Among his many topics, Dr. Henry Cloud sometimes describes the impact we each have on the world in terms of “the wake we leave behind.” By any measure, the wake he is in the process of leaving behind is extraordinary indeed. As executive coach and corporate consultant, he has worked with leaders of Fortune 25 firms. As co-host of the nationally syndicated radio program New Life Live, he has reached millions of listeners in over 150 markets for over a decade. He has produced and conducted hundreds of public seminars on relationships, marriage, personal growth and spirituality. The health care company he built and co-directed for ten years operated treatment centers in thirty-five cities. And his books, among them the million-seller Boundaries and his latest, Integrity, have sold over four million copies. His keen philanthropic interests focus on the areas of homelessness, the inner city and Third World development. When it comes to understanding “the essential elements of greatness,” there is nobody more qualified for the task. — JDM

You have such a broad résumé, and you’ve done so many different kinds of things. What have been the key events in your life that have made the most impact on you, in terms of what you want to contribute to the world?

One would be the fact that I had a significant childhood illness and was in a wheelchair, then in braces and on crutches for a few years. That helped me understand what it’s like for people to go through different kinds of challenges.

Another key event was hitting bottom in college. I had gone to school to pursue a career in golf, but when a hand injury sudden made that out of the question. This sent me on something of a spiritual search, and I ended up deciding that psychology was a field where I could tap into a lot of interesting things I enjoyed and help people at the same time.

It’s fascinating to me that the two events you went to right away were fundamentally negative experiences. That’s one of the six essential qualities you speak about in Integrity: “embracing and solving negative realities.” What are some other essential elements of greatness?

I think the single most critical component is one people don’t pay enough attention to when they look at greatness, and that’s character.

People often attribute greatness to a person’s talents, aptitudes, brains and capabilities. These things may be the cargo of the ship, but its engine is character. There’s a lot of potential greatness—a lot of talent and aptitude—stuck out there dead in the water because it doesn’t have character driving it.

Do we tend to focus on the “cargo” in our approaches to training?

By and large, I think we do.

Is there a training for character?

There is, but it’s a little like the operating system on a computer: it gets installed at the factory.

The best training ground for character is good parenting: parents and teachers who love kids and discipline them, give them opportunities, show them how to resolve problems and deal with failure. This morning, my four-year-old was snooty to her sister, and I made her go back and apologize.

There are other training grounds, too, but here’s the problem: typically, you don’t get your operating system worked on unless your computer blows up.

You say that companies and individuals who operate by “transcendent values” are winners in the long term. What does that mean?

It means operating with the realization that whatever you’re doing, it’s also part of things that transcend you. You’re always part of a reality that is larger than your own purposes.

If the CEO of a company operates with the mindset, “I’m here to serve me and my interests,” it’s easier to do some off-the-balance-sheet deals that put the stockholders’ retirement plans at risk. But if that CEO realizes that there are larger issues at stake, that other people are involved, it’s a different story.

You can see this same dynamic in a family. If an individual constantly expects the other members of the family to adapt to him or her…well, that’s what an addict does. And that situation will blow up.

Whenever there’s a conflict between what he personally wants and what those transcendent values are asking from him, the person of transcendent character will bend the knee to the larger picture.

In Integrity, you cite the example of Johnson & Johnson.

In the fall of 1982, seven people died because someone had tampered with some Tylenol capsules and laced them with cyanide.

If you’re a big company faced with a disaster like this, what do you do? Some companies would gather all the actuaries in a room and do statistical models: how many bottles are out there, how many are likely contaminated, how many people might die, and what’s it going to cost to settle those suits as weighed against the loss of profits if we pull it all off the shelf? They say, “Hey, it’s a business decision.”

But that’s not what Johnson & Johnson did. They said, “One death is too many.” Even though it was a near-certainty that only a small number of bottles in one city had been tampered with, they pulled every single bottle of Tylenol capsules off of every shelf around the world—31 million bottles worth $100 million.

And they didn’t try to hide or defend themselves.

They exhibited total candor. Marketing experts at the time predicted that Tylenol was history: no product could come back from a PR disaster like this. But they did. Once they were sure the product was safe, they put it back on the market in new triple-sealed packages—and they won everybody’s trust. They actually gained market share.

When I teach this, there’s always someone who says, “Come on, get real! The guys who win don’t really care about character.”

That’s true—if you’re talking about a single scene in a movie. We can go back and find headlines from a few years ago when Enron was the golden boy. They certainly looked like the winner…at the time. But I’m talking about the ones who win in the long run.

Does character matter? Absolutely—always.

Michael Milken’s done some pretty amazing things lately.

Exactly. And to see that, you had to see the sequel!

Network marketers often pursue this business because it represents a life of more integrity—working at home, in concert with our values, without having to sacrifice family for finances—and yet we too often gain this reputation of “using” our friends in a way that lacks integrity. Where does this come from?

I’m not an expert in network marketing, but I think two things probably contribute.

First, a lot of people have had or heard about some experience of a bait-and-switch, where they were invited to someone’s house for a party, and when they got there, discovered they were being recruited for a network marketing business.

I think that really, really bugs people. If they’d been told, “I’m involved in a network marketing company, and one of the ways we introduce this is we have these gatherings and explain it to our friends, and I’d like you to come,” it would be a completely different experience.

Create and maintain trust—number one of your “six essential qualities.”

That’s right. So that first reason is a matter of methodology: people were taught an approach that feels deceptive. The second reason speaks more to the character of the individual.

I have four friends with whom I’m involved in deals they’ve told me about as part of their work. Two of them are in real estate, one is a money manager, and one is in the entertainment business. These people were all friends before I invested in them. Yet they didn’t in the slightest way use our friendship to try to get me to do business with them or invest in their ventures.

Now, I have a few other friends who are also good guys, but I would describe them as sort of “users.” When they come along with a deal, there’s some quality about the situation that makes me feel I’m being leeched—and no matter how good the deal looks, I probably would never get involved.

If you’re a good friend and somebody trusts you, then they will evaluate your deal based on its own merits, without this creepy sort of feeling that “I’ve got to do this to be your friend.”

With that first group, what is it about their approach that feels different, that inclines you to look at the deal with an open mind?

Part of it is that they’re successfully doing things on their own two feet, without me. They show me something good, and it would clearly benefit them to have me in it—there’s nothing wrong with that. But they don’t need me to join it. Paradoxically, this gives them more of an ability to build alliances.

Too often, what people call “networking” is really a synonym for leeching. But there is a true networking, and that is alliance-building.

You talk about the “wake we leave behind us” in the world. How does that come into play here?

When you look at those in that second category, the ones you instinctively don’t want to get into business with, you find a lot of people who have done things with them and have never gotten anything back. Whereas with the first group, all you have to do is look at their history, and know you can trust them.

Nobody invests in “deals” or “opportunities”: we invest in character. We don’t sign up with companies; we sign up with people.

And that doesn’t mean people have to have a perfect track record. Sometimes deals go bad; it happens. But even if a deal didn’t pan out, if I trusted the person, I wouldn’t hesitate to invest again—because of his character.

I have a really good friend who is involved in a network marketing company right now. I don’t have the time to go gather the people and work with them. But I know her family and they’re really good people. So I told her, “If there is some way where you hold the meetings and I can just send people there, I’ll do it.”

I offered this not because I know the company or the product, but because I know her.

What led you to get involved in working with large companies and doing executive coaching, as opposed to an ordinary, basic psychology practice?

When I first went into practice, I happened to work in a clinical practice with a psychologist who mostly did organizational consulting—team-building, working with organizational culture and so forth.

His team found that they were often dealing with things that were not purely organizational issues. There would be CEOs or VPs or other high-level leaders whose own issues were contributing to the culture problem. So they would refer these people to me, and that’s where my initial practice began. In fact, I wanted to call my first book, The Leaders’ Shrink.

I spent some twenty years sitting in a chair listening to leaders and high-performers, hearing about the kind of things they struggle with, what does them in, what prevents their talents from coming to fruition. Gradually, these people started asking me to come into their companies.

I started doing this in the mid-eighties, and it’s been a large portion of what I’ve done ever since.

How did you get involved in building your clinical care company?

I was just going to build one psychiatric hospital. When that one worked we built on the model, and ended up creating treatment centers and hospitals in thirty-five cities, from Seattle to San Diego. I ran that company for ten years.

Now instead of consulting to high-level executives, you were one! Did you find yourself wishing you had your own “leader’s shrink”?

I actually dedicated the book to four guys who serve as my personal board. These are all greatly experienced and high-character men who believe in what I do, and I make myself accountable to them.

Do I need a shrink? Absolutely—and what I mean by that is that we all need to be in a process where we open up everything we’re doing to people of greater experience and knowledge. That’s the template that’s going to structure our growth.

What do you look for in selecting that team?

Number one, look for people who are for you and not against you. If they’re not truly there to help you win, you can’t trust them.

Secondly, you want people who can be completely honest. Sometimes we get enamored with our idea or plan, yet it might have a big hole in it that we don’t see. We need someone else to look at us and say, “That’s not gonna fly!” My four guys are brutal. They’re completely for me, but they pull no punches.

Thirdly, they’ve got to bring some relevant business experience to the table. My four guys have résumés that would knock your socks off; they’re presidents of huge companies and people with absolutely phenomenal experience. And, they’re really good people who value being involved in the growth of other people’s lives. For whatever reasons, they sort of adopted me years ago and have been with me ever since.

This seems to directly evoke the whole Napoleon Hill mastermind idea: the essential urgency of putting together a group of people you trust to coach you.

It’s not a new concept. To successful people, it’s not a foreign concept. But it is a concept ignored by losers and people who keep repeating their same mistakes over and over, because they know better.

People typically think of “integrity” as being something like goodness or moral character. But you also talk about it as wholeness, as having all the critical pieces in place. Can you give us briefly those six essential elements?

People of integrity are able to connect with others and build trust; they are oriented toward reality; they finish well; they embrace the negative; they are oriented toward increase; and they have an understanding of and appreciation for the transcendent.

How would you relate these to our readers, who are mostly home-based entrepreneurs?

You simply cannot make that kind of business work without these six essential elements.

You mean specifically a home-based business?

Yes. In network marketing, you don’t have the external structure of a corporate job making you do certain things. The only structure you have that will make you exhibit these six essential traits is your own character and whatever you create for yourself.

If you’ve got a boss telling you, “You’ve got to go solve this problem, pick up the phone and call that customer or you’re fired,” then you’re likely to do it. But if you’ve got a problem with a customer or a downline person, and because you’re on your own, you avoid picking up the phone and calling them, pretty soon you’re out of business.

So for a network marketer, these six traits are even more important?

It’s not that they’re more important per se, it’s just that taking responsibility for these things becomes a much bigger issue when you’re on your own. Otherwise, you’re like a kid who’s home alone. Your parents aren’t there to watch you, so you need to have your character watching you.

So, in that sense, yes, for network marketers it’s even more important to focus on developing these traits.

Like oxygen, character is a vital element. If you don’t have it, you’re just not going to make it. Now, is oxygen even more important for a scuba diver? No, it’s just as important to the person standing on the beach. But when you go scuba diving, you have to take your oxygen down there with you. You have to take responsibility for it, otherwise it won’t be there.

When you’re in business for yourself, you’re relying on your own character, and you’d better make sure your tanks are full!

That’s why I think it’s vital for people on their own to put together a board of peers to consult and submit to. That doesn’t mean they have control of your business. It means that if they tell you what you’re doing is a bad idea, you listen to them.

So you would counsel that network marketers put together their own accountability team?

I would say, don’t even begin to think about filling out your first application without that team.