CEO Corner

Alabama Climbs Ranks Due To Automotive And Manufacturing Investment

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Thanks in part to a continued influx of manufacturing investment and its steady flourishing of its digital capabilities, Alabama continued its climb up the 2018 Chief Executive Best States and Worst States for business rankings, to No. 17 from No. 19 last year and from as low as 24 in 2015.

“Part of what’s going on is that we have suffered from people remembering the old Alabama, not the new Alabama,” Steve Leath, president of Auburn University in Auburn, Ala., told Chief Executive. “But we wouldn’t have these companies coming are at the rate they are if it wasn’t a great place to come.”

Toyota and Mazda chose a site near an existing Toyota engine factory in Alabama for a new plant that will employ up to 4,000 workers at an average annual salary of $50,000. Alabama’s package of incentives was worth more than $350 million. The plant is to produce $951 million in net revenue to the state after the incentives are taken into account.

Alabama put the bulk of its incentives into a jobs credit worth $91 million over a decade and an investment credit that will be good for $210 million over the same period. There also was reimbursement for eligible capital costs, state sales-tax abatement, a non-educational property-tax abatement and a vow that the state employment agency will build and operate a training center.

“Part of what’s going on is that we have suffered from people remembering the old Alabama, not the new Alabama.”

It helped that Alabama already was fifth in auto production among all states, with not only Toyota building engines there already but Mercedes-Benz, Hyundai and Honda assembling vehicles and many suppliers providing in-state production as well. Vehicles have become the state’s No. 1 export.

Alabama also has carved out a huge spot in aerospace production thanks in part to the legacy of the location of an important National Aeronautics and Space Administration operation in Huntsville.

And now Alabama leaders, including Leath, are trying to take a page from one of the all-time Sun Belt economic-development success stories: the Research Triangle in North Carolina, which was built around three major universities.

“We’re learning from many of the things they did but trying to move at a quicker pace,” Leath said about Auburn’s role in integrating a public research university with successful economic development. “We’re going to make Auburn the best partnership school in the country.”

Auburn also is partnering with General Electric and other manufacturers to develop more skilled engineers for expanding additive-manufacturing operations. “Our graduates have a lot of experiential learning while at Auburn, so these companies can come and get young engineers and supply-chain people who’ve actually done things already,” Leath said.

The complete listing for the Best and Worst States for Business can be found here.

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A Push In Advanced Manufacturing Illustrates Florida’s Progress

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Behind the Mickey Mouse ears at Walt Disney World, the killer whales at Sea World, and the fantastic movie sets at Universal Studios, folks in Orlando have been working hard at something else. They’re turning the area into one of the nation’s foremost hubs for optics technology and advanced manufacturing, outgrowths of a factory footprint that already was pretty formidable.

That effort is one reason Florida continued to nip at the heels of Texas in the 2018 Chief Executive “Best States and Worst States for Business” rankings, placing No. 2 to Texas once again for the umpteenth consecutive year.

“We’re the No. 1 visitor destination, but even including the retail aspects, tourism is only 1/3 of our local economy,” Tim Giuliani, CEO of the Orlando Economic Partnership, told Chief Executive. “The other two-thirds is grounded in manufacturing” by well-known outfits including Lockheed, Siemens and Mitsubishi. “We’re a lot more diverse economy than people think.”

Orlando’s University of Central Florida also, he said, is the second-largest university in America by population, and all told there are about 500,000 college students within 100 miles of the city.

As a result, the four-county area in Florida is one of America’s fastest-growing job-creating regions in advanced manufacturing, especially sensors and optics. Part of that is also the legacy of Orlando-area engineers who worked in the federal space program not far away at Cape Canaveral, Fla., on the Atlantic Coast.

“We’re the No. 1 visitor destination, but even including the retail aspects, tourism is only 1/3 of our local economy,” Tim Giuliani, CEO of the Orlando Economic Partnership, told Chief Executive. “The other two-thirds is grounded in manufacturing.”

For example, the region is home to BRIDG, an industry-led private-public partnership for advanced technologies and manufacturing processes, the first organization of its type in the world. Officially opened this year, the $72-million facility offers 100,000-plus square feet of lab and office space dedicated to supporting advanced manufacturing and sensor R&D for applications in the burgeoning Internet of Things and elsewhere. Siemens also announced a partnership with BRIDG.

Florida also continues to gain in some areas of traditional manufacturing that people wouldn’t typically associate with the Sunshine State. Nucor, for instance, a major steel manufacturing, announced recently that it plans to build a $240-millon steel mill east of Tampa that will employ 250 people and pay an average salary of $66,000.

But Florida still faces some big challenges, said Jeffrey Vinik, owner of the Tampa Bay Lightning pro-hockey team and the most prominent commercial real-estate developer in the Tampa Bay area.

“We need to train our workforce better for higher-quality and more value-added jobs, because we’re a pretty heavy service economy for good reason,” he said. “We need to do better training our people.”

The complete listing for the Best and Worst States for Business can be found here.

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Iowa’s Quality, Cost Of Life Draws Millennial Tech Workers

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Thomas Mahoney and Matt Rizai are CEOs who are leaders in the “new” Iowa – the state that has been moving past traditional perceptions of a sleepy, agrarian hinterland and building a reputation as an untrammeled hamlet where code writers, marketing consultants, wind-energy engineers and data-center supervisors can be as comfortable as farmers.

Iowa placed No. 14 in the 2018 Chief Executive “Best States / Worst States for Business” rankings, even with a year earlier and consistent with its spot over the last few years. It was No. 3 in the Midwest after No. 5 Indiana and No. 13 Wisconsin.

Rizai heads Workiva, a B2B cloud-based software company that counts more than 75 percent of the Fortune 100 as customers – and whose headquarters is in Ames, Iowa, not Silicon Valley. The proximity of Iowa State University helps supply and lure millennial tech workers. Iowa also leads the nation in efforts to bring ultra-fast internet access to every corner of the state.

“The state has been targeting development of certain new industries such as bioscience, where it has been building up a ‘Cultivation Corridor’ between Des Moines and Ames.”

“We’ve installed a confidence and a culture so that our people feel they can do this no matter where they are,” Rizai told Chief Executive. “We’re part of a movement to do things were you are rather than where people think you should be. And we have thousands of [job] applicants a year. People want to come to Ames for more space, or they’re thinking about their family and health care and schools. And they feel this is where they can do some exciting things and make a difference.”

Mahoney is CEO of ITA Group, a West Des Moines, IA.-based engagement-marketing agency that employs about 650 people there.

“We have the shortest commutes in the country, and the cost of living here is more than 10 percent below the national average, and the cost of doing business is 15 percent below,” Mahoney told Chief Executive. “Iowa is a perfect storm coming together.”

The state has been targeting development of certain new industries such as bioscience, where it has been building up a “Cultivation Corridor” between Des Moines and Ames. More than $1 billion in corporate investments already have settled there.

“We’re leveraging the critical thinking that takes place around Iowa as well as our knowledge and expertise in agricultural science,” said Mahoney, who is a member of the Greater Des Moines Partnership, an outfit that markets central Iowa.

Iowa also has been able to attract large data-center outposts built by Silicon Valley giants, in part by offering them its position as one of the nation’s top generators of green energy from wind – which, of course, comes sweeping down the plains.

Testimonials like these are persuading more CEOs, who ranked Iowa No. 6 in living environment and No. 1 in workforce quality in the 2018 Chief Executive rankings. And U.S. News & World Report named Iowa as the best state to live in, citing its high rankings in health care, education, quality of life and infrastructure.

The complete listing for the Best and Worst States for Business can be found here.

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Do You Need To Broaden Your Leadership Repertoire?

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Among chief executives today two distinct styles of leadership predominate—each with characteristic strengths and weaknesses that have significant ramifications for company performance in various business situations.

Our firm conducted research involving more than 20,000 senior executives—including more than 1,600 CEOs—across a wide range of industries around the world. In the course of the research we identified eight statistically distinct leadership styles or “signatures” (See sidebar “The Eight Leadership Signatures).

Each style has strengths and weaknesses, but no one style is “right” or “wrong” and all styles can be equally effective. Individuals tend to have some degree of access to all the styles, and self-aware or well-coached executive can learn to flex to additional styles when appropriate. The challenge arises when leaders continue to resort to a style less suitable under changed conditions.

On average, CEOs in our research scored highest on Forecaster attributes, followed by Provider attributes. Chief executives scored lowest on Composer attributes, which is not surprising given that Composers tend to prefer working independently. What is perhaps surprising is that the Pilot style—strategic and visionary—ranks only sixth for CEOs.

Forecasters first and foremost

No other group of executives, including other C-suite executives, scored as high on Forecaster attributes as CEOs. If you favor the Forecaster style, you likely exhibit the characteristics of a “learning leader”—continually gathering data, expanding your knowledge (often into disparate fields), and enhancing your subject-matter expertise. You like to have ample time to think deeply, amass information, and reflect on what you’ve learned. You harness that knowledge to formulate insights about future trends and consider how various strategies might impact the business.

Forecasters thrive in environments where people like to be led by leaders with new ideas and intellectual capital or in firms where deep subject matter expertise is highly valued. Forecasters also excel in innovative organizations that benefit from more thoughtful strategic insights into future trends. And they are likely to do well in circumstances where there’s opportunity to create and evolve products and processes.

Forecasters may struggle where executing on short-term results matters more than idea generation and developing intellectual capital. They may also strain in static environments where tradition reigns and the appetite for strategic change is limited. And because Forecasters understand the dangers of proceeding with limited data, they find that environments where they’re asked to provide immediate input in new or unfamiliar topics can be highly stressful.

“Savvy leaders know that different business situations—a start-up, a turnaround, a merger, growth, or new competitive pressures—call for different strengths.”

The Forecaster style also comes with potential blind spots, but you can take care to compensate for them. For instance your reliance on ideas and rational argument can sometimes come at the expense of connecting emotionally with people you are trying to influence. When engaging with stakeholders to win buy-in, try to focus on emotional, as well as analytical, persuasion. The most authentic way to do this is to identify a few key relationships you can strengthen that, over time, will give you more relationship capital and the benefit of the doubt when key decisions are on the line.

Similarly, your deep understanding of the facts, figures, and data supporting your ideas could lead you to become overly wedded to your own thinking. Challenge yourself to bring your customary intellectual rigor to truly understanding alternatives. And when you agree, however reluctantly, on a course of action you initially opposed, let go of your doubts and bring the force of your intellect to bear on the new direction.

As someone who prefers to be on firm ground before acting, you may also struggle when having to make tough choices outside your area of expertise or when you feel inadequately informed. In those situations you will need to challenge yourself to act more decisively and stretch your tolerance for risk. For example, ask yourself, “would more information actually improve the quality of my decision?” Otherwise, opportunities, and possibly the competition, could pass you by while you wait for more data.

The dual motivations of Providers

CEOs also scored higher on Provider attributes than did other members of the C-suite. If you are a Provider, you are likely motivated by two different yet equally strong forces—the desire to lead from the front and to take care of those around you. You tend to believe that your method or manner of doing things will continue to generate results and thus are motivated to impart it to others. You are also deeply loyal and committed to those around you, and you operate with a sense of conviction—all characteristics that can be very appealing to followers.

Such Providers typically thrive in situations where people want a leader who sets a clear and deliberate path for them to follow. But, in keeping with the dual nature of Providers’ motivations, they also do well where others want to be part of a group and the Provider can proactively shape the environment, as in organizations with a relatively young work force. Entrepreneurial environments, where a clearly defined point of view is required and where people need to see conviction in their leaders, also welcome the Provider style.

But Providers sometimes struggle in environments where their personal vision and perspective will be regularly challenged. For instance a new CEO from outside the company may assume leadership of an executive team populated largely by established company veterans who will test the new leader’s credibility, especially if the previous CEO was popular and successful. Providers may also struggle in situations that require a wider diversity of individuals who can build on one another’s ideas.

Providers, too, have blind spots that require attention. Your compassion and listening skills may make your colleagues feel heard, but they may find it quite hard to actually convince you to alter your perspective. To compensate, you can challenge yourself to experiment with new ideas or approaches to see how they may augment your existing approach. This goes beyond thinking about new ideas—actually changing how you do things is the real test

While you care deeply about providing for others, your relationships may feel somewhat one-dimensional to colleagues—more student–teacher than peer-to-peer. Find opportunities to share more of yourself—your background and your thinking—to let those around you experience your authenticity.

Your focus on higher-level strategy and relationship building may come at the expense of an interest in day-to-day operations and executional details. Be sure to build processes and support systems around you (perhaps with the aid of a colleague who is a Harmonizer or Producer) that can keep you on top of detailed execution.

Producers and Collaborators

For the third-highest leadership style, CEOs scored about equally on Producer and Collaborator attributes.

If you are a Producer, you typically value tangible and immediate results. With a strong temperament and work ethic, you also value consistency and hard work and you believe in paying one’s dues. You are skilled at building efficient structures and processes that enable reliable execution. But you also favor proven approaches that you know work.

Producers tend to thrive in stable environments, where significant buy-in from others isn’t required to get things done, such as in traditional industrial or manufacturing settings, or the military. They also shine in organizations that have undergone significant (and perhaps unsettling change) and require a leader who can focus on keeping things running smoothly. But they may struggle in organizations that require major change, where subtle influencing skills and flexibility are at a premium, or in strong cultures of creativity and innovation.

If you are a Collaborator, you are likely perceptive about others’ needs. You take a team-first approach to leadership and share credit for success. You support and develop other leaders by placing them in positions where they can excel. And you’re good at attracting talent—people want to work with you. You thrive in environments where followers require the leadership of someone with whom they have a relationship. But in situations where bold direction and engaging personal presence are required to influence key stakeholders—for example, when a big shift in strategy must occur swiftly but the requisite changes run against the company’s prevailing mind-set—you may need to adopt a more assertive style.

***

This hardly exhausts all of the leadership styles and possible combinations of leadership styles that are open to CEOs who are willing to flex according to the context. Too often, leaders are advised to adopt a unitary style that theoretically encompasses some timeless truths about leadership. Savvy leaders, however, know that different business situations—a start-up, a turnaround, a merger, growth, or new competitive pressures—call for different strengths. They know also that every strength runs the risk of a corresponding weakness. And instead of simply accepting themselves as they are, they try to work to be able to rise to every occasion—providing the right kind of leadership at the right time.

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Alger Award Recipient Knows How To Bootstrap – And Build Companies

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Nowadays, Don Daseke is CEO of Daseke Inc., a $1.2-billion, Dallas-based leader in the open-bed trucking industry that owns and operates 16 firms across the country. He’s made it the largest player in the industry in just nine years of building it.

However, Daseke wasn’t always on top. In fact, he started about as low on the economic totem pole as possible. For pulling himself up by the bootstraps and achieving the American economic dream to the great benefit of others as well as himself, Daseke recently was named one of just 12 recipients of the 2018 Horatio Alger Award by the Horatio Alger Association of Distinguished Americans.

A handful of precepts have been important to his success, and one of them is persistence, he told Chief Executive.

 “That’s been the key to my success,” Daseke (pronounced DASS-key) said. “We buy companies that aren’t for sale. We’ve had analysts ask the CEO of one of the companies we acquired why they became part of Daseke when they obviously already were a successful company. He said, ‘Don is persistent.’”

“Businesses too often look for shortcuts; sometimes there aren’t any. You have to hang in there and take the long-term view of opportunity and be persistent and pursuing,” he says.

Other CEOs who were 2018 recipients of the Alger awards include Ronald Bergeron Sr., founder and CEO of Bergeron Land Development Inc; Alphonso Jackson, CEO of A.R. Jackson Advisors LLC; Larry Lawson, founder and CEO of HeartcoR [cq] Solutions LLC; James Liautaud, owner, founder and chairman of Jimmy John’s Gourmet Sandwiches; James Pugh Jr., CEO, chairman and owner of Epoch Residential; and Ernest Rady, CEO of American Assets Trust.

Recipients also included Berkshire Hathaway executive Gregory Abel, former Walmart CEO H. Lee Scott Jr., and entertainers Rob Lowe and Reba McEntire.

The stated purpose of the awards by the Alexandria, Va.-based non-profit is to “induct as lifetime members … contemporary role models whose experiences exemplify that opportunities for a successful life are available to all individuals who are dedicated to the principles of integrity, hard work, perseverance and compassion for others.”

The association provides scholarship assistance to “deserving young people who have demonstrated integrity, determination in overcoming adversity, academic potential and the personal aspiration to make a unique contribution to society.”

Daseke said that Alger scholarship recipients have average family incomes of just $15,000 a year and that 20 percent have been homeless; many have been abused.

He can relate to economic hardships. Growing up in Crawfordsville, Ind., Daseke had a great relationship with his father, who was a real estate agent and business owner but struggled. By age nine, Daseke was delivering papers and pedaling an ice-cream wagon.

“I got a lot of exercise,” he recalled. “And I just hoped to make people happy with what I had in the cooler. Success was a question of inventory, of having enough dry ice, and of having good enough muscle control in your legs that you could pedal it all around town without losing control.”

Fortunately, Daske earned a scholarship to Depauw University in nearby Greenleaf, Ind., and got a degree in economics, then an MBA in accounting. He joined a CPA firm but wanted something more challenging. Daseke applied to IBM to sell computers but they didn’t like the idea of hiring an accountant for that. He persevered; got the job; and, within three years, Daseke was IBM’s leading national new-business computer salesperson.

After IBM, he left to start a real-estate investment firm, building it to 50,000 apartment units across the South. The S&L crisis in the 1980s made his business insolvent but Daseke “worked through our problems” and took the company public in 1994. Walden Residential Properties sold in 2000 for $1.7 billion.

What to do next? A friend clued in Daseke to a Seattle-based trucking company that was looking for a buyer, and Daseke bought it. In 2009, the company that would become Daseke Inc. had just $30 million in revenues.

Besides the value of persistence, Daseke offered four more pointers for the kind of bootstrapping success that enabled him to build two $1-billion-plus enterprises:

Invest in people: Daseke knew nothing about trucking but bought the predecessor of Daseke Inc. mainly because “I really liked the management team.”

Be flexible: There’s “more than one way to achieve success,” he advised. “There’s a view on Wall Street that if you buy a company, the way to be successful is to consolidate everything and eliminate people. Our view is that there’s more than one way. If you already have a successful company, you’re already very efficient. You don’t need to eliminate people.”

Always be learning: It’s an important part of a people-first philosophy for both employees and leaders, he said.

Always keep your word: “My dad always said, ‘Your word is your bond.’ Do what you say you’re going to do, always.”

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True Collaboration Yields Better Results, But Success Is Not Guaranteed

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One thing I wrestle with as a CEO is how much to encourage collaboration within our firm. Collaboration is inherently good, right? “None of us is as smart as all of us,” Ken Blanchard has said. Together we can do great things.

Research supports the benefits of collaboration—from improving productivity to boosting morale to sparking innovation. One study suggests that people are motivated simply by feeling like part of a group that is working together.

As any experienced CEO knows, however, collaboration for its own sake doesn’t always work. People often get “voluntold” to partner on projects that are ill-defined, poorly resourced, or poorly managed. If the group being asked to collaborate is far-flung, cross-functional, multicultural, multigenerational, or just generally unfamiliar with each other, the challenges can increase. There can be such a thing as poor collaboration.

Conversely, there is “smart collaboration,” which is the title of one of the best books I’ve read in recent years, by Harvard Law School’s Heidi K. Gardner. Rather than assuming that collaboration is inherently good, Gardner looks at the data and illustrates ways in which collaboration can have clear benefits for organizations. (She focuses on professional service firms.)

The proof is in what collaboration does for the bottom line, she writes in Smart Collaboration. “Collaboration is a means toward achieving the penultimate goal of solving complex, interesting problems—and the ultimate goal of giving firms a strategic, sustainable, and profitable platform.”

The benefits may not always be immediate, she notes. Collaboration requires an initial leap of faith from participants and it can be months or years until benefits outweigh costs.

“Technology is often seen as the great enabler for collaborative work, but let’s not forget that workplace technologies are still evolving.”

A Foundation for Collaboration

Good collaboration, then, requires fundamental best practices:

Make success interdependent. A key factor in the success of collaborative endeavors, says a McKinsey report, is to make sure that goals are set which “no individual function or business could meet on its own.” Collaborators don’t need to be a unified team around a single goal, but their efforts should be beneficial to all parties.

Keep it simple. Ensuring the success of collaboration, particularly across diverse groups, requires a “radical simplicity,” according to McKinsey. As I noted in a recent article, we are in an era of accelerating change, which adds to the inherent complexity of group work. Simple goals with clearly articulated steps and stages increase the likelihood that collaborations will work.

Underscore the long-term benefits. Anticipate the bumps in the road and make sure participants understand that collaborating is a process that requires dedication and patience. There will be skeptics, especially those who favor more of a DIY culture. Gardner points out in her book that even so-called do-it-yourselfers are often, in reality, seasoned collaborators who have established strong, strategic partnerships with a few key clients or colleagues to get what they want.

Allow time for trust. There is no collaboration without trust, but trust doesn’t happen overnight. Recognize the time that needs to be built into collaborations – for example, for people to get familiar with each other or to get comfortable with the parameters of a new project.

See technology as an enabler or inhibitor. Technology is often seen as the great enabler for collaborative work, but let’s not forget that workplace technologies are still evolving. “It’s taken until recently for technologies to restore the level of collaborative teamwork that colleagues previously enjoyed when everyone was in a single office together, working on papers around a conference table or clustering at whiteboards,” writes PwC’s Vicki Huff Eckert. Part of the collaboration that needs to happen, she notes, is between humans and the technology itself.

So let’s work together and collaborate. But let’s think about it before we get started.

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PepsiCo’s CEO And Chair Indra Nooyi Is Leading The Company To New Heights

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Indra K. Nooyi, PepsiCo’s chairman and CEO, is also the chief architect of the company’s “Performance with Purpose” – the pledge “to do what’s right for the business by being responsive to the needs of the world around us.”

As part of Performance with Purpose, PepsiCo is focusing on delivering sustained growth by making healthier and more nutritious products, limiting its environmental footprint and protecting the planet, and empowering its associates and people in the communities it serves.

PepsiCo’s business is three pieces, Nooyi told Fast Company. It has “fun-for-you” beverages and snacks: Pepsi, Mountain Dew, Lay’s, Doritos, Fritos, Cheetos – “All the ’tos.” The second is what she calls “better-for-you” products: Diet Pepsi, Baked Lay’s, Baked Doritos. And then there’s the “good-for-you” piece: Quaker Oats, Tropicana, Naked Juice.

“We are trying to take the fun-for-you portfolio and reduce the salt, sugar, and fat, Nooyi said. “And guess what [industry analysts] tell me? ‘Don’t be Mother Teresa. Your job is to sell soda and chips.’ So this is not being disingenuous. We are trying to take a historical eating and drinking habit that has been exported to the rest of the world and make [it] more permissible.”

PepsiCo is also making sure that the healthier products, like Quaker and Tropicana, taste good and are reasonably priced – “because you shouldn’t have to pay more for healthy products” — and are ubiquitously available. The products also have to be displayed in a way that encourages consumers to make healthier choices.

“Look, there is a time and place for the fun-for-you products,” Nooyi said. “We are not nannies, and I don’t think we should be nannies. Our job is to make sure that we put these products out on the shelf and make the labeling clear.”

To make good on the company’s pledge to contribute to environmental sustainability, PepsiCo is reducing the water use in its plants and

passing on technologies to farmers so they can farm and water their crops more efficiently.

Pillar three is empowering people around the world, making sure that “everybody in the world has a chance to come to work at PepsiCo, not just those lucky enough to get an education,” she said.

“Many large companies are bigger than countries,” Nooyi said. “With our market cap, we are the 37th-largest republic in the world. And we have global governance, which many countries don’t, or many regions don’t. I think we have to do our part to bring our heft and the fact that we have global governance to find ways to improve society wherever we are.”

Industry analysts are now eating their words that Performance with a Purpose, introduced six years ago, was just “feel-good nonsense that would tank the company while Coca-Cola grew stronger,” Business Insider wrote this February. Now, PepsiCo has beat quarterly expectations since 2016, and analysts are impressed.

As Nooyi said at Business Insider’s panel “Towards Better Capitalism” at the World Economic Forum’s annual meeting in Davos, “I have the results to show for long term management and the scars to show for short term management.”

Nooyi in 2006 was named PepsiCo’s president and CEO and a year later assumed the role of chairman. She has directed the company’s global strategy for more than a decade and led its restructuring, including the divestiture of its restaurants into the successful YUM! Brands Inc.

Nooyi also led the acquisition of Tropicana and the merger with Quaker Oats that brought the Quaker and Gatorade businesses to PepsiCo, the merger with PepsiCo’s anchor bottlers, and the acquisition of Wimm-Bill-Dann, the largest international acquisition in PepsiCo’s history.

She’s No. 44 on Chief Executive and RHR International’s CEO1000 Tracker, a ranking of the top 1,000 public/private companies.

Indra K. Nooyi, Chair & CEO, PepsiCo

Headquarters: Purchase, NY

Age: 62

Education: Madras Christian College (B.S.), Indian Institute of Management (M.B.A.), Yale University (Master of Public and Private Management)

First joined company: 1994

Positions before being named CEO: President and Chief Financial Officer, Senior Vice President, Corporate Strategy and Development

Named CEO: 2006

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SunTrust CEO Spreads Gospel Of Financial Literacy – Inside And Out

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SunTrust Banks CEO Bill Rogers has his hands full at the moment dealing with a potentially huge employee theft of customer data. But he’s not letting that interfere with perhaps the most important initiative of his seven-year tenure as chief: boosting the financial literacy of the people who work for SunTrust and for its client companies.

The Atlanta-based financial-services giant launched an internal platform for improving financial literacy a few years ago after Rogers learned that even bank employees experience huge stress and uncertainty about their own economic futures. A big reason why is they simply lack the understanding and tools to plan.

Rogers brought in a small consulting firm to teach SunTrust’s employees and then acquired the outfit so that the bank could offer the same financial-literacy services to companies across the U.S. that also perceived the need. Now, he told Chief Executive, Momentum onUp has become a not-for-profit outfit as well as a key program internally and externally.

“We said, ‘We’re actually on to something here,’” Rogers recalled. “We wanted to offer it to our clients. They can make themselves the heroes with their employees. And we gain more credibility with the client. It’s an opportunity also to help bend the curve for society; we can all learn together.”

At this point the vast majority of SunTrust’s 24,000 employees have taken the onUp coursework, and more of its clients’ personnel are doing so as well in a course called Momentum onUp. The classwork is supplemented by an online platform that offers savings calculators, budgeting tools, and lots of helpful content as well as a “gamified” experience that helps players work on financial goals.

“They were like the cobbler’s children with no shoes.”

After completing the financial-literacy program, more than 80 percent of SunTrust’s employee participants are “more confident about their finances,” Rogers said. Employee retention is about 50 percent higher for those at SunTrust who complete the program than not.

SunTrust introduced its concern about financial wellbeing to America with a Super Bowl commercial in 2016, then launched the online, gamefied consumer version of its curriculum to the general public as well in an initiative that was reinforced by a Winter Olympics TV spot this year. More than three million Americans have participated in some aspect of it.

Rogers first considered a financial-literacy effort as a way to show employees that SunTrust has a purpose beyond the bottom line for its employees and clients. “There’s a lot of opportunity being able to be an employer of choice,” he explained. “We certainly hear from our workforce that they want to work for a company that stands for something, and onUp is one of those overt things that signals we stand for something outside the company.”

The CEO also saw data that stunned him: About 40 percent of SunTrust’s employees were “not confident in their own finances,” he said. “They were like the cobbler’s children with no shoes.”

Many other Americans also feel economic insecurity and demonstrate a lack of even basic financial skills amid a growing economy, Rogers said. “They live paycheck-to-paycheck regardless of their income level, and many have nothing saved for retirement,” he said.

At the same time, research told him and his team at SunTrust that “employer-led education about financial wellbeing has the highest correlation to success. The education and the paycheck coming from the same place is an obvious corollary.”

Atlanta-based clients including Delta Airlines and Home Depot have taken advantage of Momentum onUp, and more than 100 companies overall are using the platform. SunTrust does the teaching and provides the tools for its clients’ and other companies’ employees while allowing the clients to brand the services as their own. As the Momentum onUp enterprise has grown, SunTrust has added a version in Spanish.

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How The CEO Of Barry-Wehmiller Makes 100 Acquisitions Work Together

Chief Executive Magazine -

Robert Chapman heads one of America’s most acquisitive companies, and even after 100 purchases, the CEO of Barry-Wehmiller has no intention of slowing down. He’s encouraged by the results the St. Louis-based company has been able to achieve so far with the strategy and by a current economic environment Chapman considers ripe for further acquisitions.

Moreover, Chapman told Chief Executive that more potential acquisition targets are seeking out Barry-Wehmiller as an alternative to private-equity acquirers because of the company’s emphasis on continuity of operations and the sustenance of a strong internal culture.

“We did 12 acquisitions last year alone,” said Chapman, who has built Barry-Wehmiller from a $20-million enterprise when he took over at age 30 in 1975, equating to 18-percent compounded annual revenue growth. “When you represent a culture like ours, people bring their companies to us now because they want that for their people and want to find a good steward to step in. You can’t do that with a private-equity firm.”

A German division of Barry-Wehmiller acquired BICMA Hygiene Technoogie GmbH, based in Mayen, Germany, in January, notching Barry-Wehmiller’s 100th acquisition. Meanwhile over the last 43 years, the company has divested only one small concern.

“Surpassing the 100 mark is a meaningful achievement, because it shows that our strategy has been successful in dramatically reshaping our future, and creating a company with a balance of financial performance, technology, and product and market diversity that is distinct in our industry,” Chapman said in a press release.

Chapman calls acquisitions “adoptions.” He noted, “We are able to see value where others do not. With every adoption, our goal is to inspire the team to envision a better future for their people and to build a path to that future.”

Barry-Wehmiller was founded in 1885 to provide conveyance and bottle-pasteurization machinery to St. Louis’s growing brewing industry. Chapman gradually reshaped it into today’s Barry-Wehmiller: largely a supplier of engineering consulting and manufacturing technology for packaging, corrugating, sheeting and paper-converting industries.

In 2009, Barry-Wehmiller launched a new platform that has built a $600-million group of companies outside the company’s traditional markets, completing more than 20 of the 100 acquisitions.

Along the way, Chapman established, maintained and spread a nurturing and effective workplace culture that has been widely heralded, leading to his publication of the 2015 book, Everybody Matters: The Extraordinary Power of Caring for Your People Like Family.

In the last three years, a new branch called the Barry-Wehmiller Leadership Institute has spread Chapman’s cultural approach via management consulting for major companies and institutions that range from American Airlines to the San Francisco 49ers of the National Football League.

Chapman began acquiring other companies because Barry-Wehmiller’s products were being obviated by the brewing industry.

“We only had one problem: no money or experience,” Chapman recalled. “But we began very intensely because failure would have meant death. At first we bought purely to get access to new markets and technologies. We had to buy companies that were struggling. We had to buy something that no one else wanted.”

“We are able to see value where others do not. With every adoption, our goal is to inspire the team to envision a better future for their people and to build a path to that future.”

As he proceeded, Chapman was able to add more positive criteria. “We needed to feel that we could make them better” as a company, which favored business that were within or complementary to Barry Wehmiller’s eight or nine major platforms. Also, Chapman said he wanted to ensure that the acquisitions collectively balanced one another in terms of product and service types, technologies and returns.

“Things that sell every day, every week and every month in various price points and different markets so we don’t put our company at risk.”

As Barry-Wehmiller strengthened and acquired more companies, and embraced a diversity of businesses, the strong culture founded by Chapman became crucial. “It’s probably the easiest thing in the world to share our culture,” he said. “Everyone, everywhere wants to know that they matter.”

The cultural element is one that Chapman sees lacking in most private-equity firms and the acquisitions they make, and it concerns him.

“They buy a company for a dollar and need to be convinced that they can sell it for four dollars fairly quickly,” he said. “It’s not about the people. It’s purely a financial-engineering game.” This approach reminds Chapman of the seamy side of the Industrial Revolution.

“It’s given lots of credit for creating wealth, communities, education and prosperity,” Chapman said of the Nineteenth Century phenomenon. “But it was never about human dignity and growth – only about economic gain. Nowadays again we need a human revolution that brings a balance between organizational and individual growth.”

 

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Trust Trumps Loyalty On Leadership Teams

Chief Executive Magazine -

Recently I had an intense discussion with a senior executive client about loyalty and trust in relation to his executive team. His premise is that he wants his leadership team to be loyal to him or as he puts it ‘they have to have my back and I have to have theirs.’ He argued that while it is ideal for an executive team to be able to discuss issues and challenges openly and without judgment, it is more important for teams to speak with one voice and to have each others’ backs. As I reflected on our discussion a couple of interesting questions came to mind: (1) Are loyalty and trust the same? and (2) Can executive teams be effective without trust?

Loyalty and Trust Defined

Our view is that loyalty and trust are not the same. Loyalty as defined by Webster is ‘a feeling of strong support for someone or something’ whereas trust is defined as ‘a charge or duty imposed in faith or confidence or as a condition of some relationship.’ A couple of examples illustrate our position. When I was assigned to my first Army platoon I was loyal to my company commander but I didn’t really trust him. I assumed that he was good at his job and I knew that for me to be effective at my job I would have to provide him with my full support. However, it took time for me to truly trust him (and I am sure for him to trust me) because at first he really wasn’t interested in my ideas or my challenges to his ideas. As we gained respect for each other’s capabilities, intentions, and differing perspectives my support was based much more on trust than on his position authority. Another stark example of the difference between loyalty and trust is highlighted in a great book I just read about ancient Japan called Shogun. In the book the Samurai’s are completely loyal to their lords for fear of death but they certainly weren’t always convinced that their lords were well-intentioned.

“it is up to the senior team leader to put the foundational elements in place so that trust can exist.”

Can Executive Teams be Effective without Trust?

As illustrated by the two examples above, there is no doubt that executive teams can be effective without trust but we are skeptical about the sustainability of their effectiveness. Loyalty based on position in the hierarchy is certainly important and helps teams (and organizations) maintain a sense of order and discipline. In our opinion this should be the baseline or minimum expectation that executives should have for the team. That being said, for a team to fulfill its potential and create value above and beyond what individual members bring to the table, leaders have to create and team members need foster a strong environment of trust; trust between the members and the leader and trust among the team members. The following are a few questions that we typically ask executives to get a sense for the level of trust within their teams…

  • “Can teammates challenge or disagree with the leader and each other openly?”
  • “Is the leader accountable to the team and are team members accountable to each other?”
  • “Are important and/or controversial issues tackled directly and openly?”
  • “Do team members feel comfortable admitting when they makes mistakes?” “What about the leader?”
  • “Do team members believe that the leader and their colleagues support them outside the team environment?”

Fostering Trust

In our opinion, it is up to the senior team leader to put the foundational elements in place so that trust can exist. It starts with humility – leaders who are confident in their capabilities are not afraid to acknowledge their shortcomings and this promotes an atmosphere where team members can do the same. Next is open dialogue – leaders who encourage one-on-one and team debate and who are receptive to challenge and feedback will tap into the full potential of their teams and mitigate the risk of stifled-silence. Accountability is essential for trust to exist – leaders who are accountable to their teams are much more likely to foster an environment where individuals are passionate about delivering on the commitments they make to their teammates. Finally, leaders who view mistakes as opportunities to learn and develop engender commitment and promote an environment where team members can debate, discuss and learn from each other.

In short, we believe that it is important to build loyalty within the executive team but for teams to take advantage of the unique contributions of every team member and fire on all cylinders the leader has to create an environment where trust (‘a charge or duty imposed in faith or confidence or as a condition of some relationship’) can thrive.

 

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