The following is a conversation between Rosabeth Moss Kanter, Professor at Harvard Business School and Author of Think Outside the Building: How Advanced Leaders Can Change the World One Smart Innovation at a Time, and Denver Frederick, the Host of The Business of Giving.

Rosabeth Moss Kanter, Ernest L. Arbuckle Professor of Business at Harvard Business School and Author of Think Outside the Building

Denver: My next guest believes that the leadership paradigm of the future is the ability to “think outside the building,” to overcome establishment paralysis and produce significant innovation for a better world. She is Rosabeth Moss Kanter, the Ernest L. Arbuckle Professor of Business at Harvard Business School and the Author of Think Outside the Building: How Advanced Leaders Can Change the World One Smart Innovation at a Time

Welcome to The Business of Giving, Rosabeth! 

Rosabeth: My pleasure. Thank you for having me. 

Denver: So, on many of the really big issues, climate change to take just one, we’ve been talking about them for 50 years, but we’ve made little progress on some and have actually regressed on others. Why do you believe that’s the case? 

Rosabeth: I think that one reason is that we have not tackled institutional change; we’ve made cosmetic change. We have not looked at all the complex underlying systemic issues that make a difference on whether you make progress. 

A really good one to be talking about in the United States right now is racial justice because 50 years ago, many of the headlines were similar to what they are today — protests and concerns about rights. And the progress… there has been progress, but it’s been slow. And many people think that there hasn’t been much change, that the change will only come if you tackle many institutions, many organizations. 

In the COVID pandemic, people of color are disproportionately affected, and why is that? Well, it turns out there isn’t one reason. There are many reasons. And health is not the hospital, so it’s not whether there are hospitals in an area. Within a few miles of my home in Boston, there are some world-class hospitals; also, one of the most affluent parts of Boston and one of the least affluent. And the disparity between those two in longevity is startling, 20 years or more, and yet, they’re within walking distance of one another. So clearly there are some systemic issues we haven’t tackled. 

Now, this is a depressing way to start the conversation, and yet, I think we are on the verge of making leaps forward in progress because we’re now starting to identify and name the systemic issues.

Denver: Yes, which are a little bit more complex. And again, I think sometimes we deal with things in a one-dimensional way because we “stay inside our building” as you so aptly say. So before we wander outside, what happens, or at least, happens far too often, Rosabeth, inside the building?

Rosabeth: Many people would be more creative and come up with solutions, but we have organizations that operate in silos. They operate within their sectors, and people who work for companies feel that they have to please their bosses. But more than that, in fact, sometimes it’s the most successful people who should have the most freedom who find themselves most boxed in because the people they talk to are the same people all the time — with similar attitudes, similar characteristics, similar points of view — So they find their thinking reinforced rather than stretched and opened. 

And I know how important this is because even for for-profit companies that I still consult to and want to see succeed, who need more innovation, they also need to see people’s thinking opened up beyond conventional assumptions and closed networks.

Success is a great thing, but it requires some breaking out. It requires the courage to say, “I don’t know,” the courage to learn from people who are very different, the courage to see that not every problem is solved.  

Denver: As you say, they almost get trapped by their success, and they get into that little cocoon and that little circle.

Rosabeth: No, they are definitely trapped by their success. Success is a great thing, but it requires some breaking out. It requires the courage to say, “I don’t know,” the courage to learn from people who are very different, the courage to see that not every problem is solved.  And that is sometimes hard for people. Of course, they can do it, and I have noteworthy examples in my book Think Outside the Building, wonderful examples of people who at all stages of life have broken out, see things differently and are creating some very innovative solutions to big problems. 

Denver: And some of those people, and what much of what your book is based on is your experience with the Advanced Leadership Initiative that you launched at Harvard. Tell us what it is and what inspired you to start it? 

Rosabeth: Of course, the book is well beyond just that initiative. But that initiative is a new stage of higher education, a new aspect of the university experience. It’s for successful people who have accomplished a great deal in life but know there is more. They are motivated by values. They have a sense of purpose and they want to make a difference in the world, and there are more and more of those people. 

These are also institutions that need to be reinvented. People live highly productive and healthy lives, often well beyond the point at which they might be willing to move on from their primary career. In investment banking, for example, that’s often at a fairly young age, in the 50s. In other occupations, it can be later. But people who believe that success is not simply the attainment of wealth, it’s also the ability to spread that wealth. It’s the ability to create new solutions and leave an even more lasting legacy by making a difference in the world. So that was one premise, that there’s a big population. 

The other premise is that to solve all these problems — climate change is a very good example — you need more than one field, more than one discipline. And colleges and universities themselves have come to operate in silos — one discipline, one department. And so our goal was to have a group of people who could learn across disciplines, create projects that were cross-disciplinary, and bring new ideas to the world. And we did it. 

Denver: You did it, and I applaud you for that because Harvard is a pretty old building. It’s 400 years old. So, to sell an idea like that in that building, it takes a lot.

Rosabeth: Yes. Well, it was almost 400 years, not quite. But yes, we used all of the same principles I talk about in the book, so I know they work. We had to do all the selling. We had to convince people. But the power of the vision was so strong. People loved the idea of doing something that would make a difference in the world and deploying these highly talented, often affluent people, not entirely… because a number of — there have been over 500 fellows by now and spouses/ partners because we have a partner option —  and those people who come from all walks of life have gone on to achieve miraculous things. 

And one of the things that made us know we’d be successful within the first year,  where we were kind of grabbing people where we could because no one had ever heard of this before, we had some incredibly phenomenal people. One was a Marine general who had been an astronaut, and when halfway through the program, first year, I was called by the Secret Service for a background check on him because President Obama was about to appoint him head of NASA. Well, I’ve never lost a person in a better way than that.  Suddenly, people took notice of this thing we’re doing, and we had to–I wouldn’t say break a lot of rules… we were very careful about that– but we had to do a lot of things, shall I say, very differently and get consensus that that was all right to do. 

And we did it by using the same techniques of this new leadership style. You can’t do it by any one discipline acting alone. We had in the beginning, very distinguished, very senior, impressive faculty members from five of the big professional schools. We kept adding schools, and we had only the top people, and they were great colleagues. Many of us had never worked together before. We forged strong bonds, and we learned the power of doing something collaboratively that you could not do individually within your own silo.

Change requires everybody to think like an entrepreneur, to think about creating something that never existed before, to think about selling an idea that’s unfamiliar, assembling a new team. And that’s hard work. Sounds fine, but hard work. 

Denver: You have some wonderful stories in the book about some of these innovators. I’m going to get to those in a second. But first, I want to ask you what prevents so many of us from getting outside the building? Even when we know we need to do it, we simply don’t do it. Why is that the case? And what can we do to actually move on that?

Rosabeth: I want to give you a serious answer, but first I need to say that we are recording this at a time when a lot of people aren’t leaving whatever building they’re in because we’re working remotely; we’re told to stay home which is quite an irony. So in fact, we have to rethink the nature of a lot of buildings. We now know that education, in fact, is not the classroom or only the classroom. We know that hospitals are not healthcare and telemedicine, which has been talked about for years; we’re suddenly using all of these things. So some of this is classic resistance to change and how long it takes to get innovations into use. And I think that even when we do go back to widespread classroom use, widespread doctors appointments and stays in hospitals, we will still add these digital tools. 

So what keeps us from this imaginative thinking…  well, in any innovation, there are some people that jump on every bandwagon, that are early adopters, but there are other people who wait and see, and there are people who get very comfortable. And change is uncomfortable because change requires learning. Change threatens all of my assumptions.

One of my favorite sayings about change is that “change is a threat when done to me, but an opportunity when done by me.” Personally, I hate the large numbers of changeovers of our IT systems we’re going through right now because somebody says that between the following hours, you must do X. On the other hand, I love my projects, and I think most of us are like that. And also, when you’re on familiar territory, you have a lot of help. Companies are not as hierarchical as they used to be, but still you’re surrounded by a pretty clear assignment, people who know what your role is, and it’s relatively easy to function.

Change requires everybody to think like an entrepreneur, to think about creating something that never existed before, to think about selling an idea that’s unfamiliar, assembling a new team. And that’s hard work. Sounds fine, but hard work. 

Denver: Rosabeth, another part of the book title that caught my attention was this. That would be one smart innovation at a time. Now, that sounds not too radical but actually pretty measured and pretty disciplined. Speak a little bit about that and how best to go about getting an innovation adopted. 

Rosabeth: I start out, I have a prologue in the book called “How to Attack a Castle.” So here’s the book. I should have had some castle picture, a very creative book jacket, a little hard to see on the background.  I should have had a bunch of pictures of medieval castles because they have lots of fortifications and lots of ways to cut themselves off from the rest of the world. 

The best way to attack a castle, I say in the beginning, is not head-on because you just invite all those defenses and fortifications, and if you’re small and new, you’re going to lose. But you can attack a castle by going underneath. You can befriend all the people in the basement at the bottom who are disaffected and ready to join something that might start weakening the castle from inside. Or you can, even better, you can create a little village of your own on the outskirts of the castle, and you can start your project, your smart innovation, and you can be having so much fun that soon people from the castle are going to wander out to see what you’re doing.

Well, you know, it’s just a metaphor, but in fact, radical change is very hard to do at the very beginning. Some of the radical ideas that even today are getting into popular discourse but are still a little radical took a very long time before they sounded familiar. Yes, the climate crisis has been around for a long time, but you didn’t hear many people talking about climate change until very recently. So it takes a long time to establish the ideas.  And you might have a very big, bold, radical idea, but you can’t do it overnight. You have to start establishing the idea. 

And radical change requires some fairly conservative moves. You have to find the early wins, early successes. Don’t lose sight of the big vision. You need the big vision to inspire people and to not settle for the small, early win, but you need projects that demonstrate what the ideal looks like in practice. So you need the little villages that spring up around the castle. You have to show what it means to do something differently. You have to show remote education in practice. You have to be Sal Khan, a graduate of Harvard Business School who started Khan Academy as just tutoring videos to teach his own family–

Denver: His niece!

Rosabeth: — some skills, and it’s become a fairly big business and a fairly big adjunct to education, challenging whether education always has to be just in the classroom. 

So that’s what you do. You demonstrate it a step at a time with the big vision in mind, and I think we got this done at Harvard. Definitely a big castle. And believe me, this idea that everybody applauds now — we’ve got a lot of attention, we had others duplicating it… Stanford and others — when I said I’ve lived through this, I’ve lived through it. But in the beginning, we had a lot of criticism. Well, a lot of the people who were critical, now that it’s so successful, they forget they were critical. 

One of the other secrets of radical change is you don’t go back and take revenge on your enemies; you bring them along.

Denver: Isn’t that the way? 

Rosabeth: One of the other secrets of radical change is you don’t go back and take revenge on your enemies; you bring them along. Nelson Mandela is one of my absolute heroes as a leader. He was pretty radical. In fact, he was so radical and had departed for a while from non-violence that the US called him a terrorist. The South African regime imprisoned him for 27 years, which is amazing. But when he came out, and he could legitimately run for president of the country, he did not use that to remind the critics of how terrible they were and take revenge. Instead, he tried to bring them all along with him because he needed everybody to build a new South Africa. 

Denver: Exactly. He recognized he was going to have to work with them. Well, you tell some great stories in the book about innovation and innovators, and I want to run through a couple. A few of them are place-based, and a lot of people need critical services that, for one reason or another, they don’t avail themselves of. So these innovators took those services to the people themselves. And one great example of that was a barbershop in Louisiana. Tell us about it. 

Rosabeth: I’m very excited about Reverend Raymond Jetson in Baton Rouge, Louisiana. Ray Jetson has been a Louisiana state legislator elected. He also worked for various governors, both parties of Louisiana on things like Hurricane Katrina relief efforts, and he’s also a Black pastor with a congregation. And his vision was to take a divided city –Baton Rouge, Louisiana, Black and white areas, very, very divided –and get people to work together.

And so he created an umbrella “Better Baton Rouge” later called “Metromorphosis”– cool name, in which he put working groups together. Volunteers empowered them. They came up with the ideas. They created projects in education and nutrition and many other things. For their Black men’s health initiative, which is really very striking, they did a barbershop initiative. They trained barbers in healthcare, preventive healthcare. They train barbers to do blood pressure readings, to advise people. They use barbershops as places to convene because they were trusted by community members, whereas the establishment hospitals were not trusted.

And if you think about that for a moment, and you think about all the potential outside the building solutions: women in Chicago can now get mammograms in a Nordstrom’s department store. There are so many opportunities to take these essential services and make them available to people wherever they are, some digitally, but some just in the neighborhoods. And that’s very inspiring. 

Denver: It’s inspiring. It’s incredibly smart. It’s almost behavioral science in that you remove the friction from doing things that you should do, and you go to where the people are. 

Another great story — Doug Rauch, the former president of Trader Joe’s and what he’s done right up there in Boston.

Rosabeth: So we love Doug. Doug is our poster child for what’s possible in advanced leadership. Everyone loves Doug. Doug and everyone loves Trader Joe’s so hence, they love Doug. 

So Doug had an idea.  Doug wanted to work on what he thought was the nutrition issue or the hunger issue, the food insecurity issue, particularly in lower-income neighborhoods. And it wasn’t that people were actually hungry. They were not well-nourished because those neighborhoods called food deserts… They had a little fast food. They had bodegas where you would get bags of potato chips, but they didn’t really have access to affordable nutritious food. And so that was his first idea… was a little inside the building. 

He knew a lot about food distribution. He worked with Whole Foods or somebody, and they would pick up bread, and they distribute bread. That was a kind of, as I like to say, a kind of stale idea. It wasn’t big enough. He wasn’t dreaming big enough, and he wasn’t thinking about institutional change. But after he, by meeting with lots of other people and listening and learning beyond his field, learned about the climate crisis and learned that food waste is one of the biggest sources of methane gas, which is more destructive of the ozone layer than carbon… and that there’s so much wasted food in America, that if they could get food that’s perfectly healthy to eat but, for whatever reason, it’s going to go to waste,  then they can create a, win-win: do something about the climate, but more than that, get this food to people in inner cities.

He also recognized that the traditional ways of thinking, which is to give away…well, that’s a nice thing. Charity is a good thing. But that doesn’t uphold people’s dignity; it doesn’t create something that scales, and it doesn’t create jobs. So he created a retail concept, a unique new retail concept called Daily Table. It’s a wonderful name because it suggests things you get every day. He’s got two stores, about to have a third. He now has a national model, and they sell the food at amazing prices because they partner, say, with farmers who have too much of a particular crop.  It was sad in the summer of 2020 to see  pictures of farmers destroying their crops because they couldn’t get it distributed.

Denver: Heartbreaking, yes.

Rosabeth: Well, Daily Table can distribute that, get it directly to people. Daily Table prepares food. So for working parents, they can pick up nutritious meals for their children at very affordable prices. And they’re located in lower-income neighborhoods, but anybody can shop there because the IRS doesn’t let you discriminate against the affluent either.

But he hires from the neighborhood. It’s by the people, for the people. And he discovered, by the way, that people didn’t care whether it was a nonprofit or not. What they cared about was the service they got and that it was good for the community, and they had a voice in it. 

Denver: The tax status is between the organization and the IRS. The people do not care, not one bit.  

Somebody who did have a big enough idea right at the outset was a concerned European banker who had this absolutely crazy idea to improve the health of the oceans. Tell us about him. 

Rosabeth: Torsten Thiele. He was always an environmentalist. He rose in banking. He worked on project finance. He worked for major global banks. He worked on financing, for example, the undersea cable across the Pacific, and so he noticed what bad shape the oceans were in, and he noticed in the Pacific those islands of plastic. 

And he wanted to do something about this because the oceans turn out to be much more important for human health and the health of the planet than we ever think about. The oceans keep our oxygen clean for us to breathe. The oceans cover some very large proportion of the world’s surface. We count on it for shipping. Goods go by ocean often for food, fish and other food. And yet, their health…they were deteriorating and climate change making it worse. And that’s a pretty big topic to take on. In fact, we have a familiar saying, “Don’t boil the ocean!” which is to say don’t take on something so big that you couldn’t possibly do anything about it.

But it’s like I said before, you take on something that big, you can see it differently. And one thing he saw is that of all the players that get together to talk about the state of the oceans — governments, government ministries, NGOs — there was one conspicuously missing player, and that is the financial field – the banks, investors, and others. And he brought that to the table. 

He has an entity called Global Ocean Trust. He envisions a world bank for oceans, where there is investment in ocean projects. And so those islands of plastic… companies like Adidas are making running shoes out of some of that recovered plastic. But that’s one company idea. There are bigger ideas. Insurance companies getting together to finance better data, invest in sensors.  Countries floating new kinds of bonds so that they can invest in projects on their sea coast and create jobs.

So it’s very big. In the few years that he’s been doing this, his major accomplishment is getting a lot of people to talk to each other who would never have talked to each other before — bankers and conservation organizations who thought banks were the enemy. 

Denver: Good stuff.  Well, as they say, it’s a crazy idea until it’s not, and he has proven that.

And when you’re going after a lot of these innovations, sometimes you get a little lost along the way, and you have said, Rosabeth, that everyone should have a law named after them. What is Kanter’s Law? 

Rosabeth: Well, thank you for asking that. So yes, I do call it Kanter’s Law. Kanter’s Law is that everything can look like a failure in the middle.

Denver: That’s a great law.

Rosabeth: Well, if you’re having trouble struggling with something, you can always say to yourself, “it’s just the middle.” But the reason that happens is that we all love announcements. We all love beginnings. And if you get to some successes, I call it the “oasis” after you’ve been wandering in the desert, you like to celebrate, but it’s just that wandering in the desert.

If you’re doing something that’s new and different, that no one has ever done before, how can you really forecast how long it will take, what it will cost, how many obstacles you’ll run into along the way? You can’t tell. And besides, you have your backers and supporters, your coalition, and then people start changing jobs. People move away. You can’t keep everything the way it is at the moment of announcement. So you have to be very flexible, know how to persist, to pivot, to keep being creative in order to keep going. 

I like telling the story, especially about two entrepreneurs who brought solar lighting to West Africa. And everything that could go wrong went wrong from the beginning. It was such a good idea because so many of the people were not on the power grid and particularly in rural areas. It means it’s hard for kids to study at night. It’s hard for parents who have to walk many miles to charge a cell phone if they don’t have a generator.

So this was a great idea, a business idea that would have so many social implications, but from their beginning was a middle. Because from the beginning, they hit obstacles like the solar cells didn’t work. So they had to find a source of local labor, which they found in street kids who could learn to fix the solar cells. Then, they had an investment loan crisis; they’d solve that. But the big one was an Ebola outbreak. That’s pretty disruptive. That’s a little bit like Coronavirus. 

So think about changing the world one smart innovation at a time. One smart innovation for frozen fish and solar power in Liberia, multiplied a hundred, a thousand times. One Daily Table expanding nationally to many cities. These start out as small, not necessarily even so small, but they’re just one becoming many. That’s our army for change. 

Denver: Which you start the book with… talking about a global pandemic, right at the very beginning of the book before it even occurred. 

Rosabeth: Yes. I mentioned a global pandemic. One pandemic can ruin a whole career. I don’t mean to make light of it because it’s a very difficult thing, but they had to do what the best employers are doing today. They had to figure out how to persist, how to pivot a little, and how to protect their workforce because they had real values. So their main city was shutting down for a month. They sent workers home with two months’ pay. 

And then everybody wanted to come back. They were so valued by their customers, by the community that they started hearing from big companies, big multinationals that wanted to throw their business to this company instead of buying electricity from the big electric utilities, which were a little corrupt. So they ended up doing well. 

Recently, they had another Ebola crisis, even before the pandemic. It’s challenging, but they now have such a resilient organization, providing things that people need with more and more uses. I mentioned food before.  Their main first country is Liberia, which is on the coast, lots of fish, lots of protein, but that couldn’t get to the interior. Why? No refrigeration. And so they started making available and selling solar cell-powered freezers, and they could transport the fish and get it to people who otherwise didn’t have food. 

So think about changing the world one smart innovation at a time. One smart innovation for frozen fish and solar power in Liberia, multiplied a hundred, a thousand times. One Daily Table expanding nationally to many cities. These start out as small, not necessarily even so small, but they’re just one becoming many. That’s our army for change. 

Denver: And I think people could stand to hear more about these stories. With the diet of bad news we get, these uplifting stories can really change the way people think. And I think it will lift their anxiety and help to think more positively.

Boy, I could go on and on with you, but we do have limited time. The book again is titled Think Outside the Building: How Advanced Leaders can Change the World One Smart Innovation at a Time. I advise that people read it outside, if possible. It’s really a wonderful, fresh framing of how to address the really big challenges, some that have been around 50 years and a lot more. 

Rosabeth, for those who want to follow you on this and some of the other projects you’re involved with, how is the best way for them to do that? 

Rosabeth: You can always email me by [email protected]. That will reach me. You can follow me on Twitter @RosabethKanter. In fact, I hope you will. And Denver, I am so happy to have the opportunity to talk with you wearing your Harvard shirt there. 

Denver: I came dressed. Thanks, Rosabeth. It was a real pleasure to have you on the program.

Rosabeth: I appreciate the opportunity, and I hope everybody stays safe and well.

Listen to more The Business of Giving episodes for free here. Subscribe to our podcast channel on Spotify to get notified of new episodes. You can also follow us on TwitterInstagram, and on Facebook.

Share This: