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[MUSIC] So I thought we'd do two main sets of things.
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I want to talk to you about your signature culture, because I think it is so interesting to all of us.
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And then at some point we'll pivot from that into talking a little bit more generally about leadership, leadership style, and how you approach leadership, and then we'll leave some time for questions from the audience and we'll wrap up at the end.
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So, talk to me about some of these signature pieces of the culture that I refer to in my opening remarks, the idea of mayor and village and teammates.
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The dress up, the chanting that I heard backstage.
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What's the story behind all of this?
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>> Yeah, so we believe we're a community first and a company second.
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And hopefully, everybody has some communities that they're a part of In their life.
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It could be their family, could be their book club, could be their church, could be their sports team, could be their best friends.
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Community basically means that people care about each other, respect each other and they care about the organization that they are apart of.
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That they're stewards that care about what they give on to the next generation.
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That's the basic concept of community.
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And so we believe in that fervently that given we spend more than 50% of our waking hours as an adult at work, and for some of us, it's way more than 50%, especially if you travel, that to concede that in any way that shouldn't be central to your life mission, and that you shouldn't be emotionally engaged with the people that you work with all that time.
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We think it's a grotesque concession that some people have to make.
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And a lot of people don't have to.
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And people like the ones in this room are going to have a spectacularly big impact on the folks that work for you through the course of your life.
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And so we said, okay we're going to be a community, act like a community, let's call it a village.
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Let's make it the mayor because that raises the bar of expected behavior for us.
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And so we take it very seriously when we make decisions, we consistently use the metaphor, if your a Mayor of a village, how would you decide?
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Because if you're a mayor of a village, you care about the economy, but the economy is the means to an end, it's not the end.
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You want to help the economy so you can have good schools, good parks, etc.
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>> So, I have to say, I mean I alluded to what happened in the green room, before.
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But it is very impressive.
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So here you are meeting up with a bunch of folks from, you know, the local area, who, you don't do this every day.
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And yet, you were able to lead them through a series of cheers which are clearly deeply ingrained.
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And done as you can see, by just looking around the room, with you know, with a sense of passion and by in.
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Which of course is critical to having, we can talk about culture all we like.
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But getting it bought in in that way deeply through a fortune 500 company. I mean that's tough.
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So could you tell us a little bit about, how do you go about that? How do you do that?
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>> Well first, teammates stand up. What the heck.
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I got some teammates here. So.
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>> [APPLAUSE] >> I knew there were going to be a couple here, but I didn't know that there was going to be a bunch.
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And so this is a pleasant surprise right before.
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So I will ask them three questions. Stay standing. What is this company? >> You. >> Whose company is it? >> Ours. >> And what can it be? >> Special.
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>> And if we are to build the greatest health care community the world has ever seen, let it be like this one for all! >> All for one. >> Damn straight!
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>> [APPLAUSE] >> So this part wasn't conscious when we started this adventure.
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And it kind of popped up organically.
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And what we find is that healthy tribes, military units, religions, sports teams.
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Places that have strong sense of team, strong sense of community, they do call and response.
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A language means something. >> Yeah.
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>> Rituals mean something.
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And so we said if we're going to be a community, we should have the attributes of a healthy religion, tribe, village.
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And it turns out call and responses is what happens naturally in those quarters.
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Doesn't happen naturally in most companies. >> Right.
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>> Because they're sort of morally sterile.
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>> [LAUGH] No value judgment implied. >> Yeah. [LAUGH] I said sort of.
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>> [LAUGH] So it is pretty amazing to watch, but how do you know it works?
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Obviously, it works in that you're able to perpetuate it, but how do you know that you're distinctive because of it?
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How do you know that you're getting superior results because of it?
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>> Yeah, so we're very metric oriented.
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And if you're going to be serious about being a community, you've got to be objective.
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And we certainly, not all of our neighborhoods are happy neighborhoods, but our clinical outcomes are superior to our competition.
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The government just came out with a new rating system, for example only 30% of the centers in America, in dialysis, which is one of our two big businesses, can be ranked at four or five, and the percentage of our centers that are in those four or five categories is twice as high as any competitor.
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So it's a crushing example.
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In addition we did an acquisition, about a three billion dollar acquisition, x years ago.
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We did all the analysis, our wages were the same, our salaries were the same.
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We were in all the same geographies across America.
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Their turnover was 40% higher.
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So if we were them we would have had to hire an extra 1,200 people a year compared to what we had to do given the difference in retention at the same pay across America.
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And third there's some of the big consulting firms the Ann's, the Hewitt's that do standard questions across big companies.
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And our team mate engagement scores are quite high, and then I'll give one anecdote.
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About five, six years in, a woman came up to me at a big conference, and said, they've been hired by a pharmaceutical company to do focus groups with patients.
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And you know they had never worked for us, they were never going to work for us, and she said by the third city, we were playing a game, because that's when you have a facilitator, and then the sponsors are behind a mirror, looking at the people, and then the 15 patients answering the questions, just like they do with cars and
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toothpaste and all that, and by the third city, we played a game that about 40 minutes in, since they didn't ask the question of do you know who owns and operates your dialysis center, until the very end, about 40 minutes into it, they would play a game and guess which patients were the Devita patients. Because you could tell that they talked differently.
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Because you could tell that they talked differently.
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And this, at this point was across a thousand different locations, small locations across America.
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That was, for us, separate from all those hard metrics, that was perhaps the most special one, that human beings talked differently.
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>> You spoke a little bit about some acquisitions and spreading culture through acquisitions and the one that you referred to is one where it was really a like business model that you were taking the culture and too bad.
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And of course, a couple years ago you bought HBC, which is in a quite different, related but different business.
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So have you tried to take the same culture there?
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Are there limits to the extent to which you can transfer the culture to?
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>> Both the big dialysis company, when we bought them, they were horrified at the notion of being subjected to this weird shit.
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Yeah, that they said it looks like a cult.
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>> That's a technical term. >> Yes.
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>> [LAUGH] >> A term, it's a, I'm just quoting them.
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The, that this seems like a cult. It seems sophomoric. It seems cheesy.
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It seems inappropriate, cavalier, and both there and then with this related business three years ago, they were similarly worried about being subjected to it, forced to try to adopt it.
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We made very clear in rooms like this, only not as nice, we can't afford nice rooms like this.
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They make very clear, please don't use our language, unless or until it becomes comfortable.
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Don't talk about, don't feel like you have to talk about our values or some of our concepts for the village.
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Don't do any of that, get to know us.
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Watch how we behave, watch how we interact, and then a year downstream, we'll talk about whether or not we need to change any of the values or whatever.
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And both the first time and second time, legacy to be the veterans were appalled that I would say that we might change them.
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But my response was, if you're a village, you have to represent the current population, and when you have a lot of new people, it's a new thing.
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And you need to speak for that new community and in the case of this related acquisition, that from a business point of view, the first two years went very poorly.
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Tremendous organizational change, we took out half the senior executives, so relatively traumatized organization which exasperated the fear around one hell of a village.
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You let half the people go and you're introducing all this change.
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And so in the second nationwide meeting since the time we closed the deal, once a year we get our top 4,000 leaders or so together, I went off in a room with the 270 leaders from that enterprise, 18 months in, traumatic 18 months, and said, okay, now we're going to have a debate.
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Do you want to go adopt the legacy DaVita vision, mission and values?
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Do you want to keep what you have, wait another year, keep it forever, or somewhere in between?
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And it was a very intense debate.
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About 80 out of that 250 people or so were physicians.
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People from all over America somewhere new to the enterprise because the acquisitions had been in post flow, some of them had been there 25 years.
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They went through it, and about halfway through a woman stood up, and it was a very intense debate, a woman stood up, and one thing we didn't have on the ballot was go all in and take the vision mission and values.
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You can take these two, these two-thirds or just one or none.
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Because we never thought it would go all in, but this one woman stood up and said, you know what, it's been a year and a half since the deal.
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We have wonderful people in our company, health care partners, they have wonderful people in legacy, DaVita.
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They are living the values that we all agree with, with far more intentionality and follow through and purpose and robustness than we are, and I want to be one company.
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I vote for all in, I think that should be added to the ballot.
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Applause broke out in the room.
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We had another hour of debate, both in small groups and big groups and at the end of that two and a half hours.
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That 260 or so leaders from that enterprise voted 85% to go all in.
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14 of the remaining 15 voted to go two- thirds of the way in.
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Only 1% voted, so they voted for, embraced the village concept themselves, much to, I think, to their own surprise.
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No one knew what the outcome was going to be going into that room, and therefore, there was no one subjected to anything, and they went out and told everybody across America that.
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I've sort of taken this stuff more seriously now and in fact I just voted for it.
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>> And, has it taken root?
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I'd say the math I use as I think we're one third teammates, citizens, maybe more, maybe 33 to 40%.
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We're about 30 to 35% in a just still watching, observing and whatever number is left are still negative.
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>> So, still on the subject of exporting the culture, you've taken DaVita now internationally.
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Can you talk a little bit about some of the challenges, and taking this kind of corporate culture to international cultures?
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>> This has been very intense.
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So first, when you think about core values, some people will look at them on a wall and say, it's motherhood and apple pie.
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Who doesn't believe in integrity?
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Who doesn't believe in team?
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What a dumb, pointless list, everybody believes in them.
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And as a leader the issue is not belief, it's practice.
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So yeah, I believe in all those things.
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If you evaluate exactly how I behave everyday some people would say, hey KT, I'm not so sure that you're living that core value that you believe in.
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And even harder to create an environment where everybody practices that an not violating a core value does not equal living it.
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So if I go a month without telling a lie that is not living a life of integrity.
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Living a life of integrity is when you tell the truth when it hurts when its embarrassing when you didn't have to.
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If i go a month without blaming someone for something they didn't do, I'm not living a code value of accountability.
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Living code value of accountability is when someone makes a mistake and no one thinks you had anything to do with it.
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And you realize that you knew the person wasn't very good about that.
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You could have taken them aside two weeks for half an hour, they never would have made the mistake.
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And you stand up and take accountability because you said, you know what, I could have prevented that, I know Josh was uncertain or whatever.
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And so there's a big difference between not violating and living, and it's contagious how that works.
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And so internationally, when we decided to go, if I was a better CEO we would have gone international ten years ago, but I wasn't, so we started four years ago.
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And I went to other CEO's from prestigious business schools like Stanford, and they all said, you know that weird stuff you do, leave it at the airport.
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>> [LAUGH] >> because, it's unusual, even in America, so don't you dare try to do it in Saudi Arabia, don't you dare try and do it in China, etc.
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Poland, Portugal, Columbia, India, all these other places we are.
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So I took their advice, and then I was giving a talk to a bunch of our Indian teammates x months later as we begin to grow and it just fell totally flat.
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And so I went to the boss after, I knew him enough where he was honest to give me that gift.
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I said well that really fell flat, and he said, they've all been on the Internet.
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If you go walk around their cubicles, they've got the DeVita symbols up.
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They've got the story of how our neighborhood has grown within the context.
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And now they're feeling like this village thing, that's just about America and they're not really citizens, they're just foreign laborers.
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And so I voice-mailed back, we went full on, and in doing that, you find out that it's about human values.
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That everyone wants to have a robust discussion around actual human values and whether or not they're used in making day-to-day business decisions or not.
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It's not a fairy tale thing, and we've had uncomfortable moments in some of the cultures, as we work through.
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In particular, for example, because we won't stand for some of the gender discrimination that exists in a lot of other societies, and that leads to awkwardness.
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And then one other moment of awkwardness, and then I'll stop.
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So you're trying to get the right translations is not always straight forward.
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And so it turns out in one country, the word that we were using for fulfillment, basically means masturbation.
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>> [LAUGH] >> And, and so we were saying, you know fulfillment's very important.
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>> [LAUGH] >> We think everyone should be fulfilled.
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You know even we hold our leaders accountable for fulfillment.
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>> [LAUGH] >> And then someone gave the speaker, it was not me, the gift.
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So there are speed bumps.
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>> [LAUGH] >> In the way.
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>> And you had metrics to track. >> Yes, yes, right.
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>> [LAUGH] >> So I mean, probably trivia of your days have been, but when we teach strategy we talk of course about alignment between organization, including culture and strategy.
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But then we also talk about alignment between that and the excellent environment that you find yourself in, industry and so on, so the question really is How general do you think the applicability of this kind of culture is?
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Is this something that works in mission driven healthcare, mission driven kinds of industries?
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Is this something that you think could applied more broadly? What are the limits?
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>> This is one where we're quite intense because a lot of people will kind of go, oh they're nice little health care service people.
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And I'm sure very pleasant to talk to, but they probably lose all their football games.
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And we over the last 16 years are in the top 5% of New York Stock Exchange performers.
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We outperform our competition in clinical outcomes.
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And a lot of our teammates have gone on to be COs and COOs of lots of other companies.
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So we don't think there's any tension between achieving capitalistic and market based net worth ambitions, and creating a healthy and distinctive community for people to work.
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We think there's no tension between those.
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In fact, we think they're in some ways cohabitate very positively and so if I was running an enterprise with 3,000 Taco Bells, not medical clinics or a coal mine, or any, it is all about creating a differentially healthy environment for people to work, particularly the people that don't have the career options and income flexibility that most of us in this room have.
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That, that applies to any business.
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That we, a healthy workplace is a gift to that mommy or that daddy that they will take home.
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It is a gift that they will savor at work.
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And it's about basic ways in which humans behave with one another.
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So we believe passionately, that it's transferable everywhere.
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That's not to say that there aren't differences in how one would implement, how it would manifest itself in a Goldman Sachs, or a Bain company, versus the other organizations that the demographics of the citizenship does affect it.
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But the basic principles have to do with how we behave with one another.
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And whether or not it's consistent with the values that we allege to hold dear.
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>> And so I'd like to start to transition to leadership and keep one foot in culture and put one foot in leadership.
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So some of the things that we're talking about village, mayor, community, sounds soft. They sound soft.
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They sound a little bit squishy. Very GSPS actually.
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>> I wasn't going to say it.
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>> We're also heavily into costumes, which you call uniforms.
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So see a parallel there as well.
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But at the end of the day, you're the CEO of a Fortune 500 company. And that's a tough role.
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It requires tough decision making.
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It requires holding people accountable.
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You know, that doesn't sound so soft and squishy actually.
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So I'm just wondering how much of this translates into your day to day job?
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How do you think about that?
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>> And Elizabeth at some point the video is ready. We can play it. Okay, didn't okay.
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It's where the metaphor comes in so handy, if your the mayor of a village, everyone knows the village has to have a healthy economy in order to create jobs for people to have, everybody knows you gotta pay taxes that support the school system and the police so.
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But there is serious issues of who to pay how much tax.
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How transparent is the deployment of the tax funds that are raised?
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How competent are the organizations that spend the tax money?
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So we think of profits to the share holder like that.
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So we are very open about it, that we don't get to create the DaVita University that our people love, with a tremendous emphasis on personal reflection and introspection, not just applied stuff.
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We don't get to grow and create career opportunities.
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We don't get to grow and create profit sharing awards unless we are allocated capital, which is just like a mayor's gotta collect tax money in order to all the things the citizens want to exist, the parks and the summer programs.
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And we find that it doesn't matter, we have 18,000 folks out of our 65,000 that have not been to college and never will.
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They understand the concepts totally about what real life is like, if they feel you're honest and transparent about what reality is, and are willing to have real debates.
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So I've gotten up in front of thousands of our teammates, and talked about my compensation, an executive compensation, with people making $17 dollars an hour.
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And they get the right to ask questions, or send messages.
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So first, there's an issue of just basic straight forward honesty, and transparency, and explanation to kind of loop things together in a way that otherwise doesn't work.
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And then second, when we talk about tough decisions, we will discuss them in the context of a metaphor.
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Give one example, we made that big acquisition referred to while the government was appropriating any requires to do some divestitures.
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And when you do the divestitures, what the FTC requires, is that you either divest all of the legacy Davita centers or all of the new companies'.
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You can't pick and choose because you would cherry pick all the best market positions and he can't do that, it's a reasonable federal policy.
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Everybody assumed, I mean everybody assumed, that I would decide to divest all centers from the company we were buying.
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Some of these folks would've been in part of this, and I said no.
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If the other company that we're buying has got a group that's on the ascendancy, that is a clear long-term winner, then we will divest the legacy DaVita centers. People were appalled.
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You know, this is a violation.
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We love the village, we've been good citizens of the village.
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We have excellent clinical outcomes.
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And you're going to sell us?
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You don't even know who you're going to sell it to, and we can't even switch and work because the way the FTC rules work, you can't take all the employees.
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You gotta, there's a certain hands off period.
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In our case, teammates are employees, they call them employees.
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And so, people are livid.
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And I got up in a room, a much bigger room, with 3,000 of our leaders and explained that job one of a mayor of a village is to make sure the village is sustainable for the long term, because every single one of us talking to them is going to leave the village at some time.
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Because we get a great job offer, because we retire, because their spouse gets transferred, and so we are all stewards for the next set of people in these chairs.
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And for maintaining an environment where we can provide superb care for our patients.
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That's job one, and just like if you're mayor of a village and you know you've got to put a highway in or your downtown's going to deteriorate and you're going to lose to some other village.
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You know you gotta rip down houses to put in that highway, and some of those people will have lived in those houses for 25 years, love their neighborhood, and you're going to rip down their house to put in a freaking highway.
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But that's the right thing.
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Either that or the place goes dead in 30 years.
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And got up and explained why I had decided what I decided, and about 70% of the people being divested came up after, most of them crying, saying that they accepted the logic that the decision was best for the village, and I was consistent with my responsibility, and they were very sad but understood.
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So we put it together because life.
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>> Yeah >> Is hard sometimes.
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>> And how much of this translates to decision making with your core team?
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You were talking about the village at large.
23:48
But when you bring this back to core management team, what are some of the tough decisions you've made?
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Are there times where you've had to go against the wisdom of the core team and say You know I am the mayor, I think this is the right decision. >> Yeah they've been.
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We do a lot of votes compared to most organizations.
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Votes with thousands of people involved, sometimes hundreds of people involved.
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But I always retain the right to overrule the vote.
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I mean it's the discussion that matters.
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And the data is very useful for me and for others but in the end I have the job I have that should come with differential insight and should carry with it a differentiated experience.
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Some people would question that and so we had one business that I wanted to buy and the entire team wrote against it.
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So I hired Baine and then they came out and recommended against it.
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So, we stopped that project and I pulled out of the process and then I went home that weekend.
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And I just said, our alleged vision at that point, because we were just Kidney Care at that point, was to transform Kidney Care in America, which we're halfway there.
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And this was 13 years ago.
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And we cannot seriously try to do that unless we buy this thing, even though right now it's little and broken and there's no pro forma you can do that makes sense.
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That we have to change a bunch of laws to do a lot of things.
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And I went back on Monday and told the team we're going to buy it and I respect all of the reasons, but it's not inconsistent with our construct and then I guess the other part of it was implicit in the question about core team, in the I am sensitive to the fact that there are times that I behave in ways that are inconsistent with our mission values.
25:51
In particular with my core team, let me say, bring it back to that.
25:56
And that is where one hopes that you scored enough points in terms of intentionality, that people forgive you for your behavioral transactional shortcomings.
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>> Do they call you on it?
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Do they feel comfortable enough to call you on it? Do you apologize for it? How does that go?
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>> I'd say that's, I'm a bit curious what some of the teammates say.
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I think we're seriously above average, and people are going to be willing to call us on it.
26:29
I get scored on the core values every year, an independent consultant goes out and talks to a lot of folks.
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My scores are made public to the board and to the teammates as well as a bunch of comments.
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I don't get to change them.
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And then we'll talk about high and low scores.
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We take, as it's sort of self-evident, that we all have bad stretches. That we all have faults.
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And that, if you can't create an environment where you talk about them, each of our personal growth journeys are going to be stunted.
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And so we do a lot of introspection, a lot of reflection, a lot of discussion.
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And in the second part of every executive's review is, for example when I'm reviewing others, the first part is the most important message, the second part is to go through each core value and talk about how other people's experience, you with respect to integrity.
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How do they experience you with respect to fun?
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How do they experience you with respect to service excellence?
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Real words, and so, and that I get the same back.
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So I think we help me and we help each other grow as human beings, and so I think we're reasonable on that.
27:43
>> So where most of the first years been taking your course here which we call Leadership Labs.
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One of the things we talk to them about in the labs is being active learners and being active learners their whole lives, their whole careers.
27:58
They constantly learn from what went well, what didn't go well.
28:02
Become a better manager, leader.
28:03
You've spoken about some of the ways you're getting feedback.
28:06
But what are some of the other ways that you personally have worked on your own leadership and management skill over time?
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>> Well, so, one of our pitter patters is management is a business skill. It's really important.
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So you should study it and think rigorously about it.
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Leadership is a human thing, not a business thing.
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And if you want to get better at leadership, learn more about humans starting with yourself.
28:35
And so virtually every University class has elements of introspection and self reflection.
28:40
And in particular, if you have as many behavioral deficiencies as I have you would try to make sure not just through the 360 process but through using other tools and outside coaches that you're continuously forced to reflect on your self.
28:58
And that combined with having to discuss yourself publicly is a tremendous spurt, thing that can spur your growth, for me to work on some of my behavioral things, I have done things like give myself a score everyday.
29:17
So when I took this job 16 years ago I was 43, when you still have serious behavioral issues, which many of you'll have, you know, doesn't mean you're a bad person.
29:27
And overall, I've got some good scores.
29:29
But I had things I had to work on.
29:29
When you're 43 and you've been a CEO already for eight years.
29:34
That means there is some stuff going on, I mean you're not just going to get their feedback and then suddenly the next day, stop entirely.
29:41
And so for some of those things, I use the metaphor that my brother is an alcoholic.
29:47
He is now 11 years sober.
29:49
And he talks about the early years, he said I had to win that battle against alcoholism every day.
29:55
And so for some of my behavioral deficiencies, like getting angry with people.
30:01
I started giving myself a daily score and tracked it on a spreadsheet.
30:04
Because I had to build the muscle memory to catch myself first after I did it, and then I could go apologize if I had the courage, and then catch myself while I was doing it.
30:16
And then catch myself right before I was going to do it.
30:20
And then after about two years I was doing it a lot less.
30:24
But if I had not kept a daily score to confront my reality while it was still fresh, then I couldn't then just sort of consistently dismiss it as a bad day.
30:33
Or the person has been bugging me for a while, and all the rationalizations get stripped away when you score yourself everyday.
30:39
Did you have a drink or not?
30:41
Did you have too many drinks or not? It just is the reality. It is you.
30:45
It's not the external world. >> Fascinating.
30:48
I want to go back a little bit in your career.
30:53
Because I think it's of interest to the student bodies.
30:55
They're thinking about where to go, where to go next from the GSB.
31:01
You did spend a good spell at Baine.
31:06
There's a lot you learn in a gig like that.
31:09
And I'm wondering about the transition from that to being CEO of an operating company.
31:16
What did you learn at Baine that was helpful?
31:19
Are there some things you learned at Baine that you had to unlearn?
31:22
You can talk a little bit about the transition?
31:26
>> First of all I have two idea about where you should go after business school.
31:31
I have one, but we'll come back to that.
31:35
On the Baine versus operating company thing, back when I graduated, which was a long time ago, there, in that decade, in my mind there weren't really a lot of operating companies that have thoughtful programs for growing general managers and leaders.
31:56
And that's what we're about.
31:58
And that's what I wanted to become.
31:59
I knew that my dream was to become a competent general manager and leader of people.
32:06
I knew that's what I wanted to become proficient at.
32:09
And I did not see stuff, there were jobs out there but they weren't about that.
32:16
They were just about learning the business and then in consulting more generally, in my, the way I would advise young people is if you want to be a general manager, leader in the long term, that, and you find you're the sort of person who's super bright.
32:36
You figure out the case faster than other people.
32:38
You can be right verbally adroit connected to your brain but you're not a natural team leader.
32:46
You're not a natural team builder.
32:49
You're not natural in establishing trust.
32:52
Well, you got to stare at that very realistically because if you want to be general management leader and you have that mix relative to the world, there's no good or bad in this, and you go to consulting or investment banking, you're existing muscles get way, way stronger and your pay goes up, and these other muscles stay weak.
33:10
And then you want to make a shift and it's a nightmare.
33:13
Because you got to take a huge cut in pay and work on your remedial capabilities.
33:17
So, you don't do it, and I got a lot of friends who are 59, and wealthy and not happy, because they went too much, they didn't have a good strategy.
33:27
Similarly, if you're great at project management and team leadership and the rest, which I felt for me, that was some of my natural sport for me, a lot to learn but a natural sport but you need help and more strategic discipline, more analytical discipline.
33:46
You need to just be exposed to a lot more.
33:49
Then it goes the other way, that going there and getting that incredible exposure and learning those disciplines.
33:56
And then, you transfer over to a sport you were, sort of, born to play.
34:00
And, so I think it's very, there, there's no generic answer.
34:03
It's very person specific and it requires incredible intellectual honesty about your strengths and weaknesses.
34:10
And where you want to end up.
34:12
And so, for me I needed, I needed exposure.
34:16
I needed to run with that sort of intellect with people for a while to make me sharper, help me grow.
34:25
I needed to become more disciplined, analytically.
34:27
I needed all those things, and I got them, big time. >> Mm-hm.
34:32
>> And then went to play where I always knew, I mean, the sport I wanted to play. Thank you.
34:38
I don't want to, I don't want to hog all your time.
34:41
Let's open it up for, for questions from the audience.
34:48
>> I have the first question from twitter.
34:51
How do you distinguish company as community from company as a family.
34:55
How does one, for instance, fire a community member? Yeah.
34:59
Actually, when you asked about tough moments, firing a friend.
35:05
And in some cases, someone you literally love is a brutal thing to have to do.
35:12
And particularly if they love the village, and you have that personal relationship.
35:18
And then you tell them they have to go.
35:23
And we used community, which if course is made up of families, very explicitly because the family thing, while that level of intimacy exists in some of neighborhoods and some of our smaller teams, for us, some of my senior executive team, we love each other as we love our oldest, dearest friends. And we talk about it.
35:44
And so we are almost like families.
35:49
But for the bigger community, that would be an overly aggressive word.
35:52
It would just be inaccurate to say the entire 65,000 people across 12 countries is a family.
35:58
It's just this, it would be an inappropriate metaphor.
36:01
The, just like a village has families within it, that's, that's just more accurate.
36:05
We're serious about the metaphor, if you're going to, it's going to, if it's going to help you make decisions and help you talk about decisions, and help people understand how you want to behave, It's gotta be real, it's gotta make sense, it's gotta be internally holistically consistent.
36:18
And so, the one's there, we, I'm much better at this, I used to be bad at giving people bad reviews and bad at terminating because I was too intent on proving I was right.
36:28
I'm right about the ways you underperform.
36:30
I'm right about it's the right decision to terminate you.
36:32
And then one of my executives who work for me, a guy named Tom Musselton, taught me what I thought about conceptually but have never applied to that area which is the holy script of intentionality.
36:44
Until I got to the point where I intended to be helpful to that person in the review or in the decision, helpful, I could never become very good at doing it.
36:55
And as I went through my year or two of learning that from this gentleman, there were times I cancelled the meeting because I knew I was still going in with my old tendency wanting to prove I was right.
37:05
And take care and respond to any rebuttal.
37:09
And so if you go into it with the right intention in your heart, your head will do just fine by itself and in a village you gotta maintain the health of the village.
37:21
Doesn't meant they're going to be destroyed.
37:23
There are other jobs, there are other villages.
37:26
In many cases, there are people who won't take a demotion, and so in that case, it becomes their own decision to go, in terms of a majority of successful executives have a really hard time with a demotion, I think that's totally philosophically inappropriate and shallow, but it's where most human beings come from.
37:46
Shallow's not the right word, but I think in many cases they would have been happier.
37:52
But I think putting it in the right context, having the right intentionality, and then being respectful and humane. >> My name's Fernanda.
38:04
I would like to hear a little more about the intentional parts of a culture so in the beginning here you were saying oh what we just did that was not my intent when they started off and I'm sure a lot of things evolved through the years.
38:20
But I would like to hear about your vision in the very beginning and your role as a leader in making that vision come true.
38:29
Let me take a stab at it and then you come back if I don't hit it right.
38:33
Intentionality is fundamental and we just had 10 people last night in Denver who just went through something that I'll describe as part of our intentionality and that is the first word they used.
38:48
A couple of big groups that are thinking of joining us.
38:51
And when that happens, we just invite them to come to our big meetings.
38:55
So, a part A and a part B.
38:58
First, when I showed up, and for reasons we can go into later perhaps, there was a big family decision, I did announce to the groups like this that That number one, I wanted to create a deferentially healthy place for people to work and have an unusual percentage of people say that it was the best place they ever worked.
39:22
Not perfect, not easy, but the best place they ever worked.
39:26
And number two is we wanted to build the greatest dialysis company the world had ever seen.
39:30
Then that is what I said.
39:32
And we were on the verge of bankruptcy, we're being investigate by the SCC, we're being sued by shareholders.
39:37
We had no COO, no CIO, no CFO, we were in six weeks of missing payroll of 9,000 people.
39:44
And so when I said those words in that situation, a lot people thought it was inappropriate emphasis given where we were.
39:51
In my mind, if you care about that stuff, the time to start working at it is right now.
39:56
Either so you'd never delay.
39:58
It doesn't mean you don't have to do all the other stuff, but there's no such thing the leaders lead, they don't wait for the right time to lead.
40:06
Second when I did that, if you use this room, a third of the people thought it was just manipulation.
40:12
Superficial marketing, hoity toity MBA, wants us to stay, looks like we're going to go bankrupt.
40:19
So this is like, so if he wants us to say, he shouldn't give us superficial football speeches like that, he should give us retention bonuses.
40:27
And then maybe a third of the group, obviously you don't know the right numbers.
40:31
Were thinking well, that's very nice, he seems sincere, but that'll last about a month.
40:37
And then maybe a third of the group said wow, I would like to work in a place that's differentially a healthy place for human beings to work.
40:46
And has a dream of actually making a significant impact on the world.
40:51
I'd like that, I'm hoping he's sincere and he's competent.
40:55
And if you've not done it yet, given a speech in a room or two-thirds of the people, think you're full of it, it's not fun.
41:05
But it demonstrates intentionality.
41:07
And then you say, and by the way I know most the people in the room think this is not pragmatic or not sincere or naive or whatever.
41:14
And then they go okay, so he actually knows that a bunch of us, think it's bias and he's still saying it. Now that's interesting.
41:24
Because at first we thought he was dumb or naive, now we see he actually knows it and he's still saying it.
41:30
And then people would of course say, how?
41:34
It's okay, that's what we have to figure out together.
41:36
Here's some ideas about our policies around the university, here's some of our policy about helping teammates in need.
41:43
Here's some of brainstorming here and there on personal and professional development and impact on communities.
41:48
And so we started to demonstrate by having regular meetings where the only subject was.
41:54
How do we make this notion of being a differentially healthy place to work come true.
41:58
And just like if you had a marketing problem or a manufacturing problem it was the agenda item.
42:04
You would generate ideas, you would allocate resources, you would have programs, you would monitor the execution.
42:09
So we respected the challenge and we demonstrated that we were damn serious about it.
42:15
And we used to get on the phone, as we still do it.
42:17
Every eight weeks for a voice of the village call, I just had one yesterday, about 5,000 people across the world.
42:22
And in those days, every call I'd say what is the incremental evidence since the last call?
42:27
To suggest we're serious about this mission and values stuff.
42:31
And so to put it way, way out there and then at some point, you call the question and say okay.
42:37
We call it crossing the bridge and we have a bridge in every neighborhood.
42:40
I walk across the bridge every morning.
42:42
And after you've been with us six months, we ask you to stand at that bridge and decide, you never have to tell us.
42:49
And if you decide to walk across it, it means that you've declared that you share accountability.
42:54
For creating a differentially healthy place to work, having us be a community first.
42:59
And trying to have a differential impact on health care in the world.
43:03
And so it was very explicit, it was very much reinforced by actual actions, actual intellectual investment.
43:11
Actual project management, operating follow through.
43:14
Actual honest discussions about how we were doing.
43:17
Because back then we had 9,000 people across 450 locations.
43:21
If you didn't get way intense, it's not like being able to call everybody in a room.
43:26
It had to be much more serious.
43:27
So I think those are some of the things that really hammered home the intentionality.
43:32
And got a lot people thinking about whether or not they wanted to cross the bridge.
43:37
And then I'll throw out one other thing that was powerful part of it.
43:41
A bunch of managers in the first year crossed the bridge.
43:44
They said whoa, we believe this and we're psyched.
43:49
It would be great to retire and say I tried to build the greatest douse this company will ever seen and have a differentially.
43:55
I'm on board, but when I go back to Tulsa or New york or whatever and talk to the 25 people in my little center.
44:02
I can't bring that alive and were open six days a week, three shifts a day I can't even pull my team together.
44:08
Much less convey it all and the videos help but they're not enough and so the village concept is stopping at the manager level.
44:16
And so we had town halls and their managers saying this to me and the other senior leaders.
44:22
And we said okay, how can we break through that?
44:24
And then somebody had the temerity to say well, we couldn't actually fly all our people somewhere.
44:33
To go to meetings like we do and discuss this stuff.
44:36
And of course, no you can't because it's expensive and because it's really hard to get substitute staffing in all the local centers.
44:43
And then we said okay, but it appears we can't do what we say we want to do.
44:48
The dream is not feasible unless we're willing to do something that we don't have anyone else that does.
44:53
And so ever since that time, we have academies that are two days long.
44:56
Every teammate in America and now or pretty soon the world is invited to come for two days.
45:00
We have people who've never been on a business trip, lots of them.
45:03
Some have never been on a plane, don't have credit cards, never checked into a hotel.
45:07
And then the vice president's right next to the doctor who's right next to the tech who's right next to the secretary.
45:14
And it's two days with no applied training.
45:17
It's all about our mission, our vision, our language, our rituals, people go through things like Myers-Briggs and we have thousands of people who've never done that.
45:26
And the second day we ask every one to write their personal credo, which is essentially a statement of life purpose.
45:31
And then think about, are they living a life consistent with what they would say their values and life mission is?
45:38
And then do we fit in it?
45:40
And so when we started doing that, when we told people across America.
45:44
We will fly you for two days of discussion and have senior executives there to help interact.
45:50
That was a huge piece of data for people that we were serious.
45:55
And still all along the way, you had to go through waves of skepticism, cynicism, fatigue.
46:02
You set a tough budget and does that mean it's not a village, was that reasonably responsive?
46:09
>> I think we have time for one more, okay?
46:13
>> Can a non citizen call you KT? >> Yes.
46:17
>> It's a pleasure having you, KT.
46:18
>> It depends what words are in front or after it.
46:20
>> [LAUGH] Can you speak a little bit more about the disadvantages to having that strong of a culture, specifically for your leadership role?
46:29
And on a more personal note for you and for your citizens, how does having your daytime job being that touchy feely?
46:38
How does that impact your life at home and your relationship with your own family? >> Whoa.
46:43
>> [LAUGH] >> On the first one, which I think was how does the strength and nature of the culture constitute or it is a disadvantage?
46:58
I've not been asked that specific question and thinking spontaneous, I really coming up empty.
47:08
I think it's always a good thing.
47:14
Now some days it makes some stuff harder, because you have to explain really delicate things that are uncomfortable.
47:21
But that's sort of like the bridge you have to pass if you want a special culture is that's inevitable.
47:27
So I think it forces uncomfortable human behavior.
47:30
It forces you to do stuff and me to do stuff I might not have the courage to do otherwise.
47:36
One of the things we tell young leaders is get out there, talk about your values out loud to the people that work for you.
47:44
And it didnt take us a bunch of them would be looking and saying [SOUND].
47:47
You think you live that value?
47:50
I'm not so persuaded and the power of speaking out loud, so I think it forces moments of serious discomfort, but it's never a A disadvantage would be my pretty strong reaction, although I get the question.
48:03
I'm not trying to be dismissive.
48:05
And then in the second one is particularly thought provoking considering my son, my little munchkin is in the room.
48:17
But I believe that the DaVita village has made me a better human being.
48:27
And I think obviously my kids have limited memories, because they were ten and eight when we started this adventure.
48:39
But other people who know me throughout would talk about how it's fostered first, encouraged, motivated growth as a human being, and I love most the letters we get from people that have left.
48:56
Or when we give core value awards, which we take very very seriously, one of the rituals of our village.
49:00
The annual core value words.
49:01
And then they happen throughout most of the year are very, very serious events.
49:05
There's no recognition on our night of honor for business accomplishments. It's all human behavior.
49:11
That often, for me the most special ones, and often the remarks of the people who get it will say that I've been at DaVita six years and I'm a better daddy.
49:21
I'm a better mommy, I'm a better daughter. That's what we're about.
49:26
For us, our culture's not a part of our business strategy.
49:29
Our culture is about our dreams of what life should be like.
49:33
And it just happens to be inserted into a capitalistic enterprise.
49:39
So I feel it's, it's why I'm still, as my son will tell you, highly imperfect.
49:45
I think it's made me way more mindful at home.
49:51
And it's been demanding as some of you know back 16 years ago when I took the job, I had just come off a private equity backed thing.
50:06
I ran a company, it got taken over, it was very in need financially and really sad because we thought we were building something special.
50:14
Then I did a private equity backed thing with TPG and Bain Capital and it failed.
50:18
And it failed largely because of mistakes I made, strategically and otherwise.
50:22
And I had friends who moved their families across the country to join this company with me.
50:27
And then a year and a half later, I had to tell them their job was being eliminated.
50:30
And we ended up selling the piece of the company, losing half the money, and in the face of that, so I was working very hard to try to save it and didn't.
50:41
And so when that was over, I told my wife and kids that I was going to take six months off and spend time with them and get healthier and the rest.
50:53
And when search firms would call, I would say, call me in six months, I'm going to take some downtime.
50:59
I was within eight weeks of being done and then they called for this company.
51:04
And since I had run one of their caregiving company before that was the most professionally fulfilling time in my life, and so I went through a hellatious month with my wife, Denise, who was also an HBS grad, was one of America's first female venture capital partners, about how much of my taking this job was ego.
51:25
want to make some more money, want to prove I can turn a company, want to prove I can run a bigger company.
51:29
Even though it was in another city, it was a total turn around.
51:32
My family wasn't going to move.
51:34
Versus how much of it was virtuous and had to do with having a positive effect on the world.
51:39
And I wasn't sure about the answer.
51:41
I knew it was a bunch of both and clearly we decided what we did and it was sort of pivotal in the end, was saying, the fact that it was going to be difficult was highly relevant, but it's one thing to be home five nights a week with your kids and talk to them about leading a purposeful life, and a whole another thing to be there fewer nights, but lead one.
52:04
And that's the gift that The Village gave me and so, while it's pulled me away, and certainly there's times I've been distracted, that I think my kids know that I'm doing my best to lead a purposeful life and become a mindful person.
52:20
And I think that counts for something with them, I don't know.
52:23
>> [LAUGH] >> We'll check that out with a munchkin later.
52:26
>> [LAUGH] >> All of the students who are here in order to get into the GSB had to answer a question which has become customary for us to ask I guess, which is what matters most to you and why?
52:41
>> I hate questions like that.
52:48
At DaVita people some times say, well what matters more keeping the profits up and the stock price up or the village?
52:57
I say it's a mirror it's a false dichotomy, it's like what's more important to you air or water? You have to have both.
53:02
To say one's more important than the other is, I think, a paradigm that defies reality.
53:09
And so I would say three.
53:12
One is there is nothing more special than the people you love and love you.
53:19
And the older you get, I'm a couple months from 60, the more significant that he is and what you shall sow, you shall reap.
53:28
By the time you get to my age, a lot of stuff is locked and loaded in terms of the depth and the breadth of your friendships, and the texture of those friendships and relationships with your family, and you kids, your spouse.
53:43
Second is to try to become more mindful each day, to tread gently on the planet and the people in it.
53:53
This is a particularly difficult one for me.
53:58
But there's Buddhist saying that's strictly speaking, there are no spiritual people, there's only spiritual practices.
54:05
And people who act in a humane, mindful, gentle way every day, all day, send amazing human ripples through the course of their life.
54:15
And so for me that's a particular challenge and I'm proud of the progress I've made, because it's so important.
54:21
And then third is the more macro, what impact do you have on the world?
54:25
And I'll tell you for people in this room you have spectacular capabilities.
54:30
Spectacular experiences and spectacular luck in getting to come to a place like this with people like you're sitting with.
54:38
And so I sincerely hope that many of you take on the incremental responsibility on top of the first two of trying to have a significant impact on the world.
54:50
>> Great answer on all three points.
54:52
Do you have any closing thoughts you'd like to share with this crowd?
54:57
>> Well, for me, honored to be here.
55:00
When I was in those seats from 1981 to 83, it was my dream that maybe one day I would get to come back and talk to, excuse me, kids like you about important topics.
55:13
So for me, getting to be here and be here with Garth and Charles O'Reilly and Joel Peterson, this is like a dream.
55:20
So I really encourage young people, think about your dreams and don't give up on them, because sometimes they come true, they're rarely easy, and they are rarely linear to go after, but for me, many of the dreams I had when I was your age have come true, and I feel so lucky.
55:36
And the second thing I would say is just with all the ambitions and the pressures of two career couples and having babies and through all that, to really savor the adventure of life, there's a French author, Colette, who said I had a wonderful life, I only wished I'd realized it sooner.
55:57
>> Please join me in thanking KT. >> [APPLAUSE] >> [MUSIC]