“If you want to develop leaders and not followers, one of the key things you have to learn to do is delegate.” OTIS president says a key to management is learning to delegate and appreciate employees’ efforts, even if they don’t succeed

July 4, 2013

Pedro Baranda of Otis Elevator, on the Push for Innovation

By ADAM BRYANT

This interview with Pedro Baranda, president of the Otis Elevator Company, was conducted and condensed by Adam Bryant.

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Pedro Baranda, president of the Otis Elevator Company, says that “if you want to develop leaders and not followers, one of the key things you have to learn to do is delegate.”

Q. What was your first management role?

A. I studied a lot in my 20s — a six-year program in Spain, and then a Ph.D. here in the United States. So my first management role was when I was about 30. I was a research engineer and I had to hire two people.

Q. And was it an easy transition for you?

A. I probably made quite a few mistakes and learned from them. The main mistake I tended to make — and probably still do sometimes — is that because I’m an engineer, I like to get into the details of things. So I got some feedback about it early on, such as, “Let me do my job.” That was an important lesson, because if you want to develop leaders and not followers, one of the key things you have to learn to do is delegate. One of my bosses once told me: “You’ve got to delegate because there are only three possible outcomes. You tell them what your expectations are, and if their solution is better than yours, that’s fantastic. If the solution is the same as yours would be, then it’s fantastic, too, because at least you didn’t have to do it. And if it’s not as good as you expected, you can always take the time to teach them why and what to do differently. That way, you will have learned about the person and the person will have learned from you.” That lesson about delegation is fundamental if you want to develop leaders and not followers. I heard an expression from one of my business professors — that talent flow is the best predictor of future cash flows — and that has stayed with me.Q. What is some other feedback you’ve heard over the years about your management style?

A. When you do 360’s with your team, you learn that the perception people have about your skills might be different from yours. When I took over a role in Portugal, my big concern was whether I knew the business well enough. When I had the 360, the feedback was just the opposite. They said: “You understand the business pretty well. What you’ve got to do is not intimidate people at meetings, to be more open to things that may not be right, and listen.” That was a big lesson — you have to learn to be tolerant of failure, because if you are intolerant of failure, your company will retrench and not be innovative. You have to encourage people to take calculated risks. If you punish people who take risks and don’t succeed, they will never take a risk again.

Q. How do you foster innovation?

A. The spark of innovation can be difficult to manage. We have a more structured process, even though some people might think processes are kind of a straitjacket for innovation. But in our case, they’re for guiding the thought process. We decide where to focus on innovation, and we call them our innovation thrusts, which are based on what we’re hearing from customers, architects, consultants, general contractors — everyone in our industry.

We want to know what is going to be important for their business five to 10 years out. Sometimes they don’t know, but you can sense what’s going to be important for them. At any given time we have five or six innovation thrusts. Once you have those, then you structure the process around those themes, and you guide the sparks in areas where they would have a big impact.

Then we do two things. We bring together teams of people from around the world, because I believe that diversity is fundamental in the thought process. I really appreciate the importance of diversity as a catalyst for creation and innovation. It matters not just in product development and technology — I think it happens in many other aspects of the enterprise. But for innovation, it’s fundamental.

We also have an internal Web page where people can post their ideas about innovations. We have 62,000 employees, and they can vote on the ideas — thumb up or thumb down — or build on them. It also helps you to see people who have this innovative spirit. Those are the people we want to invite to meetings to develop ideas.

Q. How do you hire? What qualities are you looking for?

A. First, does the person smile? Is there a positive feeling when you talk to somebody, or are they an energy drain? That’s important. Then you try to find out the raw material and the competencies. There are techniques to try to find out their competencies, but I think it’s become like an arms race, with interviewees knowing the tools you use to learn their competencies, and they prepare for them. So I think you have to just let the conversation flow.

Q. And what if you had only enough time to ask someone a few questions?

A. I would probably ask them what they like about what they do, just to get a general sense of whether they are capable of loving what they do. And then the difficult question I ask when people are looking to change jobs is, “Why do you want to change if you like it so much?” We want people who want to have a longer-term career with us, and we want people who like what they do. And so if they like what they do, then why are they looking to move somewhere else?

Q. What advice would you give a graduating class of college students?

A. I think you have to try to follow your passion with some flexibility to adapt to reality and enjoy every bit. Life is short. So the one thing I always insist on is making sure that you like what you do.

And I always recommend that you focus on what you have in hand today. If you’re thinking too much about what your next job is going to be, you will not do your current job well, and then the next job will never come because companies tend to be meritocratic.

So I always tell people, first, focus on what you do today. Make sure you like what you do, because if you don’t, you’re not going to succeed. You cannot always do what you like, but you can get to like what you do. So it’s good to follow your passion, but then you have to make an effort to adapt yourself, to make sure that you love what you do.

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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