Ranjay Gulati:
Great business leadership takes courage. That's an easy thing to say, but a hard thing to practice. Because a risky move may be a wrong move, even if it seems like the brave thing to do. And many times, the courageous decision is one that defies expectations. It cuts against the grain. Joe Almeida has made a lot of tough decisions in his decades as a leader in the healthcare industry, but he always tries to base his decisions in hard data and to look beyond how things may appear on the surface. Joel tells this story about his dad and his uncle.

Joe Almeida:
My dad had a brother and my dad was working at a drug store to support his college tuition. My father came from very, very humble beginnings. And there was a theft at the drug store. The tally got broken in and somebody stole money.

And my father was working that day behind the counter and he didn't do it. But they were investigating. And during that time, my father was in a very tough place as a kid. He was 19 years old, 20 years old, and his parents lived very far away and his brother lived in town. And his brother had the courage to back him up 100%. So the courage to back somebody up even when things don't look right, and at the end of the day, it was proven that my father had nothing to do with that, was a pharmacist who took the money and tried to frame my dad. But my uncle never, for one minute, did not support my dad. So the lesson is the courage to back somebody up even when things don't look right. Use your intuition and facts. Do the right thing, even in light of things that may look wrong.

Ranjay Gulati:
Hi everyone. Welcome to Deep Purpose, a podcast about courage and commitment in turbulent times. I'm Ranjay Gulati, a professor of business administration at the Harvard Business School. My guest this time is Joe Almeida, the Chairman, President and CEO of Baxter International. Baxter is a global medical technology leader with a portfolio of diagnostic, critical care, kidney care, nutrition, hospital and surgical products used in patient homes, hospitals, physician's offices, and other sites of care.

Joe Almeida was born and raised in Brazil, where he earned a bachelor's degree in mechanical engineering. Before joining Baxter, he was chairman, president and CEO of Covidien, leading a turnaround of that company. Joe held senior positions at its predecessor company, Tyco Healthcare, and worked at a number of other healthcare firms along the way. He began his career as a management consultant, at Andersen Consulting.

Joe, I wanted to explore with you as CEO, leader, growing through your career. I've heard you talk about the word courage very often, in business and in life. What does the word courage mean to you? When you think of that word, what does that mean, the definition, if you will?

Joe Almeida:
Professor Gulati, let me say to you what courage is not. Courage is not an absence of fear, courage, it is not an adventure. Courage is the ability to do something that is really difficult, that will be complex, but the ability to go through with it. So not all the times that we're doing something that is deemed courageous, we are fearless. We have anxiety about it, but we have the conviction to get it done.

Ranjay Gulati:
So tell me, in your early life, in your career, can you think of one or two moments where you witnessed someone else do something with courage?

Joe Almeida:
Couple of times. Growing up, seeing my father explaining to me what he was going to do in a very difficult situation and how he was not going to take the path of less resistance was something that was not ethical and he was refusing to abide to it and was something related to his work. And said, "Today is going to be an important day because today I'm going to say no to this. And I said multiple times I'm not going to be part of it." And he actually did it, and I know that was a very tough day for him, but that was very courageous for him to stand up and say that.

Ranjay Gulati:
Any other examples come to mind, after that?

Joe Almeida:
I have examples of several leaders who I worked with, who have demonstrated courage and determination to say no. Say yes sometimes is the easy part. To say no and step out is the most difficult thing to do. I remember working overseas and encountering situations where it was easy to say yes. I faced a proposition that was not the right thing to do, and the courage to stand up and say, "I'm not doing this, I'm not going to take part in this." It was very important to me. I still remember the day, the dialogue, and I'm proud that I was able to do that. That came from an example of my dad.

Ranjay Gulati:
Tell me, when you think about your principles that give you courage, your personal beliefs, and you said your values that give you that courage, could you list a few of them for me? What are those kind of guiding principles that for those things, those ideals, you are willing to do things even if it's going to be scary and make you uncomfortable?

Joe Almeida:
Integrity is one, in ethics. It doesn't matter where you come in the world, you know what's right and what's wrong. The empowerment of this feeling gives you courage to make the right calls, no matter what. So it is very important to go back to your values to say, "I'm going to do something or I'm not." I'm going to accept or I'm not, or I'm going to stand up to this and say, no. The ability to stand up for something is all about the values. And the values are the ones that you bring with you from childhood. You can enhance them, but your value base is one that it starts very early in your life. If you've seen that, you had a significant amount of head start on somebody who comes from a different background. So those decisions for me, I never thought about the courage. I thought more about this is the right thing to do, we're going to go ahead and do it.

Ranjay Gulati:
Let's fast-forward to business. You've had a tremendous run to becoming CEO of Covidien to selling the business to Medtronic and now CEO at Baxter. Tell us about a moment or two that were actually scary, where you were really not sure how this was going to play, but you had to do something. And maybe not even on the ethical side, just like a bet in business, like you are placing bets all the time, acquiring a business, selling a business, hiring people, firing people.

Joe Almeida:
Well, at one point in time, we're transforming the portfolio of Covidien and we had Zoom in, in an acquisition that would make a difference for us, would get us in a new space, more growth. And was pretty expensive for us at the time, was a couple billion dollars. And because the amount of the purchase price and the EBITDA of the business, which was very small compared to the size of sales, there was a big risk of impairment of buying a business that you're going to have to write off a portion of the value because you couldn't achieve the proposed sales growth and profitability.

And the margin was very thin. Very, very thin. And we bought that business and I said, "Now I'm the sponsor of the business." I was not CEO yet. And I'm the sponsor of this business, we're going to make it work. And for about three, four quarters, I really, really was afraid of the business not performing as planned, and end up in a position that we have to write off the investment that we just made. And I had the courage to say we're doing it, but I was very fearful. I had the courage because it was the right thing to do for the company. It was was a pivoting moment for the company in terms of creating value. But it was a bet.

Ranjay Gulati:
So how did you talk yourself into it? Did you say, "Oh, it's going to be okay," or "I'm going to reduce the risk"? Or you know what, it was just you do it regardless of the risk?

Joe Almeida:
Well, first of all, we've got to understand the risk. Making a bet is not understanding the risk. Making a bet is understanding the risk to a certain degree that makes you comfortable. So when I think about risk, I look at two things, how much knowledge of hard facts you have and how much intuition you'll have about the path you are taking is the combination. Because you will never be able to get sufficient data to be 100% sure of anything when it comes to a projection. So your intuition is do you have the right people in place? Did you ask the right questions? Did you ask the right people the right questions? So I questioned myself multiple times. So when I decide I'm going to sponsor this and I want to my boss, the CEO and said, "I want to do this and this is why I want to do this," I had about 90% of the assurance on the data. But I went there with a 10, perhaps 15% of intuition that we could make that happen.

So it was not an easy process, but had to have speed. As you're buying a company, you have interlopers, you have people coming in and trying to buy the same business. So you have to make that decision with time. So courage is not only a function of your due diligence, but also, it's not impulsive. You have to separate, like I did in the beginning, courage and fear, encouraging and impulsive behavior. They're not the same. Courage is to do the right things with the data that makes you comfortable, and the intuition that allows you to combine with the data, be comfortable with the path you're taking. It's not about making an impulsive decision without understanding the consequences.

Ranjay Gulati:
But even with all the data, you sometimes never will have all the data. So you're still going to have to make that last leap. But you're saying, I'm going to gather as much data as I can that is available to me to reduce that risk at least, or really understand the risk, comprehend the risk, quantify the risk, color the risk. So I'm making a more bounded calculated move. Is that-

Joe Almeida:
You have to leap. I said, 10%, 15% is going to be your intuition that you think that it's going to happen because your experience brings together. Listen, I've seen this happen and this can be done and I have faith in the team who is doing it and I have enough data that assures me that I have a great probability of success. But you're never going to have 100%. So that leap of faith is based on intuition and your business knowledge or situational knowledge. So you can make that call not 100% on the numbers because that's not going to happen.

Ranjay Gulati:
So you're making that last leap. You still have to say something to yourself like, "Oh, it's going to be okay." How do you reassure yourself when you go to bed that night after having pulled the trigger on that last leap, what are you saying to yourself, or the night before?

Joe Almeida:
Well, it depends. After run with all the endorphins, you're always talking yourself up. You get up at two o'clock in the morning when everything's quite, it's dark outside, that's when you go to a dark place and say, "Well, maybe I shouldn't have done this or I should not do this." So you've got to be able to put yourself on a timeframe because the decision's not going to change much if you elongate the time. And just trust your instincts. Because I think the more experience you have, your instincts play a bigger role in your ability to make good decisions. You're not perfect, you're going to fail. But you have, as time goes by, really good instincts. What people mistakenly do, they don't trust their instincts and they rely too much on the data. And it's a combination of them. Your instincts have to be trusted by you. It's your gut. You know when it's right, and you get the numbers, you say, "This can happen. I'm going to go for it."

Ranjay Gulati:
The author and aviator, Anne Morrow Lindbergh once said, "It takes as much courage to have tried and failed as it does to have tried and succeeded." I'd add that it takes courage not only to admit your mistakes, but to really learn from them. There's a lot of talk in the business world these days about failing fast. But the rewards for failure, for making mistakes are actually pretty scarce. I asked Joe Almeida, whether he's had to confront failure in his own journey.

Joe Almeida:
Multiple times is actually takes more courage to admit mistakes. Also, there is a dose of ego that has to be put in check because nobody likes to fail. But failure is part of learning, failure is part of success. So I had several failures. I have acquisitions that failed, mistakes in terms of talent betting in the wrong talent. Or not betting, worse even, not betting on the right talent and letting people go. So facing your failures are the most enriching experience for a leader and takes courage to do it.

Ranjay Gulati:
Can you give us one example?

Joe Almeida:
I'm not going to give you the name of the acquisition, but I was confronted by my board who said with the performance that you see today, I said, "Absolutely, I would not have made this acquisition. We made a mistake."

Ranjay Gulati:
Tell me the thought process going on in your head before you had to make that public confession that, I, CEO, got it wrong.

Joe Almeida:
One of the things that I praise people in and I value in myself is the ability to be extremely transparent and clear with my board and with people who I work with. Intellectual honesty is critical for that. So people don't admit mistakes because people don't want to admit failures. So I took an example out of my career where I did not admit a failure and invested much more money in a failed enterprise that I should, and end up failing the same way.

It took me a while to admit that, and that process taught me how to become a much quicker and more humble executive. That happened to me about 23 years ago, and I made an investment in a business, in a technology that failed. And when the person who came to me and said, "This is failing," I said, "Go put more money. Go have it fixed," without having the humbleness and the courage to say, "Thank you for your input, let's cancel the project and move on." That was fundamentally important for me to be able to have that conversation with the board. So I got to that, Professor Gulati, pretty quickly after a couple of years of not successful results out of their business with the board.

Ranjay Gulati:
What makes courage so hard? The opposite of courage is, I hate to use the word, but it's cowardice. And yet, that's what we see more of than courage in the world. What do you think holds people back?

Joe Almeida:
I always think about a phrase from a former boss of mine. Great individual. He said to me, "When you come to work"... in those days, we used to wear a suit and tie to work every day. And he said, "When you come to work, hang your ego with your jacket behind the door." And I believe that lack of courage is also attributable to people who have a hard time understand their motivations and how a failure would affect them individually. Because when you have the courage to take a step, you're making not only an assumption that what you're doing is right and you're going to make that decision, but also, you are admitting that you may fail. Some people cannot take that failure. So instead of making the decision, which is courageous, but understanding the consequences, I just prefer not to make that decision. So I preserve myself in my position. I don't affect my reputation, and I can go forward with life. Now, you miss too many of those opportunities, you're not going to be successful. But the courage is impacted by the fear of personal consequences of the failure.

Ranjay Gulati:
So what advice do you give to young people who are starting out early in their career and you say, "Hey, go out there and have courage"? How do they actually embrace courage even as a construct? Is it tied to the having a North Star and strong values that will allow them to work through it? Is it gathering information and always trying to manage the risk around a big decision? Is it just simply be willing to admit failure and learn? What advice would you give? You've given a few, I think, powerful pieces of advice.

Joe Almeida:
Understand what decisions you're going to make and the consequences. The courage is the absence of the fear of failure. Not the courage is the opposite of not having fear. I have a fear every time I make a critical decision. But my fear is much smaller than my drive to make that decision. So when you are inexperienced and you're trying to make a decision, don't be impulsive. Think about the consequences, understand the ecosystem and the numbers if you're financial, whatever, emotional, whatever decision is, even embarking in a long-term partnership or marriage or a long-term decision you're making. So don't think about this only as a business deal, it's also a personal decision. When you embark on those things, think about the consequences.

And you are prepared to admit failure. You've got to be prepared to admit failure to get into a situation where you have the courage to make that decision. Make sure that you are not impulsive because impulsivity is the opposite of understanding facts. And impulsivity usually works on a toss of a coin because you can do one way or the other. You're going so fast, you can see through that. You've got to take your time in business and private life, your personal decisions, to make sure that you don't fear the failure, but you understand what the failure impact is in your life.

Ranjay Gulati:
What are your personal sources of strength? You mentioned values as one of them. What gives you the strength to wake up every day and go to work and accept failure? Where does that come from? If you look back at your own self, what gives you the strength and drive to do what you do every day?

Joe Almeida:
You have to build two things, tenacity and resiliency. To build those two things, you've got to be assured of yourself, of your principles, what you believe, but also have the empathy to understand where others come from. So in a tough situation where you have to bring yourself to face difficult days and times, the resiliency is the energy to go back at it at all times. And that is intrinsic to you. It's not extrinsic.

I'm a personal faith and have a great, great family and partner in my wife. Those things give me the resiliency to come back at it. I don't feel unguarded. You need to surround yourself with people who can be tenacious and helpful and critical, not yes people. But you got to be surrounded with people that when you make a decision, there's a support behind you. I'm as good as my team is. I'm not a one person team. So my resiliency is drawn from them, extrinsically and intrinsically from the things I describe as being my partner and wife, my faith and how I exercise and treat myself in terms of renewing energy. Because energy is important resiliency.

The second thing is tenacity. And tenacity is not giving up when things get tough. And have the principles, the true north to understand what is your responsibility, what are you accountable for, and why should you be here at this, at all times.

Ranjay Gulati:
As the title of this podcast series indicates, effective business leaders create a deep sense of purpose in their organizations. But they encourage employees to deepen their own self-understanding and their own sources of courage and endurance, their own deep purpose.

You've talked about courage not only as an individual idea. At the same time, you've also talked about the word purpose. And I'm wondering if purpose and courage seem to co-mingle in your mind? Do you think purpose helps us think of courage differently? How do these two ideas go together for you?

Joe Almeida:
Well, it's pretty simple. Courage without purpose is just an act of futility. I can be courageous to jump from a ten-meter platform into a pool. That takes courage to stand up there and just jump without any training. You can get hurt. But what is the purpose? If you want to have a purpose, go learn how to dive and then do it right. So when we go back and think about the ethics and integrity that I talk about, that's purpose.

Ranjay Gulati:
One of the things you've talked about as CEO has been courage at the organization level. This idea that even the company or the culture or the collective in the organization needs to have courage. Why do you see that as an important currency for business and even leaders in business today?

Joe Almeida:
When you're facing a very tough decision and you make the decision to go forward with a large corporate reorganization like we are going through right now at Baxter, you'll find a lot of people caution you why you shouldn't do this. "Are you sure? There's too much going on. You're going to get this thing wrong because you're trying to do too much at the same time. You've got to observe this. Did you watch the work for some concern about this." All those things come to you and they come at lightning speed.

So the ability to understand where you want to go, have the empathy and the listening skills to take it in and consider in your decision. But never walk back on a decision that you truly believe should be done. But don't have an ego big enough that you don't listen to your colleagues who are telling you, "You may want to slow down. You may want to do this." You take everything into consideration and then making your decision. But at the end of the day, it's the CEO's right to make the decision. And the decision has a purpose. With the courage, and the courage has to be fueled by data and intuition, you can predict a good outcome.

Ranjay Gulati:
Joe Almeida is Chairman, President and CEO of Baxter International.

For more of my conversations with leaders in the business world, navigating the 21st century business environment, visit my Deep Purpose website. While you're there, you can also find out about my book titled, Deep Purpose. Companies that are serious about establishing and working towards a deep purpose find that it delivers game-changing results for the workers, the shareholders, and the larger society. So visit with me at DeepPurpose.net. This podcast is produced by David Shin and Stephen Smith, with help from Craig McDonald and Jennifer Daniels. The theme music is by Gary Meister. I'm Ranjay Gulati. Thanks for listening.