The Private Equity for Families Blog

Lessons from an 80 Year Old Entrepreneur

It is a rare treat to spend 4 hours in a car with an 85 year old electrical engineer. The CapitalWorks model of involving industry savvy limited partners in our portfolio governance gave me that chance. Aside from the frequent rest stops (me not him) on the way to Indiana for an advisory board meeting, the drive was a “back to the future” experience. Marty – like the character in Back To The Future (names are changed to protect my sources) – was a compendium of facts and figures on several industries. I did a pretty good job of pretending I knew what a thermocouple did, but he lost me when he started talking about power curves and Faraday’s law. However, when I asked Marty about lessons in leadership I was sure I could keep pace.

I was both right (he slowed down enough for an English major to understand) and wrong (he completely surprised me with his answers).

It turns out that Marty had worked for most of the deans of the public company industrial business in Northeast Ohio. These are guys I use to caddy for at Canterbury Golf Club or guys who speak at the 50 Club or run United Way. They comprise the elite leadership of industrial innovation in Northeastern Ohio over the last 60 years. Marty loved them all and had a funny story about each one and his quirks. He also had a few bosses whose career sputtered and stalled.  What I found interesting, however, was Marty’s best lessons came from the guys, like him, who did not make it to the top of the public company C suite.

Marty talked about one situation that became a palace revolt when almost every member of a motor team went around a dictatorial boss and asked for him to be replaced. Marty would not sign the complaint. He said “Bill is my boss. I report to him and I can’t join a group who is going around him. That’s just not right.” Marty confessed that he agreed that Bill had to go, but he believed more strongly in loyalty and the reporting structure. Not much later Bill was terminated and the CEO thanked Marty for making it an honorable and dignified parting. Lesson # 1 about Leadership – Loyalty, protocol and chain of command create harmony and order.

Marty also talked about the best leader in his 60 years being Tom, a guy “who did nothing”. That doesn’t mean he did not show up for work or review financial statements or meet with customers. Rather he empowered excellent people to do his job for him. Marty remembers the time he was travelling with Tom to an important budgeting session with a new team that Tom had just inherited. Tom asked Marty what he thought the sales target should be for the next budget cycle and Marty was annoyed. Marty said “I gave him a $100 million target when I doubted we could do $75 million because I was so annoyed that he had set me up.” When Tom met with the line managers of the group they had similar low expectations just like Marty. But Tom was undaunted. All he ever said was “Guys I know we can do better than that. How about $100 million?” Of course, they hit $110 million that year and never missed a budget after that. Tom was so good at doing nothing that his division was the bell cow for the entire conglomerate.  Lesson #2 about leadership – Create direction, encouragement and get out of the way.

Lesson # 3 also came from Tom. He was the fast track executive but he was low profile and pretty straight forward. There was little self-promotion and large helpings of credit were dished out to his guys. When it came time for the Board of Directors to decide succession for the public company they recruited a wonderful outsider instead of Tom. Tom was disappointed, but not angry. He thanked the Board for the opportunity to work with such a wonderful group of guys and then he resigned. The guy who did nothing then went on to manage and own several immensely profitable and successful manufacturing companies. Marty says Tom was his greatest boss because he had learned how to lead by doing nothing. Lesson # 3 – Bet on yourself.

Recently, CapitalWorks sold a business that we acquired from an entrepreneur in 2012. That entrepreneur was not like Tom. He was the business and while he had hired good people with sales and technical skills he had never empowered them to reach their full potential. We were lucky to recruit a star from the steel industry to come in as our CEO. He was quiet and thoughtful. He observed and planned. He set a commercial strategy and a growth plan that included several “tuck in” acquisitions and then a move to Mexico where vacuum impregnation of castings was an emerging need. Rob had learned all three of Marty’s lessons-loyalty, encouragement, and self-determination. His team executed flawlessly under his leadership

He was instrumental in helping us achieve a spectacular result for our investors by being one of those great leaders who do practically nothing.

Happy Holidays.  My fervent hope is that all of us can bring needed leadership to 2016.

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Rob McCreary

Rob McCreary has more than 40 years of transactional experience as an attorney, investment banker and private equity fund manager, and has spent his career in building entrepreneurial organizations with successful track records Founder and chairman of CapitalWorks, he is responsible for developing and maintaining senior relationships with investors and portfolio governance.

This blog represents the views of Rob McCreary and do not reflect those of CapitalWorks or its employees. This blog is not intended as investment advice. Any discussion of a specific security is for illustrative purposes only and should not be relied upon as indicative of such security’s current or future value. Readers should consult with their own financial advisors before making an investment decision.

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