Taking Decisive Action in a Crisis

HANNAH BATES: Welcome to HBR on Leadership, case studies and conversations with the world’s top business and management experts, hand-selected to help you unlock the best in those around you. Cynthia Carroll was only a few months into leading the global mining firm   when she suspended operations in their South African platinum mine. She was concerned about worker fatalities there. But it was an unprecedented move — and it came at a huge cost for the company. In this episode, Harvard Kennedy School of Government research fellow Gautam Mukunda explains how Carroll used that temporary shutdown to make changes to the company culture at Anglo American. In order to do that, she had to manage stakeholder relationships in the government and the unions – a tricky task for an outsider to South Africa, or any newcomer. This episode originally aired on Cold Call in September 2016. Here it is.

BRIAN KENNY: In the mines of South Africa, work-related accidents claim the life of one worker every 44 hours. One company, Anglo American, lost 46 miners a year between 2002 and 2006. Today, we’ll hear from Professor Gautam Mukunda about his case entitled Cynthia Carroll at Anglo American. I’m Brian Kenny, and you’re listening to Cold Call.

SPEAKER 2: So, we were all sitting there in the classroom.

SPEAKER 3: Professor walks in and-

SPEAKER 4: And they look up and you know what’s coming.

SPEAKER 5: Oh, the dreaded cold call.

BRIAN KENNY: Professor Mukunda teaches leadership and organizational behavior in the MBA program at Harvard, a course that focuses on how managers become effective leaders by addressing the human side of the enterprise. That’s a topic that relates directly to the case that we’re going to discuss today. Gautam, welcome.

GAUTAM MUKUNDA: Thank you, Brian. It’s great to be here.

BRIAN KENNY: I wonder if you could start just by setting up the case for us. Tell us, how does this case begin?

GAUTAM MUKUNDA: The case begins with Cynthia Carroll in a helicopter on a landing pad in South Africa. She’s about to take off as she goes to the visit the next Anglo American facility. She’s fairly new in her term as CEO of Anglo American. Just been there for a few months, and she was hired not just from outside the company, but from outside the industry. Her previous career was actually in aluminum. When you think about Anglo American, what I tell the students is don’t think about it like a company. Think about it like the Marine Corps, that’s about the scale that we’re talking about. 150,000 people operating in about 40 countries around the world. And so she begins her term as CEO by basically trying to visit every one of these facilities. And she’s going around from place to place, learning about the company, getting a frontline feel for it. And then just as the helicopter’s about to take off, the head of Anglo Platinum, their platinum mining subsidiary, comes out and pulls the door open and says, “Cynthia, I’m sorry. I have really bad news.” And it turns out that a miner has been killed in a mining accident in the Rustenburg Platinum mine, which is the largest platinum mine in the world. And in fact, it turns out this is the fifth miner who has been killed in an accident in this mine just in the few months that Cynthia’s been the CEO.

BRIAN KENNY: And she’s got to deal with this.

GAUTAM MUKUNDA: She’s got to decide what to do.

BRIAN KENNY: We’re going to get back to that specific incident and that mine a little bit later. But can you just start by telling us why you decided to write this case? What prompted you to write it?

GAUTAM MUKUNDA: Cynthia tells her story and what she did at this company, and it was just breathtaking. One of these things that sort of make you feel enormously proud to be part of Harvard Business School, that one of our graduates could have this kind of a transformative impact on not just the company but an industry. And so I actually wanted to teach the story to my students.

BRIAN KENNY: So, Cynthia was a really unusual pick for Anglo American for this role. Tell us why.

GAUTAM MUKUNDA: Absolutely. And that’s another reason I wanted to study her because my research and my book are about these sorts of unconventional leaders who come in and have enormous impacts on the organization that they lead. And so Cynthia was unconventional in every way you could possibly imagine. Anglo American had never been led by an outsider. It had never been led by a non-South African and no significant company in the history of the mining industry had ever been led by a woman. And Cynthia Carroll was an American outsider, non-miner. So this is an extraordinary combination of differences for her to deal with.

BRIAN KENNY: What kind of a leader is she? If you had to describe her leadership qualities?

GAUTAM MUKUNDA: Decisive. The first thing you notice about Cynthia is I have no doubt she’s introspective, but she does not doubt herself ever. And in fact, when she came to our class, the students pressed her on this because they just couldn’t believe it. They couldn’t believe that anyone would be this certain under these stakes. And they asked her again and again, “Did you ever doubt the choices you made?” And her response was, “Never, not once.” She said, “You make a choice and you move forward. You don’t look back.” So the first thing you say is decisive. The second is deeply analytical. This is someone who really engages, who wants to get her fingers dirty, understanding how the mines actually work. The third and equally tied to that is this is someone who cares deeply about the people she works with. You can see that the choices she made were absolutely designed to sort of benefit all the stakeholders of Anglo American and deliver value to shareholders, deliver value to every part of the company. But they were also deeply, institutionally, sort of deeply moral choices where she was like… As she said at one point to the board, “I will resign before I lead a company that kills this many people every year. This is not a negotiable situation.” It’s important to realize that the company she’s taking over was in no way the bad guy. Anglo American had probably the best safety record of any mining company in Africa. Anglo American was the first company to offer free HIV tests to its workers. It was the first company to offer free antiretroviral drugs to its workers. So this is a company with a history of actually trying to do well by the people who work for it, and yet it was losing more than 40 people a year in mining accidents.

BRIAN KENNY: Can you talk a little bit about the politics and the history that she had to confront as part of this?

GAUTAM MUKUNDA: This is, I say without qualification and reservation, the most complex environment I have ever studied for any corporate leader to have operated in. Sort of every issue you could think about that a leader might deal with, many leaders who were dealing with in isolation, would say this was difficult. She had to deal with them all at once. So you have a workforce that 70% of it is illiterate, that speaks nine different languages. And it’s entirely possible that none of those nine languages are English or Afrikaans, which are the languages spoken by the supervisors of the company. You have the legacy of apartheid, which is still deeply felt, of course, in South Africa. You have political tensions where the mining industry has a history of essentially using apartheid to generate cheap labor to generate profits in South Africa that the government of South Africa understandably resents. And so they are not favorably disposed towards mining companies. And she came in, in fact, when Anglo American had just moved its corporate headquarters from South Africa to London and was now registered in the London Stock Exchange. So that had caused problems in South Africa, even before she joined.

BRIAN KENNY: And in addition to that, this is a very, very dangerous work environment. And in the Rustenburg mine in particular, they were doing the most dangerous kind of mining.

GAUTAM MUKUNDA: To quote a line from the case, this is deep underground hard rock mining. This is the most dangerous thing people do. And that is not an exaggeration. When you think of a mine… Before I did this, and I actually visited the mine and went a mile underground to visit the mine to see and get the feel for what it was like.

BRIAN KENNY: That must have been interesting.

GAUTAM MUKUNDA: It was extraordinary. Rustenburg is platinum mining through solid rock, a mile underground. So don’t think of it like a pole on the ground. Think of it like a city of 30,000 people done in tunnels underneath one mile of solid rock. That’s the experience you have to have if you want to imagine what it’s like to be in Rustenburg. And so everything you mine, you have to haul vertically up a mile just to get the ore before you can refine it. And just to make things even more fun, when you’re in Rustenburg… And think about it, this is a 12-hour shift you’re working here. So if you’re claustrophobic, you don’t want this experience, right?

BRIAN KENNY: Right.

GAUTAM MUKUNDA: You’re carrying about 40 pounds of equipment. It’s hot, it’s wet, it’s loud. And because anything you mine, you have to haul up a mile to the surface, it’s really important that you only mine the platinum-bearing rock. You can’t mine other stuff because it’s too expensive.

BRIAN KENNY: And you cite in the case that it takes 280 tons of platinum to make one ring.

GAUTAM MUKUNDA: 280 tons of ore to make one ring. That’s right.

BRIAN KENNY: That’s amazing.

GAUTAM MUKUNDA: All taken from a mile underground. And so, in this case, the reef at Rustenburg is only one meter thick. It’s about the height of a desk. And so you spend those 12 hours, and I did this with a steam drill, on your hands and knees with your head touching the ceiling, drilling in a one-meter-high space. So that’s what a shift in the minds is like, and it is… I don’t think there’s another environment like it on Earth.

BRIAN KENNY: And you do something unique when you teach the class. Can you describe how you start the class off?

GAUTAM MUKUNDA: I really wanted them to get the feel for what it’s like. And it’s impossible to do that in any realistic sense, but what I did do is the first time somebody talks about what it’s like to be in a mine, almost always someone in a section has been in a mine. I say, “Okay, but let’s stop for a second. Let’s process that. So everybody get under your desk,” and I have every single one of them get under the desk and sit under the desk. And believe me, they want out. They want to be under and like, “Ooh, that was great,” bounce back out. It’s like, “No, I want you to stay under the desk for a minute or so while I talk. And just imagine what it’s like being in this posture for 12 hours while you’re doing just incredibly heavy physical labor that entire stretch of time.” That’s being in the mines.

BRIAN KENNY: How do students react to the case?

GAUTAM MUKUNDA: There’s an interesting mixture. So there are some people who are horrified, who just find the idea that anyone would die in a mining accident, in a company, just to be unacceptable. In fact, Cynthia herself had said that her goal as the CEO of Anglo American was zero harm. They should never have a single person hurt. And then there are some students who think, “Well, every one of these jobs has a hundred people applying for it,” which is true. People compete desperately to get one of these mining jobs because given the unemployment rate for people in South Africa. We may not think of it as a good job, but they often do.

BRIAN KENNY: So, the fundamental question that the protagonist, Cynthia in this case, faces is does she decrease production? Does she shut down operations? What is she trying to address ultimately?

GAUTAM MUKUNDA: She has to decide that. This is in fact, it is a wonderful moment because you are the CEO of one of the world’s most important companies. This is as high as the stakes ever get. So we’re talking more like 600,000 people might be dependent on what decision she makes here. What is the most important thing for her? Should they keep producing? Rustenburg is not a trivial thing. Rustenburg is the largest platinum mine in the world. So everything she does has global impact. Is the most important thing making sure that no one else dies and doing whatever you have to do to stop that? Does that mean just shutting down the mine, in the knowledge that in the history of South Africa, no company has ever voluntarily shut down a mine for safety reasons? Is the most important thing continuing with operations in what is after all commodity business. Mining is the quintessential commodity business. So it’s not like Anglo American has market power. If they don’t sell platinum, somebody else will. They have customers who need that platinum. We think of platinum as jewelry, but platinum is actually most important for catalytic converters. So there’s a profound industrial need to keep producing this quantity. You have shareholders. In fact, many of Anglo American shareholders are pensioners in South Africa who depend on this for their retirement. So all of the stakes here are about as high as you can get, and she has to decide, pretty much at that moment, what is her hallmark going to be as the CEO of Anglo American? What is her legacy going to be and how is she going to execute on that?

BRIAN KENNY: And I won’t ask you to tell us how that ends in class. If there’s a rising manager out there who’s in a similar situation where they’re working in an environment where people’s safety is at stake and they’re concerned, they’re aware of things and they need to manage that, is there some takeaway from this case that they should have?

GAUTAM MUKUNDA: The most important thing is simple. Never ever underrate what you as a leader can do. Never underestimate the capacity for change that you might have. If Cynthia had said the day she took the job, “This is what I’m going to achieve. This is what I’m going to do while I’m the CEO of Anglo American,” I think anyone else would’ve said, “That’s impossible. Can’t be done. No one can do this in the South African environment.” And that didn’t stop her, and I think you can know that it doesn’t stop you either. So this is a leader who had in her hand hundreds of lives and could decide what happened to them. And so when I used to say, “Nobody dies in business,” no, people do. And you can change that if you decide to.

BRIAN KENNY: Professor Gautam Mukunda, thank you for joining us today.

GAUTAM MUKUNDA: Thank you, Brian.

BRIAN KENNY: You can find the Cynthia Carroll case online at hbr.org. I’m Brian Kenny, your host, and you’ve been listening to Cold Call.

HANNAH BATES: That was Harvard Kennedy School research fellow Gautam Mukunda – in conversation with Brian Kenny on Cold Call. If you liked this episode and want to hear more of Harvard Business School’s legendary case studies in podcast form – check out Cold Call wherever you get your podcasts. We’ll be back next Wednesday with another hand-picked conversation about leadership from the Harvard Business Review. If you found this episode helpful, share it with your friends and colleagues, and follow our show on Apple Podcasts, Spotify, or wherever you get your podcasts. While you’re there, be sure to leave us a review. We’re a production of the Harvard Business Review – if you want more articles, case studies, books, and videos like this, be sure to subscribe to HBR at HBR.org. This episode was produced by Anne Saini, Ian Fox, and me, Hannah Bates. Music by Coma-Media. Special thanks to Maureen Hoch, Adi Ignatius, Karen Player, Ramsey Khabbaz, Nicole Smith, Anne Bartholomew, and you – our listener. See you next week.