Sam Walsh gives a lesson in humility at Dean’s Leaders Forum

7/12/2015

Rio Tinto CEO and Melbourne Business School alumnus Sam Walsh AO provided a lesson in leadership, forward-thinking and humility to students, alumni and the business community as the speaker at our final Dean’s Leaders Forum for 2015.

 
The head of the world’s second-largest and, Mr Walsh says, most-profitable mining company is understandably proud of helping to turn Rio Tinto around in the three years that he has been at the helm, especially given the global slump in commodity prices and the challenges his rivals face.

“Since the beginning of 2013, we have reduced our cost base by $5.4 billion, saved approximately $2 billion in working capital, trimmed our capital spend from $17.6 billion to $5.5 billion, reduced our gearing to a very enviable 21 per cent and increased our returns to shareholders,” he told the packed theatre.

His achievements as CEO and his many contributions to the Melbourne and wider Australian community have endeared Mr Walsh to his hometown, as demonstrated by the standing ovation he received when introduced by Melbourne Business School Dean Zeger Degraeve.

MBS_DLF_December-2015-0978.jpg



It’s all about communication


Mr Walsh attributed much of his success as CEO with engaging with his 60,000-strong workforce and the people around him.

“When I took over as CEO, I had the do-gooders, the thought police in the business, saying. ‘You can’t tell people what our earnings are or our capital is this month’. But you’ve got to tell them, so they get the feedback and see the difference they’re making.

“It’s all about communication, sharing the data. When you’ve got 60,000 people in an organisation saying, ‘Ah, I get it. That’s why we’re doing this’, it has a huge impact. People want to be part of a winning team and proud of what they do. That’s what you can build on, and it gathers momentum.”

Mr Walsh said driving change across the organisation also required a major transformation of Rio Tinto’s culture, which required strong leadership to embed a strong sense of responsibility across the company.
 

Listen to Mr Walsh’s full presentation.

 

 

Taking ownership


On becoming chief executive, Mr Walsh asked all his employees to start acting as owners and ask themselves, ‘If it were my money, how would I spend it?’

“You can ask what difference that could make. Well, if you’ve ever worked for a car rental company, you’ll know the difference. People don’t drive rental cars like they drive their own car. They drive them harder and brake harder and do all the things you wouldn’t dream of doing with your own car.
“I mentioned earlier that we pulled $5.4 billion out of our costs. That wasn’t me pulling it out. There were 60,000 employees all questioning what they’re doing, how it adds value, how this expenditure helps the business.”

 

Technology matters


A decade ago, when head of Rio’s iron ore business, Mr Walsh took his team to the US, not to look at mines but to see how technology was being used in the space, automobile and agriculture industries.
When a team member saw automated farm machinery, he reacted with, ‘If they can do that for farming, why can’t we do it in mining?’ The company now operates its massive Pilbara iron ore mines remotely from Perth, 1500 kilometres away.

“I hear about the work that Google and others are doing. Well, I’ve got news for you, we were there eight years ago. With these 70 trucks, we’ve mined 400 million tonnes of material, and they’ve travelled four million kilometres, that’s about 100 times around the earth.”

When Rio Tinto realised that it could automate the giant Komatsu trucks used in their Pilbara mines, it bought the next five years of the Japanese company’s production run to prevent rivals getting hold of them.

 

Career lessons


Mr Walsh has been with Rio for 22 years, following a 20-year career at General Motors and Nissan, where he learned some valuable lessons. He’s a firm believer in the just-in-time approach to production efficiency and the committee approach to decision making, made famous by the Japanese, which he applies at Rio.

Students and alumni were keen to probe Mr Walsh about his involvement with community organisations, especially in the arts, such as the Black Swan State Theatre in Perth and, now, the Royal Opera House at Covent Garden in the UK.

“These organisations provide a perfect opportunity to stretch your mind,” he said. “I particularly like the arts because it forces you to take a different view, a creative view of the world.

“And they teach you how to manage your time – how to do 25 different things at once, make quick decisions, absorbing the facts and data, or pass decisions down the line if appropriate. It’s a great opportunity for development.”

The audience also wanted to know about the most important lessons he learnt in rising to the top of one of the world’s oldest mining companies, which began in 1873 in the town of Rio Tinto in southern Spain after taking over a mine that folklore traces back to King Solomon and the historical record to Roman times.

”I think it’s remaining in touch with reality. A lot of people get to an elevated role and suddenly lose their human qualities. But you just physically can’t. You won’t be effective if you isolate yourself and separate yourself from the people who work with you and your customers.

“I cherish friendships and relationships. They’re awfully important, especially in terms of the people who are willing to say, ‘The Emperor’s wearing no clothes today. Sam’s gone off on a tangent’.

“And, sometimes, it’s the people you wouldn’t even expect to have a view or opinion. It’s important to have a relationship or chat with them. It doesn’t cost you anything.”

 

Mentor and mentored


Mr Walsh also spoke about the importance of mentors. He has one, who tells him, when he says he’s thinking about this or that but isn’t sure what to do, ‘If you’re thinking about it, then do something about it.’ And he is a mentor himself – to the thirty-something, human-dynamo, Holly Ransom, the youth representative at the G20 summit in Brisbane in 2014.

For a busy man, Mr Walsh values the time he spends with other people. An hour after the questions finished, and after Dean Degraeve had presented him with the 2015 Honorary Fellowship of the Melbourne Business School, the highest honour the School bestows on its community members, he was still listening and talking with our students and alumni over drinks.

It was a class act, which many in the audience would love to follow.

If you’re interested, you’ll find a copy of Mr Walsh’s speaking notes on the Rio Tinto website.