Yahoo Finance’s Brian Sozzi speaks with former Prologis CEO and author of ‘Transfluence: How to lead with Transformative influence in today’s climates of change’, Walt Rakowich, about how leaders should go about taking charge through this national crisis.
BRIAN SOZZI: With the state of the American economy in a bizarre place, and uncertainty among US business leaders growing more prevalent, let's check in with one CEO who was able to bring his company back to profitability after near collapse following the Great Recession. It's former Prologis CEO Walt Rakowich, and he's also out with a new book called "Transfluence."
Walt, good to see you here. Prologis is a company my producer Nick Monte knows very, very well. Explain to our viewers, how did you use transfluence? What is it? And how could other leaders use it?
WALT RAKOWICH: Right. Well, thank you, Brian. First of all, thank you for having me on the show. And you know, transfluence is short for transformative influence. And you know, look, I went through a very difficult time in 2008. In many respects, I see this as a similar time to that.
And you know, I learned one thing, and that is that tough times are your greatest opportunities. And transfluence really is about building an environment of trust internally. I think the more trust you can build as a leader during difficult times, the better off you are. People are watching very, very closely during difficult times, and your ability to positively influence them and build trust is, I think, critically important to a-- to a turnaround.
BRIAN SOZZI: Walt, how could government rebuild trust?
WALT RAKOWICH: Oh, boy. Well, government can rebuild trust probably the same way that-- that businesses rebuild trust over time. And I think number one, it starts with transparency. I talk a lot in the book about the importance of transparency.
And these days, I think, leaders have to actually create an uncomfortable amount of transparency because we live in a more transparent world. And you know, I like to say in the book, you know, leaders live in a world of glass houses where everybody can see them. So you can't really hide anymore these days.
I think the second thing is that, you know, we live in a world where we're overloaded with information, and sometimes there's false narratives. And so I think to the extent that leaders can lead with a strong core set of values that people can believe in, I think that that goes a long way towards building trust.
And in the book, I talk a lot about the importance of humility. I talk about the importance of integrity, honesty. And I talk about the importance of leading in a human way. I mean, I think these are all really, really critical in a difficult time.
INES FERRE: Walt, Ines here. You, also in your book, talk about vulnerability. That goes along with humility as well. Talk to us a little bit about that. Why is that so important?
WALT RAKOWICH: Yeah, you know, Ines, I-- you know, on my second day on the job, our stock was down 96% over a 10-month period of time, and we were the third worst-performing stock at that point in the S&P 500 in 2008. We went to Wall Street, and there were 1,000 investors in the room, and we started off by talking about all the problems that we had and the things that we did wrong over the course of the last two years. And we told them that we needed to rebuild trust.
And we told them, don't trust us, but watch us. And I really think that was a vulnerable moment for me as a leader, and it's very uncomfortable for a leader to say those kinds of things. But yet it can be very powerful because it's human, and it's the ultimate expression of honesty. And so I think-- look, I think by letting your guard down, you invite others to do so. And in doing that, I think that's where real communication starts.
BRIAN SOZZI: Walt, also a tough decision is to lay off people. We have seen over the past three to four weeks big companies laying off people, not one or two, we're talking thousands and thousands of people inside a day, in which I'm sure is creating uncertainty inside the organizations and brings into question corporate culture. How can leaders rally-- rally other employees back from situations like this next year?
WALT RAKOWICH: Through trust-- through establishing trust and transparency. Brian, you know, layoffs are tough. In 2008, we had to lay off over 30% of our workforce. And I think transparency was crucial to our ongoing reputation with not only the third of the people that we laid off, but the 2/3 of the employees that stuck around.
After all, you know, our reputation meant a lot to them. And so we were very transparent with our employees by really informing our employees well before we needed to that we were going to need to lay people off. We took them through the math. We literally said this is the position that we're in. And by the way, if we don't do this, we're not going to be around.
And I think we also built trust by handling it in a human way. You know, I mean, we gave our employees fair severance packages, you know, outplacement services, emotional support, financial advice, career counseling, you name it, we gave it to them and in a difficult time when we felt like we could go bankrupt. So it was hard to dole out that kind of money, but at the end of the day, we built trust and transparency-- through transparency, and we survived, and I think we kept our reputation intact.
BRIAN SOZZI: Walt, before I let you go, you're still very much involved in corporate America. You're not just an author of writing a book. What is the mood inside of corporate America right now as it pertains to the election? How concerned are top leaders at companies we know and trust, in many respects, known-- and trust and know very well, how concerned are they about the election outcome?
WALT RAKOWICH: Well, I think everybody's very concerned. And I think-- I think people are-- you know, I think, in many respects, the markets are on hold until-- until they find out what happens. And you know, you mentioned prior to this the stimulus package. I think that has-- it's going to be a big deal.
I think there's a lot of CEOs and C-level executives that are waiting for that to happen. But I'd say the flip side of that is that, you know, leaders need to look at this time and consider it an honor and a privilege to be leading during this time, not fear it, but continue to have a great attitude about it. Attitude matters, because their employees are watching them every day.
BRIAN SOZZI: All right, we'll leave it there. Former Prologis CEO Walt Rakowich, good luck with the new book, again, titled "Transfluence." Good to see you.
WALT RAKOWICH: Thank you, Brian.