patterns you’ve seen before. You say, “Aha. This is what’s happening. I’ve seen this before. This is like that.”
And you’re rapid fire iterating as you are walking into the situation. Now how do we extrapolate that into business? So you start to take small steps into it and you work your way into iterating and getting a greater understanding of the situation. So if you’re getting into a new market, right, you’re trying to build an adjacency and go into a new arena. Take the old days of Nike going from footwear into apparel. That was a huge leap because footwear, they were pre-selling. People would buy up the new shoes in advance, and if they didn’t sell, that was on them.
Apparel is a fast moving market where now all the unsold stuff comes back to Nike and then you’re going global or you look at Netflix on which I wrote a case. Going from DVD distribution to content streaming, from content streaming to content production. How are we going to do that? These leaps into the unknown, which are in arenas that you don’t know anything about. You sense make your way, you tiptoe your way into it.
ALISON BEARD: So is that about just pilot projects, experimentation?
RANJAY GULATI: Yes. But add to that the learning loop that as you’re piloting your rapid fire, trying to iterate and learn as you go, but taking that first step is sometimes the hardest piece of it. The willingness to lean into the fog and try to navigate your way in with the idea and understanding that I will adjust as I go. So courageous action doesn’t have to look like I have to leap off a cliff. I’m working my way into it.
ALISON BEARD: And then the final piece is staying calm, which probably is the most difficult thing to do in times of turbulence and turmoil. So how did the leaders that you studied actually do it?
RANJAY GULATI: I think I wrote that chapter for myself personally. There’s a great body of research in social science on emotional regulation. The example I use in the book is really around Simone Biles. Because the thing is fear naturally floods the brain. It is not a calming emotion. I’m sad to say also that the two most common emotions in the workplace are fear and anger. So fear is widespread paralyzing emotion. So how do we learn to regulate ourselves and how do we learn to step away first of all, set it aside so we get some distance from it?
Let me use Simone as an example. So it’s a classic example of how she got the twisties in the Tokyo Olympics. Mind you, she’s doing gymnastics where any move can be fatal if she does it wrong. So she has to be very, very careful. And she suddenly has this twisties which suddenly she’s no longer in control and withdraws from the Olympics. So first thing you have to do is tune it out and center yourself again. It’s called selective attention. She tunes out from all social media. She tunes out from the news. And when she comes back, she then starts a very small, regulated practice going back in.
Next step, ritualizes it. It becomes a daily ritual for her. And when we do rituals, it creates a sense of normality over what may not look normal. And then she reframes it. Reframes it as, “You know what, this is my chance to come back even stronger.” So as we think about this, we have to first figure out how do I selectively tune myself out of the emotional response I’m having? I have to ritualize and ask myself, what do I need to do to just keep at the task? And finally, I have to then figure out how do I reframe it for myself?
I’ll add one more to it that I think is important. I found a little bit of a twist in this. Some leaders are intensely outcome focused, but not caught up in the outcome. They’re very process focused. So it’s about getting the task done right. That results are byproducts of doing what needs to be done well. So your immediate focus becomes not on winning, but on doing.
ALISON BEARD: Yeah. My son plays tennis, and we hear this all the time. If you played the point, right, but you still lost it, that’s okay. If you played the match, right, if you followed your strategy, if you adjusted where you needed to, but the guy just hit more winners than you did or more serves than you did, then a loss is okay. But it’s hard to do in a business setting where you’re beholden to targets and investor expectations.
RANJAY GULATI: I think there’s a kernel of an important idea there – sticking to your strategy, sticking to what needs to be done, and not letting a scoreboard or a KPI completely cloud you. The business translation of that would be we all have outcome metrics. Show me your EBITDA, show me your other numbers, your sales growth numbers. We should also be equally focused on input numbers. What are inventory terms like? What is our customer satisfaction? What is our employee engagement? If those are healthy, you hope the outcomes will be good. But I think if you have only outcome measures and you’re not thinking of the process measures, I think that’s the challenge. I think you need both.
ALISON BEARD: Yeah, I think also focusing on the long-term goal or purpose of the organization, there will be ups and downs, but are we on the right trajectory getting to where we want to be in the long-term?
RANJAY GULATI: That’s a great observation. Alison, I think is worth noting because one of the other catalysts for courageous behavior is what I call conviction. And you have to have conviction around an idea or an ideal, and what do you believe in? And I think when organizations create a rallying cry around a purpose, it’s because it then is to create conviction in everybody that that’s what we are here to do. That’s our raison d’etre. And when you have conviction about an idea or an ideal, that’s what inspires people. And I think inspiration, inspired behavior leads to courageous action because you’re doing it for a larger cause. And I think hitting a EBITDA number is not inspiring. I think you need something bigger than that.
ALISON BEARD: As a senior leader, someone who has pull in the organization, how do you work to cultivate courage across teams? Whether that’s being brave enough to give negative feedback or report a problem or make a decision about something that other people have doubts about.
RANJAY GULATI: I wrote a case on a Singapore bank called DBS on the turnaround of the bank and the CEO, when he took over, somebody gave him advice and said, “You can’t turn sheep into wolves, so go hire a new team and clean house.” And he came back and said to himself that that is so wrong. I am going to turn sheep into wolves. And he transformed the bank from the bottom rated bank in Singapore when he takes over to the number one rated bank in the world in seven years. Beyond their wildest of dreams. And he doesn’t fire anybody.
And his whole lesson, I think, was he said, “As a leader, you have to create the conditions in which people behave. You’re a context architect, and you need to create the conditions in which people are willing to try, experiment, learn, fail, grow. You can’t mandate it either.” So the first thing I think is a leader has to be a context architect to create the conditions for brave behavior. Whether it’s allowing for failure, resourcing, experimentation, learning and growing. That’s all that is important.
I think the second piece of it is the leader themselves has to embody courage. And I think you have to really probe the word embody. Embody doesn’t mean role model. Okay. Yes, role model too. Embody means you actually live it. You live and breathe it. So how are you as a leader showing up? How are you willing to take ownership? How are you willing to step up? The last piece of the puzzle is how do you communicate it? Every company I’ve talked to these days has the word courage in their mission values somewhere or the other the courage word is out there. You can’t communicate courage like be courageous, be bold. How do you bring it alive? And sometimes these emotion laden words, you need to bring it through storytelling.
By really communicating the idea through a set of stories. By celebrating it. By putting out courage stories of, look at what this person did. Look at how this individual really brought this idea alive. I think that is the other piece of the puzzle. It’s not something you can snap your finger, put courage in your official values and leadership qualities and change a few KPIs and say, “Let’s resource it. Okay. We’re courageous.” You’re working with the human mind and the human emotion.
ALISON BEARD: How should we all evaluate whether we’re being smartly courageous?
RANJAY GULATI: That’s a hard one.
ALISON BEARD: That’s why I saved it for the end.
RANJAY GULATI: Yes. It’s a hard one.
ALISON BEARD: Because there are plenty of people who are taking bold, decisive action right now that I don’t know that any of us would think will lead to good long-term results. So what is the measure? How do you know if your courage is paying off in the right ways?
RANJAY GULATI: Let me go back to Aristotle. When Aristotle was making the distinction between courage and cowardice, and he was thinking of it in the context of the ideal soldier, he made a distinction between courage and reckless. So in his mind, was that you have to be methodical, thoughtful, so that whatever you choose to do is impactful. If it’s not impactful, then you’re just making a statement and it doesn’t lead to much else. And so how do you look for the maximum possibility? So there’s a bit of pragmatism woven into this that courage is not reckless. Reckless would mean I’m just going to do it and I don’t think it’s going to have an impact, but I’m making a statement. But sometimes people do things that at their own physical cost.
ALISON BEARD: Yeah. Do you think that over the past couple of years business, as we’ve been facing all this uncertainty, business leaders are figuring out ways to act courageously? Or would you like to see more of it? Would you like to see more bravery?
RANJAY GULATI: I think I would not be alone if I said that the world needs more bravery today. We are in a world where somehow bravery is in very short supply, and it manifests in actually all facets of our lives. And I think in the business world where there is tremendous uncertainty, we need to see more bold behavior in other spheres of life as well. Let me take technology for instance. I think people are no longer even willing to have a conversation about where is AI going? What are the consequences of it? Any naysayers have been completely drowned out and are no longer speaking up the way they were just a year ago. And so how are we thinking through the consequences? You look at environment sustainability. Where have those voices gone? So I think business leaders are facing so many realms in which there are consequential changes happening around them. And I think I, for one, would be really thrilled to hear more clear voices with a clear point of view that is necessary today.
ALISON BEARD: Well, Ranjay, thank you so much. It was a delight interviewing you on this topic and also working with you on the article. I really appreciate you joining us.
RANJAY GULATI: Thank you so much, Alison.
ALISON BEARD: That’s Harvard Business School professor, Ranjay Gulati, author of the HBR article, Now is the Time for Courage as well as the new book, How to Be Bold: The Surprising Science of Everyday Courage.
Next week, Adi will speak with Cory Doctorow about the trend of technology getting worse over time for users and society. If you found this episode helpful, share it with a colleague and be sure to subscribe and rate Ideacast in Apple Podcasts, Spotify, or wherever you listen.
If you want to help leaders move the world forward, please consider subscribing to Harvard Business Review. You’ll get access to the HBR mobile app, the weekly exclusive insider newsletter, and unlimited access to HBR online. Just head to hbr.org/subscribe. Thanks to our team, senior producer Mary Dooe, audio product manager, Ian Fox and senior production specialist Rob Eckhardt. And thanks to you for listening to the HBR Ideacast. We’ll be back with a new episode on Tuesday. I’m Alison Beard.