Andrew Liveris has headed Dow Chemical for a decade and been with the company for 37 years. He believes the CEO’s role is a balancing act, answering to shareholders day-to-day while also having a vision for the long term.
He has the ear of Barack Obama, he runs one of the world’s biggest companies and he admits that, while he’d like to, you can’t have it all and be the chief executive of a multinational company.
Andrew Liveris is a boy from tropical Darwin in Australia who is now president, chairman and chief executive of Dow Chemical Company, based in Michigan in the US.
He advises President Obama on how revolutionising manufacturing will kickstart the US economy and deliver prosperity. Under his stewardship, Dow – a business with US$57 billion of sales annually and 53,000 employees globally – transformed from a commodity producer to a high value-add company with innovation at its core.
And he has found a way to re-skill and redeploy thousands of workers in the Detroit area who lost their car industry jobs during the global financial crisis.
In this interview with the chief executive of CPA Australia, Alex Malley, for INTHEBLACK and The Bottom Line, Liveris reveals which was his ideal job and how he deals with the stress of his demanding schedule.
Alex Malley: Andrew, I should ask for the movie rights to your story because we’ve got a grandfather who came to Australia [from Greece] in 1915 and his grandson running one of the largest companies in the world, in the US. It’s a wonderful story isn’t it?
Andrew Liveris: It is … my grandfather came through the Gulf of Aden or Suez Canal. One boat, another boat to Singapore, and then [he] literally got on the first boat heading to Australia. Did not know it was going to Darwin and so just by accident he got on that particular boat. And so there we are, grew up in Darwin as a result.
Malley: And he built a shanty home with a dirt floor?
Liveris: Yes, they took a photograph of that shanty; blanket as a door, dirt floors, pot-belly stove … my father and his two brothers and a couple of cousins – rags, barefoot.
That photograph is in the family. I show it to my kids. I think it’s important to remember that we are here because of the people who preceded us and their sacrifices.
Malley: Your dad was just two years old when your grandfather came to Australia, and was a carpenter who showed early form in building a business.
Liveris: In essence, he was eight years old when he had to go out and start working. My grandfather died young so my father had to support my grandmother.
He was self-taught. He took his middle brother and brought him into the trade and the two of them built what ended up being the Northern Territory’s largest building company, Progressive Builders, prior to the cyclone [Cyclone Tracy devastated Darwin on Christmas Day in 1974].
American companies seem to say, 'I don’t care where you’re from, you can be CEO.'– Andrew Liveris
The youngest brother became the immigration minister for the Northern Territory and got a posting in [Australia’s] Madrid and Athens’ embassies as vice-consul.
Malley: Your dad passed away when you were only 15. That’s an extraordinarily tender age for any child to lose a parent. But your uncle stepped in to provide guidance.
Liveris: Yes, the aforementioned younger brother who became the immigration minister, he stepped in.
I remember the day of the funeral, he put his arm around me and said, “Andrew, don’t you worry, I’ll look after your family.” It was profound. A father figure is what he became.
As I went through my early career I sought out mentors, like he sought me out. That’s another attribute I gained from what was a tragedy. Seeking out people who are smarter than you is something which I keep doing today.
Malley: Speaking of today, your career has taken you to the US. How do you compare the business cultures of the US and Australia?
Liveris: Can I say it’s like chalk and cheese? When I was going through university my professor [at the University of Queensland], Don Nicklin, terrific guy, he had spent a lot of his work career and then his academic career in the United States.
Most young Australians were thinking Europe, thinking the UK. He strongly influenced me to think United States.
So I did my curious learning thing; I learnt a lot about America and I said “I’d like to join an American company” because they seem to have a different cultural model.
They run global companies but they value diversity. They seem to say: “I don’t care where you’re from, you can be the CEO of this company.”
Not that I thought that at the time, but literally you can grow and learn with us.
Americans celebrate success, celebrate leadership. I think our country’s [Australia] gotten better. In the last decade or so of my coming back as a CEO, I’ve seen a big sea change in Australia celebrating leadership … still a long way to go.
Australians are still risk averse. When you have a great lifestyle, why risk it? I get it.
Americans have a great lifestyle but they know that if they stayed still they’d atrophy and I think there is a little bit of that occurring right now – the decline of empires and what happens to empires.
Malley: So let’s turn to manufacturing. You’ve written a book about the issue, Make It In America. We have enormous dilemmas in Australia in relation to manufacturing. Where do you see the innovation in manufacturing in the US and where perhaps in Australia could we look to improve that?
Liveris: I wrote a book on this because I’d made maybe six years of visits to Washington under the Bush Administration and the Obama Administration, but was going nowhere fast.
The American psychology was that manufacturing was old school, was smokestack, was pollution, was the industrial era and that in the new era, services economy was the way forward, that we could become the financial services capital of the world.
In that book I made a couple of observations that were in front of people’s noses, like most things, so I simplified them: Where production goes, innovation follows.
Why does China run a production economy? Because it wants a research and development economy. To get to a knowledge economy, to build the iPhone, you had to start with the flip phone. To have a flip phone you had to start with the brick we used to call the car phone. To have the brick called car phones, you had to have telecommunication capability and chips.
America started all that and then grew it and so therefore we have the iPhone. China gets that.
The other observation I made is countries around the world want what America has, and countries unlike America compete like companies. So you’ve got Japan Inc., China Inc., Germany Inc.
Nation states are the new competition.
President Obama reacted quickly. He said we need a manufacturing economy of the value-add kind. “To compete in this world of ours, it’s not just brawn and muscle, it’s not just low cost and commodities. I need to be smart and then how to combine brawn and brains? Well I need an innovation-centric economy, so I need to create lots of Silicon Valleys” [Obama said] – and that’s what we are now doing. I’ve been coming back to Australia since I wrote that book and offering Australia help because I think Australia can be a mini America.
Malley: And what’s been the reaction to that offer?
Liveris: It’s slow. One thing we overcame in America, as witnessed by comments from President Obama, is we had a willing government that was in crisis.
Malley: It helps when they are in crisis. They are a bit more focused.
Liveris: Everything in humanity is like that, right?
When I came back I kept noticing dependency on the resource sector and my trips to China were telling me it was short lived. I want to “de-commoditerise” this economy.
I don’t think Australia’s gotten that yet but you’re noticing it now. As the resource sector loses its steam, if you don’t have a diversified economy you will go the way of commodity cycles – boom/busts.
Malley: You need a vision to go with it. Of course we need to be fiscally responsible, but you can’t do that without a vision for where you want to be.
Liveris: So I use the private sector world to reinforce your point, which I really agree with. I have shareholders who demand an outcome every three months, whether I like it or not. I also have shareholders who want to hang on for many years and that balancing act – deliver the short while always having the north star of where you’re going, the vision of where you’re going and articulating how you’re going to get there, is the role of any CEO.
Malley: Let’s look at your governance model in the US – you are the president, chairman and CEO of Dow. That would not happen in Australia and in many ways the chairman of the board has become the middle man between the company and the shareholders. I look at your scenario, a decade or so in that role; ultimately you’re only answering to one group, the shareholders. It’s the ultimate market model. How do you compare those two models?
Liveris: Boards have changed dramatically in America in the last decade. The old way of doing boards, I’m going to use the term “country clubs”, the chairman and CEO would appoint friends and family, more or less. Shareholders were getting the short end of the stick.
Governance around shareholders in this modern era is who the chairman and CEO is accountable for. So the only question before the house is, should the chairman of the board do the shareholder interactions, or should the CEO, or should they both do it?
The answer is both because the CEO knows the day-to-day, knows the short term but is guiding the company for the long term.
The American model of doing it in one job works because you take the second-guessing out of two people trying to do it. But the accountability there is enormous. I spend a considerable amount of my time in front of shareholders. I should be, shouldn’t I? It’s their money.
Malley: At one point you had to talk about a lower return during some tough times.
Liveris: Companies of any size have to bet the company. When you bet the company, the short-term returns go down. The board and I agreed to bet the company, to change from a commodity producer to a high value-add innovation company.
At our size, that’s high risk. Having the resiliency to stay the course no matter the slings and arrows of the short term is what I get paid for. I think the shareholder interaction helps keep me and the board on balance.
We had to explain to our shareholders during that period of low returns, what that meant. And of course created a long version of, if you stick with us, this is what it’s going to look like.
Malley: We wish you continued success and look forward to you coming home at some point.
Liveris: Yes, me too. Australia is a great place to live.
Watch Alex Malley’s interview with Andrew Liveris on The Bottom Line which screens on Saturdays at 4.00 pm on Nine Network Australia.
Andrew Liveris on...
Retooling a workforce
The high school diploma gets you nowhere anymore in America. An undergraduate degree, not much further.
[When autoworkers were laid off in Detroit, Liveris used community colleges on the Dow payroll to re-skill them.] We actually helped reinvent the community college curricular to get these technical trained operators of highly sophisticated machinery, robotics automation.
We gave them a complete new skill set and now they are employed and putting that into society. This is something that will save America. Organising is part of what I’ve been doing with this current administration and its Advanced Manufacturing Partnership, because you can’t do one-offs.
You’ve got to have a systemic approach and that’s why I believe in public-private partnerships.
It’s a cliché but I’m going to say it outright: The luckiest moment of my life is that my wife agreed to marry me, and I married up.
You can’t have a career like this and have it all, you’ve got to find a way to integrate your life with your family.
I have 20-somethings. I’m proud of them. They’re balanced. They have integrity. They are loving.
Their mother’s done that.
My priorities were very clear: my family and my work. Just make it conscious, I tell young people at Dow to do that.
Along the way you’ll make choices and, by the way, not everyone should want to be a CEO. I had my best job at Dow four jobs ago, in terms of having an integrated life. But some of us have to take on these burdens and my family supported me all the way.
As we see them grow into their professional careers, I hope what l learnt along the way will be helpful to them.
People ask me how I survived Dow’s toughest years, five or six years ago. I never lost sight of where we were going and I never accepted someone else’s stress. I’
m as energetic in this job today as I was 10 years ago, and it’s a lot because my family supports me and I’m a giver. I believe the world is divided between givers and takers.
Be a giver, it releases stress.
The US culture
Number one: the US still has the best university system in the world, by far the most far reaching.
Number two: it celebrates entrepreneurial action and success. Three: young people like that.
And you see that with all these new internet entrepreneurs and billionaires and this ability for America to be agile. So it gets the best of humanity.
There is no real other country that does that yet.
Being there for the long haul
How do you run a company with a 10-year vision? One day at a time. I’m making decisions every day towards that 10-year vision.
This article is from the June 2014 issue of INTHEBLACK.