As a former cabinet secretary of the US Department of Veterans Affairs (VA) and CEO of Procter & Gamble, Bob McDonald is one of a handful of leaders who has excelled in both the public and private sectors. Under his leadership at VA, he delivered a significant uplift in service to veterans and organizational culture, and as CEO of Procter & Gamble, he led global expansion, sustained innovation, and profitable growth.
As part of our Leadership Excellence series, he sat with Roland Dillon and Scott Blackburn to reflect on his approach to leadership, teamwork, and culture. An edited transcript of the discussion follows.
McKinsey: Bob, you’re a rare leader who has worked at the top of both the public and private sectors. What experiences shaped you the most into the leader you are today?
Bob McDonald: I would go back to my time at West Point, the United States Military Academy. Attending West Point, the preeminent leadership institution in the world, is a life-changing experience. It focuses you on the profession of leadership, and it made me an intentional and deliberate leader. As a freshman in college, when you have relied on serendipitous leadership in high school, leadership becomes a skill that you have to work hard at to hone over the years.
While many leadership books talk about different behaviors in leadership, I think culture is the one aspect that is undervalued.
McKinsey: As VA secretary, you had an incredibly important mandate. What were the hardest tests for you as a leader?
Bob McDonald: When I took over VA, veteran trust in the organization was 47 percent. Organizations are perfectly designed to achieve the results they get, so if veterans are having adverse medical conditions in Phoenix, for example, that is for a reason.
While many books talk about different behaviors in leadership, I think culture is the one aspect that is undervalued. I learned about culture in the US Army—when you’re tucking soldiers into bed at night and you’re waking them up in the morning, whether it’s in the Arctic or the jungles of Panama, you learn a lot about them.
What I found at VA was a culture of learned helplessness and a very hierarchical military culture. Everybody called each other by their last name, not their first, and generally by a title. Good news traveled up to leaders very quickly, but bad news didn’t.
One of the first things I did was to start a campaign, “Call Me Bob”—rather than call me “Secretary.” That was something I learned at Procter & Gamble. On my first day, I called everyone “Sir “or “Ma’am” since I came from the army, but colleagues said that they refer to each other by their first names, because first names lead to a relationship. That leads to intimacy, intimacy leads to trust, and trust is what makes the company very, very efficient.
At VA, I also stopped the large entourage of people who traveled with me. I got rid of the “body man,” who is somebody who follows you around and carries your phone. I removed the trappings of formality that prohibited me from knowing what was going on. I then traveled all over the country to different locations, averaging more than one trip a day during my tenure. Everywhere I went, I had town hall meetings with veteran constituents, employees, and local government people.
It was in the town halls with employees that I discovered that people had learned the helpless victim behavior. I had to turn that around, which was the biggest challenge. How do you teach people to lead and get them to understand that you’re expecting them to make a difference in their area of responsibility? That’s when we started developing leaders and looking at strategic deployment to ensure that everybody would have a project that would lead back to our strategies.
McKinsey: With so many challenges, how did you know where to start?
Bob McDonald: There is a framework I’ve used throughout my career, which I honed through various assignments.1 The foundation of the framework is purpose, values, and principles. Whenever I analyze an organization, I start there. From there, the model supports technical competence, passionate leadership, sound strategies, robust systems, and ultimately, a high-performance culture.
At VA, you might have thought the problem was the 1985 MS-DOS green-screen scheduling system. But it wasn’t the scheduling system. The problem was that people were lying to the secretary, directly or indirectly. They were doing that while one of the organization’s values was integrity. The values of the VA are an acronym, “I CARE”—integrity, commitment, advocacy, respect, and excellence. But people were not being true to those values. So, we had to reteach people and get them to certify that they would perform consistently with those values. I used this model to sequence the activities, because I knew that if you didn’t get right the purpose, values, and principles—the foundation of everything in high-performance organizations—nothing else mattered.
McKinsey: I noticed that, at every single opportunity, whether it was a congressional hearing or giving an interview or speech, you always started with the mission and values. What else did you do to address the cultural and operational challenges within the organization?
Bob McDonald: We implemented human-centered design across the organization, which you would think people in government already would have been exposed to, but unfortunately people at VA knew nothing about it. When you’re in a bureaucracy or a very large organization, especially those under attack, the bureaucracy can turn inward and forget about the customer. The leader’s job is to send everybody out of the office to get in touch with the customers to bring them back into the center of the operation.
I role modeled that behavior on all my trips because I would meet with our customers. The key was that we talked about the transformation of the organization, got their input, and made them part of the plan of transformation. We wanted both the employees and customers to feel like they had a stake in the transformation. We drew up a journey map that tracked a veteran’s experience from the day they raised their hand to be sworn in to burial in a VA cemetery, looking at the touchpoints, or “moments that matter,” and their measurements.
Successful leadership involves recognizing the unique qualities of different leaders and adapting to the context.
McKinsey: Looking back on your distinguished career, have there been moments when your perspective changed, or lessons you learned early that proved to be timeless?
Bob McDonald: I like to think of myself as a perpetual learner. One of the things I have learned is that when you get to the level, say, of CEO of Procter & Gamble, generally everyone working for you is an effective leader, because they typically have had a 30-year career practicing leadership. The challenge that a CEO faces is to identify the strengths of the leaders around you and find where they can be effective, rather than assuming that leaders are fungible and putting them in any situation. It is important to be agile and, depending on the situation, be able to change your leadership profile to be more effective.
A classic military example is how General Patton wasn’t chosen to lead the Normandy invasion because he couldn’t lead alliances. Instead, General Eisenhower was the right choice. Conversely, Patton was effective in pushing the US Third Army across Europe, whereas Eisenhower would not have been because he was not that type of leader. So, the challenge of leadership is being flexible and recognizing how different people’s leadership profiles may make them more effective in one situation than another.
I didn’t fully grasp the importance of situational leadership when I was at West Point, where I believed there was a single model of leadership. Over time, I realized that successful leadership involves recognizing the unique qualities of different leaders and adapting to the context.
McKinsey: As someone who has been a successful leader in the private sector, what were the biggest differences when you transitioned to the public sector and how did you navigate them?
I had a board of directors of arguably 535 people. . . . You have to rely more on the vision and mission to motivate people, because you don’t have stock options in government.
Bob McDonald: Having been in the army, I was exposed to the public sector early on, but in a different way. When you graduate from West Point, you have a five-year legal commitment of active duty. When I transitioned to VA after 33 years at Procter & Gamble, where I held various global roles, I treated the VA as if it were a new country or business.
One major surprise was that rather than a board of directors of 12 to 14 people, I had a board of directors of arguably 535 people, including the president, the House, and the Senate, with authorizing and appropriating committees. The authorizing committee authorizes the laws, and the appropriating committee appropriates the money. It’s not uncommon to have a law authorized, but the money not appropriated.
The second difference is that in VA, you have very few levers to motivate employees, at least not of the financial kind. You have to rely more on the intrinsic motivation that government employees have for the stewardship of public trust and commitment to public good. As a leader, you have to rely more on that vision and mission to motivate people, because you don’t have stock options in government.
It’s also very difficult to fire people; you can move them, but it’s difficult to fire them. At VA, 65 percent of the organization was unionized, including doctors. I worked closely with the head of the American Federation of Government Employees (AFGE), which is the largest federal government union. What worked to my benefit was that I offered them a choice: work with me to transform the organization and grow membership, or risk privatization and lose all your members. We ended up working closely together and he helped me a great deal.
Nobody will see your strategy if you don’t execute it well. I think that’s why the biggest challenge in public sector leadership is getting to execution. For example, when I joined VA, many people told me the problem was that I didn’t have enough political appointees—out of more than 300,000 employees, we had only 75 political appointees. The challenge is that political appointees come in and try to motivate 300,000 people to get their jobs done, which is arguably incongruent with the political party’s point of view. Employees know they’re going to be there long after the appointee’s tenure. So, how do you get them to do their jobs, particularly if your policy is unfavorable?
To address this, we held the belief that it is better to teach people how to fish rather than catch the fish for them. This ensures they know it’s the right thing to do and makes employees’ personal achievements consistent with organizational strategies, rather than them being independent actors. Instead of getting more political appointees to have more control, my focus was to get the mission, vision, and leadership right.
You also have to get the strategy right. For the first time, we had a strategy called “Caring for the employees of the VA,” because how can you have a customer-service organization without caring for the employees? Strategy one obviously was caring for the veterans and improving access. Strategy two was to teach them concepts such as human-centered design, Lean Six Sigma, and leadership. We also implemented a “leaders developing leaders” program, where each level of leadership trained the next respective leadership team through a cascade. We used that program throughout the organization and that’s what got people aligned. I would argue that’s why we got the results we did. As I said, when we started, veteran trust in the VA was 47 percent; by the time we left, it was about 67 percent. Today it stands at over 80 percent and continues to grow.
One of my core leadership beliefs is that everyone wants to be successful, and success is contagious.
McKinsey: You brought in new people but also inherited many existing employees. What strategies did you use to inspire and win over those you didn’t bring in?
Bob McDonald: One of my core leadership beliefs is that everyone wants to be successful, and success is contagious. The people at VA didn’t want to be victims; they wanted to win, especially given our mission of caring for veterans. My approach was to teach them how to win and, as John Kotter says, “celebrate the small wins,” which then led to bigger ones and created a flywheel effect. The idea was to make people believe they were winners, and every time something went right, we publicized it on a big billboard.
When we arrived, many employees were embarrassed to wear their VA pins. They didn’t want to ride to work on a bus and be associated with an organization that was perceived negatively by the public. I’m happy to say that it didn’t take us too long, and through many of those small successes, people started wearing their pins again.
McKinsey: What advice would you give to leaders in the public sector?
Bob McDonald: Government often values politics more than leadership. Many secretaries and deputy secretaries are appointed based on their political connections or previous public sector roles, such as former mayors or members of Congress or governors. While they may be good leaders, they often lack experience in concepts such as human-centered design. The intellectual property from the private sector doesn’t always get to the public sector. They also may never have led a large, complex organization. At the time I was secretary, the VA would have been a Fortune 9 company. I auditioned for 28 years to be CEO of Procter & Gamble, Fortune 25, or so on. Why would you pick a political appointee to lead a Fortune 9 with no large, complex organizational leadership experience serving 17 million veterans? Veterans deserve more.
In my role on the Partnership for Public Service, I tried to pass a law to measure customer service for every government agency. Unfortunately, we weren’t successful, but the idea highlights the need for a greater focus on leadership and customer service in government.
Another challenge is the frequent turnover of leadership. For instance, if they were on the Fortune 500 list, it would rank as a Fortune 9 company. How can you possibly change the leader of such a company every three to four years and expect that company to succeed? It’s impossible. I would propose a longer tenure for VA leaders, similar to the FBI, to ensure continuity and sustained progress.
McKinsey: If you were addressing a graduating class at West Point, what message would you impart about leadership in public service?
Leadership is the scarcest resource in the world.
Bob McDonald: Leadership is the scarcest resource in the world. It’s not about brands, buildings, money, or hospitals—it’s about leadership. It’s the highest leverage activity in the world. If I were president, I would run leadership training for all my top-level people to give them a rudimentary baseline of experience. The assumption that leaders inherently know how to lead is a fallacy.
