Intro Announcer: Tech Sounds presents The Conscious Capitalists. Hello and welcome to the conscious capitalists hosted by two of the co-founders of the conscious capitalism movement and co-authors of the Conscious Capitalism Field Guide from Harvard Business Press, Raj Sisodia and Timothy Henry. Each week this podcast covers current events and business news and Raj and Timothy’s latest thinking on what it takes to build a conscious business. For more information and notes from the show, go to www.theconsciouscapitalists.com. And now, Raj and Timothy.
Timothy Henry: Hello everybody and welcome to this episode of the conscious capitalists with myself Timothy Henry and my partner in making the world a better place through business Raj Sisodia. Hey Raj.
Raj Sisodia: Hey Timothy. Good to see you again.
Timothy Henry: Good to see you. And this week we have a prime practitioner in the art of conscious capitalism, Gerry Anderson. He is the executive chairman of DTE Energy. He joined DTE in 1993 and had various senior level roles there until being named president 2004, CEO in 2010 and chairman in 2011. He is considered the architect and leader of the company’s strategy to focus on cost operational excellence and utility bill and develop its non-regulated businesses. In addition, he’s focused on building, and this is going to be the heart of what we talk about today, a highly engaged culture and on deeply connecting DTE energy to the communities it serves, enabling it to act as a force for good. Gerry, welcome to our show.
Gerry Anderson: Well, thank you very much. Happy to be here.
Timothy Henry: So, tell us a little bit about the journey that you went on at DTE that got you to that place of being able to say, I want us to be able to be force for good in the communities in which we serve.
Gerry Anderson: Well, you know, that journey for me really started about 15 years ago now. It was shortly after I was named president and it was the first time that I really felt responsible for the whole. When I looked around at the whole, it was not good. We were poor to mediocre at pretty much everything we did, ranging from our costs, our safety, our customer satisfaction, and our total shareholder returns. But, for me, what really began to become conspicuous was the fact that our employee engagement was routinely bottom 20% and our union engagement was often bottom 10%. I eventually concluded in 2007 the root cause is a deeply broken culture and I need to fix that.
Timothy Henry: And when you sat there and said, “Okay, I’ve got to fix a culture.” How did you start to break it into bite-sized pieces where you could start to make sense of it to yourself, let alone to others?
Gerry Anderson: I as a leader didn’t really know what that meant. I had never dealt with culture the way I dealt with strategy, finance, and operations. I began to go off to experts and what I found was they weren’t very helpful; they would describe culture in these broad terms and I had no idea really what to do with that. I learned by doing. In late 2008, the world economy came to a screeching halt. The very epicenter of all of that was my headquarter city, Detroit, Michigan. The auto industry was imploding, our city was going bankrupt, and there was fear everywhere. The company began to be talked about as the junk bond utility. That served up the defining decision of my career which launched me on the real journey of culture change.
Raj Sisodia: Gerry, I remember along the way that you and your team took a trip to USAA. If you could share some of what you learned there and the seeds that planted for you.
Gerry Anderson: Before the trip, as we entered that great recession, I had been working on continuous improvement. A Japanese tutor told me the roots of continuous improvement are a deep respect for the dignity of people. I learned that people only give you their best when you stand for what’s best for them. In the 2008 financial crisis, everyone was deathly afraid of being laid off. The decision we made was to do the opposite: we went to our people and said, “The last lever we will pull at this company is to lay anybody off.” But for us to make good on that, we needed them to come at the crisis with every ounce of creativity and energy they had.
I was dumbfounded by the experience. We had calculated that $200 million had evaporated from our margin line overnight, yet we came out way ahead of budget. When I finally accepted the numbers, I found thousands of discretionary acts on behalf of the company that were gluing it back together. That locked in my belief that culture really is the most powerful tool available to a company.
At USAA, I saw people who were so passionate and energized. I asked CEO Joe Robles, “How do you create that?” He said, “Gerry, the first job of any leader and especially CEO is to create a deep connection to purpose for the people.” If you can do that, it will pull them. I realized he was describing the step I needed to take from a fear-based response to an aspiration and purpose-driven pull on our culture.
Timothy Henry: How did you manage that with a traditionally minded executive team and bring them along from fear to being more purpose-focused?
Gerry Anderson: We had leaders who were very analytical engineering or financial types who didn’t believe the numbers would add up. In early 2010, I pulled my leadership team together for a off-site. I told them, “We are what we think, and all that we are arises with our thoughts. With our thoughts, we make the world.” I asked them to describe vividly what they wanted the company to look like and why they really cared about that. They started telling stories about their childhood and values. Many had grown up in poverty and wanted to fix the breakdown in Michigan for our people. We aligned as a senior team on what we wanted to create, and five years down the road, almost everything we described came to be.
Raj Sisodia: Talk to us about the purpose journey. What was the process used to identify and articulate that purpose?
Gerry Anderson: We realized we run an incredibly important business. Everything in society depends on what we produce. I spent time thinking about what we stand for and had the communications team put together a video. I showed it first to 200 leaders and they erupted into a standing ovation. When they took it out to the field, I heard stories of men in power plants crying. These people had wanted for a long time to know that what they’ve spent their life’s energy on is important and matters deeply.
The purpose was articulated as: “We serve with our energy.” We are an energy company, but I was talking about our energy as people. We provide a core need of human beings. The sublines were “the lifeblood of communities and the engine of progress.” Without what we do, our community dies. Our employee engagement eventually went from the bottom 20% to the top 3% in Gallup’s worldwide database.
Timothy Henry: How did you connect that purpose to the nuts and bolts of strategy and business planning?
Gerry Anderson: Communication needs to become tangible where people do their work. I would tell people at coal-fired plants that they have been the keepers of the flame ensuring our citizens have a secure supply. You have to find compelling ways to talk to people so they realize the company is worthy of their pride.
Regarding strategy, business leaders need the courage of their convictions. For us, that was climate change. In 2017, despite political talk of going backwards on environmental issues, my team said the issue is real and we are responsible. We made a public declaration that we were going to shut down all of our coal plants over time and drive to net zero. This declaration has been the most powerful pull on our company’s strategy. We told our people at those plants that nobody was getting laid off; we would put them into other parts of the company. Purpose gets connected to strategy when you stand for things like the environment and customer service in a way that expresses that you serve people.
Raj Sisodia: DTE was featured in The Healing Organization. I remember a moment where a woman came up to you at a town hall and thanked you for the no-layoff pledge. Could you share that moment?
Gerry Anderson: It was early 2010. A woman waited around after a breakfast and said, “I just wanted to say thank you for what you did last year.” Her husband had been laid off from the auto industry and they were deathly afraid of having no income for their two young children. She said your pledge gave her a sense of hope. I realized I had tapped this woman’s love for her children on behalf of the company.
Then she asked, “Isn’t there something we can do as a company to help our community?” It was a revelation. I began to talk about DTE as a “force for growth and prosperity,” which eventually became a “force for good.” This shifted our engagement to that top 3%. I learned that when you’ve got your people’s energy, it’s like wind at your back. Culture eats strategy for breakfast.
Raj Sisodia: That led to you organizing the business community in Michigan to take ownership of challenges like housing and education.
Gerry Anderson: I believed that if we waited for government, we were going to wait a very long time. We formed a regional CEO group. For example, when a new arena was being built, they couldn’t find enough Detroit employees in the skilled trades. We raised over $50 million to revitalize technical schools in the city. We also set up a line clearance training facility at a maximum security prison. I visited the prison and one prisoner told me he wanted a second chance so his children could be proud of him. Of 38 graduates, 29 are now working in our company. This joint effort covers everything from education to workforce development.
Timothy Henry: How did you shift the mindset of middle management?
Gerry Anderson: It’s all about mindset. Until you change the way people think, you don’t change how they act. We found that much of our culture breakdown could be traced to the way people were being led. We trained them in the mindset we wanted to bring to our people. I told them, “You don’t lead machinery. You don’t lead balance sheets. You lead people.” About 90% of leaders could make the trip. For those who weren’t cut out for it, we put them back into individual contributor roles.
Raj Sisodia: Talk about your family background and what planted the seeds for you to become this kind of leader.
Gerry Anderson: My father and mother were serious Christians, and the real ethic was service. My grandfather started a company called The Andersons. In 2008, I read a statement of principles he had written decades ago. He connected his deepest values to his business so directly, and I asked myself if I had the courage to do that. I realized we’re taught in business school to create a separation between values and business, but it’s wrong. When we have the courage to speak about values, it gives our people permission to create those connections. It’s not a sucker’s choice; you can be a thriving business while also playing out important values that help society move forward.
Raj Sisodia: You also had a near-death experience in Arizona.
Gerry Anderson: I was taking my family on vacation and was broadsided by a commuter train five minutes out of the airport. The vehicle exploded, but thankfully the injuries were not serious. Before the crash, an Enterprise Rent-A-Car manager had upgraded me to a larger vehicle for free, which turned out to be the top-rated side impact vehicle on the market. He likely saved my family’s life. His first concern afterwards wasn’t the ruined vehicle, but how my family was doing. I came back to my company and told them: if we want to serve people well, behave the way Enterprise did to me in a moment of crisis. It left me with a deep sense of gratitude that took a long time to wear off.
Timothy Henry: Gerry, thank you for what has been an inspiring and practical walk through this journey. We really appreciated your presence today.
Gerry Anderson: I enjoyed it and I love the work you two are doing. It’s so important for the world.
Timothy Henry: Thank you to our listeners. Please feel free to hit the subscribe button and visit theconsciouscapitalists.com to leave us a message. Thank you to our producers at Tech Sound.
Raj Sisodia: And thank you to Tecnológico de Monterrey and the Conscious Enterprise Center for their support.