Ep. 22: Acing ‘The CEO Test’

with Kevin Sharer

August 12, 2021

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Kevin Sharer
Former Chairman and CEO, Amgen; Author, "The CEO Test"

Kevin Sharer is the former CEO of Amgen, the largest biotech company in the world. He spent 20 years in the role, growing the company from $1 billion to nearly $16 billion. He is a former chief engineering officer in the Navy and Lieutenant Commander on fast-attack submarines. He has helped with more than 20 major CEO transitions for various companies. He teaches at Harvard Business School, where he is the co-creator of a successful course on the life and role of the CEO.

Leadership is about getting the right outcomes in the right way through the right people.

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Gary Bisbee

Kevin Sharer went from being an engineer on fast-attack nuclear submarines to Chairman and CEO of Amgen. During his 20 years at Amgen, it grew from one to 15 billion in revenues. Kevin is a student of leadership and he defines it as “realizing the right outcomes in the right way through the right people.” He agreed that there are natural leaders, but far more important is the opportunity to grow as a leader no matter the starting point. Being a good listener is an art form and Kevin shares the moment he realized he was a poor listener and how he went about learning to listen, which he attributes as his key to enhancing his career. Kevin’s discussion of how to build high-performing teams was particularly enlightening. He discussed in depth three necessary conditions: (1) developing a shared set of values, (2) developing trust, and (3) learning to take an enterprise view. Kevin describes culture as the expected behaviors of the leaders of the company. In his experience, changing culture inevitably means new leadership at the top. The CEO Test, which Kevin co-authored and was recently published, is a readable and practical collection of stories that provide a roadmap for the pursuit of leadership. A particular relevance to healthcare executives was the discussion of handling transformation and handling a crisis.

Good morning, Kevin, and welcome.

Kevin Sharer  2:18  

Thank you, Gary. It’s good to be with you.

Gary Bisbee  2:19  

We’re pleased to have you at the microphone. What a leadership career! US Naval Academy, US Navy, nuclear subs, time spent at GE, at AT&T, CEO of Amgen, faculty at Harvard Business School, author, coach and mentor of young up-and-coming CEOs. What’s on the bucket list, Kevin?

Kevin Sharer  2:44  

I have to share about my hero, Clint Eastwood. He has two sayings we all should keep in mind. One, you have to know your limitations, so I know I can’t do everything. The other one, though, is more timely, it’s called “don’t let the old man in.” As it relates to my bucket list, that means to stay engaged, stay contributing, stay learning, and try to stay active and fit and growing and enjoying life. There are lots and lots of ways you can do that. On the personal side, I love to ski, sail, golf, etc. On the professional side, working with the CEOs I work with, I can feel the temporary challenges they have. If I can just keep doing this for a while, I’m going to be a happy camper.

Gary Bisbee  3:31  

I’m sure you will. I know you’re working out because you said you just worked out right before our meeting here, so really good stuff. We like to get to know our guests to understand the foundation that they build their leadership career on, so what was life like growing up for you?

Kevin Sharer  3:50  

I was always the new kid. My dad was a Navy pilot and an officer so we moved every two years, so I was constantly the new kid in school. It had some challenges. My sisters didn’t like it but it made me comfortable coming into new situations. If you’ve talked to other people whose parents were military aviators, they’re kind of a heroic figure. My dad cared a lot about leadership and talked about it a lot. My mom was encouraging to me academically and in the arts so I had that ideal background. Growing up, we lived on both coasts. In the Navy, you always live near the ocean, so it’s probably a pretty good place.

Gary Bisbee  4:39  

Interestingly enough, my father was a minister and we moved every two years as well, so I know exactly what you’re talking about, and part of it was really good, no question about that. You mentioned that your father was talking about leadership throughout your early years. At what point did it dawn on you that you had the capacity to be a leader and wanted to be a leader?

Kevin Sharer  5:02  

It was pretty early, probably the first meaningful leadership job I got was in the Boy Scouts. I was in seventh grade and the guy who ran the troop is probably 100. Some people, he just said, okay, you’re going to be the senior patrol leader. And all of a sudden I’m in charge of in seventh grade 100 other guys, and in those days, it was all guys. And that was a serious thing. I enjoyed it. I always had the calling. That’s where it started.

 

Gary Bisbee  5:33  

Do you think that your leadership style took something from your father, you think it grew from your father in your leadership style?

 

Kevin Sharer  5:43  

I’m sure I did. He was a guy who was a role model leader. He cared about his people. He was deeply professional. He was trying to grow. He tried to help people. He had ambition. He was articulate. He wasn’t perfect, was human, but Dad was important, and so was my mother. As a team, they were a great draw as parents.

 

Gary Bisbee  6:11  

With your father being in the Navy, I suppose you thought about the US Naval Academy pretty early in your educational career. Is that true?

 

Kevin Sharer  6:20  

I did. My dad did not go to Annapolis. He didn’t encourage me directly to go there. It just seemed like the thing to do. And what I wanted to do is fly airplanes. And it seemed like going to Annapolis would get me in the cockpit. Good education. I didn’t really think much. My mother wanted me to go to Brown.

 

Gary Bisbee  6:41  

Well, it was near the water at least, but probably not a lot of flying there. So majoring in aeronautical engineering, which tracks your thought that you wanted to be a pilot, but when you actually ended up in nuclear subs, so what was the transition there?

 

Kevin Sharer  6:56  

It was forced. I was going to graduate school and I passed the flight physical for your eyes in school, and then you had to take it again before you started. And the guy said, Hey, son, you can forget about being a naval aviator. My eyes went below spec. And I had never in my life considered anything else. So here I am, 23 years old, “Okay, now what?” I’d been running everyday with a guy who was going into submarines, and I looked around and said, “Surface ships, submarines? What the hell? I’ll go and submarine.” It was a complete fluke, probably the second most important fluke that happened to me. Amgen was the most important, but going into the submarine force was enormously important in my development. I can’t say enough about it from a foundational point of view.

 

Gary Bisbee  7:41  

Most of us have no idea what it’s like to be on a submarine, but all of us wonder about it. What was the thing you liked best and what was not so good about being on a submarine?

 

Kevin Sharer  7:54  

Well, the one I like best is there are two kinds of submarines. One kind of submarine is the ballistic missile kind, I was not on that kind. I was on the attack submarine kind, which where you go, you’re aggressive, you go off Russia, you sneak around looking at the Russians in those days now Chinese too. The mission was really important, and I knew it. Our captain would brief the president, the United States, on what we did and what we saw. The mission had to be your motive and it really, really mattered. Second, the people you were with were extraordinarily capable and dedicated. And that that was a privilege. Third, the standards, the expectation for you as a leader, as a performer was probably the highest I’ve ever experienced in my whole life. And so all that was really, really good. And I carried it with me. The “not so good” was you were gone all the time. In the first year of operations, my first submarine was gone from homeport for 260 days. You can’t raise a family, so I said, “I can’t do this.” I got the best out of it. I was on two ships, but a career wasn’t going to be in the cards for me. It was a great foundation.

 

Gary Bisbee  9:08  

How many days at a time were you typically underwater?

 

Kevin Sharer  9:12  

The longest we did was 110 straight days.

 

Gary Bisbee  9:16  

Do some people have trouble tolerating that, or does everybody just do it?

 

Kevin Sharer  9:20  

It’s a volunteer service, people self-screen. By the time you’re on a mission-ready ship, you’ve rung all that out. You’d be surprised what human beings can adapt to. We had routines. I’d read lots of books, I’d work out, I’d play a lot of bridge. It was like being in a really friendly jail.

 

Gary Bisbee  9:42  

What was your assignment? What did you actually do in your operating role?

 

Kevin Sharer  9:48  

There are two things you do, one is drive the ship. You’re the officer of the deck, so you’re in charge of the ship for a six-hour stretch. And that means you’re the captain’s representative. You carry The plan, I was the battle stations officer, the DEC two. And then in my regular job I was the engineer officer which means I had responsibility for 100 people. And the entire reactor plant the propulsion plant, all the electronics, all the diesel and every everything that was engineering for a 28-year-old guy frighteningly responsible job. I can’t believe we actually give 28-year-old people that kind of responsibility. We still do, but you had two jobs: your operating job and your administrative/maintenance/equipment, whatever you want to call it, leadership job.

 

Gary Bisbee  10:39  

You obviously rose to that challenge. When you left the Navy, you wanted to go into general management but your degree was a pretty technical degree in aeronautical engineering. What was the decision point to take you down the general management road?

 

Kevin Sharer  10:57  

I always wanted to have a broad gauge job, being a specialist never interested me. I knew my interest was in leadership. I was ambitious, that’s for sure. I knew that if you wanted to be a contender for big jobs, you had to as early as you could get some operating responsibility, multifunction P&l and so that attracted me. I didn’t particularly have an industry orientation. I had a general management orientation, I was pretty naive. I didn’t know anybody in business. AT&T had a job where I was actually in charge of people. AT&T seemed like a pretty good outfit. They promoted you fast if you did okay, sort of felt like the government, I could live in DC (which I liked), so I went for it.

 

Gary Bisbee  11:47  

Then after that, GE, so you have a couple of name brands there that you spent time with? What was the backstory on Amgen given that you really didn’t have pharma background? Obviously a terrific amount of leadership. background, but what was the connection to Amgen?

 

Kevin Sharer  12:05  

It was a completely idiosyncratic thing. At the time, 1992, Amgen was a profitable company had about a billion dollars in sales, had two products on the market that went on to be just enormous products. I used to say if we were a movie studio, the first two movies were probably the Star Wars series on the Titanic. And that’s a great way to start a company. It’s a flywheel of cash to invest. And they were really the people who ran Amgen had a very strong view that the pharma ethos was much more sales and marketing and Amgen wanted to be and still does want to be a science-based company. The idea that they’d hire a president from pharma and infect Amgen with pharma badness (this is 30 years ago) was seen as impossible. And so they hired a guy who clearly could move around between technical industries, I knew GE, I’d been General Manager a bunch of stuff, and said, Hey, this guy can learn pharma, learn our business, biotech, he can learn the science. And frankly, if you hire a president, the guy doesn’t work out, you just fire him and get another one. So it’s not like the bet you make hiring a CEO. So I was just enormously fortunate. I’m grateful to Gordon Binder to my last breath. He was my CEO and a former Navy guy so we instinctively knew what the captain did and what the executive officer did. He was a great captain and I hope to him I was a good executive officer. That was the theory: “Hey, this guy is good at what we need. He isn’t infected with pharma badness. And he’ll either learn the science in our industry, or he won’t. And if he doesn’t, we just fire him.” I had enough time to learn. How did I learn that stuff? This is where the submarine stuff came into play. To be certified as a chief engineer of a submarine, you had to take a battery of tests, your knowledge had to be so in-depth, I knew the theory of operations, the metallurgy, everything, the physics, everything you can know about a reactor plus I can take that thing apart in my head. And that level of knowledge or that approach I brought to the study of biology, and it clicked in my head, hey, human biology is the world’s most exquisite and dimensional automatic control system. I knew about automatic control systems, so I had some scientists to help me learn and I was able to learn enough of the science that I could participate paid. I didn’t have any insights, of course, but I knew what the right questions were. And the scientists respected me because I worked so hard. And I actually took almost a year off at the instigation of a board member to basically study science, study medicine, go around and talk to the heads of R&D every place I really, really in a way I hadn’t done since the Navy learned it. And I’m glad I did, it was important that I did that.

 

Gary Bisbee  15:30  

You make a really important point about asking the right questions, particularly an area where you may not be that familiar. How about that? Did you have to learn to ask the right questions? Do you just naturally do that?

 

Kevin Sharer  15:44  

One of the things that is vitally important for senior leaders is simplifying complexity. That’s the leading superpower. Being right, important. Simplifying complex and being wrong? Not so good. There are basically five, disarming questions. It goes like this: Some scientists or scientific leaders got a proposal, so how does that work? That’s a very disarming question in biology. How does that work? Tell me the mechanism of action. What are the interactions between the molecules in the chain and cascade of events molecularly that affect this disease state? That usually stumps a lot of people. Question two, what’s the human data? I don’t care what the dog data says. What’s the human data say? Three, what’s our intellectual property position and how defensible is it for what’s our competitive position? Are we going to get to market number five and forget it? Number five, what are the payers going to say? What’s the market? If you take those five questions and you go deep on every one of them, you’re going to have the information you need to make a quality judgment.

 

Gary Bisbee  17:06  

That’s just terrific. I think questions are so important. We’ll talk a little bit about listening, which is the other side of that, but one quick question back to you being hired. You were hired as president CEO. They had confidence that you could learn bio-logics, they knew you could lead and manage, but they put you on the board, which I thought was pretty interesting. They must have had a lot of confidence in you when you came in.

 

Kevin Sharer  17:31  

Yeah, it was crazy. I never would have done it. It was pretty unusual. I was in my early 40s. And we had some distinguished people on the board. And they did. And it’s very unusual. You don’t put two insiders on the board. But Amgen was a small company. And I remember Ted Levitt, who was a famous CEO of Abbott. He was renowned and I love Ted’s gone now, but I love Ted. And he was in the Navy in World War Two, and I walked in, he said, oh, maybe guy, you’ll be alright. And when I went to Ted’s Ranch, he said, like, I want to tell you three things: (1) don’t make the FDA unhappy, the Italians always pay slow, and (3) if there’s land available near a factory, buy it. I violated guide one once and lived to pay the price, but it was a welcoming board. I love those guys.

 

Gary Bisbee  18:37  

Onto leadership, The CEO Test which you co-wrote with Adam Bryant is a terrific book. It’s readable, it’s to the point. There are actually seven tests, and we’ll have a chance to discuss several of them here today, but for our audience that’s interested in leadership, this is a must-read. Kevin, book writing is a pain. Why did you end up writing that book?

 

Kevin Sharer  19:03  

I’ve had an interest in the CEO job for a long time. I don’t mean doing it but conceptually, why is this job so hard anyway? I’m a member of a small group of 25 well-known CEOs. We get together about twice a year. Part of the deal was we’d give speeches of 20 minutes each on interesting topics. I said, “Hey, guys, let’s talk about why this job we’re doing is so darn hard.” I’m an engineer, so I draw a three-dimensional plot. One dimension is altitude, that is conceptual altitude, strategic down to Hey, what do we make this week? The other axis is task inside task outside tasks. The other axis is, what’s your style at the moment? I described basically 1,000 cube things with 1,000 little cubes and I said the reason this Job’s so darn hard is you have to move from one of these cubes to the other instinctively fast and many, many times a day. And so everybody in the audience said, oh, wow, that’s the best description of this job I ever saw. And that’s why it’s so darn hard because people get hung up in various parts of this cube. So then time goes on. I teach at Harvard Business School, I teach general management, and Larry Culp, the CEO at GE now, and our pals were teaching together and the dean at the time, Nithi Norio, the three of us decided to dream up this course called “the life and role of the CEO.” So we put that course together and I think to myself, “Maybe I have something to say here.” I knew Adam, there’s a friend of ours who is common and we hadn’t seen each other longer, so I cheekily said, “Hey, Adam, want to write a book on the CEO job?” He kind of looked at me like, “What?” We worked for a couple of years and I’m pleased with the result. And it’s sort of what I’ve learned on the trail over a lot of decades. And I hope it helps people. It is not a typical CEO book, which is usually “my excellent adventure at company x and why you should be amazed” or “I didn’t screw up as bad as they said” or that kind of stuff. This book is about how you do a leadership job. We wanted to make it practical.

 

Gary Bisbee  21:23  

It’s readable, which makes it practical, but it’s definitely a must-read. I went cover to cover on that one, but your point begs a question: you use the word instinctual. We have natural athletes and natural musicians. Are their natural leaders?

 

Kevin Sharer  21:41  

There are, but the companion question is probably even more important. Can you grow as a leader? Can you become a leader? The answer is absolutely yes. Second question: Are there certain styles of leadership you have to adopt? The answer’s no, there are all kinds of styles. What’s consistent are the behaviors. If you tried to be the classic, A-personality type, that may not even be right. It may not be you, it may not work. You have to be authentically you, but the behaviors are what count.

 

Gary Bisbee  22:22  

Let me follow that up with the characteristics of a leader. I sit on a board of directors of a fairly large public company. We’re currently searching for a CEO. What advice would you give me? What characteristics should I be looking for as a board member of this company?

 

Kevin Sharer  22:41  

Good question, Gary, and it’s one lots of boards struggle with. I’ve been through seven or eight CEO transitions. You’re almost trying to find a unicorn. It feels like sometimes you’re trying to find somebody who has the right personal characteristics. What’s necessary? What’s sufficient? Personal characteristics are necessary. I could list them. I probably don’t have to, but round character, basically. Secondly, what’s the track record? Has this person demonstrated the ability to lead in the past? Third, what do people who’ve worked with him or her think about them? Four, what’s their self-knowledge? Most people don’t have much self-knowledge. Five, what’s their passion level? They really want this job, they have the energy, they have ambition. Six, can they grow? Becoming a CEO is like going from a governor of a medium-sized state to president of the United States. You’re jumping the Grand Canyon. I start there and then what do we think about this person? Does our head and our gut line up to check all the boxes? There’s some X-Factor sometimes, and it’s a tough job. I’m a fan of collective decision-making around people. I trust my instincts, but I value enormously the judgment of other people I respect. If four of us think, “Yeah, this is okay,” that makes me feel a lot better than if I’m solely advocating.

 

Gary Bisbee  24:16  

The book, The CEO Test, makes an interesting distinction between a leader setting priorities and pursuing outcomes. Can you talk to us about that?

 

Kevin Sharer  24:28  

Leadership is about getting the right outcomes in the right way through the right people. It’s easy to set priorities—“We’re going to do this. We’re going to do that. We’re going to do the other thing”—but it’s outcomes that matter. There are three things about management to simplify it. One is to have a shared reality. Where are we really as a company? That reality needs to be shared among the leadership group, which in my way of thinking is the top 100 people. Some people might think, “Hey, we’re great. We’re in good shape. No worries.” Other people might think, “Oh my gosh, the house is on fire.” You can imagine at Facebook right now, the business folk are saying, “We’re killing it!” The people in public policy are saying, “We have now made the president of the United States unhappy and he and his minions are calling us out and the house is on fire.” What’s the reality? The second thing is you have to get alignment. What does “good” look like? That’s a powerful question. What does good look like? When and how are we going to measure that specifically. Specifically. Pick the timeframe: three months from now, six months from now, a year from now, three years from now. Then execution, that’s the third piece. Who is responsible for what? How are we going to allocate resources? How are we going to make decisions? How are we going to track implementation? How’s the comp system going to reinforce that? If you try to diagnose folks who are in trouble, they usually have problems in all three spaces: (1) they don’t have a shared reality, (2) they don’t agree with what good looks good, and (3) they’re confused about who’s supposed to do what, when, and how are we going to measure?

 

Gary Bisbee  26:14  

That’s really well said. Let’s move to listening, which is one of the seven tests. A lot of people think they’re good listeners, but I think a lot of people actually aren’t good listeners. What’s your observation?

 

Kevin Sharer  26:30  

I was a lousy listener. What’s the dark side of confidence? All positives and negatives. The dark side of confidence is arrogance. My shadow is arrogance. I would think, “Hey, I’m pretty smart. I’m experienced, I’m competent, blah, blah, blah, I don’t need to listen. I got it. I’m quick. I got it.” That wasn’t true. It dawned on me that listening is really complex. It’s not passive. You have to create a receipt in the book, your own listening ecosystem because the signals are of varying intensity. And intensity does not necessarily correlate with significance. And so you want to be able to listen broadly, not just to your direct reports are not just the things that come at you naturally. And if part of your listening isn’t an act of intentionality, like I would go out and ride with sales reps once a quarter or I’d go visit factories, that was intentional. If all you do is depend on what naturally comes to you, you can be sure you don’t have the facts or you’re living in some reality distortion field. Listening is an art form, it has to be intentional and you have to create an environment where it’s okay, unexpected, and safe for people to tell you the truth. It is a real art form. The power of listening and how bad I was at it was probably the biggest revelation of my career.

 

Gary Bisbee  28:15  

Will you share the story that you related to when Sam Pelicano was the IBM CEO and you connected with him in a way that brought forward how important listening is?

 

Kevin Sharer  28:28  

Sam’s a great guy. Sam’s a salesman, so he’s outselling Amgen on something. I said, Okay, the deal is part of what you have to do is talk to Amazon’s 100 vice presidents, and just tell him what you learned in your journey in life as a CEO. And Sam said, Okay, I’m going to, he gets in there, and he loves that kind of stuff. He said, “I was in Japan and I learned that in Japan they listen for only one objective: comprehension.” That hit me like a ton of bricks. I didn’t listen for comprehension, I listened for a chance to interrupt. I listened for a chance to make my argument. Later I was thinking about what I’m doing over the weekend. I was doing anything but listening. When you start saying, “I want to understand what you think and why you think that,” you are giving maximum respect to that individual. If you ask questions that elucidate, “Why do you think that?” It’s not critical. Or confronting questions: “How did you come to that conclusion?” It’s so powerful. That light really went on in my head when Sam shared that story.

 

Gary Bisbee  29:47  

That’s a good one. What advice do you have for young up-and-coming leaders? Obviously, the advice is “learn to listen,” but any tips for how you learn to listen?

 

Kevin Sharer  29:57  

First of all, reflect on your ecosystem. Who’s important to you? The people who work for you, the people you work for, your colleagues, your customers. I could go on, but understand who’s important to you and then think intentionally about how those ecosystem elements think about you and relate to the job you’re doing. How healthy are you in your ecosystem? Then what messages have you been getting from them? What’s your boss told you about development? Do you have any subordinates who are frustrated or have needs? Be intentional about your listening in a strategic way. In the moment, give the person who’s talking or communicating your full attention. Don’t be texting, don’t be looking at your social media, give your full attention. Third, when you have an important conversation, sometimes it makes sense to write the person back and say, “Thank you for that conversation. Here’s what I took away from the conversation and here’s what I’m going to do.” I would do that with a board of directors after every board meeting to make sure they knew I heard them and what the next set of actions were going to be. You can do that at more junior levels, too. The thing about listening is full attention and intentionality.

 

Gary Bisbee  31:38  

Let’s move to teams, which is another one of the seven CEO tests referred to in the book. When you talk to leaders, it seems one of the things they pretty much all agree with is it’s tough to build good, high-quality teams. Why do you think that is?

 

Kevin Sharer  31:54  

What you’re trying to do is get people who have a shared set of values, that’s hard, right out of the blocks and values feels like a fuzzy term. Values are where behaviors come from. For example, if I have a value that we’re going to respect others, there’s a lot of behaviors that flow from that. So it’s easy to say we’re going to respect people. But when you say one of the behaviors is you’re not, you’re not going to intimidate or bully people. Well, that’s hard. First of all, lining up a bunch of people who are diverse, because diversity is power. It’s good in every possible way, getting a bunch of diverse people to have a shared set of values, and an agreed-upon set of behaviors, that’s going to define the culture of the place, that’s hard. By the way, we haven’t done anything yet. We haven’t done anything. Now, we have to get everybody to agree on what reality is now we had to get aligned. Now we have to trust each other. This is hard. And it’s much different than sitting a bunch of superstars down at the table. That’s easy. That’s not what I’m talking about. The other thing is, most teams devolve to their functional responsibilities and show up like they’re all barons of their castle, when in fact, we have to think about the whole company. So getting people to take an enterprise view, instead of a functional view is hard. Next, it’s really hard to get senior executives to realize they have to get better. And most people by the time they become senior have said to themselves, “Yeah, I know this stuff I’m maybe not so good at. That’s okay because I’m so good at this other thing.” The deal is you have to be threshold good at everything, and that’s not easy. I could go on and on, but this is a challenge of the highest order for a senior executive and most people could do a lot better.

 

Gary Bisbee  33:53  

There’s a reference made in the book to someone who said that high-performing organizations have 75% of the people in the right job at the right time and in the right place. In low-performing organizations, probably 25% at the right time and in the right place. Do you agree with that?

 

Kevin Sharer  34:12  

I agree with the sentiment. If you said to me, “Hey, Kevin, you’ve been on the trail all these years, tell me the three things you learned.” There is no substitute for the best team. That would be my 75%. Two, don’t break the law. Three, don’t run out of cash. If you have those three things nailed, you have a shot, but getting the right people in the right jobs is number one.

 

Gary Bisbee  34:40  

Those three things are just evidence of how practical the book is because that’s the way the book comes at you. So, so well done there. So let’s go to transformation, which is another test in the book. And, of course, those of us in healthcare think that we’ve been transforming forever. It’s just part of it, but when you read the book you begin to get the impression that every leader really is a transformer. Do you agree with that?

 

Kevin Sharer  35:12  

The short answer is yes, but let me amplify a little bit, I have a view about life that pertains to countries, the people to organizations, that there is no such thing as staying the same, you’re either getting better or you’re getting worse, it may not be that you’re getting absolutely worse, but you’re getting worse compared to the competition, compared to what expectations of your customer are compared to what the new technology coming at you is going to be there is no stay the same. So if you’re a leader, you have to be on the side of we have to get better all the time. Now, the degree to which you want to get better, probably we get in this transformation, transformation is brought about because something is going wrong. Others haven’t gotten better over time. And it’s finally apparent, we have to transform, which means doing the deferred maintenance we should have done in the past. And it’s really hard because what you’re trying to do is optimize the business system you have and change it at the same time. And the most powerful factor in life in organizations is the status quo. So you’re fighting the status quo. And the status quo is all kinds of powerful manifestations. So transformation is the supreme test.

 

Gary Bisbee  36:39  

We haven’t really talked about the culture of companies, but it seems to fit into this transformation. It seems like a lot of new CEOs who go into an organization feel that they need to evolve the culture. How do you go about doing that do you think?

 

Kevin Sharer  36:58  

Here’s what culture is, culture is the expected behaviors of the leaders of the company. And those behaviors are modeled. They’re taught, and they’re enforced. In most places, culture is described with a bunch of words that are totally inconsistent with how the leaders behave. And so hypocrisy sets in and they aren’t enforced. You have to have specificity. Culture equals our expected behaviors, what we value, the top leadership in the way they behave, models them and make decisions on who they promote? And three, if you’re an unrepentant culture felon, you get fired. I don’t care what your performance is, those words are important, unrepentant felon, fire, and it’s hard to do that stuff. And so I do not believe that a new CEO can go into an old team and say, okay, sports fans, all you people, we’re all going to have a new culture and start behaving differently. That’s like going into E Street Band and saying you’re now going to be the New York Philharmonic. It’s not going to happen. So you don’t have to change everybody. But inevitably, culture change involves some new leaders at the top, not just the CEO. And the sooner you get on with that, the better.

 

Gary Bisbee  38:26  

Let’s cover crisis, which is another one of the seven tests. It’ll be the last one we cover here today. What’s the closest thing to a crisis that you had to manage during your time at Amgen?

 

Kevin Sharer  38:39  

Oh, it wasn’t the closest thing, it was a crisis. It was a dual simultaneous problem. They weren’t directly related, but they compounded. One was we had this medicine that I thought, we thought, the world thought was perfect. It was a red blood cell medicine, Epogen. It was used by dialysis and cancer patients. It had been on the market a long time. We thought it had no side effects. Turns out there was some data that at certain high doses that were off-label there were some cardiac dangerous signals. We didn’t agree and we took the FDA on. Stupid. We really angered the head of the FDA cancer division, Dr. Paster. They changed the label, they restricted dosage. This is a very profitable product that was now in freefall and we’ve angered the FDA. Simultaneously, a headline above the fold in the New York Times basically said “Amgen bribes doctors to kill people.” It had to do with a contract we had that said “if you use two of our products together, we gave you a better deal.” One of those products was Epogen, so the New York Times made the connection that this was unsafe medicine and we were getting a financial incentive for doctors to use more of it. Of course, our stock falls in half, etc, etc. So yeah, I went to the crisis movie Technicolor.

 

Gary Bisbee  40:20  

What characteristics get you through a crisis like that? What do you rely on to get through something like that?

 

Kevin Sharer  40:28  

Isn’t it strange how many people don’t get through the crisis. I’m sure in our joint experience here, we can list a bunch, but they do have some common characteristics and they’re understandable. One, the leader doesn’t take a “I have to find this out” point of view. It takes a “deny and defend” point of view. We couldn’t have done that. The leader ends up early on saying things they believe are true or they hope are true but in fact aren’t, so that gets you right down the slippery slope of losing credibility. This deny and reassure ahead of the facts is always act one and the CEO is going to blow up drama. Act two is you’re now not in control of events anymore because you’ve finally woken up to the fact that your act one statements are wrong. Now you have to actually do something to fix the problem. Some CEOs fail there because they can’t fix the problem or they don’t take the steps to fix the problem. Act three is to find out what the root causes are. How did we get here anyway? By then, you almost always have a new CEO, so it is incredibly difficult to face a crisis. One of the things about the COVID crisis that’s made it more horrific, obviously, as it has been in large parts of the world continues to be, at least we’re all going through it together. So the CEO doesn’t have the spotlight up. It’s your company’s fault. It’s you. It’s all of us together. So that kind of crisis, interestingly, from a management point of view, is not as severe as your bawling in the airplane goes down.

 

Gary Bisbee  42:18  

That’s true. One of the things the health system CEOs with whom I’ve chatted about reported is that they learn to be more humble because they didn’t have good data—in some cases, no data—but they still had to make decisions. Data would become available and they’d have to turn back the decision they made. They said that was a difficult one. That’s your point about credibility. How do you walk that fine line?

 

Kevin Sharer  42:48  

I would say to anybody in the crisis, you have to be sure that any public statements you make about the facts are true not because somebody told you or you hoped or last year. If anybody goes through a successful CEO tour and doesn’t come out more humble, you didn’t learn much.

 

Gary Bisbee  43:11  

That’s a good point. That’s even a broader point. Well said. Let’s talk about governance for a moment. You were and are on a number of boards. What do you think the characteristics of a good board member are?

 

Kevin Sharer  43:24  

First of all, you have to care about the company. It can’t be a “check the box” or “I show up and collect my fee.” You have to care and your bias has to be, I’m here to make sure we have the right CEO, the right culture, and we’re obeying the laws, regulations, etc. You have to take on the role, that you do have direct responsibility for the broadest possible outcomes. You have to find a way to be informed on those things. You can’t say, “Gee, I didn’t know. The CEO didn’t tell me.” You have to do it in a way that’s not generally intrusive. Next, you have to have a relationship with your other board members because boards act together. You’re not the sole person that people have different points of view. You have to come to a reality with them, etc. You have to have some relationship with the CEO in a way that the CEO hopefully respects you and trusts you. You also have to be willing to make some if you have a tough call. Being a good board member is not easy. And you finally have to realize you’re not the operating committee, you are not trying to manage the company. From our science background. The way I used to call it was the board member was more like the Ph.D. thesis committee. The CEOs, the Ph.D. candidate, the thesis committee, the research evaluates the quality, etc. The committee doesn’t do the research or write the report, but they do opine on it, they approve of it. Hopefully, they make it better. Some board members are confused and thinking they’re the operating committee, and they’re trying to leave the company that doesn’t work.

 

Gary Bisbee  45:13  

No, it doesn’t work, and it happens more than you think. You’ve had experience with not-for-profit boards and obviously for-profit boards. Is there a difference between being a trustee of a nonprofit company?

 

Kevin Sharer  45:26  

I think the duty of care is similar. But the stakes are now much higher in the public sector. You’re exposed legally, the stakes are higher. But hey, but you look at great big nonprofit boards like the Met, a giant enterprise of worldwide significance, the responsibility those folks have would compare it to any public board Memorial Sloan Kettering, I could go on. So they’re probably more alike than they’re different.

 

Gary Bisbee  45:56  

Kevin, it’s been an honor to have you on this has just been a terrific interview. I have one last question, which encapsulates much of what you’ve said today. But I’ll ask that directly for the part of our audience who are up-and-coming leaders? What advice do you have for them as they continue to pursue their leadership career?

 

Kevin Sharer  46:17  

Thanks for that, Gary. First of all, make sure that you care about the work you do, make sure that you can really identify with the company, the product, etc. Be in a good industry, there, lots of them. That’s number one, make sure that what you’re doing you care about and feel a real purpose, to realize you can get better. This isn’t self-criticism, it’s more a statement of optimism, we all can get better. And three, try to get as much self-knowledge as you can. It’s hard to get. But if you don’t have self-knowledge, you can’t know how to get better. And lastly, have confidence in yourself and be willing to take a risk and take a swing, it’s okay. early in your career, you can make a few mistakes, and that’s fine. And you can learn. So that’s kind of the summary. And the last thing I used to say to young people, the single most important decision you make in your life as soon as your life part. So think pretty hard about that, too.

 

Gary Bisbee  47:25  

That’s a great place to land. Kevin, thank you so much. This is terrific.

 

Kevin Sharer  47:29  

Gary, a real pleasure. This worked out from my end. Just great. Thanks a lot. Honor to be with you and all the best.

 

Gary Bisbee  47:38  

New episodes will debut every Thursday. Join me in conversations to gain advice and wisdom from CEOs, presidents, and healthcare experts. Health care leadership is hard work, but it becomes more manageable as we learn from the remarkable lives and careers of our guests. I’ll see you there.

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