Dr. Klaus Kleinfeld is one of the only leaders in history to have served as CEO of two Fortune 500 companies on different continents: Siemens in Germany and Alcoa in the United States. Today, Klaus is the founder of K2Elevation, where he invests in tech and biotech firms, and he has served on boards ranging from advanced industrial startups to global cultural initiatives. He’s also the author of the new book Leading to Thrive, where he shares how leaders can manage energy, cultivate self-awareness, and thrive under immense pressure without burning out.
Klaus joined Robert Glazer on the Elevate Podcast to discuss his leadership career, overseeing two Fortune 500 companies, self-awareness as a leader, and more.
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Klaus Kleinfeld On Leading Two Fortune 500 Companies And Lessons From His Leadership Career
Resilience Forged: The Kleinfeld Story
Our quote for this episode is from Viktor Frankl. “When we are no longer able to change a situation, we are challenged to change ourselves.” Our guest, Dr. Klaus Kleinfeld, is one of the only leaders in history who has served as CEO of two Fortune 500 companies on different continents. That was Siemens in Germany and Alcoa in the US, two very well-known businesses.
Klaus is the founder of K2Elevation, where he invests in tech and biotech firms. He served on the boards ranging from advanced industrial startups to global cultural initiatives. He’s also the author of the new book, Leading to Thrive, where he shares how leaders can manage energy, cultivate self-awareness, and thrive under immense pressure without burning out.
Klaus, welcome. It’s great to have you join us on the show.
A pleasure to be here. I am looking forward to a great conversation.
I read that you were born in Bremen and raised by your parents, who fled East Germany. How much of that do you remember? How did that shape your resilience and outlook on leadership?
It’s been one of the biggest impacts on me, and that still shapes me. One thing is, they fled before I arrived. It’s not obvious, but that’s what happened. They fled at a time when the border was still penetrable, and then they started their life anew. Then, I was born, and life was starting to get better. My father got an education as an engineer. He worked his way up, starting and designing aerospace planes, and then became one of the first founding members of the outer space team that Europe started again. He died when I was ten.
My mother decided to go back to work, and I should spend the vacation time with my relatives who were all in East Germany. I spent a lot of time in two different systems. On the one hand, West Germany, which was very free, and in an obstructive place like East Germany. I grew up there. It was not necessarily discoverable. I was one of theirs and had friends there.
Fundamentally, these two things. One is the early death of my father. The other thing is experiencing a system that was clearly not a free system, where I saw people being very courageous. Even at a young age, they were standing up for their own beliefs, knowing that they would have massive negative consequences to bear with it.
From Programming To CEO: The Path To Siemens
It’s a little different from the world now, where there’s a lot of yelling and virtue signaling, but no one is willing to stand up behind those. What did you study? How did you eventually find your way over to Siemens?
I was good at math, and I liked computer programming. At the time, it was starting. I didn’t know what I would be studying, so I was looking for a place where I could get my hands around a computer. There were only two places there. One was the physics department in Göttingen, where I studied. The other one was the econometrics guys. I decided to go with the econometrics guys.
I then ended up having the German version of an MBA. I did a lot of programming, psychology, and a lot of philosophy on the side. I had the pathway to an academic career because I like complicated problems. I was a teaching assistant already when I hadn’t even graduated. They were very kind to me, and that led me into consulting. At consulting, I loved it. I decided I wanted to be an execution site. Then, I left and went to Switzerland to work in the pharmaceutical industry.
Siemens was a client of mine in consulting. They were not very happy that I didn’t even apply there. They knew that my wife was living in Munich, so they invited us a couple of times for dinner. One night, they very kindly had a prepared offer letter that they passed on to my wife and said, “Take a look at it and then pass it on to your lovely husband. Maybe it is a good opportunity for him to live back here together with you and not just have a weekend relationship.” That got me to Siemens.
The ‘Soul’ Of Restructuring: Making People Believe In Change
I know you founded the consulting group, which you said you’re interested in, but you were also part of driving a lot of restructuring efforts. Restructuring gets a whole bunch of different names. Some people think it’s a euphemism for layoffs. I don’t think that is the case. Organizations have to change. These things are hard. I like the quote, “Everyone loves progress. No one likes change.”
Only a baby with a diaper loves change.
I’ll add that to it. That’s good. What did you learn about organizational change and the strong resistance to doing new things?
Resistance to change is an inherent human trait. There’s some truth to it. It is because, in a way, humans want to have a stable environment. Most want to have a stable environment. That’s okay. In a business environment, you have a different indicator of what’s good or not. You are not the one who chooses. It’s competition and your customers. That has to be the North Star.
In the end, in all of the restructurings that I’ve done, I noticed one thing. I came in as an internal person while I was working at Siemens. I knew then I wanted a career at the company, so I wasn’t like an external consultant, then being brought in, leaving, and going to another place. It was a very different feel, not just for me, but also for all the folks. I came in at a very late point in time. Some external and internal folks had already tried to restructure it. I was very young, and they wouldn’t give me this unless they ran out of options.
What I noticed is that many of these restructurings fail because they didn’t bring the soul back to the company. What I mean by this is that, with a human, purpose is a very important thing to drive you and focus your energy. We get to this, I hope. In a larger organizational environment, it’s pretty much the same. My test is always a Saturday morning breakfast table test. You are around the breakfast table, and your kids are there, or your family is there.
They ask what you have done all week because they haven’t seen anything of you, and then you tell them, “I am so excited. I’m in this restructuring project. We cut out 40% of the cost. I am working on the procurement team. I am squeezing the last penny out of our suppliers.” Honestly, in today’s world, either they will have left the table, or they will be on their devices and think, “This is why he wasn’t here, this idiot.” It’s a very different ballgame from when you say, “We are working on making this company innovative and creating products that can save lives.”
I’ve had the pleasure of working in the Medicaid division. We did save more lives. It’s things that nobody else could do, but we said, “We have to change. We need more software people. We are a hardware and metal company, but we need more software. The software allows us to do things that we currently can’t do and allows the doctor to treat patients faster.” It’s about saving their lives. Time matters greatly.
The point was to give them the soul back and give them a perspective on the future. The second thing is you have to create a burning platform to make people understand. Not changing is not an option. The competition will eat our lunch. We will slowly die and bleed out, and none of us will have a livelihood with this company.
Innovation Culture: Why You Must Attack Your Own Business Before Rivals Do
It’s interesting. There are a lot of people talking about it in the world of AI. If you need to inject innovation into a culture, does that require new thinking or new people? I was at a conference, and this guy was like, “The people you need to do this aren’t on your team. You need different ways of thinking.” We’ll talk about Alcoa. I know that was your theme there. This is not an easy thing to do.
It is very hard to do. There are some changes where it is almost impossible to do reskilling. I have rarely seen companies that come from a pure hardware world. When there were changes to a software-dominant world, they were able to make the change. In most cases, you either had to separate these 2 firms and build a new 1 internally, which you can do. You say, “This is my existing business.”
It’s skunk work.
You have to start it as skunk work because otherwise, the existing one would be dead. You have to protect it in the beginning, but then it gets bigger. You have to allow the rule to say you can fight against each other in the marketplace. The worst is when you say, “Don’t go so fast because it’s going to eat our market share in this.” You’d better attack yourself with your own skills because otherwise, somebody else is going to do it. With this, you’ll have a chance to be dominant again, or at least have a primary position.
You better attack yourself with your own skills; otherwise, someone else is going to do it.
Many people don’t do that. I’ve seen so many times, they say, “We have a dominant position. This wave is coming, but can we wait?” The classic example, and we’re both old enough to know, is Kodak, 3M, or Xerox, and what type of businesses these were. If I think of Xerox, it was iconic. Kodak was iconic. Kodak invented the digital camera. Think of that.
I remember when the memory cards first came out. I was like, “How is Kodak not having a yellow one of these or putting their brand on these?” They were succeeding in doing this to all these Asian companies that no one has heard of. It was crazy. The company that has done that incredibly well is Netflix. They have, twice, when it was going from CDs to streaming and then from syndicated content to original content. Usually, those companies were beaten by the startup, and they let the new thing kill the old thing. It’s easier said than done.
It’s not easy. I tip my hat off to the leadership. They have done an enormously good thing that was very difficult, and they’ve done it very successfully.
Do you think that’s something embedded in the overall culture, or is it letting that new thing compete unimpeded against the old thing?
You have to adopt a ruthless internal competition.
The market will do it for you.
You’d rather simulate it inside. My assumption is that the only way that they have done it to let these units compete with each other is to create a new unit, protect it, let it grow, and then fight against each other. Whoever wins, wins.
Global Leadership & Crisis Strategy At Alcoa
You made the cross-continental jump from Germany to the US in Siemens to Alcoa, adapting to a very different business culture. I’m sure you were happy. There was one CEO between you and Paul O’Neill. Paul’s shoes were big ones to fill. What was the biggest adjustment you had to make in terms of your leadership style? Was it cross-cultural?
There’s always some cultural element that I still carry with me. Time discipline will probably never leave me. Discipline, in general, will never leave me. I’ve worked most of my life internationally. I’ve noticed that although there are cultural differences, in the end, humans have more in common than cultural differences. The biggest trait is that everybody wants to be respected. Everybody wants to be treated in the right way.
Despite cultural nuances, humans share more common ground than differences. The biggest truth remains: everyone wants respect and to be treated right.
Everybody wants to be part of a winning team, as long as they see that that’s what you’re building and that you treat them with respect. That does not mean that you have to or you should not reduce your performance standards, but as long as this is transparent and all done with, “You have a role here, as long as you fulfill blah.” That has been the leadership style that I’ve been adopting, and I always had. I also have always believed in building teams. I’m a big fan of high-performance teams. I’m a very good collector of extremely good talent, and bringing talent together to play as a team. That is another skill that has allowed me to do things that I alone would have never been able to do.
You had to lead Alcoa through the global financial crisis and a crash in commodities. I’m always interested. There are always bad decisions and less bad decisions during those times. Did you have a guiding strategic framework that you carried forward during periods like that?
In this case, for people to understand what it does to a commodity company, we had, in less than six months, the price of aluminum fall to 1/3. Think about it. In less than six months, your revenues shrink by 2/3. In this world, you can’t shut down fabrications because if you shut them down, you can never use them again. You have to go through a stage process to ramp them down. That costs you a lot of money. At a time when you have no money, even curtailing things costs you money.
My principle was to try to do it fully aligned and have everybody on the team coming in. That’s what we also did during those times. In a way, we were lucky. This is an interesting story because we had a very good board. One individual on the board had told us in the summer that year before it hit, “I think it would be good if you add another revolver and another credit line to it.”
It’s sunny. You want to do those things.
We would not have done it without that recommendation. This also shows how great boards can be. He wasn’t in an industry that had the early indicators, which we didn’t see. At that time, we were all in this psychotic situation of seeing a global commodities hype. It’s the never-ending global commodities hype, and it will never end.
The never-ending post-COVID exercise machine.
Then, it flipped very quickly. That saved us. One thing we didn’t realize in the real crisis is that even though you have bank lines, the banks might be gone and not around anymore. It’s always syndicated. You look for the bank, and it’s not there anymore. They can’t give you any money. The other thing that we did was we got together in a conference room for a few days, the top leadership team, and said, “We switched the whole company to cash sustainability and made a program.”
I believe very strongly in corporate-wide programs, looking at all levers systematically. Even a small lever matters. In the greater scheme, everything matters. We said, “We’re going to throw all of the incentive schemes out the window. We go for only one incentive, and that’s cash. We’ll put a program together by saying, ‘With this lever, we can produce so much cash.’” We had a mechanism already developed, where when we got physically together, in 24 hours, we could roll a program out completely worldwide. We establish it and roll it out. In the matter of three months, we could already see how big the impact was. At the end of that year, we were able to already grow substantially.
The Case Against Synergy: Why Splitting a Company Creates More Value
Coming out of the ‘90s and early 2000s and GE, it was the conglomerate era. We were pulling everything together. One of the things you did was split the business into two. We’re still seeing more of this divestiture into businesses that do. How did you know that that was the right move?
I did not know that that was the right move. When I came to Alcoa, in my first presentation to the board, I already told them, “I’m of the old-school of strategic thinking. I think in a strategic business unit.” What that means is I think that it’s extremely important to understand what the unit is that can create a sustainable competitive advantage. If you get that definition wrong, a lot of wrong things follow from it.
If you get that definition wrong, a lot of wrong things follow.
I told them that I look at the company in three chunks. I look at an upstream chunk, a midstream chunk, and a downstream chunk. They follow very different mechanisms. Inside this, there are different businesses. This was my principal way. The biggest difference is on the upstream side, you are completely in a commodity world. The cost position is the determinant of your success. In the downstream, you are innovation. It’s all about innovation. You have to understand the customers very well. What are they doing? You innovate, and you get paid for innovation. In my first presentation, I said, “We have to manage this in a very different way. I will manage this.” I chopped it into three divisions.
What I realized was that the market was more and more going to a world where the investor said, “I’m an investor. I like risk. I don’t mind having this global risk that you have.” China’s risk is upstream. When China takes a deep breath, the market goes up or down in the commodity world at that time. Whereas in the innovation world, it’s all about what’s the new blade that you can come out with. Can you come up with new coding? Can you do something so that the temperature on the jet engine is going to increase when fuel efficiency goes up, and emissions go down?
I said, “We have to manage these things very differently.” I also realized that the investor types are completely different investor types. There are investor types that say, “I don’t mind geopolitical risk. I love it. I’m a big gambler.” I have a portfolio around this. My investors like that. The others are saying, “I hate that. What I want is a stable understanding of the industry. What are you doing on your innovation side? How are you steadily growing your revenues and your profitability?”
I realized that even though I started talking about this and I was very transparent, this would never change. We had a good discussion with the board. It’s not easy to split a company that’s more than 120 years old, but we said, “It needs to be done. This is the only way we can also have a good future and make sure that both companies get valued in the way that they deserve.”
There are these myths of scale and synergy. Not to put words in your mouth, but I think sometimes, those are whispered. To what you were saying, those are great as long as they don’t undermine excellence in what you’re doing and focus on whatever the business is doing. Having a crappy product but thinking with scale, how you could sell more of it and sell it to your other customers, seems like a false strategy.
The worst is cross-subsidization. People would say, “I’m going to give this because I have this unit. I can give this fork at cost to the other division.” That’s wrong because that completely distorts the view of the market. There are, however, some synergies that can be extremely strong. At the time of Jack Welch, Jack had some of these things done very neatly. One is talent. In the end, I believe the only sustainable competitive advantage is talent.
If you can generate almost a monopoly for getting top talent, that is of very high value. He had that position. The second thing that he created is a financing structure, which we know was not sustainable, unfortunately. He created it, and that allowed him a major financing advantage. That’s stuff that you can spread like wonderful butter across a lot of businesses, and everybody benefits from it. The third thing was on the procurement side. They were good on the procurement side. I honestly think those times are over.
The only sustainable competitive advantage is talent. If you can generate an almost monopoly for getting top talent, that is a very, very high value.
I had David Gelles on the show. He is a reporter who wrote the book about Jack Welch and his management. We were talking about when I was in school, the airplane interview, the three CEOs, and everyone who went on to lead these other companies was the gold standard of talent management. That story turned to vinegar over the next decade. It was a bunch of people who had mastered earnings management at the end of the day.
Yes and no. I know that that’s the general view. Having looked at it from a competitor’s perspective, I have to say I thought that they did a very good job for a company of that size. Probably some of those folks have not chosen the right jobs, the jobs where they couldn’t shine. I don’t think it was all earnings management. There was a bit of that. Jack was the master of it. We all knew it in a way. Anybody who tells you they didn’t know it, that’s crap. We knew it.
He never missed the earnings.
Exactly. How does that work?
Leading To Thrive: Inner Game (Energy) Vs. Outer Game (Business) Framework
Let’s talk about the new book, Leading to Thrive. Talk about the inner game and the outer game and how you integrate them. Can you explain that metaphor and maybe give a few examples from your career experience?
Sure. I believe that in the end, it’s not about time management. It’s about managing your energy. If you have enough energy, you can bring it to anything. If you don’t have it, even the great calendar app won’t save you.
When you say the energy, do you mean at the individual leader level or the organization level?
I start with you as a leader. My book is written for you as a leader. The outer game goes to how you spread it. In the end, it’s about you as a leader. The only people who have no energy are people who live in graveyards. The question is, how much do you have? If you have a lot, you can bring it to whatever you want to bring it to.
The question comes to, “How do I manage my energy?” Your energy is your biggest competitive advantage. “How do I preserve it? How do I generate something? What is energy?” It comes to the question, “What are the sources of energy?” There’s physical, mental, emotional, and spiritual. You’re like, “How does that work?”
There’s this odd thing called purpose. Purpose does to energy what a laser does to light. Energy is a fuse thing. Once you have a purpose, it brings it together, focuses it around 1 or 2 things, and then it goes through everything. Every one of us has experienced that. When you want something, you find the energy. You know what to prioritize. You know that you can’t have energy suckers around you. You have to go for it. That’s the inner game. You start with that. You give yourself strength.
In my book, the outer game focuses purely on the business side of things. The question is, how do you select talent? How do you go about it? How do you build the team? I’m a big believer in high-performance teams. There is a mechanic for how to build it. It’s not that complicated, but it needs a lot of things from you. For instance, deep trust among individuals and the capability to be brutally honest with each other, which many have an issue with. The question is, how do you deal with the board? How do you manage to get a good execution? Those types of things come on the outer game side.
The Special Forces Model: The 5 Elements Of A High-Performance Team
I assume, though, that in terms of the high-performance team, it’s trust and honesty, but it’s also the same market dynamics you were saying before. I think about a basketball team. If the star player is 5 for 20 for 2 nights or 3 nights in a row, they’re going to get the bench. Everyone loves the person, and they don’t love them any less. This is where even some of the closest teams have a hard time saying, “I don’t know why or what, but you’re not scoring points. We need to score points these days.”
That is a very important point. That’s where the analogy with sports is extremely important. In sports, there is zero ambiguity about what winning looks like.
What good playing sometimes looks like, too. A little bit.
Getting you, but then you prepare a score. It’s clear. It’s the score. I coach quite a number of CEOs and senior leaders. Often, they complain about, “My team is not that great.” When I ask them, “What do you tell them what winning looks like?” I very often get this long list of KPIs. I say, “No. They have to, in the end, make a decision on what is winning. What’s the goal? When you then have a chance to ask the team, ‘What do you think winning looks like?’ You get a diverse view.” Alignment around what winning looks like is critical.
One of the critical elements to building a high-performance team is that you have to have trust in each other. The analogy that works better here is probably the Special Forces. If you think of a company’s Special Forces unit where a dramatic thing in their life is at stake, you would not want to be with one in a mission where your life is at stake, and you don’t trust the individual. You would not want that. You would say, “I trust the person.”
The second thing is you would say, “Everybody has the right to criticize what didn’t go well.” Criticism is not meant personally. It’s meant content-wise. The idea is, “We want to win. You have to do your part in this. You can do those things better.” That requires a capability of handling conflict and not seeing conflict as a negative, but seeing conflict as a positive. It also requires brutally honest feedback. Feedback culture is super important. That’s the second thing.
The third thing is you want to have commitment. You want people to say, “I’m in it. This is my part of the mission. I’ll do it.” That comes with, “If it doesn’t go well, this part, I am accountable.” There is no dabbling around, saying, “The bridge wasn’t there. The time was late. The sun wasn’t coming out.” It’s your job in the situation to figure it out. Figure it out. It’s your job. You know what the mission is. The last and the fifth one is to be completely aligned with what winning looks like. It’s those five things that are required to build a high-performance team, but it all starts with having talent. Also, you have to be attractive to bring talent out.
I like the analogy. You wouldn’t get 60,000 people to fill a stadium to watch a game if they didn’t know what the score was or how to know if their team was winning.
That would be a fun thing to do.
That’d be a great spoof thing to see how frustrated everyone got.
It would probably be like me when I went to a cricket match, and I was like, “I can’t figure this out.”
Think about a tennis match where you can’t see the ball. Therefore, you don’t know whether it is in or out. They debate for weeks.
The Spiritual Edge: How Purpose and Perspective Drive Sustained Energy
It’s interesting. We haven’t talked about my new book called The Compass Within, which is on core values and understanding personal core values as a basis of leadership. That, to me, is a lot of the inner game and the inner purpose. Even if you’re working in a company, you have to understand who you are, what you like, and the things that energize you. If you have a good leader, they want you to do more of the stuff that you like and less of the stuff that you don’t like, which isn’t tied to what you care about.
That’s true, but I don’t go that much into the like thing. I go more into fundamental principles on how you recharge. On the physical side, the very fact that you have to move your body, eat well, drink, hydrate, sleep, and breathe.
They’re human things. You have to be doing things that connect with you at a deeper level.
I completely agree. That is the part on the spiritual side, which we almost never talk about in business. We shy away from anybody who mentions the word of belief in God. We should not because it’s a very strong source of energy. There are tricks around when you think about emotional energy. A lot of people are telling me, “I get so mad when I sit down with this person.”
I tell them, “The emotions are in you, so you allow yourself to get mad. The person does not make you mad. You allow yourself to create this emotion in you, which is called madness. Try to look at this from an outside observer and say, ‘I have nothing to do with this. Whatever that person says doesn’t affect me.’ You can learn those types of things.”
On the mental side, it is whether you see a challenge or whether you see an opportunity in something. There’s the story of the shoemaker who has two sons and wants to pass his business on. He sends 1 to the East and 1 to the West Coast of Africa. The first one sends a note back and says, “Father, I’m sorry. There’s no market here. Everybody goes barefoot.” The other one says, “Father, send me as many shoes as you can get. This market is endless. Everybody is barefoot.” A classic example.
How many times have I seen this in almost all leaders? The common wisdom is, “This is only that.” The individual says, “I think that there’s an opportunity for us. We can get an upper hand on this if we do this.” The question of perspective is important, as well as the question of compartmentalization to get control over what’s going on in your head. There are a number of these tricks that I think we can see Special Forces use, as well as high-performance sports. All of them use that. How do you quickly recharge? How do you not allow people to drain your energy? That’s a lot on our game part.
This point of yours, the purpose part, is very important. I have a long chapter in there on purpose. Purpose is one thing that mankind has dealt with since the beginning. We always ask ourselves the question, “Why are we here on earth?” You don’t want to be in the situation as some of the people that I’ve covered there on their last breath. I have a few studies around that. They say on their last breath, “I wish I had allowed myself to be happier,” or, “I wish I had listened less to other people telling me what to do and be more myself.” You don’t want to wait until your last day for that.
You allow the emotions to surface; you choose to get mad. The other person isn’t the cause of your anger; you create that emotion within yourself.
I listened to the podcast, How I Built This, a lot. I find it fascinating. I’ve heard it 4 or 5 times. You have your shoe analogy. It was the Dyson guy, and then it was someone else. They were at a big company in the industry. They invented the thing at the company, they went to people, and they went, “That’s stupid.” They left and did it. They laughed him out of the room at Dyson. I can’t remember the company I was listening to, but it was fascinating. It’s a great company. He was at the company that could have done it, but they laughed them out of the room, so he went and did it somewhere.
One other thing that I’m always telling people is that every great idea goes through three stages. The first is that everybody laughs about it. The second is everybody tells you, “It might be a good idea, but it’s not doable.” The third one is when everybody says, “I had this idea early on.”
Years ago, I was with a guy. He went to Stanford Business School. This guy from Stanford Business School invented this wearable blanket. He showed it to his friends and was like, “What do you think?” They were like, “This is so embarrassing. You went to Stanford, and this is the best idea ever.” They shamed him out of pursuing it.
The 4 Energy Quadrants: Performance, Survival, Burnout, And Renewal
Three years later, there’s the Snuggie. It’s a billion-dollar direct-to-consumer thing. No one was laughing at it. You talk about the four energy quadrants, which are performance, survival, burnout, and renewal. Two of those sound good. The other two sound problematic. How does a leader know where they’re drifting into survival or burnout? How do they lay out in the quadrant?
I was following time management for a big part of my life. My metaphor for life was life and business are like an ultramarathon. You run. At the time, I was running marathons. My trainer was an ultramarathoner. I enjoyed it. I have learned a lot through it. In reality, sustainability is a lot more like having sprints of different lengths and then a recovery.
When you look at this box of negative and positive energy and low and high energy, the quadrant in the upper right corner, which is positive and high, is the one where you want to be. That’s called the performance zone. How do you notice that you’re in it? It feels a little bit like the flow where you think things are going well. You are in a good position.
In truth, if you are a leader, even if you want to be in that zone, something happens. You get a call. It happened to me one time around Christmas. I get a call, saying, “Your new smelter in Iceland is on fire. Not just on fire making a lot of aluminum, but on fire.” It’s Christmas, so not that many people are there. You go from the performance zone very quickly to the left. The energy is high, but negative. It’s like, “What do I do now?” That, by definition, is not entirely bad because it broadens your comfort zone.
You can’t stay there.
It scratches you. Our body is made this way that the moment you go there, adrenaline pushes through your body and turns you into a superhuman. You realize something happens. Your focus narrows. If you try it out, your focus narrows. If somebody does something there, you would not even notice that it happens.
These are our fight or flight biological mechanisms.
The cool thing is you become superhuman. You can do a lot of things much faster and very well, but if you stay too long in that zone, you burn out, and then you drop into the burnout zone. To come back from that is very difficult. Once you are in the survival zone, you try to go quickly back into the performance zone. The way to do that is by finding mechanisms to frame this or to say, “This is bad. What should I do? Is there a mechanism?” You then go back into the performance zone and say, “I do this. I do that.” Mental rehearsal helps a lot.
I tell the story in my book about Sully Sullivan when he landed the plane on the Hudson. The reason why he was able to do something that nobody was able to do, and to do it successfully, and everybody got out safe, is because not only did he train maneuvers like that on a simulator, but he was the trainer for the airline to do that. For him, going into the survival zone with all engines out, he immediately found a way to go back into the performance zone by saying, “This relates to a number of things that I’ve done.”
The cool thing is, you want to toggle between performance zone and renewal. You want to find ways how you can quickly recharge. There are a lot of tricks. Breathing is a trick. I close my doors and sit behind my desk. I do 5 to 10-minute breathing exercises. It usually gets a lot of energy back. All the tennis players have their routine between serves, where they go through a mental routine of less than twenty seconds. There are those types of things.
Coaching the Next Generation & The ‘Follow Your Passion’ Myth
I know through your company, you’re mentoring a new generation of leaders. Resilience and thriving under pressure are part of leadership, but there’s an interesting thing going on. The leaders in the ‘90s and 2000s grew up in times that were harder, more difficult, or had stories like yours. It’s like, “I left this thing. My parents told me these stories as a child.”
As much as everyone thinks the world is horrible, on fire, and whatever, objectively, it’s the best it’s ever been. I see this issue that there’s this expectation that everything should go right, and that it should be easier. There’s an entitlement to going right. You can tell me if I’m wrong. We have fewer leaders who seem to be able to handle the pressure and shorter tenure. How do you evaluate that? Your factory is going to catch on fire. This is part of the game of life and business, right?
Yeah. I don’t belong to the category of folks who say the generation before was always better. I once was challenged. He said to me, “Your generation will never be able to achieve what we were.” I said, “Why are you saying that?” He said, “We used to go through war.” I then told him, “Do you want us to start a war again?” It was unfortunately on a podium, so it was not that amusing. What he wanted to say at that time was that we’ve gone through a lot. That’s the same thing that you are saying. It bound us together. We had to stand up for things at an early point in time. Maybe that’s not so much the case.
At the same time, if I look at the young generation that’s leading, I think that they are very capable and extremely hardworking. One of the reasons why I wrote the book is that I was shocked. I also work with a lot of startup firms, firms that are 2 to 5 years away from going public. I was shocked by how many of those leaders are at risk or have burned out. One of the things that’s missing is to get this frame. That’s why I wrote the book.
The quarter-life crisis is a thing.
They feel like taking some time for themselves to recharge is not allowed. I tell them, “Recharge time is productive time. That’s part of it. Develop your routines. Do these things actively. Also, don’t be afraid to get challenged at times. You don’t win in everything. As long as you continue to grow in your comfort zone, that’s fine.”
One thing that I think is a bit problematic that I hear very often is to follow your passion. This is different from the purpose. If you had told me, “Follow your passion,” I had no choice but to follow the money instead of following a passion because I needed the money. I got my first paying job when I was twelve. It was not my passion to refill the racks in the supermarket early in the morning before school. That was not a passion.
However, when I started doing this, I found it interesting, not only because it paid, but also because I got to know people, I got to know certain things, and I learned about buying patterns. I saw which of the racks empties fast and what’s going on over the course of the week. I found this fascinating, and I learned a ton. I thought, “This is cool. I can do more with this.” My recommendation would be particularly when you’re early, don’t think there’s this one thing of passion. Passion often comes with being good at something.
It comes with the application. People think that it’s this perfect job out there that wouldn’t exist. There are some people whose passion is operations. They like to streamline stuff. There are a million ways to live that out.
You see that my real passion is working with talented people, learning, and getting something. You can find talented people in all kinds of niches, but you have to find them. Many of the areas that I worked in, I hadn’t got the foggiest idea about until I got to them by accident. I tried it out, and I became a fan of it. I said, “This is so cool.” I met people who enriched my life and showed me perspectives and ways to think about it, which I thought was worthwhile. My recommendation is, particularly if you’re young, to try things out and see how that feels. One of the mantras that I’ve always followed is, “Love it, change it, or leave it.” You have a choice, particularly when you’re young.
Love it, change it, or leave it. The choice is yours.
That’s a popular real estate show in Canada. Love It or Leave It.
I have Change It in that, which is important. You don’t want to say, “I don’t like it.” A good leader also evaluates the opportunities of changing it for the better so that you love it. I would apply this and then see where life leads you. I put a lot of time into writing these chapters about purpose because I wanted to crack the code and because many people think, “This is a purpose thing,” like it’s one thing. It is not one thing for all of your life. You have multiple roles. In these roles, you have multiple purposes, and they change. You can change it. Even if you decide, “I follow one thing now, but I realize it’s not my true purpose,” then go to something else. It’s your life.
I want to double-click on something you said. I was reading an article by a psychologist who works with kids, and it tied to what you said. You need these times of stress and stretching for growth. It is required. We are anti-fragile as humans. The absence of those in some people seems to be a huge driver of mental health problems. There’s been an effort a lot of times to eliminate that. Then, real things happen, and people don’t have the coping mechanism. It’s an area of growth, but you have to come out of it. You can’t live in it. If you live in it, it will lead to burnout.
I fully agree. This concept also relates very well to this aspect of earned success. You see these multiple studies about people who are winning a lottery. They may have a ton of money and then waste it.
They’re pretty unhappy.
That’s where I was going. You look a few weeks later, and they are deeply unhappy. Why is that for the people who’ve inherited money? It is because deep down inside, they feel like, “I haven’t earned it.” It came. This comes back to the question of respect. Everybody wants to feel respected and wants to feel, “I have achieved something. I am proud of this.”
That’s the other thing. Being proud of it can also be achieved through gratitude and random acts of kindness. I’m a big fan of this. You are very friendly. I made it a habit when I’m in an elevator with somebody else that I say something. It could be something funny or something that comes to my mind. It’s super interesting.
Fortunately, in New York, we have tall buildings. In a few minutes, you learn something, but you also feel like energy is coming back. Somebody is looking at you and smiles. They’re like, “I didn’t have that great a day. My train was late.” You say, “Sorry, you will have a great day.” This is what humans should be doing. This is what makes our life livable, in my view.
I wish the higher education system in the US required these eighteen-year-olds to sign up for all these coaches, classes, and things. I know some of the schools are doing this. I would rather look at, “Did that kid work? Did they work for two years?” There’s inherently stuff you learn from that. It’s not something someone can do for you or buy for you. You learn a lot from doing. That’s how you also build a work ethic.
Final Lessons: Earned Success, Education, And Mistakes
I agree. That was also one of the points from Helmut Schmidt. When Germany had a discussion about eliminating mandatory Military service, I understood the reasons why they did it, but I was very strongly arguing for, “Let’s go for mandatory civil service for women and men.” The US has a number of organizations that offer this. It’s a great thing. It’s a great start to a business life to spend a year in an organization like that.
Teach for America.
Honestly, it’s fantastic. One of the issues in the world is that it is a very stratified society, and it has gotten more stratified through social media. We need a social blender. We need a way for multiple people to see how it is in different environments. That’s why I thought that the Hillbilly Elegy book was also so insightful. Vance went through this. He has this point in there where he thought, “Top universities I can never afford,” until he realized that a lot of them have stipends for people who are decently good. That’s the nice thing about America. The capabilities of having good people get a great education are very broad. Unfortunately, the primary system is a bit broken.
The nice thing about America: the capabilities for good people to get a great education are very broad. Unfortunately, the primary system is a bit broken.
Everyone says, “We need a new party,” and then everyone says, “No. You need to remove control of the primary system,” because we have a very small percentage of people determining the final candidates, which determine the election, in most cases.
I was referring to the primary education side, the K-12. K-12 is a very strange thing. It’s almost un-American. I always admired America for its flexibility. If you look at the great people in the past, they never went to K-12. They found their path even when the education system was very undeveloped or when they didn’t have money for it. In Germany, you have what’s called labor education. You can leave until class 9, go into an apprenticeship model for 2 to 3 years, and learn a certain thing, like being a plumber or auto mechanic.
You learn applied math. That usually works even for somebody who thinks they are not good at math. When they know that they can tune the motor of their car and make it sound cool to attract girls, you suddenly become a math genius and understand how a curve works, because that’s what allows you to tune the car. That’s great stuff.
Back to Teach for America, my daughter is looking at it. Kids who studied their whole life and worked for 80 hours a week said it was the hardest thing they ever done. They were in tears and had to work their way through it. That’s because it was out of their comfort zone. I think that’s great.
Also, these are people who are not in your tennis club or whatever your school is. That is a good thing for all sides.
Last question. I always say this is multivariant. It can be singular, repeated, personal, or professional. What’s the biggest mistake you’ve made that you’ve learned the most from?
My biggest mistake is that I’ve usually waited too long to make a change with an individual on my team. Typically, I always found ways to excuse why this performance was not there, but in reality, it took a burden on the organization and on me. Motivation was meant to be helpful, but in reality, it was not helpful.
Where can people learn more about you, your work, and your book?
We have a website called Leading to Thrive. There, you’ll also find a way to communicate with me. The other thing is I’m on LinkedIn. LinkedIn is another way. Those are pretty much the two ways to get in touch.
Thank you for joining us. You’ve had ian ncredible few decades of leadership lessons, particularly under pressure. I appreciate you sharing your story.
Thank you. This was a very good conversation. I enjoyed it. I’m pretty sure that the readers will also enjoy it.
If you enjoyed this episode or the show in general, I have a small favor to ask. Do you mind taking a few minutes to share this conversation with someone who you think would appreciate it? Thank you again for your support. Until next time, keep elevating.
Important Links
- Klaus Kleinfeld
- Klaus Kleinfeld on LinkedIn
- Leading to Thrive
- Hillbilly Elegy
- The Compass Within
- Dirtbag Billionaire Author David Gelles On Chronicling Patagonia, Yvon Chouinard, Jack Welch’s Leadership, And More
