Sound Leadership Begins in Silence

Ethical focus, desire to make a positive social impact guides Kellogg professor and Northwestern trustee Harry Kraemer Jr.

By Matt GolosinskiApril 17, 2017

It’s midnight and the house is quiet. Harry Kraemer Jr. is sitting in his study, reflecting on the day’s events — good, bad, indifferent—and filling a journal with his observations.

He’s done this most evenings for years, even back when his five children were all still at home here in Wilmette, Illinois; even when he was chairman and CEO of Baxter International, then a $9 billion global healthcare firm with more than 50,000 employees in 100 countries. He works it in now despite busy days as an executive partner at Madison Dearborn, the Chicago-based private equity firm he joined in 2005, after 23 years with Baxter. The notebook is part of a disciplined routine and values-based leadership model that Kraemer extols in his booksblog, and at the Kellogg School of Management, his alma mater, where he teaches in the MBA and Executive MBA programs.

Leadership, according to Kraemer, requires true self-confidence, which he defines as a willingness to accept one’s weaknesses as well as strengths, while committing to constant improvement. It also demands genuine humility; the ability to balance multiple perspectives; and daily reflection.

“We’re moving so fast these days that it is easy confuse activity with productivity,” says Kraemer, a devoted family man and Northwestern University Life Trustee. “You have to turn off the noise and figure out first, ‘What are my values? What do I stand for? What really matters?’”

So he writes and reflects even though he’s been a lifelong “numbers guy,” with an early aptitude for mathematics, a talent with which he processed childhood. He funneled grade school civics class through arithmetic to memorize every US president from Washington to L.B.J. with unerring accuracy. He crunched baseball statistics to calculate Bob Gibson’s earned run average and Willie Mays’ batting average and slugging percentage down to the inning.

“Baseball was the only sport I really got into,” says Kraemer, “because it’s all statistics! You become incredibly facile with mathematics. Now, if only I’d been as good at playing the game as I was at analyzing it,” he says with a laugh.

He embraced history as a kid, too, thanks to his maternal grandfather, Farrell Grehan, who taught the subject for nearly 40 years in Queens on Long Island in New York and whose house — even the kitchen — was filled with books. But math was Kraemer’s first love and would eventually lead him into economics and finance. In 1977, he earned his undergraduate degree from Lawrence University in Appleton, Wisconsin, where he met his wife, Julie, to whom he’s been married for 37 years. (For their first date, on Halloween in 1976, Kraemer dressed as Jimmy Carter, wearing a jean jacket with peanuts sewn on; Julie went as Rosalynn Carter.) He earned an MBA from Kellogg in 1979, which enabled him to move into senior roles where he learned the importance of “knowing oneself” to be able to help others and shape institutions.

That perpetual quest for insight, night after night, leads him to his notebook, even after long days. Maybe especially after long days, when examining decision-making’s nuances and half-hidden motivations can yield a little wisdom for tomorrow. There’s a satisfaction in making an honest effort, whether or not you’re tired. That’s something his grandfather taught him decades ago while taking long walks in New York or Scranton, Pennsylvania. Grandfather Grehan would settle a youthful grumble and instill respect for the determined attempt with a retort that’s become a refrain for Kraemer: “That’s why they call it work, chief!”

It’s advice that punctuates Kraemer’s dynamic classroom presentations, serving as a touchstone within a rich narrative of corporate war stories and personal vignettes that showcase his leadership model in action. For him, leadership is a vocation, not a set of buzzwords. It’s rooted in strong ethical values, anchored in community spirit and service to an enterprise larger than oneself, even though leadership, he says, begins to flourish within the individual — and long before that person enters a boardroom.

“Leadership has nothing to do with titles and organizational charts,” says Kraemer. “It has everything to do with influencing people and relating to them.”

He provides an example from his career. Early in his Baxter tenure while in the acquisitions department, Kraemer was calculating the valuation of a company that Baxter was considering buying. He couldn’t get the value above $50 million, which meant there was no financial justification to pay more than that. His own boss praised his analysis, even while admitting that “those guys” are going to make the deal — for $100 million. “It’s done, Harry. Leave it alone.”

This went against Kraemer’s logic. Making matters worse, Kraemer couldn’t get his boss to reveal who “those guys” were. Fueled by his conviction that the company was about to throw away $50 million, Kraemer decided to take matters into his own hands and “accidentally” bump into the CEO, Vernon Loucks Jr., the next day.

“Everyone knew Mr. Loucks went into the cafeteria about seven a.m. to grab a grapefruit,” Kraemer remembers. “So I’m hanging around the grapefruit about a quarter-to-seven the next morning, waiting to casually introduce myself to the head of the company, a guy I’d never spoken with before.”

Loucks arrives right on time, scrutinizes the produce and affably greets the junior employee who just happens to be hunting for the same breakfast. He asks Kraemer what department he’s with, what project he’s working on. Before long, Kraemer convinces Loucks to review the numbers that “those guys” greenlighted. The deal gets quashed. “As I’m leaving his office later that day, he stops me and says, ‘Harry, any time someone tells you to do something and they don’t give you a really good reason, push back until they make the right decision.’ I said, thanks, because I was starting to think that you were one of ‘those guys.’ He looked at me and asked: ‘Who are those guys?’”

Kraemer is effusive and intense, forthright. He’s a person who talks to the custodian as easily as the CEO, and who doesn’t think this makes him a saint. It’s just what decent people do. He’s happy to show you the cards because he prefers you learn the game too, and, well, he’s won plenty already. Plus his folks and close-knit family (three younger brothers and one sister, who he says all got along exceptionally well and still do) taught him “not to get caught up in the whole material thing.” His father worked in the financial sales for CIT Group Inc. His mother was a secretary. He remembers his dad telling him, about age 11: “Have you ever seen a hearse with a U-Haul trailer pull into the cemetery? All that stuff is not going with you. Never be possessed by your possessions.”

Kraemer never flew on a plane until after college and was honestly puzzled by classmates who jetted off to some place called Vail to go zipping down a mountain on skis. “The only time I’d ever seen skiing was in a James Bond movie,” he quips, adding that he viewed his modest upbringing as a competitive advantage. “I knew what every single class cost me, and there was no way I was ever going to miss one.”

Today, Kraemer seems driven by kind of focused urgency. That’s because he wants to get this right, make an enduring contribution. And the clock is ticking. At 62, he hopes to teach for another 20 years. He’s got the passion for it, but each day is a gift and this realization is never far from his mind.

“We’re in this life for such a short time, the blink of an eye,” says Kraemer, with such conviction that the fact settles in the bones as if for the first time. “What are you called to do?”

He sounds like the Catholic priest he once thought he might be, at age 13, talking about that vocation with his Uncle Francis, his dad’s brother, who was a priest. Francis convinced his nephew to consider ministering to a flock outside the church — maybe in the business world. Plenty of room there for franchise opportunities, they decided. Plenty of folks who could benefit from someone who emphasized how values, how the Golden Rule, could animate the commercial world to better purposes.

“You know, Harry,” his uncle suggested, “you could impact a tremendous number of people that I can’t even reach.”

Kraemer demonstrates an unshakable faith that he can play a modest but important part in helping the next generation of leaders succeed. He’s not Pollyannaish, though. He knows the importance of talent, discipline, diligence, and luck, too. But he starts from a premise that leadership’s four pillars, as he articulates them, can benefit almost anyone.

“You don’t have to have an executive title to be one of those of ‘those guys’ to start your leadership journey,” says Kraemer, referencing his shorthand for the stereotypical upper-management honchos who call the shots — sometimes without enough pushback from others in the organization who could help sharpen strategy or execution. Better, he says, to work hard, smart, and with unflagging determination to make a difference. “When you do, you may discover that you are ‘one of those guys.’” Northwestern Research News spoke with Kraemer about his leadership model and career.

What’s the basic purpose of being a value-based leader?

Value-based leaders help their teams understand and navigate what I call getting from the roots to the trees to the forest — to move through the micro to the macro levels of a situation. The best leaders tend to have the capacity to keep things simple and apply common sense, which is not common. That’s not to say that you never get into the weeds. The problem, though, for some people, is they dive down to the bottom of the pool and they never come back up. The ability to go down and then come up again is huge. I also think it’s important to start cultivating your leadership skills long before you have anyone report to you. Leadership has nothing to do with titles and organizational charts. It has everything to do with influencing people and relating to them.

You focus on four principles that guide values-based leadership. What are these?

I encourage my Kellogg students to cultivate self-reflection, balance, true self-confidence, and genuine humility. Reflection is the most important because it helps you determine your values and purpose and what really matters. Balance lets you benefit from different perspectives to gain holistic understanding. True self-confidence is more than a collection of great skills, though that’s also important. This confidence lets you accept yourself as you are — strengths and weaknesses — while being determined to keep improving. Genuine humility keeps your feet on the ground and reminds you where you come from. It helps you sincerely value and respect others. If you can get better on these four principles, you can lead anything.

How do you define success?

I immediately think not about conventional success, but about significance. You and I are passing through this world for the blink of an eye. What difference can you make? What are your values? What’s your purpose? What are you called to do? Rather than getting preachy about it, I really think that, by living as an example to others, we can have an enormous positive impact on people.

Yet, you’ve enjoyed conventional success, too. You’ve managed to walk a line that seems difficult, one that melds material success with genuine spiritual depth. You never seem preachy, but in your teaching you bring an enthusiasm that might be equally at home on the church pulpit.

It’s all related to balance. If you work hard and do a good job, treat people well, you’re probably going to do well. A big part of this I learned from my family. Do well, but don’t get caught up in the whole material thing. You don’t have to be a monk about it. You can buy yourself something nice. But the key phrase my father always told us is “never be possessed by your possessions.” Keep it in perspective. One of the unfortunate things — and this is critically important — we’re moving faster and faster and may have confused activity and productivity. Turn off the noise, turn off the gadgets. Unless you take time to reflect on your values and strike a balance, it’s very easy to get caught up in materialism. You end up saying, “Oh, I need a bigger job! I need more money!” As if somehow that’s going to make me happy. The research suggests that, after a certain point of material comfort, more money does not make you happy. There is no correlation. In fact, it can lead to more and more things to worry about. “Hey, Joe, what are you worried about?” I’m really worried about my condominium in Aspen. They got four feet of snow and the roof may cave in. “Wait a minute. We got a billion and a half people living on a dollar a day and I’m supposed to feel sorry about your condo in Aspen? I don’t think so!”

Who were your early mentors who inspired you?

I was fortunate to have a very close family. I’m the oldest of five children and I still talk to my siblings every couple days. One of the things my parents really emphasized is that we all get along. We’d all go to the movies together — even when I was a junior or senior in high school. Family was always very important, and to me this is the hallmark of what matters and why I’ve always tried to cultivate these values with my own children. 

We’re all living such fast-paced lives. Are we really taking the time to understand what one another are doing or thinking about? My dad, when we were growing up, would go around the dinner table and ask, “Hey, Harry, what did you do today? Hey Paul, Hey Steve, Hey, Marilyn, Hey, Tommy: what did you do today?” And everyone would share their life and experiences. That made such an impact on me.

I remember this vignette from second or third grade. I’m walking home with my buddies and we go into a 7-Eleven. A couple of the guys are stealing penny candy, back when you could get candy for a penny. I didn’t take any. And it wasn’t just that I was trying to be a good guy. I literally remember thinking to myself, “If I do this, how would I explain this to my dad at dinner tonight?” The idea that I wouldn’t tell him never occurred to me! [laughs] Because that’s what we did. Julie and I have done that with our kids, too.

You often mention your grandfather when you teach. What role did he have in your life?

My maternal grandfather, Farrell Grehan, was a history professor on Long Island in New York for 40 years. When I was 6, 7 years old, he’d walk me around the parks in Queens and would talk to me about Alexander the Great and the Romans and what the Greeks were doing. I got so involved in world history and culture. He’d always say, “Harry, I know you’re an optimistic guy, but you got to understand how to think about people and relate to them, because, unfortunately, from the very start, there’s never been a period where man hasn’t been at war with man. Even slight differences cause friction. This inability of people to find common ground is a root of so much trouble.” He had an enormous impact on me.

My grandfather also pushed me to go to a liberal arts college. Rather than deciding what I wanted to do for a career, he encouraged me to go to school to really understand history, government, religion, science, mathematics, and the arts. I ended up getting a scholarship to go to Lawrence, a small liberal arts university in Wisconsin. I originally thought I might get a PhD in math. I was very close with my math professors at Lawrence, but they encouraged me to study applied mathematics — economics and then finance — because they knew I was an outgoing person. At Kellogg, Don Jacobs, as a finance professor and dean, was an enormous mentor for me.

You almost chose a different path, not business or education, but the priesthood.

When I was a child, they would pray at Mass for vocations to the priesthood. “There’s a shortage of priests, so we need to pray that more people join the priesthood.” One Friday night at dinner, I got real serious and asked to talk to my dad’s brother, Uncle Francis, who was a Catholic priest and who often joined us for dinner. We went into another room. “Father Francis, I just got to tell you: I think I want to be a priest.” He says that’s wonderful that you received a calling to do this! I listened to him and then said, “Father Francis, let me make sure you understand something: I don’t think I have a calling. In fact, I’m a little disturbed by this whole thing. I’d like to get married. I’d like to have kids.” So he looks at me and says, then why are we having this discussion? “Here’s the reality,’ I told him, and maybe this came from my practical or math side. “We absolutely need more priests. Somebody’s got to do it. And quite honestly, Father Francis, knowing my friends, if any of them becomes a priest, we’re going to have a real problem, so somebody’s got to step up.”

What stopped you from becoming a priest?

Uncle Francis told me that one of his frustrations was that the people he could impact were the ones already coming to church — not that they didn’t need help too. But he often wondered how he might impact the people who don’t come to church. He convinced me that a career in business, for example, could allow me to share my values — to live my values — in ways that might help others. I tried to do that throughout my career, at Baxter and now. If today I was teaching finance or accounting, I probably would have done it for only a couple years. However, I’ve been teaching leadership for 12 years now, and I told Dean Sally Blount to sign me up for the next 20 years. I teach value-based leadership not only in the MBA program, but at companies, associations, and even high schools, too. I’ve done leadership seminars for rabbis, ministers, and priests, as well as school principals. I view it as a calling. It’s a privilege to have a small impact on the next generation of leaders.