The Servant Leadership approach

Though leadership is historically associated with dominance and assertiveness, there are individuals who, through their diverse experiences and unexpected paths, unveil transformative approaches that shape outstanding executive teams.

Principal of Black House and Chair of 7-Eleven and Starbucks Australia Michael Smith Hon DLitt (UWA) FAICD, is one such leader, whose remarkable journey has not only shaped many successful organisations but also challenged traditional notions of leadership.

As Michael discussed at an AIM WA Sundowner, the servant leadership approach has its merits in any successful organisation.

By igniting humility, authenticity, collaboration and prioritising the team's needs, he has seen how a positive work environment can be created where individuals feel valued and motivated.

The Servant Leadership approach

Michael's journey to success, marked by his experience as a leader and chairman, was both unexpected and, in his own words, accidental.

From not completing university, to eventually providing strategic support to organisations including Rio Tinto, the West Australian Football Commission and the Western Australian Cricket Association, he spoke on the humility of his unexpected leadership journey.

“I guess I would have voted myself as the man least likely,” he said.

To introduce the concept of servant leadership, Michael invited the audience to share their opinions through an online poll.

They were asked to choose between two leaders with distinctly different leadership styles. Riley, representing a decisive leader characterised by confidence, clarity and efficiency and Alex, a servant leader emphasising support, collaboration and empathy.

With the audience favouring Alex’s style, Michael also noted that while servant leadership was important, it was essential to become a decisive leader at times.

“The servant leader is foundational; from time to time you have to be decisive,” he said.

Michael further spoke on the importance of building trust in a team, regardless of leadership style, to build relational capital.

“If I trust you and we have a relationship, when we get cross with each other, there's something that we can use to patch it up,” he said.

Building trust within teams

Exploring this concept further, Michael shared his experience of becoming chairman of the West Coast Eagles football club, after being asked to join the board with no prior experience of football.

“I began thinking, ‘How could I become useful here because I don't know anything about this sport?’” he said.

Michael described his process of connecting with board members, engaging in discussions about their thoughts and concerns and identifying issues. He would then communicate these concerns to the chairman, who would lead discussions on these topics during board meetings.

Amid a controversy, it became clear that the club needed a new chairman, and as a result, Michael was appointed to the position.

“... There was some surprise [with the decision]. But that was a classic example of the board choosing me because they trusted me,” Michael said.

He drew a comparison between this trust-building approach and his experience of being selected to become chairman of the National Board of the Institute of Company Directors.

“I spent time figuring out what would be important to the board and providing suggestions for how we could perform better as a group,” he said.

As the chairman at that time fell ill, Michael was quickly approached to take on the role.

“An astonishing result from my university underperformance. You couldn't make it up,” he said.

How do you make a servant and a leader compatible?

When it comes to strong leadership, Michael highlighted the importance of honesty.

“Being a good leader doesn't mean that you lack the ability or the capacity to listen," he explained.

"Being a servant leader does not make you subservient" 

Michael emphasised that leadership involves demonstrating your value by recognising and appreciating the individuals in your group and acknowledging their combined efforts.

In turn, if someone in the group isn't contributing or learning from their colleagues, they might not be considered worthy of their place in the team.

To justify this point, Michael compared this notion to having to become Riley - the decisive leader at times.

“[With crises] everything I've tried as Alex didn't move the dial,” he said.

“When we do become Riley, there's a cost. You can’t be Riley for too long. But there are times you have to be Riley.”

The 7-Eleven crisis

Michael delved into the challenges of being a servant leader during crises, such as the 7-Eleven wage underpayment controversy where many of the company’s franchisees were found to be underpaying their staff. 

He discussed the delicate balance between being a servant and a decisive leader, highlighting the importance of making tough choices for the greater good of the group.

“I was made chairman and had to deal with this incredible problem,” he said.

“We had 1000 pieces of negative media … The whole place was on fire. Then I’m thinking ‘servant leader isn't going to cut it at the moment’.”

Although the company had not done anything illegal, it was clear that some events had occurred under its watch, requiring some responsibility to be taken.

Michael discussed a leadership concept he drew inspiration from during this time, from Harvard Business School Professor John Kotter. According to Professor Kotter, effective leadership involves having a well-defined approach, motivating and inspiring people with that vision and ensuring they are motivated to move in that chosen direction.

“During the 7-Eleven controversy, I needed to think about how we could go about this mess, get people interested in how we would be able to receive feedback and give enough direction that people would feel motivated to work by,” he said.

In doing this, Michael spoke about the importance of setting an example during a crisis. “We needed to heal and we needed to heal fast,” he explained.

"We kept thinking about how we should act in light of the challenges ahead. Our goal was for people to look back and say, 'You set an example of how to take responsibility, look after those affected, ensuring it doesn't happen again and making things right’."

Handling the crisis

Examining the 7-Eleven crisis, Michael recounted the steps taken to address negative media and class action.

Faced with the need for clear direction and motivation, he re-emphasised the importance of being an example of responsibility, healing and cultural change.

“I thought this is the moment I've got to be Alex. What this needs now is for me to make myself small,” he said.

After speaking with many franchisees, with backgrounds predominantly from Pakistan, India and China, Michael discussed how cultural barriers were preventing a common understanding.

To initiate a change, he visited the families of the individuals in their home countries to grasp their stories. For Michael, this marked the initial step towards repairing their relationship, establishing trust and fostering a shared understanding.

When touching on this experience, he shared that “The success of our company comes from the moment where we all became sort of servants and said ‘we have to heal and we have to listen to each other’. My instinct is to fight, but now I choose to appreciate instead.”

Reaching a turning point

After the company decided to pay the unpaid wages of franchisees staff going back years at the cost of over $100 million, despite no legal obligation, Michael reflected on how this helped strengthen the company culture.

“I said until we can accept our responsibility, we can’t repair this … Let’s move on and put this behind us,” he stated.

“The culture that’s in place now, we did that. We faced into it and we fixed it … And it’s now better than it was before.”

Pursuit of meaningful success

As a respected businessman, chairman and leader, Michael's journey showcases the power of servant leadership.

By putting the team first, handling challenges with strength and instilling a sense of responsibility, he has transformed organisations while challenging traditional ideas of leadership.

His story serves as an inspiration for leaders seeking a path with a genuine commitment to the wellbeing of the team, without requiring the academic rigour behind it.

“I've never applied for a job … I have never been ambitious. But the thing I had right was to be energetic and interested,” Michael said.

“I liked the fact that I wasn't ambitious to achieve things that ultimately wouldn't have had meaning for me.

“ ... You’ve got two jobs in life. To be happy; you’re the only one that knows what will make you happy, and to be useful.”