SUMMER 2022 Chief Executive Magazine

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THE VOICE OF AMERICA’S CEO COMMUNIT Y | SUMMER 2022

GET TO

GREAT What does it take to truly thrive amid our current chaos?

Jim Collins has thoughts.

An exclusive interview

PLUS Marshall Goldsmith: Tap the Unused CEO Superpower Crafting an All-Weather People Plan Bootstrapping Innovation

WITH THE NATION’S 3RD LARGEST WORKFORCE, FLORIDA IS WHERE YOUR BUSINESS BREAKS THROUGH.

C O N TE NT S

S U M M E R 2022 No. 315

FEATURES COVER STORY 16 THRIVING IN CHAOS What does it take to create a truly great, lasting company amid historic uncertainty and volatility?

Based on decades of research, Jim Collins, bestselling author of the business classics Good to Great, Built to Last and Great by Choice, has some answers. A challenging guide for challenging times.

By Dan Bigman 16

TOOLBOX 26 INTRAPRENEURIAL PURSUITS Why risk hiring or acquiring when you can build better from within? CEOs share tips on sparking homegrown innovation that wins.

By Dale Buss

WORKFORCE 34 ‘IT’S ABOUT BEING INTENTIONAL’ To win ‘the war for talent,’ you don’t just need great people—what you really need is a great people plan.

By C.J. Prince

BOOK EXCERPT 42 THE LOST ART OF ASKING FOR HELP 34

We’re all flawed human beings. We all should be asking for help. Reminding yourself and your team of this eternal truth is one of the essential tasks for anyone inside—or outside—of business today.

By Marshall Goldsmith

CEO SUMMIT 60 ‘EMBRACE IT AND FACE IT’ Challenging times demand innovative approaches to leadership. Gathering in Detroit for the 2022 Chief Executive Smart Manufacturing Summit, CEOs shared strategies. Some takeaways.

By Dale Buss

CEO ROUNDTABLE 66 GET AN EDGE IN THE TALENT HUNT Human capital remains a top concern for manufacturers. Here’s what they’re doing about it.

42

COVER PHOTO: MAT T NAGER

C O NTE NT S EDITOR Dan Bigman MANAGING EDITOR Jennifer Pellet DIGITAL EDITOR C.J. Prince ART DIRECTOR Gayle Erickson PRODUCTION DIRECTOR Rose Sullivan CHIEF COPY EDITOR Rebecca M. Cooper CONTRIBUTING EDITORS Dale Buss, Ram Charan,

Daniel Fisher, Marshall Goldsmith, Kelly Goldsmith, Jeffrey Sonnenfeld

EXECUTIVE EDITOR, STRATEGICCXO360

Emily DeNitto DIGITAL PRODUCER Alessandra Cooper VP, PUBLISHER, CHIEF EXECUTIVE

08

Christopher J. Chalk | 847-730-3662 cchalk@chiefexecutive.net DIRECTOR, BUSINESS DEVELOPMENT

DEPARTMENTS 4 EDITOR’S NOTE

Lisa Cooper | 203-889-4983 lcooper@chiefexecutive.net MANAGER, STRATEGIC PARTNERSHIPS

Rachel O’Rourke | 615-592-1198 rorourke@chiefexecutive.net

Ukraine From Here

6 RESEARCH Optimism Down Across the C-Suite

8 LEADERS 8 Here Comes the Fun Ping-pong, “Bar-keti,” food trucks? Sure. Whatever it takes.

By Dale Buss 12 Law Brief / Daniel Fisher When Feds Attack

CHIEF EXECUTIVE GROUP EXECUTIVE CHAIRMAN

Wayne Cooper

CHIEF EXECUTIVE OFFICER

Marshall Cooper

CHIEF CONTENT OFFICER

Dan Bigman

CHIEF COMMUNITY OFFICER

R.D. Whitney

DIRECTOR OF EVENTS & PUBLISHER, CORPORATE BOARD MEMBER

Jamie Tassa

14 On Leadership / Jeff Sonnenfeld Building the Nation

VP, PUBLISHER, STRATEGICCXO360.COM

KimMarie Hagerty

DIRECTOR OF MARKETING Simon O’Neill

52 ECONOMIC DEVELOPMENT Regional Report: Northeast & Southeast Despite an overall slowdown in the national economy, states continue to see pockets of growth.

By Craig Guillot

69 PLANE ADVANTAGE Who’s Flying Now? Enabling more team members to travel by private jet or charter makes sense—until it doesn’t.

By Dale Buss

72 LAST WORD Business as Unusual How to manage constantly shifting public expectations.

By Donna Kennedy-Glans

VICE PRESIDENT Kendra Jalbert HR MANAGER / OFFICE ADMINISTRATOR

Patricia Amato

RESEARCH DIRECTOR Melanie Nolen DATA SERVICES DIRECTOR Jonathan Lee DIRECTOR, DIGITAL PRODUCTS Leigh Townes ASSISTANT CONTROLLER Brittney Smith STAFF ACCOUNTANT Marian Dela Cruz MARKETING MANAGERS

Simone Bunsen, Christian Robinson EVENTS & MEMBERSHIP MANAGER Rachael Gaffney EVENTS COORDINATOR KP Wilinson DATA ANALYST Denise Gilson CLIENT SUCCESS MANAGER Victoria Campbell STRATEGIC PARTNERSHIPS ASSOCIATES

Lara Morrison, Allison Roberto Chief Executive (ISSN 0160-4724 & USPS # 431-710), Number 315, Summer 2022. Established in 1977, Chief Executive is published quarterly by Chief Executive Group LLC at 105 West Park Drive, Brentwood, TN 37027. Wayne Cooper, Executive Chairman, Marshall Cooper, CEO. © Copyright 2021 by Chief Executive Group LLC. All rights reserved. Published and printed in the United States. Reproduction in whole or in part without permission is strictly prohibited. Basic annual subscription rate is $99. U.S. single-copy price is $33. Back issues are $33 each. Periodicals postage paid at Brentwood, TN and additional mailing offices.

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ED ITOR ’ S NOTE CHIEF EXECUTIVE OF THE YEAR

2022 SELECTION COMMITTEE

UKRAINE FROM HERE

4 / CHIEFEXECUTIVE.NET / SUMMER 2022

ADAM ARON President and Chief Executive, AMC

KEN FRAZIER Executive Chairman Merck & Co. 2021 CEO of the Year

DAN GLASER President and Chief Executive, Marsh & McLennan

FRED HASSAN Former Chairman, Bausch & Lomb; Partner, Warburg Pincus

MARILLYN A. HEWSON Former Chair and Chief Executive, Lockheed Martin 2018 CEO of the Year

TAMARA LUNDGREN President and Chief Executive, Schnitzer Steel Industries

BRIAN MOYNIHAN Chairman and Chief Executive, Bank of America 2020 CEO of the Year

ROBERT NARDELLI Chief Executive, XLR-8

THOMAS J. QUINLAN III Chairman, President and Chief Executive, LSC Communications

JEFFREY SONNENFELD President and Chief Executive, The Chief Executive Leadership Institute, Yale School of Management

CARMINE DI SIBIO Global Chairman & CEO, EY Exclusive Adviser to the Selection Committee

TED BILILIES, PH.D. Chief Talent Officer, Managing Director, AlixPartners

CONTACT US Chief Executive Group LLC 105 Westpark Dr., Suite 400 Brentwood, TN Phone: 203.930.2700 Fax: 203.930.2701 ChiefExecutive.net PHOTO CREDIT: DONOVAN MARKS

THE WAR IN UKRAINE: WHERE IS IT GOING, when might it end and what are the likely implications? These questions remain front and center for every CEO, given the global impact of Russia’s murderous invasion.

During a recent session at the Yale CEO Leadership Summit in New York, hosted by Jeffrey Sonnenfeld, a Yale professor and longime Chief Executive columnist, CEOs got a sobering, big-picture assessment in a Q&A with Ukraine President Volodymyr Zelensky. Takeaways: Negotiated Settlement Unlikely Anytime Soon. The Russians currently have no interest in finding an end to the conflict, Zelensky said. “The validness of the Russian Federation to take a seat at that negotiating table to resolve the issue diplomatically…is simply not possible now,” Zelensky said, “because Russia can still feel its power.”

Food Situation Will Get Worse. Zelensky said Ukraine, one of the world’s largest and most essential grain exporters, is unlikely to be able to meet demand. Port facilities are blocked, and efforts to move grain via rail will be unable to match the volume required. “We are going to have 50 billion tons of grain stranded in Ukraine because of the occupation,” he said.

Economic Impacts Just Beginning. Some 12 million Ukranians have fled their homes, with 5.5 million leaving the country. This will ripple through Ukraine—and Europe—in ways no one has fully grasped so far. “What is going to happen to their places of employment? What is going to happen to schools where their children study, what is going to happen to shops where they bought groceries? All of these things are simply dying,” Zelensky said, adding: “This has killed our country economically.”

Economic Disaster Will Need to Be Backstopped. The country will need to be rebuilt, and he asked CEOs, representing some of the world’s largest companies, for help. “I’d like your companies to consider not only the option of leaving Russia but also finding their place in the Ukrainian economy.”

Underrated Environmental Catastrophe. Setting aside the risks of a Chernobyl-style disaster at one of Ukraine’s large nuclear facilities, Zelensky said he worried about the long-term impacts from the fighting on the country’s environment. The country had already seen large-scale damage from as far back as 2014, when he said Russians flooded coal mines in occupied territory, poisoning aquifers in the region. “These people do not have potable water now,” he said.

It’s as daunting a list of problems as can be imagined for any leader, and Zelensky remains valiant in rallying his country. But he can’t do it alone and he knows it. He thanked the audience for all its support but also asked that they not forget Ukraine, even if the atrocities they face fade from the front page. “It’s important for us that the world remembers that the war is raging, that some territories are still occupied,” Zelensky said. “It is important to not only to talk about it but to make sure our words are heard.”

What can we do? Send aid, invest. Not conduct business in ways that help Russia. And, at the very least, we can keep listening.

—Dan Bigman, Editor

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CH I EF E XECUT IV E RE SE A RCH

AD INDEX ARKANSAS ECONOMIC DEVELOPMENT COMMISSION arkansasedc.com 57

OPTIMISM DOWN ACROSS THE C-SUITE

BOSTON CONSULTING GROUP bcg.com 13

Insights from Chief Executive Group’s CEO Confidence Index, a widely followed monthly poll of CEOs, including members of the Chief Executive Network (CEN), our nationwide membership organization that helps C-Suite executives improve their effectiveness and gain competitive advantages. For more information, visit chiefexecutivenetwork.com.

CEO AND SENIOR EXECUTIVE COMPENSATION REPORT FOR PRIVATE COMPANIES chiefexecutive.net/compreport 59

LEADERSHIP TEAMS HAVE SHOWN GREAT RESILIENCE over the past two years, bullying through every challenge thrown at them with confidence they’d come out stronger on the other end. But signs of exhaustion are beginning to appear, and optimism is waning among every member of the C-Suite polled by Chief Executive and our sister publications.

Our Confidence Index surveys of CEOs, CFOs, CIOs, CHROs and board members all show deteriorating optimism about the business conditions that will prevail 12 months from now—and CEOs gave the lowest rating of the bunch, a 5.9 out of 10 on our 10-point scale where 10 is excellent and one is poor.

That rating is the lowest in nearly six years, and on par with the final, chaotic days of the Clinton-Trump election brawl. At this time last year, our leading indicator was at 7.2—a stark difference, particularly considering that was at the time of the onset of the Delta variant.

Until now, CEOs have told us they’ve been confident they could navigate the series of events fairly unscathed, but fatigue appears to be setting in. Only a quarter (27 percent) of those polled in our last survey, conducted in early May, expect conditions to have improved by this time next year—down from 42 percent at this point in 2021.

Hopes that we’ve reached the bottom of these economic challenges are fading across other members of the C-Suite as well, with 31 percent of CFOs expecting things to improve, 39 percent of CIOs, 29 percent of CHROs and 25 percent of board members.

CEOs say the unceasing series of headwinds the economy is facing is wearing down consumer buying power, and they aren’t optimistic that Washington can help. Many also point out the destabilization that the war in Ukraine brings to the global economy. With prices for utilities soaring in Europe and elsewhere, the effects on the supply chain have been damaging for many.

Yet, some remain optimistic. “Spending is still up, money is available at relatively low rates, inflation will drive efficiencies, sure, but things will stabilize,” said Tad Bohannon, CEO at Central Arkansas Water. He expects business conditions to be “very good,” at 8/10 by this time next year.

—Melanie Nolen, Research Editor, and Isabella Mourgelas, Research Analyst

CFO NETWORK thecfonetwork.org 51

CEO FORECAST OF BUSINESS CONDITIONS 12 MONTHS FROM NOW

6.77

6.95 6.72

6.50

6.63 6.10

6.36

July

August

Sept

Oct

Nov

Dec

Jan ’22

Feb

Chief Executive’s CEO Confidence Index is measured on a scale of 1-10.

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March

CORPORATE BOARD MEMBER NETWORK boardmember.com/cbmnetwork 65 THE CRUX hachettebookgroup.com/contributor/richard-p-rumelt 15 DELOITTE LOCATION SERVICES deloitte.com/us/en/pages/operations/topics/real-estate-and-location-strategy.html 23 DIRECTOR FUNDAMENTALS boardmember.com/directorfundamentalsprogram 31 ENTERPRISE FLORIDA enterpriseflorida.com INSIDE FRONT COVER FLYEXCLUSIVE flyexclusive.com 68 KENTUCKY CABINET ced.ky.gov BACK COVER LEADERSHIP CONFERENCE chiefexecutive.net/leadershipconference 49 LIOR AUSSEY liorarussy.com 47 LOUISIANA ECONOMIC DEVELOPMENT opportunitylouisiana.com 5 MICHIGAN ECONOMIC DEVELOPMENT CORPORATION Michiganbusiness.org/pure-opportunity 11

NEXT LEVEL LEADERS nextlevelleadersseminar.com 71

5.92

5.54

June

CIGNA cigna.com 3

MISSISSIPPI mississippi.org 32, 33

6.71

6.61

CHIEF EXECUTIVE NETWORK chiefexecutivenetwork.com 63

MELMARK melmark.org 40, 41

7.27

6.89

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L E AD E R S

HERE COMES THE

FUN Ping-pong, ‘Bar-keti,’ food trucks?

Sure. Whatever it takes.

BY DALE BUSS

Onestream Software bumps up the fun quotient with team activities organized by its affinity groups.

SUMMER HAS BEEN A literal bucket of fun at Arketi’s headquarters in Atlanta, where each week an employee has plucked a paper slip at random from a sandpail and kicked off the company’s next voyage into amusement. They have included “Bark-eti Day,” when staffers brought their pets to the office, and a “Bar-keti Day” during which the alcohol flowed freely, as well as an on-premises mini-golf tournament and a “Crazy Hat Day” that also involved the remote-working members, as the staff of 25 donned chapeaus, cowboy hats and notready-for-Pinterest homemade headgear.

“We’re a creative agency, so fun is part of our DNA,” says CEO Michael Neumeier.

“We need to look for ways to drag that into

8 / CHIEFEXECUTIVE.NET / SUMMER 2022

our organization. And we like to do things that are often unexpected.”

Don’t look now, but fun is back in the office. But it’s not the dissipate 2019 version of the amenities and activities that comprised much of corporate culture as millennial workers came of age. In 2022, the fun is more nuanced, more empathetic and more flexible—designed not only to produce chuckles and guffaws but also to accommodate the expectations of Generation Z, the demands of the new hybrid office and the sensitivities of workers who may have been scarred by the pandemic and apprehensive about a future that also looks foreboding. “There is so much heaviness going on throughout the world: ‘Does this job even matter?,’” says Lia Garvin, team operations manager for Google and a Marin County, California-based organization consultant. “Workplaces need to become more engaging and figure out what

does fun even mean to people.”

Indeed, CEOs, CHROs and others are still figuring out how to generate fun in this environment, but they know it’s imperative.

“If we’re not creating a fun environment for people to go to their jobs every day, then we’re going to lose talent and people,” says Tim Albrecht, president of a division of Milwaukee Tool, a maker of power tools based in Wisconsin.

So Milwaukee Tool hosts multiple employee sports leagues, from soccer to hockey to ultimate Frisbee. Work teams get to go play Top Golf and shuffleboard.

Food trucks often ring lunch breaks at company facilities, and a barbeque has featured Group President Steve Richman manning the grill—and doling out double meat and double cheese. And in its new digs in Chicago at the refurbished Old Post Office downtown, Milwaukee Tool is taking advantage of amenities, including rooftop

paddleball and basketball courts, a lounge with billiards and bocce, and a Boxcar fitness facility. “You’d think you were in Silicon Valley if you look at the space,”says Richman.

But not all fun is equal in the new-office era. Savvy CEOs are making sure there’s method to the mayhem. Some tips:

Milwaukee Tool President Steve Richman serving burgers at the company appreciation lunch.

Couple it with productivity. Fun can

mean creating more engaging ways to do the work. CLA, for example, recently launched CLA TV, a closed-circuit channel, and wired all its offices to produce video content, including a big new studio at the professional services firm’s Minneapolis headquarters. “It’s a new way of messaging for leadership but also to show things going on around the firm, and for events,” says CEO Jen Leary.

Create a mother ship. Given the chance

to reimagine workspaces, some compa-

CEO MAGAZINE / SUMMER 2022 /

9

Crazy hat day is one of many weekly theme days that help to connect creative agency Arketi’s remote and on-site staffers.

nies are creating a major magnet for fun. Nextiva, for example, minimized scattered food pantries when it opened a 101,000-square-foot new headquarters in Scottsdale, Arizona, in favor of funneling employees to a three-story “work café” that occupies about one-third of the first-floor footage. “It creates good energy for lunches, breaks and events, and the first time people walk into the building, it creates a ‘wow’ moment,” says Kim Lamont, chief of staff for the telecom software company. She even hired a lighting consultant to get the mood right, and “people have noticed.”

Design purposeful fun. T&M Associ-

ates, a construction-management outfit in Middletown, New Jersey, has conducted environmental beach sweeps and built homes with Habitat for Humanity.

Branded Group has 13,000 square feet of office space in Anaheim, California, and the company tries to leverage the now-underutilized space for fun—but one with a layer of higher purpose that attracts many employees. So the facility-management company conducted a backpack drive for a local charity for abused children, for instance, with employees loading back-toschool backpacks from supplies that were drop-shipped to its building.

Tailor to fit. For Augury, Tiffany Millar

created seven “personas” to represent

10 / CHIEFEXECUTIVE.NET / SUMMER 2022

post-pandemic workers for the New York-based industrial-sensor company. They include the Hero Visitor, who “wants to see the fun qualities that come with side conversations and organic meeting spots” in the office, and the Time Traveler, those employees fresh to Gotham from abroad.

Most in need of fun, says Augury’s workplace-experience director, are the Home Away from Home people who live close to the office. When they come in, “they like conference rooms where you can turn the table into pingpong,” she says, “and coffee and espresso are huge.”

Gather around interests. More compa-

nies have been launching and expanding employee-resource groups as internal support organizations for demographic and psychographic cohorts. This impulse also has led to the creation of affinity groups that organize around shared hobbies and interests more for fun than for ally-building. OneStream Software, for example, sponsors groups for dog owners, music fans and microbrewers, all meeting virtually. “People share recipes and pictures of their brew rooms throughout the world,” says Martha Tangle, vice president for global culture, diversity and people for the financial-software unicorn based in Rochester, Michigan.

Make coming in a perk. Branded Group

has a monthly contest for teams among its 150 employees around the country, and the winner gets to spend three days in the office in California. “Ninety-five percent of our people still want to work from home, but we are trying to find a happy medium and put some teeth behind it—the team that executes the contest the best, we fly them in,” explains CEO Michael Kurland.

A trip to the office? Sounds like fun. CE

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LE AD ERS LAW BRIEF \ DANIEL FISHER

WHEN FEDS ATTACK

Don’t expect justice when the government hauls you into court.

AT FIRST GLANCE, it sounds like something out of the old Soviet Union, or China today: You are dragged into court by the government, only to have your case decided by a judge who works for the prosecution.

But that is how federal agencies have worked since the New Deal.

Congress grants them the authority to write and enforce complex regulations governing everything from aircraft safety to toilet design. Break those rules and you will find yourself in front of a somewhat deceptively named administrative law judge (ALJ), who is employed by the very same agency that decided you violated a regulation. If you lose before the ALJ, you can appeal first to the agency and then to a traditional court— assuming you haven’t gone broke in the meantime.

Here Come the Judges

Daniel Fisher, a former senior editor at Forbes, has covered legal affairs for two decades.

A recent decision by the Fifth Circuit Court of Appeals in New Orleans may have thrown this entire order into chaos. In Jarkesy v.

Securities and Exchange Commission, the court ruled that hedge-fund operator George R. Jarkesy had a constitutional right to a jury trial over claims that he defrauded investors of $24 million. An ALJ employed by the Securities and Exchange Commission (SEC) found that he had committed fraud, and lower courts ruled that he had to exhaust all his administrative remedies, a process that had already consumed seven years, before getting a shot at a jury trial.

In a decision that has raised wails of discontent among legal scholars wedded to the idea of the modern administrative state, the Fifth Circuit overruled those decisions, finding that the Seventh Amendment guarantee of trial by jury applies to serious allegations like fraud.

The court also found that the very structure of the SEC was unconstitutional because Congress delegated too much power to the agency without a “guiding intelligible principle” to

12 / CHIEFEXECUTIVE.NET / SUMMER 2022

govern how it acts. Finally, the court ruled that ALJs, with two layers of protection from being fired, were unconstitutionally insulated from removal by the executive branch.

‘Built-In Bias’

It was a clean sweep for critics of the administrative state, including the New Civil Liberties Alliance (NCLA), a group founded

by Columbia Law School Professor Philip Hamburger, who says: “Administrative power is the most important civil rights issue of the 21st century.”

“Our position is, any ALJ who is employed by the agency is going to have systematic, built-in bias,” says Peggy Little, an NCLA attorney who won another critical decision at the Fifth Circuit, speeding up the appeal process for people caught in the bureaucratic enforcement machine.

For decades, the prevailing view in legal academia was that the Constitution changed during the Roosevelt administration to accommodate the administrative state, because elected representatives simply couldn’t write laws to address constantly changing technology and business practices. Judges were only too glad to shift their workload to agencies.

That is starting to change, however. There are still thousands of ALJs deciding routine questions like whether someone can get Social Security benefits, and that’s not likely to change. But when the government hauls you into court seeking all your assets or an order barring you from practicing your trade, groups like the NCLA are getting involved.

Billionaire Mark Cuban also fought the SEC and won in 2013, refusing to settle an insider-trading case and eventually convincing a jury he was innocent. However, he spent more on legal fees than the $2 million in fines the government was seeking. Others crumple in the face of years of bureaucratic procedures and overwhelming legal bills before they can even take their case to court.

“If you’re not ultra-wealthy like Mark Cuban, you can’t get out of those administrative hearings,” Little says. CE

THOUGHT LEADERSHIP PROVIDED BY BOSTON CONSULTING GROUP

A SOCIAL LICENSE TO USE AI? Deploying AI at scale is vital. Think about how a “social license” could make it easier.

By: François Candelon, Rodolphe Charme di Carlo and Steven Mills ARTIFICIAL INTELLIGENCE (AI) IS DRIVING THE DIGITAL transformation sweeping business, yet many companies face foundational challenges getting started. The issue, our studies show, isn’t technological; it’s human.

Because of our history of technophobia—probably dating back to Socrates, who warned against writing because it would “lead to forgetfulness and weaken the mind”— humans worry when they see technology that behaves like them or mimics their decision-making skills.

Yet CEOs need to battle through these barriers and ensure AI is deployed at scale in their company. The business benefits of AI are too great to ignore. In addition to enabling automation at an unprecedented level and scale, AI drives better decision-making through data-driven insights, for instance, developing complex scenarios that improve forecasting and planning. Companies that hold back will be at a severe disadvantage, just like those that missed the first wave of digitalization in the early 2000s.

For many companies, the answer to concerns about AI is the framework known as Responsible AI, which goes beyond algorithmic fairness and bias to identify the potential effects of the technology on safety, privacy and society.

However, following the principles of Responsible AI is just a starting point—plenty of firms using this framework have still had substantial problems with AI deployment.

Based on our experience, we at Boston Consulting Group (BCG) think that if a business wants to use AI at scale, it needs to go beyond responsibility in AI development and obtain society’s explicit approval to deploy it.

This explicit approval to use AI can be described as a social license. This concept of a social license is new to AI but has been used in mining and other industries that have high community impact for decades. Companies cannot award themselves social licenses; they must earn them, by demonstrating consistent and trustworthy behavior and stakeholder interaction. If they lose their social license, they risk higher costs or other threats to competitiveness, even if they comply with all formal license conditions.

Our studies show that a social license for AI rests on three pillars: Responsibility: Society must perceive the AI application as fair and transparent in its working and results. For example, a company that uses an AI-based recruitment system must demonstrate that candidates who provide similar responses receive similar ratings.

Benefit: This implies stakeholders share their perception that the advantages of using AI systems are greater—or, at least, no less—than the costs of doing so. Society’s verdict will not always favor AI’s use. For instance, privacy concerns may prevent AI’s use in some healthcare applications.

Social contract: Society must accept that companies that want to develop AI can be trusted with its use, as well as the acquisition and analysis of real-time data to feed their algorithms, and that they will be accountable for the decisions made by AI systems. Mistrust and a perceived lack of accountability are two reasons why society has been slow to approve unrestricted use of self-driving automobiles, for example.

Every business has to find its unique way to earn a social license for AI based on the problem being solved and the number of stakeholders involved. But to start: • Commit to stakeholders about how you will (and won’t) use AI and the standards you will use.

• Deliver on that commitment with a Responsible AI program entirely consistent with your values.

• Demonstrate commitment through transparency. Admit to any failures, explain what happened and what you will do about it.

This will likely take time and effort. But AI’s value to business means there is clear value in a process that increases the chances of success. CEOs should use the social license concept to help unlock the transformational benefits of AI at scale.

François Candelon, Rodolphe Charme di Carlo and Steven Mills are AI leaders at BCG.

BOSTON CONSULTING GROUP | bcg.com

LE AD ERS ON LEADERSHIP \ JEFFREY SONNENFELD

BUILDING THE NATION THERE ARE PLENTY OF POLITICAL rationalizations to explain why we haven’t been fixing our broken immigration system.

That doesn’t make it less of a lost opportunity.

Apple pie, “God Bless America,” hot dogs and hamburgers were created by immigrants, along with iconic American companies like Intel, Google, Tesla and Uber. More than half of startups with revenues of $1 billion or higher have immigrant founders or co-founders. Immigrants or children of immigrants are responsible for creating some 45 percent of F500 companies. Let’s consider three such leaders: Hamdi Ulukaya, Chobani

Let’s focus on a business challenge we can do something about: immigration policy.

Jeffrey Sonnenfeld is senior associate dean, leadership studies, Lester Crown professor in management practice at Yale School of Management, president of the Yale Chief Executive Leadership Institute and author of The Hero’s Farewell.

Follow him on Twitter @JeffSonnenfeld.

Chobani has 2,000 employees and a $10 billion valuation with plans for an IPO. Founder Hamdi Ulukaya represents an inspiring first-generation immigrant, selfmade success story. Of Turkish Kurd ethnicity, his family led a seasonally semi-nomadic existence tending and herding their flocks.

Ulukaya, who came to the U.S. at age 25 with $3,000 and limited English, took a job on an upstate New York farm and imported the family’s feta cheese from Turkey.

He partnered, first with a small wholesale feta cheese plant in Johnstown, New York, in 2002, then used a $800,000 SBA loan and local economic development grants to purchase an abandoned diary plant in New York State—which became Chobani. Unable to secure private financing, he relied on government loans and personal savings.

Ulukaya is a distinguished inter-faith human rights leader, who draws on teaching from his own Islamic faith in hiring thousands of refugees from varied cultural backgrounds and providing support/training/skills programs to help them acclimate.

Farooq Kathwari, Ethan Allen

Named for the Revolutionary War hero, furniture maker Ethan Allen celebrates its 90th anniversary this year, thanks largely to Kashmir born Farooq Kathwari. He came to this country with no money but climbed

14 / CHIEFEXECUTIVE.NET / SUMMER 2022

to become CFO of Rothschild before leading an LBO for Ethan Allen that enabled him to revamp its operations, with vertical integration across retail, design and manufacturing.

CEO since 1987, he has been exporting to China for over 20 years, having set up 100 showrooms there. Roughly 80 percent of manufacturing is in North America. In the 1990s, Kathwari said he considered “taking the easy route of moving manufacturing to east Asia but I said no.” Instead, he chose two U.S. locations: Vermont for wood and North Carolina for upholstery. He has been investing in leading human rights causes and interfaith understanding in the U.S. and abroad. He’s chaired Refugees International, as well as a family foundation that funds scholarships for employees children.

Adi Tararko, Houss

Tel Aviv-born Adi Tararko built her home-design website Houss into the most highly valued private U.S. company run by a female founder. Worth over $4 billion, Houss has 40 million unique users and 1,700 employees and is primed for an IPO. Tararko founded the company from her kitchen table after coming to the U.S. to live in Silicon Valley and experiencing issues remodeling her home. Asked about her entrepreneurial spark, she credits growing up in a country that “embraced women in general. We have Golda Meir.”

More directly, her heritage is anchored upon a family of self-made women, including a mother who led her own real estate business and grandmother who somehow survived four concentration camps to became a successful Israeli fashion designer.

Tararko drew from her family’s spirit of resilience to help her company and its dedicated workforce survive the pandemic.

Operating success secrets from such immigrants include: imagination, hard work, reinvention, pride in heritage and the self-confidence to avoid discouraging cliches. How truly American. CE

© Cathy Maier Callanan

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fundamental values, even the

existence of the organization.

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C OVE R STORY

LIVE COMMUNITY EVENT Join us as Jim Collins keynotes our annual Chief Executive Leadership Summit, Nov. 3-4 in Denver. Space is very limited. More information: chiefexecutive.net/leadershipconference

16 / CHIEFEXECUTIVE.NET / SUMMER 2022

‘THRIVING IN CHAOS’

What does it take to create a truly great, lasting company amid historic uncertainty and volatility?

Based on decades of research, Jim Collins, bestselling author of the business classics Good to Great, Built to Last and Great by Choice, has some answers.

A challenging guide for challenging times.

BY DAN BIGMAN

Ask a few hundred CEOs from nearly every industry in nearly every part of the country

for the name of the most useful business book they’ve ever read—as we recently did—and one title tops the list, and overwhelmingly so: Good to Great by Jim Collins.

That’s because—as you likely know already—Collins did a staggering amount of research to discover what really separated middling companies from those with decades-long outperformance. Who makes the jump? And how? It’s part of what’s become a pantheon of classic Collins tackling one fundamental question after another: Why do great companies fail? (How the Mighty Fall); How do some companies persist in being great over very long periods of time?

(Built to Last, with Jerry Porras); Why do some companies seem to survive in chaos, while others falter? (Great by Choice, with Morten T. Hansen).

Throughout these works, he’s created some of the most widely quoted strategy ideas in a century: the Hedgehog Concept, the Flywheel, getting the right people on the bus, Level 5 leaders, the Stockdale Paradox, unlocking, along the way, some fundamental secrets about what works and what doesn’t—and why—when it comes to nurturing a successful organization over the long haul. (See sidebar, p. 17.)

Five years ago, in the wake of the bruising presidential election, I spent some time with Collins at his offices in Boulder, Colorado, asking him some fundamental questions about the nature of leadership in America. To my surprise, he was deeply optimistic—based on what he’d seen working with West Point cadets, hospital staffers, teachers and businesspeople,

CEO MAGAZINE / SUMMER 2022 / 17

thousands of whom he said embodied his concept of Level 5 Leadership—people with a blend of “personal humility” and “indomitable will” who are ambitious for “the cause and the organization…not themselves.”

(That interview is available at chiefexecutive.net.) We were a nation full of Level 5 leaders, he argued, and that was our great, under-considered strength.

Now, as the world faces yet another round of volatile, unpredictable challenges, from inflation to war to climate change to poisonous politics to a reshuffling of the post–World War II global order, I decided to talk with Collins again, this time to ask him about the nature of resilience. What do great companies do right in the face of severe challenges? What do others get wrong?

For him, there’s no more timely question in business.

“The primary reality of history is uncertainty, turbulence, chaos,” says Collins. “As Edward T. O’Donnell, a history professor, puts it, ‘history is the study of surprises.’ So, I actually feel we’re heading into what is more normal, rather than what is less normal. In some various form, this level of uncertainty is more likely—nobody can say with certainty— to characterize the rest of our lives than not.”

But once again, that doesn’t mean Collins is pessimistic. Far from it. As he reminds us, even if most of our post–World War II stability was, in his words, “aberrant” compared with the rest of human history, that only means that most of the critical facets of our civilization were developed in chaotic rather than stable times. “Look at what people did,” he says. “Look at the kinds of companies people built, look at what people accomplished through all the uncertainties, turbulence, chaos, change, technology, that came before. They did it. So, we can do it.”

The question, of course, is how: How do great companies make their way through tough times? How do the best leadership teams approach uncertainty and volatility?

And how can we do it, too? The following conversation is edited for length and clarity.

“Enterprises that prevail in turbulence selfimpose a rigorous performance mark to hit with great consistency.”

18 / CHIEFEXECUTIVE.NET / SUMMER 2022

What have you learned about what great leadership teams do—and what the not-great do—during volatile times and what happens as a result?

The wonderful thing is, we have research we can draw upon. The work that Morten [Hansen] and I did in Great by Choice was really, ultimately, about thriving in chaos.

Number one, we observed that you learn how to exert self-control and self-discipline in a world that is out of control. We found this marvelous matched pair, Roald Amundsen and Robert Falcon Scott, the first two to try to go to the South Pole in 1911. It was like an entrepreneurial startup heading off into the most uncertain and unforgiving environment.

It wasn’t just, “Hey, let’s go to the South Pole, hunker down and survive.” It was to try to be the first in history to reach the South Pole.

What we found is that the way Roald Amundsen led—he’s the one who got there first and got back alive and safe—was different than the way Robert Falcon Scott led. Scott got there second, and then he and his entire team died on the way back that same year.

The environment was completely out of control. It’s the South Pole. It’s 1911. It can easily kill you. You think it’s hard building a company in California? Try going to the South Pole in 1911. It was the moon mission of 1911.

Amundsen was very, very disciplined in his march across the plateau, and Scott was very erratic. Amundsen stayed on this consistent march. He never wanted to get exposed to a terrible storm when he was depleted and exhausted. But even on really uncertain days, he would still make progress towards their goal, they were 20-mile marching across the plateau. Scott was much more erratic. He had big days and not big days, and the weather determining his pace rather than himself.

When we looked inside companies that did really well in times of uncertainty, they had the same pattern. They had something they would focus on that was like a heartbeat march that kept them exerting a sense of self-control in a world that was out of control. A historical business example of this is the rise of Intel from startup company into the 2000s. In that case, their march was to stay on Moore’s law.

Imagine all the chaos, uncertainty, technology change and disruptions. In fact, their entire business got obliterated, essentially, when the memory chip business went into [depression] in the 1980s. But they had this march, which was doubling components at affordable cost every 18 to 24 months, no matter what, like clockwork. They never, ever missed it. Moore’s Law wasn’t a law, it was a decision.

It speaks to figuring out what that one key metric is that moves your business, and committing to it over and over.

Right. It’s not a random choice. You could have a technology march, a profitability march, a growth march, a cost march or whatever. It just has to be an intelligent march for you.

Having that heartbeat allows you to exert self-control in a world that is out of control.

When people are feeling frozen, feeling, “What do we do next? Oh my god, inflation might happen, and it might be 9 percent.

What happens with interest rates? What’s going to happen with the geopolitical situation?”

If you basically say, we’re going to set out and commit ourselves to achieving this march for 25 consecutive years, you manage yourself differently than if it’s just reacting to the environment. Amundsen led his team across the plateau that way, and Scott didn’t.

The second thing that we also saw in our companies is that in an uncertain world, there’s this very weird paradox of, on the one hand, placing really big bets, and, on the other, protecting your flanks against downside events, and putting both of those together.

Amundsen and Scott both had to come up with a strategy for navigating an uncertain environment. Amundsen said, “I’ve got to bet my strategy on something that’s empirically proven because if it fails, we might not just fail in our quest, we might die.” So he goes and lives with people in the Arctic, who have navigated these environments for thousands of years. They say, “You want to use dogs and sleds. That’s what we’ve tested. That’s what works. That’s what you need to master. If you’re going to bet your life on a strategy, bet on dogs and sleds.”

Scott bet on an untested technology, to drive motor sledges across the Antarctic Pla-

JIM COLLINS 101 There’s no substitute for reading the books, but here, distilled from all of Collins’ work and arranged in order, are his key principles to building a Great company that can take a punch and thrive for decades. For more: jimcollins.com/concepts.html 1. Cultivate Level 5 Leadership. Tough people who are ambitious for the cause and for the organization, not themselves.

2. First Who, Then What. Get the right people on the bus and in the right seats before you decide where to drive the bus.

3. Embrace the Genius of the “And.” In the research for Built to Last, Collins found builders of greatness are able to embrace extremes at the same time, i.e.: purpose AND profit, continuity AND change.

4. Confront the Brutal Facts. “Every good-to-great company embraced what we came to call the ‘Stockdale Paradox.’

You must maintain unwavering faith that you can and will prevail in the end, regardless of the difficulties, and at the same time, have the discipline to confront the most brutal facts of your current reality, whatever they might be.”

5. Develop Your Hedgehog Concept. “A simple, crystalline concept that flows from deep understanding about the intersection of three circles: 1) what you are deeply passionate about, 2) what you can be the best in the world at and 3) what best drives your economic or resource engine.”

6. Build Your Flywheel. In Collins’ research, he found building a great company “has no single defining action” but rather “resembles relentlessly pushing a giant, heavy flywheel, turn upon turn, building momentum until a point of breakthrough, and beyond.”

7. 20-Mile March. “Enterprises that prevail in turbulence self-impose a rigorous performance mark to hit with great consistency—like hiking across the United States by marching at least 20 miles a day, every day.”

8. Fire Bullets, Then Cannonballs. Don’t use up all your dry powder firing your big gun at a problem without first firing a series of smaller, calibrating shots. Once you’ve hit your mark, then you can open up.

9. Practice Productive Paranoia. “Leaders who stave off decline and navigate turbulence assume that conditions can unexpectedly change, violently and fast. They obsessively ask, “What if?” And they prepare accordingly.

10. Clock Building, Not Time Telling. “Leading as a charismatic visionary…is time telling; shaping a culture that can thrive far beyond any single leader is clock building.”

11. Preserve the Core/Stimulate Progress. “Great organizations keep clear the difference between their core values (which never change) and their operating strategies and cultural practices (which endlessly adapt to a changing world).”

CEO MAGAZINE / SUMMER 2022 / 19

teau. They didn’t do well in that environment, and the engine blocks cracked. So they ended up man-hauling sleds across the plateau. It didn’t work very well.

In a tough environment, you have to place a bet on your strategy. When you bet on an un-empirically validated strategy—this is where that idea of “fire bullets to get calibration and then fire your cannonballs” tends to do well. Then, when you bet on an empirically validated approach, you bet very, very big. Companies that get in trouble tend to often place big bets because they’re uncertain, but they’re big bets that are uncalibrated, and then uncertainty intersects with a big uncalibrated bet. And that can kill.

“In an uncertain world, there’s this very weird paradox of, on the one hand, placing really big bets, and on the other, protecting your flanks.”

You described this in How the Mighty

Fall—that increasingly desperate hunt for a “one-off” to save yourself.

It’s the stage of grasping for salvation. In good times, everybody’s rising up; they’ve got the hubris and the undisciplined pursuit of more—we’re not 20-mile marching, we’re just going for more and growth and big and more and growth, until it starts to catch up with you. You’re not 20-mile marching, you’re just more growth big, more growth big.

It’s hard to tell what’s leadership prowess and what’s luck when you’re in a rising market. These days you need a little more craft than that.

This is what can get lost in a rising tide.

Top leaders have great productive paranoia.

They always assume everything will go bad and manage accordingly. Part of what enables them to survive spates of bad luck, catastrophic downturns and unexpected shocks is they just build more shock absorbers into their whole system.

We went back and ran an analysis on the cash-to-assets ratio of companies that did really well in these kinds of environments, even when they were small. We found that

20 / CHIEFEXECUTIVE.NET / SUMMER 2022

the discipline to have a very high cashto-assets ratio showed up early in their history. It wasn’t a luxury of their success.

It preceded their success.

I go back to Amundsen and Scott. Both calculated the amount of supply depots they needed. It is highly inefficient to multiply your potential supply depots by three. But it’s not highly inefficient if you’re coming back, winter’s gathering on you, and you run out of supplies and die. Tell me what efficient is. We found that great companies are kind of irrational in their “efficiency.” They’re not the most efficient use of capital; they’re not the most efficient use of buffers. What they are is enormously resilient by design.

You see people who maintain highly conservative balance sheets and enormously prudent financial positions. They’re willing to place really big, calibrated bets—but they also protect the flanks. They always assume there’s something coming around the corner they can’t see but that will be disruptive, they know it could be really bad. It’s not a matter of if that will happen. It’s only a matter of when, what form it will take and how fast and ferocious it will be.

They further understand that that’s an advantage for them. If you study economic history, you find that in good times it’s very hard to see the difference between the great and the mediocre. They both look pretty good. But when turbulent times come, the great tend to navigate it reasonably well.

And the mediocre tend to get slammed, and a gap opens between the great and the mediocre. And then that gap is never given back.

We systematically studied luck events and studied the role of luck: good luck, bad luck. Covid was bad luck for the whole world, right? But when you understand what luck is and that you can actually define it, quantify it and study it, there was no evidence that our big winners were luckier than our comparisons. What they got was a higher return on the luck events, the good luck or the bad luck, than their comparison.

It’s the return on the luck that separates, not the luck itself. But there’s one really key caveat, and this is something people have to grasp about luck. For building a great company, luck is not a causal variable. Good

luck never, ever causes a great company. Bad luck, if it’s big enough, can kill a company.

That’s why you have to manage yourself such that you can absorb tremendous hits of bad luck, so you never hit the death line.

For you, the ultimate resiliency starts at the very beginning, with finding the right people. Getting those purposeful, driven-for-the-company, not themselves, “Level 5 leaders,” as you call them, on the bus, in the right seats. Can you talk about achieving that in a time when it’s hard to hire people?

You can’t do everything I just talked about if you don’t have the right people. There’s a wonderful Edward T. O’Donnell quote, “Your ultimate hedge against uncertainty is your people, people who can adapt to whatever the world throws at you.”

Here are a few things I would pass along to any CEO right now. Sit down and make a list of all the people in your company who surprised you on the upside with their leadership through Covid. Because Covid exposed the leadership capabilities of people.

I’ve had conversations with numerous CEOs who realized that Covid brought some people to the fore whose Level 5 leadership wasn’t necessarily so visible before under the stress of Covid. Take that as a gift, and say, “It’s hard to find enough of the right Level 5 leaders, but Covid just gave me a bunch of Level 5 leaders that I hadn’t seen before.”

How can you make those people a bigger part of leading your company today?

One of the most effective ways is to say, “There’s Jane, Suzy and George. And those three leaders showed a Level 5 leadership through Covid that is extraordinary. I’m gonna make them 10 times more important in this company than they were before.”

That’s like getting 10 new Level 5 leaders.

If every single one of your readers did that right now, they’ve got a resource they can build upon. It’s great, too because there’s nothing more exciting than to recognize somebody, to suddenly realize, “Wow, I never saw that in them before.” That’s very exciting to identify and work with.

Another thing I encourage is literally thinking: How many key leadership seats do we

have? It’s more than just your executive team.

And how many of them have Level 5 leaders?

A CEO of a privately held second-generation family company, enormously successful, wrote me a letter recently that says simply, “My life’s work is to build an iconic company that can last 100 years, driven by Level 5 leaders driving a fleet of sparkling minibuses. I intend to fulfill this before I’m done.” Then there is this marvelous sentence. “Of 450 leaders, we have 42 Level 5 leaders. There is work to be done.” What I love about that is he’s systematically saying, “It’s not just about me being a Level 5 leader, I need 450 Level 5 leaders. And if I have Level 5 leaders in all these different leadership roles...” It’s a matter of building them; it’s not necessarily finding them, it’s building them. Then we can do great things, and we can absorb all kinds of shocks, and we have an inherent resiliency.

“Good luck never, ever, ever causes a great company.

Bad luck, if it’s big enough, can kill a company.”

One part of your work that’s always resonated is the idea of “confronting the brutal facts” and the Stockdale Paradox, or not giving up hope but also not giving in to Pollyanna optimism. Why is this so hard for leadership teams?

Part of what happens is that leaders are afraid, sometimes, that if you dwell on and confront the brutal facts, it will somehow be demotivating. The truth is exactly the opposite. Your best people know the brutal facts. And as soon as you begin to confront them—simply by asking, “What are the brutal facts?”—the very best people tend to get really inspired, because they would like nothing more than to confront them and to overcome them. There’s very little that’s more demotivating than feeling that your leaders are failing to confront the facts that you see so clearly.

I was at a storied American company facing new challenges from competitors around the world and watching the CEO present. I could see everybody in the room.

The first part of the presentation had to do with a vision. And, as you know, having a great vision is a great thing. But I noticed

CEO MAGAZINE / SUMMER 2022 / 21

a lot of people checking their phones and kind of distracted. It was a pretty good vision but didn’t really magnetize people.

Then the CEO put up a “brutal facts” slide.

He said, “We really need to confront the brutal facts that are in the way of accomplishing our vision.” He put out some things related to some scary stuff, about the threat of the international competition, about the cost structure, about a number of things. Everyone put down their phones.

The room went silent. People were riveted. One of the most engaging things you can do is present the brutal facts. And yet people fear that, “oh, the brutal facts will demoralize people.”

No, exactly the opposite.

Part of it is just not asking the question. When an executive team comes to our management lab, I ask everyone to take out a blank sheet of paper and write down the top five brutal facts that the company faces today literally seven seconds into the session.

“People fear that, ‘oh, the brutal facts will demoralize people.’

No, exactly the opposite.”

That’s how you start?

That’s where it begins, every time. That explodes all the conversations open. It’s not just what’s wrong. It’s what are the facts?

I find that building in the discipline to ask about the brutal facts is really powerful.

And all you have to do is ask.

A second thing is you have to be able to conduct autopsies without blame. Things go wrong, mistakes get made. You want a culture where the question is not, “Who do we blame?” but “How do we autopsy and learn from this?” If it ever devolves into trying to figure out who to blame, you will shut down the confronting of the brutal facts.

That’s part of the secret sauce of doing this.

Now, the other side—unwavering faith has to do with timeframe. Why am I an optimist, for example, about our country?

Well, in any given news cycle, you can feel, mmmmm, right? Unwavering faith is about “we will work through this, we will come out the other side. It might take a long time.” What’s hard about the unwavering faith is that it’s a bit like delayed gratifica-

22 / CHIEFEXECUTIVE.NET / SUMMER 2022

tion. You have to retain that faith with the idea that that’s a long-term outcome, not a tomorrow outcome. If I could pick the one thing that I would change in how executives lead companies by magically waving a wand, it would be the timeframe in which they operate—that you manage for the quarter century, not the quarter.

The central point to a lot of your work in my mind is the “Flywheel,” finding that operating system inside your company where you can attain repeatable success and grow it over time. How do you get clear on what your flywheel is?

The essence of the flywheel is momentum.

Usually over time, across multiple businesses, as you evolve from one phase to another phase to another phase as a company.

Think about two ways you can feel the world coming at you. One is like you’re on your heels. You’re getting buffeted about.

Or, you can feel that, yeah, maybe there’s a hurricane in your face, but the fundamental feel you have is forward momentum. You never want to underestimate the power of feeling momentum in what you’re doing. It’s this building effect even if it’s in a particularly challenging time, the sense that you are creating momentum. The flywheel is about that.

It’s also about the idea that building anything great is a cumulative process.

The turning point for me in understanding the power of the flywheel when you’re facing difficulty came in 2001, when I presented the Good to Great ideas to Amazon and met with the executive team, the board and Jeff Bezos.

It was the dot-com crash. Whatever we’re facing now, it may not be as hard as being a dot-com company in 2001. I taught the Good to Great ideas, but I put special emphasis on the flywheel principle. I’m not a consultant, I don’t tell people what to do, so as I left Seattle I simply said, “Don’t respond to this as a crisis. Respond as a flywheel.” Amazon took the flywheel principle, and they asked, “What is our flywheel?” Then they captured the architecture of momentum.

They sketched out how that architecture of momentum of their flywheel worked, and they built upon that, turning the flywheel coming out of the dot-com crash.

T HO U G HT L E A DER S H I P PROVI D E D BY D E LOI T T E LL P

Where’s the Talent?

Finding the Next Set of Emerging Tech Locations

BY DARIN BUELOW AND ALEX DUNLAP kets? To answer this question, let’s explore what makes a vibrant location to THE APPETITE FOR ENGINEERS, SOFTWARE DEVELOPERS, cyberfind tech talent. In our experience, strong tech talent markets can demonsecurity experts, R&D technicians and other technology-related talent strate that they: continues to grow. According to the U.S. Bureau of Labor Statistics (BLS), science, technology, engineering and math (STEM) occupations are 1. Have the workers with the target skills already present in the projected to increase by 10.5 percent from 2020-2030, comgeography. This can be assessed by looking at the current STEM pared to 7.5 percent for non-STEM occupations. Computer occupation location quotient (LQ). The U.S. as a whole will occupations represent approximately two-thirds of the represent an LQ of 1.0, while every city’s LQ will be greatStrong STEM markets predicted STEM job growth from 2020-2030, and jobs er or less than 1, revealing that metro’s relative density of for employers often exhibit in information security and software development STEM occupations compared to the U.S. average.3 an above-average density of both have expected job growth of over 20 percent, 2. Will have a robust supply of the workers with tech talent, a steady and according to BLS data. Additionally, a 15 percent the target skills in the future. This may be assessed surge in demand for engineers is expected as baby significant flow of STEM by analyzing college graduates with STEM degrees, 1 boomers retire. graduates coming out of projected population growth, demographic trends and area colleges and positive Companies need and will continue to need this kind other factors. of talent in an ever-virtualizing world. Trouble is, many net migration figures.

3. Are attracting talent with the target skills to move are unable to recruit STEM talent in sufficient numbers to the geography. Indicators often focus on the inflow of in the labor markets surrounding their existing locations. In talent; look for positive net migration statistics, especially among some cases, the talent is there but has become increasingly exthose with desired skillsets. pensive due to years of wage escalation; in others, suitable tech labor to support growth simply doesn’t exist in the area.

Without question, Austin hits the mark in all three of these talent market dimensions: Austin enjoys a STEM occupations LQ of 1.18, 19 percent five-year The acceleration of work-from-home and remote work options have growth in graduates with STEM degrees, 11,382 total annual graduates with prompted some companies to hire the tech talent they need nationally, STEM degrees4, five-year population change of 14.6 percent and approxiregardless of proximity to a company office. However, many companies mately 134 people moving to Austin daily5, as of Q1 2022. still want the opportunity for face-to-face collaboration and interaction between team members and therefore strongly prefer to place facilities in Other cities with the positive attributes described above include Ramarkets with a sustainable and affordable source of tech talent. leigh-Durham, Seattle and Salt Lake City. However, when looking at relocation or a new location, while it’s safe to choose a city that has all three attriIn looking for new locations, many firms “follow the herd,” opening tech butes, CEOs should have their teams evaluate specific factors reflective of the centers in cities that have been attracting software, IT and engineering organization’s unique needs. While a city may not currently have a positive LQ, hubs for decades. Austin, for example, in 2020 (a year not generally assoit could score well in population growth and STEM graduates. Cities exhibitciated with job growth) saw a 3.5 percent increase in tech industry jobs ing these attributes include Sacramento, Oklahoma City and Dallas. Likewise, while the metro’s total jobs fell by 2.9 percent. Tech industry jobs total 17.1 perhaps a firm is more interested in recruiting a lower number of experienced percent of all jobs, compared to just 9.2 percent nationally, according to the professionals, making current STEM LQ more important than population Austin Chamber of Commerce. growth and new graduates. This type of deployment may wish to consider The problem with this strategy, of course, is cost. Recent high-profile tech high STEM LQ cities like Huntsville, San Jose and Detroit. announcements in Austin may make other companies feel as though they The myriad of location options for companies to consider is itself revealing: are chasing increasingly scarce resources when recruiting quality STEM canIt is difficult to say “this is the city to go to” without an understanding of the didates. More competition can drive up costs; even pre-pandemic Austin unique needs of the business. Every geography comes with pros, cons and a experienced significant wage escalation and cost-of-living increases. The wide cost range that will affect each business differently when it comes to recity’s average high-tech salary from 2015-2020 climbed from $104,671 cruiting key STEM talent. A location decision should be evaluated on a caseto $136,541, a 30.4 percent increase. According to the Austin Chamber of by-case basis with a detailed understanding of a company’s specific talent Commerce, “over the last decade, tech payrolls are up 131 percent comneeds, growth projections, cost objectives and risk tolerance. Firms should pared to 101 percent for all payrolls.” Austin’s population has grown 33.7 decide if they want to enter the established but potentially saturated marpercent from 2010-2020, five times the national average. This, among other kets, constantly competing with the big players for talent, or consider more reasons, has caused housing and overall living costs in Austin from 2010emerging markets, knowing that they might grow more slowly. That is why 2020 to jump 20.7 percent and 17.8 percent, respectively, the 12th-highest an informed location decision should be based on data-driven decisions and increase of all metros in the U.S. analysis to enable business leaders to find the most suitable talent market for We can’t opine on whether the influx of investment has “kept Austin weird”2 their future needs. but data reveals that it has made Austin expensive.

Darin Buelow (dbuelow@deloitte.com) is a principal at Deloitte Consulting So, where’s next? How should CEOs direct their teams to look at the right LLP in the Real Estate & Location Strategy practice. Alex Dunlap is a consultant statistics and data, so the company places its bets in the right talent marat Deloitte Consulting LLP in the Real Estate & Location Strategy practice.

As used in this document, “Deloitte” means Deloitte Consulting LLP, a subsidiary of Deloitte LLP. Please see www.deloitte.com/us/about for a detailed description of our legal structure.

Certain services may not be available to attest clients under the rules and regulations of public accounting. Copyright © 2022 Deloitte Development LLC. All rights reserved.

Sources: 1 Jeff Roman, P.E. “How To Meet the Increasing Demand for Engineers”, 2021 https://www.nspe.org/resources/pe-magazine/spring-2021/how-meet-the-increasing-demand-engineers | 2 https://austin.culturemap.com/news/city-life/03-14-18-history-why-is-keep-austin-weird-slogan-bumper-sticker-shop-local/ | 3 Location Quotient analyzed in top 50 metropolitan areas in regard to currently employed workers in Science, Technology, Engineering, and Mathematics (“STEM”) occupation cluster. JobsEQ data as of Q1 2022, Private Deloitte license, https://www. chmura.com/software | 4 JobsEQ data as of Q1 2022 for most recent complete academic year, Private Deloitte license, https://www.chmura.com/software | 5 JobsEQ data as of Q1 2022, Private Deloitte license, https://www.chmura.com/software

In a disruptive world, you don’t do well by blowing up your own flywheel. That’s not how you respond to a disruptive world. You disrupt the world by turning your flywheel. The disruptors are a flywheel. The disruptees are those who react to a crisis.

Once you understand your flywheel, you can build on it systematically.

It’s kind of like the 20-mile march, except it’s all about the momentum. If we do A, it’ll drive B, if we do B, it’ll drive C, if we do C, it’ll drive D, and so forth, around and around the flywheel.

“A lot of people use the word flywheel, but when I look at their flywheels, I realize they’re not flywheels.”

So, how do I identify our flywheel? How do I know I’ve got it right?

A lot of people use the word flywheel, but when I look at their flywheels, I realize they’re not flywheels. A flywheel is not a series of steps drawn as a circle, then you go, “We have a flywheel, because it’s drawn as a circle.”

That’s not a flywheel.

You need five checks to know that your flywheel is really a great flywheel. First, it has an inexorable chain of momentum. In the case of Amazon, you can offer lower prices, more stuff for customers. Next is an inevitable consequence of that. If we do A, then we can’t help but bring more customers to the site.

And if we bring more customers to the site, then we can’t help but attract more third-party sellers. And if we do that, then we can’t help but expand the store and extend distribution.

And if we do that, we can’t help but grow revenues per fixed cost. And if we do that, we can’t help but be able to lower prices on more stuff. Every step in the chain follows such that it throws you into the next step. That has to be the case along every single line in the flywheel, because that’s what creates the momentum.

The second test is that the starting point at the top of the flywheel captures something essential about you. In the Amazon case, it’s about lower prices or more for our customers, because they’re a customer-obsessed flywheel.

But for my friends at Giro Sport Design, who started out making great bicycle helmets, it was always about the next great innovative

24 / CHIEFEXECUTIVE.NET / SUMMER 2022

bike products that will help people bike faster.

Or 3M’s flywheel in the 1930s was cultivating a culture of creative ferment to create an innovation machine, right? My flywheel starts with what’s the next question I want to answer, because that’s my animating force. Pick the top of the flywheel to reflect something essential, then begin creating change.

Number three, there’s a right side and a left side of the flywheel. Your right side is about actualizing your purpose in the world. It’s what you do, what you contribute, how you make your customers or other people’s lives better. It’s what you do that is of value in some way and of use.

The left side of the flywheel is fuel. It’s high profitability based on your brand at Giro Sport Design that we could reinvest. It’s economies of scale at Vanguard and Amazon.

It’s fuel. Then, here’s the key: The fuel is not to be siphoned off to make a bunch of people rich; the purpose of the fuel is to go back to the top of the flywheel and drive it around even faster.

Number four is it’s got empirical validation.

The way you start working on your flywheel is you make a list of your big successes and your big disappointments. You look at those and say, “If we have a flywheel, it is already evident in what our big, replicable successes are.” Our disappointments should be things that wouldn’t fit on the flywheel, that’s why they’re disappointments. So, when you go back, you back-test your flywheel against where you’ve actually been incredibly successful and map that your actual replicable successes can be explained by the flywheel.

Number five is that it’s an architecture, not a business. It allows you to move, say, in the case of Apple, from personal computers to smart handhelds to an entire ecosystem on one flywheel. Or restaurants to hotels on one flywheel. Or chemicals to pharmaceuticals on one flywheel, right? From Amazon website to Amazon Web Services on one flywheel. That ability to see that the flywheel is not constrained to one specific little narrow business, but it’s an architecture, and you can renew your company over time into exciting new businesses that fit on that flywheel. If your flywheel meets those five tests, you’ve got a really good flywheel. CE

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INTRA— PRENEURIAL

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Why risk hiring or acquiring when you can build better from within?

CEOs share tips on sparking homegrown innovation that wins.

companies have invested lots of time and money in the past several years reaching outside of their own outfits for innovative ideas and people, then bringing them under the tent in various ways: corporate venture arms, accelerators, incubators, stakes in startups, new partnerships and outright acquisitions.

But in doing so, company chiefs may be neglecting to unlock the considerable innovation engines that already exist right under their noses. And now—abruptly facing stubborn and even acute problems, ranging from inflation to supply-chain instability to geopolitical woes and the threat of recession—may be a good time for leaders to try harder to tap the formidable power of “intrapreneurship.”

“The pendulum is swinging,” says Andy Binns, director at Change Logic and author of a new book on intrapreneurship. “The lab model is great for play but not for execution, and many firms are unhappy with the outcomes being delivered by outside entities. Some are pulling out altogether or at least substantially changing how they function.”

Linda Yates, founder of growth incubator Mach49, says more companies “are realizing they already have core assets and competencies and capabilities—like ideas, talent, brands, channels and customers,” providing strong foundations for greater intrapreneurship.

Intrapreneurship is far from a new idea in Corporate America, of course. Serendipitously, for example, it led EOs OF LARGE AND MID-MARKET

26 / CHIEFEXECUTIVE.NET / SUMMER 2022

to 3M’s development of the miracle adhesive on Post-it Notes. Companies got more serious about it toward the end of the 20th century. Even some of the most significant innovations of the digital era have come from intrapreneurs, including Microsoft’s Office 365, Google’s Gmail, Amazon’s Prime and Fuji’s escape into broader chemical and biochemical markets instead of failing with the demise of photographic film as Eastman Kodak did.

Many companies have been happy with ideas, products and talents generated by partnering with and investing in startups. “But where you run into difficulties is scaling it into a business,” Binns says. “There are no good examples of a business that creates new ventures through external, arm’s-length labs, but there are loads of examples of creating new businesses from internal innovation.”

So intrapreneurship is getting more attention these days. For instance, last year, after years of reaching outside to acquire fast-growing innovators such as Annie’s Homegrown and setting up its 301 Inc. corporate-venture arm, General Mills established an intrapreneurship program called Gworks. It selects internal researchers and others to become “cofounders” of promising product and brand initiatives, including developing and testing a new low-blood-sugar brand of snacks, Good Measure.

“We know we need world-class innovators and entrepreneurs in spaces where we don’t have brands, so we’re nurturing and growing our own talent in

HEALTHCARE-SCHEDULING SOFTWARE PROVIDER Gworks,” says Jonathan Scearcy, who recently left his job as cofounder of the Innovation Lab at General Mills.

A focus on intrapreneurship can be attractive to innovative minds on staff because “we can provide the developers and engineers rather than have a situation where someone is forced to do that on their own,” says Chris Francosky, CIO of Kore, an IoT technology provider. “Plus, we have global reach with unique partnerships that someone couldn’t start on their own from scratch.”

Such intrapreneurial initiatives are “becoming a ‘yes-and,’” Yates says. “A corporate-venture arm and an internal venture factory are yin and yang, and they should work together. But the success rate for intrapreneurs has to be much higher, because no large company can afford the failure rate that even Silicon Valley has.”

Some CEOs trying to do more with intrapreneurship remain skeptical that it can yield as much innovation as outside-in efforts. “Part of entrepreneurship is risk,” says Gleb Polyakov, CEO of Nylas, a business-software provider. “Tech companies tell you you’re ‘CEO’ of your own project; no you’re not. Or they give people pet projects, but they have so many sign-offs that they can’t accomplish their goals.”

But Binns argues there’s a mentality among most intrapreneurs that motivates them to access their innovative minds for their employers. These “tend not to be people who are going to go set up a startup,” he says. “They’re typically an insider; they think how to get there quickly with the assets they’ve got.

“But also, they’re more oriented to the company they’re in and the colleagues they have rather than being very individualistic.

That is part of how they get through the corporate morass.”

Or, as Wei Deng, CEO of Clipboard Health, puts it, “Do you want to be the CEO of your desk and a URL, or do you want to lead a growing team at a unicorn?”

Here are some of the best ideas from companies that are blazing trails in intrapreneurship:

RECRUIT STARTUP FOUNDERS Wei Deng, CEO Clipboard Health, San Francisco We hire a lot of former startup founders, and we see that many of them are scrappy enough to find ways to move the needle in our organization and specifically with our product.

Founders are good at problem discovery, at questioning assumptions and then acting on insights.

Our culture works to empower them. We want them to be on a loop, moving from curiosity to implementation, again and again.

We say, “If you see a problem, solve it.” There are no toes to step on here. It’s not someone else’s problem. Founders tend to thrive in that environment because it’s very similar to running your own company.

The unfortunate truth is that the equity value of most startups goes to zero. Also, most founders do not pay themselves market rates or anything near it while they are trying to get the product-market fit. We end up paying founders better than a lot of them could pay themselves, and, given our growth path, we make them part of a company that has a really high likelihood of a good outcome.

B2B TECHNOLOGY INTEGRATOR

EMPHASIZE MENTORSHIP Gustavo Sepulveda, Robotics and Innovation Business Head Panasonic Connect North America, Newark, New Jersey Panasonic believes mentorship is very important. If we want to do new things in the future, it’s important that someone shares the experience from the past in order to repeat what went well and to avoid what went bad. This is critical.

One of our programs puts together a mentee and a mentor, and they work together for a year. The mentee sets the goals, what he or she wants to reach in the next 12 months, and they have on average one monthly meeting where the mentor helps the mentee to reach the goals.

It’s very important that the mentor doesn’t solve the problem for the mentee. It’s a development program.

CEO MAGAZINE / SUMMER 2022 / 27

BUSINESS SOFTWARE PROVIDER

PUSH THEM OUT OF THE NEST Gleb Polyakov, CEO Nylas, San Francisco We just set up the Nylas Alumni Fund, which provides $20,000 toward a seed round of funding for both current and former employees who have turned entrepreneurs. We’ve already informally done similar things in the past, and we have a wall in our office about where our alumni go next.

For the fund, we know the quality of these folks’ skill set, and we get to take a stake in a company that’s founded by a strong person. We want Nylas to be helping them in their career for the long term. No one stays in a place for longer than five years anyway. My job is to make sure our people are rich and famous wherever they want to be, and Nylas is on their résumé.

And we think it helps recruiting. There is a qualitative excitement about it at the company. And while in the past it’s been informal, with a program, it helps demonstrate the values we have as an organization.

ENGINEERING FIRM

COACH ’EM UP Rob Ioanna, Chief Technical Officer Syska Hennessy, New York City Our Syska Innovations subsidiary invests in seed-stage companies, pilots their software and products and promotes ideation and technology development within Syska. We’re trying to ignite things internally so that we are at least at pace with disruption that’s happening, not left in the cold and disrupted by others.

We mimic one of the most successful companies out there in intrapreneurship, Chick-fil-A, and take a very decentralized approach. That way we get more ideas across the entire company; it’s harder to manage, but you get all that passion.

This includes creating a network of coaches throughout the firm, so that maybe one of every 20 people has an “innovation coach.”

We teach the coaches problem-solving, market analysis and other skills. It’s not their full-time job, but it’s additional responsibility that we incentivize with some extra base compensation, some bonus.

For individual ideas that come through the coaches, each employee gets to vote with Brightideas “coins”—like the “Like” function on Facebook—and every quarter, the idea that has the most coins get a $5,000 bonus. Plus it’s a nice thing to show others; we showcase that person’s idea on our blog, and they have speaking opportunities at different summits and innovation conferences.

28 / CHIEFEXECUTIVE.NET / SUMMER 2022

MAKER OF FOOD INGREDIENTS

CONDUCT AN INNOVATION SUMMIT Tia Rains, Vice President, Customer Engagement and Strategic Development Ajinomoto Health & Nutrition North America, Chicago We were used to giving our ideas to our parent company in Japan, but recently we completely overhauled our approach to innovation. We had to teach our people what innovation even is; it wasn’t part of our DNA [in the North American arm] before.

We are trying to set up a growth pipeline for our future.

We kicked off our effort with bimonthly meetings where we would bring in speakers to talk about trends and innovation in general. We had to teach people what innovation is, how we approach it, and get them thinking around what customers are looking for to grow.

Then, in May 2021, as we moved into our new headquarters, we hosted a dayand-a-half “innovation summit” where we invited 40 people from across the organization, from R&D and culinary and supply chain and sales, reps from accounting, junior as well as senior people and even interns. We picked people who were excited to be in the room and to have accountability for the innovation process.

The cross-functional approach was great: When you have an accountant sitting next to a chef, it’s fascinating to see how they build off each other and come up with something neither would have done independently.

We left that session with 118 different ideas on ways we could grow our business: products, new processes, new partners. It completely exceeded our expectations. Some weren’t viable ideas; some were farther out that we’re nurturing along. But we ended up with a handful of near-end ideas that we’re in the process of deciding this year if we’re going to proceed with, including new ingredient technologies that really push our boundaries.

IOT TECHNOLOGY PROVIDER

LAY DOWN A PARALLEL TRACK Chris Francosky, CIO Kore, Atlanta We created an innovation lab in 2020 to push intrapreneurship and help streamline innovation, which is constantly needed in the fast-growing and disruptive field of IoT. We created a new type of operating system for running it, which we call Growth OS, in contrast to our core business.

In Growth OS we have a quick, agile, fail-fast mentality. The trick was to harness the entrepreneurial mindset internally to give those individuals who have an ability to execute on new ideas some kind of outlet.

The risks are more our ability to learn and explore versus putting our mainline business at risk. It’s a challenge with an organization of our size, but we’re maintaining our link to the mainline business so we don’t build anything that’s not going to work with the mainline strategy.

We’ve gotten better at working in a guiding coalition with representation from the core business, so the surprise factor doesn’t exist anymore: People there are well aware of what’s going on and giving input, but we can still move fast.

BOAT BUILDER

LEVERAGE YOUR INDUSTRY Roy Nouhra, CEO Ocean Craft Marine, Annapolis, Maryland We recently launched the Accelerator for Innovation in the Maritime Ecosystem, which will enable ideation, collaboration, cross-pollination and integration among our industry peers to accelerate innovation across the board. Ocean Craft is investing more than a quarter billion dollars in this over the next 10 years.

This will change the way the industry operates and speed the process significantly because we’re choosing collaboration over siloed work, transparency over secrecy and partnership over competition.

If you keep seeing competition only as competition, you’re going to stay where you are on innovation. Our competitors are partners, and each one has a specialty it can put on the table.

It’s a way to unlock a lot of knowledge that’s trapped in our organization and others and to deliver better solutions for the end users, who in our industry are military and recreational customers.

USER-INTERFACE AND USER -EXPERIENCE SOFTWARE

PROVE THAT IT WORKS Dean Guida, CEO Infragistics, Cranbury, New Jersey When we launched the Infragistics Innovation Lab, it cemented our commitment to our internal inventors and entrepreneurs. Now, we have a $50 million fund and a formal process for the constant innovation that we need to stay two steps ahead of technology shifts.

The lab encourages employees to contribute a regular stream of insights that help the company shape ongoing innovation. It provides freedom for internal inventors to experiment with innovations beyond the company’s core product, without the need to generate immediate revenue. One product that came out of it is our business-intelligence tool, Reveal, that is commercially available today.

We try to reward everyone at fair-market value and reward people who are A-plus players and getting outstanding results, rather than creating a single value or event [around a successful idea]. That would create too much conflict.

CEO MAGAZINE / SUMMER 2022 / 29

FOOD COMMODITIES TRADER AND PROCESSOR

USE AN ALL-OF-THE-ABOVE APPROACH Leticia Gonçalves, President, Global Foods ADM, Chicago We have created three different physical innovation centers around particular capabilities, including the latest, our Protein Innovation Center in Decatur, Illinois. This center will allow us to take advantage of our legacy in the plant-based, alternative-protein space, where we were actually the first company to bring out a veggie burger, using our textured protein, 40 years ago.

We use our innovation centers and our go-to-market approach to drive speed to market, from concept to market.

We use our current knowledge to say, “What’s next?” We codevelop with our customers, and it’s that ability, as well as our use of value-chain capabilitie that help us bring the best products to consumers.

But we believe in an ecosystem approach, innovating some things in house, partnering with new companies or startups that can complement our capabilities, and eventually making acquisitions. We truly believe in a buy, build and partner approach. Then you can have the best of all and create competitive advantage.

PROFESSIONAL SERVICES FIRM

CREATE AN INTERNAL VENTURING STRUCTURE Jillian Slyfield, Chief Innovation Officer Aon, Chicago We have an innovation team called Aon Growth Ventures. When we look at filling gaps, we look at re-sourcing internal capabilities differently, or it might be an acquisition of capabilities we don’t have.

Growth Ventures has a core team that looks like a C-Suite and growth accelerators that work in each area of our business, such as climate, IP, digital assets such as crypto, and new mobility.

The leader of each team is responsible across the entire firm for net new-product generation, to bring together current capabilities the firm has to clients in ways they haven’t seen before. That might be in insurance, data and analytics, software and so on. That leader is responsible for completing that value proposition at large.

30 / CHIEFEXECUTIVE.NET / SUMMER 2022

BUSINESS SOFTWARE PROVIDER

MAKE A POINT OF RECOGNITION Elona Mortimer-Zhika, CEO Iris Software Group, London We created the Made in Iris CEO Awards to foster employee entrepreneurship, new ideas and innovation to enhance business. Each quarter, employees can present business plans for new or existing mission-critical software and services to further support our vision and make sure customers get it right every time.

The diversity of ideas presented by employees continues to surprise us. Because of their proximity to our customers, we’ve received concepts that are spot-on and would’ve taken years to reach production if employees hadn’t suggested them.

While developing ideas for the awards, entrants often pursue tasks and projects outside of their daily business functions and develop additional presentation and collaboration skills. In most cases, employees who propose the ideas haven’t yet made it into management, so the ideas are really different from what we’d expect to see moving up the management chain. They’re less risk-averse and more innovative.

Our executive panel reviews entries and provides investment and resources to the strongest proposals to bring their ideas to fruition, and the projects that receive funding are automatically entered into the annual “Made in Iris” CEO awards for a chance to win a one-off prize of £25,000 for individual ideas or £50,000 for team ideas. CE

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Into the Blue

Why one tech company left California for the Gulf Coast FOR THE FIRST EIGHT YEARS OF ITS LIFE, OCEAN AERO was make meetings, they went for us. When something popped up, largely an R&D company, focused squarely on making better, more they would rush in. If something went wrong, they would go try rugged, autonomous underwater vessels designed to explore the to mitigate it for us. I met those guys and I said, ‘This is the right oceans in an environmentally safe way. Staffed largely by former place. These are the right people. This is where we want to be.’”

Navy personnel, it made sense to operate out of San Diego.

And the leaders of the Gulf Blue initiative want more businesses But at the end of 2020, the founders reallike Ocean Aero. To get them, USM knows the ized it was time to take the company to the region has to offer a top-notch pool of talent, next level and brought in a new CEO, Kevin which is why the university is partnering with Decker. “At that point, we became commerbusinesses. “We are actively sitting down with cially active,” says Decker. The company began industry and asking, what are your needs?” making steady gains with its signature product, says Kelly Lucas, USM vice president for rethe TRITON, into defense, offshore energy—oil, search. “And what do you predict will be the gas and wind—and maritime science. But it also needs of your workforce five years from now? began struggling to find the skilled engineering Ten years from now?” talent it needed to grow.

Not all of those needs will require traditionDecker decided it was time to move. He conal academic programs, she notes. “Some will sidered half a dozen states, each with the ocean be certificate programs or smaller levels of proximity he needed. Some were known for betraining, but whatever the need, we want to "We want to make sure ing friendly to business; most had a lower cost of make sure we're being responsive to the inwe're being responsive living than San Diego. But one state—Mississipdustry partners in our area.” To that end, USM to the industry partners pi—showed an outsized enthusiasm for industry looks to partner with businesses to codevelop in our area.” partnership that made it a clear winner. “When programs. “We're not asking you to fit into our we looked at the ground support here in Gulfport, model of what we already have going on,” she the people and institutions partnering with the state had a vested insays. “We want to partner with you to make you successful, beterest and a personal affinity for wanting to see the Gulf Coast grow cause if we make you successful and you're hiring people and and thrive and develop. It was really the people—specifically, the Uniwe're training them, and we're all working together, then we're versity of Southern Mississippi (USM)—that set it apart.” all successful.”

Proximity to the USM’s Marine Research Center and the Center for The skilled talent pool is also bolstered by the presence of a number Ocean Enterprise at the Port was already a selling point for Ocean of key players in the area, including Huntington Ingalls, with its 800Aero. But in 2021, USM took it to a new level with Gulf Blue, an initiaplus acre facility, Teledyne Technologies and General Atomics Sietive focused on the blue economy, which is expected to account for as mens. “There are not too many places in the world that have a better much as $3 trillion in revenue for the global economy by 2030. concentration of labor for us than right here,” Decker says.

Gulf Blue aims to pool the knowledge of research scientists, fedIn the post-Covid environment, where remote work has become eral agencies, industry partners and entrepreneurs, all of whom the new norm, the coastal community has also been seeing an inwill collaborate to develop the region into a global leader in blue flux of people who are still employed elsewhere but want to live technology. They will begin by focusing on solving challengin Mississippi. That doesn’t surprise Decker, who enjoys the more es in six key areas of convergence: uncrewed maritime systems, relaxed pace, the lower cost of living and the Southern culture that ocean-friendly plastics, precision aquaculture, smart ports, coastremind him of his home state of Kentucky. He adds that for the al data and sea-space systems, says Brian Cuevas, a director in the employees who moved with the company from California, Gulfoffice of technology development at USM. In those areas, “we felt port was not a tough sell. “You're not spending a bazillion dollars that we had the innovation, the human capital and the technolofor a small apartment anymore. You're not spending an hour each gies to start competing on a global scale.” way in traffic,” he says. “Overall, it’s just a better quality of life.”

Decker’s team witnessed the enthusiasm and dedication of the Gulf Blue team even before the company moved. “While we were transitioning, sitting there in Southern California, we had allies on mississippi.org the ground championing us every day,” he says. “When we couldn't 32 2022 CEO GUIDE TO SITE SELECTION

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WOR KFORC E

‘IT’S ABOUT

BEING INTENTIONAL’

34 / CHIEFEXECUTIVE.NET / SUMMER 2022

To win ‘the war for talent,’ you don’t just need great people—what you really need is a great people plan.

C.J. PRINCE

ASK A DOZEN CHROs WHAT THEIR BIGGEST TALENT WORRIES ARE IN 2022,

and 11 of them will likely put talent acquisition at the top of the list. Facing one of the most competitive labor markets the business community has seen in years of rapid change and smarting from the post-Covid Great Resignation, companies across all industries are struggling to find great people.

But ask Verizon CHRO Samantha Hammock for her biggest talent challenge, and she gives a very different answer. Her main worry, she says, is managing career progression for high-potential employees who are eager to move into the next role but may not be ready yet. As far as finding the best talent to bring into the organization? “I actually feel pretty good about that,” she says.

That positivity is largely down to the fact that Verizon has what many companies lack: a formal strategic workforce plan that aligns talent strategy with overall business goals. That framework, which Hans Vestberg initiated when he took over as CEO in 2018 and which Hammock spent the first year setting up, allows her team to focus on building talent and skillsets internally rather than on vying for external hires. “When you do strategic workforce planning, you start fully with the business vision and mission and overall strategy,” she says. Now three years into a five-year strategy, which she notes has stayed consistent, Hammock is able to stay ahead of the company’s growth, plotting moves in advance of need and keeping the bench

CEO MAGAZINE / SUMMER 2022 / 35

even higher than companies had forecast in 2021, and almost a quarter of companies were planning midyear wage increases in addition to their annual hikes, with another 8 percent considering it, according to new research from Pearl Meyer.

Given all those factors, there is less and less margin for error when it comes to talent acquisition and retention. “When we get into a market that’s the most competitive we’ve seen for the longest period of time and with no end in sight, companies are going to go out of business not because they don’t have a successful product or service, but because they cannot figure this hiring thing out,” says David Lewis, CEO of HR consultancy OperationsInc. “They don’t seem to be paying close enough attention to how a lack of strategy and a lack of execution on this strategy is causing them to not be able to attract or retain people.”

“You can’t really effectively do HR anymore unless you understand the strategy objectives.”

—Samantha Hammock, CHRO, Verizon

Three ways that a lack of strategy is

deep. The way she knows it’s working?

“We do almost all of our growth completely from within.”

Verizon seems to be in the minority.

Many companies were caught off guard by Covid, by the need to scale down and then back up quickly, and by the mass resignations during and after the pandemic’s peak.

“There is a real scarcity of talent in the market, and a lot of companies have been scrambling over the past couple of years to get people on their team,” says Anish Batlaw, managing director at private equity firm General Atlantic.

Many companies, in fact, moved both by the tightening labor market and cheaper borrowing, went on hiring sprees in 2021, only to have to announce layoffs a few months later amid falling stock prices and higher interest rates. In May 2022 alone, 66 tech firms laid off a collective 16,800 people, according to tech job tracker Layoffs. fyi; that was the highest number of employees to get the axe in a single month since May 2020.

And the already significant fixed costs of adding staff are only getting steeper.

This year’s 4.8 percent increase in average annual salary—the highest in decades—was

36 / CHIEFEXECUTIVE.NET / SUMMER 2022

causing companies some big talent headaches: 1. They are hiring reactively. Companies

that don’t have a solid strategy in place can easily wind up in a vicious circle of hiring to replace those who’ve left or to keep up with an unexpected surge in new business—and they then inadvertently cause future turnover by burning out existing staff while trying to fill the gaps, says Lewis. “You’re not looking to hire in a measured way that is part of a broader plan with a long runway.”

R. J. Heckman, vice chair of Korn Ferry, points out that companies often waste time and money on finding the “best” talent. “They think they need great talent in all areas, but they truly don’t,” he says. “It’s about being intentional, focusing on those most pivotal roles that will differentiate the business in its strategy, which should be very unique.”

In other words, if you’re chasing great talent simply because your competitor is going after them, you’re wasting resources.

2. Decision-making is too slow. When

a clear talent strategy is lacking, it’s often more challenging for leadership to come

to a decision on skilled senior hires. Since those people are in high demand, they’re often snapped up by the time the call is made. Hammock says that one of the silver linings of the pandemic was that it forced companies to overcome perfectionism and learn how to reduce the bureaucracy that hampers decision-making. “As we’ve been coming out of it the last six to nine months, I find myself thinking, ‘Hey, can we get some of the Covid leadership back?’” she says. “We were making decisions so fast.

The agility that was demonstrated, I loved that. Now, sometimes, I see some of the muscle memory going back to before.”

3. Not enough career carrots to dangle.

If you don’t have a three-to-five-year plan, you can’t communicate to a prospective employee what his or her potential path might look like over the long term. “In a hot job market like this, an employer that’s really able to articulate what the job is today and what the job has potential to grow into tomorrow is really special sauce,” says Paaras Parker, CHRO at Paycor, a global leader in human capital management. “It also helps to create a compelling case for an employee or an individual who has multiple offers, and helps you fight burnout before it happens.”

To stop the cycle of hiring, firing and replacing, consider the following steps: 1. Spend the time up front. There is no

way around this being a major time commitment for both the CHRO and the CEO— but as Parker notes, “you can either spend it strategically and intentionally on the front end, getting really crisp on what the outcomes are that you’re looking for, or you can do it in that middle gray area,” which is where companies often find that they’ve been fishing in the wrong pool or chasing the wrong skillsets.

Hammock talks to CEO Vestburg “constantly,” she says. “We probably trade notes every single day, multiple times—either calls or texts or in meetings.” Then they have more formal meetings a couple of times a week.

RJ HECKMAN’S THREE STEPS TO ALIGNING BUSINESS AND TALENT STRATEGY The author of The Talent Manifesto and vice chair of Korn Ferry shares tips for making talent acquisition and retention more sustainable.

1. UNDERSTAND THE VALUE CHAIN. “A lot of HR leaders lack the business savvy and the financial acumen to really understand where and how to align their talent initiatives with where the business has to go. So, what you get, unfortunately, is oftentimes HR initiatives that copy or mimic another company’s strategy or best practice even though it may be not that helpful for your own. So, you really have to tease apart the value chain of the business itself and identify where exactly the business will differentiate from its competition. For example, a business that competes on price, would need to tease apart the supply chain and see what it is about talent that will drive a very competitive supply chain so that the business can be more competitive on price. Another business might want to compete on innovation and product superiority, so they would need talent in the engineering and creative ranks that are world-class. So it’s understanding how a business makes its money, why it grows, where its margins come from, and then making sure that the talent to support those differentiators is world-class—and that you have a sustainable pool of that so you’re not hiring and firing in that area because those are your crown jewels.”

2. SEE HOW YOU STACK UP. “The second step to getting this right in a sustainable manner is to, using good and highly predictive data, baseline the talent you have today in those differentiated areas. The problem most organizations have is that they don’t have very good data at all, so they’re guessing about the quality of their talent vis-a-vis their competitor’s talent in the same areas. They just plain don’t know. So baselining that is really a critical next step. You look hard in the mirror and you say, ‘okay, in this area where we need to differentiate and win, our talent is mediocre, so we have work to do.’”

3. CLOSE THE GAPS. “There are always gaps, in terms of either quantity or quality of the talent. But closing the gaps requires that you allocate your engagement efforts, which might be compensation or work-life balance—you have to be really attuned to what your most pivotal talent needs in order to stay fully engaged. So, how do we ensure that every dollar spent is going toward engaging and developing that most pivotal talent so that they stay, and so that they have the differentiating capabilities needed for the business to execute its own winning strategy? Being intentional about it is really the only way to sustain a talent advantage.”

CEO MAGAZINE / SUMMER 2022 / 37

“We need to move at speed to forecast demand and hire in a way that provides us the greatest agility.”

—Jim Bailey, CEO of the Americas, Capgemini

“While I’m an HR person, I’m a business person first.”

—Deb LaMere, CHRO, DataSite

Jim Bailey, CEO of the Americas at Capgemini, estimates that he spends about 15 percent of his time on internal talent moves and another 25 percent on top of that on overall talent pool. Every other week, he meets with his talent acquisition team to review the pipeline and the dashboard of metrics on what the market demands are, what they’re searching for, how they are doing in terms of speed and agility of hiring and how it’s changing. And it doesn’t stop at the recruitment process, he says. “In the first three, six, 12, 24 months, how are those people onboarding? How are they integrating? How are they adapting to our environment, and what are the touchpoints that are going to make them successful in understanding the culture?”

Setting aside the time for talent strategy review makes it easier to make adjustments quickly when needed, says Datasite CHRO Deb LaMere, who sees strategy development as “a joint effort that I like to call ‘a customer care team for the business.’ You’ve got your business leader, your HR business partner, your recruiter and your finance person all kind of coming together to have a regular review of what the headcount is looking like, what the business is looking like, do we have to add to staff above the budgeted number? So when you have that baseline of the workforce plan, [you can see] where you might need to change or pivot based on what’s happening within the business or externally.”

Given that so many HR leaders are still transitioning from a more transactional role, CEOs may need to take extra time to be involved and to look for inefficiencies

38 / CHIEFEXECUTIVE.NET / SUMMER 2022

on the talent side, says Heckman. “They should bird-dog it as much as possible.”

2. Give HR a seat at many tables. If you

haven’t already made the CHRO a C-Suite business partner, there is no time to waste. “That is the only way it can work,” says Horizon Therapeutics CHRO Irina Konstantinovsky, who notes that she is an “intricate part” of CEO Tim Walbert’s leadership team. “I don’t think Tim has a discussion about an acquisition, a new product, a change in our business landscape [without me]—he understands that any business decision he makes, other than maybe buying a molecule, has people implications, and he believes wholeheartedly that I am part of that equation.

So, I spend a lot of my days and time in business-driven meetings because if we’re not completely plugged into the strategy of the company, this doesn’t work.” She also meets with Tim monthly to review the talent strategy they formally set up every June.

Verizon’s Hammock is also a regular at a host of business meetings, including the biweekly C-Suite meetings. “I am a key member of the steering committee of every single governance meeting we have, whether that is the M&A council, the product council, the strategy execution council, our business reviews, I am in every one of those meetings,” she says, adding that for business meetings lower down in the organization, members of her HR staff sit in. “It’s all a huge acknowledgment of how it’s changing—you can’t really effectively do HR anymore unless you understand the strategy objectives and agenda of the business.”

LaMere agrees that the change in human resources from transactional to strategy has been seismic. “It’s not even about a seat at the table—it’s about being the partner who is there to understand the needs of the business,” she says. “While I’m an HR person, I’m a businessperson first.”

At Capgemini, CHRO Anne Lebel is a full business partner like any other C-Suite member, but Bailey adds that “it’s a two-way street, in not just having the

business inform HR of the strategy but also having HR inform the business on the realities of the recruiting market.”

3. Plan for the pivot. One of the things

that catches companies flat-footed is that they fail to hire people with the flexibility to move into other roles when the company needs to switch gears. Batlaw, who leads General Atlantic’s human capital efforts for the firm’s portfolio of growth companies, says that nimbleness is essential to be “equipped to deal with not just the challenge that the company faces today, but the challenge that the company will face two years from now, three years from now.”

He encourages leaders of the firm’s portfolio companies to start building leadership bench strength right away. For example, Mike Pykosz, the CEO of Oak Street Health—which was a General Atlantic portfolio company before going public— brought in high-potential talent and put them in frontline roles so they could better understand the company’s services. “He invested in their development and managed their careers closely,” says Batlaw. “So when there was a need for more leaders, he had a whole crop of talent from within the company who could step into those bigger leadership roles.”

Bailey makes a point of hiring not for specific skillsets but “for a set of characteristics that allows the individual to pivot as the world evolves,” he says. “We need to move at speed to try to forecast demand and hire in a way that provides us the greatest agility.” The hallmarks of agility that Bailey looks for include being a fast learner and a critical thinker, having a bias for action and the cultural adaptability to work well in teams and with people of different backgrounds. “In the professional services industry, it’s all about reinvention,” he says.

Going through the process of creating and reevaluating talent strategy, whether over a one-year time period or a three-year or more, will “push the leaders you support to not just think about the problems of today but to anticipate some of those problems of tomorrow,” says Parker. “The talent strategy, much like the business strategy,

should never be etched in concrete. There should be an expectation that even though you’re writing it firmly in sand, it’s going to change.”

For Hammock, having a framework allows her to more effectively manage the paths of 125,000 global employees and to deploy the “buy, build, lease” approach much more strategically. Now, Verizon hires only for skills the company doesn’t have at all currently but will need in the future; outsources those skills that are core to the company today but won’t be in the future; and Hammock spends the bulk of her time reskilling, upskilling and steering that increasingly skilled talent into different roles, where they will be challenged and less likely to quit.

“That informs the investments that we make in developing our existing workforce,” Hammock says, adding that the company is still early in the journey, about a year and a half in a formal way, but is already more prepared for the future and in a position to take the kind of risks necessary for growth. “We have this North star now,” she says. “Because of course things come up where you’re like, ‘We have to pivot on that, that’s not working’—and we wouldn’t be great if we weren’t taking some risks and trying and failing—but at the end of the day, it still has to link into the five vectors of our strategy. Having crystal-clear alignment on those at all times is really the key.” CE

“The talent strategy, much like the business strategy, should never be etched in concrete.”

—Paaras Parker, CHRO, Paycor

CEO MAGAZINE / SUMMER 2022 / 39

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B O OK E XC E R PT

JOIN US FOR AN EXCLUSIVE CEO COMMUNITY EVENT On July 19, Marshall Goldsmith will host a masterclass based on his brand new book, The Earned Life. He’ll dive deep into his practical framework for decreasing regret and increasing fulfillment, helping you become more productive—and more present in your life.

TO REGISTER, VISIT chiefexecutive.net/ goldsmithmasterclass 42 / CHIEFEXECUTIVE.NET / SUMMER 2022

THE LOST ART OF ASKING FOR HELP We’re all flawed human beings. We all should be asking for help. Reminding yourself and your team of this eternal truth is one of the essential tasks for anyone inside—or outside— of business today. Here’s how.

BY MARSHALL GOLDSMITH

During nearly four decades of coaching 200-plus CEOs and their management teams, Marshall Goldsmith has learned a few things about the obstacles that even the most successful people face in creating more fulfilling careers and lives—and how to overcome them. He’s also adept at distilling lessons gleaned from working with a broad array of leaders across industries into universally applicable advice, insights and tools in best-selling books like Triggers; Mojo: How to Get It, How to Keep It, How to Get It Back If You Lose It; and What Got You Here Won’t Get You There.

This excerpt from Goldsmith’s new book, The Earned Life, explores one of the biggest faulty premises plaguing corporate America: the idea that acknowledging the need for help is a weakness rather than a strength. It’s something every business leader—and every company— would do well to understand and address. Here’s how.

AMONG PETER DRUCKER’S MANY UNCANNY MANAGEMENT PREDICTIONS IS THIS:

“The leader of the past knew how to tell; the leader of the future will know how to ask.”

The myth of the self-made individual is one of the more sacred fictions of modern life. It endures because it promises us a just and happy reward that is equal to our persistence, resourcefulness and hard work. Like most irresistible promises, it deserves our skepticism.

It’s not impossible to achieve success on your own to the point where it could be accurately described as self-made. The more salient question is: Why would you want to when

CEO MAGAZINE / SUMMER 2022 / 43

Excerpted from The Earned Life by Marshall Goldsmith (Currency, May 2022)

you could surely achieve a better result by enlisting help along the way? An earned life is not more “earned” or glorious or gratifying—or even more likely—because you tried to achieve it all by yourself.

Too many of us try to go it alone. Our near-clinical reluctance to ask for help is not a genetic defect, like color blindness or tone deafness. It is an acquired defect, a behavioral failing we are conditioned to accept from an early age. I didn’t learn how companies slyly discourage asking for help in my organizational psychology classes in grad school. I had to learn it on the job.

In 1979 I was working at IBM headquarters in Armonk, New York, at a time when IBM was the most admired company in the world, the gold standard in management.

IBM had a problem: Its managers were not perceived internally as doing a good job coaching their direct reports. I was called in to review the program being used to train managers to be good coaches. Over the years they had spent millions of dollars on the program—with negligible improvement to show for it. Managers were still bad at coaching direct reports. I was invited to Armonk for a firsthand look to figure out what went wrong and why. When I interviewed employees, it typically went like this: First, I asked the direct reports: Q: Does your manager do a good job providing coaching?

A: No. Then I asked the managers: Q: Do your direct reports ever ask you for coaching?

A: No, never.

Back to the direct reports: Q: Do you ask your manager for coaching?

A: No. Curious about IBM’s performance appraisal system, I analyzed the employees’ year-end reviews and discovered this IBM definition of a top performer: “Performs effectively with no need for coaching.”

Basically, IBM had created a vicious cycle whereby if the manager offered coaching,

44 / CHIEFEXECUTIVE.NET / SUMMER 2022

the employee was incentivized to respond, “No, thank you, boss. I perform effectively with no need for coaching.” (You can’t make this up!)

I’d like to say IBM’s dilemma was unique.

But it wasn’t; they were merely the platinum-plated example of companies making the same mistake. It started at the top rungs of IBM management, few of whom would debase themselves by admitting they needed help. To ask for help was deemed a sign of weakness. You asked for help when (a) you didn’t know something, (b) you couldn’t do something, or (c) you lacked resources. In other (more pejorative) words, you asked for help because of your ignorance, incompetence or neediness.

None of these is a good look. Since people in any organization tend to model their behavior on their bosses’, the CEO’s attitude about seeking help swiftly flowed down the hierarchy and settled in place for everyone to emulate. Sure, corporations actively hired trainers to teach classes on generalized topics that we had learned in business school—teamwork, situational leadership, decentralization, total quality, Six Sigma, “excellence” and the rest—but these were more like the continuing education courses doctors and CPAs are required to take to maintain their accreditation.

As for one-on-one coaching between managers and staff—which begins when an individual reveals his or her vulnerability and says “I need help”—it was barely on anyone’s radar in the corporate environment. Something that resembled coaching took place in highly technical fields—medicine, the performing arts, craft trades like carpentry and plumbing—in which skills were passed on in a traditional master-and-apprentice relationship. But this wasn’t coaching; it was just a more intimate, hands-on form of teaching. It was a finite process by which eventually the apprentice learns enough to graduate into expertise.

Coaching, on the other hand, is an ongoing process, as open-ended as our desire to continue improving. The difference between teaching and coaching is the difference between “I want to learn” and “I need help to get better and better.”

WRITE YOUR HISTORY OF HELP I didn’t fully appreciate this distinction during my time in Armonk. As with most consequential advances in my career, clarity began a few months later at someone else’s suggestion—in this case, a phone call from a major pharmaceutical company CEO. I had just given a leadership clinic to the human resources department at the CEO’s company. He attended the session and must have heard something that struck a nerve. He had an unusual request. He said, “I’ve got this guy running a big division who delivers his numbers every quarter. He’s a young, smart, ethical, motivated, creative, charismatic, arrogant, stubborn, know-it-all jerk. Our company is built on team values, and no one thinks he’s a team player. It would be worth a fortune to us if we could turn this guy around. Otherwise, he’s out of here.”

I had never worked one-on-one with an executive before (the field of executive coaching as we know it today did not exist), and certainly not with someone who was one click away from the CEO’s chair at a multibillion-dollar company. From the CEO’s terse description, I had met this fellow many times already. He was the kind of guy who had triumphed at every rung of the achievement ladder. He liked to win, whether it was at work, playing darts or arguing with a stranger. He’d had “high potential” stamped on his forehead since day one in the workplace. Would someone whose entire life was an affirmation of always being right accept my help?

Needs Exercise

I had taught plenty of mid-level managers in groups before. These were people on the verge of success but not quite there yet.

Could my methods work on a more elite flight of executive material on a one-onone basis? Could I take someone who was demonstrably successful and make him or her more successful?

I told the CEO, “I might be able to help.”

Here is an exercise in recovered memory and humility.

DO THIS: Make a list of your five to 10 proudest achievements, particularly the ones where the accomplishment felt well deserved. Now imagine you were invited to receive an award for each achievement and you were expected to give a thank-you speech in front of all your relatives, colleagues and friends. Whom would you thank? And why?

I suspect you’ll find in each case that you did not succeed without help.

I’m not talking merely about instances of unexpected luck and serendipity, but rather the gifts of other people’s wisdom and influence that helped advance a project or avoid a catastrophic misjudgment. Without this trip down memory lane, I suspect you will always be underestimating how much assistance you have received in your life.

Once you appreciate all the help you’ve either forgotten or failed to credit in your life, you are finally ready for the alarming payoff of this exercise.

You can imagine—and kick yourself with regret—how much more you could have achieved if you had asked for help more often. Now extend your imagination forward: Where do you need help in the future? And who are the first people you would ask to help you?

The CEO sighed. “I doubt it.”

“Tell you what,” I said. “I’ll work with him for a year. If he gets better, pay me. If not, it’s all free.”

The next day I caught a return flight to New York City to meet the CEO and my first one-on-one coaching client.

I had a big advantage with that first client. He had no choice but to commit to being coached. If he didn’t, he’d be out of a job. Fortunately, he had the work ethic and desire to change; he got better, and I got paid. But as I picked up more clients like him, I learned to create an environment in which a leader did not feel embarrassed to ask for help. It harkened back to the paradox I noticed at IBM: The company’s leaders thought coaching was valuable for employees but not for themselves. This was nonsense, of course. None of us is perfect. We’re all flawed human beings. We all should be asking for help. My breakthrough was reminding my accomplished clients of this eternal truth.

One of the ways I did this was by asking them to list all the things they could do as

CEO MAGAZINE / SUMMER 2022 / 45

a leader to support the people they worked with. I called this the Needs Exercise: What do your people need from you?

They’d rattle off the obvious stuff: support, recognition, a sense of belonging and purpose. Then they’d go deeper.

People needed to be loved, heard and respected. They needed to feel loyal to something and receive loyalty back in return. They needed to be fairly rewarded for doing a good job, not overlooked or discounted.

“That’s a lot of neediness among your staff members,” I’d say to my client.

“What about turning it around on yourself? Admit that you need the same things. You’re no better than your employees. One or two of them might even become the organization’s leaders after you’re gone. They are you.”

I wanted clients to see that by trumpeting their roles as supportive leaders and, in the same self-contradictory breath, asserting that they do not require equal support themselves, they are demeaning their employees and the dignity of their needs. This doesn’t go unnoticed by the employees. It is a massive failure in leadership.

Since successful leaders recoil at the thought of failing at anything, it didn’t take clients long to overcome their shame and abhorrence for the phrase “I need help”— and accept coaching. They recognized that they would perform better with help, not without it. It’s amazing that smart people had to be told this, but those were the times. Nowadays, the widespread demand for executive coaching is evidence that companies value their leaders and are willing to pay for them to get better.

An earned life is not more “earned” or glorious or gratifying— or even more likely— because you tried to achieve it all by yourself.

The Need for Approval

The more I conducted the Needs Exercise with clients, the more I noticed that needing anything, whether it’s help, respect, time off or a second chance, has somehow evolved into an object of derision in the workplace, a character flaw,

46 / CHIEFEXECUTIVE.NET / SUMMER 2022

a weakness as objectionable as being ignorant or incompetent.

The reviled need that continues to baffle me most is our need for approval. If you google “need for approval,” the first 100 entries describe it as a psychological defect, selectively illustrated by cringeworthy behavior such as valuing the opinions of others more than your own, agreeing with people even when you actually disagree and praising people in order to be liked by them. When did seeking approval or recognition become a bad thing, a synonym for phoniness, sycophancy and tactical dissembling? How did seeking approval or recognition get demoted to neediness?

In the workplace, I believe our problem with approval, like our problem with asking for help, starts at the top. My experience with successful leaders is that they’re sensitive to employees’ need for approval and recognition and are adept at providing it. But for the same reasons, they won’t admit they need help; they’re reluctant to acknowledge their own need for approval or recognition. A leader’s internal sense of validation—i.e., self-approval—should be enough, they tell themselves. Anything else is grandstanding, the equivalent of turning on the Applause sign for yourself.

Net result: The CEO’s attitude filters down the line until approval and recognition are denied their rightful place throughout the organization.

This “do as I say, not as I do” hesitation to seek approval even infects experts on the subject. My great friend Chester Elton is the world’s authority on the value of recognition in the workplace. I asked whether he encountered this reluctance to seek recognition among leaders he’s worked with.

He said, “I may not be the right person to ask. I went through a period in my life when I was feeling really down. So I wrote a note to a dozen friends saying, ‘I talk about recognition all day. To be honest, I can use some recognition myself right now.’

I received a dozen wonderful letters that made me feel fantastic. They revived me.”

“Sounds like you’re the perfect person to ask,” I said.

“That was one time, 20 years ago. I

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never did it again,” he said, recognizing his do-as-I-say-not-as-I-do error. “But I should, and I will.”

For many years now, helping leaders accept and emphasize their needs has been a big part of my coaching. Sometimes it’s the only advice they need.

Coaching Joly

I started coaching Hubert Joly in 2010, when he was CEO of Carlson, the privately owned hospitality giant in Minneapolis. I did my usual setup routine: I interviewed Hubert’s direct reports and the Carlson board of directors, distilling their feedback into two reports.

First I sent Hubert the report of all the positive feedback, advising him to appreciate it. The next day I sent the longer report about his negatives, telling him to digest it slowly. Although he was already a respected leader, of the 20 executive bad habits I’d listed in What Got You Here Won’t Get You There, Hubert, by his count, was guilty of 13. His big issue was thinking he always had to add value, out of which flowed his other issues, such as needing to win too much and passing judgment.

Then we met, and I could see where his reputedly excessive need to be right came from. He’d been at the top of his class at the most elite schools in his native France. He’d been a star consultant at McKinsey. In his 30s, he became president of EDS-France, then moved to the U.S., where he eventually rose to the top of Carlson. But I also learned he was a bit of a religious scholar who’d collaborated with two monks from the Congregation of St. John (they’d met at business school) on articles about the nature of work.

He was well-read not only in the Old and New Testaments but also in the Koran and the teachings of Eastern religions. I liked him immediately.

I didn’t belabor the bad habits in his report. I told him to pick three he wanted to work on and commit to improving. Then the coaching process began—the apologizing

When did seeking approval or recognition become a bad thing, a synonym for phoniness, sycophancy and tactical dissembling?

48 / CHIEFEXECUTIVE.NET / SUMMER 2022

to colleagues for past behavior, the promising to do better, the asking for help and the grateful acceptance of feedforward advice.

Two years later, Hubert became CEO of Best Buy, where he faced one of the biggest challenges in American business: saving a big-box electronics retailer competing on price against Amazon. Hubert’s improvement before he started at Best Buy was so significant, he could have taken a victory lap and ended our coaching relationship.

But he didn’t, for two reasons: (1) He was committed to continuous self-improvement, having grown very comfortable with expressing his need for help, and (2) he wanted his new colleagues at Best Buy to see the self-improvement process in practice. So he invited me to come along for the ride as his coach at his new job. He went public with his need for help, in effect telling his staff, “I have a coach. I need feedback. You need feedback too.”

His strategy for Best Buy was to compete with online retailers not on price, but rather by offering better “advice, convenience and service.” This meant that when a customer came to one of Best Buy’s 1,000-plus showrooms, the floor people had to be so knowledgeable and enthusiastic that the customer would have no reason to buy anywhere else. In other words, Hubert was betting the store solely on the employees of Best Buy. As Hubert became more acquainted with Best Buy and we discussed how to get the workforce behind his strategy, he came up with a remarkably counterintuitive strategy.

Hubert wasn’t going to help the employees in the usual top-down management approach.

Quite the opposite. He would ask them to help him. He would expose his vulnerabilities publicly to them, acknowledging his need for help at every step. He would ask for their approval, not in the form of personal “Do you like me?” assurances, but rather in the form of their “buy-in” and commitment to his strategy. Like a great salesperson always asking for the order or a savvy politician never forgetting to ask citizens for their vote, Hubert’s ask went deep and close to the bone. He asked employees for their belief in his strategy by asking for their “heart.” And they gave it to

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him. All he had to do was ask.

In the course of transforming Best Buy—during which the stock price quadrupled and Jeff Bezos of Amazon would say in 2018, “The last five years, since Hubert came to Best Buy, have been remarkable”—Hubert transformed himself as a person as well. To his employees, he became a human being, imperfect and vulnerable, willing to admit he didn’t know everything and therefore willing to ask for help. He joined Alan Mulally and Frances Hesselbein as one of my three most successful coaching clients—Alan and Frances because they had to change the least (they were already great when we met and became even greater), Hubert because he changed the most.

By trumpeting their roles as supportive leaders and, in the same self-contradictory breath, asserting that they do not require equal support, they are demeaning their employees.

Ask for Help

Marshall Goldsmith is one of the world’s leading executive coaches and the New York Times bestselling author of The Earned Life, What Got You Here Won’t Get You There, Mojo and Triggers.

If I can leave you with only one piece of advice to increase your probability of creating an earned life, it is this: Ask for help. You need it more than you know.

You would not hesitate to call a doctor if you were in extreme physical pain, a plumber if your sink was clogged, or a lawyer if you were in legal trouble. You know how to ask for help. And yet there are moments in each day when asking for help is clearly the better choice and you decline to do so. Beware two situations in particular.

The first is when you are ashamed to seek help because doing so will expose your ignorance or incompetence. The teaching professional at a golf club once told me that fewer than 20 percent of the 300 members at her club had ever taken a lesson from her. They were too embarrassed by their faulty swings to let her help them. “I pay my bills giving lessons to the 30 or 40 best golfers at the club,” she said. “They only want to shoot better scores. They don’t care how they got there or who helped them.

Their scorecard doesn’t care either.”

The second situation begins when you

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tell yourself, “I should be able to do this on my own.” You fall into this trap when the task you’re facing is adjacent to knowledge or a skill you think you already possess.

You’re driving through a familiar neighborhood, so you should be able to reach your destination with no need for directions from your phone’s GPS. You’ve given speeches before, so you don’t need a friend’s helping ear to fine-tune a wedding toast or your most important sales presentation of the year.

I do not have this problem anymore, which is why “Did I do my best to ask for help?” is no longer on my list of basic Daily Questions. I declared victory in this battle many years ago, when I asked myself what task or challenge in my life could be more profitably and efficiently dealt with alone rather than with solicited help from other people—and couldn’t come up with an answer. You should too.

Consider all the times someone—friend, neighbor, colleague, stranger, even foe—has asked you for help. Did you • refuse them, • resent them, • judge them to be stupid, • question their competence, or • deride them behind their back for needing help?

If you’re like most good people I know, your first impulse was to help. You’d demur only if you lacked the capacity to help—and you’d probably apologize, regarding your inability as somehow your failure. The one response you wouldn’t offer is an instant and outright no.

Before you reject the idea of asking others to help you, consider this: If you are willing to help anyone who asks for your help without thinking ill of them, why would you worry that other people won’t be as generous and forgiving when you’re the one seeking help? The Golden Rule, by definition, works both ways, never more so than when help is on the table.

An even more meaningful question: How have you felt when you have helped others?

I think we can agree that’s one of the great feelings, right? Why would you deprive others of the same feeling? CE

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EC O N O M IC D E VE LOPME NT

REGIONAL REPORT

NORTHEAST & SOUTHEAST Despite an overall slowdown in the national economy, states continue to see pockets of growth. BY CRAIG GUILLOT THE OVERALL U.S. ECONOMY started to slow in Q1 2022, with GDP falling by 1.4 percent. Nevertheless, many states continue to see new expansions and investments from both domestic and foreign companies. Manufacturing, life sciences and tech remain hot sectors in the Northeast and Southeast.

2 FLORIDA*

*State’s rank in the 2022 Chief Executive Best & Worst States for Business (ChiefExecutive.net/bestworst-states-business)

EXPANDING INTERNATIONAL PROFILE In 2021, Enterprise Florida assisted in more than $2 billion in capital investments and the creation of 12,000 jobs. Announcements included an expansion by Boeing with 334 jobs in Jacksonville. Additionally, Dun & Bradstreet announced the city as its new corporate headquarters.

The state is now doubling down to sell itself and its “stayed open” success to the world. In 2021, EFI started the Florida International Trade Expo and conducted 4,500 export consultations with more than 2,000 companies in 62 countries.

“Florida’s leadership, open economy and business-friendly environment have sent a

52 / CHIEFEXECUTIVE.NET / SUMMER 2022

signal to the country and the world that the Sunshine State is the place where abundant opportunity and growth awaits,” said Holly Borgmann, vice chair of the Enterprise Florida Board of Directors.

3 TENNESSEE VOLUNTEERING TO DRIVE GROWTH In 2021, the Volunteer State welcomed 130 projects worth $12.8 billion in investments and helped create more than 34,000 job commitments. Oracle announced 8,500 jobs at a $1.2 billion hub in Nashville.

Thermo Fisher Scientific announced 1,400 jobs at a manufacturing facility in Wilson County, and Ultium Cells will create 1,300 jobs at a $2.3 billion battery cell manufacturing plant in Spring Hill. This all comes on the heels of Ford’s announcement of its Blue Oval City megacampus being built in the state. ATC Drivetrain announced in March 2022 a new manufacturing facility in Knoxville that will create 218 jobs.

“Tennessee has become a national hub for the automotive industry with our highly skilled workforce, thriving econ-

NORTH CAROLINA Vietnamese electric-vehicle company VinFast is opening its first North American automotive assembly and battery manufacturing plant in metro Raleigh.

omy and strong business climate,” said Gov. Bill Lee in a press release.

5 NORTH CAROLINA GREENER PASTURES POST-PANDEMIC In 2021, the Economic Development Partnership of North Carolina secured 174 corporate relocations and expansions, leading to 24,000 jobs and more than $10 billion in capital investments. Toyota announced a $1.29 billion electric vehicle plant and 1,750 new jobs at the Greensboro-Randolph Megasite, while Eli Lilly announced a $1 billion facility and nearly 600 jobs in Concord.

The momentum continued into 2022 with announcements by Nucor Corporation and Macy’s. Vietnamese electric vehicle and battery company VinFast announced a $4 billion investment and 7,500 new jobs in Chatham County. The state’s workforce, quality of life and business-friendly policies “appeal to both businesses and individuals seeking greener pastures in a post-pandemic world,” said Christopher Chung, CEO of EDPNC. 11 GEORGIA ECONOMIC PROMISE IN THE PEACH STATE Georgia nearly doubled its jobs and investment in the past year. Between July 2021 and March 2022, the global commerce team supported 251 project locations, resulting in more than 35,000 new jobs and $12.9 billion in investments. Electric mobility is one bright spot. Electric truck manufacturer Rivian announced a $5 billion campus and 7,500 new jobs, the single-largest economic development project in state history, said Georgia Department of Economic Development COO Brittany Young. “Georgia offers the right mix of elements that companies need to succeed. It has a skilled and diverse workforce, robust and integrated infrastructure, and affordable cost

of living in a moderate climate,” said Young.

12 SOUTH CAROLINA DRIVING THE FUTURE OF ELECTRIC VEHICLES The Palmetto State is quickly raising its profile in the electric vehicle industry. In March 2022, the U.S. Postal Service announced a nearly $3 billion deal to build 50,000 zero-emission electric vehicles in Spartanburg County. Electric transit vehicle company Proterra also announced a $76 million investment and 200 new jobs. Additionally, BMW Group, which has invested nearly $12 billion in its South Carolina operations since 1992, is manufacturing two plug-i hybrid electric models in the state.

“We’ve worked hard for years to cultivate our reputation as a global leader in the automotive industry, and we will ensure our continued success with the speed we are gaining in the electric vehicle market,” stated Harry Lightsey, South Carolina’s secretary of commerce.

SOUTH CAROLINA Proterra will invest $76 million in a new battery factory opening in Greer.

14 VIRGINIA A LEADER IN LIFE SCIENCE INNOVATION Virginia continues to grow as a hub for life sciences innovation with new development in Fairfax and Henrico counties.

In March 2022, Thermo Fisher Scientific announced a $97 million expansion and 500 jobs in Richmond. “This sector has gained significant momentum in the commonwealth due to our research institutions, skilled talent and advanced innovation ecosystem, and we are proud of the company’s developments happening right here in Virginia,” said Governor Glenn Youngkin in a press release.

Also, real estate information provider CoStar Group announced a $460 million expansion and 2,000 new jobs in Richmond. Distribution is also growing, with Amazon, AutoZone and Mondelez International announcing major distribution hubs in the state.

CHIEFEXECUTIVE.NET / SUMMER 2022 / 53

15 DELAWARE

KENTUCKY Japan’s Envision AESC is breaking ground on a $2 billion gigafactory in Bowling Green.

FORWARD IN THE FIRST STATE Delaware continues to attract new fintech and biotech investments. In December 2021, Investor Cash Management announced a new headquarters and 395 jobs in Wilmington. Life sciences company Analytical Biological Sciences announced in 2021 an expansion at its headquarters and lab space in Wilmington, with 36 new jobs.

B&M Meats also announced an $18 million production facility and 190 new jobs in Wilmington.

Medical technology company Hologic announced a $24 million expansion and 225 new jobs at the Glasgow Business Community in Newark. LaMotte Company, a water-quality testing instrumentation and reagent company, announced a $3.3 million investment to build out its lab space in Wilmington and add 100 jobs.

21 NEW HAMPSHIRE HIGH GROWTH, LOW STRESS WalletHub recently ranked New Hampshire one of the least stressed states in the nation at No. 47. While the slow pace of life may not attract earth-shattering projects, businesses and talent are taking notice. Exports from the state hit a record high in 2021 of $6.4 billion, a 16.7 percent increase from 2020. Two top exports driving the growth include electrical and industrial machinery.

“We’re proud that New Hampshire companies helped alleviate shortages in the global supply chain in 2021, specifically in essential products, like automotive and computer components, said Taylor Caswell, BEA commissioner.

23 KENTUCKY ELECTRIFYING THE AUTO INDUSTRY The Bluegrass State is also building on its strength in automaking by attracting new investments in the electric vehicle industry.

In April 2022, Japanese electric vehicle battery company Envision AESC announced a

54 / CHIEFEXECUTIVE.NET / SUMMER 2022

$2 billion Gigafactory and 2,000 new jobs in Bowling Green. The facility will produce valuable battery cells and modules to power the next generation of electric vehicles. This comes on the heels of an announcement last year by Ford Motor and South Korea-based SK Innovation to build two battery manufacturing plants in Glendale. The $5.8 billion investment is expected to create 5,000 jobs.

26 LOUISIANA DIVERSIFYING APPROACH TO ENERGY In 2021, the Bayou State doubled its capital investments to more than $20 billion from 64 projects. These projects created more than 18,000 jobs, spanning sectors like agribusiness, advanced manufacturing, and life sciences. Louisiana is also diversifying beyond its petroleum base, announcing six clean energy projects in 2021 representing more than $6.1 billion in capital and 1,500 jobs. As of April 2022, three more clean energy projects had been announced in the new year.

“Louisiana has adopted an approach to energy that is ‘all of the above,’” said Louisiana Economic Development Secretary Don Pierson. “We are supporting the state’s legacy energy producers in chemicals and oil and gas to respond to the market and their customers on the long ramp toward NetZero carbon emissions.”

30 ARKANSAS AMERICAN STEEL Fueled by investments from companies like Nucor and Zekelman Industries, Arkansas’ steel industry has grown nearly 30 percent in the past decade. In January 2022, U.S. Steel announced a $3 billion project that will make Mississippi County the biggest steel-producing county in the nation.

Arkansas announced several other projects in the past year, including Trex Company, Vista Outdoor and Canoo. Mike Preston, secretary of the Arkansas Department of Commerce, attributes the growing interest in the state to its friendly business environment and the low taxes and regulations. “We boast a reliable workforce, a low cost of living and a high quality of life—and businesses across the nation are taking notice,” said Preston.

31 MAINE EXPORTING A NEW FUTURE Maine is a small state with a growing profile on the global stage. In 2021, Maine-based companies exported more than $3.1 billion in goods to more than 177 markets.

International trade now supports one in five jobs.

DeepWater Buoyancy now exports more than a third of its products internationally, and Guilford-based Puritan Medical Products has since added three plants and 1,200 new employees. “Businesses and individuals like these are shining examples of the many businesses and people who made it happen and will make it happen into the future,” said Wade Merritt, president of the Maine International Trade Center.

32 MARYLAND A HUB FOR HIGH-TECH Tech is thriving in Maryland. Between May 2021 and April 2022, the state’s tech workforce grew 8.42 percent, the highest rate of any state in the nation, according to a report by the Technology Councils of North America. “Maryland is brimming with career potential for tech workers, and an outstanding quality of life sweetens the deal,” said Maryland Commerce Secretary Mike Gill in a press release.

“We’ve known that Maryland is the best state in the nation for tech careers, and this report proves that workers are taking notice, too.” High-tech companies continue to announce new expansions in Maryland. In May 2022, Greenland Technologies announced a manufacturing facility in Annapolis.

33 RHODE ISLAND SUPPORTING SMALL BUSINESSES Little Rhody has been going to great lengths to shore up its small businesses in the past couple of years. The state has granted more than $51 million in awards to 4,100 small businesses, with up to $30,000 for each company. State officials also announced another program in January 2022 that offers direct financial assistance of up to $5,000

for each qualifying business.

“These past two years have taken a significant toll on our small business community,” said Lt. Governor Sabina Matos in a press release. “Some small businesses have shut their doors, and others are barely getting by…These funds will boost our small business economy and provide owners the temporary relief they so desperately need.”

ALABAMA OEM production and electric vehicle manufacturing are driving job growth.

34 ALABAMA EYING A FUTURE IN ELECTRIC CARS The Cotton State is doubling down on its strengths in the auto sector to ensure it has a prime seat at the table in electric vehicle manufacturing. In April 2022, Hyundai announced plans to build electric cars in the state. Mercedes Benz also opened a new E.V. battery plant near its Alabama assembly plant in March 2022, where it will begin building two electric SUVs later this year. Last year, the state’s auto sector recorded new investments totaling $536 million and over 1,400 new job commitments. The activity came from increasing OEM production, including a ramp-up at the new Mazda Toyota joint venture assembly plant and new models on Alabama assembly lines, including electric vehicles.

35 PENNSYLVANIA BUILDING BACK IN THE KEYSTONE STATE The Keystone State is doubling down on its manufacturing sector with a mixed bag of projects. Homegrown manufacturer Bunting created 79 jobs at an expansion in Lawrence County. Manufactured-home builder Cavco Industries

CHIEFEXECUTIVE.NET / SUMMER 2022 / 55

MISSISSIPPI Sustainable wood bioenergy firm Enviva is opening a $250 million manufacturing operation in Bond.

announced 55 new jobs at an expansion of its operations in Clarion-Butler County. Australian Company Easy Signs announced in March 130 new jobs at a manufacturing operation in Allentown. Black Buffalo 3D Corporation also announced the relocation of its manufacturing operations from New Jersey to Monroe County.

“Manufacturing has long been a key part of the commonwealth’s economy, and we have much to offer the industry, from our skilled workforce to prime Northeast location and more,” said Gov. Tom Wolf in a press release.

38 MISSISSIPPI MOVING UP IN THE MAGNOLIA STATE The Magnolia State continues to attract new investments in manufacturing and timber mills. In April, Enviva, a leading global energy company specializing in sustainable wood bioenergy, announced 100 jobs at a $250 million manufacturing operation in Bond. In January 2022, Walmart announced 250 new jobs at a fulfillment center in Olive Branch, while Scotsman Manufacturing company began operations in Laurel with 85 new jobs.

“When homegrown companies stay in Mississippi to plant roots and begin creating jobs in our communities, it truly does make a statement to other companies that we are a great place to do business,” said Mississippi Development Authority Interim Executive Director Laura Hipp.

39 WEST VIRGINIA MOVING UP THE MOUNTAIN In recent years, the Mountain State has continually climbed the rankings with new

56 / CHIEFEXECUTIVE.NET / SUMMER 2022

accolades from Fortune 1000 executives in a remarkable turnaround from a decline in the coal industry. Clearway Energy Group recently completed a $460 million wind energy project, one of the largest and most advanced in the region. There have also been new investments by manufacturers like Veloxint, Omnis Building Technologies and Italy-based manufacturer Fanti USA. Fanti announced in April 2022 the location of its first U.S. production facility in Weirton.

“Being the home of a company’s first United States facility is a great honor, and we are excited that Fanti USA says, ‘Yes, West Virginia,’” said West Virginia Department of Economic Development Secretary Mitch Carmichael.

40 VERMONT NOW HIRING Vermont’s impressive 2.5 percent unemployment rate sounds good on paper but has left employers struggling to find workers, a trend that was already in play before the pandemic. The latest data indicates eight of the state’s 14 counties have experienced labor-force declines of 10 percent or more since their peak.

Gov. Phil Scott is now proposing a 2023 budget that will use funding to help make the state more affordable in areas like housing. In April 2022, Vermont held the largest job fair in state history in Essex Junction, with more than 150 employers and 1,200 job seekers.

“Our strategy to grow the workforce cannot just be about training—it must be about meeting the needs of families. That’s why my workforce proposals also include things like housing, affordability and jobs,” said Scott.

43 CONNECTICUT PLAYING ECONOMIC OFFENSE Connecticut’s economy grew at an annual rate of 7.7 percent in Q4 2021, the 12th highest rate in the nation. The state is now “playing offense,” said AdvanceCT CEO Peter Denious, with the public and private sectors strategically working together in key industries. More than $1.6 billion in public and private sector invest-

SUCCESS STORIES BEGIN IN ARKANSAS “People ask me a lot, ‘What’s in the water in Arkansas that you can have such great companies founded there?’

And I tell them, ‘It’s the people.’”

Warren Stephens, Chairman, President, Chief Executive Officer Stephens, Inc.

To learn more about how inspiring businesses are leading the way to a strong economy, visit ArkansasEDC.com/Stephens or scan to watch the video.

the country and well higher than the average national growth rate of 2.6 percent.

“The strength of the New Jersey manufacturing sector has been a huge contributor to the state’s economic momentum,” said Tim Sullivan, CEO of the New Jersey Economic Development Authority, in a press release. “And, with major investments underway, like the New Jersey Wind Port and Hax in Newark, the future of manufacturing in New Jersey is bright.”

NEW YORK In April, Wolfspeed opened the world’s largest silicon carbide fabrication facility in Marcy.

ments have driven projects in distressed communities, workforce development, and the innovation corridor.

Connecticut’s Innovation Corridor is now home to thousands of companies seeking talent and customers. The state is also home to 15 Fortune 500 companies and 25 Fortune 1000 companies. “Our world-class workforce is our greatest selling point. We have some of the most highly educated and talented workers in the nation,” said AdvanceCT’s Denious, in a press release.

44 MASSACHUSETTS BIG BETS ON NEW DEVELOPMENT Despite downward economic indicators in Q1 2022, the Bay State continues to see new announcements and expansions. Swiss technology company Nextthink announced plans to double its U.S. presence with a new headquarters in Boston. Additionally, Israeli diagnostics firm MeMed is embarking on a $93 million expansion at its local headquarters in Boston.

As of May 2022, Gov. Charlie Baker was urging the approval of a $3.5 billion economic development plan that would use American Rescue Plan Act funds and borrowing to fund economic development plans and hundreds of shovel-ready projects to help Massachusetts cities attract new investments.

47 NEW JERSEY MANUFACTURING MOMENTUM While New Jersey remains a hub for biosciences, it is also making substantial progress in rebuilding its manufacturing sector. The state’s manufacturing output grew at a 5.8 percent annualized rate between Q4 2017 and Q4 2021, making it the seventh-best in

58 / CHIEFEXECUTIVE.NET / SUMMER 2022

49 NEW YORK NEW STRENGTH IN SEMICONDUCTORS The Empire State is eyeing new opportunities in the semiconductor industry.

In April 2022, semiconductor developer Wolfspeed opened the world’s largest silicon carbide fabrication facility in Oneida County. New York currently has 10 semiconductor research sites with expenditures over $350 million and is striving to establish the Albany Nanotech Complex as a primary R&D hub and the headquarters of the proposed National Semiconductor Technology Center.

“As supply chain concerns and global conflicts continue to impact the production of microchips, New York stands ready to spearhead the revitalization of the semiconductor industry domestically,” said Gov. Kathy Hochul in a press release.

WASHINGTON, D.C. FEDERAL IMPORTANCE Much of the growth in the capital region continues to be driven by new expansions and announcements in Fairfax, Virginia. In May 2022, Boeing announced it would move its headquarters from Chicago to the D.C. area in Arlington to be closer to key federal government officials. Competitor defense contractors like Lockheed Martin, General Dynamics and Northrop Grumman are already based there.

Downtown D.C.’s central business district is still trying to return workers to offices since the start of the pandemic. In March 2022, a pandemic recovery committee on the city council approved a recommendation to explore transforming the district with more vibrant mixed uses and to support the creation of job centers. CE

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C EO SUMMI T

‘EMBRACE IT AND FACE IT’

Challenging times demand innovative approaches to leadership. Gathering in Detroit for Chief Executive’s annual Smart Manufacturing Summit, CEOs swapped notes on what’s working, what’s not—and what to do next. BY DALE BUSS

D

etroit is the home of manufacturing brands as old and fabled as Henry Ford’s blue oval and as new and cutting-edge as Shinola, a haven for both the heaviest of metal-bending American manufacturing and for the nimblest of new-age additive fabrication.

So there was no better place for hundreds of manufacturing leaders from around the country to assemble to talk shop, be inspired and learn helpful hacks at the recent 2022 Chief Executive Smart Manufacturing Summit, presented in partnership with the Michigan Economic Development Corporation.

The highlight of the two-day event was a tour of Ford’s Rouge Electric Vehicle Center in suburban Dearborn, as Summit attendees comprised one of the first groups to get a thorough behind-the-scenes look at the futuristic factory where the automak-

60 / CHIEFEXECUTIVE.NET / SUMMER 2022

er is assembling its revolutionary F-150 Lightning pickup truck.

Those attending the event in person and virtually also learned why the future of their own manufacturing operations might lie in creating a “listening” culture, in forging their own brands, in staying steady with their supply-chain philosophy amid unprecedented disruptions or in harnessing the iterative power of 3D-printing collectives.

“It’s an uncomfortable time for many of us,” said Debbie Manzano, Ford’s director of manufacturing, in a keynote that focused on how the automaking titan is pushing its transition to the era of electric-vehicle making. “But we need to challenge ourselves in being uncomfortable, which drives change and learning. We need to embrace it and face it. And we can’t help but be excited by it at the same time.”

Here were some other highlights of what manufacturing leaders shared at the Summit:

Summit participants touring Ford’s Rouge Electric Vehicle Center in suburban Dearborn.

CREATE A DIFFERENCE-MAKING CULTURE THE U.S. MANUFACTURING COMMUNITY has been grappling with the lack of skilled workers available to fill what amounts to millions of vacant positions in factories, on docks and in engineering offices across the country. But it won’t help CEOs to throw money at those jobs and hope that more-than-competitive compensation will attract and hold people. For long-term advantage, there’s still no substitute for building a cohesive and sustainable corporate culture.

“Forty-four percent of employees are actively looking for a new job these days,” said Corey Stowell, CHRO for Webasto Roof Systems Americas. “It doesn’t matter what industry you’re in: You can’t afford [with compensation] to keep up with what you’re seeing in the marketplace today.”

Webasto has been in the middle of this struggle, because the U.S. arm of a giant Germany-based manufacturer of automotive sunroofs has been trying to staff about 900 positions at its new plant in Plymouth, Michigan, southwest of Detroit. And the company has found its most effective recruiting tool to be the fact that Webasto completely overhauled its workplace culture five years ago in a transformation that continues to reverberate today.

Eight years ago, Webasto was making several rounds of layoffs, freezing and cutting wages and “creating fear within as employees moved to the end of the week,” Stowell said.

“Fridays became known as ‘Black Fridays,’ and employees would celebrate if they made it through.” Webasto had “created an environment full of fear and distrust, where collaboration rarely existed and people worked in their own little silos.”

New management came in at that point and engaged a consulting firm that confirmed the bleak picture: It had never measured employee dissatisfaction at levels as high as those it found among Webasto’s workforce. So, leadership decided to leverage cultural transformation as a way of revolutionizing worker attitudes and even gaining new business.

And it happened quickly. Within a few years, the same consulting firm tapped into Webasto worker attitudes and found record happiness with the company. Business was booming, and the company built a new headquarters locally in addition to the new plant.

Here were the keys: Come up with a coda. Webasto wanted to forge and explicate its new commitment and document it as quickly as possible. The company chose a diverse group of employees from up and down the organization to address a series of questions about the future of the organization.

“It generated emotional discussions and a hell of a lot of passion that went into them,” Stowell said. But it all helped Webasto produce a sort of corporate culture Magna Carta that it called the Compass. Now, operations folks get on a daily call in which they “pull up the Compass and someone talks about what it means to them or an example of someone living the Compass.”

Listen before anything else. Webasto hosted one-hour “listening sessions” for which it gave workers time off the factory floor to “come in and talk.”

“We urged people to be open and transparent, and talk about their hopes and fears,” said Stowell. Venues included roundtables, town halls and “coffee hours,” as well as a complimentary full-weekend conference for hundreds of employees at a Detroit hotel and casino. “We had to be taught how to listen,” said Stowell. “We actually went through a class about how to become fully engaged, how to look at individuals eye-to-eye, how to use phrases to get them to open up.”

Don’t argue. In the process of soul-baring, Stowell said, some workers threw out falsehoods about the company, such as one who said Webasto didn’t even offer him time for bereavement when a loved one died. “I knew that wasn’t true because we had bereavement,” Stowell said. “But I wasn’t there to argue with him. My goal was to listen and learn. People’s perceptions are reality, and it was important that we recognized there was a reason he felt that way.”

So, even if what you’re hearing “goes against the grain,” Stowell said, “listen to your employees.”

Expect instant results. Launching the listening process brought changes in employee attitudes and results. “It gave us time to focus on longer-term topics such as leadership development and improving communication,” Stowell said.

This includes the requirement that you act on what you hear. “If you take action, you’ll gain their trust and respect,” he said, even if remedies are as simple as installing a new light bulb in a parking lot to restore a sense of security when second-shift employees leave for the night. “Otherwise you’ll have the complete opposite effect on the organization.”

Embrace employees. “Give them a sense of belonging,” Stowell urged. “Give them the freedom to be themselves.

The more connections employees have with the organization, the less likely they’re going to leave. Or at least they’re going to think twice about it.”

Webasto was soon the subject of a Harvard Business School case study and winning awards as a “best place to work.” Covid-19 registered a “hit” to Webasto’s culture, Stowell admitted, as the company “fought hard to keep our employees safe. But we didn’t have a single layoff. We experienced more turnover than we’d ever seen, so we need to focus on what we can do.” And most of that is to rely on the new culture Webasto had built quickly.

Recognize contributions. “You can’t do it enough,” Stowell said. “Give reasons you’re recognizing employees, and make it important.” Webasto even holds a national employee appreciation day each month.

CHIEFEXECUTIVE.NET / SUMMER 2022 / 61

INDUSTRY 4.0 REALITIES WHILE HURDLES LIKE the risk of failure can be considerable, adding technology to operations is increasingly imperative for manufacturers. In fact, innovations that incorporate additive manufacturing, or 3D printing, have already changed the terms of engagement for American manufacturers deploying this crucial cog in the Industry 4.0 toolkit, noted Tom Kelly, executive director and CEO of Automation Alley in suburban Detroit.

Among them are members of Project Diamond, a collective of small manufacturers testing the capabilities of 300 carbon-fiber printers purchased by Automation Alley. The printers are stitched together by blockchain. Valentine Vodka, for instance, now designs and prints components for its distillery line instead of waiting up to six weeks for parts. And Air & Liquid Systems 3D prints its own valves for $2.50 each instead of paying $99 each for stainless-steel varieties.

3D printing, IoT, robotics, cloud computing, big data, cybersecurity and AI are “disrupting manufacturing all at once,” said Kelly, noting that “the business model of manufacturing is changing, moving from capital intensive to capital light or capital zero. This is the biggest organizational-disruptive force in our lifetimes.”

Kelly outlined five principles for manufacturers to thrive in a “new economy” where Industry 4.0 is setting the terms: Champion software. Become a software company that happens to be a manufacturer. “It boggles minds to see that Apple just decided to make a car. How do they do that?

Because the car is getting simplified at the same time [Industry 4.0] technologies can be applied to manufacturing. So you get all kinds of new entrants: technology players who understand resilience and agility. Variability becomes their friend.”

Think like the customer. Figure out, “How does the customer win?” from what you might do with 3D printing and the other tools. “You’re not in the manufacturing business but in the customer-services business.”

Embrace the duality. The merging of digital and physical possibilities knocks down previous constraints. “Complexity is very expensive in manufacturing,” Kelly said. “But in additive manufacturing, complexity is free. It’s encouraged.”

Make small bets. VCs succeed in the digital arena unburdened by traditional notions of return on equity. “They place a lot of bets because if one hits, it pays for all of the bets they’ve ever made,” Kelly said. “This is total anathema to [traditional] C-Suite structure.”

To determine whether additive manufacturing can help your company, “You don’t have to bet the farm. Just start by thinking, ‘If I were unconstrained by the assets I have today, how would I put myself out of business?’”

PREVENTING ‘JUST-IN-TIME’ FROM BECOMING ‘JUST-IN-CASE’ WITH NO END IN SIGHT for the global shortage of microchips, supply-chain risk continues to be front and center for car makers. At Toyota, the crisis is serving to underscore the effectiveness of the kanban strategy it has used for decades—one that offers lessons applicable to other manufacturers, noted Jeff Liker, a University of Michigan professor, consultant and author of The Toyota Way: Stick with your knitting. “Their [supply-chain] principles are timeless,” Liker said. “They don’t change them often or quickly to deal with specific problems.” Toyota has and adheres to standards for normal operating procedures, adjusting them only after careful review.

Find your partners. “Supply-chain management is about continually learning to work together ever better for the customer,” Liker said. “If you want to improve your supply chain from this model, you have to partner with various entities to learn together. You, as a customer, can’t control anything. It requires interdependence. You need to

62 / CHIEFEXECUTIVE.NET / SUMMER 2022

learn to solve problems and improve together. That’s the ultimate vision.”

Toyota’s approach “is based on fair and honorable business relations; next-layer-up, stable, reliable processes; then clear expectations; then enabling systems; then learning enterprise.

Synchronicity is crucial. The just-in-time system is rigidly enforced at the top of the supplier pyramid and allowed more slack the further a supplier is from the assembly plant apex. “System suppliers are integrated and tightly connected with little inventory” to the Toyota operation, Liker said. “Rookie or troubled suppliers are monitored and may be asked to hold more inventory.”

Perform exception management. Toyota’s strategy, Liker explained, is “to develop standards for normal operating procedures and respond to specific disruptions on a one-off basis, then reflect and learn lessons from that major crisis that become part of your new normal operating procedure.

The basic principles of just-in-time don’t go away. You just have to decide what you need to modify based on what you’ve learned from the crisis.”

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BUILDING A BRAND TO BUILD A BUSINESS SHINOLA IS A MANUFACTURING COMPANY that’s nothing if not audacious and ambitious. “We are building a lifestyle brand, more than just a watch company,” said CEO Shannon Washburn. “We’re determined to become the next great American lifestyle brand born in Dertroit.”

To that end, the startup that began by making bicycles and assembling watch movements in Detroit has added a Shinola Hotel downtown, a design cooperation with Lincoln for a version of its Aviator SUV, a merchandise collaboration with Crate & Barrel, the possibility of a Shinola toboggan and the prospect of Shinola eyewear by spring of 2023, in a collaboration with Marchon.

Shinola now employs about 450 people making leather goods as well as watches, half of them in Detroit, as founder Tom Kartsotis—who first founded the multibillion-dollar Fossil watch brand—and Washburn continue to build out the notion of what an American manufacturing brand can become.

Here’s how other manufacturers can move toward Shinola-level success: Start small. For a year, Shinola’s initial watch-making workforce of about 100 people in Detroit did “nothing but build movements,” Washburn said, a labor-intensive skill that could involve putting together tiny assemblies of up to 120 pieces. Supervised by Swiss watch-making experts, the company’s core manufacturing workforce mastered the most important capability for a watch-making startup.

Improve the basics. Last year, Shinola introduced single-piece flow manufacturing in Detroit. “We saw efficiencies improve, quality go up, and lead times go down, and overall productivity and happiness within the team got much stronger,” Washburn said.

“It helped us see how we could achieve operational excellence and efficiencies and create really strong teamwork in the manufacturing space,” she added, “It became more about having the right product at the right time for the needs of our [customers] versus the organization of our equipment.”

Focus on your people. Developing its people has been key for Shinola. “We celebrate our manufacturing team members and give them opportunities,” Washburn said.

“They’re developing new skills as we develop new launches; and it’s about education and letting them show their strengths.” Two of Shinola’s original hourly employees have become production managers.

Launch apprenticeships. Shinola works with its entry-level employees to elevate them within through its Be More program.

“From positions in retail, customer service

64 / CHIEFEXECUTIVE.NET / SUMMER 2022

and manufacturing, where do they want to go next?”

Washburn said. To help employees figure that out, Shinola holds “passion days” around different areas of the business to help them foresee pathways upward. Four of five people who joined the new apprenticeship program have already been promoted.

Communicate thoroughly. “I tend to overcommunicate, but I prefer that,” Washburn said. “People can’t do what they don’t understand.” That includes sharing the company’s success with KPIs, she said. “People want to know what they’re working toward, and if they do, the results can be outstanding.”

Stay in touch with customers. During Covid, while Shinola stores were closed, the brand “stayed close to our guests as associates sent handwritten notes,” Washburn said. “It wasn’t to say, ‘We want to sell you this or that,” but more to check in. ‘How are you doing? How are you feeling?

When things open back up, we are here for you.’”

React to the moment. Shinola is looking to cut expenses by 10 percent this year in light of the muddied picture for the U.S. economy. It is also “focusing on our top 25 basic watch [SKUs] and go deep on those and be in stock, dedicating our manufacturing to those products,” after cutting down from 36 SKUs. Stick with your DNA. Hotel, store or via e-commerce, Washburn said, “it all says, ‘Shinola.’ The consistency of what we want to be and what’s important to us has to be a touchpoint. That’s the only way to have authentic interaction” with customers.

And every new brand extension by Shinola “needs to be core to our DNA, which is stylish design, clean and classic.

We are listening to our guests in terms of how they’re experiencing the brand differently.” CE

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C EO ROU NDTAB LE

GET AN EDGE

IN THE TALENT HUNT

Human capital remains a top concern for manufacturers. Here’s what they’re doing about it.

Inflation, continued supply-chain snarls and the threat of recession may grind away at them, but U.S. manufacturing companies still rate recruiting and retaining workers as their most intractable problem.

And it’s one that business leaders from 16 manufacturing companies participating in a roundtable discussion cosponsored by Chief Executive and the Michigan Economic

We want to bring sexy back to manufacturing.”

—Quentin Messer, CEO, MEDC

Development Corporation (MEDC) are working to address.

“We want to bring sexy back to manufacturing,” said Quentin Messer, CEO of MEDC, who explained that Michigan companies are “getting creative in telling their story,” as well as working with state job-development entities on training programs and cooperating with vocational educators to “create [more] lifelong learners.”

Yet, many companies continue to share common challenges. One that emerged strongly from the discussion: strong front-line supervisors. “No matter how good our benefit package is, if there’s not a connection between the shop-floor employee and their supervisor, we fall apart, and all the best-laid plans go down the tube,” said David Sunderland of

66 / CHIEFEXECUTIVE.NET / SUMMER 2022

Vermont-based Carris Reels, a maker of spools for industrial cable. “We want to make great supervisors: engaged, empathetic supervisors on all of our shop floors who can really connect with people. It hasn’t been highlighted enough what a difficult job that is; it’s the most difficult position in the entire factory.”

The root problem, Sunderland said, is that most companies promote productive factory-floor workers to supervisory jobs even when they lack managerial chops, such as listening skills. “These skills need to be developed in most people,” he said.

At a time when many manufacturing leaders are focused on workplace culture, that gap is particularly problematic, as front liners can sell—or sink—such efforts. “The C-Suite is saying, ‘Culture, culture, culture,’ but front-line supervisors may not be buying into it or believing it,” said Robert Thompson, of EnviroTech Services. “You’re saying to the troops, ‘We’re all about culture,’ but if you’re not genuine and sincere about it, [they’ll] know.”

Thompson’s fix has been to pair a capable front-line worker on an improvement project with a reluctant supervisor whom he considers unlikely to cooperate. Subpar results often quickly prove his hunch. “Yes, it’s risky,” Thompson said. “But which is more detrimental: having the company not growing and people potentially sabotaging things, or parting ways and getting someone willing to work and move, who has a flexible mindset?

I’d much rather cut my losses now than have someone run me down.”

Service Wire opted to develop the concept of a “lead role” that calls for certain competencies in its floor supervisors, said Shane Berry,

director of human resources for the wire and cable maker based in Culloden, West Virginia. “We focus a whole lot on that role to make sure we’re setting ourselves up to be successful. It gives us a platform to assess that individual’s skill set so we don’t promote them or put them in a position where they won’t be successful.”

Purpose as an Edge The need to attract next-generation workers was another challenge cited by participants, who noted that millennials look for more than simply a paycheck from employers and have plenty of opportunities in today’s job market.

“If you peel away the layers of the onion, the purpose of an organization is to improve the quality of life of the employee,” said William Hindle, CEO of HindlePower. “If you can convince the workforce that is truly your purpose, you find you’ll draw great talent to the company. You have to draw them out of other organizations one at a time.”

HindlePower also offers a strong employee-recognition program and no time clocks or even attendance policies. “But we get 97 percent to 100 percent attendance every day,” Hindle said. “And everyone has the purpose to succeed.”

Adaptability is also key. Post-pandemic, companies like die-casting equipment producer BuhlerPrince are coping with three classes of workers—all remote, hybrid and fully on-site—at its Holland, Michigan, headquarters and trying to be equitable in how they’re treated. “You have to offer some kind of balanced understanding that they’re in different dynamics,” explained CEO Steve Jacobson, who recently returned to the top job after a five-year absence from the company.

“So you need to listen better. That’s why we have a quarterly meeting with a mixed group of employees who are open and transparent.”

CEOs must go beyond merely entertaining such conversations, Jacobson added. “People are willing to offer ideas,” he said. “Some are transparent no-go’s, some are long-term, but some are quick wins. So you have to take action or individuals go back to the plant and say, ‘Nothing changes.’ You have to be willing to make some changes. If not, don’t have the conversation to begin with.”

All of these concerns are supercharged in an era when millennials are taking on more key roles as boomers age out of manufacturing leadership and the factory workforce in general. Masaba owner and CEO Jerad Higman summarized a frustration shared by many at the roundtable when he reported that millennials often “don’t even show up for a job interview.”

“I question millennials and their commitment to work,” said Higman, who noted his company, a maker of conveyor and material-handling products, adapted its workweek to changing employee expectations. “We’ve gone to a four-day work week, and kept Friday for overtime, but people don’t want to work overtime. I have to keep lowering the bar to get them on board, but that’s not my belief. We need to keep the bar up [high] with quality land commitment and have the right people on the team.”

Tanya Steer, HR manager for Integrity Tool and Mold, reports similar issues. Working at the injection-plastic mold maker “requires a lot of hours, sometimes 50-plus a week,” she said.

“But millennials don’t want to do that; they want to work 40. They’re not living to work, but working to live.”

Integrity tries to offer programs that will appeal to those with a strong work ethic.

“Some of them want to buy a house, but the housing market is insane, and they can’t afford to buy a house,” Steer said. “So, we latch on to those people and do all we can for them: recognition programs, points, gift cards, cash and more bonuses.”

Ultimately, said Hindle, manufacturers’ “organizational culture has to change for millennials, and I don’t think a lot of organizations are quick to do that.”

“We need to make manufacturing inviting and make it clear that we need technology in our business,” he added, noting that companies haven’t done a good enough job of selling the appeal of their companies and of manufacturing in general. “A lot of people don’t think it’s a sexy industry, so we have to do a better job of showing them. We need to support our workers more and show them that manufacturing is a heck of a career path.” CE

“Organizational culture has to change for millennials, and I don’t think a lot of organizations are quick to do that.”

—William Hindle, CEO, HindlePower

CEO MAGAZINE / SUMMER 2022 / 67

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P L A N E ADVANTAG E

WHO’S FLYING NOW? Enabling more team members to travel by private jet or charter makes sense— except when it doesn’t. BY DALE BUSS THE BOOM IN CORPORATE TRAVEL ON

private aircraft is taking on a new dimension: It’s not just for CEOs and board members any longer.

More executives and managers at lower levels now are getting on company planes or taking charters as a productivity measure. A growing number of companies also are using the prospect of private flying as a perk to lure executive or managerial talent.

Employers are scrambling to formulate policies to cover this new twist: Who gets to go private, and when?

“Larger aircraft for longer range are still mainly being used for board activity,” says John Owen, CEO of private-flight provider Airshare. “But we’re also seeing engagement teams using smaller aircraft. There’s a little more carte blanche for them to use private aircraft when they need them, versus the previous practice of having to travel [only] with someone who ranks above them.”

Doug Gollan sees this expansion as founder of Private Jet Car Comparisons, a buyer’s guide for time-share seats. “Companies, having bought 25 or 50 hours for a CEO, now are buying a couple hundred hours after the CEO sees how efficient it is, and allowing more of the management team to fly privately,” he says.

The practice has caught on in part because the productivity benefits of private aviation have become more apparent in the last couple of years. “Face-to-face meetings have become really important again,” says

Ramy Sidholm, head of PNC Aviation Finance. Meetings are easy on planes and insulated from distractions. Executives don’t get snarled in the vagaries of commercial travel or exposed to its riskier environs while Covid still rages.

The difficulties of airline travel have shunted more lower-level corporate travel to private aviation.

Even as commercial schedules have recovered, pilot shortages and other factors mean airlines have drastically culled routes to many of America’s secondary and tertiary cities.

“If you’re a large, multinational corporation and you’re putting a factory, a switching station or a data warehouse in a relatively inexpensive place like Tucson, Arizona, or Alliance, Texas, you stuck it there because it’s inexpensive to build and operate there,” says Greg Raiff, CEO of Private Jet Services.

“But it’s tough to get there by air.”

In fact, dangling private flights has become a recruiting tool. “With the Great Resignation, so many people are looking for perks, certainly at the senior level, and if a company has a vast footprint, it’s something many executives are considering more than ever,” says Joseph Smith, aviation director for the Cassel Salpeter investment-banking firm.

Essentially, more companies are pivoting to the sort of approach that Walmart has used for decades. America’s largest retailer

For a team performing due diligence or looking for a new acquisition, it can be very efficient to pack six to a dozen people on a private plane.”

—Joseph Smith, Cassel Salpeter

CEO MAGAZINE / SUMMER 2022 / 69

What people value about private aviation is that it’s a time machine. It gets there faster. It is in fact private, and it allows people to be more productive.”

—Greg Raiff, Private Jet Services

employs its fleet of a couple dozen private planes as a corporate livery service, dispatching lower-level executives and managers to string together visits to its 10,500 stores in 24 countries.

In the U.S., per Walmart’s business model, most stores are still in smaller places like Gardner, Kansas, and Easley, South Carolina.

But not every company is going in this direction. It’s understood, for instance, that General Motors hasn’t budged on its private-flight policies lately, though the automaker operates 118 facilities scattered across the United States.

Here are some ideas for dealing with this trend: Work it forward. The broadening of private air travel within an organization should cascade back into any planning for new aircraft or budgeting for time shares on planes, especially at a time of continued tight supplies of both planes for purchase and time-share seats.

“We work with new prospects to give them a total trip and cost analysis on an annual basis before they buy anything,” Owen says. “This will help them build a budget for each department or individual, which creates a little more structure around what they’re going to put into effect.”

Ponder the perk. CEOs and boards can use private flying as a lure or reward on an individual basis, or open up the practice to new categories, such as vice presidents. “Companies need to think about the development of their people, their business, whether they want to convey a change in culture that the best and brightest are going to be allowed to use these kinds of assets to do their job and to do it right and fast,” says David Mayer, partner with the Shackelford, Bowen, McKinley & Norton law firm.

Expect pleasant surprises. Private flying is increasingly cost competitive with airline flights these days, especially if the destination is a second- or third-tier city, the travel is frequent and regular, and a number of employees are involved.

“If you start seeing that the company has

70 / CHIEFEXECUTIVE.NET / SUMMER 2022

four or more employees traveling the exact same route two days a week, for instance, chances are you should be looking at some version of a corporate shuttle,” Raiff says.

Adds Smith, “You may not do it for one person unless it’s an emergency. But for a team performing due diligence or looking for a new acquisition, it can be very efficient to pack six to a dozen people on a private plane.”

Attune the bureaucracy. Many corporate travel departments planners have stayed away from private aviation “because it’s high stakes and highly visible; they don’t mess with it,” Raiff says. But with more of their traditional internal clientele now becoming eligible for private travel, this part of corporate operations may need to rise to the occasion.

“Find a consultant and get smart before you start spending money,” he says. “Learn about the private-aviation space. It’s here and it’s not going away.”

Beware tax snares. With expanded rosters of individual participants comes potential exposure of more travelers to the IRS. So aircraft-use policies should take into account the tax ramifications of business and personal transportation of permitted passengers on an employer-provided aircraft.

“It can involve the flight’s ‘fringe-benefit’ value to these new travelers unless they otherwise pay for the flight,” Mayer says.

Don’t over-glamorize. C-Suite and board members may still get to ride on bigger, faster and more expensive planes than underlings. But the differences in their on-board environs are mainly going to be a matter of a little more personal space and maybe a guaranteed bathroom on the plane, or the presence of a flight attendant.

It’s not like the top brass are receiving foot massages while a regional manager can only expect a bag of peanuts. “The wealthiest client we have only wants pizza and sour gummy worms on the plane; it’s not about the caviar,” Raiff says. “What people value about private aviation is that it’s a time machine. It gets there faster. It is, in fact, private, and it allows people to be more productive, and that goes for everyone.” CE

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LEADERS CHIEF EXECUTIVE NET WORK

L AST WOR D

AMANDA RICHARDSON \ CEO, CODERPAD

MY USER MANUAL

Creating boundaries for yourself gives your team permission to do the same—and might just help keep them on board.

AS MANY WORKPLACES continue to try to coax people back into offices and employees continue to resist, the time seems right for a serious chat about boundaries.

In 2021 alone, four million people quit their jobs. Every. Single. Month. And that trend has continued. In March 2022, 6.4 million people did the same. If quitting isn’t the ultimate expression of a boundary, then I don’t know what is. It’s a hard line that says: No more. We’re done. Thanks, but no thanks.

It’s not too late. If you’re a CEO or in a position of leadership, model your own boundaries for everyone and give them explicit permission to do the same. At CoderPad, I give everyone access to a “Working with Amanda” manual. It’s not long—10 bullets or so—but it is the “user guide” to working with me. It’s mainly so that people know my rhythms and never feel pressure to work when I do, as well as to underscore that my family is also very much my priority so my time with them is precious and protected.

Here are some of the highlights.

• I clearly outline when I’m with my kids

while thinking through work stuff.

I also think boundary-setting means establishing expectations and norms upfront so I do some of that too. For me, this includes elements like: • Ask forgiveness, not permission. Just

go already! I hire smart, capable people and I want them to have the room to run.

• I like simplicity and directness so please do not sit on bad news. Tell

everything like it is, push back when things don’t make sense and be candid. And expect the same of me.

• 1:1s with me are for employees, so come knowing what you want to get out of our time together. Agendas are good.

• Leaders do the right thing the right way. Everyone can be a leader.

• What you’re not doing is as important as what you are doing. I push on what

we’re not doing and regularly kill features and projects purely for focus reasons.

before and after school. I’ll respond to

Slack or email messages left between 5 and 8:30—morning and night—after starting the day or post-bedtime.

• My personal style is to Slack/email folks when I can. This may be outside

their working hours. I underscore that this is solely because of my kid schedule and there is no obligation or expectation to get back to me right away. And I mean it (that’s the most important point—don’t put this out to employees if you aren’t sincere. You’ll erode trust and look like a jerk).

Amanda Richardson is the CEO of CoderPad, a leading software platform for evaluating technical talent.

• If you can’t find me on Slack and you need me, text me. Why? Because when

I’m not in meetings, I’m a thinker who requires coffee. I’m often wandering around my kitchen—or neighborhood—to get it

72 / CHIEFEXECUTIVE.NET / SPRING 2022

• Track projects, update me and keep me looped in. I don’t need a ton of detail

every time but even a “Will do” or “ack” (for acknowledged) is enough to connect the dots.

Leadership is a complete privilege. Every day, every lucky CEO has an opportunity to set the tone for the organization. You get to help shape what that tone is—and you are shaping the tone, so you should be deliberate about it. Is it one where you, purely through your own example, take the time you need, prioritize the not-work stuff as much as the work, set clear expectations and ensure employees feel the freedom to do the same?

If the answer’s no, time to rethink the tone and vibe you’re putting out there. And maybe ask some questions to understand why everyone is quitting. CE

CH I

E IV

EXECUT F E

CEO100 mentor John Lundgren (former Chairman & CEO of Stanley Black & Decker) speaking with CEOs

NE

T WORK

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ChiefExecutiveNetwork.com/CEO100 CHIEFEXECUTIVE.NET / MAY/JUNE 2019 / 51

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