'The job of a CEO is to be a stress absorber'
CEO of International SOS Arnaud Vaissié explains to IMD President Jean-François Manzoni how the business has survived 40 years by overcoming obstacles like COVID-19 and navigating financial crises....
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Rio Tinto CEO: ‘You have to bring hearts and minds with you’
Rio Tinto CEO, Jakob Stausholm emphasizes relationship-building and empathy to restore Rio Tinto's social license and guide its decarbonization efforts....
Jakob Stausholm emphasizes the importance of relationship building and long-term thinking as he works to restore Rio Tinto’s social license and set the Anglo-Australian miner on a path to decarbonization.
Jakob Stausholm spent most of the first four months of his tenure as CEO of Rio Tinto working from a hotel room in Australia.
His promotion to the top job came at the height of the COVID-19 pandemic after his predecessor was ousted following an international outcry over the destruction of two sacred Aboriginal rock shelters to make way for a mine expansion.
With the 150-year-old company’s social license in tatters, Stausholm, who was previously CFO, knew he had to get to the heart of the crisis.
“In our kind of industry – mining and processing – you cannot do good business if you don’t have social license. Social license is critical,” he explains. Stausholm flew to Australia, spent two weeks in hotel quarantine, and then went to personally apologize to the traditional landowners of the site.
The 56-year-old Dane saw it as his job to build new relationships and restore trust in Rio Tinto, which employs 57,000 people worldwide and had revenues of around $55bn in 2023.
The decision exemplifies a leadership style that is based on connecting with others – something Stausholm openly admits he has had to learn over time and still works on.
“Maybe some people are born as perfect leaders. I’m not born as a perfect leader, but you can learn an awful lot,” he says. “You go out and say, ‘Now I’m the CEO, we’re going to do this.’ And you know what’s happening? Absolutely nothing. You must cultivate deeper connections and bring hearts and minds with you.”
Future back to future proof
His first move after being named CEO was to appoint a new management team. His second was to fly to Australia. Then, he realized he needed to buy himself some time, so he rapidly set out four objectives for the company: to be the best mining operator, to have impeccable ESG credentials, to maintain a long-term perspective, and to have a strong social license.
To design his strategy, Stausholm brought his executive team to IMD where they spent a week using the ‘Future Back’ approach, which involves imagining where you ideally want to be at a certain point in the future and working out the steps needed to get there.
“It became clear that the energy transition was part of the strategic response,” recalls Stausholm. “And the beauty for Rio Tinto, as opposed to some other companies, is it is both a challenge and an opportunity. I would argue that the opportunity is much bigger than the challenge.”
Mining, which is responsible for 4-7% of global greenhouse emissions, is one of the ‘hard-to-abate’ sectors, requiring vast amounts of energy to extract iron ore from the ground. Rio Tinto ships one million tons of iron ore a day, a weight similar to 50 ten-story buildings or 666,667 cars. This is sold to customers who require vast energy supplies to turn it into products like steel.
Yet it is also a provider of critical raw materials needed for the energy transition, including electric vehicles and renewable energy infrastructure. A typical electric car, for example, requires six times as many mineral inputs as a conventional car, and an onshore wind plant requires nine times more than a gas-fired plant.
Early on in his tenure, Stausholm made an ambitious pledge to invest $7.5bn decarbonizing Rio Tinto’s assets – a move which initially took some explaining to investors. Asked whether he ever questioned his resolve, Stausholm responds, “We were lucky that we went quite quickly from having bad press to having positive press. That gave us some self-confidence. As CEO, you always have to remember that you have the most authority early in your tenure. If you must take risky decisions, you’d better take them early.”
A key component of Rio Tinto’s efforts to decarbonize the steel industry is Simandou, the world’s largest untapped high-grade iron ore deposit in Guinea. This iron ore is suited to low-carbon steel making, where it doesn’t have to pass through a traditional blast furnace, in which coal is combined with iron ore. As a result, it offers the potential to reduce emissions to one-fourth of what they would be otherwise, helping to lower the overall carbon footprint of many essential products.
Ultimately, it comes down to the fact that we are all just human beings. How do we connect, how do we express sympathy, and how do we understand each other?
Leading with compassion
Stausholm’s career includes a stint as chief internal auditor at energy major Royal Dutch Shell, and finance and strategy roles at global shipping company A.P. Moller – Maersk and facilities group ISS. But he says he had no issue setting aside his finance hat when he assumed the CEO mantle.
“I’d been a CFO for around 25 years, so I feel I have outlived that dream and it’s been wonderful, but somehow I really enjoy the freedom of the new role I’ve got,” he explains. “As CFO, you must be extremely diligent. You need to know all the numbers. Here it’s much, much more about attention, energy, relationships, and it’s a more holistic challenge, and I like that freedom.”
A critical difference is the amount of time Stausholm must spend managing and reassuring stakeholders, in particular the pushback Rio Tinto gets from communities and NGOs. A current challenge is overcoming misinformation about the company’s lithium mining project in Serbia. The project, which would provide critical minerals to power Europe’s green energy transition, has become politicized with demonstrations across the country over safety and environmental concerns. While Stausholm says he had little training in this aspect of the job, it’s something he has come to enjoy.
“The reality is, I didn’t know. I wasn’t educated for it. I had to go into a crisis. In Australia, I went, and I met the Aboriginal people, and I didn’t have a playbook. I didn’t have the experience. Ultimately, it comes down to the fact that we are all just human beings. How do we connect, how do we express sympathy, and how do we understand each other? I have learned that this gives me a lot of energy.”
An important part of relationship-building, Stausholm believes is leading with empathy and compassion, something he has consciously worked on over the years. “I do think that it’s quite rewarding the more you can use compassion and empathy to try to understand somebody else and what they’re trying to achieve. It’s when you do that that you very often also can get the best things out for your own company.”
It all starts with getting to know your limitations, explains Stausholm. When he took over as CEO, he mandated that Rio Tinto’s top 100 leaders attend leadership training, so they could learn to lead others by first learning to lead themselves.
Three-and-a-half years into the job, Stausholm remains happy in the role, but says he is nonetheless on the lookout for his successor.
“When I was interviewed by the board, I said that succession planning starts on day one. I think I have an incredible team, and my job is not to select my successor, but my job is to provide the board with as many potential successors within the company as possible,” he says. “The other side of the story is it’s a long-term company. Just changing CEO every year is not the best strategy, and I’m in for the longer term, but it’s of course not in my hands to decide when I should be retiring. But I’m committed to staying for a period where you can see that certain things have been achieved.”
Watch the full CEO Dialogue video to hear more from Jakob Stausholm on different topics, such as why he remains bullish on the Chinese economy and global demand for Rio Tinto’s products, the importance of not losing sight of longer-term considerations while catering to short-term pressures, and why it won’t be so easy to move hard-to-abate industries to the Middle East, as well as his personal development and leadership journey.
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