A CEOs Perspective on Leadership Kunal Kapoor

Anita Brick: Hi, this is Anita Brick. And welcome to CareerCast at Chicago Booth, to help you advance in your career. Today, we're delighted. Oh, my gosh, way more than delighted. This has been in the works for such a long time. I'm so happy to have Kunal Kapoor here. As many of you who know, he is a super wonderful, generous Booth alum. And he is CEO of Morningstar. An amazing, amazing role. Before assuming his current role in 2017, he served as president responsible for product development and innovation, sales and marketing, and driving strategic prioritization across the firm. No easy feat, and all the changes that are going on in the industry and leading. As we can see from some of the questions, people are really excited to get your sage advice. And I know there's no real sage advice, but I hear you come pretty close; is that fair?

Kunal Kapoor: Thanks for having me. That's a very generous introduction. I'm going to do my best. But there are a lot of wise people out there, far wiser than me. We'll see how it goes.

Anita Brick: You bring some very special things together. So, let's start off. Here's someone, a recent alum. And he said, "I'm a first time leader and it's hard. How do you stay positive and forward-thinking in a world that is filled with discouraging realities?"

Kunal Kapoor: Well, first of all, congratulations to that individual on becoming a first time leader. I'm an optimist, so I tend to always look at the glass as being half full or some would accuse me of saying it's always full. I think one of the important traits that good leaders show is that they can lead in any environment. And I always say that you should be focused on the things that you can make a difference at and where you can lead authentically, as opposed to getting too caught up in things that are out of your control. The reality is that there will always be headlines and things that are going to cause noise. At the end of the day, if you really look back on those kinds of things and what success looks like, it's where you want to have an impact. It's how your company does.

The external factors ultimately end up being short-term in nature, and I think it's really important to instead be focused on what you're doing. One way not to let the outside stuff depress you is to just make sure you're doing something you're passionate about, because that'll have your full attention. There's nothing better than being in a place where you feel like you can drive change, have impact, and do it in a way that you're proud of.

Anita Brick: That's a really good point and it aligns very nicely with a question another Boothie had about bringing purpose to work. "As a leader, how do you bring a sense of purpose to your work that really, really takes you beyond the day-to-day realities and the activities of your role? I know this is key in enduring engagement. I used to have it and I don't anymore. Perhaps you can give me a little boost so I can help regain it."

Kunal Kapoor: A lot of that just comes down to whether you're excited about what you're working on. And I'm often asked the question as to why I built my career at one firm for more than 25 years. Something that seems to surprise a lot of people. And I answer that question in many different ways. One thing that I always come back to is I've done that because I have a high degree of conviction in our mission. I really like to observe and be part of the outcomes people experience because of the work that we do. And I think that can be really, really motivating. It can lead everyone in the organization to understand that they're doing more than just a job. And I think it's that discretionary effort, when you know you want to put discretionary effort into something. You know that not only are you driven and you want to get great results, but that you're also doing something going to drive good results.

Anita Brick: Okay, So, if you've lost a little bit, some people can get pulled in. How have either you or seen others, or maybe even guided others to regain that connectedness?

Kunal Kapoor: I think there's multiple ways to do it. One way that I think you can be incredibly connected to your work is to be connected to the people that you're ultimately doing that work to. And I think one of the risks of becoming a leader is that you get a lot of people around you who are trying to manage you or you get further away from the end product. I always encourage leaders to be hands-on and to use their own products, to spend time with their customers, to be out there, because it does make a difference. It doesn't feel many degrees removed from what it is that you are trying to do. Pretty important from my perspective. And in the debate of whether you should be hands-on or hands-off, being hands-on with your clients and your products is pretty important.

Anita Brick: I like that. How do you know, or how do you create an openness where whether they are people using your products or even your direct reports, they're actually giving you ideas, and feedback, and even pushing back when they know you're the CEO and they're very differential? How do you get real feedback from them, which, of course, could then create greater engagement as well?

Kunal Kapoor: It can be tough. And I've certainly seen, as I've moved up over the organization, I've had to invest to be clear to people. I want that feedback and I want to be part of it. I'll give you actually a live example. On Friday, I was part of a relatively heated meeting internally. And it was an important meeting, because there was some misalignment in terms of what was being done. Yesterday, one of the people in the meeting sent me an apology note, apologizing for the fact that the meeting got so heated. And I responded with the message which I 100% believe in, which essentially said, "Thank you, actually, for seeing the conversation in the way that you did, and being so blunt and honest, because without that we wouldn't have been able to have the meeting." One of the things you have to do is actually acknowledge and reward that kind of behavior when it's appropriate.

You never want people going over the top, but I think it's okay to acknowledge it. And at Morningstar, we've got a lot of analysts and researchers. And that in and of itself really creates an environment where people grow up debating and challenging each other. And I try to foster that and keep that. Even on our executive team, I'll often say that I don't want personalities that are singing Kumbaya together. Clearly we want to get along, we want to have a great time outside work, we want to be friends. But when we're working, we want to be brutally honest. And that means challenging each other and a good team needs to have some degree of scratchiness, if you will, which I think is important.

Anita Brick: I agree. Some people don't want that. They need to be over others. Maybe it's a throwback from command and control from decades ago, but it feels like there's still some of that. In fact, a student asked this question. He seemed, I don't know, really disgruntled. And he said, "My skip manager believes he's a positive leader, but that is not my experience. He makes fun of me and my colleagues in meetings and on our company's communication platform. I feel he's a bully and I don't feel safe sharing what I see. And yet, I like my work and my immediate team. I would really appreciate your perspective. Thank you very much, Kunal."

Kunal Kapoor: I certainly think it's incredibly important to work in a place where, if you feel that way, you have the license to approach your manager and provide that feedback. And I always say that in a situation like that, if your manager then essentially brushes you off or takes that feedback poorly, even if it's well-intended, kind of a sign to you that you shouldn't be there. And no matter how wonderful the work may seem, if you're working with somebody who's not able to absorb that feedback, it's probably not worth it. Now, I will say sometimes persistence matters. And I've seen people give it one shot and give up. And I think persistence does matter, because the reality is nobody likes being told they're not up to something or they're not performing at a certain level.

And I mean, to this day, when I get harsh feedback from somebody, it takes me a day or two to really appreciate it, because your first reaction is to be defensive. You just can't help it. We're kind of built that way. Over time, some of the people I've come to trust the most and appreciate are the ones who have been candid with me about what isn't working as much as they are about what is working. And funnily enough, I'll seek them out for their opinion because I know it's an independent opinion, as opposed to one that's going to be candid and pleasing to my ear or that of another leader. Take some career risk, I would say, in this situation.

Anita Brick: Yeah. If it isn't going to change, although it would be a very difficult decision, you may need to move on and go somewhere else because you don't want that to be the main menu all the time that it is almost abusive. So, another MBA student said, "What would you someone to do to turn around a relationship where you resent a direct report and that is actually damaging the team?"

Kunal Kapoor: Well, if you resent a direct report, that's a difficult situation for sure. And I would just ask is it a personal thing or has it more so got to do with someone's work? I think if it's the latter, it's a lot easier and you should definitely go and deal with that situation by providing the feedback that you need to, about why you feel that person isn't doing the work you would expect. I think beyond that, you resent someone and it's a personality thing, it may be best to just be honest and try to move that person to another team with a manager that they could work with. I guess I have not run into many situations where people end up resenting the people they're managing-

Anita Brick: That's good.

Kunal Kapoor: ... for reasons other than the fact that they're just not capable of doing the work.

Anita Brick: Sometimes people have first impressions. And here is an alum who had a first impression of someone in his organization that wasn't very favorable and he stuck there. He said, "I will admit it, that I have limiting beliefs about a leader in my organization. Well, my initial assessment of her has changed, my perspective hasn't improved. What advice would you have to help someone update a negative perception to something more positive, which is actually more accurate?"

Kunal Kapoor: I would come back to what I said earlier. Candor is really important in professional relationships. And that goes whether it's a manager to someone who's a peer or someone who's reporting to them, as well as the other way around. If you have feedback for your manager, it's really, really tough, but hopefully you're working with people and for people who are open to it. And I can tell you from personal experience, it works over time if you give feedback constructively, because the goal is ultimately to help someone, even if in the moment they may feel challenged or put off. I recommend a direct approach.

And I can tell you in my career, too, if I look back on things, I've certainly had a couple of managers over time I wished had been stronger. I feel like I've helped them and helped myself, where I've given them feedback and there've been a couple situations particularly early in my career where I didn't. Unfortunately, I would say in those situations, the manager didn't get any better and my job satisfaction didn't get any higher, and you sort of end up devolving and complaining with some of your peers about that manager, which leads to general dissatisfaction I think in what you're doing.

Anita Brick: You're right. Here's the tricky part, though. You gave feedback later, earlier, maybe not as much. How did you develop the courage to do that? That's a very scary thing to do at times.

Kunal Kapoor: As with all things in life, you do it once, it becomes a lot easier-

Anita Brick: That's for sure.

Kunal Kapoor: ... the next time you have to do it. What I would recommend and what I always point to is provide context. Provide real live examples of how you feel in situations where you and the manager can both relate to what is going on. It's very hard to go to someone and say, "Well, I wish you operated in this fashion," rather than going and saying, "In this situation, I saw that you did X, my feeling is we would've been better off doing Y. Can we talk through why you chose X and can I explain why I thought Y would've been the better option?" I think that's a way more productive way of doing it. And I think if you get comfortable observing what's happening in meetings, and decision-making scenarios, and then building culture where you're able to reflect on that together with a manager, it ends up being pretty powerful. Nothing works like practice, the skills to do it, because once you've done it a few times you realize there are real benefits to both parties in this context.

Anita Brick: I agree with you. I think sometimes, at least for me, I do it in lower risk environments to build up my confidence and courage.

Kunal Kapoor: That's good point.

Anita Brick: It sounds like, all in all, you've had a few things here and there, but that it's been an easy ride. I know that's not the case. One of the Boothies said, "All right, we all have challenges. When you think of a 'daunting experience,' how did you grow to the point where you could address it and actually benefit from it?"

Kunal Kapoor: So, for clarification, is that in a management situation or in a broader business context?

Anita Brick: Well, given that they didn't say, you choose. So, if you want to talk about it in terms of management, leadership, that's great. If you want to have it be something broader, it's really your call. Whatever is meaningful to you.

Kunal Kapoor: Well, one of the things that has been important in my career and what I often point to with people, is this notion that when we are moving up an organization, we all tend to be attracted to what I'll call shiny toys. The business that is performing the best. The business that has the highest growth rate at a moment in time. The business that has the most significant profitability. The business that all external parties point to and say, "Wow, that's the one that defines that company at any moment." I understand why that is. As humans, we tend to be drawn to those things. Perfectly reasonable.

On the other hand, I think one of the biggest opportunities for leadership growth as well as just business growth and understanding, is to take on challenging situations. I would say that some of the most significant moments of growth in my career have come when I have agreed to manage businesses that maybe have been underperforming, or maybe are underappreciated, or are on a path where the growth opportunities have not as yet truly been analyzed and brought to the fore. When you get one of those opportunities, as difficult as they might seem, as much as you might feel like you're kind of getting the ugly duckling of the family, and you are, those are some of the most meaningful opportunities to become a leader.

And if I look at my career, the jumps I think in my leadership style came about when I took on the most personal risk by taking on the businesses that were not the shiny toys. It's not to say I didn't enjoy running the shiny toys. I certainly did. The growth that you get and the license to drive change that you get when you are running something that is not necessarily the top performing thing at a moment in time is amazing. I always recommend to people in their careers to be a little bit contrarian in the choices they're making, especially in the earlier side of their careers, because you can afford to take some risk, you can afford to have wider learning outcomes, and you should take advantage of those.

Anita Brick: So if you feel comfortable, can you share maybe a few specifics of what you did and how you needed to grow and develop to actually succeed? I think that our listeners would love to hear a little bit about the specific challenges and what you actually did. I think that would be very meaningful.

Kunal Kapoor: I can think of one of the businesses that we had seeded now more than two decades ago. I had an opportunity to run it at a time when it didn't look like that business was going to play out and work for us. There's a few things I did very quickly. One is I understood for the first time the importance of really having a leadership team that bought into a vision for a business that could have gone in multiple directions. And for a business at that time that was very small, we punched above our weight in terms of building a terrific team that was motivated to go and change it.

We really pour up the strategy. Instead, rework the strategy. And in doing so, we had to go to several clients and essentially get them to change the way that they worked with us, which was incredibly difficult. We had to take some medicine and lost a few clients as a result of it. Once we were over the hump, it actually was a better model and attracted more new clients than was the case. And then importantly, we had to bring the team along. And when we first were making the changes, I'd say the team was hugely skeptical. I often say, we as humans, we love change as long as it's not happening to us.

Anita Brick: You're right. I love it after it happened.

Kunal Kapoor: Yes. Leading people through change is really, really difficult. As a leader, you really got to put yourself out there, repeat yourself over and over again. You've got to walk the floors. You got to meet with teams on a more regular basis than you ever would. And you've got to let them share in the progress and explain to them what you're trying to do, including being transparent about what it means for their compensation. And I remember in the case of this one business, when I was moved over there, one of the first things I said to everybody is, based on what we think we're going to have to do, I don't think I'm going to be able to change the bonus outcomes for everybody on the team this year, which means we're going to have poor bonus. What we want to do is going to take a couple of years to play out. And I could come up with some short-term medicine that would help the bonus this year, but it's not going to help the bonus in future years.

And we did that. And I remember, I think that year, our bonuses were upper sixties or lower 70% of our targets, which is not where anybody wants to be. But you bring the team along, and you promise what you're headed towards, and you show them that you're executing. And people let the low bonus go if they feel like they're working towards something bigger and a great goal. And in that case, we brought the team along. They were so motivated. They saw the changes. They wanted to participate in it. Just like I was hands-on and stepping into things that I had not done and reconfiguring things, when people see that level of energy from the leader, they're energetic too. And stuff like bonus is really important, but it's not the defining factor. It becomes a defining factor when that's how people define their job, as opposed to are we having success or not.

Anita Brick: I like that.

Kunal Kapoor: And so, people, of coarse, share in success but shouldn't start with a conversation about compensation. That should be an outcome of what you create. And in that case, all these changes led to tough first year, an okay second year, and then some rewards further down for those who were a part of it.

Anita Brick: So, ultimately, you created another shiny toy, but did you retain the whole team?

Kunal Kapoor: I think we retained large chunks of the team. We retained whoever we needed to retain. Let me put it that way.

Anita Brick: Okay, that's fair. That's fair, because sometimes teams need a little shaking up too.

Kunal Kapoor: Yeah.

Anita Brick: All right. So, here's a question that is definitely about you. And I think this question is on the mind of people when they look at their own lives and careers. That sounds really big and ominous. It's actually not. One person, this was an alum, said, "As the CEO of a major organization, how do you carve out time for yourself for thinking continual development and rest? In other words, how do you even find some me time when you're running this big company?"

Kunal Kapoor: It's taken some time to get there. There's no doubt that life is busy. I have a young family and I have Morningstar. And one of the things I think you realize when you become a leader of a firm is that you have people and opportunities coming at you from all directions. And I got a great piece of advice from one of our board members early on, which was, "Only do the things that you're super compelled by. Remember that your time is precious." I know totally obvious advice, but you got to hear it from somebody to believe it. Outcomes of that was I chose just to focus my time on my family and Morningstar exclusively, and have done that for the most part of the last eight years. I've limited other activities. But I am also just by nature a person who likes routine. And if anything, the pandemic made me even more routine based.

People were sitting around in their pajamas and I was not interested in doing that. If anything, in the pandemic, I was even more routine based and trying to lead with a high degree of conviction around how I thought people should be engaging with work. I find time for myself. I love running, so I'm up most mornings and out running no later than 5 AM. And that's in any time zone that I'm at. I make sure my day is not filled with meetings. Try to make time just to work and be productive without being in meetings. I found ways as well to ensure that I do a lot of reading. On weekends, I make sure I have time for reading. And it's not just about reading books, which I love to do, but also just reading things that I could learn from.

When I was at Booth in one of my classes with Professor Harry Davis, one of the things that Professor Davis always recommended is that spend some time learning about something that you don't know anything about. And I've taken that advice to heart. And on weekends, I'll find a topic that I know nothing about and at least spend an hour on it. It's kind of fascinating. Sometimes I'll end up doing nothing with it and sometimes it ends up being something I am going to do something with. Key thing is to make the time to do that. I am pretty structured in that context. I'll also just say that, like everybody else, when phones came about and you felt plugged in all the time, I was probably the person who just never put my phone down.

To this day, I'm not very good at putting my phone down. But I'm very purposeful now to make sure that when we're having family time, and it could be just an hour in the evening and no more than that, that I'm not sitting there looking at my phone. And that I'm kind of immersed in what I'm doing with the family, whether it's having dinner or just hearing about my daughter's day, or now telling my wife that she should put her phone down.

Anita Brick: Yeah, there you go.

Kunal Kapoor: I've just become a little bit more practiced. And I really believe that you need to just be a little bit more structured in the way you create time for things.

Anita Brick: I'm curious how you have the discipline, although it may be obvious given what you do, who you are and how long you've been doing what you do. But how do you have the discipline to not be attracted by that ping or to say, "Well, I did schedule this time in my calendar that should be for this, but I'm going to default and have another meeting." How do you have that level of discipline? It sounds amazing to me.

Kunal Kapoor: Well, I shouldn't convey that I'm 100 percent disciplined, because I'm not. If I'm doing that, then that would be incorrect. As with all things in life, it's practice. Taking 30 minutes to have dinner with your family, with the phone on the side, it's very rare that the world is falling apart if you do that. The reality is people know to pick up the phone and call me if there's an emergency and I'll make myself available. I'm always available to my team. My phone is always on, even if it's the middle of the night. You just learn that the world keeps going around. And sometimes you do need to carve that mental space, because I'm a better leader at work too when I create space for doing other things and not just taking my work with me in every moment of the day. Because sometimes when I'm thinking about other issues and learning about other issues, it does ultimately end up coming back to helping me at work.

And look, candidly, when work is going well, your family life goes well. And when your family life goes well, your work life goes well. And so, that's great balance. It doesn't mean I'm working 10 or 12 hours a day and that's it. And it doesn't mean I have to go and do six hours on a weekend with my family. No. It just means that you put in the right effort on both things and sometimes one is a little bit more on the ascent versus the other. But over time it tends to balance out and you get the right spot. Although, my family may disagree with my answer here.

Anita Brick: Most people want more of us, regardless of what dimension of our life it is. And I like your candor. I think that it's amazing because you clearly have a commitment to things that are important to you and you have heart, because I don't believe anyone can be a leader today without having an empathetic heart. And that seems pretty obvious with you as well.

Kunal Kapoor: Thanks for saying that. I mean, I think you have to be authentic. And I have a lot of heart for my work and I have a lot of heart for my activities that are outside work with my family and otherwise.

Anita Brick: It's important. So, do you have time for one more question?

Kunal Kapoor: Yeah, for sure.

Anita Brick: Okay. So, we like to get really practical. When you think about it, what are three things you would advise someone to do and even become to succeed as a leader in today's world that is changing so rapidly?

Kunal Kapoor: Well, first of all, don't take any advice from me. I think that's a good starting point. We are all always obsessed with bad leaders, capable in this way or that way, and I'd like to be this way as well. And I always say to people, "You start to become a true leader when you're comfortable in your own skin." And there are many leaders who I admire, and I borrow all kinds of things that I learn from other leaders, and try to make them part of what I do. At the core, I lead in a way that I'm comfortable with. What people see with me is me. It's not somebody else. I think that's very important. I feel like my voice and what it means is not something somebody else ought to control. And that authenticity is important because you're going to have good moments and bad moments. And you're going to have moments where you need to deliver messages that people don't like. Get chances to deliver messages that people like as well.

But doing it in your voice is important and in a way that is authentic to you, no matter how much you rely on other tidbits of information, is so incredibly critical to being a good leader. The second I think is being even keeled. The first question was, "Oh, there's all this stuff going on in the world." And sure there is. But if you are conveying nervousness, if you are conveying distraction, if you don't show some grit, then I think that rubs off in everyone in the organization as well. And so, I think being calm and thoughtful in how you lead, especially in moments of stress, is incredibly important. And the third thing is to have a growth mindset. And that's a total cliche. I've worked at one firm all these years because it's not the same firm. It's the same values and the same mission for the most part, but what we do is very different. How we do it is different. Who our clients are has kind of changed as well.

It makes it a lot of fun, because you come to work and something changes and face new challenges. And so, really growing and having a mindset to accept growth, and think about growth, and embrace growth is important, because we can all very easily get caught up in what could go wrong. And especially if you're an analytical type and you have a degree from a place like Booth, trying to get to the answer like, what is going to go wrong in this situation? You can get so distracted by that. It's so important to do that part of the analysis, but you got to think about how can something come to be as well. One of the signs of good leadership is really trying to solve how you get from A to B, even if that seems impossible or difficult or unreasonable, because you've got to have a growth mindset. And I think that's important in my view.

Anita Brick: I totally agree. Anything else that you want to share? I know I said 3:00, but is there anything else you'd like to share before we conclude?

Kunal Kapoor: No, I think I've already probably put half the listeners to sleep.

Anita Brick: Okay. Not to disagree with you, but to disagree with you. I disagree with you. I think you gave us a lot of value. And the thing that I learned about you is that you know who you are. And I think that's part of what was contained in number one, in your thoughts at the end, is that over time you've learned who you are and you lead with that authenticity, which makes it so much easier to follow. I would guess, even when a person might disagree with you, they know they're getting one Kunal. They're not getting Kunal under this situation and Kunal under that situation, because the trust that is built through that authenticity is amazing. So, anyway, thank you. Thank you for being very forthcoming and making time for us.

Kunal Kapoor: Totally my pleasure. Thank you so much.

Anita Brick: Great. And thank you all for listening. This is Anita Brick with CareerCast at Chicago Booth. Keep advancing.