Australian Andrew Liveris has guided a resurgence of The Dow Chemical Company since being named chief executive officer in November 2004. His devotion to personal relationships and creating a better world while growing profits is a model of successful corporate leadership. As he steps down as chairman and chief executive officer of Dow and from the board of directors of DowDuPont Inc., he continues his efforts to promote inclusive capitalism and to ensure that the global economic system works for everyone. Before he spoke at a recent American Chamber of Commerce in Japan (ACCJ) CEO Forum event, The ACCJ Journal sat down with Liveris to learn more about his journey from chemical engineer to CEO, and how that experience helped him take Dow to new heights.
What were the keys to navigating the path from your first job to becoming CEO?
I think the first five years, joining any enterprise, most of us are making assessments on exactly what we have joined, what we are doing, and if it excites us. I, a chemical engineer joining a chemical company, was a no brainer. Dow was the world’s sixth largest at the time, and they gave me assignments that characterized the way we did it then and still do it today.
You had a thing called a job description, but you could drive a truck through it. Fundamentally, you could make your own job and empower yourself. This boundaryless way of describing work was prescient and for a company of our era—seventies eighties, and beyond—enabled people like me. In those first career assignments and jobs, I was excited at the opportunity that Asia presented. And I eventually moved over into marketing and business, where I literally could create my own paradigms and my own success models. The culture of Dow, generated from the beginnings of Dow by the founder to the present day, is exactly this: empowerment and enablement, no matter the organizational design.
When I was stuck with a bad boss in Dow Pacific headquarters in Hong Kong for five years, if there was ever a time I was going to leave Dow that was it. Why did I stay? Because I found my way to other people who would coach me and advise me. “We all know how bad this guy is, let alone why he’s still there. But the fact that you’re working in that environment, don’t worry. You’re going to actually learn something from this. Learn how not to do it.”
So, the whole system surrounding me—including his boss, who intervened and grabbed me under his wing, this fluidity of organizational model that enables every human being to emote and express according to their own talents—is what retained me.
I like to say 'til present day that you join a company, but you leave people. I could never make that decision to leave people. There were too many people I knew that I impacted, that I helped—especially as I got bigger and bigger jobs. You take it very personally and you really feel like you’re disloyal if you leave them. I’ve been very focused on allowing our company to maintain that cultural attribute that enabled me to stay in one place for 42 years.
Do you find that this personal atmosphere is becoming less prevalent in companies today?
Absolutely, and I think it’s due to digitalization, which is one of the topics I speak about a lot. I have a front row seat on what’s going on both in our own company as well as at IBM, where I am on the board. I see the effects of digital. You see it in restaurants where families are having dinner and everyone is on their device. We see everywhere that it’s de-personalizing, that everyone being connected means no one is connected.
A Chinese businessman that I did business with in my late twenties in Hong Kong gave me this axiom that I still live by today: the tenants of society are relationship, logic, and law.
In eras where you know you need certainty, the rule of law dictates the rule of logic and dictates the rule of relationship. What I’ve always done is let the rule of relationship drive the rule of logic, drive the rule of law, which I happen to believe is an ancient tenet, a Middle Eastern tenet, an emerging geography tenet. But, actually, in the digitalization world, it is a human element, a human tenet. I think all of us are going to have to find ways to reconnect with empathy and all the wonderful emotions that human beings are capable of. Greed, envy, fear, and anxiety are leading to, in essence, train wrecks.
This part of what I believe is the leadership model of today is being amplified by digitalization. You are not talking to someone when you’re on a Webex screen; you are being filtered by a machine and you are not there, you are not present. When I am in a room, I am present. I make sure I am present. I read the audience and I know when someone isn’t present and, when I run meetings, they’re present. These sorts of new axioms we have to learn are to reconnect us all, which I think is a very big tenet of modern society.
How did your journey shape how you lead the company?
When I was first appointed CEO, I did something which is indicative of all my experiences to that moment, and indicative of me as a person. I figured out one of the most important things I can do is benchmark the very best. So, my then-CEO—as I was being appointed COO—gave me the license to go and assure connections. Roughly 25 successful CEOs, people who were at or near retirement who had done the job for X years, gave me their time. I listened very carefully, and I understood what I didn’t understand. I started to hear what I didn’t know. I started to understand the parts of the job that no amount of training before getting the job could give me. I started to hear language that I wasn’t familiar with.
If nothing else, I am a good student. I am a voracious reader and I am voracious internalizer of data. I looked at the details of what they were telling me and started to distill it down into work plans and action plans at the CEO level. One of the key things I learned was the role of the shareholder, and that what’s going on in the world, leading up to this topic of inclusive capitalism, is the siloing of financial wealth versus multi-stakeholder returns.
The CEOs were emoting it to me back then in ways that I could internalize and then say, “I’ve got to get the board of our company to understand the strategy, such that it’s a multi-stakeholder strategy and not just a single dimensional strategy—i.e., please the current owner. That is a breakthrough thought that today is a lot more prevalent than it was back then. So, strategy as it relates to shareholder and board is a dimension of me that I gained from the first weeks and months in the job.
Everything I had done prior to that point had taught me that risk management comes from judgment calls. All my experiences to date had given me good experiences and good outcomes but—more critically—bad experiences and bad outcomes. That brings us to young people. You’ve got to give young people the ability to make mistakes so that they can have some bad experiences—hopefully not terminal, and certainly not against the key tenets of our company, our values and our safety and ethics. But, if you allow them the route to operate that I had, then they can make those mistakes that can make them better people who can judge what the right answer is.
In my case, it prepped me to take the bet, to bet the company, which, at that time, was roughly a $30 billion market cap company. For me to have the mandate to do that, I had to explain to the board what managed risk looked like.
Another important thing that we are witnessing to this very day is the focus on people. As CEO, I started working on succession immediately, because I understood that I needed a team that was different from the previous team. I needed a team that could undertake this transformation. I needed a team that, at the end of the day, was aligned and didn’t have internal fighting. Now there is only one fight we have, and that is in the outside world. Aligning, recruiting, rebuilding, rewiring, and rehiring the talent pool and the succession pool—in essence I was trying to make Dow entrepreneurial again.
Under your leadership, Dow has been a champion of diversity and LGBT rights in the workplace. Why do you feel so strongly about the value of diversity and inclusion to corporate success?
I would say it would be a fair assessment that my own personal wakeup call on the word “inclusion” came relatively late. As someone who is diverse in my own right—I’m an Australian of Greek origins from the Outback who, growing up, was seen as someone with dark skin and a big nose and I was given names for that—I never accepted this notion that just because you were a WASP [White Anglo-Saxon Protestant] you were that much smarter or more brilliant and you just had this entrée to life. I never accepted that. I grew up in a very multicultural town in northern Australia.
Because of my attitudes, I felt very strongly that we should adopt strong diversity mandates at Dow. We did, but we were noticing that it didn’t address the major issue, which is, to distill it down to a term, unconscious bias. You go after conscious bias pretty easily. You can confront it and, ultimately, purge it out of your company. But what we figured out, and I personally figured out, was that we had to become inclusive. So, we started to benchmark some of the best early companies that were doing inclusion.
You mentioned LGBT. I worked very closely to help Jim [Fitterling] come out, and I watched his pain on a personal level and coached him through it. I was his go-to person. I was watching him go through what I thought was inexcusable. He felt almost a guilt and almost a stigma, and he just wanted to be a normal person and treated as a normal person and yet he couldn’t be. My chief of staff at the time is openly gay, and he and I would chat about it a lot. I would try to understand it a lot more than I then did. Then I started to understand it when I looked at the African-American community and what was going on out there with racial riots in Missouri and Baltimore, and the black community and their anger. I talked to my African-American director who explained it to me and said: “We are our own worst enemy. We come across as angry and therefore we don’t even attempt to build the bridges.”
I started to internalize a lot of these conversations and I said, okay, this needs role modeling from the very top. We need to change our whole persona. We need to allow people to bring their whole self to work. We are at a competitive disadvantage if we do not and we are going to be inclusive of everybody. We will invest in everybody. I think this drumbeat accelerated in the past 18 months, and I am very happy to see Jim pick it up as one of his go-to thoughts.
The only problem with inclusion is obvious: exclusion. So, if suddenly a group, let’s say the white-majority male, suddenly feels excluded, then we are not doing our job. This balancing act is not just to accelerate inclusion, it’s to be truly inclusive.
What is inclusive capitalism?
I adopted this term because it’s the best we have. It may not be the ultimate term, but it’s starting to suggest something which the word inclusion is hopeful of. This notion of democracy and capitalism coexisting, it is only as good as the effects of that being fair to all of society. When there is disequilibrium and unfairness—part of it could be access, part of it could be the family unit itself, whatever it is that creates a them and an us—we are reverting to tribalism. And, if you start to think about what’s going on around the world, there’s tribalism appearing everywhere.
What’s the only conclusion? That democracy and capitalism haven’t distributed wealth in a mechanism that’s fair. Now, when people start hearing me talk like that they say, “Socialism! Communism!” No, those are broken models; we know that. You don’t want a Big Brother distributing the model for you, you want the market to be more perfect.
For the market to be more perfect, you need quality access to the tools the market provides.
One of the most obvious tools, that is not fair in its access, is the schooling system. We are failing people all over the United States on schooling and education. You now have people of means—whether black, white, or Hispanic—putting kids into private school because the public-school system doesn’t give them the tools. So, who gets to go to the public system? People that can’t afford to go to the private system. We have that with healthcare, so we have lost the plot on benefitting society. In fact, by leaving society behind—most of it—now the middle class is getting lower income, they are starting to feel excluded from opportunities for their kids. You’re getting this wellspring of anger and anxiety and fear, which is not a good set of human emotions, that the political class is not responding to its policies. The policies are way too hot. They’re responding to it with rhetoric and promise. So here we are now, going through a large experiment around different parts of the world to find a new political class that actually can help the affected parts of society.
Inclusive capitalism means that enterprises need to take a role and a stake in helping governments and NGOs come up with a fairer way to put in place distribution of wealth and equality, based on skills and access. Inclusive capitalism means that we have to take away short-termism, because short-termism gives you returns in the moment but doesn’t do anything for tomorrow. Let’s go to infrastructure, let’s go to clean air, let’s go to the things that preserve our lives on this planet. This notion of business and CEOs taking stands on policy is something I decided—with the support of my board—that Dow would take a lead on. We are one of the founding groups of something called FCLT Global: Focus Capital Long Term. I’m on the B Team with Sir Richard Branson. All of this sees alternative ways to get policies to be inclusive in the capitalistic model. There is no other model, because markets drive behaviors. We should all want to succeed. We need a hunger to succeed, but we need it with humility. We’ve lost the humility.
What changes do global companies need to make in how they operate for the world economy to work more effectively for the good of everyday people?
It depends on what their ownership structure is, whether they’re 100-percent public markets. Public markets are all catching up to each other and the effect in the United States is profound. The UK it’s starting to invade Europe; its invading Japan. Owners are basically saying: “I want both. I want short-term and long-term.”
When you’re a pilot flying a plane, you have got to look up to the horizon and see where you’re going, but you have got to look to your instruments to handle short-term volatility. Enterprises have to get pilots who can do that. It’s no good anymore to say, “I’m building for the long term.” Your owners will throw you out. They will change the board. This is activism. Just doing things in the short term means you’re spiraling to non-existence, and you’ll end up being owned by private equity or even sovereign wealth funds or state governments. There is no in between anymore, you actually have to do both. We at Dow have got 22 straight quarters of earnings growth while we have been investing billions of dollars: $50 billion in Saudi Arabia, the US Gulf Coast, R&D, acquisitions, etc.
I’m not saying we have got the secret sauce, but it means a relentless focus on doing both things at the same time. Those enterprises are few and far between, which is why you are now starting to see the demise of iconic names—certainly, in the United States, definitely in the UK, and it’s beginning a little bit in Europe and you’re getting attacked here as well as in South Korea. Those companies won’t survive as diversified conglomerates. That era is going. I said in Davos the era of publicly owned diversified conglomerates is gone.
What are those most important problems facing the world that Dow Chemical is working to solve?
Dow’s sustainability goal is now at the nexus of our business model. I would have said when we first did our sustainability goals in 1995 that we were driven by the enterprise and its boundaries, and by minimizing the impact of our factories on the environment and safety records, etc. A second set of goals focused on our products that we sent to the world, that were consumed, and then sometimes returned or recycled or became refuse.
Today, the last set of goals we set back in 2015 is focused on the planet. That sustainability and its incredible challenges—going from 7 billion people to 9 billion people—we will have a billion people without access to clean water by 2025. We will have 1.8 billion people that won’t have access to fresh food. More than 40 percent of our energy will be renewable; 60 percent will be fossil fuels, but we will triple the amount of fossil fuels we will use, which will impact carbon emitted into the environment. We have no solutions to that, other than technology.
Dow is focused on typical solutions to those challenges, whether that be light-weight materials for automotive and transportation, cleaner combustible fuels, ways to 100 percent recycle plastics, or ways to create renewable plastics. These are the sorts of things that drive Dow’s business strategies. By being a more focused enterprise and having a more focused research and development budget, we are one of the few companies in the world who are hiring scientists to put them against those challenges. We are doing it, obviously, for a profit motive, but we also see the value.
Our businesses in China are growing double digit. People ask, “How are you growing in China?” Well, it’s because our strategy is to grow with value not volume. People will pay for high-value-driven products that solve those challenges. Energy efficient buildings, smarter transportation, safer food and hygiene, and wet markets or dry markets are big drivers in China and elsewhere. Those are the sorts of business strategies the Dow model is undertaking. Biggest challenges, biggest opportunities.
How does your business in Japan play into these initiatives?
A lot. Under our leadership here in Japan, in the past five years we have brought the world back to Dow Japan. We have created innovation forums here, the Olympics in its own right—2020 creates a drive and companies in Japan are opening up their ecosystems. I’d say Japan is in its first trimester for Dow to figure out how we can actually modernize this economy going forward, not looking back. And the inclusion of companies like ours—we’re local but we’re global—is widely welcomed because of our history; the Dow Diamond symbol has a strong record here, so we are getting open doors. I think Japan becomes an opportunity for us as a result. It already is.
Custom Media publishes The ACCJ Journal for the American Chamber of Commerce in Japan.
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