E201 - Steve Hare: Remaining calm through chaos with the UK's highest rated CEO

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1:11And as so many of our guests have proved, action leads to motivation. So sign up now at thehighperformancepodcast.com forward slash foundation. Hi there, welcome along to a very special episode of High Performance. Over the next few weeks, we're going to be working with PwC to bring you lessons in leadership. Between us, we've tracked down some of the most fascinating leaders in business to share their insights in how to lead. So we start the series by welcoming Steve Hare, the CEO of Sage. It's a fascinating conversation, but I think we can only truly assess leadership when times are tough. And actually, Steve was voted by Glassdoor as the number one CEO in the UK during the pandemic.

1:57So what can he share with you? Prepare for a fascinating insight into leadership. Here he is, Steve Hare on high performance in association with PwC.

2:11Well, Steve, welcome to High Performance. Thanks very much. First question is, what is your definition of high performance? for me it's doing amazing things that you probably maybe didn't think you were capable of so pushing to be that best version of yourself it also starts with you've got to want it so high performance doesn't happen unless you set yourself that ambition you put effort in you've also got to be resilient because high performance doesn't happen every day it goes in ebbs and flows and And so overall, I think one of the best measures of high performance is whether you can deliver it consistently over a period of time.

2:51And you can sort of ride those highs and lows, but produce something amazing over a consistent period. And you've done it over a long period of time. You're sitting here as a very experienced CEO. But if we wind the clock back to the early days in your career, was this mindset there then? Or did certain things happen that kind of led you down the path that you've been on? So from a very young age, if I decided I wanted to do something, I've always had this determination. But it hasn't always produced amazing outcomes. You know, I think particularly when I look back, I tried lots of things. You know, I didn't have a particularly outstanding academic record, for example.

3:30And I think when I look back, that's partly because I was much more motivated to play rugby when I was at school than I was really, you know, to study Latin or history or geography or whatever. And so if I couldn't see the link with an outcome that I thought was interesting, I found it very hard to really get excited about it. So I think where I'm passionate and where I'm invested in an outcome, then I've always had that kind of drive to get to something. I've got much better at doing things I also don't enjoy quite so much, but I see as essential, whereas when I was younger, if I didn't get a kick out of it, I kind of didn't really do it.

4:13It's quite an interesting topic to pick up for a second, actually, because I think a lot of people feel they've only found high performance. You see it all the time. Find your passion, find what you love doing, find what makes you happy, find what makes you float and fly. The truth is, quite often high performance is also doing the stuff that you don't want to do. So how have you come to terms with that? You fall in love with the outcome. What is it that we're trying to achieve? What is it that is that kind of north star that excites us? And then you just get to learn over time that if you want that north star, there are a lot of hard yards.

4:48And, I mean, I've never met anyone who is consistently achieving high performance that doesn't put a huge amount of effort in and who doesn't have highs and lows. Because in order to achieve that outcome, you have to be prepared to experiment. And I think when you're younger, you probably worry too much about outcomes or how you are perceived. And actually, it's probably getting worse with social media, etc. Right. And so I think you worry too much about as you're going along the journey, how am I being judged? How am I being seen? Well, you can't be brilliant and high performing at every single step.

5:28Nobody can. The best athletes in the world have days where it doesn't. gel it doesn't work and so i think that determination and as i say falling in love with the outcome then drives you that when you hit those obstacles you get up you kind of brush yourself off and maybe when you're younger as well when you hit those obstacles you overreact to the lows and you probably overreact to the highs as well by all means celebrate the highs but don't get carried away because it is about being consistent and driving your way through those ups and downs. So we'll come on and talk about the highs in a minute, Steve, but I'm interested in the lows then because, like you say, so many of our interviewees have told us that that's where they've discovered more about themselves.

6:17What would you say are the biggest lows and what have they taught you that you've experienced? The first really big low was one of these classics where I had a really big high and then I had a really big low, which was I'd had a pretty typical career up until my late 30s working my qualified as an accountant, had lots of good jobs and was given lots of really good stretch roles, was great. And then in my late 30s, 39 actually, I became the CFO of what at the time was GC, later to be renamed Marconi. 10 billion revenue company making a billion of profit was footsie 20 so it was one of the 20 biggest companies in in the uk and at the time i wasn't the youngest but i was one of the youngest cfos on the footsie and i always remember i was appointed on the 10th of april 2001 six months later we'd done two profit warnings the chairman the ceo and the deputy ceo had all left and a guy I'd previously worked for had taken over as CEO and it was the dot-com crash.

7:26Demand had just you know sort of dried up. The company was still trading profitably but during the boom years the team had gone on a big acquisition spree and we'd taken on four billion pounds of debt which there was now very little prospect we'd be able to repay that debt. I'd become CFO because I had a lot of operational experience. But now I was faced with the prospect of renegotiating the financing package with the banks, which I'd never done before, which I did. So we had a group of 35 banks and hundreds of bondholders because the debt was half bond, half bank finance. And I negotiated a revised financing package, which took about six months.

8:15But in the meantime, the market had continued to deteriorate. And so we got to a point where I went to the board and I said, look, we've got a package here, a refinancing package we could sign. But if we sign it, I think in a year's time, we'll be back at the table because we have no prospect of paying this 4 billion of debt off, is the truth. So what we really need to do is a fundamental restructure where we do what's called a debt for equity swap, which is basically we give the equity to the banks and the bondholders, we restructure the whole thing but then it's in a fit shape for the future that took another year or so to do which we did and at the time it was the largest debt for equity swap in europe at the end of that process the banks approached my chairman and said this is great but we think steve needs to go because he's negotiated very hard he's left a bit of a sour taste in everybody's mouth so let's draw a line in the sand and I'd been with them for 13 years so I'd started as a factory accountant and worked my way up to be group CFO so I'd gone from this achieving my career ambition to be a listed CFO to being asked to leave in 18 months and that was pretty that was a pretty severe contrast but it was the right thing it was the right decision because nobody was happy if you see what I mean I mean I'd negotiated a fair deal but literally nobody involved in that in negotiation was happy they were all sort of equally unhappy but it was the right thing for the company did you recognize the feedback that the banks were giving to your boss People have asked me a number of times actually during that whether did I ever think about whether at the end of it I was sort of sacrificing anything personally.

10:10And I can honestly say that that isn't how I thought. I just was determined. I knew we had a healthy company that just had too much debt. So all I could think about was the thousands of jobs that we had to save the company. We had to put it into a position where it could survive long term. and if at the end of that I needed to go and do something else well so be it it took me a while afterwards so my rational brain said yeah I get that so I didn't really argue with the chairman I said yeah I get it no problem let's kind of move on and I remember agreeing he said I think it'll work best Steve if we if we announce it your number two takes over and then you stay for six months to help him through the transitional period but i think if we're going to do this we need a bit of a clean break so let's agree how it's going to work and we'll literally announce it in the next few weeks and this taught me a very valuable lesson because i'd been there 13 years i thought i was a very you know really important part of the fabric so to speak we announced it and literally within a week nobody was coming to me for any advice communication with me had sort of ceased up and I remember going to somebody who I'd worked who I'd worked for a more experienced boss and I said I can't believe this you know I said a week ago I was the CFO and he said yeah but now you're not Steve that sounds like quite a bruise to the ego as well and you must have had a healthy ego to put yourself in these positions to eventually be trusted as a CFO at such a young age.

11:52How did you handle it? The thing that it really taught me, and obviously, look, at the time, did I feel bruised? Yeah, yeah. I mean, it took me a while to kind of come to terms with what had happened. But, of course, it's not personal, right? And it's not about you. It's about the bigger team and it's about the bigger organization. And it's not personal. I mean, when the chairman sat me down, it wasn't like, you know, Steve, you've done a terrible job here. We need to get rid of you. It was very much, Steve, you've done the right thing. You absolutely have done the right thing. You've negotiated a really great outcome for the company.

12:36But the right thing for the company now is for you to leave. that probably to be honest that probably took me a few years to fully compute from a personal perspective i mean i'm quite a rational person so at the time i sort of it was all very rational the emotional part probably came over the course of the next few years because i what i did was i left gc and then i went and i did some consulting so for a couple of years i worked with a friend of mine and we just did sort of troubleshooting consulting we took advantage of the fact we'd got this restructuring experience and we just sort of touted ourselves around as as um experts and i remember one of the bankers uh said to me when i was leaving you'll never work in london again you're finished and i thought well that's a bit unnecessary you know i mean really um but that bank was particularly, they didn't like the agreement.

13:36They didn't like the final structure we'd come up with. So I remember I went and did my consulting, et cetera. And then I thought, you know what? I want to have another crack at this. I was, you know, this was what I wanted to do. I wanted to be a public company CFO. I thought, I can't leave it there. I can't just, that can't be the way I sort of finish, if you like, my public company career. So I thought, no, I want to do that again. I couldn't get a big FTSE 100 job. So I went to a company that was FTSE 250, a bit smaller, did that for a couple of years. Then I went to a company called Invensis, which was on the verge of being FTSE 100, became FTSE 100.

14:11So I did another two public company CFO jobs. And that was part of me proving to myself, and I guess also indirectly others, that I had a lot to offer. I wanted to come back and show that I could win people over and I could, you know, it wasn't my fault that we'd ended up in that situation. What I was trying to do was protect or do the best job I could for all stakeholders, which basically meant none of the stakeholders were particularly happy. So can I come back to that comment then from that banker that tells you that you'll never work in London again? You can disagree without being disagreeable.

14:50Yeah. So maybe people weren't happy with what you'd negotiated when you were trying to represent the company and save all those jobs. But then that sounds like that banker has taken your disagreement about what the best way to restructure the loan is and made it disagreeable. Yes, and made it very personal. So where do you stand on that? Yeah, I think it's very important and it's an important part of high performance. to have differing views, to challenge, and to explore the right outcome for a particular situation. And as soon as you become somebody who is only interested in the outcome for you personally, well, then you're not contributing to that wider discussion, are you?

15:43So as you say, that is a really good phrase. You're becoming disagreeable because you're making it a personal thing. Now for me, you know, if you take this situation that I'm talking about, there were thousands and thousands of stakeholders, including all the people who worked in the company. This one banker is just one player who has a particular view about what works for them. Now that person got overruled because the wider banking group approved the deal. And so this person was particularly upset about something for them personally that's not acceptable that's not that's not behavior that you know any of us want you have to ultimately sign up to collective you know responsibility you can't always one person can't veto the whole thing it doesn't doesn't work we talk a lot about a culture in business these days obviously you've got some big learnings there and i wonder how much those moments those personal moments that perhaps sense of injustice when you when you left GEC and a few other moments in your career I wonder how much they inform the kind of culture that you tried to create in your business now I think the first thing to say is you know Sage we serve small mid-sized businesses so my my customers are all small mid-sized businesses so I spend a lot of time talking to small mid-sized businesses a lot of my friends run small mid-sized businesses and so thinking about what's important to them and the tone they set within their businesses is also an important ingredient for me, right?

17:16Because that's who I'm serving. So I believe that, you know, humility and, you know, being humble and not being too self-centered is an important part of the culture that I've sought to create. But even if you didn't think that was the right thing to do, if you didn't have that, you would struggle to serve your customers. small mid-sized businesses generally are people who have gone into business they have multiple different reasons for doing it you know not everyone sets up a small business because they want to become super wealthy they do it for a whole variety of different reasons and if you go into a conversation with a customer and they think it's all about you and not them that's not the relationship they're looking for they don't like it they it it you know look i'm from the north right you know i mean in yorkshire if you start a conversation about yourself rather than the person you're talking to it immediately puts people in the wrong frame of mind so i felt you know cei the culture i've tried to create is yes it's high performing but it's high performing in a very it's respectful right behaviors matter values matter how you treat people matters when When I first became CEO of Sage, when my predecessor left, the chairman said to me, we're going to run an external search.

18:40Do you want to be a candidate? And I said, you know, I'm not sure I do. I'm not sure I really want to be CEO because I think we've lost the dressing room a bit. And I was part of that. You know, I was the CFO, so I wasn't the CEO, but I was still part of the team that I felt where we'd kind of lost a little bit. And why and how that happened? I just think we'd lost the hearts and minds because it had become, the performance was starting to drift. So we were going through a big transformation. Transformations are all about highs and lows, right? They do not go smoothly. And we were going through one of those periods where things weren't landing.

19:17It wasn't working. We ended up having to do a profit warning. And then we got into a bit of finger pointing. instead of really owning it and as a team really figuring out what was going wrong we got into a bit of a spiral around whose fault it was and all this sort of stuff and so I said to the chairman I'm not sure I'm the right person to sort that out but you know I'll do the job on an interim basis you go kind of figure out you know who's the best person to do it and then I I decided whilst I was interim, I was going to focus only on internal because I felt that was the issue. So actually in those first three months, I didn't really speak to any customers.

20:00I didn't do any external interviews. I just traveled around talking to people. I did loads of skip levels. So I didn't just talk to senior people. I walked around the offices, all open plan. I walked up to people. I talked to them. I just talked to as many people as I could. And as I was doing that, I thought, I think I get this. I think I'm starting to know what the issue is here. I think I could maybe do something. And there was this pivotal moment I'll never forget. I was in Atlanta, which is our head course of our US business. I was doing all hands. It was probably a couple of hundred people there.

20:35And I'd settled on this format where instead of presenting, I would just let someone interview me. So this guy Terrence was interviewing me. And he said, oh, can we have an update? Where are we on the CEO search? and I gave one of these kind of pretty pathetic, slightly political answers. Doing what we can. It's a long process. It's a long process. We've got to get it right. You know, we've got to find the best person. Anyway, he sort of interrupted me and he said, have you applied? Are you a candidate? And I said, no, no, no. Look, I don't think I'm the right person. I think we need to find somebody really experienced in the industry, et cetera.

21:12And he said, well, I think you'll find there's 200 people in this room I mean, if you decided to be CEO, they'd be right behind you. And they all started clapping. And I suddenly thought, wow, okay. So I went back to the chairman and I said, well, look, if you find somebody who's amazing, obviously fine, but I'm softening now. It might be something I want to do. And then the headhunter who was doing it ended up saying to the board, look, we found you a few candidates, but the truth is, the best candidate is Steve. You should give him the job. so I took it and the first year or so I found it really really hard really harder than the interim so much harder because I hadn't really prepared myself if that makes sense because I hadn't intended to do the job so I think the board expected me to have this master plan whereas actually I didn't really have a master plan other than I had this sort of slightly loose idea that I was going to persuade 12 ,000 people to buy into what we were trying to do.

22:20You know, we want to be one of the leading tech companies in Europe. Our purpose actually is to knock down barriers so everyone can thrive. So whether that be our customers, whether that be colleagues internally, whether that be society, etc., we're here to do good, right? And so creating an emotional connection, you get the best out of people when people think, wow, this is cool. I want to do this. Yeah. I mean, what's not to like supporting small midsize businesses around the world to flourish? I mean, that's a pretty cool thing to do. So I spent the whole first year pretty much doing what I did in the first three months, which is traveling around a lot, trying to win people over.

23:06I spent a lot of time looking at if we're going to have values they need to mean something you go so many places where the values are on the wall and then if you covered them up and asked people what they were they'd be like so I said we got to a point where we said we're going to have sub values, we're going to have four values but we're going to have this overriding value which is we do the right thing and I use that all the time if we're making decisions, we're talking about something I'll often say to people, do you think that's the right thing to do? Morally right? Yeah. Morally right. Is it right for all our stakeholders?

23:43Right. So people will sometimes say you can't, you can't do something equally for all your stakeholders. No, no, you can. So colleagues, customers, society, shareholders, they're my four stakeholders. So if we're doing something, is it the right thing for those four sometimes there's a trade-off but if there's a trade-off be honest that there's a trade-off so we might do something for a customer for customers where we say well in the short term that doesn't really enhance colleagues experience because they've got to do something which is which is a bit harder it's a bit more inconvenient for them but we're doing it because it's the right thing for the customer and we know that we will be able to resolve it for the colleague in due course.

24:28And if you're getting close to the edges, so if someone goes, well, not sure whether it's the right thing. Well, it's probably not then, is it? Because you kind of know. Now, we then have guiding principles of it's got to be human. So in an increasingly digital world, yes, lots of interactions are digital, but we're human beings we serve small mid-sized businesses they are people they're not corporates they're not faceless corporates with ever-changing people most of our customers you go and see them year after year after year well it's often the same person because it's their business they employ their family their friends these are human beings and if you treat them with respect and you treat them as human beings and you engage with them guess what people tend to work with you for longer you know we talk about customer for life it's a genuine thing customer for life because if you're dealing with small mid-sized businesses and you serve them well and you look after them and you make their lives easier they do stay with you for life can i ask you um you said i had to go around and win people over you know win hearts and minds it's something that a lot of people struggle with yeah would you mind sharing some advice for people listening to this who are in a position where they need to go and win people over they need to share their message or make people feel empowered or bring people on the journey what what do you do that you could share i'll tell you there's a few things i found quite hard initially about being ceo i'm an introvert and actually that was one of the barriers initially that when i thought about being a public company CEO I was like well I won't be able to do it I'm I'm happy to be out of my comfort zone but this is this is a step too far so even doing something like this or doing external interviews I remember the first time I went on TV I mean I was just you know in such a state yeah I mean because I just mentally so when I talk about winning people over that means walking in to a big office open plan office hundreds of people and it means walking down that floor and it means going up to people and talking to them set pieces are important so all hands meetings but they're all orchestrated if you walk a floor the more junior the person you speak to when you haven't warned them you're going to speak to them the more honest they are right what's the best question that you find elicits a great answer so i always try and uh i follow a similar pattern i always say to people so how's it going what's working well for you and then i laugh and i always say what i really want to know is what's not working so well you know you got a chance to tell the ceo what's not working so well so you have to build up a bit of trust I sometimes do it in a slightly jovial way as well I'll say if you were me for the day and you had a magic wand and you had my my CEO powers what would you do with them and what tends to be the most common response you get to that question for most people um there will be something locally which is really getting on their nerves it's not it's not normally big things i'll give you an example we i was in south africa a few weeks ago and i did exactly this i was walking around i said what what's the thing that's kind of getting under your skin at the moment and this lady said to me i don't understand why you took away the fun budget and i was like right what are you what took it yeah so what can you explain what do you mean what do you mean i took away the fun budget and she said we used to have a budget quite a small budget which meant that we had total freedom locally to decide if we wanted to do have a few you know pizzas a few beers we wanted to have a bit of an event take people out bowling or whatever we had a local budget and it's gone and I said right where's it gone and she said well you've taken it away Steve you you've made it all global and I said thank you that's really really valuable feedback because i know exactly how that's happened it's a completely unintended consequence we didn't intend to do it that way but what's happened is as we've gone to be a more global company and we've gone more into global functions these things that were held locally have got swept up into global cost centers and so for that person at the sharp end sitting in south africa working long hours and i don't know i mean at the moment south africa they're having power cuts all the time etc so they have all these things that all these headwinds against them and the thing we'd done to most upset them was the fact that when they're in the office they're now told they can't just order out for pizzas so that's an easy did you want pick it but i would never yeah so we fixed that we're now putting those fun budgets back in if i didn't travel around no senior person is ever going to give me that feedback are they ever right the only person is going to give you that feedback it's the person on the ground i remember talking to a customer as well who i think was paying us 10 pound a month and she was like but you're the global ceo you know i pay you 10 pound a month why are you ringing me because i want to know what your experience is right i say can you imagine as the global ceo does anybody ever really give me honest feedback about how my small list of customers feels so you're one of my smaller customers i want to know what it feels to be a small customer in Sage.

30:19Because if I talk to our biggest customer who gets loads of attention from the account management teams, et cetera, they're probably going to tell me it's a pretty good experience. I want to know what your experience is like. And you just learn so much, don't you, when you do that. But is that my comfort zone? No. As I've done more and more of it, I really enjoy it now because it's really interesting. But the first time I did it, I was worried exactly what either a colleague or a customer would say. I was thinking, well, God, you know, they'll have a list of demands. I mean, what am I going to do?

30:52I'll have to respond to it, and I don't know how to. But, of course, the truth is most people are very, very nice and polite, and they tell you the truth, but they're not aggressive. They see it as the fact that you've made the effort they think is amazing, and so they tend to take advantage of that and just give you a honest feedback. See what I'm struck by there is you spoke about the purpose of the business is removing barriers for people to thrive and you're removing barriers to find out the truth so you're role modeling the purpose of the business which I see the importance of but I'm also intrigued by this idea of you phoning up the 10 pound a month customer because I think one of my big frustrations when I go into businesses is how people scale up a problem and they'll go, can't do that mate, why not?

31:42Health and safety said. And then you say, what's the name of the health and safety manager? And they don't know, but it's a catch-all term that means that we don't have to do it. And you're almost a great example of that South Africa equivalent of, can't do the fund budget, why? Steve's taking it away. So it becomes about you and you often don't even know decisions being made in your name. How do you stop people now getting wired to you i'm talking about amongst your team where they almost give you the sanitized version of steve you go and speak to them people because they'll tell you what you want to hear how do you avoid that echo chamber as a ceo yeah so it's it can be a bit of a challenge because obviously not everything i do is random right so if i take that example of the small customer we tend to schedule the calls now because what i've discovered is if i ring a customer completely out of the blue, it takes me a while to convince them that it's me, right?

32:38And so it's just, it's wasted time. And actually people, people get a bit intimidated when someone rings. So we do tend to schedule them now. And so that means that someone is making a decision about who I speak to. So I give a lot of feedback about, no, I want this type of customer, or I want these customers to be selected more randomly, et cetera. And it's the same when I'm traveling. Because I walk out onto the floor, nobody can control who I speak to because I decide. It's completely random. I just wander around. And also, I've been CEO for four years now. So hopefully I've built up a bit of trust that people know that they can tell me things.

33:19And of course, I don't guarantee that just because somebody tells me something that I will do what they want. I mean, in this particular example I gave you about the fund budget, the person was right. And so I actioned it. But there are other examples when someone will say to me, well, I really think you should replace this system because I don't like this system. And then I go back to them and say, well, we chose that system for a reason. And if you take the total system infrastructure, this is why it makes sense. And so it might be slightly inconvenient for you, but in the total, it's better.

33:55So you also have to be prepared to listen, but say, okay, but having listened, this is why I'm not going to do anything about it. What people don't like is being ignored. So if someone gives you feedback and then you go back a year later and they go, you know, I gave you some feedback a year ago and did anything happen? That's what really frustrates people. If you explain the context, people accept that I have to make choices. Everything's not going to be perfect. I can't fix everything all at once. And so when you build up a bit of trust, people trust that I make the decision. I mean that's a term that you've used a lot, it's a small word but it does add a lot of the heavy lifting, trust and it's obviously hugely important to you.

34:40Would you tell us a little bit about what you understand trust to be? you have to do what you say you're going to do so if you say you're going to do something and then you don't do it people think well so it doesn't really mean it does he doesn't really mean what he's saying and i think particularly when you're going through a lot of change you're going through a lot of transformation you have to make a lot of choices you have to make a lot of decisions lack of clarity and lack of accountability where people don't really do what they say is a real enemy of getting things done we we had a period where we got somebody to help us create greater clarity over what we were trying to do because we we had a best endeavors culture which means that we have a nice culture in search people people don't like to you know they always say if you say oh can you do that people say yeah yeah i'll see what i can do well what does that mean right so if you're overloaded and you just keep telling everybody i'll see what i can do you can then choose which bits you do and then when you don't do them you just say well you know i'm overloaded well that's not high performance high performance is about saying i can't do that so no i'm i'm not going to do that but i can do this or look that's not a priority.

36:02I'm not doing that at the moment. It's being open and honest with each other, but it's being accountable to each other. So sometimes you get this kind of hierarchical structure, which we do still have a little bit of, where if in doubt, push it up, get the senior people to make the decision and then push it back down. Actually, what you need is on the pitch on a day-to-day basis, you need people to make decisions, right? Because the coach can't be jumping on the pitch during the game, right? The people who are there, the people on the phone to the customer, if every time the customer says something, they go, oh, I've just checked with my boss on that one, or I'll get back to you, da-da-da, and then three days later.

36:47When I get customers writing to me, it's nearly always because they've been passed around and it's taken too long. It's very rare, actually, that a customer complains that we've sort of treated them badly and refused to address their concerns. If you can first time resolve something in the moment, people feel so much better about that, even if it's not entirely to their satisfaction. If you solve it in the moment, people feel good about that. If you're still messing around with it two weeks later and you've spoken to seven different people which is what happens in a low accountability culture that doesn't deliver great experience so let's talk about creating this high accountability culture which let's be honest comes down to recruitment i mean every business is a recruitment business i know that you have a sort of no stars approach even at the highest level i'd love to talk about the the waiter or the waitress test as well if you're if you're happy too so how you recruit what you look for in the culture that it therefore creates we all have an ego to some degree right i mean it's part of what what drives us to achieve but it has to start with it has to start with the team i have a number of people who work for me who are very you know they're all very talented people known as as very high performing people within their craft but you have to sign up to the team the team comes first and therefore how you treat each other within the team really really matters and i've always always from a very early age had this waiter test thing that i use which is how do people treat someone who is serving them in a restaurant or a receptionist you know when someone walks into an office do they say hello to the receptionist or they just walk straight past them and ignore them you want to be in my team you need to respect all people right so you need to say hello to the receptionist if you're in a restaurant and you've had a few drinks and you start getting arsey with the waiter and speaking in an obnoxious way you can't work for me and how do you deal with that because i think we've all seen it and been in that position and i sometimes i'm annoyed with myself for thinking you're just a dick but i don't say anything yeah i just so what i do what i do now is i think probably when i went when i was a bit younger i just sort of noted it yeah i didn't really do anything about it if it's within my team environment i don't embarrass people in front of their peers.

39:28Although increasingly, I hope within my team environment that people call each other outside. You start to get a kind of self-regulating behavior amongst the team. But what I do now is, you know, if it does happen, I speak one-on-one and then it's all about how the person reacts, right? If the person immediately goes, you're right. How do you put it to them? I describe the situation. I say, you know, that incident, how do you feel about that? Why did you speak to the person like that? What was the reason? If the person then becomes defensive and says, well, I was getting terrible service, they deserved it, I know that we've got a problem, right?

40:06If they go, no, you're right, I'm sorry, I'm tired, it's been a bad day, I'll go and apologize to them. You're absolutely right, thanks for pointing it out. That's the right behavior, right? None of us are perfect, right? We all, under pressure, when we're tired, can do things that we wish we hadn't done. and it may not happen absolutely immediately if you're if you're in a bit of an agitated state it may take till the next day for you to reflect and go no god he was so right i shouldn't have done that right when i first became ceo the first uh leadership meeting we had where we had the top 80 90 people in the room i was talking about culture and i was talking about behaviors and i said every single person in this room is talented otherwise you wouldn't be here you're all capable really of doing what you've been brought here to do but whether you stay here will be determined not by your talent but by your attitude and if you don't live the values every day if i don't see you living and breathing and behaving in the way that we want you won't be here so what are the values and we know we spoke about the first one that you so we have this overriding as i say you know we uh we do the right thing um we're human bold because if you if you don't push if you don't push the boundaries you don't try things you'll just achieve uh mediocrity but you have to bring it all back to the purpose of knocking down barriers we're here to serve those for stakeholders and how we do it is really important.

41:41And I think everyone knows, it all starts with the top. If my leadership team behave like this every day, then it will filter down, right? Now, do we all play together nicely every minute of the day? No, because when the pressure's on, when you're driving hard to get stuff done, it can be difficult sometimes not to have slightly sharp elbows as you're trying to and this was i mean this is something when i was younger i really wasn't that good i i was very good at getting stuff done i've always had the reputation of getting stuff done but when i look back when i was younger sometimes the way i got stuff done left collateral damage because it's time consuming to you know high performance with kindness right you you you need to respect people around you you need to spend time to explain to them the context it's much faster just to bulldoze right through get stuff done and say hey i did my bit and you need someone at that point to point out to you you know steve that's fantastic that you did that bit but let's look over here at the overall picture and because you did that we haven't done this have we so it's a bit like how do you feel if you win the man of the match award but the team lost it's meaningless you didn't win can i pick up on one of those values you spoke about which is about being bold and innovating yeah because i think when you work through the logic of that that means if people are pushing the envelope and and go into the edges of what they think is possible.

43:27There's going to be cock-ups and mistakes that inevitably follow. And I'm interested in, as a leader, how do you create that psychologically safe environment where people can make errors and know that they're safe to do so without favoring the consequences? What was the phrase, Greg Hoffman? He was the former chief marketing officer of Nike. What did he say? He said failure is the price of ambition. Yeah, it's a great phrase, great phrase. This is something that is, it is very much work in progress. When I go around doing my skip levels, I still get quite a lot of feedback that people are worried about making mistakes.

44:01I always say whenever I get the opportunity, by definition, if we're pushing and we're trying to find new ways of doing things, things are not going to turn out as we expected. And so I sometimes use that phrase as well. Say to people, look, if it worries you to use the word mistake, use that phrase. well it didn't turn out how I was expecting well that's great because now you've learned something so now let's try something else but don't keep doing the same thing right so if you something doesn't turn out as you expected well don't repeat that particular experiment try a different one and try a different one I mean if you talk to people you know who've invented things or people who are successful there are very very few if any that turn their first idea into something amazing most people have had 20 ideas 30 ideas 40 ideas and what they've done is they've they just keep iterating them so i've never fired somebody ever in my entire career for making a mistake i nearly always ask people to leave because of behaviors or if they can't learn from the experiment because if you don't have good learning agility then you start repeating that becomes a performance issue but to achieve great things yeah you you've got to make mistakes you've got to have cock-ups I mean you know if I look back at my career I mean some of what we were talking about in Marconi etc I mean there's there's been all sorts of things that I've tried that didn't work out the way I intended but you keep going you keep trying you try different things and eventually if you're focused on well where am I trying to get to you've always got to kind of know what what am I trying to achieve what's what's the point i'm trying to get to and it's very rare that the path that you take is the one you thought so what would you say has been your biggest mistake that's led to the biggest breakthrough in your career steve although the um you know the the marconi restructuring or ending up with um you know the amount of debt we we had was not you know they they were not my decisions I think I went in that run-up to the dot-com crash I was as guilty as anybody of being over-optimistic so I said earlier you know you need to be when you're on the highs don't get carried away and when you're in the lows don't get too despondent I think in the late 90s running up to 2000 I think everybody was on a massive massive high everybody including me was slow really to see the signs because we we thought this would last forever and what that's done is the learning that's given me now is when I go through these highs and lows when we're in the highs people will often say that's when I'm asking questions it's when I'm starting to get restless and people are like, oh, why can't you just enjoy the moment?

46:58Because I need to, what's coming? What's coming? What are we going to have to react to? Because these things never quite last. Life's not linear. It's just not the way it is. And then likewise, the other thing I learned from what happened in Marconi is I think I'm really, really good now in a crisis or when things aren't going very well. Nobody wants to see the boss panicking, do they? Nobody wants to see the boss all hyper. you know you you know i learned very early that any signs of anxiety from me are massively multiplied across the organization and so it's important that you you're clear you're calm we all have anxiety right to get high performance i think pretty much everyone has anxiety but you don't want to multiply that anxiety because too much anxiety can lead to poor performance particularly if it's multiplied across the whole organization i remember one somebody saying to me the way to get high performance steve is everyone who works for you needs to be constantly anxious that you're going to fire them oh my goodness i think that is completely the wrong approach to high performance but that was a little bit how it was in the 90s i remember in 90s it was like keep them on their toes you know and then they'll they'll perform and that leads me to the final question before we go into our quick fires at the end of the interview which is we're very careful on this podcast in this era of hustle culture and you know push yourself to the limit burn the candle at both ends and chase your passion and never rest about saying actually that's not what high performance is i would just love to hear from you about creating boundaries what you've done to make sure that you know life at sage and business life is not your entire life yeah i think balance is really really important i think to be successful on something you have to be you do have to be all in but all in doesn't mean 24 7 my life is not 24 7 of high performance you know when I when I'm at home I treasure the time that I have at home with my with my wife my kids the family and of course look things can happen right there can be a crisis which requires me to to get involved and intervene.

49:11I don't plan on the basis that my team need to be available 24-7. You know, I have people in my team who have young kids. They need to be able to create the boundaries so that they can go and see their kids at a sports day. They can take their kids to school. They can do, because it's all about the outcome. It's about balancing so that you're fit for the big moments. And I think when I was younger, I thought I could work flat out, not really have that much balance. And I remember one of the things I regret a little bit is when I was younger, I wasn't, I wasn't, I'm still not great at it, but I was terrible at being present.

49:54So I would, I would say, right, okay, I'll go to this event, right? Go and see my son at a sports day or whatever. but then when I got there I wasn't there right I was in my head I was doing my to-do list I was having you know those background conversations and if someone spoke to me I was having my background conversation at the same time I was speaking I just wasn't there so I've got much better at when I'm there I'm present and I don't expect my team to be at my constant beck and call. They know that if I call them on a Sunday, it's because we've got a crisis. I wouldn't do that as a norm. Yeah, you have to have the balance.

50:37And I think sustained high performance, even in business, it requires fitness. It requires you to look after yourself. It's hard work. I mean, I run a global business. I travel a lot. You know, I'm 62 now. I don't get off the plane with quite the sort of bound in my step that maybe I did, you know, and I suffer from jet lag more and stuff like that. So I've now got much better at, you know, I'll sit with my EA and say, look, I'm on a flight back from New York. I know I'll only get four hours sleep. It is completely pointless scheduling anything important the next day. I can do routine things, but if it's a big thing that requires real deep thought, it's pointless.

51:21I'll be tired. So don't do it that day. Do it a different day. Get to know yourself is so important. Quick fire question, Steve. The three non-negotiable behaviors that you and ideally the people around you should buy into. It's all about the team. It's got to start with the team. You have to be all in. You have to be emotionally connected to what we're trying to achieve, not just intellectually. It's emotional connection. And you've got to pass the way to test respect. What's your biggest strength and your greatest weakness? I have a way of finding a way of getting things done through teams. I think I'm a, I'm very much a team player.

52:02I don't think I'd be a very good individual contributor. I never played individual sports. I only played team sports. So I think, yeah, I have a way of getting things done. I think despite the fact that I've worked really hard at it, I'm still not great at being in the present. So as soon as something, people often say to me, you don't really celebrate enough. and I know what they mean because as soon as something's happened I'm thinking about the the next thing I live I live a lot in trying to anticipate where we're going in the future and therefore I find it hard to to really really be present and always fully and I've got I'm a lot better but I still don't quite possibly a strength as well though hey yeah I think it's one it's a trade-off isn't it I think if if you like that if you got rid of it completely you'd probably struggle with the with with what drives me it's part of what drives me but it does frustrate me sometimes that I can very quickly move on from a from an amazing moment because I'm already thinking about the next one we have a high performance book club would you mind sharing a book with the club that maybe meant something to you or that you learned a lot from I can't remember when I read it was a it was a good few years ago but I it the timing just seemed right when I read it, which was The Long Walk to Freedom by Nelson Mandela.

53:20And I think I'd been to Cape Town and we went to Robben Island and we went to see the cell that Nelson Mandela was in. And we were so fortunate to be shown around by someone who was in the prison at the same time as Nelson Mandela. And I asked him, I said, what's the thing that you really remember about Nelson Mandela? And he said, you know, it's amazing. He was so kind to the guards. I was like, wow, okay. And he said he was just like that. He wanted an inclusive society. So that inspired me to read his book. And then when I read his book, I was thinking, wow, talk about someone playing a long game.

54:02He stayed so true to what he was trying to do at huge personal sacrifice. Not a perfect man, none of us are. But yeah, he was very purpose-driven. How important is legacy to you? Not so much personal legacy, but if we take what I'm doing at the moment at SAGE, it is really, really important to me that when I hand the baton on, I've left it in much better shape than when I took it over. So making a difference, making an impact, you know, the thing that would hurt me the most, I think, is if someone said he left that in a much worse position than he took it over, whether it was sage or anything else you know i want to be that person who comes and adds something i've obviously get a lot as well i'm learning all the time so i take away learnings but i want people to just kind of think yeah you know he he contributed he left something lovely and the final question your departing message really after what's been a brilliant conversation your one golden rule for living a high performance life you have to be constantly open to learning because otherwise you don't maintain it.

55:15You can achieve high performance, but other people are doing different things all of the time. And if you're not listening and learning, your high performance will turn into low performance, which is why if you look in business, it's so hard for companies to survive over generations because they get out-innovated. The hardest time to listen and learn and innovate is when you're at the top of your game.

55:43Damien. Jake. Yeah, that's a really valuable episode for our CEO conversations here on High Performance. I love what he said about learning from those setbacks. You know, there definitely would have been a real perhaps sense of injustice when he was removed from his position at GEC. But to take the learnings, to take the lessons and to come back again, I think, you know, Steve came back a lot wiser, a lot calmer. And I also love it when we speak to someone who's in their 60s. I think you see a very different businessman to the one in their 20s and 30s. Yeah, that phrase that he used around, don't get high on your own supply, but don't get too low when things go wrong, is so valuable.

56:22We've heard it from so many of our guests about this idea of the consistency, the constancy, is where the real value is, not getting carried away by your successes. And also knowing that he may well be the CEO, but that business doesn't live or die by him doing a good job. It's about building the team and the waiter test sounds brilliant. I love the fact he wants no stars in the team. He doesn't accept bad behavior. He knows lots of businesses have all these catchy slogans on the walls, but they actually mean nothing in reality. I think what he's building at Sage sounds to me like it's a business equipped for now, but also equipped for the future.

56:57That sums up what Steve is. He's almost like an emblematic of the culture that he's trying to build. If that aspiration is about removing barriers so people can thrive, look at his walk arounds that he's doing around the business he's removing barriers so people can thrive and tell him this is what i need you know look at the fact that he prioritizes trust in relationships and that's what he's trying to do for his customers often i see a ceo like steve as like the prime minister of a country they almost have to role model the values that they want other people to do and he certainly fits that criteria i really enjoyed it thanks mate yeah thank you mate i loved it well there you go i'd love to know what you thought of that conversation with steve i mean he's a fascinating individual and he's leading in the right way yeah i just thought it was really cool actually so we've got some really good conversations coming your way over the next few weeks thank you so much to pwc for wanting to partner with us during this leadership series i think it's just so important that we open up what leadership is really like i think from the outside leadership can often look like the most exciting part of any business but the truth is that leadership can often be lonely leadership often means that you're the person who feels like you're facing so many challenges on your own and that's why having these kinds of conversations with real leaders in business is so important so big thanks to Steve for agreeing to come on high performance huge thanks to PwC for working with us to create this series and in a week's time we bring you another fascinating leader.

58:33See you then.