Leading Through Change and Crisis | In Practise

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Leading Through Change and Crisis

Former President, Defence at Rolls-Royce Group and former CFO, EADS

Why is this interview interesting?

  • Leadership fundamentals: leading by example, the importance of transparency, the ability to identify talent and to build teams and the value of authenticity
  • Finding your own leadership style: the importance of authenticity in developing an effective leadership style
  • Creating a learning environment: why leaders should talk less than their subordinates in meetings
  • Leadership in a crisis: communication principles
  • Leadership development: cultivating self-awareness

Executive Bio

Axel Arendt

Former President, Defence at Rolls-Royce Group and former CFO, EADS

Axel joined Daimler-Benz in 1979. He held a number of positions in financial controlling before taking on international senior leadership positions including CFO of Mercedes-Benz Mexico, President of Mercedes-Benz Argentina and later President of Mercedes-Benz Turkey. Presented with the option to move into the aerospace industry by Daimler, Axel took up the role of CFO of EADS (today Airbus), where he was responsible for the complex international merger between French Aerospatiale Matra, Spanish Casa and German Daimler-Chrysler Aerospace. In parallel to this merger an important part of the company was publicly listed. Axel then moved on to join Rolls Royce Plc as a member of the Executive team, where he was first in charge of the company’s Aerospace activities in Germany and later, until his retirement, in charge of all Defence related activities of Rolls Royce. Axel continues to consult and currently heads the Supervisory Board of Rolls-Royce Power Systems. Read more

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Interview Transcript

I’d like to ask you in terms of what’s really mattered to you in your career as a leader and as someone who’s been exposed to a great number of very senior leaders, how would you define excellence and what does that mean to you?

As you already said, you can find about hundreds of books on leadership and what have you. I’ve never really read a book on that one, to be honest. Not that I’m saying it’s a waste of time, but it’s usually something that you experience through your business career in one way or another anyhow. If I would point out a couple of things that I would say is really leadership, as I have been exploring it through my years in business. To be a true leader, one of the first things I would like to mention is you have to lead by example. You have to show your team, you have to show the other people in the management that you really live what you are saying.

Between what you are doing and what you are saying, there is no difference. I think one of the other things is that transparency is a very big element of good leadership. You need to be predictable for your people, you need to be predictable as well for the outside, because it’s something with leadership. It’s not something that’s within the company, but as well we have to show that to shareholders and to the outside world customers. One of the things that I would be particularly keen on is to make a few comments on is you have to listen to your people, your team.

I have seen in my life quite a few leaders, unfortunately, when you come to see them in front of their teams, it’s 80 percent of the time they are speaking and 20 percent the members of their team. I think it should be the other way around. Why is that so? The further you go up in your career, the further you go away from where you were a true expert. You still need to make decisions. You need to make decisions on the basis of the information that you gather. Information that you usually get from your people. This does two things. When they see that you listen, when you see that their expertise is valued, then they really work on that. They will give their utmost to really supply the best of expertise to you. If you then at the end of the day after listening to a couple of different experts, still have to decide maybe one or the other situation against some of this expertise. You still have to be transparent. You have to explain why you’re not taking the advice of somebody. That you still value that and that you’ve taken that into account. What this altogether means is it’s very important in exerting leadership that you have the right people around you.

These people, sometimes you get them when you’re put into a certain position, but then over time, you have the opportunity to choose people into certain positions there. That’s probably one of the most important qualifications that you need to have as a top manager, is evaluating people. Getting a good judgement on that. I’m not saying that you will be right 100 percent of all the time, but you should have a high degree of certainty on when you choose a person. That is difficult enough, but it’s one of the things which are really important. Again, you will not know everything yourself. You need your people to be excellent in what they know and then form a decision out of that.

You’ve suggested a number of areas here, from leading by example, the importance of transparency, listening to your people, making room for them to express themselves and to pass on information, selecting great people, evaluating talent, building teams. What do you feel really makes people follow a leader in your experience?

I think what makes them follow is that I wouldn’t really want to add any more characteristics to the ones that I’ve already said and that you’ve correctly mentioned again. When people see what you’re saying is really coming from yourself and that you’re constantly really following your own guidelines and the guidelines that you give to others, I think that creates a trust in you, people will then trust you as a leader. Then even if you do take, which might happen, wrong decisions, but taken back later on and correct then, they will follow you on that one, as well. They have to trust that you will be guiding them in the right direction in the best of your knowledge and taking their advice and their knowledge into account whilst doing that.

How important is authenticity?

I think it’s very important. It really is a nice word to sum up what I’ve tried to say. You need to show that you’re really yourself in what you’re doing. That you’re not playing a role. If you go there and play a role, you will not be able to really manage that all the time. People around you will notice that. Again, you lose your own credibility and people will then, at the end of the day, not trust you and follow you and support you in what you’re doing.

More broadly, as it relates to your career specifically, on the subject of leadership styles, how did you become aware of your style? Would you describe it in a particular way? Were you influenced by certain individuals in your career in important ways?

Yes. Especially in a big company like Mercedes, that’s where I started my career, obviously at the bottom. When you then go through the different ranks of levels, you learn by doing. You see what you do in a small group of people, with my first leadership role was in a group of 20 people and controlling. We were controlling a specific plant in Germany. There, again, you run into problems here. You have colleagues on the other side that are not wanting to do what you want to do. You have to get your team together to say how can we convince these people to do what the controlling area wants them to do. You establish your style through practice, yes. You do that and when you do it in a normal way and don’t, again, from the beginning ever try to play a role, but really try to be yourself. Then I guess that grows. This is something which I’ve tried to manage through my whole career. Again, that was even in foreign circumstances, as I said before, I’ve been working in countries like Mexico and Argentina and Turkey.

Of course, the culture already says that things are being different. It’s more that you even act as the superior guy who knows everything from the very top. I’ve always tried to avoid that as much as much possible, which sometimes took a while and created some kinds of conflicts. I knew that to my own personality and the way that I was conducting my business, it was essential that I could do my style even in some more difficult circumstances before as I said, the culture in some of these countries are different.

Something which I’ve always liked when you create around you an environment of people who are willing to question a decision. Not each and every five minutes. Sometimes you just have to say, okay, this is a decision now and we now go. If you question your decision the next day, already that is not really very helpful for getting things done. At a certain point in time, to sit back with your people who report to you and ask yourself, did we take the right decision? Did we have to redo things around it? Did we have to refine it in one way or another? Or maybe even have to turn around because certain information which we didn’t have half a year ago shows now that we need to redetermine what we really want to do. This is something which I’ve always felt myself more comfortable with. I’ve always tried to create a leadership team around me who knew I was willing to listen to them when they came up with these kinds of things and not throw them out at the first resistance. That this was not something which I saw as disloyalty. I rather saw it as something, listen, maybe you have a point here which you should be aware of.

That’s really interesting in terms of how you create and cultivate an environment where people feel comfortable and willing to volunteer information, to volunteer critical thinking.

One of the things I’ve mentioned at least as some headline is when you are sitting together with your management team and you find yourself at the end of whatever, a one/two/three-hour meeting, you measure what percentage of the time did you speak and what percentage did the other ones speak? That already creates a certain first impression. When you’re talking too much, then that is discouraging the other ones to really speak up and give their opinion on certain things. I think that is one of the things which is important. Over time, people see that you take their comments and their suggestions into account. They see that they matter. That they really can give a certain decision-making process a certain direction. That these matters and that these decisions, these opinions are very welcome. If you do that over time, this is not something which goes from one second to the other, if you do that over time with a team of people working together with you, that again will create the trust that you need to have in order that people are willing to speak up.

How do you motivate a leadership team in a crisis? And, beyond a leadership team all the way through the ranks of a company?

It’s again something that always leads to the same principles, which I’ve tried to elaborate on. If you have your leadership team built up in such a way that they trust what you’re doing, that they see that you’re leading by example, that they see that this is something which at the moment needs certain hard decisions to be taken. Then they will hopefully, most of them will follow.

I’m not saying that you can convince 100 percent of each and everyone. But if you have the majority of your leadership team following in these circumstances, then they need to transfer that down. You have to do a lot of communication during those periods. It’s important that you try as much as possible in those situations, as well, to be transparent, you can do that with different assemblies, even townhall meetings for bigger groups of people. In which you explain what’s happening. You can do that with your leadership team in a very day-to-day conversation, like create crisis management groups during that period, which if it needs to be every day, you give a report or you get the incoming information as transparent as possible to each and every one of those. Ask them to transfer that information further down in the ranks. I think that is my best advice and we are, as a matter of fact, right now in the company where I’m heading the supervisory board, trying to do exactly that.

What would you say are the greatest contrasts in communication approach, communication strategy between the good times and really difficult times as a leader?

First of all, in difficult times, you need to communicate with a higher frequency. You need to. When you look into the situation as it is for example right now, and to a certain degree similar to what happened in 2008/2009, you have the bad information, bad news coming up almost day-by-day. The bad information does change in almost day-by-day things. Then as well you have some good information once in a while.

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