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The principles of leadership: An interview with David M. Culver

Grant, Michael. Canadian Business Review20.3 (Autumn 1993): 7.

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Abstract

David M. Culver is chairman of Canadian-based equity investment fund, CAI Capital Corp. In an
interview, Culver believes that faith and technology are critical for business people. When asked what
he would suggest to Canadian corporations trying to implement change, Culver responds by saying
that good organizations are impossible to put down on paper. A good organization is a messy
organization - not logical but it works. Culver says that some of the most effective techniques for
implementing change are those so-called peer-group meetings, particularly in a large international
business. Culver suggests that a good CEO is someone with integrity and honesty. Another mark of
good leadership is the ability to surprise while not being surprised. Surprise is about freshness and
change. The ability to change is important. First, one has to have vision of where one wants to go,
and then one has to have the ability to bring change about without issuing commands. Culver's
message to business people is to have faith in one's product, learn everything there is to know about
it, and stick with it.

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Full Text

Q: How would you characterize the biggest challenges facing Canada's economy, particularly
its large, resource-based companies like Alcan?
A: Two ideas come to mind: faith and technology. You have to have faith in your product.
One of the great mistakes that business periodically makes, at least once every 25 years, is
to get the idea that there's safety in diversification. There is safety in faith; there's no safety in
divesification.
Second is technology. I think it is the single reason why North American business seems to
have slipped vis a vis other parts of the world in recent years. We have had a number of
CEOs of major corporations who have not really understood the technology of their own
industry. "Yes", they say, "technology is important", but they didn't really understand the
technology of their own business.
Faith and technology: those are tao things that are critical for business people. There will
always be somebody whispering in your ear "we need another business to balance this one".
But tell me, which business has not had a tough time in the last few years? On the other
hand, if you can make something for one dollar and sell it for three dollars, it doesn't matter
what's going on around you. If you have faith in your product, it will reward you richly.
Q: During the mid-to-late '80s when you were restructuring Alcan, vou demonstrated those
two principles: you had an underlying faith in the product, and you concentrated on
technology to help you make that product more economically. You were also making
fundamental changes. What are the lessons for other Canadian corporations trying to
implement similar changes today?
A: In business, I think we adopted too much from the army and not enough from the Catholic
Church! The Catholic church got away with three or four layers of management; the army
built up rigid structures with many more layers.
Good organizations today are impossible to put down on paper. A good organization today is
a messy organization; it's not logical, but it works. And it works because it takes advantage of
concepts like: everybody can have a good idea, and there are only a small number of real
experts, and experts should be used throughout your world, not devoted to a part of it.
Some of the most effective techniques for implementing change are these so-called peer-
group meetings, particularly in a large international business like Alcan. You might have
someone in Germany who is one of the world's great experts on a certain aspect of
manufacturing. What you do is ensure this person's colleagues, say in Brazil or Australia, get
help from the guy in Germany when they put forward a proposition that involves this aspect.
His colleagues just pick up the phone and ask him, they don't write a letter to headquarters.
What I this does is create these natural matrixes that release a tremendous amount of
energy into the organization. You have to support and encourage these kinds of exchanges.
Despite what I just said, I don't denigrate the army; I learned a lot from the army. Because of
the nature of the business it's in, it needs a different kind of structure. When I graduated from
Harvard Business School, the buzzword was "span of control"--you shouldn't have more than
five people reporting to you. In fact, there's no reason why 5,000 people can't report to you,
depending on the nature of the business and the atmosphere in which it exists. But an
organization is still a group of people helping one person do a job. The trick is for the leader
to be selfless.
A leader must realize he can only exercise great leadership if he does it in a selfless way.
That's the real challenge; that's why it's so hard to be a leader. When I first went into
business, I thought "wouldn't it be great if I ever get to the top of this company, then I can do
whatever I like". Of course, it's just the reverse. The higher you go, the more you find yourself
doing things for other people, because of other people, and in response to other people.
QUALITIES OF A CEO
Q: You were a member of the Advisory Board that selected the 1993 CEO of the Year. As we
move toward "messier" corporate structures, a CEO's role is both less well defined and more
challenging. What makes a good CEO today?
A: A good CEO, amongst other things, is someone with integrity and honesty. When I first
went into business, an Englishman said to me "Culver, if you insist upon telling the tnth,
eventually you will be found out". It's an aspect of good leadership to be very truthful. Good
leaders don't manage the news, and they don't try to gild everything. Apart from these traits, I
think it's extremely important to understand the technology of the industry.
Another mark of good leadership is the ability to surprise while not being surprised. It seems
to me, a good leader needs to surprise the organization. He's the only one who should be
surprising; everyone else should be eliminating surprise as much as possible.
Q: Why surprise?
a: Surprise is about freshness, and change. It's being ahead; it's being a scout rather than
driving the wagon train.
When I became President of Alcan (it was really my first big job), a very wise gentleman said
to me: "Don't be too full of yourself. Lots of people can run Alcan, but very few can change
it". That ability to change is important. First, you have to have a vision of where you want to
go, and then you have to have the ability to bring change about without issuing commands.
The greatest reward for a leader is when suddenly the people he's leading are clamouring for
him to do something that he was hoping they would clamour for him to do. It's their idea, but
they want him to do it, and he says "I'm going to take your idea and do something about it",
when actually it was his idea about six months ago.
Q: One aspect of corporate change that you had to manage at Alcan was succession
planning. How important is it?
A: Any good organization spends a lot of time on succession planning. I have seen some that
do it extremely well, and I've seen other effective companies that do it extremely badly.
It's also one of the tests of leadership. The more successful a leader, the easier it is for him
to think he's irreplaceable, and the harder it is for him to surround himself with people as
good as he is. The leaders I admire are the ones who say "I get the best people around me
because they push me ever onwards". Succession planning is a test of a leader; some are
good at it, and some are not.
I once heard a story about General Charles de Gaulle and some adoring mayor from a little
town in Brittany where he was on a whistlestop tour. The mayor asked, "Mon general, qu'est-
ce gu'on va faire quand vous n'etes plus avec nous?" And de Gaulle replied to the effect "it
will be up to France to find someone who resembles me". That's not what you need for good
succession planning. It's the job of a good leader to find somebody who doesn't necessarily
resemble him, to find someone who is better than he is.
At Alcan we did that, not just for the top job, for all the jobs. We spent a lot of time on
succession planning. That came from the founder of the business, Edward K. Davis. It is
interesting how the culture that the founder of the business instils lasts long after he's gone.
THE FREE TRADE DEBATE
Q: You were an outspoken advocate of the Free Trade Agreement with the United States. Is
the FTA working as you thought it would?
A: The whole economy is less good than I thought it would be, everything is tougher. But my
fundamental reason for supporting the FTA is as strong as ever. If a company is going to do
well in the world, it must face and survive domestic competition.
The Japanese companies--and there aren't that many--that are household words around the
world, all have fierce domestic competition. It's what they learn and what they develop while
facing that domestic competition that makes them effective. I went to Japan for many years
before I realized this. Pricing policy in Japan masks the fact that there is a lot of fierce
competition going on. When you see that prices in Japan are higher, you say to yourself,
"there is no competition here". Well, there isn't for price, but there is in everything else--in R
and D, in coming out with the next new product one week ahead of the other guy, in making it
smaller or lighter. That fierce competition is of what produces in an organization the ability to
survive.
Now, why the FTA? Because in Canada, we're too small for our major firms to face fierce
domestic competition. We have only one Alcan in Canada; we have only one Northern
Telecom. We need only a handful of really good companies to swing the whole economy. But
we need them, and the only way we're going to get them is with domestic competition. Ten
years or twenty years down the road, the FTA is going to produce "domestic competitors" for
Canadian industries.
That's the fundamental reason why I was in favour of the FTA, but there are other reasons.
We sell so much to the United States, their system of trade law, the way they run Congress
and the power of a single senator: all those are other reasons why we needed to try to get
some kind of rule of law into the trade deal. We haven't completed all of it, but we're a lot
better off than we were. We've won two-thirds of the cases that have come up so far.
The older I get and the more I see of the world, the more I'm convinced that the real benefit
of the FTA is the need for "domestic" competition. It's not necessary for all Canadian industry
to be competitive on a worldwide basis. Not all Japanese industry is--probably 80 per cent of
it is not. But the 15 or 20 per cent that is, carries the country. We need that in this country.
We need really world-class competitors in a dozen industries, and we can get them by having
what I call North American "domestic" competition.
Q: Are you similarly enthusiastic about NAFTA?
A: NAFTA is of critical importance to Mexico and, for a different reason, to the United States.
FTA was not of critical importance to the United States except in the geo-political sense that
they need a strong neighbour to their North. NAFTA is more critical for the United States than
it is for Canada. If it is turned down by Congress, they are going to have an unstable political
situation on their southern border. I don't want to be a scaremonger, but I think it's fair to say
that. Every day they are going to have thousands more illegal immigrants, which is a real
problem for them.
This brings us to another reason for NAFTA--a humanistic reason. The Mexican people
deserve a better break, and NAFTA gives them a chance to get back in the game. To say
nothing of the fact that if they're successful, they're a huge market for many of the things that
we produce.
If NAFTA fails, it will be a problem more for the United States than for Canada, but if the FTA
had failed, it would have been a problem for Canada.
Q: One of the aspects of the NAFTA debate is the idea that liberalized trade is in conflict with
environmental considerations. What do you say to those who criticize trade agreements on
these grounds?
A: This is an aspect of the new protectionism. But it's also true that if you go to Mexico City,
you realize that in terms of the environment, they've got a lot to do, if indeed they can ever do
it. It is the new protectionism to say "I don't like something. We'll hit it on environmental
grounds". Environmental grounds are serious, and they should be taken seriously, but they
shouldn't be used as a shield to hide behind.
PRESSURE IN THE PUBLIC SECTOR
Q: In a 1988 interview in this magazine, you talked about disinflation. You said that it was
going to hit the smokestack industries first and then the commodity industries. It was going to
move through manufacturing and through financial sercices. Then, you said, the next stage
was going to be governments. Are you satisfied that governments are now dealing with
disinflation with the same rigour as other parts of our society have done?
A: It's getting close. The pressure is increasing in the public sector now. I'm not talking about
individuals--it's a tragedy when individuals lose their jobs. I'm talking about what happened in
New Zealand. Lots of Canadians are saying we're getting precariously close to being told
we've come to the end of the road. So, the pressure's on in the public sector. What I wouldn't
want to see happen in Canada, though, is for us to lose our sense of being a caring society.
I think Canada engenders respect in the world because of that. It's also one of the values
that holds this country together and we don't want to lose that. We do want to learn how to
pay for it, however. We paid for World War II as we went. This country came out of World
War II with no more debt than when we went into it. Somewhere along the way, having
learned how to pay for war, we lost the knack of paying for peace.
What we're going to learn in the next four or five years as the public sector moves through
what happened to the other sectors is that it can be paid for, it can be organized so as to be
payable for. I'm convinced that we can do it.
But I don't want to see us lose a key part of our values--that people in this country who need
help, get help. What keeps nation states together is a commonly held sense of values. In our
case, that sense of values is what we call "the caring society". That sounds a little "wet"
sometimes, as Mrs. Thatcher would say. But it's what we are, it's the way we're made. It's
easy for families to stick together; one is born to stick with one's family. It's easy for cultural
groups to stick together. thev have their culture in common. In a country like Canada, which
is made up of a lot of different groups, it's not so easy for us to stick together.
INNOVATION AND TECHNOLOGY
Q: You've often spoken out about the importance of technology and the need to apply
technology in productive ways. Why do you think that Canada is usually low in the list of
spending on R and D?
A: To be blunt about it, it's because there aren't more guys like me talking about it. In this
country, we did start out as "drawers of water and hewers of wood". That life was easy. We
could live a good life in Canada up until the last 50 or 60 years without being too dependant
upon high-tech, but that's no longer the case.
As a nation, we need to have faith in our resource husinesses. They are great businesses.
We're unique in the world in many of them, and they deserve our full attention. But, as I said,
in this world you have to make something for a dollar and sell it for three. In the commodities
business, you can't do that. People will only pay you three bucks if it's something unique and
only available from you.
Now, we've got many good things going on in research and development in this country. Dr.
Fraser Mustard and the Canadian Institute for Advanced Research--that's a great approach
for a small country that can't afford to throw money at problems. It's a marvellous way of
proceeding. But we have to recognize that the technology business is not a bricks-and-
mortar business. The assets have two arms, two legs and a head. To in in the world of high
technology, we have to have those people. In this country, we have a great way of attracting
them: they love to live in Vancouver or Montreal. We should take advantage of that. For
example, after the Cold War, some of the best brains in the world wanted to escape from the
Communist-dominated world and go to the United States. The United States wouldn't take
them, so we took them. Now we probably have the best cadre of Eastern European talent
anywhere in the world, right here in Canada. We should use those people. So it's not just
"science" technology we need, we also need to use the "human" technology in our society.
Q: Do you think there is a public policy issue here? How much confidence do you have in the
government's ability to support technology development?
A: In my opinion, it is a disaster for the government to try and come up with an industrial
strategy that says we'll support this company and give them big grants. It's not a disaster for
a government to point to a particular enterprise that has proven it does good work, and to
decide not to tie one hand behind its back. That's very different.
There's a lot that public policy can and should do to stay out of the way, lxlt it should not be
at taxpayers' expense. These companies should pay their taxes like anybody else. I'm
against active support in terms of giving resources to a company, but staying out of the way
is good public policy.
PUBLIC POLICY CHALLENGES
Q: By the time this interview is published, we will be facing a federal election. What advice
would you give the new Canadian government? And what do you think is the next big public
policy issue the nation will have to address?
A: For a start, I wouldn't fire Mr. Crow!
One issue we're going to have to deal with is universality. We should maintain our caring
society, but we must learn how to pay for it. One of the ways to pay for it is to recognize that
universality might have to be defined to mean "universal to those who are dependant upon
it". This has already started here in Quebec. We pay two dollars to get a prescription filled. I
applaud every time I pay the two bucks, why shouldn't I pay ? We pay five dollars, under
certain circumstances, if we show up at the emergency ward. Those are user fees, but it's
more fundamental than that.
For example, back in the early 1970s, I tried to convince the Finance Minister of the day,
John Turner, that we could use a little incentive in our tax system. I proposed having two
income tax regimes. You could elect to be in either A or B but once there, you had to stay in
A or B for a period of three to five years. The difference between the two was that if you
elected A, you received nothing from the government in the form of health care or old age
pensions or baby bonuses. In return, you got a fractional reduction in your marginal income
tax rate, thereby saving the government a whole lot because the reduction came nowhere
close to the cost of providing the services. At the time, Turner quite rightly said that
Canadians weren't ready for that.
Q: Would they be ready for it today?
A: I think they might. But I know what the NDP would say. They would say that we're just
creating two classes of citizens. I don't know if it's a practical solution, it might cost more than
it saves. But the fact is, one of our public policy challenges is certainly going to be to examine
universality. We want to keep our caring society, but we must pay for it on a day-to-day
basis.
Q: Are you optimistic ahout the future of Canada?
A: Of course I'm optimistic. We tend to knock ourselves down too much. We're the opposite
of some nations that tend to think they are mightier than they are. We tend to regard
ourselves as less mighty than we should. But that's not all bad; it's not a major fault.
Q: What are some of the other major challenges facing us as a nation?
A: I would love to see the practice of political life regain some of its lustre. I think we have
some very good people in politics today who deserve a better break from the public. We say
"you get the government you deserve", and there's some truth to that in a democracy. But we
should be encouraging the best people we can find to go into politics because it is still a very
necessary and critical part of our life.
Q: Why do you think that more business leaders aren't attracted to politics?
A: Well, they have a good life where they are, for one reason. Also, politics has been going
down in public opinion for a long time. One of the reasons, I think, is not so much because of
who is in.politics and how they behave, but because we have too many of them. People are
fed up--eleven cabinets and who knows how many ministers. We are over-governed in this
country, and whenever anything is in excess supply, the markets turn against it! But I think
Kim Campbell made a symbolic start by reducing the size of Cabinet.
HONORARY ASSOCIATE AWARD
Q: You're going to be presented with the Conference Board's Honorary Associate Award at
the Annual General Meeting. What will the theme of your address be?
A: I've been thinking a lot about the importance to a nation of its sense of values. In a world
where we see ethnic strife breaking out all over, we have to ask ourselves what is the glue
that lf keeps us together as a nation? In the past, it was because you lived on one side of the
mountain, or one side of the river. Nowadays, the geographical justification of the nation is
meaningless. So what does make sense? Because people still want to be Canadians, they
want to be Americans or Germans.
A nation has to have a commonly held sense of values--that's one theme I might talk about.
It's not a business subject, but it's one I feel very strongly about because I think we risk
taking our values for granted or not cherishing them enough. As we found out, the words in a
Charlottetown Accord or a Meech Lake Agreement are not what keeps us together as one
country. We've always had a lot of self-interest at stake ever since we started, but that's not
enough to keep us together either. Fortunately, we've had a lot of affection for each other in
this country, which is good, but it's not good enough. The glue that keeps this country
together is our sense of values.
Q: You say this is not a business message, but our view of the role of business in Canadian
society is part of our value system. What do you think about the standing business has now
in Canadian society?
A: I think it was probably higher a few years back. It reached its highest point just before the
FTA debate, but since then, it's slipped.
Q: Why do you think that is?
A: Well, we took a frontal assault from all the non-business groups. That was my only
experience that came close to being called politics. I was on the radio and on talk shows. The
things you hear on those shows! People are separated from you, and they say whatever they
like over the telephone or on the radio. They say the most outlandish things. I think the
standing of business suffered a little under that, especially when the FTA passed by a
whisker and then we ran into this recession.
REFLECTIONS OF A CAREER
Q: When you reflect back on your business career to this point, what is the accomplishment
of which you are most proud? By the time you retired from Alcan, it was the most profitable
Canadian organization ever.
A: There was a lot of luck involved in that! If I were still there today, you wouldn't be saying
that. But last week, somebody asked me the same question when I happened to be in a
room with my successor, David Morton. I said that I was most proud of the fact that I left him
with only one problem, not two or three!
But something that I'm really very proud of is the way my family reacted, how they put up with
my constant absence, because it as tough. For instance, once I was away for nine weeks
trudging around in the Pacific. My wife was at home struggling with three kids. I came home,
just one week before our fourth child as born.
I think it's very important if you get to a high position in any branch of work that you have the
right kind of support at home because you can't live two lives. You don't have enough energy
to fight all the other battles and then come home and fight the family's side...you realize that
there's just not enough to go around. One reflection is that I was very lucky in that respect.
Another reflection, of course, is some of the people I've worked for and with. They loom large
in my thoughts. I was lucky to have worked with them. I learned a lot: they had great abilities
but also great integrity, and a great sense of fun. You can't go through life without ever
having a good time. "Nothing in excess, even moderation" is my motto. So, that's another
reflection.
It's natural too, to think that one's own parents would be in favour of what you did or didn't do,
and I have had that advantage.
Q: Do you have a last thought, perhaps a message to share with the business community in
this country?
A: My message to business people is: have faith in your product, learn everything there is to
know about it, and stick with it.
I guess the simple truths in life are the ones that stay with you. I can't stress too heavily how
important it is to recognize that good ideas can come from anywhere. Let me give you an
example. Recently, I was fishing, and the guide I had I've fished with for 35 years. He guides
a lot of different people, and, like all of these guys, he tells you what he thinks. This time, he
said to me, "You know the bigger the job of the man I'm guiding, the nicer he is to guide". I
asked why, and he replied, "Well, he doesn't pretend he knows everything. He listens to me
and asks questions. I feel I'm doing something for him". He said, "You know, the worst ones
are these young assistant professors. They think they know everything! They're higher up
than I am, but that doesn't mean they know everything". I said, "No, Andre, they're no higher
than you are. No one's any higher up than you are!"
To me, this is ahat leadership is all about. It goes back to the need for the leader to be
selfless. The person who says, "Now I'm leader, I'm going to start acting like one, and being
difficult, and everyone must do what I want", doesn't last long.
DAVID M. CULVER
David M. Culver is Chairman of CAI Capital Corporation. He was born in Winnipeg and
attended schools in Quebec and Ontario. During World War II, he served in the Canadian
Infantry Corps. Mr. Culver obtained a BSc from McGill University, an MBA degree from the
Harvard Graduate School of Business Administration, and a Certificate from the Centre
d'Etudes Industrielles in Geneva. He holds Honorary Doctorate of Law degrees from McGill
University and York University, and an Honorary Doctorate in Applied Science from the
University of Sherbrooke.
Mr. Culver joined Alcan Aluminium Limited in 1949 and, after 40 years with the company,
retired as Chairman and Chief Executive Officer in 1989. At that time, he formed a Canadian-
based equity investment fund, of which he is Chairman.
He is a Director of American Express Company, Lehman Brothers, American Cyanamid
Company and The Seagram Company, Ltd. Mr. Culver is Honorary Chairman of the
Business Council on National Issues and is a member of its Policy Committee. He is a
Governor of the Joseph H. Lauder Institute of Management and International Studies at the
University of Pennsylvania and is a Trustee of the Lester B. Pearson College of the Pacific.
He is also chairman of the Board of Trustees of Canada's National Museum of Science and
Technology. He is a member of the International Council of J.P.
Morgan &Co. Inc., of New York; the Advisory Council of the Centre of Canadian Studies at
Johns Hopkins University's School of Advanced International Studies; and the International
Advisory Council of Stanford University's Institute for International Studies. Mr. Culver was
Canadian Chairman of the Canada-Japan Businessmen's Co-operation Committee for 11
years and in 1987, he was awarded the Order of the Sacred Treasure, Grand Cordon, of
Japan. Mr. Culver is a Companion of the Order of Canada and an Officer of the Order of
Quebec. David Culver spoke recently in his offices with Michael Grant, Principal Researcher,
International Programs, The Conference Board of Canada.
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Indexing (details)
Subjects Organizational change, Organization development, Opinions,
Management
styles, Implementations, Corporate objectives, Chief executive
officers
Locations Canada
Classification 9172: Canada, 2500: Organizational behavior, 2310: Planning, 2120:
Chief
executive officers
Title The principles of leadership: An interview with David M. Culver
Authors Grant, Michael
Publication title Canadian Business Review
Volume 20
Issue 3
Pages 7
Number of pages 8
Publication year 1993
Publication Date Autumn 1993
Year 1993
Publisher Conference Board of Canada
Place of Publication Ottawa
Country of publication Canada
Journal Subjects Business And Economics
ISSN 03174026
CODEN CBREDT
Source type Trade Journals
Language of Publication English
Document type PERIODICAL
Subfile Organizational change, Organization development, Opinions,
Management
styles, Implementations, Corporate objectives, Chief executive
officers
Accession number 00770276
ProQuest Document ID 220712948
Document URL http://search.proquest.com/docview/220712948?accountid=50247
Copyright Copyright Conference Board of Canada Autumn 1993
Last updated 2010-06-09
Database CBCA Complete: Business

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