The best leaders minimize mistakes by empowering, then applying just the right amount of control to ensure employees don't stray too far from the company's goals and values. On a day-to-day basis, this can be difficult. The best CEOs use a variety of metrics to monitor and maintain the balance between control and autonomy. The challenge here is to create an environment that provides both psychological safety and accountability. This is another polarity that leaders must master. On the one hand, a safe environment cannot come at the expense of accountability. This can lead to a culture of complacency, avoiding difficult conversations and demoralizing highly motivated employees. On the other hand, a safe environment should not be sacrificed for accountability. This can lead to a culture based on fear.
One leader who has balanced a safe environment with accountability is Frank D'Souza, former CEO and co-founder of Cognizant, a global technology services company, and co-founder and managing partner of Recognize, a technology investment platform. Cognizant helps companies modernize technology, rethink processes and transform experiences to stay at the forefront of a rapidly changing world. D'Souza became CEO of Cognizant in 2007 and grew the company more than tenfold from $1.4 billion in annual revenue at the time. When he stepped down in 2019, the company was generating more than $16 billion in annual revenue. Cognizant is luck The company has been ranked on the magazine's list of the 100 Fastest Growing Companies for 11 consecutive years, and he attributes a large part of its success to a system for developing strong, purposeful, self-reliant leaders who consistently deliver top performance.
When D'Souza became CEO, he faced the kind of problem many business leaders would want to solve. His company was on a fast-growth trajectory. But he knew that without achieving a certain size and scale, his IT company would remain a mid-market company. Its market position was too big to be as agile as a small business, but too small to compete in the big leagues. It was crucial to grow and scale Cognizant. But his main constraint wasn't capital: it was leadership. D'Souza knew he needed to develop leaders at least 20 percent faster than the company's growth rate. If Cognizant was growing 50 percent a year, he would need to develop 70 percent more leaders than the previous year.
DeSouza knew the growth he wanted would require him to take big risks and make bold decisions that would determine his tenure as CEO. “My philosophy is that you rent your job, you don't own it,” he says. “You only have a very short time in the job, so you have to earn your place every day. If you haven't earned your place, you shouldn't be there. If there's someone better than you, you should step down. My responsibility to the company and my fiduciary responsibility to all shareholders and other stakeholders is to maximize the value of the company, not do what's best for Frank.”
To meet the challenge of developing quality leaders, fast, DeSouza applied an engineering mindset. First, when hiring, he looked for highly competent and intrinsically motivated people. “As a young CEO, I had a deep-seated fear that I didn't know enough to do the job, so I made sure to find and surround myself with highly capable people who were smarter than me. That was the only way I would learn and grow. But ability alone wasn't enough. I also needed people who could take the initiative and navigate new, complex situations without my direct involvement. I read a lot of articles on intrinsic motivation by researchers and authors such as Edward Deci, Daniel Pink, and Jim Collins. Intrinsically motivated people crave autonomy, mastery, and a sense of purpose. Developing highly competent, intrinsically motivated leaders became the core of our leadership development approach.”
To help his leaders succeed, D'Souza created an environment where Cognizant's managers were encouraged to pursue autonomy, mastery, and purpose, then stepped back to let them do what was necessary to achieve the company's goals. “It was a culture of high psychological safety,” D'Souza says, “where people felt safe working independently and doing what they wanted to do.” D'Souza gave them the freedom to hone their skills and become best-in-class in their fields.
Next, he combined radical delegation with a rigorous performance management process to help leaders identify what they were doing well and where they fell short. The idea was that de Souza would maintain their leaders' autonomy, while stepping in to help them grow when necessary. “Our guiding principle was that we wanted to serve a small number of clients deeply,” he says. “Everyone says that, but we tried very hard to live up to that ideal in everything we did. That meant keeping decision-making very close to the client. We couldn't have a top-down, bureaucratic approach, and we couldn't have issues being escalated all the way up to headquarters every time we made a decision.”
To keep leaders close to Cognizant's customers, D'Souza made sure they had the resources they needed. He also built tools to monitor their performance. He introduced a leadership dashboard consisting of four fundamental metrics to guide leaders in the right direction: revenue, profitability, employee satisfaction, and customer satisfaction. D'Souza saw these metrics as guardrails to guide intrinsically motivated leaders in the right direction and align them with the company's goals and values. Success at Cognizant was about balancing all four metrics. Hitting the numbers isn't enough if your customers aren't happy. But happy customers aren't enough if your employees are unhappy. If your employees are unhappy, your team is probably burned out. “Early on, when we had to hire leaders from outside, many of them prioritized some of these metrics,” D'Souza says. “Some of our recruits came from highly competitive, scorched-earth companies where they learned to hit numbers at all costs. Not surprisingly, they struggled to keep teams together and delight customers. By tracking all four metrics, we're able to step in and help change behavior.”
D'Souza also sought symbolic ways to spread the message that success at Cognizant wasn't just about hitting the numbers. To emphasize the importance of customer satisfaction, he gathered more than 3,000 employees to celebrate and recognize employees who had done the most for customers. He also invited eight to 10 of Cognizant's top customers each year to a strategy session with the board to share what it was like working with Cognizant, both good and bad. “The ritual of having customers attend the board sent a powerful message to the entire organization that the board took its customer responsibilities seriously,” D'Souza says. Through newsletters and blogs, Cognizant sent summaries of what customers had told the board throughout the organization. The message was that, yes, financial goals needed to be met, but they couldn't be met at the expense of the customer. “The customer became our true goal,” D'Souza says.
This approach to developing leaders has not only made Cognizant an industry leader and financially successful, but the impact and success of D'Souza's methods has been seen beyond the walls of his company: Since he left Cognizant, at least 14 of its top executives have gone on to become CEOs of other companies.
Excerpted from The Leadership Journey: How CEOs Learn to Lead from the Inside Out by Dana Maall, Hans Werner Kaas, Kurt Strobing, and Ramesh Srinivasan. An publication of Penguin Publishing Group, a division of Penguin Random House LLC, under agreement with Portfolio. Copyright © McKinsey & Company, 2024.