Developing Successful Leaders: DaVita's CEO Says It Takes a Village
STANFORD GRADUATE SCHOOL OF BUSINESS — For a CEO who speaks often about leadership, DaVita Inc.'s Kent J. Thiry says it's not something that can easily be taught in business school. Management, yes, but leadership is a human skill.
"If you want to learn more about leadership, learn more about human beings, starting with yourself," Thiry said in a Nov. 17 speech at the Stanford Graduate School of Business.
Leadership isn't a function of position, either, he said. "Leadership is a function of behavior, so don't fall into the trap of 'well, I can't really be a leader until they promote me to vice president.'" Leaders lead, regardless of the time or place, he said: "Leadership is a way of life. It's not a temporary tactic. It's not a tool. It's not a practice. It's a function of how you behave."
Those were two bits of advice from the chairman and CEO of one of the largest U.S. providers of dialysis services for patients with kidney failure. DaVita has 1,400 dialysis centers in 43 states. The $6 billion Denver-based company has 34,000 employees.
The DaVita story is told to GSB students as a business case in organizational behavior classes. The company underwent a remarkable turnaround between 2000 and 2005, in part based on building a strong values-driven culture and an emphasis on community. The story of how the company went from one that was barely making payroll 11 years ago, was being sued and investigated by the SEC, and was losing more than 40% of its employees each year, is one that Thiry relishes telling.
When he took over in late 1999, all eyes were on DaVita, a company in crisis. As Thiry tells it, his talk of core values and mission statements and creating a culture of interdependency, democracy, and development of its employees was scoffed at by many. "About a third said, 'OK, that's the fad of the month.' A third of the room was literally insulted that I would be demeaning them by thinking that they'd fall for that sort of rhetorical flourish, and maybe a third were interested," he said.
But he persisted, saying a company culture that believes employees should "feel an emotional level of trust and mutual commitment" was a company that didn't sacrifice performance.
DaVita operates like a village, meaning employees are citizens and neighbors who watch out for each other and work toward the good of the community. Its business objectives support the village rather than the other way around. "We say we are a community first and a company second," Thiry said. "That doesn't mean we don't care about profit, but that's a means, not the end."
Describing leadership, Thiry said: "It doesn't matter one bit what kind of leader you think you are." What matters is that "you are the type of leader other people experience you to be."
DaVita's leaders walk the talk, opening themselves up to a 360-degree review by subordinates, peers, and supervisors. Thiry said early in his career he kept a spreadsheet of his behaviors, "to recognize when I was going down the bad path." In response to a question, he said he's worked hard on eliminating "getting angry with people when they underperform" and micromanaging.In conjunction with that openness, Thiry advises leaders that they should "speak the dream" and encourage others to buy into the vision by letting them help design a special place to work. That entails, "letting the people speak about their degree of ownership or lack thereof." If you don't, "you are never going to get the point where you have it."
DaVita has a rigorous recruitment process, and Thiry advised students not to impress strictly with their knowledge gained from an MBA. "Most of the people know very quickly that you have the arsenal," the business skills. "They're wondering if you care about them, if you respect them, and if you are a team player."
He also said students can learn from a Buddhist saying: "One cannot pour from an empty cup." He urged them to "refill your cup physically, emotionally, mentally, spiritually" in addition to going on to successful careers. His objective at DaVita, he said, is not to create better business leaders: "It's about creating life leaders for whom business competence is a subset."
Thiry earned his BA degree, with distinction and Phi Beta Kappa, in political science from Stanford, and his MBA from Harvard Business School in 1983. Previous to joining DaVita he was chairman and CEO of Vivra Inc., and a partner at Bain & Co.
His appearance was part of the student-run View from the Top speaker series.