Q1 2020 Texas CEO Magazine by txceomag

Q1 2020

THE BUSINESS OF

TEXAS SPORTS TILMAN TELLS IT LIKE IT IS

No-Nonsense Business Lessons from the “Billion Dollar Buyer”

COWORKING WITH THE COWBOYS A Chat with Jerry Jones Jr.

CATCHING UP WITH MARK CUBAN 7 Questions for the Legend

THE RELAUNCH ISSUE

Wa r r e n i s c l e a n i n g u p Te x a s – a n d K E E P I N G I T S A F E.

Warren Paynes | Lead Residential Driver | Texas Disposal Systems, Inc.

Warren Paynes doesn’t just make Texas a cleaner place — he makes it a safer place. As a driver for Texas Disposal Systems, he knows that driving safe protects him, his route partner and everyone around them. He stays focused, performs inspections on his vehicle and puts his cell phone away. Warren takes his driver safety training seriously, and that’s why Texas Mutual is proud to support him and all the Texans who make the road their workplace. Texas Mutual is changing the way workers’ comp works for you. See Warren ON THE JOB at WorkSafeTexas.com/OnTheJob. © 2019 Texas Mutual Insurance Company

Letter from the OWNER

Great CEOs create great jobs. And meaningful work is something almost everyone craves. That’s why I have always felt that building a business is a noble cause. By creating and running great businesses, we satisfy our need to help others even as we provide for our own needs. This dynamic is, in large part, why we are excited to relaunch Texas CEO Magazine with the mission of helping CEOs across Texas grow their businesses and master their role as head of the organization. Whether that organization is public or private, for-profit or nonprofit, large or small, we all face similar challenges. We hope that Texas CEO Magazine can become your best and most trusted source for information on the CEO role and the state of business in Texas—and become a part of your personal CEO journey too. We intend to do this not only through ideas and insights in the magazine but through events, podcasts, and newsletters that allow you to access our content in whatever way is most convenient for you. Texas is one of the great states for sports, and that’s one reason we chose sports as the theme of our relaunch issue. Here, football is king: We’re the state of Friday Night Lights, epic college football rivalries, and the Dallas Cowboys (the world’s most valuable sports team, worth an estimated $5 billion). But that’s only part of the Texas sports story. Whether it’s our forthcoming third Major League Soccer team or our growing esports scene, Texans love sport of all kinds—and spend a lot of money on it. There’s also an even deeper connection between sport and business. Great coaches and great athletes hold lessons for every CEO, about leadership, strategy, endurance, and so much more. We will explore a few of those lessons throughout this issue.

WE WOULD LIKE TO INCLUDE YOU IN THE CONVERSATION. DON’T HESITATE TO REACH OUT

As Texas CEO Magazine moves forward, we would like to include you in the conversation. Don’t hesitate to reach out if you have story ideas, CEOs you think we should profile, or CEO issues you want us to cover. Get in touch anytime at info@texasceomagazine.com. Leading an organization is a challenging endeavor, and we look forward to being alongside you in your journey to becoming the most effective CEO possible.

IF YOU HAVE STORY IDEAS, CEOS YOU THINK WE SHOULD PROFILE, OR CEO ISSUES YOU WANT US TO COVER. TexasCEOMagazine.com

INSIDE Features Q1 2020 Publisher Lauren Daugherty Editor Aaron Hierholzer Operations Tamara Trammell Graphic Design Michele Rodriguez Contributors

LISTEN TO TILMAN!

A Conversation with Tilman Fertitta, Landry’s CEO, Houston Rockets Owner, and the “Billion Dollar Buyer”

LEADERSHIP LESSONS FROM A TEXAS RANGER

A Conversation with Hank Whitman, Former Chief of the Texas Rangers

ARE UPON US

A Conversation with Chris Del Conte, Athletics Director at the University of Texas

WHAT CEOS CAN LEARN FROM EXCEPTIONAL COACHES John Thornton, PhD

7 QUICK QUESTIONS A Lightning Round with the Legend

WANT TO WORK FROM COWBOYS HQ? HERE’S YOUR CHANCE.

A Conversation with Jerry Jones Jr.

CEO ACTIVISM

AND THE CLOAK OF SOCIAL RESPONSIBILITY

Bill Simon and Blaine McCormick, PhD

STARTUP SUCCESS: HOW MUCH SHOULD WE RAISE? Gordon Daugherty

To subscribe to the print or digital edition of Texas CEO Magazine, please visit our website: www.texasceomagazine.com and click subscribe.

WITH MARK CUBAN

THE EYES OF TEXAS

Texas CEO Magazine Q1 2020

Wade H. Allen Akira Asada, PhD Craig Casselberry Ed Curtis Gordon Daugherty Tasha Eurich, PhD J. Michael Godfrey, PhD Lisa Jaster Blaine McCormick, PhD Gary Oden, PhD Timothy J. Quigley, PhD Bill Simon Tony Streeter John Thornton, PhD Kirk Wakefield, PhD

POSTMASTER Please send address changes to: The American CEO, LLC dba Texas CEO Magazine 8012 Bee Caves Road Austin, TX 78746 © 2019 The American CEO, LLC dba Texas CEO Magazine. All rights reserved. The Content in this issue may not be reproduced, distributed, or otherwise used without the prior written consent of the American CEO, LLC. The various contributors own their respective Content that is published in this magazine. The beliefs, content, comments, opinions, statements and viewpoints (collectively, the “Content”) published in this issue are those of the respective contributors and we do not necessarily agree, endorse, support or verify such Content. The Content presented in this issue is for informational purposes only and is not advice of any kind. Your use of the Content is at your own risk. The Content is provided on an “AS IS” basis, without any warranties of any kind, either express or implied. Neither The American CEO, LLC nor any person associated with us makes any warranty or representation with respect to the completeness, reliability, quality, or accuracy of the Content. Without limiting the foregoing, The American CEO, LLC does not represent or warrant that the Content will be accurate, reliable, error-free, that errors will be corrected, or that the Content will otherwise meet your needs or expectations. The American CEO, LLC disclaims all warranties of any kind, whether express or implied, statutory or otherwise, including but not limited to any warranties of merchantability, non-infringement and fitness for particular purpose. The foregoing does not affect any warranties which cannot be excluded or limited under applicable law.

INSIDE Departments 6 [MANAGEMENT]

OUTSIDER CEOS GENERATE MORE EXTREME RESULTS Timothy J. Quigley, PhD

THE BODYGUARD

A Conversation with Mike Ramirez, Personal Protection Expert

29 [ENTREPRENEURSHIP]

THESE ENTREPRENEURS ARE MAKING SAN ANTONIO SAFER Showcasing Safety Innovation in Alamo City

41 [PERFORMANCE]

DESIGNING AN EFFECTIVE SALES PROMOTION: LESSONS FROM TEAM SPORTS MARKETING Kirk Wakefield, PhD

43 [SELF-AWARENESS]

THE NEGLECTED KEY TO STRESS MANAGEMENT J. Michael Godfrey, PhD

47 [SELF-AWARENESS]

SELF-AWARENESS AND THE CEO Tasha Eurich, PhD

WHAT’S MY CMO TALKING ABOUT? Tony Streeter

THE SPORT OF RELOCATION Ed Curtis

LEGISLATIVE FOOTBALL, TEXAS-STYLE

Craig Casselberry

BUILDING A BRIGHTER FUTURE FOR CENTRAL TEXAS KIDS

CATCHING THE PERFECT PASS

A Conversation with S. C. Gwynne, Best-Selling Author of The Perfect Pass

80 [CULTURE]

IS YOUR EMPLOYEE WELLNESS PROGRAM WORKING? Gary Oden, PhD

A Conversation with Richard Tagle, CEO of the Andy Roddick Foundation

84 [PERFORMANCE]

IN SOCIAL MEDIA MARKETING— WHICH IS MORE EFFECTIVE?

WHAT HAS ANDY RODDICK LEARNED

UNITY VS. UNIQUENESS Akira Asada, PhD

SINCE STARTING HIS FOUNDATION?

90 [LEADERSHIP]

3 KEYS TO MILITARY AND CORPORATE SUCCESS

BUILDING THE ESPORTS SKYSCRAPER

A Conversation with Jason Lake, Founder and CEO of Complexity Gaming

72 [RESOURCES]

MISSION, PRIDE, PEOPLE: Lisa Jaster

BRINGING A RENEGADE SPIRIT TO XFL 2.0

CRAFTING THE BLUEPRINT

A Conversation with Grady Raskin, President of the Dallas Renegades

Wade H. Allen

THE BUSINESS OF COLLEGE ATHLETICS

A Conversation with Judy MacLeod, Commissioner of Conference USA

FOR A SUCCESSFUL EXECUTIVE SEARCH

TICKET TO THE LIMIT

A Conversation with Randy Cohen, Founder and CEO of TicketCity

TexasCEOMagazine.com

[MANAGEMENT]

CEO SUCCESSION RESEARCH

OUTSIDER CEOS

GENERATE MORE EXTREME RESULTS Timothy J. Quigley, PhD When a firm replaces a CEO, everyone involved typically goes through a period of high stress. The board faces a highly consequential decision, the organization faces uncertainty, and the newly appointed CEO faces a fresh challenge—all under the watchful eye of shareholders and the market. One of the most frequently studied factors in CEO succession is whether the new CEO is promoted from within or appointed from without. After dozens of attempts, researchers have come up with little conclusive evidence that either of these profiles, the insider or the outsider, typically outperforms the other. Absent in much of the literature is the acknowledgment that each type of candidate has its pros and cons. While insiders are familiar with the firm’s current state and resources, they are also more likely to preserve the status quo. Outsiders, on the other hand, bring fresh blood to the top of the organization and are usually more willing to rock the boat, but they also may have blind spots and incorrect assumptions about the firm, which can lead to errors.1 Nevertheless, CEO succession remains a worthy subject of study, not least because of the “CEO effect”—the measurable effect a particular CEO has on performance.2 We know that, generally, the CEO accounts for around 25 percent of variance in a firm’s performance. That may not be as large a number as you expect, but it is clearly significant enough to warrant the board’s careful consideration of CEO candidates. We also know that, while most CEO appointments are inconsequential (with no major effect on firm performance upward or downward), a minority are quite consequential—either negatively or positively. 6

Texas CEO Magazine Q1 2020

Rather than revisit the issue of whether insider or outsider candidates are “better,” I, along with my coauthors Donald Hambrick, Vilmos Misangyi, and Alessandra Rizzi, recently set out to give the issue of insider-outsider CEO succession a new frame: that of risk-taking (see “CEO Selection as RiskTaking,” Strategic Management Journal). Instead of asking the usual question of which type of CEO delivers better results, we hypothesized that outsider CEOs were more likely to deliver more extreme results, whether positive or negative, as compared to the more neutral results delivered by an insider CEO. That meant that boards, making the call between an insider or outsider candidate, actually faced a risk-taking problem. Would they prefer to bet on an outsider in the hopes of outsize performance, with the concomitant risk of large losses, or play it safer with an internal candidate?

Testing Our Prediction To test our expectation that outsider CEOs delivered more variable performance, we examined 1,027 CEO successions of small, midsize, and large public companies in the United States. Of these successors, 43 percent were outsiders. We wanted to see how much the firm’s performance (measured, like most succession studies, by return on assets) changed relative to its previous performance and to industry-wide performance. Multiple analyses revealed that our prediction was correct. The insider CEOs were generally safer bets, while outsider CEOs were risker, producing either higher or lower results than inside hires overall. The figure below shows the post-succession performance-change scores for the full sample of incoming

CEOs; as you can see, the outsiders’ scores are distributed more widely across the spectrum, signifying a broader range of outcomes, while the insiders tend to cluster toward the middle.

Distributions of performance-change scores for insider and outsider successors

To prevent the possibility of other factors, such as recent performance, skewing this comparison, we performed several other analyses. One involved finding “matched pairs” of similar firms in the same industry who hired outsider or insider CEOs in the same time period. For these “lookalike” comparison firms, we found the same results: there was more variance (up or down) when the successor was hired from outside. We also used another form of matching that compared firms with similar pre-succession probabilities of hiring an outsider CEO against each other. Again we found the same trend: When these firms chose an insider CEO, there was a greater chance of neutral performance changes. If they chose an outsider CEO, on the other hand, variance in performance was more likely to be more extreme in either direction.

Why Are Outsider CEOs a Riskier Choice? There are several reasons why outsider CEOs tend to generate more extreme results—and thus represent the riskier choice for a board of directors. First, outside appointments are somewhat more common when the company is in distress and needs a fresh perspective, while inside promotions are more common when company performance is stable and healthy. Clearly, if the company is already unstable, extreme outcomes are more likely. (Our analysis took this into account and found that outsiders are still riskier, showing that this is not the sole factor.) A second and related cause is the fact that outside CEOs may be less constrained by their history with the firm and more likely to take bigger and bolder action than someone promoted from within, thereby causing more extreme outcomes, up or down.3 Third, there is always “information asymmetry” when a board seeks to hire an outside successor to the CEO. In other words, while the board is likely to be familiar with an internal candidate currently serving as COO or president within the firm, they will likely know very little about a candidate who is new to the company. Outsider CEO candidates also know much more about themselves than the board knows about them—

and the candidate has an incentive to misrepresent or inflate their capabilities during the hiring process. Because of this information differential, the board may make errors in judgment regarding the successor. When a board chooses an outsider, they often use the logic that they want a world-class executive to lead the company—and what are the chances that that executive is currently employed there? But in the process, they may overestimate the outside candidate’s capabilities, cultural fit, and other factors, leading to lower-than-expected performance. Or they may miss a significantly beneficial characteristic of the CEO, leading to unexpectedly high performance. When we combine these factors—considering that outsiders are more likely to take the helm in times of crisis, more likely to make sweeping, decisive moves, and may not be as capable (or may be more capable) than the board expected—it’s not surprising that a CEO plucked from outside the company is more likely to cause larger swings in firm performance.

The Takeaway Understanding that outsider CEOs are more likely to deliver extreme results does not necessarily make the board’s job of overseeing succession any easier. On the other hand, it can help if boards consider the succession decision and source of the new CEO in the frame of risktaking, much like any other important strategic decision. Understanding this dynamic, the board can consider follow-on questions such as: “What is our tolerance for surprises right now, whether welcome or unwelcome?” “Is the company in a state that we need to take the relative risk of an outsider?” and “What attributes, capabilities, and experiences may we be overlooking in this outsider candidate?” And with internal candidates: “Are there impediments the board can remove to ensure they are able to see and take appropriate risks?” Because the CEO role is so unique, it will remain difficult to predict how any one candidate will fare. But, viewing the insider-outsider choice through the frame of risk-taking is one way to empower the board of directors to make more informed and confident succession decisions. Timothy J. Quigley is an associate professor at the University of Georgia’s Terry College of Business. His research is focused on CEOs, top executives, and managerial discretion. More specifically, Dr. Quigley’s interests lie in understanding how and when CEOs and other top executives impact organizational outcomes, the causes and outcomes of CEO succession, and how these have changed over the course of time. Dr. Quigley received his PhD in Strategic Management from Penn State University and is on the editorial board of Strategic Management Journal. 1 A. W. Gouldner, Patterns of Industrial Bureaucracy (Glencoe, IL: Free Press, 1954); R. H. Guest, “Managerial Succession in Complex Organizations,” American Journal of Sociology, 68(1), 47–54 (1962); W. Shen & A. A. Cannella, “Revisiting the Performance Consequences of CEO Succession,” Academy of Management Journal, 45(4), 717–733 (2002). 2 Timothy J. Quigley, Donald C. Hambrick, Vilmos F. Misangyi, and G. Alessandra Rizzi, “CEO Selection as Risk-Taking,” Strategic Management Journal, 40, 1453–1470 (2019).

D. L. Helmich and W. B. Brown, “Successor Type and Organizational Change in Corporate Enterprise,” Administrative Science Quarterly, 17(3), 371–381 (1972); A. Karaevli and E. J. Zajac, “When Do Outsider CEOs Generate Strategic Change?,” Journal of Management Studies, 50(7), 1267–1294 (2013).

TexasCEOMagazine.com

Leadership Lessons Tintype of Chief Hank Whitman by Brigham and Jenna Mayfield

FROM A TEXAS RANGER Former Texas Rangers chief Hank Whitman on his transition from law

enforcement to head of the Texas Department of Family and Protective Services In his long career, Hank Whitman not only spent eleven years with the Texas Rangers, rising to become chief of the agency. He also, most recently, held what he describes as an even tougher job: overseeing the Texas Department of Family and Protective Services. When Whitman retired from DFPS last June, Governor Greg Abbott recognized his service, saying he’d “helped create a safer future for Texas.” We spoke with Whitman about his time as a Ranger, the leadership challenges he encountered at DFPS, and the fulfillment of his role in, as he describes it, protecting the unprotected.

Feature Did you know when you were small that you wanted to be a Texas Ranger? No, I didn’t. I’ll tell you that I didn’t have a real long career with the Texas Rangers. I only did 11 years. I don’t think anybody’s ever made it to chief that quick, but things happen quickly within our division. I was a police officer in Corpus Christi for ten years before I came to DPS, where I was later promoted into the Criminal Intelligence Division. I completed my graduate degree and was promoted into the Rangers in 2001. Before the governor asked me to be the commissioner of the Texas Department of Family and Protective Services, I thought being the chief of the Texas Rangers would be the pinnacle of my career. But this whole new family [DFPS] that I took on for the last three years really captured my heart. It’s two different worlds. The Rangers are completely apolitical. They do a lot of public corruption work and investigate mostly high felony crimes. Public corruption cases are a huge part of their daily work and are often referred to the Rangers by a district attorney or a law enforcement agency head. Those cases are sensitive and sometimes controversial and, understandably, should not be investigated by the local law enforcement agency. On any given month, we’re also working 40 to 60 homicides around the state. But this latest job [with DFPS], I went from overseeing a $22 million Ranger budget and a $20 million border budget to an almost $3 billion budget. A large increase in personnel too. DFPS has 12,250 employees while the Rangers now have 150. There really aren’t that many Rangers. When I came on to the Rangers, there were a little over 100. Wow. That’s not many for a big state like Texas. That is true! But I had to learn how to deal with politics in the new job at DFPS. Something that I didn’t have to do in my previous position. Lawmakers would either be hugging each other from both sides of the aisle or arguing. It was tough and that is a big understatement. I met with lawmakers on a regular basis. A lot of them were fantastic to work with. Many I consider personal friends. Obviously, I didn’t see eye to eye with all of them, and likewise they didn’t with me at times. But I don’t think I left that capitol with any enemies. We all respected each other. They too have a very tough job. It was difficult to see our caseworkers get pounded on a daily basis, when they’re doing the best job they can with very limited resources and funding. If a legislator would start yelling at me in a hearing, I would think, “Well, I’m going to yell back too. I may be an appointed commissioner but I’m a citizen of this state too.” Fortunately, I had nothing to lose—I didn’t apply for the job. So, I thought, “Well, I’m going to yell back. Fire me! I don’t care. I’ll go home right now.” I was mindful of not crossing the line too far and knew I had to maintain a professional demeanor for my employees. It wasn’t about me. It was about them and to

this day, I say they have the hardest, most thankless job in government service. I’m proud to have been their leader for those three years. They have saved so many children and elderly people from abuse, neglect, and exploitation. What were some of the first challenges you faced when you took on the commissioner job at DFPS? One of the things I asked the governor was, “Will you allow me to build my own executive team?” He said, “Absolutely.” There was no influence from above. There was no “Hey, you need to do this or that or consider this person or that person.” We were allowed to develop sound policy that was proven, develop an effective, dedicated executive team, and challenge the status quo. The generals underneath the executives were a different challenge. About half of them were engaged, and the other half were like, “We’ve seen cowboys ride in here, but eventually they ride off into the sunset. We’ll watch this guy ride off into the sunset like the rest.” That attitude did not sit good with me at all. When I called all the field leaders in for a face-to-face meeting, I could tell which ones despised me even being there. And I understand that. Here’s a guy coming into their world who doesn’t even have an inkling of knowledge about child welfare or adult protection services. I respected that wholeheartedly. I’m not a caseworker. I’m not a social worker. I was a cop and I didn’t want them to think I was arrogant and not respectful of what they do. But I do know public administration and I have a solid understanding of human behavior. One of the things I noticed was that there was a lot of complacency in upper and middle management—middle management being the hub of a successful agency. They weren’t the ones getting yelled at by the lawmakers, so they saw no need for change. How did you handle that situation? I said, “Accountability is big to me, and no more are we going to blame the caseworkers when you, as their supervisors, oversee the cases yourself.” We’re supposed to be leaders and mentors, not just people filling leadership roles. Two different things. Boy, did that change the agency immediately. I picked up six new enthusiastic regional directors, and the other six would not return. Those six great new leaders were like, “Put me in, coach. I’ve been sitting on the bench waiting for this.” Some people still saw me as an outsider, but I wasn’t the enemy. “We’re going to be bold,” I told them. No more status quo. “We’re going to change, and we are going to change big.” Surprisingly, the changes we made proved to turn the ship in a big way. DFPS is like a huge aircraft carrier—you can’t turn it on a dime. But it turned, and it turned in the right direction. It still needs lots of improvements, as any agency does, but it turned for the better because of its dedicated employees and a new direction.

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Tintype of Chief Hank Whitman and Mike Ramirez by Brigham and Jenna Mayfield. Read Ramirez’s story starting on page 14.

I would make each of my executive team members take over in each weekly executive meeting. I wanted to watch how they made decisions. In this manner, I was able to build a succession plan and they got to know how I operate. One thing they noticed was that I didn’t talk a lot. I listened. A lot of CEOs need to do more of that, especially when they have good experts. Sometimes they would even forget I was sitting there. Did it help that your leaders at DFPS were presumably drawn to the work of helping these kids and families? Yes. We were all affected by that. On any given day, the state of Texas has 30,000 kids in our conservatorship. Thirty thousand. It was horrifying for me to even see 10

Texas CEO Magazine Q1 2020

those numbers. It was also tough and heartbreaking to see kids who age out of foster care without being adopted. Our biggest push was to get them into college or vocational school. Every foster child in the state of Texas can go to any state college or vocational school tuition free. No school loans to worry about. Unfortunately, fewer than 7 percent take advantage of it.

It made my job as chief of the Rangers seem like a cakewalk. The normal life expectancy in the position of commissioner is 18 months, so I surpassed that, with three years and two grueling legislative sessions. There was one commissioner who completed four years, but it’s not a position people hold for a long time.

Wow. We’ve raised that number now. They often don’t take advantage of it because they’re mad and don’t trust the system. We as a community, not just DFPS, weren’t doing a good job of mentoring those kids. Because that’s all they need—someone to be there for them. These kids have never lived a normal life, and we want them to have that life of normalcy.

What did you tell your successor on your way out? What did you learn? As I told the governor’s staff when I decided to retire, “I want the next person to do ten times better than what we did.” And they’re going to want the next person to do that. I’m confident that will happen. When I retired, I got a lot of good feedback on the changes we

Feature implemented. People told me, “It worked. We didn’t like it. But we understand now that it worked.” What were some of those changes you made? One thing my crew learned quickly was that I hold people accountable. I take notes. I don’t forget. When I first came in, there was a lot of what I call “slow rolling.” Every project was estimated to take six months or a year. “Really?” I’d say, “I think that’ll take three weeks. I’ll give y’all one month.” Well, hell, they’d have it done in two weeks. I also noticed in executive meetings that we had these employees lined up all around the walls. They were “subjectmatter experts.” They attended the executive meetings in case one of the executives needed them. As far as I recall, they never talked at all. After the first couple of meetings, I asked if they really needed to be there. I found out they were doing it that way because they’d always done it that way. And they all dreaded it. So, I told them to go back to work and we’d call them if needed. It saved everyone time, and for us productivity was critical. Of course, we did call them in when we needed to hear from them. Those subject-matter experts are your successors. You’re mentoring them to move them up. There’s a saying I learned when I went through Police Staff and Command School many years ago: “Either move them up or manage them out.” At first, I found that to be very distasteful, but the goals and objectives of a department like DFPS must be met or children and elderly suffer or possibly die. If they’re good, you promote them and continue to mentor them. And if they’re not making it after all attempts are made to make them good, productive employees, then you have to manage them out. How did you know who to manage up and who to manage out? One thing was, I did a lot of ride-alongs. I’d say, “Okay team, I’m heading to the field to do some ride-alongs with the caseworkers.”

“Well, Commissioner, where are you going?” people would ask. I wouldn’t tell them. Because if I did, they might want to call the field: “Hey, Commissioner’s out. Make sure you clean up the place.” The first time I did it, I did tell them I was going to San Antonio. Well, hell, it was like a reception when I got there. Everything but the flowers. But those ride-alongs were important. They let the field know that I wasn’t the Wizard of Oz in a big tall white building behind a curtain. They knew even the top guy was willing to come out and work with them from time to time. I encouraged my executives to do ridealongs too. I made it part of their annual evaluation. I told them they were required to ride along twice a year. Each one of them got a profound appreciation for what a caseworker does on a daily basis. I recalled that my CFO had never been on a ride-along. After completing his first one he told me, “Now I know why they keep asking for the funding they need. I get it.” We did a lot of things right, and sometimes we didn’t. When we fell through, we’d work with the Office of Consumer Affairs to look at what went wrong and how not to make the same mistake again. When we saw that a case wasn’t handled correctly, I’d look at that person’s annual evaluation. Sometimes it would say they were great, and then I’d know the evaluation wasn’t being used correctly. So I’d have that talk with the supervisor and let them know how critical the annual evaluation is to their success as an effective leader. Eventually they understood that everybody’s accountable, including me. I take full responsibility for everything they do. But everybody’s going to be accountable for themselves too. That was a whole different concept to them. If I’m going to fight for you, I told them, then I have to know you will take care of our children and vulnerable adults. And I didn’t run the Ranger division any different when I was chief there.

What were some differences between leading the Rangers and leading the DFPS? With the Rangers, I had seven commanders, and they were proven leaders of their own command. But the biggest difference is the nature of the work. At the Rangers, we lived in a very intense investigative world. Most of the cases we dealt with were homicides. But we didn’t have to worry about keeping kids safe, healthy, and away from harm. That’s a tougher job! So there’s a lot more urgency at DFPS. On any given day—seven days a week, 365 days a year—our 7,000 caseworkers are having to lay eyes on children within 24 hours. It’s not like the Rangers, where we can start working once we get there— unless there’s a shootout, of course. It’s two different levels of stress. The Rangers live in a stressful world too, of course. Rangers work independently. They do not have an assigned partner. You can only imagine the Ranger who walked into the scene at the church in Sutherland Springs [site of the 2017 mass shooting in Wilson County that killed 26 and wounded 20 more]. One of the first ones who walked in there goes, “I’m going to need a lot of help.” Even those guys had difficulties seeing that gruesome scene because of the children and the elderly who were shot and killed in there. Just because you’re wearing a Ranger badge, it doesn’t mean that all of a sudden you have no emotions. You do, and they too go through PTSD like other first responders. Every police officer does, and so do my caseworkers. I bet. They suffer from an extreme amount of PTSD. A lot of them mask it, but that’s one of the things we implemented: a peer group to keep an eye on those who lose a child on their case. That’s almost a career killer for them, not in that they’re going to be dismissed necessarily. More often they just say, “I quit. This baby just died under my care and case supervision.” Well, true in a sense, but they were usually doing TexasCEOMagazine.com

everything they could. Society forgets that caseworkers are human and they, like police officers, cannot predict what a person will do with a child despite having followed all the directions of the court and despite the services they provide the parent or parents. When critical incidents of that magnitude happen, I would personally call them: “Are you okay? You doing all right?” It helps. But I also knew when it was time to get them mental health services. These houses they’re going into, they’re not mansions. You’re looking at some very difficult situations. They’re going into homes I wouldn’t go into as a cop unless I had backup with me. And they’re doing it with no weapon. They often have no sense of fear. They just do it. They get called all kinds of names. At times assaulted, threatened, and stalked. It’s awful. It’s the hardest job in government service without a doubt. Some of these caseworkers, they’ll be sitting in a client’s home, have a roach fall on their shirt or watch a rat run by, and they’ll just go back to talking to mom or dad. It’s like, “They don’t scare me.” I’m sure some people would start and then immediately say, “This isn’t for me.” My predecessor, Judge [John] Specia, was instrumental in redeveloping the academy’s training process for new incoming caseworkers. He started putting trainees in the field right off the bat. Instead of doing three months in the classroom before they went out to the field, they now go two weeks in the classroom, one week in the field, three weeks in the classroom, and so on. I wish the colleges that teach social work would start doing that. Let them intern with us, so that they can get that fear factor out of the way. Now, if we’re going to lose them, we’re going to lose them real quick, and then we don’t spend tens of thousands of dollars training them just to have them walk out. I also overhauled how we promote supervisors and that helped with turnover too. Before, it was the fellow supervisors 12

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and program directors who selected upcoming supervisors. I brought everyone in and had them explain the process to me. And I said to them: “Truly, it’s the ‘good ole boys’ system, right?” They all looked at me like, “Well, yeah.” I knew we needed to stop that immediately. Supervisors were picking their favorite person, and it wasn’t always a person who had leadership qualities. The other unit members saw that—and it was destructive to the entire unit. I called all my training people in and said, “I want your team to develop a 120-question test for every role of supervision in this department, with 1,000 questions in a computer bank. I want it to cover everything from leadership to the job itself to the family code.” For those who desired to become a supervisor, they were required to take the exam and make at least an 80 percent score. To my surprise, we had a one-in-three failure rate. Wow! That would have been a third of personnel who were not prepared to lead. Second, I told them that we were going to put together a promotion board. The candidates would be required to answer a series of critical questions pertaining to their field of supervision. The board would not consist of anyone they would directly work for. Their faces were turning white listening to this. I said, “There’s going to be a proctor in the room, too. They’re going to take the score sheets from the interviewers and put them in a sealed envelope.” I didn’t want people looking at each other during the process or knowing how the other evaluators were scoring. I wanted it to be a fair process. When we implemented that, my supervisor turnover went from 28 percent to 7 percent. That 7 percent was due to normal retirement turnover. Caseworkers in the field were happy because they knew their supervisors were now competent and went through a fair process—it wasn’t just the ‘good ole boys’ system anymore. Of course, that didn’t go over real well

with the existing supervisors—“Oh, God, I have to take this test,” they said. But I once sat in a room with 700 of them at a conference, and I said, “Can I see a show of hands of how many of you got promoted under the new system?” Threequarters of them raised their hand. Not one out of them in that category have I ever had to demote or dismiss. Where did you learn to hire and train like that? DPS. That’s the way we did it in DPS. It’s a fair system. If your middle management isn’t working, that’s like the engine of a huge truck freezing up. That’s what was happening. The previous promotion process was gumming things up, and our engine was running very sluggish. I take being promoted very seriously. On the last Tuesday of every third month, every person who is a newly promoted supervisor comes to Austin with his or her family and attends a formal promotion ceremony. Our promotion ceremony is broadcast throughout the state on our intranet, so all employees can watch from their phone or office computer. We’d have a guest speaker and the new supervisors would take pictures with their families, friends, and coworkers. They went home with a feeling of, “I’ve accomplished something. I’m a leader.” After we implemented that, morale just kept going straight up. Then I implemented the commissioner’s award of excellence. It’s the highest award that can be bestowed on an employee or outside stakeholder. In the three years I was there, I awarded 70. The award ceremony was televised, and again, we’d have the recipient up with their whole family. I’d invite them up to see my office and visit with the executive team. Their kids really enjoyed it as well. These caseworkers save lives daily. It didn’t cost anything to recognize them and bring their morale up. An employee wants to be told when they’re doing good. Pay is good, but that recognition is more important. Every CEO needs to know that.

S T

Each week on Ask a CEO, veteran tech CEO Joel Trammell explores a challenge of one of the least understood jobs in business—that of the CEO. Some topics we’ve covered: • TAKING A COMPANY PUBLIC • MASTERING WORK-LIFE BALANCE • THE DIFFERENCE BETWEEN MANAGEMENT AND LEADERSHIP • BEST PRACTICES FOR COMPENSATION

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BODYGUARD In 2020, personal and diplomatic security protection isn’t just for heads of state. Increasingly, businesspeople are enlisting the help and services of professionals like Mike Ramirez, who provide personal and executive security protection in dangerous situations and places, whether at a conference abroad or in a warzone. We asked Ramirez to tell us about his job—and what business leaders should know about it.

How did you get into the profession of personal protection? I grew up about an hour southeast of San Antonio in a small town called Kenedy, Texas. From a young age I always knew that I wanted to be a Marine. In my senior year of high school, I contacted a recruiter who then came to talk to me about the Marine Corps at my parents’ house. After about an hour of the recruiter telling me all about what the Marine Corps had to offer and all the places I would get to travel to, I signed my contract, and the path to where I am today began. I spent the next four years as an Infantry Marine and a Security Force Marine. In the mid-1990s, I got my first taste of military personal protection while on a special duty assignment providing armed protection for a high-ranking officer. At that time, it wasn’t called “personal protection”— you were just a military enlisted man assigned to an officer because their rank warranted protection by a Marine.

After my first year in administrative segregation, I took another position as a correctional field officer. As a CFO, you ride on horseback every day and take offenders to work out in the fields. The penitentiary I worked at sat on a large amount of land, so the prison used the offenders to do the labor and farm the land. We would take a squad of anywhere from 25 to 50 offenders per field officer and have them plant seeds and harvest crops.

After four years in the Marine Corps, I came back to Texas and went to work for the Texas Department of Corrections. I worked in a maximum-security state penitentiary in my hometown of Kenedy. My first year, I worked in administrative segregation, where offenders are locked up 23 hours a day because of hostile behavior or because they had threats on their lives. You’re worried about your own personal protection at that point. Needless to say, it was not a very cordial environment, but I learned a lot in my first year at the penitentiary. For one, I learned how to read people very quickly and that no two situations are ever the same. Nothing is what it appears to be when you walk into a cell block.

That sounds a little more pleasant than administrative segregation. It was! It was one of the most rewarding jobs and if I ever win the Lotto, I would go back and do it for free. Getting to ride horses all day and work with dogs was a very rewarding experience.

Texas CEO Magazine Q1 2020

Later, I was promoted to K-9 sergeant. My job was primarily breeding, raising, and training dogs to track humans. If an offender tried to escape from our prison or any other prison, we would deploy our human-tracking dogs to track and capture them. We also assisted local and state police with our K-9s. If they conducted a traffic stop and someone bailed on them, they would call us, and we’d take our dogs out and assist in capturing the suspect.

Around 2003, the war in Afghanistan had been going for a couple of years and the war in Iraq had started, I was still working for the penitentiary. I kept in touch with guys I had been in the Marines with. When I shared with them that I was working at a penitentiary, they would say, “Man, that sounds like a dangerous job for not very much

money.” They went on to share with me about private military contracting. They informed me that the US government was paying former military guys, like myself, good money for the skills the Marine Corps taught us.

our weapons when out in public. It proved to work well. This method is still used to this day in many different countries as a way of transporting diplomats around cities in combat zones and hostile areas in a low-profile status.

I thought, “Well, I’ll go give it a year, save that money, and come back and decide what I want to do next.” I went through the extreme vetting and grueling selection process, then headed to Iraq. Before I could blink, I’d been there 10 years. My first clients that I provided personal protection for were US civilian contractors who were rebuilding the infrastructure, water-treatment facilities, and power plants that had been damaged in the bombings during the beginning of the Iraq War. From there I went on to providing diplomatic protection for US ambassadors, secretaries of state, diplomats, senators, congresspeople, and many other government officials traveling in, to, and around Iraq.

During that time, I was recruited and switched gears from diplomatic protection to intelligence and counterintelligence work. This work took me in a whole new direction. After about 10 years of doing private military contracts, both diplomatic protection and intelligence, I was ready to slow down and returned home to the US.

We also provided 24/7 protection for the US ambassador assigned out of the embassy in Iraq. We conducted the advance surveys and risk assessments, coordinated the routes we’d be taking, put together evacuation and emergency plans should we come under attack, which we did on many occasions. When the war in Iraq kicked off, there became a need for former military guys like me with special skills to provide protection for designated government officials because our military was doing the offensive missions, tracking down terrorists and fighting the war on terror. Looking for the bad guys wasn’t our job. Our job was to protect those who we were assigned to. We weren’t looking for an engagement. Our job was to get the person we were assigned to protect to their meetings safely, keep them out of harm’s way and return them back to a secure location. When it comes to diplomatic protection, we figured out over time that in some cases, depending on the mission and the location we would be traveling to, that it was better to have the diplomat travel without the four or five black Suburbans and two helicopters—“little birds”—flying above. It’s kind of announcing the target. Yes, you could say that. In the beginning, the thought process was to overwhelm our attackers with our physical presence, sirens and lights and men with superior firepower. With time, we realized that wasn’t enough. The would-be attackers were getting braver and their tactics were changing. They started identifying our Suburban motorcades and using IEDs [improvised explosive devices] on the sides of the roads or in dead animals. We had to adjust our tactics and ways of moving our clients around the country. The decision was made at the higher level that a new method of transporting clients needed to be developed. My team and I were tasked with that adjustment. We implemented using vehicles commonly used in that area so we would blend in more. We started dressing like the locals and concealing 16

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I was fortunate enough to bring those security and personal protection and intelligence skill sets back with me from all my years in combat zones and hostile areas and put them to use in corporate America. In this day and age, the need for personal protection here in America and abroad is in much greater demand than when I started in this business. Many more private families, business professionals, and company leaders are seeking professional protection services. It’s very rewarding work, whether it’s a businessperson or a family, making sure they can go about their business and not have to be concerned for their security. What causes somebody to say, “I need to hire professional protection”? There are many reasons for an individual or a company to decide that security and personal protection is needed. A lot of times the requests come if there’s been a direct threat against themselves or to their business. If a company’s executives must travel, they may want protection, especially if it’s a speech or event in a public forum and there may be protesters or activists who could potentially cause them harm. It could even be simply so the protected person does not have to travel alone. Other times, there is no specific threat, but if they’re traveling for example in Mexico or South America, danger can arise at any time. Kidnapping for ransom and maintaining a positive public image are a big concern in those areas. It could even be something like the client wanting some private time or to avoid business pitches while traveling abroad. If someone recognizes him or her and starts doing a pitch or asking to borrow money, it’s easier for me to be there and step in to handle the situation. Beforehand, we would have already established our code words and signals, so they can signal that they want out of the situation and I can intervene. What makes a good client? Someone who’s open-minded and willing to listen to our recommendations instead of putting themselves in bad situations. That happens in some industries more than others, especially when you compare people in the business world to those in the entertainment world. When people are willing to listen to our advice and expertise, it allows us to do a better job for the client.

When you get a new client, how do you assess their needs? We start by scheduling a conference call or a sit-down, where I ask questions so I can have a better understanding of what the person’s needs and concerns are: What is the purpose for the travel? Is this business or personal? Who do you plan to meet? How long are you going to be there? Are there known threats against you? Why are you requesting security? Are you being proactive, just wanting to travel safely, or has something recently happened? Once I get the information, I can start devising a security plan specific to their needs and begin reaching out to my network of security professionals. I have a large network in this industry that I utilize for real-time intelligence and security information in just about any part of the world. If it is multiple people traveling that require security, I will put together a team of security professionals to travel with the clients. If requested or warranted, I will send someone ahead of time to conduct an advance of the area and places that we will be taking the client to. One person cannot provide adequate security for multiple people. Is there anywhere people don’t use security where you think they should? Many Americans go to Mexico and think, “Oh, Mexico is okay.” Honestly, Mexico is one of the most dangerous countries in the world today. People just don’t realize it. Americans can be targeted for kidnapping, extortion, or just plain robbery. The cartels have been jockeying for control over different parts of Mexico for years and it has caused so much turmoil. You can be at the wrong place at the wrong time and get caught up in a bad situation with the continuous fighting among the cartels. If they’re traveling in Mexico or anywhere in Central and South America, I recommend that CEOs and companies take the time and spend the money to ensure the security and safety of their personnel. It’s much better to have a security plan and team in place and not need it than to need it and not have it. The cost will be a lot less than it would be to pay a ransom. A lot of times it comes down to dollars, but when it’s time to save money, it shouldn’t come from your security. Businesspeople shouldn’t have to be concerned with their security and safety when traveling. They should be focusing on the business and representing their company. Do you see yourself doing this for 20 more years? Whether it be on the physical side of protection or overseeing operations and passing my knowledge to the next generation, I will continue bringing an undeniable passion and great value to the table for many years to come. I’m very thankful to have had all these years doing this work operationally. At some point I’m probably going to have to step back and allow the younger men to keep doing the handson work, and I’ll take more of a management role and continue to pass on the knowledge to the younger men. I

will squeeze a few more years out of the operational side by continuing to stay in shape physically and mentally, training on a regular basis, and keeping my network going. How do you handle privacy issues? Do people worry about having some guy standing a foot away every time they go down to the beach on their vacation? That comes up a lot, whether the security is for a family or corporation. People struggle with losing their sense of privacy and personal space. And it’s understandable. No one wants to have private conversations with some stranger hovering around. I try to make it clear to potential clients that there are several ways of conducting personal protection and security. We go over this in client assessments. It’s always tailored to the client’s needs. There’s the up-close-and-personal protection where I’m dressed in a suit walking a foot away from the client, always by their side, opening the door to let him in and out of the vehicle, and there’s no doubt that I am there to protect that person. There’s also what’s called low-profile protection, where security is going to dress down and blend in more with the people of that area. We will travel a little more low-key, probably utilizing the same types of vehicles everyone else is driving in that area. When we get to where we’re going, the client will open their own door. I may have another security person already at the location. Once you exit the vehicle, I’m going to hand you off to the security member already at the location. Security will give the client plenty of space depending on the circumstances and have little to no contact with the client unless the situation requires it, or the client requests it. And then there’s what we call shadow security or protection, where we never have contact with the client in public unless the situation calls for it. This way of protection requires multiple security team members in order to have men prestaged in the locations the client will be traveling to as well as to provide several security personnel to follow the client in separate vehicles. The client drives themselves in their own vehicle and we follow in different vehicles. Another example of shadow security—let’s say you’re on vacation in Cabo San Lucas with your family. We’ll have established where you’re staying, how you’re traveling, and security will have men on the ground before you get there. Security will be in place around the house and they’ll look like locals from the area. If a client is hanging out on the beach, a security team member or members might be getting sun, wearing shorts and hanging out like everyone else just a short distance away, and unless security identifies a threat or we get the code word or signal from the client, we’ll give them some room so they don’t feel like they have lost their personal space. So, as you can see, there are several ways to provide security and still maintain the client’s sense of personal space and freedom. TexasCEOMagazine.com

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Texas CEO Magazine Q1 2020

Feature

OF TEXAS ARE UPON US University of Texas athletics director Chris Del Conte on servant leadership, the future of collegiate sports, and what it takes to run an institution representing nearly 30 million Texans.

By most accounts, Chris Del Conte has revitalized Longhorn athletics. Since his hire in December 2017 as vice president and athletics director at the University of Texas, he’s not only overseen a recordbreaking $219 million in annual revenue—he’s also led the charge on building new sports facilities, amped up game day with a festival concept on Bevo Boulevard, and found time to run one of the most responsive Twitter accounts out there. (Seriously, try tweeting at him. He’ll probably respond.) We recently spoke to Del Conte about leading an organization that entertains millions of spectators even as it prepares its student-athletes for success—on and off the field. To start off, can you give us an idea of the scope of UT Athletics? We’ve got about 400 full-time employees, 2,000 part-time employees, 523 student-athletes, and a budget of $225 million. We’re the front porch of an institution that has 52,000 students and about 500,000 living alumni. Plus, there’s about 30 million people in the state of Texas that the University of Texas represents on a daily basis. The eyes of Texas are upon us! You ran smaller operations before you got to the University of Texas. What were the big differences moving to a larger institution? I’ll go back to the movie Hoosiers for a moment. When I was director of athletics at Rice, it was a lot like the town of Hickory, Indiana, in Hoosiers. It was a small town, 3,000 students, and you have basically 30,000 living alumni and an $11 million budget. You know who your constituents are. When I moved to TCU, it was like the sectionals in Hoosiers. It was a bigger stage, where you have 8,000 students and 50,000 living alumni. And now I’m at the University of Texas, with a lot more than that. But at the end of the day, the fundamentals of the game are the same. It’s still a 10-foot rim, it’s still a 15-foot free throw, and it’s still a 94-foot court. At the end of Hoosiers, they take the whole team into that big gymnasium and they’re all looking around at the size and scope of the place. But the dimensions of the court are the same as anywhere else. In the same way, the football field is the same at Rice as it is at TCU as it is at the University of Texas. It’s just the size and scope of the operation that’s bigger. With that comes all the challenges of a larger organization, but the basic footprint is the same. And in all three institutions, we’re educating young people, helping them get a degree through their interests on the playing field. It’s just the size and scope of who you represent and the complexities of the

Photos courtesy of Texas Athletics

institution that are magnified when you move to a larger institution. Finding good jobs for your student-athletes is a key priority of yours. What do you want Texas CEOs to know about your student-athletes? When they come to our school, every one of our student-athletes believes that they’re going to be a pro athlete in whatever sport they participate in. But there’s always that “aha” moment where they realize it’s about more than that. Our job is to say, “A sport is what you do—it’s not who you are.” When you come to college, we’re going to find and accentuate who you are. Every one of our kids has tremendous grit. They are driven to be the very best. They have put their entire efforts into athletics and they know what time management is, they know what hard work is. TexasCEOMagazine.com

THERE’S A SAYING IN OUR WEIGHT ROOM: “THE WINNING TRADITION OF THE UNIVERSITY OF TEXAS SHALL NOT BE ENTRUSTED TO THE TIMID NOR THE WEAK.” TELL ME WHAT EMPLOYERS WOULD NOT WANT TO HIRE SOMEONE WHO’S BEEN TRAINED UNDER THAT MOTTO? The American dream of bettering one’s life is always predicated on education. That’s exactly the opportunity we’re offering at the University of Texas. We’re getting young people to come change the world. That’s what we say here: “What starts here changes the world.” We truly believe that. When you get a degree from the University of Texas, from the finest faculty the land has to offer, you are then prepared to change the dynamics of any institution you go work for based on that educational background at the University of Texas. So, an employer getting a student-athlete from the University of Texas can be sure that person has been tested under the eyes of Texas. The pressure of being a student-athlete is not for the faint of heart. There’s a saying in our weight room: “The pride and winning tradition of the Texas Longhorns will not be entrusted to the weak nor the timid.” Tell me what employers would not want to hire someone who’s been trained under that motto? The athletics director position has a lot of similarities to the CEO position. One unusual aspect of it is that you are often not the face of the organization. It’s often the coaches who are most visible, and the success of the institution might 20

Texas CEO Magazine Q1 2020

be externally judged on their success. How do you deal with that? I think of my role as one of servant leadership. It should be about our coaches and our student-athletes. My job is to be the wind beneath their wings, whether it be our coaches, our student-athletes, or our constituents at large. When you put them before you, that’s the greatest form of leadership—serving your community. That’s what team sports are all about. It’s a collective group that makes your team successful, not an individual. As athletics director, I’m running an economic enterprise based on people’s passion. No one has to buy a season ticket. No one has to buy a T-shirt. No one has to come to the games. We’re providing an opportunity for people to form a sense of community around the University of Texas. We invite 100,000 people to come

back to campus to celebrate the University of Texas through the eyes of sport. That makes us the front porch, like I said, but the most important thing is the house—the university. The house has transformed lives and bettered the community through education. Then Texas Exes is the back porch, where we invite people to the barbecue to relive the glory days. When you’re running an enterprise based on passion, whether it’s the passion of the kids on the field or the coaches or our donors or our students or the state of Texas as a whole, you’d better have a servant mind and heart. You will not be successful if you think it’s about you. It is always about the University of Texas first and foremost. You had a “lemons into lemonade” situation this year, where you had to

Feature replace a coach in the middle of the year. The team rallied and then ended up winning a national championship. How do you handle a situation like that? You always put the student-athletes first. Kids are resilient. That particular issue was difficult to deal with, but the kids knew they wore that burnt orange and white across their chest and were going to rally around each other and the university. We were already having a successful season, so that was a bump in the road. But it was an opportunity for them to realize that together they can do something special. As you look five, ten years down the road at collegiate athletics, do you see any big changes? Do you see the esports craze getting folded into intercollegiate athletics? Are you worried about the struggles people are having with football injuries? It’s ever-changing every day. The enterprise has always gone through big shifts since it was established over a century ago. The football program here was established in 1893, but college athletics in its current form really took hold in the early 1900s. One thing that we’ve always had is change, whether it be changes in conferences or rules or affiliations. You just have to be able to adapt to the changes. As far as the two trends you just mentioned, some of those are politically motivated. I don’t know if esports will ever take hold in the South. But it’s happening in other cities and states, so you have to be aware of that. And

the safety of the game has always been paramount. Hell, that was paramount when Teddy Roosevelt was president. You’re always going to have these dynamic topics. They’re always going to be there. My job is not to be rigid in thought but to be malleable for the betterment of the institution and our program.

WHEN YOU’RE RUNNING AN ENTERPRISE BASED ON PASSION, YOU’D BETTER HAVE A SERVANT MIND AND HEART. YOU WILL NOT BE SUCCESSFUL IF YOU THINK IT’S ABOUT YOU. What do you tell people about what it’s like to work for you? I expect you to do the job! You’re the expert in your particular field, so do your job. As a leader, I don’t need to be a jack of all trades—I hire experts to do their job. It’s like in football, where you’ve got 11 people on the field and if each of them does their job, the team will be successful. You’ve got to hire the right people, give them the tools necessary to be successful, then stand back and let them work. That’s what a leader should do. If you’re manipulating every little thing as a

leader, then you’re not allowing people to grow. If you hire someone to run an area of your organization, let them run that area. At the University of Texas, our goal is to be a top-10 team in every one of our sports, so collectively we give our staff and our coaches all the tools necessary to be great and then we let them do it. And we hold them accountable to that standard. Period. If I worked for you, what stories would I hear? What has influenced you throughout your career? I have mentors I constantly work with, but probably my biggest mentor was my dad. Growing up, he always told us: Be humble, be honest, and serve people. If you do those three things well, you will be successful. But if you don’t do one of those three things well, then life will be difficult for you. Those three things are important to me and I always carry them with me. And my dad and mom lived those things. When I was a kid, they started a children’s home in New Mexico, where they helped look after over a hundred and fifty foster kids. Did you know that athletics director was a job you wanted at a young age, or did you stumble into it? It wasn’t one of those things I knew from the beginning. When I was in college, a house parent at the ranch I was at became a team doctor at Washington State, and he gave me a job in the maintenance department. I worked my way up from there. But I always knew that I wanted to be around an organization that was giving something good to humanity. Outside of the GI Bill, more kids go to college for free through athletic scholarships than anything else. It doesn’t matter where you’re from or your socioeconomic background—through sport you can change your paradigm because you got a free education. But to me it’s always been about being humble, being honest, and serving others— those three traits my father instilled in me. Those are always going to be with me. I was always going to do that type of work. Sport just happened to be the arena that galvanized my interest.

TexasCEOMagazine.com

WHAT CEOS

Can Learn from EXCEPTIONAL COACHES

John Thornton, PhD I have always been fascinated by the coaches who have “it”—that X-factor that separates exceptional coaches from the also-rans. What do they do differently as they put together a staff, organize practice, recruit talent, and manage high-stakes games? While a favorable bounce here and there helps out, it’s become obvious over my forty-plus years in athletics that consistent winning happens by design. In some form or fashion, the exceptional coaches all had a system, a routine that worked for them. John Wooden, Pat Summitt, and Paul “Bear” Bryant—with their respective Pyramid of Success, Definite Dozen, and Junction Boys—are the stuff of legend. Each is absolutely authentic. Each put in the vast amount of time, expertise, and effort it takes to achieve success.

Does that sound familiar? Perhaps a little like the CEO role? Indeed, coaching within a Tier One athletic program like Texas A&M—with its seven-figure revenue and nearly 600 studentathletes—is a lot like leading in corporate America. Leaders in both settings face the same pressure to perform, the same responsibility to deliver wins through other people. And I believe that each role has much to learn from the other. Here are five characteristics of the exceptional coaches I have known, each of which translates to consistent winning in the business realm. 1. Exceptional coaches define and embrace their

My interest in great coaching runs through my entire career, from

uniqueness. Exceptional coaches are special: They stand

my early involvement in high school coaching to my experiences

out in some way, whether you call it their style, their persona,

with intercollegiate coaching and administration, ending with

or something else. They might be folksy, hard-ass, no-

my time as interim athletics director at Texas A&M University.

nonsense, or mystical, but whatever they are, they are totally

It continues through today in my role as executive professor and

themselves. They find the authentic core of themselves, share

director of the Texas A&M Coaching Academy, where I deal with

it with their teams, and use it to separate themselves from

the complexities of directorship over intercollegiate athletics

the merely average coaches. This authenticity fosters the

programs. If I have learned anything, it’s that the job of building

kind of trust and loyalty that—to again quote Coach Metcalf—

a successful athletic program is not for the faint of heart. As the

prevents fans “from naming a street after you one year and

homespun Coach Bum Phillips once said, “There are two kinds of

running you out of town on it the next.”

coaches: those that are fired and those that are going to be fired.”

2. Exceptional coaches are consumed with their

The exceptional men and women who succeed in this high-

profession. For better or worse, exceptional coaches live

pressure role have my utmost respect. They must channel their

their job every day. They have an unrelenting, laser-like

players’ competitiveness, please their donors, and persist through

focus. They constantly fight for what they and their teams

public scrutiny and the incessant chatter of social media gurus.

need to win. As an administrator, dealing with these passion-

And as my mentor Coach Shelby Metcalf—hall of famer and the

filled firebrands could get tiresome at times, but I had to

winningest coach in the Southwest Conference—was fond of

realize that this was a part of what made them good. They

saying, they do all this with “a scoreboard tied to their ass.”

take no days off. They are always striving for excellence.

Texas CEO Magazine Q1 2020

Feature 3. Exceptional coaches are competitors. The best

In my time at Texas A&M, I have seen exceptional coaches perform

coaches I know hate to lose more than they enjoy winning.

incredible feats. One coach inherited a team that hadn’t won

They attract players with that same competitive drive, which

a game in conference play the entire year before—but after six

can be a curse or blessing depending on your perspective.

months of preparation, he helped the team qualify for postseason

Recruiting, developing talent, and scheming up the x’s and o’s

play and set the stage for six straight NCAA appearances.

all contribute to game-day success, but as Coach Metcalf also

Other coaches recently led Texas A&M teams to three national

says, “talent that doesn’t compete gets you fired.” Coaches

championships, a feat this institution had not achieved since

that recruit competitors—and develop the competitive nature

1939. These exceptional coaches, to a one, displayed the five

of their teams—are the ones who win consistently.

characteristics I have outlined, which is why I strive daily to impart them to future and current coaches.

4. Exceptional coaches develop a culture you can feel. Just as exceptional coaches have their own unique style, they also build a unique team identity. They make players feel like they are part of something special. Whatever the specifics of that culture are, players are motivated by the sense of belonging and shared identity. They know that their

I also believe that these characteristics are not confined to the world of athletics. Like exceptional coaches, exceptional CEOs do all of the above: They find their authenticity as a leader, build their passion for the business, harness their competitive spirit, build a strong culture, and surround themselves with top-level talent. It is

coach and their teammates have their back.

no surprise to me that so many business leaders draw inspiration

5. Exceptional coaches surround themselves with

winning lie many of the same principles—principles that can

talent. Great coaches don’t just focus on the one or two superstars—they make sure they have talent in every role.

from the world of sport. At the heart of leading, coaching, and inspire us to higher performance, whether we are pursuing a national championship or building a world-class business.

That goes for the MVP, the “glue guy” (who holds the team together), and everyone in between. They are not afraid to tinker with the process to ensure that talent is properly utilized. And they do not have a problem making the tough call and benching the underachievers.

John Thornton is the inaugural director of the Texas A&M Coaching Academy. He earned his doctorate degree from Texas A&M in 1997 and received the 1998 Academic Inspiration Award by a vote of the Texas A&M Scholar-Athletes of the Year. Previously, he served as Senior Associate Athletics Director and Interim Athletics Director at Texas A&M.

TexasCEOMagazine.com

STARTUP SUCCESS:

A STARTUP FUNDRAISING SERIES

HOW MUCH

Should We Raise? Gordon Daugherty For most startups, the decision to raise money is made out of necessity. The entrepreneur needs more funding to continue pursuing their dream, whether the money will be used just to survive a while longer or truly shift a gear and move into the next stage of evolution. Other startups pursue funding out of want more than need. Usually, this is because they either want to get more aggressive in their growth or because there’s some opportunity they want to exploit sooner than when they might otherwise organically. These startups are in the fortunate position of turning down the funding if the terms, timing, or amount isn’t right. 24

Texas CEO Magazine Q1 2020

But regardless of whether the entrepreneur is pursuing funding out of necessity or desire, they still face a difficult decision: how much to raise. Not only is the decision critical to the startup’s own planning and forecasting, but investors will want to understand why the entrepreneur has chosen to raise the stated amount of money. The ability to demonstrate that they determined the right amount of funding for the company at its particular stage is important for establishing credibility with the investor. The entrepreneur will essentially become the steward of the investor’s money through multiple rounds of funding, until they eventually exit and the investor gets a return. Thus,

the investor needs to see a cohesive fundraising strategy that doesn’t just let the startup survive for a while longer but rather allows them to reach future key milestones for continuing to get funded and eventually grow a great company. Investors typically get a lot of unacceptable responses when they ask why the desired amount of funding is the right amount, such as “Most other startups at our stage seem to raise that amount,” “It’s the most we think we will be able to raise,” “It only dilutes us 25 percent,” and “It gives us one year of runway.” These responses might be true, but they are all also terrible. This article provides a framework for determining how much

Feature a startup should raise and how they should describe that to investors.

The basic formula

For startups seeking growth, the figure below summarizes the first major steps for deciding how much to raise. As you can see, the amount of money raised affords the startup a combination of time and resources. And with time and resources, they can accomplish things (outcomes).

The basic concept is simple. And since we are trying to solve for the right amount of funding to raise, let’s analyze the other variables a little further.

Time and resources

When I say time, I actually mean an amount of time the money will last, or what is often referred to as runway. The amount of runway needed varies widely for each venture but usually gets longer with subsequent rounds of funding and later stages of evolution. The most obvious type of resource is the one every founder obsesses about, additional headcount—regardless of whether they are part-time or full-time. “If we only had two more developers, we would be in great shape.” In the same category as headcount are contractors, consultants, and various service professionals like lawyers and accountants. What many early-stage startups don’t think about are things like increased spending for marketing programs, specialty tools, and software systems. These are usually important resources that are also needed to advance the business. For startups, time and resources are in competition with each other. In other words, a startup could use all of the new funding to gain time, but that means not adding headcount to the team, not adding more contractors, and not spending more on programs, tools, and the like. Instead, they could use all of

the new funding to aggressively dial up headcount and spending, but that means they’ll almost immediately have to raise more money. Part of the trick is dialing in the optimal combination of extra time and extra resources in order to achieve the desired outcomes. Figuring out the best combination involves creating a financial forecast model that allows experimenting with various assumptions and alternatives. For a preseed or seed round of funding, the startup will have lots of assumptions that have no support from prior results. Because of this, the investors will really want to understand any information or insights the startup has to support their assumptions. Later, the prior track record will serve as a basis for many of the projections.

Outcomes

Outcomes are discretely identifiable results the startup hopes to achieve with their newly raised funds. How about acquiring a certain number of new customers to reach the next meaningful revenue milestone, or significantly reducing your average cost to acquire a new customer? How about securing a strategic partnership that will provide significant leverage, or getting final approval on a patent filing? What about launching a new product or entering a new market? These are outcomes that reduce the investor’s risk or increase their upside potential when the startup eventually exits. The best way to understand the formula is the way it is diagramed above, left to right. But the best way to actually go about the exercise of figuring out how much money to raise is to work backward, starting with the desired outcomes. It is those future outcomes that the investors want the company to achieve and, therefore, the things they want to fund. Once the desired future outcomes are determined, the startup simply needs to use their financial forecast model to determine the best combination of time and resources needed to generate the outcomes. With this, they can determine how much funding is needed for that combination of time and resources.

There are pretty dramatic differences in the outcomes Silicon Valley investors expect and the outcomes investors in most other places in the country expect. A set of projected outcomes that are exciting to an investor in Memphis, Tennessee, or Denver, Colorado, could easily seem way too safe and conservative to a Silicon Valley investor. There is much more of a swing-for-the-fences, build-a-unicorn, global-world-domination mentality in Silicon Valley, and fundraising startups should understand this philosophical difference in risk tolerance as they go about setting their desired outcomes.

Time for the first check and balance

Why not just raise enough money to last a long time, like three or four years? Well, ignoring whether the startup could be successful raising that much, the answer relates to the valuation they’re able to negotiate with investors. Let’s assume $10 million would fund a particular venture for four years. The question is, What sort of valuation can the company earn at the time they raise that money? As you can see in the figure below, today’s valuation is mostly based on the state of the business today. If investors will only agree to a $5 million valuation, for example, the company will experience significant dilution and immediately give control to the investors due to the amount of equity they will get. The amount of money raised compared to the valuation they’re able to negotiate provides a check and balance.

Because of this, the process of figuring out how much money to raise is often iterative. First, an uncontested look into the crystal ball allows the startup to figure TexasCEOMagazine.com

out how much to raise in order to accomplish a desired set of outcomes. Next, a test-drive with investors helps inform whether the valuation they’ll be able to negotiate derives reasonable dilution or if they’ll need to adjust the amount, either up or down. If they adjust the amount down, the significance of the projected outcomes will also be adjusted down. That might cause the round of funding to seem less exciting for investors, and an adjustment may be necessary. These iterations continue until the startup finds the right balance of outcomes and valuation.

Multiple rounds over time

Now that you understand the basic formula and framework, let’s project forward to see how multiple funding rounds tie together. As you can see in the figure below, with each round of funding, the projected outcomes eventually become the state of the business in the future. That is what the company uses to gain the desired step-up in valuation for the next round of funding. This cycle continues again and again until the company is either self-sustaining or experiences an exit (acquisition or IPO).

Evolving from a bootstrapped startup to a funded one is a big and important transition. A startup might end up as a funded one out of need or want. If they don’t need funding, then they have alternatives. Most startups eventually need outside funding and, once that happens, many things change. One of those things is they get to accomplish more and grow faster, assuming they have a scalable business. But they will also experience a change in accountability. No longer are they only accountable to the founding team and other team members; they suddenly have to answer to their new investors, who might have different interests, beliefs, and motivations than they do. The more investors they take on over time, the more varied those interests, beliefs, and motivations will be, and the more they’ll have to accommodate or negotiate with them. Like many things in business, up-front time and effort spent on fundraising strategy can pay huge dividends later. It translates to increased odds of raising the right amount of money to reach the next significant milestone for making another want-versus-need decision and generally controlling their destiny. Surely, they know things won’t play out exactly as planned, but that doesn’t relieve them from the obligation to start with a strategy. After that, they can do what every great entrepreneur does—adjust and adapt as necessary. Iterations to fundraising strategy may also happen as you test-drive ideas and assumptions with investors before actually launching the fundraising campaign. That takes place during the planning phase of fundraising—and is the topic of my article in the next issue of Texas CEO Magazine.

Gordon Daugherty is a seasoned business executive, entrepreneur, startup advisor, investor, and the best-selling author of Startup Success: Funding the Early Stages of Your Venture. A proud native Texan, Daugherty graduated from Baylor University. He has vast experience with early-stage fundraising from both sides of the table, making more than 200 investments and raising more than $80 million in growth and venture capital as a company executive, fund manager, board director, and active advisor.

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Texas CEO Magazine Q1 2020

Improve Your

PROFIT MARGIN Via... • Process Automation • Platform Standardization • Digital Transformation • Data Analytics & Governance

Case studies on the aforementioned can be found at:

ylconsulting.com/tx

Feature

Quick Questions

WITH

Mark Cuban

We don’t need to introduce Mark Cuban, do we? Entrepreneur, investor, author, Texan, Dallas Mavericks owner, Shark Tank star—you know the drill. We threw seven quick questions to Cuban. Let’s see what he had to say.

YOU HAVE THE RESOURCES TO LOCATE ANYWHERE IN THE WORLD. WHAT KEEPS YOU IN TEXAS? The people. The energy. The business climate. And of course my favorite basketball team.

Kathy Hutchins / Shutterstock.com

WHAT DO YOU THINK CAUSED YOU TO GO DOWN THE ENTREPRENEURIAL PATH? My parents always encouraged me to try new things, and more importantly, they were insistent that if I wanted something, I had to find a way to earn the money for it. That pushed me in the direction of selling everything and anything a little kid could.

WHAT WERE THE FORMATIVE EXPERIENCES THAT DEVELOPED YOUR MANAGEMENT APPROACH? Lots of mistakes. Recognizing that if my vision wasn't aligned with those of my employees and customers, nothing works. I have to add that management is a skill that requires constant developing. Managers have to be adaptive to what is happening— not just in their marketplace but also culturally. And they have to always learn from their mistakes.

4. WHILE THE MAVERICKS ARE A PRIVATE BUSINESS, THEY OPERATE VERY PUBLICLY. WHAT ADVICE DO YOU HAVE FOR CEOS WHO FIND THEMSELVES MOVING INTO THE PUBLIC LIMELIGHT? There is nothing like running a sports team. For any other CEO that finds themselves moving into the limelight— or wishing to move into the limelight—develop relationships with any and all media that impacts your industry. It could be a blogger and Instagram influencer or it could be a magazine. Don’t wait for them to come to you. Go to them and let them know that your knowledge can help them create content and make them look better at their job. 28

Texas CEO Magazine Q1 2020

5. YOU LOOK AT A LOT OF DEALS AND VISIT WITH A

LOT OF ENTREPRENEURS. WHAT ARE YOU LOOKING FOR TO MAKE YOU THINK THEY WILL BE SUCCESSFUL? I want to see deals where my first reaction is “Why didn't I think of that?” I want entrepreneurs who are agile. Always willing to learn. Always willing to sell. Always willing to connect with people and be nice. Nice is a very underrated skill.

IS THERE A PART OF BUSINESS YOU WISH YOU HAD SPENT MORE TIME LEARNING ABOUT EARLY IN YOUR CAREER? Video editing. It would be fun to be able to whip up any video anytime, so I don't have to wait on others to get things done.

7. IS THERE A NEXT ACT FOR MARK CUBAN, AND WHAT

MIGHT IT BE? I haven’t had my first act yet. Stay tuned.

[ENTREPRENEURSHIP]

THESE

ENTREPRENEURS ARE MAKING

Josh Ramos, Rick Narpaul, John Adams, and Beto Altamirano

Plenty of innovators have made our lives more convenient, productive, and connected—but for some, the primary concern is making our lives safer. Each of these four San Antonio entrepreneurs developed a new way to keep people safe from preventable harm, at home, at work, or on the road. The world may still be a dangerous place, but these Texans are making it a little less so.

Rick Narpaul

Founder & CEO, Mach1 Services Ever been stranded on the side of the road thanks to a blown tire, a drained battery, or an empty gas tank? Even if you have a membership to AAA or other insurance, you still have to wait for someone to dispatch help from a call center, which seemingly takes forever. When you’re in that stressful situation with cars and trucks speeding past you, you want help as soon as possible. The Solution: Rick Narpaul describes Mach1 Services as “the Uber of roadside service.” With the Mach1 app you can access roadside assistance dispatched automatically, connecting you to the closest service provider that can help. This cuts down your wait time and lets you track the help that’s on the way in real time. The process is simple for service providers too: Receive the request, follow turn-by-turn directions, and arrive at the driver in need. The service is currently available in San Antonio, Austin, Houston, Dallas/Fort Worth, and Corpus Christi. Next up for Mach1 is expansion across the US and into more automotive services. Users will soon be able to use the app to order a mobile mechanic to do oil changes, trip inspections, and lots more, right at their home or workplace. www.mach1services.com Download the iOS or Android app

SAN ANTONIO SAFER

Josh Ramos

Founder & CEO, RMS Innovations Josh Ramos usually begins his elevator pitch with a number: eight. As of 2019, Ramos explains, eight children in the US are shot in their own home accidentally every single day. Gunlocks may seem the obvious solution, but they have their flaws. Many can be easily unlocked with the universal keys available at any Home Depot or Walmart. Some guns can still be discharged with the lock in place. And the traditional key or combination dial mechanism can prevent the firearm owner from quickly using the gun in an emergency situation. The Solution: Ramos’ solution is twofold. First, biometrics allow the owner to unlock the spring-loaded mechanism in less than half a second by pressing their finger on the sensor. Second, the RMS gunlock uses a dual-rod blocking mechanism, which ensures that accidental firing doesn’t happen while the lock is engaged (setting it apart from dangerous single-rod trigger gunlock). When Ramos’ gunlock hits the market soon, it will fit about 80 percent of rifles, shotguns, and handguns.

John Adams

Founder & CEO, RubrixAiD For 60 years, since the inception of the modern EMS and 911 phone system, citizens have only had one major response to crisis in their homes or in the street: call and wait. Most people—even trained ones—are not always mentally ready or equipped to deal with injury as it happens. EMS is not readily available on every street corner, so time is a factor. Seconds count, so proper and immediate aid could make the difference in saving limbs or life. The Solution: For the first time in human history, RubrixAiD has developed and manufactured an automated first-aid kit that helps users with medical care, anytime, anywhere. RubrixAiD walks

the user through emergency non-critical first-aid care, whether it’s minimizing blood loss, stimulating breathing, or mending wounds. The interface is visual and intuitive, meaning that even a preteen can offer on-the-spot, potentially life-saving assistance. RubrixAiD uses the latest and greatest technology on the market, including artificial intelligence and machine learning, to accomplish this feat in real time across any geographical location. As it works to offer safety and care to the public, the company has garnered significant attention, including strategic partnerships and working relationships with companies such as Google, T-Mobile, and Twilio. www.rubrixaid.com

Beto Altamirano

Cofounder & CEO, Cityflag Let’s say you see a pothole, an abandoned car, vandalism, or any other unsafe area in your neighborhood. What’s your best option for getting it fixed? Most likely, it’s calling 311, having a drawn-out phone conversation, and simply hoping that your local government is able to follow through. The Solution: As cofounder and CEO of Cityflag (and one of Forbes’ “30 Under 30 Social Entrepreneurs”), Beto Altamirano is using mobile technology to open up the lines of communication between citizens and government—and get issues resolved quickly and more efficiently. With Cityflag’s 311SA mobile app, San Antonians can instantly report issues in their neighborhood to the city. It’s a 15-second task rather than a 20-minute call. The app has already drawn 20,000 users, who have generated over 40,000 requests. Bringing the agility of the tech world to bureaucratic and risk-averse government may not have been easy for Cityflag, but it’s now paying off in saved time, saved taxpayer dollars, and increased civic involvement. www.cityflag.co

TexasCEOMagazine.com

Want to Work from COWBOYS HQ? HEREâ&#x20AC;&#x2122;S YOUR CHANCE

Feature

A CONVERSATION WITH JERRY JONES JR. The Dallas Cowboys have the most loyal fans in the NFL. We didn’t just make that up—an Emory University poll from last July proved it. In the 30-plus years since Jerry Jones bought the legendary franchise, he and his family have grown it into the most valuable sports property in the world. Recently, we had the great privilege of chatting with Jerry Jones Jr., who serves as the Cowboys’ executive vice president and chief sales and marketing officer. He told us how his operation capitalizes on Cowboys fans’ legendary enthusiasm, especially through Formation, a new collaborative workspace in the team’s world headquarters. Formation opened its doors this past summer, offering open workspaces, dedicated desks, and private offices to individuals and entrepreneurs. Get a seat at Formation and you’ll not only hitch your business to the excitement of the Dallas Cowboys—you might find yourself in the lunch line next to an NFL legend.

The Dallas Cowboys World Headquarters at The Star has been open for a couple of years now. What was the process of building the headquarters like? When we built our stadium [AT&T Stadium in Arlington, Texas, completed in 2009], we were all asked what our biggest challenge was. In our minds, that challenge was meeting the expectations of our fans for what the home of the Dallas Cowboys should be. That was the approach that we took to build AT&T Stadium and create an experience for our fans.

Photos courtesy of Formation

Five years ago, when we got the opportunity with the City of Frisco to build The Star as the future headquarters of the Dallas Cowboys— business operations, training and practice facility, and a lot more— we wanted to create yet another way our fans could experience the Dallas Cowboys in ways they hadn’t before. We sat there really whiteboarding different ideas of what that might mean and how we could take advantage of the Dallas Cowboys brand. At the time, we had more than 25 years of experience to draw from, things we had done with our sponsors, their customers, and our fans. It’s from those conversations that The Star evolved and became what it is today. The things we have done there are things we believe in 100 percent, things like the Omni Hotel, Cowboys Fit [the health and fitness center at The Star], Cowboys Club, and work we’ve done with Baylor Scott & White on health protection and injury prevention. Those ideas were all whiteboarded long before they came to fruition, using the concept of leveraging the Cowboys brand. TexasCEOMagazine.com

Our approach, starting with Jerry Sr., has always been to leverage the passion and excitement of the Dallas Cowboys. We’ve found we can use that tradition, history, and brand affinity to help sponsors like Pepsi, Ford, or the Miller Brewing Company. By leveraging the association with the Dallas Cowboys, you really create an uneven playing field, and that’s what we’ve done here with Formation [the new collaborative workspace]. Our family has always been passionate about entrepreneurship and business and now, with Formation, we have the chance to help foster success with everyone from entrepreneurs to CEOs of up-and-coming businesses. My understanding is that Formation is already highly utilized, even though it’s only been open since last August. How did that business come about? It really grew out of our focus on the culture and environment at The Star. As we were collecting ideas for what we wanted our headquarters at The Star to be, we weren’t looking 32

Texas CEO Magazine Q1 2020

at sports training facilities like we did when we were building the stadium. We looked for ideas all over the place. We studied corporations and their headquarters, places like Apple and Google. We went and saw what some of our sponsors, like Ford Motor Company, were doing. In looking at those places, we wanted to see how they treated corporate environment and culture. In building The Star, we focused on the atmosphere, the look and feel of everything from the players’ cafeteria to business operations. We had to think

WE REALLY DIDN’T LOOK AT IT AS COWORKING AS MUCH AS WE LOOKED AT IT AS AN ENTREPRENEURIAL MEMBERSHIP CLUB.

about not only what the experience for our fans was like, but how we could ensure that our employees and our football team had a great experience as well. What setting could we give them that would make them thrive? That really bled to the idea of a coworking space, which then led into the development of Formation. The concept was picking up steam and a lot of people were jumping into that industry, but we really didn’t look at it as coworking as much as we looked at it as an entrepreneurial membership club. What does that mean? It means you have an opportunity to leverage the Cowboys the very way that our family does. Formation really lets people tap into the history, the passion, and the excitement of the Cowboys brand as well as the dynamic of a family-run operation. With Formation, we had a chance to let people access those amenities and take part in that very excitement of being a part of the Cowboys family. That’s what Formation represents.

Feature TO THINK THAT YOU’RE GOING TO LUNCH AND RIGHT NEXT TO YOU IN LINE IS DAK PRESCOTT OR JAYLON SMITH? THAT IS PRICELESS.

What is the appeal for individuals or companies that take advantage of Formation? Leveraging the Cowboys brand makes a big difference. It lets the guard down in a business dynamic. We’ve done that very thing for the last 30 years by giving our business partners access to the brand. To me, that’s what we’re emphasizing with Formation. It’s why Formation is more of an entrepreneurial club than a typical coworking space. Its connection to the Dallas Cowboys, The Star, and our family has allowed it to stand out from similar spaces and provide a unique edge in business. Our headquarters at The Star is 400,000 square feet. The Dallas Cowboys are only in 70,000 of that square feet. What’s going on in the other 330,000? Those are companies like FM Global, Bank of America, Merrill Lynch. And we just announced Keurig Dr Pepper’s new 350,000-square-foot Texas headquarters adjacent to our building, on another side of the practice field. When those companies invite a client to come to have a discussion, they walk through the main entryway of the Dallas Cowboys headquarters. There are five Super Bowl trophies sitting there, five Super Bowl rings, a tribute to the Cowboys Ring of Honor. They feel like they’re visiting the Cowboys even though they’re going over to have a meeting at Merrill Lynch. Those companies have seen what a brand association with the Dallas Cowboys does for their business.

Now, with Formation, smaller operations can get in on that and really benefit in the networking and relationship-building space—whether you’re an entrepreneur just starting out on your own or a CEO of a newly launched corporation. In fact, our open workspaces are designed for maximum flexibility and connectivity with others. We also provide many ongoing opportunities for relationship-building like weekly happy hours, monthly network huddles, a monthly series called “The Cowboys Way,” in which our front office executives share professional insights, and periodic keynote addresses for members. That’s the opportunity Formation gives. If I were starting up a company and my name wasn’t Jerry Jones Jr., that’s where I’d be officing. It’d be the best chance to get that uneven playing field that I’ve been fortunate enough to have throughout my business career. Another topic that’s come up a lot lately is esports. I know you’ve done some partnering in that arena. Where do you see that going? It’s a really interesting industry, especially with Complexity Gaming now headquartered here on our campus. I’d say that right now it’s a really broad-strokes term. When someone says “esports,” they’re often being too general. Which part of esports are you

talking about? What video game is it? But there are still a lot of uncharted waters out there. We’ve had discussions with high schools, with UILs, with school districts about this becoming a high school sport and a college sport that’s no different from rowing or lacrosse. We’re certainly staying educated on it, we see the opportunity, and we’re putting a chip on the table if you will, seeing what will transpire. The younger generations are following it closely. When we first started discussing esports, my boy was 11 and he definitely knew more about it than my brother and I did—how you could watch and how influencers worked related to esports. It was a good education for us. Your brand is obviously associated with the Dallas metro area. What do you see happening there that has you excited about business going forward? We all know the great environment that the state of Texas creates for corporations, not just in sport but in any industry. You see big corporations moving to Austin, you see them moving into Dallas, you see them moving to North Dallas especially. Back in 2013, we had to make the decision to make a huge financial commitment here. As we sit today, we have over $1.5 billion

TexasCEOMagazine.com

invested into The Star development, and that’s with only two-thirds of it being developed. We still have 30plus acres of the 90 acres to go.

have growth throughout, that becomes a real issue. But it’s also a good problem to have, because it creates a stimulus in that area for thriving economics.

But you get comfort in seeing the growth of North Texas and Texas overall. There’s no better place to do business right now. We felt that Frisco really was the heartbeat of all that when we made the commitment to bring The Star here, and now we’re doing the same with Formation. We’ve created an uneven playing field with the Dallas Cowboys name and fostered an energy there that has allowed businesses to thrive. We’ve also found that several of our members see Formation as the perfect way to extend their business into the growing north corridor of Dallas.

These high costs for new construction are yet another reason why coworking is often a good option for businesses. Formation, for example, offers an elevated level of hospitality and aesthetic that is truly unmatched in this market. We’ve also seen firsthand how our workspaces are well-liked by any level of professional— from an entrepreneur to a seasoned CEO. And, better yet, Frisco is the ideal place to be, as one of the fastest-growing suburbs in Texas and in the US overall. When you combine this with The Star campus and Dallas Cowboys organization, there’s truly no better place to do business.

ith growth often come challenges. Are W there any major challenges in the DFW area or Texas in general you think we should be leery of as we continue to experience this significant growth? Well, I can tell you one thing you see when there’s growth everywhere, especially as we look at North Texas and the DFW area: In the development phase, construction costs usually go a little higher than you had budgeted for, because there’s that kind of demand for contractors. When you

The workforce is probably the numberone concern we hear from CEOs. How are we going to keep filling the pipeline with workers? They’re hard to come by. At Formation, one of the lures of the workplace is how closely it is tied to the Dallas Cowboys organization. To think that you’re going to lunch and right next to you in line is Dak Prescott or Jaylon Smith? That is priceless. It’s also all about the amenities.

Texas CEO Magazine Q1 2020

Formation is located next to more than 30 restaurants and just steps from fitness, entertainment, and business innovations. Members also have special access to presales for select AT&T Stadium and Ford Center events, and unique members-only events created by Dallas Cowboys staff with opportunities to hear from in-house experts. There are many other particularly unique membership perks, like professional headshots from a team photographer, an on-site barista, notary services, lunch delivery from the team chef, and more. And secondly, as big as we have grown, between my brother, my sister, myself, and of course Jerry Sr., we’re still a family-run, hands-on operation. In today’s workplace, the more you look at your colleagues and employees as family members, not just as tools to a bottom line, the better culture you’ll have. Because you ask—how would you manage them if they were your own children, your own siblings, your own parents? If you take that approach of trying to invest in them and take satisfaction in their growth and success— even if it ultimately means they leave for a bigger opportunity somewhere else— you ought to take pride in that. That’s our approach, and so far it’s working well.

CEO Activism & THE

CLOAK OF

Social Responsibility Bill Simon & Blaine McCormick, PhD

In August 2005, when Hurricane Katrina ravaged Florida and the Gulf Coast, leaving unprecedented destruction and human misery in its wake, Walmart was one of the first companies on the scene. Springing into action, the company used its emergency management team and renowned logistics capabilities to bring relief efforts to ravaged parts of New Orleans and Mississippi. Walmart representatives arrived on the scene long before most government agencies could react. In an October 2005 speech entitled “Twenty First Century Leadership,” then-Walmart CEO Lee Scott asked of his company, “What would it take for Walmart to be that company, at our best, all the time? What if we used our size and resources

to make this country and this earth an even better place for all of us: customers, associates, our children, and generations unborn? What would that mean? Could we do it? Is this consistent with our business model? What if the very things that many people criticize us for—our size and reach—became a trusted friend and ally to all, just as it did in Katrina?” Using the experience with Katrina as a springboard, Lee Scott led Walmart to take an active role in the environmental sustainability movement. Walmart, by most measures, has had a significant impact in moving sustainability to the mainstream consciousness of the consumer. Taking a stand on something like Katrina, or even the TexasCEOMagazine.com

environment, still allows a company to avoid some measure of controversy. After all, who is opposed to hurricane relief? Further, the sustainability movement is seen favorably by most Americans. However, since Lee Scott moved Walmart into sustainability in 2005, CEOs have increasingly taken more controversial positions on issues that historically have been off limits. We have seen Target take a position on gender identity and bathrooms, CVS on cigarettes, and more recently, Walmart and Dick’s Sporting Goods on guns. Though the issues may be new, American business leaders have been engaging in social issues for well over a century. In 1914, Ford Motor Company announced that it would pay a minimum wage of $5 per day—more than double the industry wage at the time—and later reduced the workday from nine-hour shifts to eight-hour shifts. Contemporaries praised founder Henry Ford as a great humanitarian, but Ford claimed that humanitarianism had nothing to do with it. He was setting policies to attract and keep the best possible workforce he could—and refused to frame his business decisions as socially responsible. In his memoir, My Life and Work, he explains, “The payment of high wages fortunately contributes to the low costs because the men become steadily more efficient on account of being relieved of outside worries. The payment of five dollars a day for an eight-hour day was one of the finest cost-cutting 36

Texas CEO Magazine Q1 2020

moves we ever made, and the six-dollar day wage is cheaper than the five. How far this will go, we do not know.” In 1915, however, Ford would start taking controversial activist stances on how to end World War I, would run unsuccessfully for Senate in 1918, and in the 1920s would publish anti-Semitic material in his newspaper, The Dearborn Independent. CEOs are not the only activists in the business community, though. Author Jeff Gramm contends that shareholder activism has been alive and well in the United States since Benjamin Graham clashed with Northern Pipeline in 1927, pressuring the company to distribute excess cash to shareholders. Gramm chronicles that history in his recent book, Dear Chairman. Shareholder activists can be very pro-shareholder like Benjamin Graham or more pro-consumer like Ralph Nader, who grew toward shareholder activism in his later years. Milton Friedman captured some of the history between activist shareholders and activist CEOs in his now 50-year-old essay, “The Social Responsibility of Business Is to Increase Its Profits.” Specifically, he noticed how corporate executives would raise wages “to be a socially responsible business” when it was clearly in their self-interest to raise wages to attract better talent and reduce shrinkage or sabotage. He also observed that, more blatantly, executives frame corporate donations as efforts to improve their

Feature

A convoy of Walmart trucks waited to enter New Orleans on Sept. 1, 2005, after the city was battered by Hurricane Katrina. Government agencies said the massive storm taught them that big-box retailers need to be an integral part of hurricane preparation and relief efforts. Nicholas Kamm/AFP/Getty Images

communities rather than as self-interested gifts that maximize their tax deductions. In his essay, Friedman coined the term “the cloak of social responsibility” to describe how CEOs transform self-interested actions into exercises in social consciousness. So, CEOs taking positions on social issues and committing corporate resources to support these positions is nothing new. The relationship between CEO and shareholders took its most recent turn on August 19, 2019, when 181 CEOs signed the Business Roundtable’s “Statement on the Purpose of a Corporation.” The statement posits that a company has stakeholders beyond its shareholders and that profit and return is not its only objective. This is an extreme departure from the historical objective of a company: it has long been held that fiduciary duty to the shareholder is the driving factor in the strategic objectives of a company. Some even argue that acting on behalf of “stakeholders” who are not shareholders may violate that fiduciary responsibility. Yet at least one signatory of the agreement has doubled down on its commitment to social responsibility. Almost two months after the release of the “Statement on the Purpose of a Corporation,” Amazon created a webpage outlining “Our Positions” on a wide variety of social issues, including the minimum wage, climate change, and immigration.

What would motivate CEOs and their respective companies to take controversial positions? Companies, especially publicly traded companies, live and die on quarterly and annual results. A few percentage points on the top or bottom line can mean the creation or destruction of billions of dollars of value. Many of the controversial issues that are in the public eye today reflect the split that exists in our country. The split is not only political—that is, Democratic or Republican—but also geographical: the two coasts versus the vast middle. We see a bifurcation in our cities versus our rural areas, in our age demographics, and in our racial makeup. Against this backdrop, taking a position on an issue could have a massive impact on a company. Companies taking positions on political issues (or politicians) can find themselves on the wrong side very quickly. Since World War II, the majority party in Congress has changed seven times (even more if you count only one party controlling either the House or the Senate) and the presidency has changed parties nine times. If you are going to take a position, be sure it is one that you can stand on, because recent history has shown that political cycles are much shorter than business cycles. Across two centuries of American business history and thousands of executives, CEO activism remains a relatively rare activity, with only a handful of CEOs—public or private—ever TexasCEOMagazine.com

5 Things

TO CONSIDER BEFORE TAKING AN ACTIVIST STANCE Before jumping into the activist role, here are some things you should consider: 1. CEO activism remains a rare phenomenon. Despite lots of press to the contrary, CEO activism remains an exceptional activity. In 2018, researchers at the Stanford Graduate School of Business surveyed 3,544 CEOs and found that the vast majority never go on the record regarding social or political issues in a meaningful way. Only 12 percent of S&P 1500 company CEOs engage in activism, and much of this activity was less controversial (i.e., surprisingly mainstream) than headlines such as “The New CEO Activism” might suggest. And the Stanford researchers surveyed only publicly traded companies, not the far more numerous group of private businesses, where CEOs can more easily avoid publicity. So, if you’re not receiving outside pressure to engage in CEO activism, don’t let your internal team talk you into it without clear and compelling reasons.

2. Potential backlash requires preparation. Activist executives go at least as far back in American history as Thomas McKenney and John Jacob Astor’s differing views on Native Americans and the fur trade of the early 1800s. The difference today is the speed at which social pressure can be brought to bear. Social media and the 24-hour news cycle have changed the model. CEOs almost immediately know when something has gone viral as tweets and retweets begin to rain down in indescribable quantities. Protests, email campaigns, and boycotts can organize in an instant and have an impact not only on business but on organizational morale and dynamics. Several years ago, Target responded to internal and external pressure and made an activist decision regarding the use of restrooms by transgender individuals. A boycott followed swiftly and Target would spend $20 million to install private bathrooms in stores. Thankfully, CEO statements and company positions can also be disseminated in seconds, changing the narrative instantly. Being prepared is key. The blade of corporate activism swings in both directions, but the speed at which it does can be dizzying.

3. CEOs can advocate for state or national economic issues instead. CEO activism is framed as a political activity, even though it is far removed from the political decisions made by executive, legislative, and judicial players in Texas or Washington, DC. In fact, the Stanford survey intentionally disregarded CEO advocacy on matters such as trade negotiations, tariffs, and corporate tax rates. Yet these are the very things that CEOs can address far more effectively than political actors can. It’s almost like asking CEOs to do the job of Congress and vice versa. Who is speaking out to create economic environments where businesses 38

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can flourish? Texas is such a place at present, but so was Michigan at one time. Rather than becoming embroiled in social issues, you might consider speaking out on an economic issue that’s important to you or your business. Be mindful, however, that even seemingly benign topics can be met with resistance. Walmart’s recent efforts to encourage US manufacturing have been a contributor to the resurgence of US-based production. Surprisingly, some critics accused Walmart of trying to minimize its reliance on Chinese imports. Others said that those were not the kind of jobs we wanted back in the US. Even when you think everyone will be on board, activism will often result in criticism.

4. Private ownership affords special freedoms. Founded in 1972, Hobby Lobby had almost 200 stores when it initiated its policy of closing on Sundays in 1998. The company later noted that it estimated $100 million in lost sales when it made the decision. Company leadership could have put on the “cloak of social responsibility” and stated that they did this for the sake of climate change (reduced energy usage and less car travel to their stores) or to take a stance against war (by promoting peace and mindfulness among its workforce). But, largely because it is a privately owned company, Hobby Lobby’s leadership felt comfortable clearly communicating that they implemented this policy for religious reasons—the least favorably regarded category of corporate activism according to the Stanford survey. Similarly, Chick-fil-A’s religion-based decision to stay closed on Sunday would be very difficult if it were a public company. As a private company, Chick-fil-A can make the decision to forgo its Sunday earnings without pressure from shareholders.

5. The cloak of social responsibility increases the risk of political capture. The objective of any CEO activism should be to take a position that benefits the corporation as well as society as a whole. As Friedman pointed out, CEOs often don the cloak of social responsibility to earn public goodwill for decisions that ultimately serve the interests of the business. These two things can be very difficult to separate. Friedman would argue that when CEOs allow “social responsibility” to dominate their decision making, the result is to “extend the scope of the political mechanism to every human activity”—meaning that the corporation becomes a tool for certain social interests and can thus open itself to political influence. Why, for example, would legislatures pass potentially controversial gun control legislation when they could pressure CEOs to take their preferred stances instead? CEOs can minimize the risk of political capture by using the cloak sparingly and being up front about the benefits of this activity to their companies.

Feature announcing a public position on a political matter. Though some headlines claim that CEOs are “breaking with tradition” and taking stances on social issues, ours are not the first corporate executives to assume the cloak of social responsibility. For years, Harry Potter was forced to live in a cupboard under the stairs while his hosts blamed him for all manner of their unhappiness. Along the way, he goes to wizarding school, hones some of his powers, and is given a Cloak of Invisibility. Ultimately, he realizes that he’s a very powerful wizard who doesn’t really need a Cloak of Invisibility to succeed—though that cloak certainly proved useful on several occasions. Somewhat

like Harry Potter, US corporations live in a cupboard under the stairs, are blamed for all manner of societal evils, and are often reminded of their status as guests. Note that the Business Roundtable’s “Statement on the Purpose of a Corporation” starts and ends with the hosts: “Americans” and “our country,” respectively. Like Harry Potter’s invisibility cloak, the cloak of social responsibility might prove useful from time to time when troubles come—so use it as you must. However, our hope is that US corporations remember that their true power remains in generating long-term value for shareholders. The ultimate statement a CEO can make is staying in business.

Bill Simon is the former President and CEO of Walmart, US. He is currently a Senior Advisor with KKR and Executive in Residence at Baylor University. Blaine McCormick is Chair of the Department of Management at the Hankamer School of Business at Baylor University.

4 APPROACHES TO CEO ACTIVISM ACTIVISM-INCLINED

ACTIVISM-DISINCLINED

PUBLIC COMPANY

The Cloak of Social Responsibility (e.g., the 2019 Business Roundtable statement)

Maximize Long-Term Shareholder Value (e.g., Apple during Steve Jobs’ 1997–2011 tenure)

PRIVATE COMPANY

Engagement Strategy (e.g., Patagonia and environmental activism)

Separation Strategy (e.g., Chick-fil-A and LGBTQ+ issues)

Imagine a product that has an 18-month lifecycle and is constructed with many rare-earth (or “conflict”) metals. The product is not easy to recycle given the complexity of its construction, and the company continues to raise the price of newly introduced models. Further, the product’s company gives virtually no money to charitable causes. Its leadership states that it is the company’s product, not tax-deductible donations, that will make a difference in the world. You’ve probably guessed by now that this is Apple Computer and the iPhone during Steve Jobs’ tenure. During that time, Apple created billions upon billions of dollars of value for shareholders by focusing on two fundamentals: making insanely great products and delighting customers. At his best, Ford took a very similar approach, stating, “Most certainly business and charity cannot be combined; the purpose of a factory is to produce, and it ill serves the community in general unless it does produce to the utmost of its capacity.” These are both examples of one approach to the issue of CEO activism: focus squarely on maximizing long-term shareholder value while taking no substantive positions. This is just one of four places a CEO might find himor herself on the above matrix. Let’s explore the other three: Separation Strategy: After navigating a period of intense criticism centered on founder S. Truett Cathy’s support for “traditional marriage,” Chick-fil-A released this statement in July of 2012: “We are a restaurant company focused on food, service, and hospitality; our intent is to leave the policy debate over samesex marriage to the government and political arena.” As a private

company, they clearly showed that they will separate business and political issues and not allow others to force their integration. Though Cathy did dip his toe into activism, the company has since modeled the Separation Strategy to distance itself from criticism. At present, they have pretty much stayed focused on “food, service, and hospitality,” even as protests roiled restaurant openings throughout their expansion into Canada. Engagement Strategy: For decades, Patagonia has leveraged its position as a private company to say and do things important to its founder, Yvon Chouinard. The company is clearer than ever that “we’re in business to save our home planet.” In a recent interview, Chouinard even noted that when it comes down to two candidates for a job, they hire the person most committed to saving the planet. Fully engaging in social activism has associated costs and benefits, but Patagonia works hard to align company activities with its core values. The Cloak of Social Responsibility: The 2019 Business Roundtable statement is a good recent example of the “cloak of social responsibility,” often worn to relieve political pressures or to transform self-interested activities into something that seems less shareholder-focused. CEOs of public companies can and have used the cloak in tough situations. CEOs might find that it promotes both brand loyalty and employee loyalty but increases the risk of being captured by political actors.

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DESIGNING

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AN EFFECTIVE SALES PROMOTION Kirk Wakefield, PhD

LESSONS FROM TEAM SPORTS MARKETING When a fan buys a ticket to a professional sporting event, they have learned to expect some form of promotion. This trend reflects a larger shift in the sports world, as promoters work to make the experience more entertaining rather than relying solely upon team performance to attract fans. Today, promoters are on a continual search for the next big promotional idea and, so far, the most effective appears to be . . . bobbleheads. Seriously. Past and current research on the effects of single-game promotions in Major League Baseball finds that the following have the strongest effects on attendance (in order): • Bobbleheads • Combination of giveaway and special event • Combination of two or more special events • Giveaway valued at $5 or more • Giveaway valued at less than $5 • Price discounts • Single special event1

What is the common denominator here? All but one of the items in this list (price discounts) add value to the experience. Bobbleheads, for example, give fans the opportunity to exhibit the passion they have for the team when they put them on display at the office or at home. Giveaways can add value to the experience as well. Fans prefer giveaways that are in some way related to the event (e.g., bats, gloves, and caps for baseball)2—this fuels the fantasy and feelings they associate with the experience. Special events like concerts or celebrity appearances, especially when combined with giveaways or another event (e.g., a pre-game concert and post-game fireworks), also have great impact on the experience. The idea is to make promotional events truly memorable experiences that excite fans rather than just offering another forgettable promotion. Assuming a brand sponsors the promotion, the extent to which the experience provokes strong internal (sensations, feelings, and thoughts) and behavioral responses determines the benefit to the brand.3 Not surprisingly, again, price discounts come near last in the previous list, as the price cut offers only economic and no direct emotional or experiential benefits. TexasCEOMagazine.com

The Characteristics of a Well-Designed Promotion Adding value is important to think about in designing any sales promotion, whether for a sports event or not. But it’s only one of the factors to think about. Well-designed sales promotions have five characteristics, which you can remember with the acronym CASES: Clear target and objective Adds value Simple Experiential Sponsored The best way to see how this plays out is to look at an example. Lexus hits all the above points with a promotion offering Lexus owners complimentary valet parking at Globe Life Park in Arlington for all Texas Rangers home games. This promotion: • has a clear target and objective; in this case to reinforce loyalty to its brand among Lexus owners who attend Rangers games. • adds value by offering a service perceived to be worth the $30 charged all other car owners (but does nothing to reduce perceived ticket value). • is simple to understand: “I give them my car before the game and I pick it up after the game.” • is experiential: “Wow, I can drop myself off at the gate and walk right into the game.”

assist in the process. For example, attendants could inquire among new visitors, including non-Lexus owners who pay for the valet, “May we exchange mobile phone numbers to make certain we provide you with the best service possible? Here is our number at the valet station. Check the box on the form if you want to hear about other great service offers from Lexus.”

Adding Real Value As you design your own sales promotions, remember that adding value—the A in CASES—does not mean reducing prices. That said, the perception of value is in the eye of the beholder. Focus groups or online panels can help you gauge fan or customer reactions before you spend valuable resources on ineffective promotions. Sometimes sponsors and corporate salespeople come up with ideas that might have made sense on the golf course or at dinner with perhaps one too many drinks, but ultimately don’t add value to the experience. Too often these “creative” promotions have poor perceived value due to a variety of reasons, including low payout odds and associated low payoff value. Take the time the Detroit Pistons partnered with Arby’s. The promotion involved giving away small curly fries if (1) a player scored a tripledouble, (2) fans printed out the box score from the paper, and (3) then went to Arby’s to redeem. Fans waited over nine years until Greg “Curly Fries” Monroe recorded a triple-double. The point is that marketers must develop promotions that deliver certainty of positive outcomes and experiences at the event.

Over the years since initiating this popular promotion, Lexus has improved the process by requesting mobile phone numbers via text and generating social media engagement, as well as connecting the promotion directly to the local Lexus dealer.

Crazy promotions such as this may add some entertainment value, but they do less to reinforce loyalty to the team and organization. The promotions that add real value are typically experiential. Shirt giveaways for a “color-out,” with all fans wearing the home-team colors, add value to the experience at the event. So do promotions where sponsoring retailers offer tickets to team practices held at outside facilities (e.g., WNBA teams practicing at a college to generate interest), which add value in an experience all its own.

Ideally, a well-designed promotion should also include data capture. While it’s always desirable to collect customer contact information (cell phones, emails, or social media), it is not always feasible. There may be a trade-off between offering a simple service and adding a complicating factor that aids data capture. Proper positioning of the data capture request can

The primary thing to remember about the sales promotion— and the lesson every CEO can take from sports promotions—is that the strongest offers add value to the experience. You want to help your customers create lasting memories they associate with your brand, not just give them a chance to pocket the money from a discount and forget about it forever.

• is clearly sponsored with prominent signage and Lexus uniformed attendants at drop-off and pickup.

Kirk Wakefield is the Edwin W. Streetman Professor of Retail Marketing and executive director of Sports Sponsorship & Sales at Baylor’s Hankamer School of Business. His research in retailing, covering more than two decades, focuses primarily upon sports psychology, team sports marketing, entertainment marketing, and fan and consumer response to pricing and promotional tools. He has conducted fan research in almost every venue in sports, including the NBA, NFL, MLB, MLS, NHL, and NASCAR. Wakefield is the author of Team Sports Marketing, now widely used in universities nationwide and available online at www.teamsportsmarketing.com.

1 Thomas C. Boyd and Timothy C. Krehbiel (2006), “An Analysis of the Effects of Specific Promotion Types on Attendance at Major League Baseball Games,” Mid-American Journal of Business, 21 (2), 21–32. 2 Kirk L. Wakefield and Victoria Bush (1998), “Promoting Leisure Services: Economic and Emotional Aspects of Consumer Response,” Journal of Services Marketing, 12 (3), 209–222.

Zarontonello & Schmitt (2013), “The Impact of Event Marketing on Brand Equity,” International Journal of Advertising, 32 (May), 255–280.

Texas CEO Magazine Q1 2020

THE NEGLECTED KEY [SELF-AWARENESS]

TO STRESS MANAGEMENT J. Michael Godfrey, PhD

Meet Nathaniel. Nate wants to be successful and respected at work but not lose himself, his family, or other things he values in the process. He’s hardworking and was very successful in his job. As a result, the board promoted him to CEO, which seemed glamorous to Nate, and he was sure it would bring money, prestige, power, and recognition. He looked forward to greater happiness and success.

YOUR ADVANTAGE, ESTABLISH

Very soon, Nate found himself facing the realities of the job. He was paying less attention to his self-care and his family. He struggled to get everything done. After about 16 months in the new position, Nate was depressed, having panic attacks, and showing all the signs of burnout. He was irritable and impatient with his family, and angry more often than usual. He had headaches often, wasn’t sleeping, and had a cold he couldn’t shake. He had more trouble concentrating and paying attention than usual and he frequently lost track of important things. He came to tears more quickly than typical for him. Disenchanted, he was not sure why it had to be this way. There ought to be a better way.

A SOLID FOUNDATION OF

How Has It Been for You?

GROWING SELF-AWARENESS.

How has being CEO been for you? Challenging and fulfilling? Stressful?

IF YOU WANT TO MANAGE STRESS TO

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Who gave you the heads-up on the unrelenting stress of the CEO job—the demands of global business, the requirement to be “always on,” and the travel involved? How about the frequent frustration, disappointment, irritation, overwhelm, isolation, loneliness, and the effects of all this on your health and well-being? How about the pressure on your family life?

to pay undivided attention to what you are experiencing in the moment, in the various aspects of your being—as objectively as possible—and being open to new experiences of growth. Such attentiveness is a disciplined process that one must learn. As awareness grows, you can take time to understand the source(s) of these experiences as well as their present and potential effect.

Do you recognize stress when it shows up in you? Do you know the essentials of managing the stress of the job?

A growing self-awareness can help you learn to recognize signals of stress and appreciate them for what they are. Then you can choose a positive, helpful path of action.

To Manage Stress, Increase Self-Awareness If you want to manage stress to your advantage, establish a solid foundation of growing self-awareness. All other stress management efforts are built on this foundation. Yet, many stress management techniques skip over self-awareness and treat only symptoms. As a result, they do not yield long-term results. I work with people like Nate (and like you) in coaching relationships to support their growth in self-awareness and help them manage the stress of the CEO job. They learn to increase their self-awareness, critically examine their situation, and implement stress management strategies and techniques that help them put stress to work for their advantage. They come out on the other side with a clearer focus, a better pace of life, increasing quality in their relationships, and ultimately, greater success.

If you are not self-aware, you can miss these signals. Then, stress can become unhealthy, leading to burnout, ineffectiveness, and depression with accompanying low energy. If allowed to continue unmanaged, the stress can wreck your health and even kill you. If you have been in the red zone of stress for a while now, you have likely come to accept it as a “new normal.” You may not be aware of how far you have driven yourself up the distress ladder until it seriously affects your health, relationships, and work effectiveness. Most people wait until the train is completely off the tracks before thinking of getting help.

A GROWING SELF-AWARENESS CAN HELP YOU LEARN TO

RECOGNIZE SIGNALS OF STRESS AND

APPRECIATE THEM FOR WHAT THEY ARE.

Pay Attention to Your Whole Being The term self-awareness is most commonly used to refer to a person’s awareness of their inner states and how those states express themselves, which is very important in leadership and life. Some have suggested that self-awareness is “both a tool and a goal” and I agree that it is just that important and beneficial.1 “The ability to reflect on and accurately assess one’s own behaviors and skills as they are manifested in workplace interactions” is a characteristic of high-performing managers, according to the organizational psychologist Allan Church.2 And self-awareness can improve your overall sense of well-being.3 Here, I am using a broader idea of self-awareness, one that involves your whole being—physical, emotional, mental, spiritual. This type of self-awareness is foundational for the management of your stress, for improving your persistence in distress,4 and for living and relating well. Helpful self-awareness is not neurotic rumination about an issue or getting stuck in the negative; that dynamic can lead to greater anxiety and depression.5 Helpful self-awareness involves getting to know yourself more deeply by taking time 44

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Stress Is Natural and Normal Stress is a natural and normal part of being human. You need a little stress all the time to assist you in meeting the demands of life and work. But you can get too much of a good thing. Your brain does countless things without your conscious knowledge, and one of these is to trigger the stress reaction based on your unique version of reality.6 Your brain is always on alert, rapidly scanning the environment, checking to see if you are safe or in danger and working to minimize danger and maximize reward. Five times per second, life events trigger nonconscious emotions.7 As it scans your surroundings, the brain may predict that danger is present and “throw a switch,” so to speak, to prepare you to fight, run, or hide. All of this happens outside your consciousness. When your brain throws the switch, your first awareness will be a feeling. Physically, you will feel it in your gut and your chest, and through physical symptoms such as rapid heart rate and elevated blood pressure. Emotionally, you will feel it as anger, fear, or frustration. These experiences can range from a little discomfort to a full fight, flight, or freeze reaction.8 Once you have this conscious feeling, which is about half a second9 after the brain “throws the switch,” you are in a position to choose how you will behave. You can let the fight-flight-freeze reaction run its course, or you can choose another behavior.

The brain sometimes makes good predictions that are helpful and even lifesaving. In cases of physical threat, the fight-flightfreeze reaction is essential and must run its course if you are to react fast enough to escape danger. But the brain often makes bad predictions and erroneously prepares our bodies to fight, run, or hide. Bad predictions can occur in interpersonal relationships, in various social settings and situations, and in response to other issues such as schedules, deadlines, disagreements, and personality or style differences. In these cases, the fight-flight-freeze reaction is not necessary, productive, or helpful. It is better to engage your problem-solving abilities to make a different choice than fighting, running, or hiding.

Stress Is Like Fever Just as you don’t choose to have a fever, you don’t choose to have stress. Your body produces it automatically when needed. It’s a signal, a symptom, showing that something unusual is present—a perceived threat, something unfamiliar, something that pushes the limits of your capacity. As with fever, once you recognize your stress as a symptom, you don’t panic every time it happens. Instead, you can use this self-awareness to manage the situation with problem-solving skills, trying to get back to “normal.” In the future, you can avoid whatever precipitated your stress and hopefully prevent it. But if your stress remains unchecked, it can become contagious, affecting not only you but also those around you—your spouse, children, colleagues, and others. Your stress can create distress for them as they witness your misery, dodge your defensive behavior, or catch the brunt of your fury.

Cognitive Impairment and Stress When you are in a stressed, defensive posture (feeling the urge to fight, run, or hide, which for some of us is most of the time), your brain is channeling your mental and bodily resources away from critical thought, problem solving, and self-management. As a result: • Your ability to concentrate, learn, think, hear, communicate, and see problems clearly declines dramatically. • A demand for certainty replaces curiosity and creativity. • Your perspective narrows. You tend to oversimplify, minimize, and neutralize problems, and you lose the big picture as a result. • You look for a scapegoat to blame when things go wrong. Imagine how these things can affect your leadership, especially in times of crisis. Fortunately, if you are growing in selfawareness, you will learn to recognize these symptoms of stress and choose better, more rational responses.

How to Improve Your Self-Awareness

• Practice mindfulness. To be mindful is to pay deep, intentional attention to what’s going on in the moment, inside and around you. It means paying attention to what’s going on in your mind (not just your brain)10— to your thoughts, motives, defenses, emotions, physical states, and how all of this might affect you and others. Increased reflection results in increased self-development.

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• Be courageously honest with yourself, even if it’s painful. Celebrate the good. Correct thoughts and actions as required.

• Use reflection questions. o Reflect on your practice. At various times during the day, especially at the end, take time to think back through your interactions. Examine the beliefs you espouse compared to beliefs you act out, your thoughts, sensations, reactions, and emotions. Ask “what” and “how” questions to understand how these played out.

• Try keeping a journal of your thoughts and reflections.

A FEW OF MY FAVORITE REFLECTION QUESTIONS

o Reflect in your practice. Monitor the above aspects of your being while you are working and interacting in real time. Present-tense versions of your end of-day questions work well to guide real-time reflection. Find questions for reflection here: https://discoveryourtruecourse.com/ resources/questions_for_reflection.

In any specific situation: • How else could I look at this? • What were my clear expectations? • What impact did my inner conversations have on my effectiveness?

• Exercise discipline. o Throughout the day, take breaks and replace thoughts of work with positive thoughts about something or someone you appreciate. Be grateful for them. o Stay present during interactions with others. Pay attention to what others say without judging them, letting your biases distort the message, or having an inner side conversation with yourself. Avoid jumping to quick conclusions, correcting, or trying to fix. Stay curious. Be open to new and unfamiliar ideas and ways of doing things. o Practice behavioral agility, which is the ability to modulate your behavior, especially stress behavior, to best serve a particular situation. • Learn how others see you. o Have conversations with others you trust to see if your beliefs about yourself are accurate. You may not feel comfortable opening up to your coworkers, your board, or even at home. If so, get a coach, a counselor, or a trusted advisor. o If you think others may be guarded in their opinion, engage a third party to facilitate a qualitative 360° interview process.

• How open am I to learning? • How stuck am I in my way of thinking? • How true am I to my values? • What triggered the emotions I experienced? • What positive impact did I have?

The CEO job is stressful, but that doesn’t mean you have to be constantly miserable. You don’t have to give up your sense of self, your family, or the other things you value. Any solution for stress management, as I have outlined above, always starts with self-awareness. As you build your self-awareness and lower your stress, remember that few of us, if any, can grow our self-awareness on our own. Once you find that trusted person or people to be your partner in building self-awareness—and to hold you accountable for sticking to the process—you have taken the critical first step to managing stress in the long term.

J. Michael Godfrey, DMin, PhD, PCC, is the founder and president of True Course. He supports leaders to be more, see more, and achieve more that matters in their personal lives and professional lives, and helps them posture themselves to finish without regret. True Course supports executives as they lead their organizations to become places where people love to work, serve, and be customers. He is the author of Without Regret: Be More, See More, Achieve More that Matters and Put Stress to Work: Turning Headaches into Advantages. For more information visit DiscoverYourTrueCourse.com. Contact Dr. Godfrey at discover@discoveryourtruecourse.com. 1 Fenigstein, A., Scheier, M. F., & Buss, A. H. (1975). “Public and Private Self-Consciousness: Assessment and Theory.” Journal of Consulting and Clinical Psychology, 43(4), 522–527. http:// dx.doi.org/10.1037/h0076760

5 Trapnell, P. D., & Campbell, J. D. (1999). “Private Self-Consciousness and the Five-Factor Model of Personality: Distinguishing Rumination from Reflection.” Journal of Personality and Social Psychology, 76, 284–304. http://dx.doi.org/10.1037/0022-3514.76.2.284

Church, A. H. (1997). “Managerial Self-Awareness in High-Performing Individuals in Organizations.” Journal of Applied Psychology, 82(2), 281–292. http://dx.doi.org/10.1037/0021– 9010.82.2.281

Kelly Richards, C. Campenni, and Janet Muse-Burke (2010) “Self-Care and Well-Being in Mental Health Professionals: The Mediating Effects of Self-Awareness and Mindfulness.” Journal of Mental Health Counseling: July 2010, Vol. 32, No. 3, pp. 247–264. https://doi.org/10.17744/ mehc.32.3.0n31v88304423806 3

4 Feldman, G., Dunn, E., Stemke, C., Bell, K., & Greeson, J. (2014). “Mindfulness and Rumination as Predictors of Persistence with a Distress Tolerance Task.” Personality and individual differences, 56, 10.1016/j.paid.2013.08.040. doi:10.1016/j.paid.2013.08.040

Texas CEO Magazine Q1 2020

Barrett, L.F. (2017). How emotions are made: The secret life of the brain. New York: Houghton Mifflin Harcourt Publishing, p. 25–29 (Kindle Version).

7 Gordon, E. (2016). The Brain Revolution: Know and Train New Brain Habits. Indianapolis: Dog Ear Publishing, p. 11–12.

For more on stress symptoms see Godfrey, J. M. (2016). Put Stress to Work: Turning Headaches to advantages. Willmington, DE: Thomas Noble, chapter 3: How Stress Shows Up to Work, pp. 23—32.

Gordon, pp. 11–12.

Lisa Feldman Barrett suggests that the “mind” is “a computational moment within your constantly predicting brain.” Barrett, L.F. (2017). How Emotions are Made: The Secret Life of the Brain. New York: Houghton Mifflin Harcourt Publishing, p. 280 (Kindle Version). 10

SELF-AWARENESS

[SELF-AWARENESS]

AND THE CEO How do we gain insight about ourselves when people are reluctant to tell us the truth? A stranger approaching you in the street will in a second’s glance see you whole, size you up, place you in a way in which you cannot and never will, even though you have spent a lifetime with yourself . . . and therefore ought to know yourself best of all. —Walker Percy Tasha Eurich, PhD The saying that “feedback is a gift” is such a painful cliché that we often forget how true it really is. As leaders, we need not only the self-awareness that comes from looking inward—we also need what I call “external self-awareness.” That comes from turning our gaze outward to understand how we are seen. And no matter how hard we try, we simply cannot do this on our own. We need that gift of feedback from the people around us, whether it’s an employee, a board member, a CEO at a different organization, or even a total stranger. Unfortunately, though, learning how others see us is usually thwarted by one simple fact: even the people we’re closest to are reluctant to share such information. We all need the “gift of feedback” for one simple reason: other people generally see us more objectively than we see ourselves. Psychologist Timothy Smith and his colleagues powerfully demonstrated this in a study with 300 married couples in which both partners were being tested for heart disease. They asked each participant to rate both their own and their partner’s levels of anger, hostility, and argumentativeness—all strong predictors of the illness—and found that people’s self-ratings were infinitely less accurate than those of their spouses. Another study asked more than 150 Navy officers and their subordinates to rate the officers’ leadership style, and found that only the subordinates could accurately assess their bosses’ performance and promotability.

WHETHER OR NOT WE RUN A MULTIBILLION-DOLLAR COMPANY, PROTECTING OUR FRAGILE EGOS BY DECIDING WE ARE RIGHT AND OTHERS ARE WRONG CAN BE RISKY. TexasCEOMagazine.com

Three Actionable Strategies for Building Self-Awareness 360º FEEDBACK

THE RIGHT FEEDBACK PROCESS

THE DINNER OF TRUTH

The most popular and well-known method for soliciting feedback in the business world— and worth every CEO’s time as a tool for understanding how they are perceived.

All feedback is not created equal: we have to choose the RIGHT people, ask them the RIGHT questions, and use the RIGHT process to get valuable information.

Josh Misner, a professor and a prominent member of the Good Men Project, recommends a practice for gaining self-awareness in our personal lives.

It’s not the “be-all, end-all,” though: the numeric outputs can sometimes be difficult to interpret and put into action.

Find the “loving critics” in your life—the people who care about you but are willing to be brutally honest—and then ask them specific questions to solicit real insight.

Invite a friend, family member, or mentor to a meal, and ask them the thing that bugs them most about you. Tell them that anything is fair game—and that you will listen with openness, not get defensive.

Developing external self-awareness becomes particularly critical, yet infinitely more difficult, when you’re the boss, and especially when you’re the CEO. Studies show that self-aware leaders are more successful and promotable, and some research has even shown that self-awareness is the single greatest predictor of leadership success. The problem is, the higher up you are on the corporate food chain, the less likely you are to be self-aware, an affliction that’s been labeled “CEO Disease.” After all, who really wants to tell the boss that his management style is alienating people, or that her latest staffing choices are causing friction, or that his clients find him controlling? Complicating matters, the overconfidence that results from past successes can make it challenging for leaders to hear and accept difficult feedback— and thus make their employees more reluctant to give it. Pixar president Ed Catmull has witnessed this reluctance to speak truth to power firsthand. Years before he co-founded his company and became president of Disney Animation Studios, he was a young PhD student at the University of Utah’s nascent computer graphics program. He adored the comradery he had with his professors and fellow graduate students—there were no strict hierarchies, they worked independently, and everyone generally got along. Catmull liked this environment so much that he created a similar structure in his first job out of school. As the head of a small computer animation research team at the New York Institute of Technology, he hired smart people, treated them as equals, and let them do their thing. As a result, they told him pretty much everything that was going on. He was involved in social activities and was basically one of the guys—it felt good. But when Catmull was hired to lead Lucasfilm’s brand-new computer division, he realized that he’d need to rethink how he managed people. His new team would be bigger, better resourced, and have a much higher profile. To achieve George Lucas’s ambitious vision of bringing computer technology to Hollywood, Catmull reasoned, he would need to adopt a more formal, hierarchical structure with a manager running each of the graphics, video, and audio groups. And when he did that, 48

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nearly instantaneously he noticed that something was different. Casual chatter had a habit of going silent whenever he entered the room. He was getting mostly good news and hardly any bad news. And his team was no longer inviting him to their social gatherings. Catmull didn’t like this very much. He didn’t feel like a different person than University of Utah Ed or New York Tech Ed. But he realized that his new role as The Boss, coupled with his increasing prominence in the academic community, had changed the way people perceived him. He told me, “I recognized that, okay, this is the way it is, and it will probably get worse over time.” The reluctance to speak up was presenting a giant obstacle not just in his own performance, but to the collective self-awareness of his team. Since then, Catmull has made it a top-tier priority to combat this reluctance and seek the honest truth, not just about himself as a leader, but about the challenges and issues his company is facing. And it has made quite a difference. He now says that one of his core tenets is what he calls “leading by being self-aware.” Whether or not we run a multibillion-dollar company, protecting our fragile egos by deciding we are right and others are wrong can be risky. Nevertheless, we fall back on the same old excuses. We tell ourselves we’re doing fine and don’t really need the feedback. Or we tell ourselves that asking for feedback would be weak. Or, perhaps most understandable of all, we rely on the excuse that we just don’t want to ask for feedback. After all, it’s scary and uncomfortable. The good news is that we can decide to pull our heads out of the sand and recognize that others’ opinions are just as important for insight as our own. The best leaders push through their fear, defensiveness, and vulnerability and go for it anyway. As U.S. President Franklin Delano Roosevelt once opined, “Courage is not the absence of fear, but rather the assessment that something else is more important than fear.” In our case, that “something else” is insight.

Take the Insight Quiz Looking to get a high-level snapshot of your own self-awareness—and how it matches up with how others see you? Take this 5-minute quiz, and choose a friend to fill out the same survey for you. You’ll get the results when both sets of data are in! Access the quiz at www.Insight-Quiz.com.

This article is adapted from Dr. Tasha Eurich’s book, Insight: The Surprising Truth About How Others See Us, How We See Ourselves, and Why the Answers Matter More Than We Think (Currency). An organizational psychologist and sought-after keynote speaker, Eurich gives leaders around the world the tools they need to succeed in an everchanging world. Visit www.TashaEurich.com to learn more about her.

Early bird registration (until Jan 31, 2020): $299 Regular registration (after Jan 31, 2020): $399 Registration fee includes the reception Friday evening and lunch on Saturday.

Baylor University Executive MBA Program - Dallas Louise Herrington School of Nursing – Academic Building 333 N. Washington Ave, Dallas, TX 75246 Have questions? Email us at info@texasceomagazine.com and we’ll respond promptly. To register, visit texasceomagazine.com/mar20

DALLAS

DO YOU ASPIRE TO BECOME A CEO? THIS ROLE IS VERY DIFFERENT FROM EVERY OTHER C-SUITE POSITION AND YOU NEED TO PREPARE DIFFERENTLY FOR IT.

Aspiring CEOs Seminar

FRIDAY, MARCH 20: 6:30 PM TO 8 PM, RECEPTION AND INTRODUCTION SATURDAY, MARCH 21: 9 AM TO 4 PM, SEMINAR To help aspiring chief executives, seasoned tech CEO Joel Trammell has taken his CEO training course and adapted it specifically for them. Joel’s leadership as CEO has resulted in successful nine-figure acquisitions by two Fortune 500 companies. As CEO of network management software firm NetQoS, he delivered 31 consecutive quarters of double-digit revenue growth and a $200 million valuation. CA Technologies acquired the company in 2009, generating more than 10x return on capital to its private equity investors. In 2010, he cofounded Cache IQ, a storage software company that NetApp acquired two years later. Joel is committed to using his experience to help current and aspiring CEOs. Join us for this crash course in excelling in the CEO role— and learn valuable lessons that will advance your career.

TESTIMONIALS:

“Joel Trammell’s CEO seminar is a must, especially for any first-time CEOs. You will learn what to expect as a CEO and the ins and outs of building a powerful team through Joel’s real-life experience and candid feedback. You will also hear from and network with some of the more successful executive leaders in Austin. I pull from this experience with every challenge I face—especially the ones I never expected. Go do this!” —Denver Fredenberg, owner, Harvest Rain; former CEO, Hyperwear “The CEO seminar was a great experience because it gives you a chance to step back from your day-to-day and think strategically with the help of Joel Trammell. I learned tactics that I now put into action every day.” —Chuck Gordon, CEO, Storable; former CEO, SpareFoot “The CEO seminar was not only insightful and thought provoking on leadership styles and successful business constructs; it also afforded a unique opportunity to interact with my peers across a variety of companies. I learned lessons I still refer to today in managing people and the culture of an organization.” —Melanie Kalemba, former CEO, Movero Technology

HOSTED BY:

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Come shoot clay pigeons with Texas Rangers at a private club in Austin, Texas. This event will benefit the Texas Ranger Hall of Fame and Museum in Waco, Texas. To put your name on the waitlist for tickets, or to inquire about sponsorships, email us at info@texasceomagazine.com.

WHAT’S MY CMO TALKING ABOUT? Tony Streeter

As head of the entire organization, the CEO is expected to have a working knowledge of each functional area of the business. But as technology evolves at dizzying speeds, it’s not always easy to keep up. You may have thought, for example, that you understood marketing nomenclature, but now noticed that it’s getting harder to differentiate between a conversation with your CMO and your CIO. Let’s take a brief tour of some of the words and phrases your CMO is probably using these days—so you can have an informed conversation about how the marketing department fits into the strategic plan of your organization.

Martech(1) is the buzzword created to describe the combination of marketing activities with technology. Although traditional methods of advertising and marketing (billboards, ads, radio, TV, sponsorships, direct mail, etc.) are still effective, the digital boom has paved the way for the development of a number of sophisticated digital tools that provide a depth of insight for the savvy marketer. Mass marketing via standard approaches has now been surpassed by digital marketing practices that allow for highly targeted campaigns and detailed effectiveness reporting. Integrating data analytics(2) with your internal customer data— typically held in a customer relationship management (CRM) (3) database—and third-party data now gives you the ability to (1) get a profile of your customer (what they buy, when they buy, how much they are willing to pay) and (2) understand who is buying (demographics such as age, gender, income, and education level); where they are buying from (geolocation), and what motivated them to buy (discount, incentive, bundle, online content, testimonials/endorsements, etc.). In the past, marketers relied on laborious multivariate testing (MVT)(4) to gauge prospective customers’ reactions to different offers, different content, and so on. Now, with prescriptive analytics(5), market testing has largely been automated. Prescriptive analytics uses both descriptive analytics (data about the past) and predictive analytics

(modeling and forecasting of what may happen in the future) to arrive at recommended courses of action, especially when combined with sophisticated propensity models(6). Machine learning (ML)(7) can also be used to automate multivariate testing by first performing a cluster analysis that groups variables before placing them into a multinomial logistic regression—essentially, a method of predicting probable outcomes given a certain set of variables. So instead of waiting weeks or months to see what actual customers do, the proper data analytics techniques can tell you what they are most likely to do in minutes or seconds. Of course, the accuracy of the recommendations depends heavily on the accuracy of your internal data and the stringency of your data governance(8) practices. Here are some other digital tools your CMO may be talking about: IP Address Hyper-Targeting Here’s a neat little development that came out around the 2016 election: IP address hyper-targeting. Every household that has an Internet connection has a unique IP address. The digital advertising tactic known as IP address hyper-targeting delivers personalized content to a website user’s mobile device or desktop based upon its physical location. IP targeting is better than traditional geo-fencing(9) in that it targets specific households or businesses. So, for example, a political message can be directed TexasCEOMagazine.com

toward a target audience’s IP addresses (based upon voter addresses in a database) while avoiding those who don’t wish to see or hear it. It works by converting physical addresses into IP addresses and then messaging to mobile devices and desktops that use those IP addresses. Let’s say you run a B2B business and are trying to win favor with a particular company; you can determine their IP address and put your message in front of every employee registered at that IP address when they go online. (For more about how this works, take a look at www.eltoro.com.)

Converting Analytics into Directional Leads

Google Analytics can tell you a lot about how your website is received by the general public. It can tell you the number of sessions you’ve had, the number of unique visitors, your bounce rate, your most popular pages, the average time spent on your website, etc. However, this information doesn’t directly convert into leads. There are online sales intelligence tools that will allow you to uncover more about your anonymous website visitors and can help you turn Google information into directional leads. Tools like Leadfeeder integrate with both Google and LinkedIn and take in IP address information to provide a customized dashboard that furnishes insights on who’s visiting your site. The lead dashboard will show you the names of the companies associated with the IP addresses that are visiting your website (important for B2B companies). And, although it can’t tell you the exact individual who visited, it can tell you what they looked at, how long they looked, and on what date. Software can also provide, via integration with LinkedIn, a list of the company’s employees, their titles, and their email addresses. So, let’s say someone from Company X spent six minutes looking at one of your services. You could infer that Company X may have a need for that service. Next, you would go through the list of company contacts and select the individual or department that would most benefit from your service, then reach out to them.

Competitor Monitoring Competitor monitoring and analysis can be an arduous undertaking. In the past, sporadic information would come in from a number of sources. Sales may have known something about a competitor’s pricing. Marketing may have snagged a competitor’s brochure at a trade show. Whatever was culled together told a patchy story at best. Today, with most of a company’s information online, competitive data can be gathered, organized, and presented more easily. Software platforms like WatchMyCompetitor.com can now pull product information (pricing changes, launches, availability, retiring products), marketing information (promotions, events, website layout changes, banner changes, online ads), social media information (impactful posts and videos), and company information (personnel changes, restructuring, financial results, investor updates, new partners, new locations) and put all of it into a concise, personalized dashboard. In addition, the information is consistently updated, and you can set alerts for strategic changes. You no longer have to be caught unaware. It’s worth every CEO’s time to learn the basic language, approaches, and tools of the modern CMO. Once you have a working knowledge of the latest developments in marketing technology, your conversations with your head of marketing will be a lot less confusing—and significantly more productive. Tony Streeter is the Chief Marketing Officer, SVP, at Y&L Consulting Inc. in San Antonio, Texas. He has led new product development, ecommerce marketing, and integrated platform marketing initiatives for major companies such as Harland Clarke, Deluxe Corporation, and RR Donnelley. Currently, Streeter leads marketing and branding initiatives for Y&L Consulting, a comprehensive IT services and solutions company specializing in IT development, data analytics, emerging technologies, and help desk services.

GLOSSARY (1) Martech - A portmanteau of marketing and technology, most often used to describe projects and campaigns that use technology to achieve marketing goals. (2) Data analytics – The practice of examining raw data sets with the objective of identifying patterns and arriving at conclusions. (3) Customer relationship management (CRM) – Customer relationship management (CRM) tools offer companies a system of record for storing data about and interactions with their future and current customers. (4) Multivariate testing (MVT) - A technique for testing how prospects and customers react to different combinations 52

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of multiple variables. Similar to A/B testing, but uses more than one variable to arrive at the best combination of variables. (5) Prescriptive analytics – A form of analytics that makes prescriptions or recommendations for future actions. While predictive analytics can model possible future outcomes based on historical data, prescriptive analytics advises organizations on the best path to take. (6) Propensity models – A tool for forecasting customer behavior, involving scoring likely future customer behaviors numerically. A higher number means the customer is more likely to engage in the behavior in question.

(7) Machine learning (ML) – A subset of artificial intelligence dealing with computers’ ability to learn from data, recognize patterns, and adapt to new situations without human intervention. (8) Data governance – The management of an enterprise’s data, including its integrity, security, and the various rules that govern how it is handled. (9) Geo-fencing – The practice of using GPS or radio frequency identification (RFID) to create a boundary around a geographic area, then trigger responses when a device enters that area.

THE

SPORT OF

RELOCATION Ed Curtis

Anyone doing business in Texas knows that the competitive landscape is changing. Out-of-state-based businesses, from a wide array of industries, are looking to set up shop in Texas. According to the YTexas Relo Tracker, 2018 and 2019 brought over 50 corporate headquarter relocations into the Lone Star State. If you were to include corporate expansions, the number is well into the hundreds. Leading industries include technology, advanced manufacturing, consumer packaged goods, and professional service firms. In recent years, another industry has emerged in the world of corporate relocation and expansion. It’s the sports industry. Here are six sports-related relocation and expansion projects that will shape the future of the Lone Star State.

PGA of America — You would think Palm Beach Gardens, Florida, would be the home of all things golf. Not so anymore. While still maintaining a presence in South Florida, the PGA of America is relocating its corporate headquarters to Frisco, Texas, after more than a half century of operation. That’s only the tip of the iceberg. The HQ will be part of a 600acre mixed-used development that is projected to include two championship golf courses, a short course, Class AA office space, and a 500-room Omni resort, to include a 127,000-squarefoot conference center and a whole lot more. Rumor has it there is a possibility that the PGA will bring a future Ryder Cup to Texas. Meanwhile, the PGA Championship is slated to be played at PGA Frisco in 2027 and 2034. Since the area hasn’t hosted a PGA Championship since 1963, that is a big deal. This relocation will create a ripple effect on the economy, creating a market ripe for vendors, suppliers, players, and residents close to the game of golf. The project will reside near US 380 and the Dallas North Tollway. When will we see this? Believe it or not, not in the too distant future. Could be as early as 2022—with the hotel and convention center not far behind. “PGA Frisco is destined to become the future home of American golf,” said PGA chief operating officer Darrell Crall. “We are working collaboratively on every step, on roads and design, making sure we are all committing to the community and executing in a way that everyone can be proud of. Frisco is a perfect match for our corporate culture. The PGA of America is thrilled to bring our headquarters and championship golf to Northern Texas.” TexasCEOMagazine.com

Austin FC — In 2021, Major League Soccer

(MLS) will have a home in Austin. The Austin FC team will be the first top-division major sports team in the Austin area. Anthony Precourt, previous owner of the Columbus Crew, brought Austin’s first major league team to the city in January of 2019, when he sealed a deal with the City of Austin to bring the 27th MLS club to the state capital. The club is building a new state-of-the-art soccer park and multi-use stadium for the team in a public/private partnership with the city at McKalla Place, near the Domain mixed-use development. The club will also build a $45 million training facility called St. David’s Performance Center in Northeast Austin, which will have four full-size soccer fields and first-class amenities for the club’s first team and academy teams. Both the stadium and St. David’s Performance Center are scheduled to open in 2021. For a town that falls short of a professional sports franchise, this is huge for Austin. Season tickets can still be reserved with a $50 refundable deposit at austinfc.com. Go get ’em.

Envy Gaming — Look no further than Dallas, Texas, for the next wave of esports teams sweeping the nation. Envy Gaming, which moved to Dallas from Charlotte, North Carolina, in 2017, was recently named the eighth most valuable esports organization in the world. Envy acquired the Dallas Overwatch League franchise spot in 2018, launching its Dallas Fuel franchise. In 2019, Envy Gaming raised an additional $20 million in VC funding and also acquired the Dallas Call of Duty League team spot, which will debut the Dallas Empire team in the 2020 competitive season. Esports has exploded in popularity in recent years, with fans filling arenas to watch players square off in popular multiplayer video game competitions. Envy Gaming will host seven home weekends of live esports competition in various stadiums across North Texas in 2020. It is estimated that there are over 50 million registered players of popular video games in the US, which creates a market for tremendous growth. For more information, visit Envy.gg. United States Tennis Association Texas

— If you’re a tennis fan in Texas, and that would include me, then get ready to make some trips to Central Texas. The United States Tennis Association (USTA) Texas is planning to relocate its headquarters to Cedar Park, Texas. The development project will bring around 40 outdoor and six to eight indoor courts and be part of a 150-acre mixeduse development. The new HQ will anchor a multibilliondollar project (Indigo Ridge) that will encompass over five million square feet of mixed-use development, including dining, retail, and entertainment. The facility will be in earshot of the major Apple expansion and will be an added draw for more corporate relocations to the area. If this will look anything like the USTA HQ in Florida, we’re in for a real treat. 54

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Perfect Game — Nestled in the Austin suburb of Hutto, Texas, will be the largest baseball development the state has ever seen. Iowa-based scouting organization Perfect Game is partnering with the city and other investors to anchor an $800 million development in the City of Hutto. In addition to the baseball facilities, the new development will feature a 200,000-square-foot indoor sports and events center designed to seat 13,000, and a convention hotel. The organization is already talking with major sports franchises and universities about expanding opportunities for children to advance in the sport. Yes, the Field of Dreams will still remain in Iowa, but about 24 baseball fields used to train students of the game will soon be here in Central Texas. When will it be done? Some say as early as 2021. Dallas Renegades and Houston Roughnecks — If you are wondering if there is

any more room for football in Texas, the answer is an astounding yes. The XFL, financed by the chairman and CEO of the WWE, Vince McMahon, chose two of the eight markets to launch in Texas. The two Texas teams join Seattle, Los Angeles, New York, St. Louis, Tampa Bay, and Washington, DC, as the league’s inaugural cities. Texas nemesis and former OU head coach Bob Stoops is head coach for the Dallas Renegades, with much of the leadership coming from other Texas sports franchises, including the Dallas Stars and Texas Rangers. The team will play its home games at Globe Life Park in Arlington, which is being repurposed as a football venue after its previous tenant, Major League Baseball’s Texas Rangers, relocates to the newly built Globe Life Field. The Houston Roughnecks will be led by former SMU coach June Jones, with their games being held at TDECU stadium on the University of Houston campus. The opening season, beginning on February 9, will have a 10-week season, with each team hosting five home-field games. What’s interesting is that the game will feature a few new, tested rules for a faster pace that should complete in under three hours. The league will draw from former college and NFL players, many of whom have talent to show the world. My analysis—the talent level will be top notch. Season tickets start as low as $20 per seat, and premium seats can be purchased for less than $100 at xflrenegades.com and xflroughnecks.com. You’ll definitely be seeing me at one of these games. Sports bring a healthy sense of competition to our neighborhoods and build strong communities. With a growing population, ripe with future talent and a fan base eager for entertainment, sports will continue to expand in our great state. Will there be a new NFL team making it to Texas? Well, that may be a longshot. Only time will tell. Ed Curtis is the founder and CEO of YTEXAS. He launched YTEXAS after 20 years in banking and private sector business, where he held various positions such as Market CEO, Chief Lending Officer, and Chief Executive Officer.

TexasCEOMagazine.com

LEGISLATIVE FOOTBALL, TEXAS-STYLE Craig Casselberry

Texas CEO Magazine Q1 2020

There’s an adage in football, now America’s favorite sport (at least if you believe the TV ratings), that winning comes down to the fundamentals. If you block and tackle properly, success will follow. Members of the 86th Texas Legislature certainly did a lot of blocking and tackling. They filed more than 7,300 bills in 2019 and enacted over 1,400 into law, addressing some difficult issues and coming away with some big wins. The “Big Three” in Texas state government—Governor Greg Abbott, Lt. Governor Dan Patrick, and House Speaker Dennis Bonnen, all Republicans—focused their legislative energies on fundamental policy issues like property tax relief and school finance reform, and largely avoided the more divisive social issues. Why the newfound synergy? Look no further than the November 2018 elections; Republicans lost 12 House seats, two incumbent senators, and two incumbent congressmen, and other statewide elected officials survived closer-than-expected elections. It was apparently enough to scare Republicans straight. What resulted was a more “moderated” leadership team and a Legislature that focused more on issues like taxes and education reform and less on social issues, as they had previously done with the so-called “bathroom bill.” While it was pragmatic politics, let’s also give credit where credit is due—the 86th Legislature solved some longstanding, thorny issues. And, importantly to our state’s CEOs, they didn’t tread on the nation’s leading economy, which continues to create jobs in record numbers.

Highlights State Budget. House Bill 1 establishes a two-year balanced state budget (as required by the Texas Constitution) with $250.7 billion in overall spending. This is an increase of more than 16 percent over the prior biennium, made possible by a healthy Texas economy and growth in the energy sector. Much of the new spending went to the top legislative priorities: $6.5 billion for public schools and $5.1 billion to “buy down” Texans’ property tax bills (more on that in a moment). TexasCEOMagazine.com

The Legislature also authorized a record-breaking $6.1 billion withdrawal from the Economic Stabilization Fund (or “Rainy Day Fund”) for large-scale infrastructure projects and Hurricane Harvey recovery. Economic Incentives. The Texas Enterprise Fund—the governor’s “deal-closing” fund to attract large companies and their jobs—received a whopping $535 million boost. Texas Enterprise Fund projects are centered largely in the big cities. Some will argue that rural Texas needs and deserves similar attention. The Texas Film Incentive program, which had languished and lost pace with other states for the past several years, was increased to $50 million dollars. Property Tax Reform. The Legislature (via Senate Bill 2) barred cities, counties, and special districts from increasing property tax collections more than 3.5 percent in any year without a vote of the public; school districts are capped at 2.5 percent, a major reduction from the current cap of 8 percent. School Finance Reform. The Legislature accomplished something many insiders thought impossible—enacting wholesale school finance reform without a court mandate. The legislation provides a total of $11.6 billion in new state funding for public education: (i) $4.5 billion for a 20 percent general increase in per-student baseline funding, and targeted funding increases for pre-kindergarten programs, third-grade reading proficiency, and dyslexia; (ii) $2 billion for an average salary increase of $4,000 for teachers, librarians, nurses, and counselors; and (iii) over $5 billion for “buying down” school districts’ maintenance and operation tax rates to provide taxpayer relief (an average of 8 cents per $100 property valuation in 2020 and an additional 5 cents per $100 property valuation in 2021). House Bill 3 will also provide future school tax relief by limiting local school property tax growth to 2.5 percent per year (absent voter approval). And because state government is increasing its share of public education funding from 38 percent to 45 percent, it is decreasing the “Robin Hood” recapture payments required from wealthy districts by $3.6 billion per biennium, or 47 percent overall. Even with the passage SB 2 and HB 3, Texans are unlikely to see their property tax bills fall in absolute terms, as increasing home values will continue to drive those bills upward. But the reform package should prevent the dramatic increases Texans have been seeing in high-growth areas. 58

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State vs. Local Control. The revenue limitations in SB 2 and HB 3 are fairly extreme examples of state preemption over local control. On the other hand, cities were successful in defeating legislation that would have removed their ability to enact local ordinances requiring employers to provide paid sick leave or regulating short-term rental companies like Airbnb. In November, Texans went to the polls and passed Proposition 6 to fund the Cancer Prevention and Research Institute of Texas (CPRIT) for another decade. Not only has CPRIT played a role in reducing cancer-related mortality; it has also spawned companies that create innovative technologies and related jobs. Propositions 1 and 7 to fund infrastructure projects in areas impacted by Hurricane Harvey were also approved by voters.

Legislative Interim Soon, Texas legislative interim committees will begin hearings on issues expected to be debated in the 87th Legislature, including the impact of business taxes on job creation and the nation-leading Texas economy. For example, the Senate Finance Committee will be examining business personal property taxes, among 20 total issues with varying impact on the business community. Where and how to tax distribution of online purchases will also be examined. Chapter 313 of the Texas Economic Development Code—which allows for local property tax abatements to attract jobs—will also be scrutinized in the interim year.

What’s Next? The 2020 elections will determine who controls the redrawing of legislative district lines (a.k.a. redistricting) when the 87th Texas Legislature convenes in January 2021, so every competitive race will be hotly contested. Those elections will also influence the approach to a variety of issues important to the Texas business community. If the economy continues to flourish and property tax bills stay at least level, expect the Legislature to stay close to its current composition. But the state’s demographics are changing rapidly, with a growing Hispanic population and in-migration from more liberal states that could change our politics—and our policy— faster than anticipated. Either way, these once-a-decade redistricting sessions have always included fireworks. 2021 will be no exception.

Craig Casselberry is founder and CEO of Quorum Public Affairs Inc. and a 30-year veteran of Texas policy and politics. He is a former aide to two Texas governors and has provided government and public affairs services to companies, issue coalitions, and economic developers since 1994.

GLOBAL FORECASTING LUNCH

featuring Dr. George Friedman ABOUT DR. FRIEDMAN

DATE AND TIME Tue, February 11, 2020 11:30 AM – 1:00 PM CST

Dr. George Friedman is an internationally recognized geopolitical forecaster and strategist on international affairs and the founder and chairman of Geopolitical Futures.

LOCATION Baylor University’s Executive MBA Campus 3107 Oak Creek Drive Austin, TX 78727

ONE OF THE MOST IMPORTANT TASKS FOR A CEO IS PREDICTING THE FUTURE. JOIN US FOR A LUNCH WITH EXPERT FORECASTER DR. GEORGE FRIEDMAN. ABOUT THIS EVENT

What global and domestic events will affect markets that impact your business? How will you be prepared for these? How will you maneuver to help your business survive and thrive? Your ability to predict the future and plan for it greatly impacts your business. To help you get the insights you need for success, Texas CEO Magazine and YTexas are hosting this exclusive lunch with Dr. George Friedman. We invite you to join us as he forecasts the future and answers your questions.

EVENT DETAILS

This event will be held at the Baylor Executive MBA campus in north Austin. Parking is free and convenient, right outside the building. A gourmet lunch will be provided. Space is very limited, so book your tickets early!

Dr. Friedman is a New York Times bestselling author. His most popular book, The Next 100 Years, is kept alive by the prescience of its predictions. Other bestselling books include Flashpoints: The Emerging Crisis in Europe, The Next Decade, America’s Secret War, The Future of War, and The Intelligence Edge. His books have been translated into more than 20 languages. Dr. Friedman has briefed numerous military and government organizations in the United States and overseas and appears regularly as an expert on international affairs, foreign policy, and intelligence in major media. For almost 20 years before resigning in May 2015, Dr. Friedman was CEO and then chairman of Stratfor, a company he founded in 1996. Friedman received his bachelor’s degree from the City College of the City University of New York and holds a doctorate in government from Cornell University.

TO GET YOUR TICKETS, VISIT TEXASCEOMAGAZINE.COM/FEB11 HOSTED BY:

SPONSORED BY:

BUILDING A BRIGHTER FUTURE

FOR CENTRAL TEXAS KIDS A CONVERSATION WITH RICHARD TAGLE, CEO OF THE ANDY RODDICK FOUNDATION For 20 years, the Andy Roddick Foundation has worked to give youth in low-income communities across Central Texas access to education and learning opportunities. Richard Tagle was born and raised in Manila and built his career in DC, but he’d only been to Texas twice when he accepted the job as the Andy Roddick Foundation’s CEO. Richard talked to us about his DC-to-Texas transition, the unique challenges of the nonprofit CEO, and how his passion for data gives him an edge—and, sometimes, gets him in trouble.

WHETHER YOU’RE A DEMOCRAT OR REPUBLICAN IN AUSTIN, YOU’RE STILL OPEN-MINDED ABOUT THINGS. YOU STILL CARE ABOUT WHAT HAPPENS IN YOUR NEIGHBORHOOD AND COMMUNITY.

How did you get into this interesting position as a nonprofit CEO? I was born and raised in the Philippines, in Manila. I was groomed to be an investment banker because most of my aunts and uncles were in investment banking. But at 16, I left the Philippines. I basically ran away. I love my family, but it was “This is the college to go to, this is the right course to take, this is the right girl to date.” Those expectations weren’t what I wanted for myself. I was ready to get out and go see the world. So I counted my Christmas money and my money from my summer job and got a one-way ticket from Manila to Hawaii to see my grandmother. I asked her if I could stay there. She said, “You can’t run away from home and live with me. Dignify it. If you really want to see the world, then see the world.” So I moved to San Francisco. Later, in graduate school in Washington, DC, I shifted gears from finance to public administration, then later on to social policy. I became more and more curious about how nonprofit organizations work and how communities change. Up until then, I had no idea what a nonprofit organization was or the role it played in civil society. For my first foray in nonprofit work, I worked for the United States Conference of Mayors. I was 22, and I had to go to 88 of the poorest towns in the South to oversee the grants that USCM forwarded to them.

Texas CEO Magazine Q1 2020

IF WE CAN MAKE OUT-OF-SCHOOL LEARNING A POSITIVE EXPERIENCE FOR YOUNG PEOPLE, THAT’S GOING TO BE COPIED BY THE REST OF THE COUNTRY. When the Andy Roddick Foundation contacted me many years later, I had lived in Washington, DC, for 27 years, doing educational lobbying, running a middle school academic program, and doing nonprofit consulting. I’d only been to Austin twice prior to coming here for this job. It was March 2013 when they showed me around. I remember it because everything was so green. Right—you were probably picturing West Texas and tumbleweeds. That’s right. When I met with the staff and the board, I was really impressed—with them, with Andy, with the city. I said I could move in summer, which probably was the wrong thing to say. When I left the airport, it was 106 degrees. We have a lot of companies moving to Texas. As someone who came here from DC, what would you tell somebody who’s thinking about relocating to Texas? I was surprised by the open-mindedness here. Prior to moving to Texas, I’d always had this understanding that Texas is conservative and Republican. Having lived in DC for 27 years, a town that’s 98 percent Democrat, I really had hesitation. “Am I going to fit in there?” But the number-one thing that surprised me is, whether you’re a Democrat or Republican in Austin, you’re still openminded about things. You still care about what happens in your neighborhood and community. People really want their schools to be great. They have different ideas of what level of investment there should be, and how to make that investment, but at the core of it, they really care about the children and the community. It’s the same for health, education, workforce development. I thought everybody here was like, “No government spending. No taxes. Nothing.” 62

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The second thing that surprised me was the level of diversity. Everybody was telling me, “Oh, it’s not diverse. As a Filipino, you’re going to stand out.” But in my neighborhood, I live across from an Indian couple, two doors down is a Chinese family, next door is a Korean family. It’s become more diverse in the past decade. I still go to places where I’m the only person of color. That still happens. But the diversity is becoming more pronounced, especially in more affordable pockets of Central Texas. As we address housing affordability and as more companies move here, I think that the diversity will increase. Are there any special challenges working in nonprofit education in Texas? The burden on Texas is that we are actually more diverse in some key ways. California may have more kids—they have eight million—but we have a bigger ruralurban divide, and our kids are speaking more languages. Thanks to our size, whatever we do in this state is going to be the barometer of what the country has appetite for. So if we can make out-ofschool learning a positive experience for young people, that’s going to be copied by the rest of the country. We’re beginning to convene all of these folks and explore how we make sure that there is learning support for the 5.4 million kids in our schools. We have the second-largest school population in the country. One of every 10 students in the country attend a Texas school. When you talk to donors, how do you convince them that making a donation to the Andy Roddick Foundation is worthwhile? There’s a lot of good nonprofit organizations out there. But I can tell you three things the Andy Roddick Foundation is set up to do.

The first is that we pay close attention to where the need is. It’s not about what we want to do; it’s about what we need to do. I’ll tell you a story. Andre Agassi, Andy’s mentor, built a foundation focused on charter schools, and Andy wanted to do the same thing. During that first board meeting I attended, Andy was talking about this charter school. It just so happened that KIPP was right next door to our donated space. I said, “Andy, just look outside the window. There’s a charter school right there. Why build something when you can just give money to that one?” I used my newness as the chip. I told them I didn’t know Austin, but that we should explore opportunities like that. For the rest of 2013, we did nothing but talk to families and other foundations about their needs and where the gaps were. That’s when we found out summer learning was a great need, especially in East Austin, and why we designed our own summer learning program. For afterschool, rather than just duplicate programs, we spend hundreds of thousands supporting other organizations that are aligned with us. That’s how we scale kids’ opportunity to be exposed to high-quality programs. We bring these partners into the fold and expand our reach that way. The second thing is that we know how we are making a difference. I’m the research guy. I want data. I want to see that the needle is moving. We count everything from the level of family engagement in our programs to how often the kids come to our program on a daily basis. We can tell you our six-week retention rate during the summer, our daily attendance rates, the academic skills we start with and the academic skills we end up with. We publish an annual report showing how our kids are doing in schools participating in our program in comparison to kids who have the same profile but don’t participate in our programs. The school district helps us with that. I was the same way when I was running Higher Achievement. I raised $3.2

probably true with McDonald’s and Coca-Cola, when you have the same product to manufacture, but as we grow as a nonprofit, there is also more personalized attention and time we’re adding. At my previous job, at Higher Achievement, we thought things would be cheaper if we went to multiple cities as fast as we could. We wouldn’t have to hire another CEO to run Nashville, another CEO to run Richmond. But I learned that if I’m based in Washington, DC, I couldn’t go to Nashville and raise money there. We needed to build the infrastructure that would facilitate relationships. You’re always seen as the DC guy coming here raising money for his program. The relationship aspect of this work is what makes it effective. Once a kid realizes I forgot his or her name, that breaks down that relationship. So you have to grow smartly.

million for a six-year randomized study that compared 500 kids who went into our program and 500 who couldn’t get into our program. Half the parents in DC loved me because their kids got in, but the other half hated me. But now we have data to tell you that the program produces results. The US Department of Education uses that as the flagship research for the value of academic programs after school. Those parents are probably still mad at me, but seven million other kids will benefit from that research.

Texas still don’t see the value of highquality out-of-school programs. There’s a notion that schools can do everything. But children spend just 20 percent of their waking day in school, and the data shows that children who have extra learning support outside school do better. Yet a lot of people are hesitant to invest in afterschool programs. “Why are we having reading mentors come at three o’clock? Shouldn’t we have done that during school time?”

The third thing would be our commitment to continuous improvement. We use the data to improve: We do one thing in the first school, learn how we can make that more efficient in the second school, then even more so in the third school. If people share their resources with us, they can trust it will address real needs, that we will track the data, and that we will use it to continue our efficiency and effectiveness.

We want to change that way of thinking. One teacher in a class of 28 students can’t respond to 28 different learning styles, so you do need community resources outside of school to facilitate that kind of learning support. Now, I’m not saying that out-of-school time should replace schools, but many students need that personalized attention. Schools can’t have volunteer teachers, but our program can have volunteer mentors to work with those kids.

What were some of your aha moments on this journey as a nonprofit leader? Well, one is that a lot of people throughout

The other counterintuitive thing I learned is that operations doesn’t necessarily get cheaper the more you grow. That’s

What do you think about the role of technology in learning? Obviously, there was great hype around technology in education a while back. Then we went through what Gartner calls the Trough of Disillusionment. Then we came out the other end with things like Khan Academy. Technology is never a silver bullet, but there are times when technology attracts students’ curiosity. You can use that when it’s appropriate. A teacher can use a video to attract students’ attention and curiosity as they learn coding, for example. And you can have a laptop in front of you to follow the instructions right there. When you’re talking about art and creativity, you can use technology, but sometimes a kid banging an African drum is just as important. So to me, the key to technology is knowing when it’s the most appropriate and when it will spark curiosity. I know you’ve focused on East Austin, but what do you see the foundation’s scope being like in five years? We started with East Austin because of the opportunity gap that still exists there. But we’re in the middle of a strategic plan to double the number of students we serve directly. I want to see all 11,800 kids in East TexasCEOMagazine.com

I OFTEN HAVE MEETINGS WITH HIM WHERE I SAY, “WHAT DO YOU THINK?” HE LOOKS AT ME AND SAYS, “YOU’RE THE CEO—YOU TELL ME.”

The second week we had a chef from Hilton teach the kids how to make sushi. This time Raul starts thinking he might want to be a chef. He asks me if chefs make a lot of money, and if he can be an architect and a chef. “The world’s your oyster,” I told him. Then the third week we built solar-powered cars out of matchboxes and reflectors. Now Raul wants to design cars.

Austin thinking about going to college or being ready for college regardless of their family’s income or background.

the West Side and two on the East Side. Everyone was going where it was easiest, not necessarily where it was needed.

For the past 20 years, the foundation has been a philanthropic grant-making institution. When I started, Andy told me he wanted the foundation to really be embedded into the community, so people know we’re not going away. People were always telling us that they didn’t like working with outside organizations because they would leave when they ran out of money. The principals would have to explain to the kids, “Oh, you’re not going to have that reading program anymore.” Andy told me he wanted to assure kids that we will be there for the long haul.

Most athletes wait until the end of their career to start a foundation. But Andy started very early in his career. He and I have talked about this several times. He had a conversation with Andre Agassi that I think really opened his eyes to how much time he’d need to figure things out. Andy is very much the keeper of the vision, but I often have meetings with him where I say, “What do you think?” He looks at me and says, “You’re the CEO—you tell me.” One of the things he’s learned is to ask the right questions.

I said, “You know, you can be anything—you just need to focus. What are your math grades right now?”

I also give Andy a lot of credit for creating an inquisitive board that doesn’t just rubber-stamp everything. They ask the right questions: “Why is that the strategy to get us there as opposed to alternatives?” “Why this school and not this school?” It’s a lot of very smart people, including our staff, asking questions of each other. I could probably write a case study on every board discussion we’ve ever had.

Raul’s family certainly couldn’t afford a math tutor. But we actually funded an afterschool STEM program in his school, so he started in that. That kind of interaction with that second grader to me is why I do this. Raul and I were able to explore different futures, different worlds, different things that he would never have imagined, especially in a subject he hated so much. Now he’s embracing it.

How big is the board? The board is 15 people. We just recruited three new board members. Now half are women and 30 percent are people of color. We have very broad perspectives, different business backgrounds.

If that kind of curiosity is being sparked in each and every one of these kids in East Austin, it’s going to be one of the most promising neighborhoods. A lot of people think you need to move away from your neighborhood in order to get a bright future. When I first spoke with the board, I said, “This is one of those things I want to demystify,” this idea that you have to move out of a poor community to have a better life.

That’s a great goal. Besides taking fundraising to the next level, what are the other bottlenecks to your growth and success? It’s very hard to find staff. I have a great team, but as we grow, it’s harder to find the combination of passion and brains and wit and ability to relate to people. It’s tough to entice those great people to work in the nonprofit sector rather than the forprofit sector with its higher salaries and sometimes greater benefits. I think the other challenge is how competitive the nonprofit sector is. And I say this as a sharer of resources with other nonprofits. In Central Texas, I think there’s a nonprofit for every seven people. It’s seen as a zero-sum game. My number-one pet peeve is when organizations don’t collaborate. Not just in sharing resources but also in addressing challenges, and strategies that can overcome those challenges. When we don’t all work together to figure out how to serve these kids, we end up, as we did in 2013, with 127 programs on 64

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Do you ever work directly with the kids? What’s that like? I do. In 2015, I mentored four second-grade boys. One boy, Raul, didn’t know what he wanted to be when he grew up. The first week we had architects come and teach them how to build the wonders of the world in Asia—Taj Mahal, Great Wall of China. As we were cutting cardboard and learning proportion, Raul goes, “Mr. Richard, I think I want to be an architect.”

He said, “Oh man, I hate that subject.” I told him, “If you want to be an architect, you need math. If you want to be a chef, you need math. You need to know the difference between two ounces and two and a half ounces. All these people, they have high-paying jobs because they did their math homework and all that stuff.”

I want them to experience growing up in East Austin as something positive, as a community that gave them all the tools they needed. Then they might stick around and, in that same community, raise their family.

WHAT HAS

ANDY RODDICK LEARNED

SINCE STARTING HIS FOUNDATION? Andy Roddick founded his namesake foundation at a remarkably young age—when he was just 18 years old. Today, the foundation gives low-income children in Central Texas opportunities to discover their passion—whether it’s sports, solar power, or sushi—by maximizing their out-of-school time. We asked Roddick a few questions about what it was like to start and grow this one-of-a-kind charitable endeavor. What moved you to start the Andy Roddick Foundation so early in your career? On a plane ride beside Andre Agassi, I asked him what his biggest regret was, and he told that he should have started his foundation sooner. That got me into thinking about how I wanted to make a difference. It also got me thinking about setting up my foundation so I didn’t say the same thing when I was asked the same question. What’s the primary way ARF is changing kids’ lives today? We look at the time when kids are not in school and we use that to make a difference. We provide high-quality out-of-school-time learning programs and opportunities. The lack of access to these opportunities contributes a great deal to the achievement gap between affluent students and students in low-income communities. Poor students often lag behind because of the absence of quality out-of-school-time support or lack of access to it.

What kinds of activities do kids do in ARF programs? We expose them to a variety of learning activities—academics, STEM, arts, enrichment, sports, and fitness. Our idea is that you present young people with a variety of programs and activities so they can discover what they are passionate about. They code, they learn cricket, they build solar-powered cars, they write their own comic books and draw their own superheroes, they learn how to make sushi from a five-star chef, they learn about opera, 3-D printing, African drumming— and all of these activities are provided in a learning-centered, engaging way, so they get to discover what excites them. What is your current involvement with the foundation like? I chair the board and I make sure we have a dynamic board that guides my thinking. We have an excellent staff that oversees the operations and the programs on a daily basis, but I ask a lot of questions. One good thing I did TexasCEOMagazine.com

was to surround myself with people smarter than me about operations, programs, and running a nonprofit. Our board is very strategic in its thinking, and our staff knows the best practices out there. We did win the Excellence in Summer Learning Award from the New York Life Foundation and the National Summer Learning Association this year, after all. How has the foundation changed in the years since you founded it? What surprised you most about its evolution? When we first started, we did a lot of good things in a bad way, meaning all we did was act as a pass-through. We raised money and distributed it to a lot of worthy causes. But beyond that, little impact was seen. Now, we piloted our program in 2014 with 78 students in one school and we really focused on providing quality programming, being strict about what outcomes we wanted to generate, and how we generate them. We wanted to be intentional about the results we wanted them. Almost six years later, in 2019, we had benefited over 7,000 students through our own programs 66

Texas CEO Magazine Q1 2020

and other programs we supported with funding and quality assistance. We see the impact. We are becoming one of the go-to leaders in the field when it comes to quality, and as such we are helping other programs also reach that level of high quality. Have you found that any skills translate from the tennis court to successfully overseeing a charitable organization? Just like playing tennis, running the foundation requires focus. I can’t just do it by ear or by winging it. It requires strategy, assessment, calculations for improvement. It needs to be very intentional. In tennis though, when I do it right, I win. When the foundation does it right, a whole community wins. Any advice for people who are considering starting their own foundation? No matter what the cause or mission is, you have to be focused on what kind of difference you want to make. There are many ways to get there, but if you don’t know what your North Star is, it will be difficult to reach it.

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BUILDING

THE ESPORTS SKYSCRAPER

JASON LAKE, FOUNDER AND CEO OF COMPLEXITY GAMING, ON THE EXPONENTIAL GROWTH AND SKY-HIGH FUTURE OF COMPETITIVE VIDEO GAMING 68

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Think esports is just a bunch of kids playing video games? Think again. In 2020, competitive video gaming is a billion-dollar industry, and Jason Lake of Complexity Gaming is in the vanguard. Complexity, founded in 2003, was acquired by Jerry Jones and John Goff in 2017 and since then has relocated to Cowboys HQ and rebranded to align with the franchise. Lake likes to describe his work in the esports industry as “building skyscrapers,” edifices that take considerable time and effort to build, but that generate returns for generations. If you’re unfamiliar with the whole “esports thing,” read on for a crash course—and to find out why every business leader should be paying attention.

THE ESPORTS INDUSTRY IS VALUED AT ABOUT $1.1 BILLION WITH EXPECTATIONS OF IT REACHING PROBABLY $1.8 OR $2 BILLION BY 2022. How did you get into esports to start with? I grew up as a football player who was also a video game player. Back in the 1980s, that was kind of a unique thing. You were either a jock or a nerd. But I was a bit of both. I discovered esports around 2002 and saw that competitive video gaming was a thing, and it was the perfect synergy for me. I founded Complexity 16 years ago, in 2003, so I’ve been in esports since the beginning. How do you think about esports? How do you see it fitting into the current landscape? Esports is essentially competitive video gaming. It takes the form of organized multiplayer video game competitions between professional players. All esports are video games but not all video games are esports. So the age-old debate has been: “Is this activity a sport?” Personally, I’m not really super interested in that debate. Any time there’s an activity that billions of people around the world enjoy, there’s going to be a certain percentage of those people who like to watch excellence in that activity. Esports is no different. Video games have become ubiquitous to virtually all cultures around the world, so watching excellence in those games is the natural progression. I think a lot of our CEOs would be surprised about the size and scope of the esports market and the amount of money involved. Esports is growing quite rapidly. Currently, it’s estimated there’s over 450 million active global fans of esports. Seventy-nine percent of those are under the age of 35. Some estimates have that number ballooning to over 600 million globally in the next couple of years. As far as dollar signs, the esports industry is valued at about $1.1 billion with expectations of it reaching probably $1.8 or $2 billion by 2022. It’s becoming quite mainstream in the digital era, due to the evolution of technology and the growing consumer preference toward new forms of competitive events. We see traditional rock stars like Post Malone doing different activations with esports teams. You see a cross-collaboration with a lot of notable athletes who all grew up playing video games and admire their professional counterparts in the esports world. You see influencers like Ninja going on Jimmy Fallon regularly. I think esports is becoming ingrained into the sports and media and entertainment culture all around the world. It’s fascinating to be a part of. Is the US the leading esports market or are there bigger ones? Esports was originally founded in the Korean market, then

caught fire in Europe before it really started to grow in the US. If you had to pick one market that’s probably going to be the world’s largest over the next decade, that would be China. You’ve recently associated with a major sports franchise in the Dallas Cowboys. Tell me what that’s been like. It’s been fantastic. Complexity was acquired by Jerry Jones and John Goff in 2017. We’re really one of the first ever esports teams to truly be integrated with a sister traditional sports team. Both Complexity and the Cowboys are headquartered at The Star in Frisco, Texas, and that enables us to have seamless coordination and integration with that organization. We work with the legal team, the marketing team, the accountants, the social media team, the coaches, the health and welfare departments, and the charity departments of the Cowboys. We’re really quite integrated across the operations. We have a gaming zone in AT&T Stadium. We set up a gaming trailer at training camp out in Oxnard, California, for the players. Players come through our new headquarters quite often and pick up a hoodie and play video games with us. So I think we’re by far the esports team that’s most integrated with a traditional sports franchise anywhere in the world. Obviously we’ve had esports for a long time, as you mentioned. What do you think is driving the dramatic growth in the last few years? Great question. The exponential growth really started with the rise of Twitch, which is a streaming platform that enabled anyone to turn on their mobile device or computer and watch these events live from anywhere in the world. Once that took off and the viewership data was filtering in, we saw an influx of investor cash, which really propelled the industry to a much larger level than it was just five years ago. That exponential growth makes this sector one of the more interesting of any sports entertainment product anywhere in the world. As the world changes and young people become more sophisticated with what ads they want to consume and what activities they’ve chosen to spend their discretionary income on, gaming time and time again tops those lists. As advertisers and marketers have a harder and harder time reaching new generations through traditional methods of marketing, many of them have found esports to be a quite compelling way to do that. Is there anything particular about Texas that is hot for esports? Definitely. Dallas is arguably the second-hottest city for esports in North America next to Los Angeles. For us, the partnership with the Cowboys makes Texas the perfect place. There’s so many synergies. Complexity is able to leverage the existing brand partnerships of the Cowboys and to create a mutually beneficial relationship. We’ve signed top endemic brands [which sell products used directly in esports, such as gaming equipment and energy drinks] and non-endemic brands like MillerCoors, GameStop, Baylor Scott & White, Mamba Sports Academy, and others—and we couldn’t have done that as quickly without the support of the Dallas Cowboys across the street. There are other organizations that have TexasCEOMagazine.com

ANYONE WHO OVERLOOKS ESPORTS OR DERIDES IT AS SILLY VIDEO GAMES FOR YOUNG PEOPLE IS REALLY MISSING THE TRAJECTORY OF THE FUTURE. relocated to Dallas as well, and there’s an esports stadium out in Arlington. I think Texas is going to continue to be a very critical place as American esports start to grow out. Not a whole lot of people necessarily remember this, but Western esports was actually born in Dallas back in the early 2000s. There were a couple of events a year, QuakeCon and CPL, and gamers from all around the world would fly to Dallas and compete. That was in a way the birth of Western esports. So it’s pretty appropriate that all these years later, Dallas is once again a leading center for esports growth in America. Most of us who have kids, we’ve learned the traditional sports ritual—the twice-a-week practices, the games on Saturday, etc. Is the same sort of thing developing in esports? Are there local clubs that kids get involved in? There are. First of all, esports is really an umbrella term. Complexity, for example, fields gamers in ten different games right now. Where the Dallas Cowboys play just football, Complexity is in multiple games [such as Counter-Strike: Global Offensive, Call of Duty, Madden, and Fortnite], similar to how a university is in multiple sports year-round. Each game has its own ecosystem, with its own fan base and player base. Generally speaking, one of the more interesting things we’ve seen over the past 24 months is the rise of collegiate esports and scholarships, which has then filtered down to high school esports programs because of course if you can qualify for a scholarship via any activity, high schools are interested in that for their students. So whereas traditional sports started at the grassroots level and then grew up to the pro level, esports grew backwards. We started at the pro level and just now we’re establishing our root system down into college and high school esports. All the major universities around Texas, to the best of my knowledge, are exploring or have already started esports programs, many of which include scholarships. What’s the future of esports? We’re creating multigenerational billion-dollar sports properties for teams like Complexity. The phrase I use is “We’re building skyscrapers,” and skyscrapers take time and money to build, but then they return revenue for generations. Once they’re built out, the top esports 70

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franchises like Complexity are going to experience similar fandom and international stardom to the Dallas Cowboys, the Los Angeles Lakers, the New York Yankees. It’s a digital sport for a digital era. As we look around ourselves, we have supercomputers in our pockets and electric cars that drive themselves. Esports are part of that transformation. I think anyone who overlooks esports or derides it as silly video games for young people is really missing the trajectory of the future. I like to say, like Gretzky, that you want to skate to where the puck is going, not to where the puck is. If you’re taking a good look, in the entertainment and sports worlds, it’s pretty obvious to all observers that the puck is moving toward esports. Is the biggest misconception about esports that it’s just a bunch of kids playing video games? Yeah. The age-old perception by people who don’t educate themselves is that all esports players and fans are 25-year-old boys living in their parents’ basements, with very unhealthy lifestyles and no social lives. Nothing could be further from the truth. Many of our professionals were all-state sports athletes when they were in high school. Our entire narrative and mission moving forward is centered around the health and welfare and performance of our gamers. Our gamers live in luxury apartments about a mile from where I’m sitting. They have breakfast and lunch five days a week at the Dallas Cowboys training table, which is the same place the players get their nutrition. They have free memberships to the Cowboys Fit gym here on the property. They have physicals and preventative medical care at the Baylor Scott & White sports therapy hospital, also on the property. Then they have the opportunity to come over and train in what is probably the world’s best headquarters. When most people come to visit us, I think they expect to walk into a room with a lot of computers and some neon lights. But we’ve built out a next-generation esports infrastructure system that closely mimics traditional sports, including how they care for the whole well-being of their athletes. We call this esports 3.0. We’re really proud to be at the forefront of it. Is there a Super Bowl of esports in the United States that people should be aware of? Since esports is an umbrella term that encompasses multiple games, each gaming title for the most part has its own system. Some are franchise systems where there’s an upfront cost of up to $40 million to own a franchise, and some are open ecosystems. So each game has its own structure and its own “Super Bowl.” League of Legends is generally considered the world’s largest esport, and they host their world finals at different locations around the planet each year. Millions of people at home also tune in and watch. It’s a very interesting space to be in because it’s really 24/7/365. And since different cultures celebrate different holidays, I generally work a bit on Christmas Day. It’s nonstop. It’s very global. We spend a lot of time on airplanes. It’s a very exciting space to be a CEO in.

The thing I find with older folks who start investigating our space is they don’t understand the attraction of going to a stadium to watch people play video games. I say, “Well, you like to play basketball and you drive to a stadium and drink a beer and watch Luka Dončić play. It’s basically the same thing.” At its core, video gaming—and this is what a lot of people don’t understand—is a very social and communitybased activity. When my son gets home from school, he doesn’t hop on a computer and play by himself. He hops on a computer to play with his friends from around America. This is where they socialize, where they learn teamwork, where they learn leadership. When you have a large stadium event, it’s a really unique opportunity to go out and meet all these other people who are passionate about the same game, the same tournament you are—and maybe have some nachos and a bottled water and enjoy the event. These events can pack out 10-, 20-, 30-, 40-, or 50,000 people at cities around the world. Where would I go to find an event like this in Texas? We typically have three to four midsize events here in Dallas a year. Since we have the Ford Center here at The Star that seats up to 16,000 people, I’m always speaking with event organizers, looking to bring more esports to the great state of Texas. From an advertising perspective, what should a CEO interested in reaching your market do? Esports fan engagement is massive, both online and offline. As I said, the global esports audience is projected to grow to upwards of 600 million in the next year. Brands recognize that large audience. It’s an audience that’s very difficult to reach via traditional means, because they’re not sitting down and watching traditional sports like they used to. They’re computer savvy, generally college educated, generally middle class, and they also use ad blockers because they don’t like to be bothered by ads. The question as a savvy advertiser or marketer is “How do I reach this generation before they start developing brand loyalties?” Esports is definitely a viable vehicle for that. You can meet the community and these new consumers in an area they’re passionate about. A lot of companies that have done so early have reaped great benefits. We’re seeing a virtual who’s who of blue-chip corporate America getting involved at some level at this point. This is not a virtual sport in the sense that people are all congregated in the same location for the event, correct? Yes, absolutely. The teams or the players go to the location, say a stadium. The fans buy tickets and concessions just like a traditional sporting event. There are giant screens where you can watch the players play, and that is also broadcast around the world on Twitch or YouTube or other streaming platforms.

Any parting advice for CEOs? My advice to any leader who looks at the esports space and rolls their eyes or would like to ignore it is to have an open mind. The world is changing very quickly, and it’s only a matter of time until esports intersect with your business in some way, shape, or form. Have at least a cursory understanding of the space. That’s just common due diligence for a leader today. TexasCEOMagazine.com

[RESOURCES]

CRAFTING THE BLUEPRINT FOR A SUCCESSFUL EXECUTIVE SEARCH Wade H. Allen

Great organizations do not happen by blind luck. Greatness depends on alignment within the organization, from culture to chemistry, from values to purpose, from skills to beliefs. When you embark on a search for a new executive leader, it’s vital to ensure that this internal alignment is already in place. Unless you have proactively built a great organization, you will struggle to attract executive talent— or to even know what to look for in the first place. Just as in building a home, the project of building a great organization requires a blueprint. A home’s blueprint must include plans for the foundation, the framework, and the buildout. All are required, and there is an order in which they must be executed, even though you can work on different pieces independently before they’re assembled if you adhere to the specifications. As you build and align the organization, all of this remains true. Let’s see how it works, starting with the foundation.

The Foundation: Culture In a home or a business, the foundation supports everything else. In building a home, whether you are starting from scratch or modifying an existing dwelling, the foundation drives what can and can’t be done. In building a business, your foundation is the culture—the set of values that guide how people interact, work, socialize, and feel at home, like this is their place and their people. Clearly, culture is not the physical facility or amenities—it is a sense of belonging, team, and unity. It’s something you feel rather than touch. Values define culture, and the behavioral norms you expect from your employees must be consistent with 72

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those values. Hiring starts with culture, too, or at least a vision of it. A common fallacy is that hiring great talent starts with a job description or knowing someone who can probably handle the job. The real starting place should be a strong culture, communicated simply and clearly in a way that attracts talented people. Yet too often little time is spent here. To get the most from your payroll expense, every employee must fit the culture. There is an exponential return on cultural alignment for individuals up the ladder, who may now lead 100 or 1,000 people and set the strategy for a whole team, group, or company. Ensuring culture fit does not mean building a company of clones, though—you need different talents and skills, as well as diversity and inclusion, to truly meet the needs of your chosen market. The CEO is always responsible for creating, articulating, and maintaining the corporate culture, the foundation of the business. This is not something to be handed off to the head of Human Resources; it is your job to make sure it happens. The way you act and work must be consistent with that message—no exceptions. Let’s be blunt—the buck starts and stops with you!

The Framework: Leadership The framework of a home defines its structure and layout and guides everything that goes within the building. This is much like the leadership capability within your company. Good leadership clarifies everyone’s job responsibilities and eliminates unnecessary busywork. It offers the essential framework for what happens day to day. A cabinet that’s 4’1” wide just won’t fit on a 4’ bathroom wall—even though it’s pretty close. On the other hand, a 2’ cabinet will look out of place on the same wall and

won’t maximize the storage space. This is why getting the framework—the leadership—of your business right matters so much. Your leadership determines what fits and what doesn’t in the workings of the organization. It’s not just the CEO’s leadership that defines the framework. The leadership of your executives and managers matters as well. While the CEO provides the structure and layout for the entire home, other leaders are essential to providing the framework for each of the rooms. These leaders must help their teams understand why they are there and the reason for working hard. They must foster the unity that motivates a team to win together. This takes time, planning, asking, and listening. It takes serious, dedicated effort. Developing people who have potential to be good leaders, next year or three years out and beyond, requires time and money, but you will pay for it now or later. If you already have people with the required leadership potential in-house, then by all means grow and promote from within. However, If you don’t have the right leaders to support your current business needs, don’t just promote someone to quickly fill the slot so you can concentrate on other urgent things—this will undoubtedly come back to haunt you. The same goes for hiring your CFO’s cousin or an old college roommate just to fill a position. Yes, providing the leadership framework takes time—something that’s in short supply for the CEO every day. But again, offloading this responsibility isn’t an option. You understand best which leaders are needed, and it’s your job to make sure you get them in place. To be blunt again—the buck still stops with you!

The Buildout: Talent Once you have the foundation (culture) and the framework (leadership) in place, it’s time for the buildout—so you can start to see what the finished product, your home, will look like. Many different skilled workers are needed to complete this buildout. In other words, this is where talent comes into play. In the buildout phase, talent must be carefully coordinated. Electricians need to run the wiring before the Sheetrock is installed; nice wooden floors will be ruined if big industrial equipment still needs to be hauled across them. Define what is needed for the long term so you hire appropriately up front. Don’t replace floors that were damaged because you cut corners. The buildout requires finding the right talent and ensuring that they understand the framework to follow. And like it or not—the buck still stops with you!

Success Requires Planning Apple’s product marketing teams spend a significant amount of time and money trying to determine what products customers want—often before their customers even realize they want them. Before the iPod was introduced, people had no idea that they

absolutely had to have one. This is planning—understanding what is needed to get ahead of the game and succeed long-term. As CEO, this is a good model to follow in your search for executive talent. It’s up to you to identify what the organization needs long before the need is pressing. The problem is the tyranny of the urgent. Too often, the planning stage looks like this:

“We need a VP of sales now! Grab a job description off the Internet and start looking. I want to see candidates next week. Of course we know what we’re looking for!”

As leaders within the same company, we often take alignment for granted because we’re around each other so much. But is everyone else on your team on the same page? For 25plus years, we’ve seen at least one such internal disconnect on almost every executive search we’ve performed. Maximizing ROI requires maximizing alignment. Your sales, marketing, finance, and strategy departments should plan like Apple design does, anticipating the future needs of the organization. You must understand what skills, experiences, and background are truly required versus simply preferred, as well as what is needed in the next six to 18 months to remain successful. Does the candidate fit the requirements? Does the candidate fit the culture? A no to either of these is a decision made: pass and move on. During an executive search, it’s also important to surround yourself with great leaders who can provide insight into your own potential blind spots. Planning requires candid, open discussions so that you end up with the right hire—and with honesty about your own abilities and potential. In this spirit, you should also be open to replacing yourself. If you determine that one of your key employees can’t take the company to the next level, then the same rules should apply to you. If you want and require the best talent, then you must lead by example. Passing the buck on an executive search is so enticing. Don’t! Make sure there is a clear vision of a great culture that attracts people who want to be part of a long-term endeavor. You need great leadership, starting with yourself, to establish that culture and the supporting initiatives that motivate people to succeed. Now you are in a perfect position to hire and retain talent. So we see it’s all about talent, leadership, and culture— what we affectionately call TLC. Time to get moving!

Wade H. Allen has been president and CEO at the executive placement firm Cendea for over 25 years. Since 1994, Cendea has provided seniorlevel executive search solutions for businesses that have high goals and require impact leaders who can take them to the next level. You can reach Cendea at TxCEOMagazine@Cendea.com.

TexasCEOMagazine.com

TICKET TO THE LIMIT

If you ask Randy Cohen, founder of the Austin-based ticket broker and online marketplace TicketCity, the letters “CEO” mean something different. For decades, Cohen has referred to himself as TicketCity’s Chief Energizing Officer. Within seconds of meeting him, you see that the moniker fits. In our fast-talking chat, he explains what it means to be the chief energizer, how his endless energy helped him conquer countless challenges—from police chases to livid ticket buyers—and how he built TicketCity into a trusted fixture of the industry.

Tell us a little about your early days in the ticket business. How did you get started? It started in the late eighties, when I took my life savings of $1,200 and bought 200 seats for the big Texas vs. Arkansas basketball game at $6 a piece. I thought for sure the game would sell out. Arkansas was number one in the country, and Texas was number three—this was during the “BMW” years of Blanks, Mays, and Wright. And . . . it didn’t sell out. So I go down to the stadium with 200 seats in my hand—couldn’t believe I was about to lose my life savings. Then, all of a sudden, sure enough, from the box office comes the news: It did sell out. And there I was, saying, “Hello everybody! Stand back, nonbelievers! Here you go!” I sold all the $6 seats for $15 a piece. That’s $1,800 profit. And you decided the ticket business was for you? It beat waiting tables! Not that the next time went so well. I took that profit and bought a bunch of seats for the Sweet Sixteen tournament in Dallas. Sure enough, same thing: It didn’t sell out. So I’m down there selling tickets on the street when somebody comes up and says, “Hey, what you got going on?” I told him I was selling tickets. 74

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He pulls out his badge and goes, “Well, you can’t do that.” I’m like, “Why not? They’re my tickets!” But he took my money and my tickets. I had a few seconds to make a decision then, and I made the wrong one. I took the money and tickets back and ran out of there. I knew I could beat the cop on foot. But then all of a sudden I hear, “We’ve got a runner! We’ve got a runner!” I came to a corner as they’re chasing me, and if I would’ve made the right turn, I would’ve been home free. I made the left, and my feet came out from under me. Money and tickets everywhere. I spent the night in jail. I thought that was ridiculous. I should be able to sell tickets I own. That taught me a real lesson: Make sure you know the rules and ordinances. From there, things slowly started to happen, and when I started TicketCity full time in 1990, I’d learned the rules. Later, we’d put together associations like the Texas Ticket Brokers Association. There’s a lot of scammers out there in the ticket world, but it’s trust that has made TicketCity so successful, as a reputable ticket company that’s been around for 30 years.

a better deal waiting until the last second, but then one out of 10 times it will blow up and really be sold out. When do sellers typically drop those last tickets? Well, today, the market stays higher for longer. I’m in control of my inventory, so I can decide whether to lower the price or be the last man standing. If I have World Series tickets and the game is in a few hours, I can still sell them up until game time and just transfer them to your phone. But usually the last six hours before a game or event—that’s where the best potential deals are. We like to have, say, a hundred tickets or less on the day of the game. That’s the inventory we can play with. But in general you make more margin by selling early. At the end of the day, it’s supply and demand on the game. You might have a bunch of LSU fans who bought season tickets from UT just to make sure they had a ticket to the game—well, now they might be selling their tickets themselves. We do the best we can to keep the market up. We’re the market makers for some events, like the US Open. We have a lot of tickets there every year. But we’re not the market makers for everything.

So how did you get from being chased by cops to a reputable business? It’s been a heck of a journey. I was doing the ticket business on the side while I had a sales job, selling labels and ribbons and mailers for a commercial printing company. But in 1990 we were doing enough business that I could quit my day job. And sure enough we started getting some traction.

If I’m trying to buy tickets, how do I recognize a scam? There are a lot of shams out there in the ticket world, and the shammers are smart. It gets tricky. I’d say that a deal too good to be true, is. Recently, you had people walking hundreds of kids into ACL for 50 bucks. Those guys ended up getting thrown in jail.

By the mid-nineties, the Internet was really going. We were one of the first companies out there to put together a secondary-market software and real-time ticketing. We did have trouble getting everybody to jump on that software at the time—“Cohen’s going to steal my information.”

There are plenty of people on Craigslist who offer sham deals. I see tears at these events all the time from people who don’t get in. At the end of the day, it’s about whether it’s worth the stress to get a good deal. That’s what makes TicketCity so successful: We’re a reputable company that’s been around for 30 years. We’ve earned people’s trust. If there’s an issue, we’re going to handle that issue right away.

But I started buying tickets to all the college football teams around the country, all the NFL teams, all the NBA teams, all the MLB teams. I had so much inventory grandfathered in. And I still have a lot of that today, even though it’s a different ballgame. We’re still able to make a lot of money off having the right to buy, say, UT tickets or tickets to ACL or the US Open or the Kentucky Derby. What’s the process of managing your ticket inventory like? At TicketCity, I like to say, “It’s not sold out until we say it’s sold out.” Because we have access and relationships, so we’re able to get seats even though something might be sold out. In today’s day and age, all the tickets are online, obviously. Today it’s all about eyeballs, so I’m putting my inventory not just on the TicketCity site—I’m putting it on StubHub, I’m putting it on Vivid Seats. We don’t care who sells them. I just want to get them sold and maximize my margin. But for the individual, the question is, What do you value more? “Do I have more money or do I have more time? What’s my stress level worth?” Many times you can get

You’ve been to just about every major sporting event that exists in the world. If you had a year to live, what are you going to make sure to catch? Man, the World Cup is amazing. The Ryder Cup is tremendous. The Davis Cup is tremendous. The opening ceremonies of the Olympics too. In fact, the Olympics are where I got one of my big epiphanies. I got a call on opening day of the 1996 Summer Olympics in Atlanta. We’d set up an office there. We’d been preparing for years. Now this lady is asking, “Hey, do you have any opening ceremonies tickets?” “Yeah, we have great seats,” I tell her. “How many do you need?” She says, “Well, I just need one. But the thing is I don’t have a ride.” That was a big moment. I’m thinking to myself, “Randy, you’ve got to do this. This is what you talk about—doing the right thing long after the feeling of doing it leaves you.” So I said, “Ma’am, it’s your lucky day. I’m coming to get you.” I went and rented a black Lincoln Continental and I picked up this 75-year-old grandmother about an hour and a half outside the city, TexasCEOMagazine.com

and we drove to the Olympics. She was so excited. She couldn’t believe she was going to check something like this off her bucket list. She was sparkling and delightful and excited. We walked in and watched Muhammad Ali light the cauldron, we saw all the Olympians walk in with all their colors. She had such a good time. The next day, back in the office, word starts spreading around. “Did you hear what Cohen did? He blew off his plans and took a grandmother to the Olympics.” And the rest of the team starts following suit, going above and beyond for our customers. It trickles down from the top. That was a big epiphany on being customer-centric. What sports are popular these days? Where is demand going up or down? Esports is coming on strong. There’s definitely a market. A lot of money’s being spent. We’ll sell tickets there if we see an event that we think is going to sell out. Wrestling is still in there too. People like WWE and cage stuff. How involved is TicketCity in the ticket-buyer’s whole experience? Do you offer other services? Some people want to rent a nice house or get a great parking spot, so we have a lot of that contracted. So we do some hospitality. But times are changing. You have to have your specific laser-like focus on what you want to be good at. If you try to do parking, hospitality, hotels, and tickets . . . it’s a lot. Our focus is still on acquiring and selling tickets. The business is changing at the speed of light, though. They don’t sell nearly as many season tickets anymore. You have big companies that try to aggregate all the inventory and then keep the market high. But I think the pendulum will swing back the other way and season ticket holders will start to buy packages again. History repeats itself. Ever since I’ve known you, you call yourself the Chief Energizing Officer, not the chief executive officer. Why is that? One of my big roles has been to put together a great team, rally the troops, be the marketing guy. I have a lot of energy. When I come in, I’m high-fiving and chest-bumping my people. I’m there for them any time they need me. They do the heavy lifting, and I’m there as a Chief Energizing Officer in case of emergencies. I’m almost like an insurance policy. I’ll give you an example. At the Seattle Super Bowl, people had ordered a bunch of seats from people who put spec inventory on our site. Some of those had sold at $3,000 but the day of the game comes and the market is at $10,000. So now we get the call: “I’m sorry, Randy, our tickets didn’t come through. We can’t deliver.” “What?” As TicketCity, I’m still responsible for all these tickets. One guy was like, “You don’t understand. I sold these to a drug dealer in Costa Rica and he’s going to kill me.” And that guy was sitting there at our office in Phoenix for three days, crying, hoping to get his 76

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seats. And we were able to get him his tickets. But there are tons of stories where we just didn’t have the inventory, from people wanting to propose at a game to people fulfilling lifelong dreams. As Chief Energizing Officer, I don’t run from those problems. You’ve got to meet with every customer head-on. And, at that Super Bowl, we ended up giving everyone all their money back, plus an additional $2,000 a person, per ticket. And I threw a big party out there for them. All the food and booze included. So they didn’t get to go to the game, but I was there, they were able to lash out at me and yell at me. It was overwhelming. It was the best-worst experience of my life. But we got everybody taken care of. Sometimes it takes extra energy to go, “Woo, woo! Stand back, nonbelievers. Let’s make this happen!” So that’s a bad day at work. What’s a good day at work at TicketCity? What gets you up in the morning? I still love what I do. We make dreams come true. We put a lot of smiles on people’s faces. We show up and help make sure people get the best experience they can, with the right seats that fit their needs. We even coach them, help them get exactly what works best for them. What about from the employee perspective? Is it easy to hire people into the ticket industry? I’ve been really lucky. The average TicketCity management employee has been with us twenty-something years. They’re still here. They’re still fighting the good fight. We have some legends in the ticket industry. And I’m considered one of the godfathers of the ticket business now. Is the legal landscape pretty stable right now for the ticket business? There’s always battles, man. It’s yin and yang. After calling us the scalpers of the world for a long time, now it’s more like “If you can’t beat ’em, join ’em.” But there’s always legislative battles. We fought things from Texas to Canada. But the law in Texas is pretty wide open. You can sell a ticket for whatever here. It’s not like in New York, where you could only sell 20 percent over at one point. People aren’t selling from the street anymore. There’s a lot of companies out there, Gametime or SeatGeek, where you’re able to actually sell tickets online. Companies have basically taken the street scalper out of the loop. They’re still out there, but not as much. Since you’re probably one of the world experts on UT athletics, how do you feel about where the program is headed? I’ll steal a phrase from our athletics director, Chris Del Conte: “Ladies and gentlemen, the bar is open.” People are excited. You can feel the energy. And the money’s flowing into that program. Any final thoughts? I tell people all the time, “Love what you do. Do it well. And keep on doing it.” I’m still showing up and fighting the fight and trying to get 1 percent better every day. That’s what we preach around here. How do you get your company getting 1 percent better every day? How do you be the best you can be?

CATCHING

THE PERFECT PASS Innovation often springs from the unlikeliest of places. Take the unnoticed football program of Iowa Wesleyan in 1989, where head coach Hal Mumme and assistant coach Mike Leach developed an offensive strategy that would change the sport forever. New York Times best-selling author and Pulitzer finalist S. C. Gwynne tells that story in The Perfect Pass, delivering a portrait of two unconventional minds at work. Gwynne spoke with us about why the story of Hal and Mike caught his attention and what management lessons may lie in their reinvention of offensive strategy. Gwynne’s latest book, Hymns of the Republic: The Story of the Final Year of the American Civil War, is available now.

You’re known as a historian. How did you happen on this story about football? It started with a Texas Monthly article that I wrote about Mike Leach, who had his great run at the national championship in 2008 with Texas Tech. That game against Texas in Lubbock, the Crabtree catch, that was the greatest single game in the history of Texas Tech. Period. Everybody at Tech can tell you what happened in that game second by second. I went out to cover Mike and the team with the idea that we would put him on the cover, as we did. We put him on the cover in September 2009 with a pirate patch on his eye. I was hanging out, reporting the story, talking to Mike, the coaches, and everybody. I wanted to understand the offense, because I didn’t. And I knew hardly anybody else did, either. Mike would

routinely put up large numbers of points against you, and you couldn’t figure out how he was doing it. And you couldn’t stop it. Before that, there had only been one significant article written about Mike Leach. Michael Lewis, one of my absolute favorite writers, had written a cover story about Leach in the New York Times Magazine, “The Most Offensive Mind in Football.” Lewis did a lot of things in that article, but he hadn’t gotten into where the Air Raid offense came from. And so I asked. Mike starts telling me about Iowa Wesleyan back in the eighties and this guy Hal Mumme who I’d never heard of. The thing that really caught my ear was when he said: “In the off season, Hal and I would get into this old car and we’d drive TexasCEOMagazine.com

across the frozen wastes of the Midwest, talking to high school coaches, JUCO coaches, CFL coaches, World Football League coaches—anybody who would tell us about the pass.” They ended up in Lindy Infante’s office in Green Bay. They ended up in Dennis Erickson’s office in Miami. Any high school or junior college where someone was throwing, they went. I thought, wow, this sounds like a buddy movie, like the Lord of the Rings—going out in search of the perfect pass. And they found it. Iowa Wesleyan did unprecedented things. And because they were a tiny college in the middle of nowhere, nobody had any idea that they had done it. Mumme and Leach then proceeded to do the same thing at Valdosta State, which earned Hal the head coaching job at an SEC school, Kentucky. I wanted to tell that story of Hal and Mike, but I also needed to know how Air Raid worked. I knew I was going to depart from most football books. I was going to do x’s and o’s, show people how their plays actually work. One in particular, called “mesh.” Because if you know how mesh works, you understand Air Raid. I spent so many hours with Hal. I had a dry-erase board and a camera setup. I would go through and ask Hal to tell me how different passes worked. He’d draw them out, arrows here and arrows there. I couldn’t keep up. I made him break it down second by second. I did probably a hundred total interviews for the book, many focused on how the black magic worked. In order to tell their story, I also had to go back into the history of football, and America’s weird relationship with the forward pass. You show in the book that Hal Mumme didn’t invent anything per se. He just integrated other things. Nobody ever invents anything. Ever. No such thing. Not even Walter Camp [the “Father of American Football,” who developed the system of downs and the line of scrimmage]. And as soon as you say that, eight people raise their hands and go, “Oh no, actually, in Abilene in 1922 they were doing that.” Hal was a great synthesizer, as are all great coaches. And some of his stuff was absolutely radical. That’s often the case in business as well. It’s the integration of different ideas, packaged up in a certain way, that’s where the “aha” is. In this case, spacing the linemen wasn’t revolutionary, for example. Yes. I would argue, however, that nobody had done “hurry-up, no-huddle” since the nineteenth century. Boomer Esiason doing a no-huddle—he was just trying to make the defense unable to substitute. In the twentieth century, nobody did hurry-up, no-huddle until Hal did, which I think is a pretty significant innovation. The nineteenth century is a long way away. Nobody knew how they did that. They didn’t have tape back then. And they didn’t huddle, because there was no such thing as huddle. But yes, everybody repackages. When Emory Bellard invented the triple option, versions of that had been around going back to the nineteenth century. On the other hand, it was a hell of a great offense. 78

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One of the things about this type of innovation—and this transfers to business—is they didn’t accept the premises of the game that everybody else did: that in a game your offense typically has 65 plays, or that the line of scrimmage is a certain prescribed length, or that three is the number of plays you get to make a first down before having to punt or kick. Hal and Mike didn’t accept that the power centers of the field would be concentrated in the middle linebacker. They spread out the power vortexes. The time and space of the game were completely different. For a lot of coaches, the goal of the game was time of possession. If you controlled it, you would win. Hal and Mike didn’t care how long they controlled the ball. They thought the concept was irrelevant. They would score 65 points on you with 20 minutes of possession and have fun with the rest. They had short, lighthitting practices. No one was doing any such thing back then. Before, there was this idea that you ran a specific play that was mapped out precisely beforehand. It turned out that if you have people who can adapt to what the defense shows you, you have a huge advantage. That’s exactly true. In a lot of ways, the most radical thing they were doing was option offense. That meant teaching your players how to read the field on the fly. Opposing teams did not understand this at first. A receiver would be trained to read coverage and react in different ways, and the quarterback was trained in the same way. Which meant that even the offense did not know exactly what was going to happen. Mike Leach’s great receiver at Texas Tech Wes Welker is a perfect example of an option receiver that no one could cover. The other management lesson here is that Hal came up with an idea of radical simplicity in a world that was getting phenomenally complex. Hal’s world was so simple. In a world of telephone-directory-sized playbooks, he did not have one. At times his teams had less than 10 plays, designed in such a way that they looked complex. From his opponents’ point of view, it looks like they’ve got 18 angry hornets coming at them. Their offensive linemen had exactly two coverages. In that era, Paul Brown was famous for his 500-page playbook. It was a badge of honor. It was supposed to take years to understand the complexity of the NFL, and all you ever did was go to clinics and pick up plays. All the options were thought out. The other teams were living in this enormously complex world. But for Hal’s guys, the world was extremely simple. And this was a constant fight. Several different times, the Air Raid started to get too complex. Hal would sit down with his coaches and just ruthlessly go through and cut out plays. If there’s one single overriding lesson, it’s this: If you can be simple in a complex world, you win. It’s a great point. A key talent of the best CEOs is simplifying the business for the team. The team’s in the middle of the details every day and they can get lost. You have to say, “These are the three objectives we’re chasing, not

the thousand other things we could be chasing.” It’s like SpaceX. Talk about simplicity. They have one goal: “We’re going to Mars.” It’s utter simplicity. Everybody there has the light in their eyes. They all know why they’re there. Besides developing the Air Raid offense, what other factors were part of Mike and Hal’s success as coaches? One of the things they were best at was spotting talent. I have written about recruitment in the business world and I have to say that the Air Raid guys are some of the best at it I have ever seen. Most coaches want that typical quarterback, a six-foot-five, 230-pound guy with a big strong arm. But Leach says you probably don’t want that guy. He’s looking for two things in a quarterback right away. One is extreme accuracy. The assumption is usually that if you find the big strong guy you can teach him accuracy. Leach says no: If he isn’t accurate in high school, he’s never going to be. That’s completely against what everybody else thought. The second thing was a great release. Have you seen the ball come out of Pat Mahomes’ hand? That’s an Air Raid quarterback. That’s what Leach is looking for. Extreme accuracy and a release like that. Nobody else was looking at that. His quarterback this year at Washington State, Anthony Gordon, was a junior college quarterback no one wanted. He’s leading the nation in passing. Leach has been able to spot quarterbacks like nobody’s business. When Bob Stoops hired him as a coordinator in 1999 at Oklahoma, everyone was really skeptical. Then Leach goes up to Snow Junior College and gets this guy who had been a washout at Weber State and has a sore arm. Not only that, Leach says, “We’re going to throw the ball 60 times a game”— and we’re doing it with this guy from Snow Junior College

who was a washout at Weber State and has a sore arm. This is Josh Heupel. Leach takes the offense from 111th to fifth in one year. It’s so brilliant that Tech hires Leach. And the next year, running the Air Raid with Heupel as quarterback, Bob Stoops wins his only national championship. Leach saw Heupel. Nobody else saw Heupel. He pulled him out of nowhere, and he keeps doing that over and over again. In the business world, people often look more for experience than talent, even though it may be experience in being mediocre. They’ll take the person who’s done the job for 10 years and shown no exceptionalism. It’s the same principle as hiring the six-five quarterback. You can’t be blamed if he fails. He looked the part. One of the reasons I love Moneyball so much is they said, “Wait, look at his on-base percentage,” which people weren’t doing. How much is classic Air Raid still used today? Mike Leach is still running the Iowa Wesleyan offense. Nobody else is doing that. They’re all mucking with it. But you can see its influence everywhere. But it took a long time to get there. The resistance to what Mike and Hal were doing was just unbelievable. They fired Hal at Iowa Wesleyan. I would argue that the only reason anybody ever hired him was he went to work for the worst college in America with the worst facilities and the worst football team. There was resistance every step of the way. It was like, “You can’t do that.” But Mike and Hal aren’t in any box. They’re not thinking outside the box. There is no box. TexasCEOMagazine.com

[CULTURE]

IS YOUR

EMPLOYEE WELLNESS PROGRAM WORKING?

Employee wellness isn’t just about fitness. Use these six tips to create a holistic wellness program that improves your bottom line, no matter how large or small your firm is. Gary Oden, PhD

Over thirty years ago, I took a headfirst dive into the world of employee wellness programs. I was working on my PhD in Applied Exercise Physiology at Texas A&M when the director of our lab came to me with a question: Was I interested in working on an evaluation of the wellness program at the big Westinghouse plant down the road in College Station? This plant, employing over 2,000 people to create radar components for fighter planes, had recently launched the program, with a beautiful new fitness center as its centerpiece. “Sure,” I said. Thus began my eight-year involvement with Westinghouse, measuring the profitability and effectiveness of their employee wellness program and consulting them on improvements. And thus began a career that would later see me consulting on several other large-scale employee wellness programs, from Norwegian shipbuilders to the State of Texas. If you lead an organization of more than 200 employees, it’s likely you already have some sort of employee wellness program (around 90 percent of US businesses above this size offer one). But all wellness programs are not created equal, not by a long shot. You may also lead a smaller company and wonder how you can get one started without blowing your budget. Either way, it’s worth assessing how your organization supports employee wellness. Especially today, a smart, well-run wellness program can be a major asset, improving everything from your healthcare spend to employee engagement to your appeal to talented job seekers. 80

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Here are my top six tips for optimizing your employee wellness program, gathered over three decades of work evaluating and consulting on them.

1. The CEO must be on board.

For any wellness program to be successful, the CEO has got to take an interest. This is obvious from a financial standpoint. The day will come when decisions must be made about whether certain resources are allocated toward the program or not. If the CEO is unwilling to devote any resources (even if it’s just employee time), the program will fail. But, more importantly, the CEO and the executive team are also critical in setting an example when it comes to prioritizing wellness and participating in the program. For example, when I first came to Sam Houston State University, where I still teach, the health and kinesiology center was seldom used by faculty. Across the whole campus, there were maybe half a dozen people who you’d see in the faculty locker room consistently. But then we got a new president. He was a big advocate of fitness, and he visited the health center no fewer than three days a week. Suddenly, the faculty locker room was bustling with people working out and being active. The president’s participation was contagious, and faculty wanted him to see that they shared his enthusiasm for fitness. The same will be true at your business. If the CEO and executive team don’t have buy-in and involvement in the program, if they never talk about it and aren’t seen participating themselves, it is likely to come across like an HR afterthought. And you will see limited benefit from it.

2. It’s not just about fitness.

Probably the most common mistake I see when I’m brought in to evaluate an employee wellness program—especially at larger companies—is the mindset that “employee wellness” equals “fitness.” Many leaders are narrowly focused on the construction of a fitness center or the purchase of workout equipment. I myself am a big advocate of fitness, but there’s much more to a holistic employee wellness program. In fact, fitness is just one of three pillars, the other two being nutrition and stress reduction. These other two carry just as much weight as fitness when it comes to delivering the outcomes we care about. We’ve known since the time of Hippocrates that we should let food be our medicine, and more than ever, stress is reaching epidemic levels in terms of the impact on employee health. A great wellness program recognizes each of the three pillars. Fortunately, implementing the stress and nutrition components usually gives you a much bigger bang for your buck—costing significantly less than purchasing fitness equipment and building exercise facilities. In fact, if a board came to me today and asked where they can get the most value from a wellness program, I’d point them immediately toward stress-reduction programs.

3. Partner with the community.

As I mentioned, you don’t have to lay out a ton of money to put together a great employee wellness program. If you lead a smaller company and don’t have budget for wellness staff or facilities, there’s still plenty you can do, especially by drawing upon the resources already in your company and your community. First, find a person (or small group of people) in the company who is already wellness-minded. See if they are interested in spearheading your wellness program. Once you find your internal point person, relieve them of some of their regular duties to make room for this initiative. The next step is to help your point person seek out health resources in the local community they can plug your organization into. You would probably be surprised by how many organizations are willing to do health screenings and educational programming at your company for a nominal fee, whether it’s the American Heart Association, the American Cancer Society, or even local hospitals and health systems. Any time these organizations can get their name in front of a decent-sized group of people, they will usually be eager to do so. That’s something you and your wellness point person can take advantage of as you put together a low-cost program. It’s a win-win for both parties.

4. Measure success.

When I was at Westinghouse in the 1980s, we had the advantage of working in a highly regimented plant environment where we could measure productivity in a fairly objective way. As employees produced parts for fighter planes, they logged their progress in a computer system, so I could see a wealth of productivity data for each person. I could see that Joe Smith, for example, completed X number of boards from August until January with 82

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THREE COMPONENTS

OF EMPLOYEE WELLNESS

FITNESS • ACCESS TO EXERCISE FACILITIES AND EQUIPMENT • GYM MEMBERSHIP PROGRAM • ON-SITE CLASSES (YOGA, ETC.) • COMPANY-SPONSORED SPORTS LEAGUE PARTICIPATION • STANDING DESKS • ON-SITE SCREENINGS (BLOOD PRESSURE, BLOOD LIPIDS, ETC.)

NUTRITION • LUNCHTIME SPEAKING SERIES FROM NUTRITION EXPERTS • HEALTHY SNACKS AVAILABLE IN OFFICE • CHOOSE HEALTHY OPTIONS FOR COMPANY-SPONSORED LUNCHES • HEALTHY-RECIPE-SHARING PROGRAM

STRESS REDUCTION • TEACHING RELAXATION TECHNIQUES (MEDITATION, MUSCLE RELAXATION, ETC.)

• COURSES IN STRESS MANAGEMENT, TIME MANAGEMENT, AND MONEY MANAGEMENT • INCREASED WORK-FROM-HOME OPTIONS • MANAGERS TRAINED IN THE IMPORTANCE OF WORK-LIFE BALANCE

a Y percent rejection rate, and I had tremendous access to all the granular underlying data. And I could see whether Joe’s productivity went up, down, or stayed the same as he attended the fitness center and took part in other health initiatives. In the decades since, a lot has changed in the corporate world. Today, it’s very rare to find an objective measure of productivity. Employees are increasingly doing knowledge work, and their productivity often comes down to their supervisor’s subjective opinion. But there are plenty of other things you can still track. Far and away, controlling healthcare costs is the metric most leaders care about when they implement a wellness program. Tracking these costs is indeed an effective way to measure how a wellness program is doing (even though many other factors, of course, affect healthcare cost). I recommend having a system that shows how a certain employee or cohort of employees’ participation in the wellness program correlates to their healthcare cost over the long term. Beyond healthcare cost, I also recommend tracking metrics like absenteeism, employee engagement (via survey responses), employee turnover, and percent of employment offers accepted—all of which can be positively affected by a great employee wellness program. Any efforts you make to support employee wellness will almost certainly have a positive effect, even if it’s small and hard to measure. But it is important to track the outcomes you care about most to determine how your wellness program is performing and how it might be improved.

5. Incentivize participation.

In a perfect world, your staff would be intrinsically drawn to participate in your wellness program. But in reality, you’ll get the best results from kick-starting participation by strategic use of incentives. Fortunately, you don’t have to drop a lot of money. At several companies, we gamified the process through a points system. Once employees rack up a certain amount of points, they get special recognition and small prizes like a water bottle or T-shirt. Don’t underestimate the usefulness of these

measures. It’s shocking what people will do for a T-shirt. At other companies, we saw significant traction from allowing people to earn paid time off through participation. But there’s one other incentive that I’ve found to be the most significant. Which leads us to the final tip . . .

6. If you have wellness staff, they need to be excellent.

In larger companies that have full- or part-time wellness staff—whether it’s nutritionists, trainers, wellness directors, or otherwise—the quality of these individuals is probably the biggest factor in employee participation and the overall success of the program. If these people aren’t well-trained professionals that employees actually want to be around, the program is not going to be successful. Period. I’m currently working with the Texas Department of Criminal Justice as they hire, train, and certify a new team of wellness professionals, and getting great people with a personal touch is at the forefront of our minds. Ultimately, it’s up to you, the CEO—in partnership with your executive team, HR team, and/or appointed wellness point person—to create a wellness program that fits your organization’s culture, work environment, budget, and goals. But keeping these six tips in mind will help you avoid the pitfalls I’ve seen many times. One final word for the CEO: Don’t forget about your own wellness. You have a tremendous amount of stress placed on you. Being able to handle that stress—whether it’s by running three miles a day or going to a progressive muscle relaxation class—is critical not only for modeling wellness for your workforce but for keeping yourself at the very top of your game.

Gary Oden is a professor in the Department of Kinesiology at Sam Houston State University. In addition to serving as Corporate Wellness Director for Westinghouse Corporation, Dr. Oden has served as a wellness-program consultant for MetLife, Aker Kvaerner, Memorial Hermann Health System, and the State of Texas. His current research focus is speed and agility training techniques, and he is currently conducting research comparing speed and agility training equipment.

TexasCEOMagazine.com

[PERFORMANCE]

MARKETING RESEARCH

UNITY VS. UNIQUENESS IN SOCIAL MEDIA MESSAGINGâ&#x20AC;&#x201D; WHICH IS MORE EFFECTIVE?

Akira Asada, PhD

Dr. Akira Asada tested social media marketing strategies for two MLB teams. The results have implications for any brand, sporting or otherwise.

Texas CEO Magazine Q1 2020

When people love a brand, they often form a community around that brand. People who love Harley-Davidson may form groups to ride motorcycles on weekends, for example, and people who love Apple may create an online forum to discuss the new iPhone. The concept of brand community is not new in the sports world. For many decades, sports fans have boasted about their favorite teams, shared unique fan experiences, and developed a sense of belonging. People’s attachment to these sports fan communities often has a significant influence on their behaviors. In fact, research published in the Journal of Sport Management found that a person’s attachment to a sports fan community is a better predictor of consistent game attendance than attachment to the team itself.1 Therefore, to develop a sustainable fan base, sports teams should create strong connections among their fans. Social media is, of course, one of the most effective tools for strengthening connections among fans of a team (or any brand). Sports teams often post pictures and videos depicting their fans wearing team jerseys and cheering together. These images make fans feel closer to other fans and promote unity. Sports teams also use hashtags to increase bonding among fans. For example, the Detroit Lions use the hashtag #OnePride, which fans use to share their pride in being part of the Lions community. Fans who learn about other fans’ personal stories with the team feel a stronger attachment to the community. However, this approach may ignore one important market: potential fans. When existing fans create a strong bond, it may create a boundary that alienates potential fans. But if a sports team wants to build a strong fan base, it has to engage both markets, using social media not only for engaging existing fans but also for attracting potential fans. I was curious about which social media strategies are most effective for speaking to these two groups, so I conducted an experiment in which I tested two approaches. In the first approach, a team emphasizes unity among its fans by showing the fans wearing team apparel and cheering for the team together. In the second approach, a team emphasizes the uniqueness of each fan by showing individual fans enjoying games in various ways. I tested the effectiveness of these two approaches for two Major League Baseball teams: the Tampa Bay Rays and the St. Louis Cardinals. The Rays are one of the least popular MLB teams, ranking 29th among 30 teams in average home game attendance, whereas the Cardinals are among the most popular, ranking second place in average home game attendance.2 I recruited 206 US residents on Amazon Mechanical Turk. Each of the research participants was randomly exposed to one of four types of social media posts:

1. Rays posts emphasizing high unity among the fans 2. Rays posts emphasizing high uniqueness of each fan 3. Cardinals posts emphasizing high unity among the fans 4. Cardinals posts emphasizing high uniqueness of each fan

After seeing the posts, the participants indicated their intention to support the team using a 7-point scale from 1 (very unlikely) to 7 (very likely). The findings revealed an interesting difference. For the less-popular Tampa Bay Rays, the uniqueness approach resulted in greater support intentions (M = 4.12) than the unity approach (M = 3.30). When a team is not very popular, potential fans psychologically put themselves in a different category than the team’s existing fans: “They support the team because they are fans. I am not a fan, so I do not support the team.” In this case, unity among the fans makes that distinction more overt, so potential fans would be more hesitant to support the team when seeing “unity” messages. By contrast, social media posts emphasizing the uniqueness of individual fans of a team like the Rays were more effective. For the very popular St. Louis Cardinals, I found that the opposite also holds true. For this team, the unity approach resulted in greater support intentions (M = 5.75) than the uniqueness approach (M = 4.87). Why? When a team is very popular, potential fans think that supporting the team is something common in their community of residence, and they perceive supporting the team to be part of social norms shared by residents: “They support the team because they live here. I also live here, so I should support the team.” In this case, unity among fans clarifies and emphasizes the social norm and creates greater social pressure to support the team—resulting in a more effective social media strategy than emphasizing the uniqueness of each fan. These findings have unique implications for non-sports businesses as well, because many businesses, like sports teams, run social media accounts that speak to a broader brand community. If you own a relatively new company that needs a wider customer base, you may want to take the Rays approach, showing how the company’s product satisfies various individual customers in various ways. By contrast, if you own a large company that focuses on maintaining existing customers, more like the Cardinals, you may want to show how customers share similar experiences and enjoy a sense of belonging. The bottom line: Unity and uniqueness are both effective social media messages for fostering brand support. But to harness them most effectively, choose the message that best fits the current stage of your brand.

Akira Asada is an assistant professor in the Department of Kinesiology and Sport Management at Texas Tech University. He conducts quantitative social research with a focus on sport consumer behavior, particularly within the areas of word-of-mouth and sport consumer socialization.

1 Yoshida, M., Heere, B., & Gordon, B. (2015). “Predicting Behavioral Loyalty Through Community: Why Other Fans Are More Important Than Our Own Intentions, Our Satisfaction, and the Team Itself.” Journal of Sport Management, 29, 318–333. 2

ESPN, MLB attendance report, 2019. Retrieved from http://www.espn.com/mlb/attendance.

TexasCEOMagazine.com

Listen In his recent book, Shut Up and Listen!, Tilman Fertitta lays out hard-hitting business advice like only the Billion Dollar Buyer could. In addition to starring in his own CNBC reality show, Tilman is a Houston native, “the richest restaurateur in the world” according to Forbes, and sole owner of Fertitta Entertainment, which owns Landry’s, the Golden Nugget Casinos and Hotels, and the NBA’s Houston Rockets. What’s Tilman’s best advice for Texas CEOs? We asked him that—and a lot more.

You came out with a book late last year. How was that process for you? It’s harder than a lot of people think, and very different from being an entrepreneur. It was from a great process. It was interesting how HarperCollins approached it. They said, “Hey, we don’t want a life story. We want you to take this part of your world and put it in a silo.” We stuck it into about 170 pages. HarperCollins told me and my team that we were more involved in the book than they’ve ever seen. You were one of those people who knew at a very early age you wanted to be an entrepreneur, correct? One hundred percent. I say this in the book: I think God gives a gift to everybody and you’ve got to find out what that gift is. A lot of people don’t take time to realize what their gift is. Some people have a great music ear, some people are great artists, some people are great athletes—you’ve got to figure out what it is. I feel that he gave me a business mind and an entrepreneurial brain, so I took that and ran with it. Do you think a lot of people are still drawn to entrepreneurship and business? Everybody wants to be a businessperson. It’s funny. I’ve had the opportunity to meet so many people, from television stars to movie stars to professional athletes, and they start making money on other things and then realize, “God, I want to be a businessperson too.” And there’s as much respect out there for the entrepreneur and the businessperson as there is for anybody. 86

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Photos courtesy of Fertitta Entertainment

Feature

TO TILMAN!

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You’ve realized your dream of owning a sports franchise, the Houston Rockets. That’s got to be a unique challenge. There’s two scoreboards there: the business scoreboard and the scoreboard of how the Rockets are playing. It’s definitely a balance. The two do go together in the sense that if you’re a successful team, you’re going to have more sponsors and more butts in the seats. And you’re going to make more money. The number-one goal is to always have a very competitive team, but at the same time you want to be careful about the business and make sure the other aspects you go into are successful. With your position in restaurants, in casinos, in the NBA, I would think you get a good pulse on the economy. What are you seeing right now? Things seem to be strong, but everybody seems to be worried at the same time. We’ve been waiting for the economy to blow up now since around 2015 or 2016, since it runs in eight- to 10-year cycles. But we’ve had a great run here for 12 years. At some point, the consumer does get full. They’re not going to buy any more houses or cars or TVs. But we continue to build condos and cars and TVs until we’ve overbuilt everything. That’s what really causes a consumer recession. So we’re just going to have to watch and see. That day is coming. We just all hope it doesn’t come next year—or the year after. 88

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But you’re seeing nothing in your businesses today that has you worried about the near term? I see a little bit, but it’s also the labor inflation that’s happening. I’m in a business with 60,000 employees. With these cities passing crazy minimum wages, it’s tough. And at the same time, I’m in a business that everybody wants to be in and that everybody thinks they can do. But all businesses are tough. Every business is competitive. The strong survive and the weak don’t. You mentioned having 60,000 employees. How do you find good people? I bet you’ve got a lot of jobs to hire every month. Two things really help: having a strong HR department and being the type of company that people want to go work for. You’ve leveraged debt throughout your career. Some people are very anti-debt, some people pro-debt. What are your recommendations for CEOs to use debt in a responsible, effective way? You have to know your business and what kind of debt you can handle. A lot of people don’t do that research to see what they can handle and what they can’t. I have no fear of debt. I look at the amount of money I’ve borrowed as my greatest accomplishment, because I have the credibility to go to Wall Street and borrow that amount of money. It doesn’t bother me. I wouldn’t be where I am if I didn’t believe in debt.

Feature Doing Billion Dollar Buyer had to be an interesting experience, especially seeing so many different types of businesses. What did you learn from seeing such a wide swath? There are so many young entrepreneurs out there today, and they all think they have a product better than everybody else’s. And they don’t necessarily. It’s important to be a realist and know if you have something special or if you don’t have something special. That’s something that entrepreneurs and even CEOs need to always remember. Just because it’s yours, that doesn’t mean it’s special. You write in the book about the 95:5 Rule, which is about paying attention to the 5 percent that makes the real difference in the business. In your restaurants, that can be tiny details like a drink served without a napkin or fans running at different speeds. Do you find you can teach that in your employees, or do some people have it and some people don’t? You can absolutely teach it. I’ve taught it at this company. Most of my people are homegrown, and it’s a culture that I’ve developed in the company. The best way is leading by example. When people see you do things as the CEO, then they do it. “Be plappy” is one of the phrases in the book I hadn’t heard before. Could you explain what that means? It means to “play happy.” It’s something I heard 35 years ago when we were doing a premeeting for waiters. One of them was unhappy, and you could just see it on their face. We said, “Hey, everybody has issues and everybody has problems. But sometimes you’ve got to come to work and be plappy”—just “play happy.” The customer

doesn’t care that your dog chewed up your wallet or that your wife or husband is mad at you. In the hospitality business, the customer experience is all that matters. You mentioned having a lot of people who work with you for a long time. What’s your secret for getting people to stick around? I think I’m very fair. You always know where you stand with me. I think if you talk to most people, they’d tell you I’m very difficult to work for, but they wouldn’t want to work for anybody else. Everybody knows that we’re going to “be the bulls,” as I say. When times are tough, we’re going to be the acquirer. We’re not going to be the one being acquired. That’s just the way we operate. Any parting advice for fellow Texas CEOs? Don’t count on your CFO to know your numbers. You need to know your own liquidity. Great companies fail all the time because leaders are expecting somebody else to understand the liquidity of their company. Just because you’re the boss, that doesn’t mean you don’t need to focus on the numbers yourself. A FEW SAMPLE TILMANISMS “Tilmanisms” are the phrases and ideas Tilman says over and over. Find a lot more in Shut Up and Listen! • There are no spare customers. • Never put your lifestyle ahead of the growth of your business. • Consultants can consult you straight out of a business. • No matter the circumstance, be the bull. • And of course . . . shut up and listen!

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[LEADERSHIP]

MISSION, PRIDE, PEOPLE

3 KEYS TO MILITARY

AND CORPORATE SUCCESS Military lessons don’t always translate to the corporate world. Here are three that do. Lisa Jaster

Every few months, a former servicemember writes a new leadership book and the general public eats it up. Many of us in the military are baffled by the popularity of these books. When every military leadership book that rolls off the press is a best seller, I think what we’re really looking at is the lack of meaningful leadership exposure the civilian sector receives. To their credit, these books can be exciting reads. What’s better than gritty tales of tough situations and leadership challenges in combat? After a few stories, these books typically take combat successes and then reverse-engineer them. Here the reader gets a behind-the-curtain view of how military training 90

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yielded teamwork, blind trust, and confidence in commanders— presumably so they can apply these lessons in their own lives. Unfortunately, you can’t just read Extreme Ownership over the weekend and expect people to follow you on Monday like you’re Jocko Willink. Number one: You’re not Jocko. Number two: Your 40-year-old mother-of-two coworker may not be ready for a Jocko around the office. As alluring as it sounds, you’re just not going to take the leadership lessons learned in Al Anbar and walk that straight into the corporate world. Those worlds are just too far apart. The military pay structure is rigid and standardized. There’s no such thing as a 40-hour workweek, and

there’s no overtime. Most members of the Armed Forces join for specific reasons and hold similar values. Whatever differences we start off with get marched out of us in our initial schools. Another dynamic specific to the military is direct authority. There are plenty of opportunities to leverage indirect authority in the military, but when influencing skills fail, the soldier, sailor, airman, or Marine leader can always fall back on “because I said so.” In the military, there’s the potential for severe penalty for not doing what your boss says. All that said, it is possible to leverage military leadership techniques in the civilian world, but they need a bit of massaging to fit the corporate environment. A great place to start are three factors that successful military units and successful corporate enterprises already have in common: a shared mission, pride in their unit, and a “people first” mentality.

Shared Mission Shared mission is simple in the military. It’s part of our oath of office and the second paragraph of every military order. Every US Army soldier, officers and enlisted, raises their right hand and states, “I, [their name], do solemnly swear (or affirm) that I will support and defend the Constitution of the United States against all enemies, foreign and domestic.” The oath continues to talk about allegiance, obligation, and duty. The second paragraph of a military operations order, which is the standard mode of tactical communications in the US Department of Defense and most other military forces, is actually called the “Mission” paragraph. It includes the task that needs to be accomplished by the unit and the purpose for doing it. Simulating that in corporate America is possible if the company’s leadership has built the organization around a shared “why” that they can articulate and motivate their employees to adopt.

documents and organization, allowing for a “cowboy” mentality that feels good. That freedom can remain within the boundaries of a standardized system of communication. In fact, the format often increases free thought and brainstorming, as long as you allow for flexibility in the “how” within the confines of the “what” (purpose) and “why” (intent). This brings us to the second point: The mission must include a purpose and intent that is clear enough to communicate the end state but open-ended enough to allow people flexibility to figure out how they will achieve it. I currently work at a rapidly growing engineering firm that has doubled in size every five years over the last 20 years. The owners enjoy the growth but want the customer to continue to feel like they are working with a small, community-based company. Our “what” (purpose) is to be a full-service engineering firm providing a one-stop shop for customers in the Hill Country and surrounding areas. Our “why” (intent) is to create relationships with each client that allow them to feel comfortable calling us for a wide variety of needs—and that make them want their family and friends to call us as well. That purpose and intent leads me, as the Director of Civil Engineering, to build a “how” around our company leadership’s guidance that differs slightly by each technical division, branch office, and type of client. I am allowed to be more creative because I have some solid guidance. Third, the company needs to live and breathe that mission in all they do. This is truer for the highest and lowest levels of employees than mid-level management. The junior-most employee has the most contact with the customer, so their behavior directly impacts client relationships and influences the organization’s reputation. The highest level of leadership

Two key components of every military mission statement are purpose and intent. What is the goal and why is that our goal? There are plenty of companies out there that just sell a product in order to make money. That’s okay, and that alone might pay the bills, but it is not the foundation for building a brand and a cohesive employee base that wants to drive the company to the next level of success. The employees may even believe in the product, but without a mission, they can’t have a vision. Without a vision, they cannot operate independently. Each soldier, after receiving their operations order brief, knows what they need to do to prepare for the next phase of the operation and begins their preparation accordingly. This way of operating is so ingrained in the military mindset that even the most junior officer in the office of the chairman of the Joint Chiefs of Staff uses the same format. If a CEO wants to leverage this hard-won military knowledge, they need to make a few critical decisions and stick with them. First, identify the form of communication that works for the company and includes all critical topics and subtopics. Make sure this new standard is scalable so it can be used at every level of the organization. Many companies shy away from standardized TexasCEOMagazine.com

cannot profess a mission and expect those below to follow it without seeing the example. Professional appearance is an excellent example of this, both in and out of uniform. It takes practice and consistency to communicate a mission that (1) includes enough detail to drive behaviors, (2) includes few enough details to allow for free thought and creative solutions, and (3) is understandable at the lowest possible level. But it is possible, especially if the leader him- or herself lives the mission through their actions. Leadership through penmanship does not work. Words on a website do not drive behaviors. Leaders must uphold the standards themselves.

Unit Pride I think it’s safe to assume that everyone who joins the military has a bit of a patriotic streak, which gives uniformed leadership a surefire motivator from the onset. As I mentioned, individuals raise their right hand and pledge to support and defend the Constitution of the United States against all enemies on their first day of work. That’s a bit extreme to expect someone to do for most jobs. It’s critical to turn that job into a career for that employee and help them find what they can be proud of at the smallest level—be it a team, an office, a department, or even just a project group. What product or service does that small section provide that the employee can brag about to their friends? Soldiers in the US Army wear a patch on our left shoulder to demonstrate what major command we belong to. And inside each major command, we have mascots and team names for every military subgroup, down to a squad or team. We paint our symbol on trucks, put it on memos, and decorate our work areas with it, just as corporate America does with logos. We have coins, stickers, hats, and T-shirts to demonstrate our esprit de corps. But the military takes it one step further: We encourage individuals to see that the mission of their small team makes the larger team’s mission possible. Without me, the squad couldn’t succeed. Without the squad, the platoon, company, battalion, all the way up to the military as a whole, wouldn’t succeed. A manager must instill a similar unit pride in employees by showing people that their individual actions are somehow adding to the whole. At my current company, where we want to be a full-service engineering firm, it is imperative that we ask our clients about items outside our direct scope. This way, we help the client solve their overarching problem rather than just putting a Band-Aid on the immediate issue. We build trust and a lasting relationship. Doing that together, across the team, grows our unit pride.

“People First” Mentality One advantage civilian organizations have over military organizations is in the people department. Although I believe that soldiers, sailors, airmen, and Marines are some of the best humans alive, they are also assigned—they are rarely chosen. Usually, the available person fills a military job and then learns what they need to do through on-the-job training. 92

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In a business, you have an opportunity to interview each employee and chose your teams based on capabilities and fit. But no matter how good or bad the staff might be, a group of bitter, isolated people will never succeed. That’s why it’s critical in either environment to have a “people first” mentality, placing relationships between humans front and center. At West Point, we took PL300, a class in military leadership from the Behavioral Sciences and Leadership department. The big joke back in 1998 was that the correct answer for any unit-cohesion issue was to hold a mandatory barbeque. Oddly enough, that lesson was truer than my 21-year-old brain could comprehend. A person spends one-third to one-half of their waking hours with their coworkers. If the individuals can’t socialize at the lowest level—at lunches, coffee-pot and water-cooler discussions, and so on—then they will never be able to work as a team. Making sure that someone is a character fit for the company or team isn’t enough. Each employee must feel like they are getting something back for the time they spend away from their personal life. I have found that there are three major drivers of work happiness: money, location, and job satisfaction. I am finding out as I get older that job satisfaction, which prominently includes my relationships with my coworkers, has now replaced money as my top priority. Knowing that your employees likely feel the same, and helping them develop positive relationships with each other, will keep your turnover low and productivity high. One thing “people first” doesn’t mean is that you must treat everyone exactly the same. I learned a hard lesson in Ranger School: There are a lot of amazing soldiers who just aren’t meant for certain types of missions. Since corporate America has the right to hire and fire people, find those who fit within the company and nurture them, but let go of those who aren’t driving toward the same end state or aren’t motivated by the company’s “why.” That way, both you and that employee can find a better fit.

In Conclusion Military leadership offers plenty of lessons for corporate America, but those lessons must be taken with a grain of salt. The base of the organization—people—is significantly different in military and civilian environments. But regardless of which type of group you stand in front of, there are three critical drivers of success. Each organization must have a clear mission, a sense of unit pride, and a “people first” mentality. Build these three in your team and you will see success, whether it’s on the battlefield or at the office.

Lisa Jaster is the Director of Civil Engineering for M&S Engineering and a lieutenant colonel in the US Army Reserve. After graduating from West Point in 2000, she was commissioned as an engineer officer and served on active duty until February 2007. During her time in the military, Jaster deployed to Afghanistan and Iraq, earning two Bronze Star Medals, two Meritorious Service Medals, and a Combat Action Badge, to name a few of her awards. She is also one of three women to earn the army’s coveted Ranger Tab out of the initial integrated Ranger School in 2015.

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BRINGING A

RENEGADE SPIRIT TO XFL 2.0

Dallas Renegades president Grady Raskin on staffing an office, drafting a football team, and appreciating all that North Texas has to offer. Did you know you wanted a career in sports from an early age? From an early age, sports were my life. Whether I was watching with my father or playing with my friends, sports was always the center point in my life. It wasn’t really until college that I realized I could have a career in the area I loved so much. Timing and opportunity came together in several instances, and I like to think I took advantage of it. How did you land the role as Renegades president? What was the process like? As in many high-level sports opportunities, recruiters played a huge role. Over my career, I made sure to connect with as many recruiters as possible. When approached about the role, the recruiter encouraged me to speak with the XFL league staff and allow them to show me what XFL 2.0 would be all about. All conversations with the XFL were direct and honest. Everyone from the HR team to Oliver Luck and Jeffrey Pollack were amazingly passionate and made me want to jump on board. I was humbled to be considered for the role and excited to get the ball rolling. How would you define your role as president of the Renegades? What were your priorities going in? Initially, my role was recruiting a front office staff. We are nothing without good people. Since we are a lean staff, I had to make sure we had strong directors in all areas and that they have the proper support staff. I am happy to say that we staffed up pretty

quickly and each hire is proving to be a home run. Now, I do all I can to provide support and relay information from the league. Ticket sales and brand awareness are our top priority, so all activity focuses on these two crucial areas. As you put together that front office, what were you looking for in people? My approach was to find genuine, selfless individuals who truly understood what it might take to create a football team in a new professional football league. I wanted confident, not cocky. Since we have such a lean staff, everyone will need to focus on their own particular areas but will also be called to collaborate in other areas. We need to take advantage of the intelligence and experience of the entire staff and everyone needs to be open to suggestions. Lastly, with the short timetable and enormous amount of work to be done, an electric energy and positive attitude was a must. We may not always agree on a thought or direction, but we will deal with each other positively and respectfully. No time to be anything else. What, to you, is the most exciting aspect of the new iteration of the XFL? So many exciting aspects of XFL 2.0. In fact, the only similarities between what was done in 2001 is the name and ownership. This go-around, it is all “for the love of football.” So much research has been done to find out what people would want out of a new professional football league. We surveyed fans, officials, coaches, and others. It was clear that the overriding theme was to make the football fast, fun, and affordable. Less stall and more ball. Low on gimmicks and high on genuine football. It will look and feel like the current football that Americans love to watch on Saturdays and/or Sundays but will have some subtle tweaks to help speed up play and create amazing new experiences. What was the draft process like? Over the summer, each market conducted showcases where invited players came out to show their skills. From those Summer Showcases, we created a pool of players who were eligible for our draft. Each player received a non-binding commissioner’s invite to participate in the draft. Over two days, each team drafted 71 players.

Texas CEO Magazine Q1 2020

Remember, we’re drafting entire teams, not just filling in a few holes. The experience was amazing, and I have to give props to our football operations team, who did their homework, were amazingly prepared, and stayed incredibly upbeat and positive for every single pick. It was a long two days and every team should be proud of their efforts. I would also note that we had a supplemental draft in November to capture any unique talent that had come on the market. Like any professional league, our rosters will constantly evolve, and we are doing everything we can to have the best players available playing in the XFL. Why the Renegades as a name? The XFL combined their internal brainpower with an outside agency to come up with all the names and logos of each team. They created a short film to show where the inspiration came from. Our short film shows the eclectic, diverse nature of North Texas, including visuals of cowboys, a graffiti artist, motorcycle enthusiasts, and more. While we see the voice of the Renegade to be unconventional, courageous, relentless, and a trailblazer, it will truly be defined by what our team does on the field and the traditions created by our fans in the years to come. You’re a born and raised Dallasite. What keeps you in North Texas? Why would I want to leave North Texas? It’s just a wonderful part of the country with hardworking, positive people. The corporate climate is extremely strong, and the cost of living provides people the opportunity to experience all the sports and entertainment that this area provides.

It also helps that my entire family is here. I married another Dallasite, so her parents, as well as my parents and my sister and her family all live nearby. We are fortunate to be able to get together for all holidays. I never take for granted how fortunate I am to be able to do this. What’s the number-one lesson you’ve learned over your leadership career? What would you tell someone looking to get into a leadership role today? I believe that everything begins with honesty and humility. If you hold yourself accountable for the same things you ask of your team, it is hard to go wrong. Something will surely go wrong at some point, but dealing with the issues directly and honestly seems to always get the best result. I am a very direct person and appreciate this being reciprocated. This may be redundant, but I would add to always deal with things in a timely manner. Holding off on tough decisions or conversations will only add to the difficult nature of what needs to be done. What are you looking forward to most this season? I am looking forward to watching football in February, March, and April. I’m excited about watching a fast-paced form of familiar football that many will enjoy. I can’t wait to provide some amazing access to our fans at Globe Life Park and to our viewers on FOX, FS1, ABC, and ESPN. All of this done with extremely affordable pricing to allow everyone in North Texas the opportunity to watch professional football and create new memories of their own.

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THE BUSINESS OF

COLLEGE ATHLETICS A CONVERSATION WITH CONFERENCE USA COMMISSIONER JUDY MACLEOD When Judy MacLeod became the third commissioner of Conference USA in 2015, her appointment was historic: She is the first and only female commissioner of a Football Bowl Subdivision athletics conference. She came to the Dallas-headquartered conference in 2005 after 15 years at the University of Tulsa, including 10 as athletics director. We talked to MacLeod about her backstory, the financial side of collegiate athletics, and what’s exciting at the four Texas schools representing Conference USA.

Your career began in athletics and you’re still there. Did you know at an early age that you wanted to be in the business? I did not. I played basketball in college and actually was planning on going into the finance industry. I didn’t even realize I could have this kind of a career. I got offered an assistant coaching job right out of college and I thought, “If I ever want to do it, I should try it now.” I decided to get into administration when I took a job with the Goodwill Games in Seattle. I ran a couple of sports in the 1990 Goodwill Games. When I tell young people that now, they look at me like I have two heads. “What’s a Goodwill Game?” I’m like, “Oh, I am old, aren’t I?”

So you were young and inexperienced when you took that job. Tulsa’s not a Division III school. They could have done a nationwide search. Why do you think they took a chance on a young person? A lot of it was the circumstances. They made me interim AD first. When they later hired Dr. Bob Lawless from Texas Tech [as university president] and introduced me to him as interim AD, he probably looked at me like, “Are you kidding me?” And to his credit, he spent about 10 months evaluating me. Those 10 months under Dr. Lawless, every day was a test. And I guess I eventually passed.

WE SAID, “IT’S GREAT IF YOU’RE AN OKLAHOMA

STATE FAN, BUT IF YOU LIVE IN

After that, I had to make a decision: Do I want to pursue coaching or administration? I thought I might be better suited for administration. So I decided to go back to grad school and moved to Oklahoma for a graduate assistantship at the University of Tulsa.

TULSA, AND OKLAHOMA STATE’S NOT PLAYING TULSA, WE NEED YOU TO BE A TULSA FAN.”

A little change there from Seattle. Had you ever even been to Tulsa? No. My friends and family might’ve thought I’d lost it, but I was like, “It’s two years. You can do anything for two years.” After a year, they hired me full-time. I was still finishing up my master’s. Five years after I arrived, I became the athletics director. People are like, “This isn’t a real story.” And sometimes it doesn’t even sound real when I tell it, but it happens. 96

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When he offered me the job, I thought, “Well, I’m already doing it. Tons of people work their whole careers to be an AD. Why would I not?” So, I took it. He was the best boss I could ever ask for. Just incredibly supportive, helped me grow so much. I consider him and his wife friends to this day. It’s unbelievable, really, to get that opportunity at 31 years old.

The AD position has some similarities to the CEO role, but it’s not the highest paid or most well-known position, especially compared to some of the coaches. How did that work? Honestly, that dynamic was perfectly fine for me and my personality. I would prefer to not be the one in the spotlight. It’s about the young men and women who are putting in the work, and the coaches. Those are the people who deserve the recognition.

As an AD I’m there to lead, but also to serve those people and give our coaches what they need to do their jobs and create a great experience for the studentathletes. It was never an issue. Obviously, I had coaches and administrators who were older than me, who made more money than me, but we were all pulling on the same rope. The more basketball was excelling at Tulsa during those times, and the more credit they got, the better I was, as far as I’m concerned. There’s a certain challenge to not being the preeminent, best-known university in a particular state or region. How did you deal with that? Tulsa is a small private school. Within a two-hour drive, we had Oklahoma, Oklahoma State, and Arkansas. There were more alums from those places in the city of Tulsa than from University of Tulsa. It was always a challenge, but we did our best to be Tulsa’s team. We said, “It’s great if you’re an Oklahoma State fan, but if you live in Tulsa, and Oklahoma State’s not playing Tulsa, we need you to be a Tulsa fan.”

it’s not like there’s so much money that we don’t know what to build next. Or that you have all this money to pay every student-athlete a living wage. How do you see that issue developing? For a long time we’ve all said, “This is too hard. How would it work?” And it is hard, but that can’t be the excuse not to try to figure it out. Whatever we do, it’s got to be uniform. We can’t have different laws in different states. We need guidelines. We’re working on it diligently—I say “we” because the NCAA is a membership organization. I can’t tell you that the answers are easy or that everyone’s going to like them, but it’s something we have to figure out. We have to move with the culture and the modernization of things.

about it within our conference. We haven’t gotten to that point of having a league championship in esports. I don’t know if it fits under an NCAA umbrella or not. But I definitely think it’s not going away. It’s remarkable, some of the facilities that have been built for esports. You’ve got four Texas schools representing Conference USA—North Texas, Rice, UTSA, UTEP. What are the exciting things happening at those schools? The overarching thing I would say is the leadership at all four schools. From the presidents to the ADs, they’ve been very aggressive in marketing and improving things. All four of them have exciting things going. North Texas has gone through an explosion of growth with their football facility and indoor practice facility, used by football, track, softball, soccer, and other sports when there’s inclement weather. Their women’s soccer team won their third consecutive conference tournament championship and play in a brand new soccer stadium, and they recently announced a new golf facility.

YOU CAN HAVE A GREAT EXPERIENCE AT OUR

GAMES FOR A LESS EXPENSIVE PRICE AND WITH MORE CONVENIENCE.

The success obviously helped. We finally got football going. We’d been to a couple Sweet Sixteens and an Elite Eight in men’s basketball. So things were moving pretty well, but it was still a challenge. We didn’t even have the challenge we do today, where people can watch every game on TV from their couch. How does the revenue break out at smaller schools—not just at Tulsa but in Conference USA overall? All of our schools’ athletic programs receive funding from their university, whether it’s an allocation or driven by student fees. That’s one of the misconceptions, that there’s so much money flowing. Our schools do not bring in enough revenue to support their expenses, so they’re subsidized by our universities. That’s a choice the institutions have made, because athletics are important and bring many things to campus—alumni engagement, publicity, exposure. But

For a while in college athletics, it felt like you had to get the new list of who’s in the conference every year. For the last three or four years, it seems like we’ve steadied. Do you see that staying in place, or is there going to be another big upheaval? I do think things have stabilized. In some of the larger conferences, the individual schools have signed over television rights and other media contracts. With that stabilized at the top, it’s a domino thing. It eventually affects everyone, though I would never say it’s never going to happen again. For some of us, high school and college sports were a big part of growing up. Now many kids would rather play Fortnite than go to a football or basketball game. Are we going to see video gaming within the NCAA umbrella down the road? They’ve talked about it and studied it for a while. We’ve talked

At Rice, especially on their women’s side, they’ve had tremendous success. Last year, their women’s basketball team went undefeated in the league and captured both the regular season and conference tournament championships, and participated in the NCAA tournament. And they should be very good again. Their volleyball team is nationally ranked, defeated Texas in the regular season, and participated in the NCAA tournament. Under second-year head coach Mike Bloomgren, the football program showed dramatic improvement this season. The football team was one of only seven programs to be honored by the AFCA for recording a perfect APR for 2017–18. The men’s basketball program is in its third year under Scott Pera and is currently 6–3 with some good wins in the early going. TexasCEOMagazine.com

YOU DON’T HAVE At UTSA, their AD is in her second year and doing some great things down there. Their football program is still relatively young, but there’s tremendous potential if they can get it going. The interest is there. When they first started football, they had quite a few people coming to the Alamodome, and it was a great atmosphere. They were picked second in the preseason poll for men’s basketball. Steve Henson’s done a really nice job. They’ve got a couple of players who are on our preseason all-conference team. They recently hired a new baseball coach in Patrick Hallmark, who brings an excellent pedigree to their program.

TO BE AN ALUM OR

AFFILIATED WITH ONE OF OUR SCHOOLS TO COME OUT AND ENJOY HIGH-LEVEL COLLEGE BASKETBALL IN A FAMILYFRIENDLY ENVIRONMENT AT AN ECONOMICAL PRICE.

UTEP’s still rebuilding in football, but they are another team that’s continuing to play hard. They have a brand new president and a fairly new AD and are continuing to upgrade their facilities. I would watch out for their men’s basketball team. Coach [Rodney] Terry is in his second year and they’ve already had wins against New Mexico State and New Mexico, both of whom were very highly regarded going into the season. I think we’re going to see some noise from them on the men’s basketball side. Conference USA seems to have an advantage when it comes to the game-day experience. When you go see a UT football game, it’s a daylong commitment, with getting there and parking and all that. Your fans’ ability to park right at the stadium, sit in a good seat, without a lot of fanfare—that’s appealing to people, right? Our ADs have made a concerted effort to think about the experience, from the time somebody leaves their house to when they return to their house—how do we make it the easiest and best? Granted, we’re not dealing with 100,000 people, so inherently it’s going to be easier. But we still work to make it a great 98

Texas CEO Magazine Q1 2020

experience, and you are going to see a good football or basketball game, because we have really talented young men and women in our programs. So you can have a great experience at our games for a less expensive price and with more convenience. Figuring out where all your schools go during bowl season has to be one of the most challenging duties you have. How does that process work? That’s one of the more interesting processes we go through. It doesn’t change day to day—it changes every five minutes, from one phone call to the next. We’ve been really successful though. Last year, Conference USA won the trophy for the highest winning percentage in bowls. The year before last, we had 10 bowl-eligible teams and were fortunate enough to find places for nine of them. I wish we could have found 10, but the system is constrained. There’s a limit. We work with our bowl partners. We talk with our ADs. At the end of the day, it’s really the bowl’s choice. But number one, we try to create match-ups that are appealing. If we have a 10–2 team, we don’t want to match them up with a 6–6 team. We also work really hard to make the games make sense geographically. Now, that’s not going to happen 100 percent of the time. But we’ve done a really nice job of having bowls in great locations. We

play in Hawaii sometimes. We play in the Bahamas every year. We play in Florida, obviously, in the Metroplex. It’s just a puzzle, putting it all together. You can’t make 100 percent of teams or fans happy, but we try to do the best we can. I think our coaches and ADs realize that any bowl is a good bowl. You get to spend extra time with your kids, and your fan base and community gets excited.

Conference USA is making moves locally with the conference basketball tournament here in Texas at The Star in Frisco for the third consecutive year. How has that helped your league’s profile? Please give us some insight on how y’all are approaching this event. We partnered with the City of Frisco, Visit Frisco, the Dallas Cowboys and Baylor Scott & White to bring one of our premier events to Frisco. We have four days of tremendous basketball with 12 men’s and 12 women’s teams competing for an automatic bid to the NCAA tournament. The unique setting, playing two games under one roof simultaneously, the Fan Fest we have created on the plaza, and the surrounding restaurants, hotels, and retail have combined for a great experience not only for our teams, but also for the fans. Similar to what we talked about earlier, you don’t have to be an alum or affiliated with one of our schools to come out and enjoy high-level college basketball in a family-friendly environment at an economical price. With the help of our local vendors, corporate sponsors and the other contributors already mentioned, we have created a great tournament atmosphere, while delivering substantial economic impact back to the surrounding area.