Podcast: Bob Chapman Talks Everybody Matters to a Virtual Book Club

The way we lead impacts the way people live.

You know, I think for your audience, a tiny bit of background, my background was I got an accounting degree from Indiana. And if you asked me why I became an accountant, I'd say I have no idea. The greatest compliment somebody ever gave me is 'I can't believe you're an accountant.' But I did get an accounting degree and went on to get an MBA at Michigan. And then went to Price Waterhouse. So, I don't have a psychology background. I'm a classic business manager with a decent education. And I was not exceptional. I would say one of the things I hope you get out of this is in my career I would say to you is not my intellect that allowed me to do well. It is my common sense and creativity. That to me, as I've given these talks around the world and I look back on it, I was just blessed with the ability to see value where other people are not. So, the first half of my career was a very traditional career. My dad died when I was 30. Company was 18 million. It was financially fragile. I had joined it from Price Waterhouse at my dad's invitation. And my first part of my career was to try and make something of my dad's hard work for the 20 years he had owned this company and tried to transform it but was unable to. He worked hard at it and he had had two heart attacks and was physically pretty tired. And so, basically again, my first half of my career and the beauty of my career was I made because my dad died when I was 30 and I had had just six years in the company. So, I had a good awareness. I was ready for the challenge but I also made a lot of basic mistakes. I grew too fast. I tried too many things. And in 1983, my banks pulled on me. And what I tell students when I teach is my greatest lessons came from my biggest mistakes. I didn't. There's a whole expression you only grow one way when you eat ice cream. Because I made my mistakes early and because I'm an eternal optimist. I mean, it was so bad in 1983 that they repossessed our coffee maker because we hadn't paid the coffee service company in six months. We lived day-to-day. So, from 1983 to 1987, we were in financial turmoil and it was a day-to-day, month-to-month transition, but I never lost hope. And I never gave up. And the key is that I went from trying to take this old business that made brewery equipment and I realized in 1983 that our history did not give us a future. So, I worked to try and transform the company through acquisitions. My only problem is I had no money. The turning point from a traditional management standpoint was in 1983, I went to our finance team and I said, 'Look you guys, I'm proud of our history, but making equipment for the brewing industry does not give us a future for a variety of reasons. And we need to do acquisitions because I'd studied a company called Emerson Electric.' My finance team looked at me and said, 'Great idea, but we only have one problem.' I said, 'What's that?' And they said, 'We have no money, Bob. I'm just going to repeat this. Do you understand? We have no money.' And my response, which kind of embodies my personality, was 'I didn't tell you I needed money. I told you we needed to do acquisitions.' And I left that room unencumbered by the fact that I was broke and I began doing acquisitions. So, what do you buy when you have no money? You buy things nobody else wants and they'll almost pay you to buy them, okay? So, that's what started transforming the company. So, I found out I was pretty good because I was pretty intense because again, we were on the edge of survival and so I started training these companies around 1987. We did a spectacular transformation. We spun off two-thirds of the company, the acquisitions under London Stock Exchange and Harvard wrote a case study because they couldn't believe we bought these broken little companies, put them together, and had a massively successful offering on the London Stock Exchange. So, the company today, the $3 billion company today, is kind of was transformed in 1987. We spun off the acquisitions and I was left with that historic business that was sick. But now I had the experiences of dramatic growth, dramatic decline, miraculous recovery. So, one of the things I'd want you to know is I designed a business model from my experiences from the late '70s and '80s. There's an old expression, you need to get the right people on the bus. That's not really quite right. You need to build a safe bus, which is your business model. And you need drivers who know where they're going and how to get there and then anybody who gets on the bus is going to be fine. So, I was fortunate to have made some pretty serious mistakes in the '70s and '80s, survived it, never lost hope, had the miraculous recovery, and now in 1988 I had money, but I still had the old business and it was about a $20 million business. So, 115 acquisitions later today, we sit here today and it's a $3 billion company. So, my first half of my career was very traditional. But I had some three transformative events occur to me in the late '90s and early 2000s that changed me from what I call traditional management to what I call truly human leadership, which is caring for people. And the three events that I think are significant. The first event occurred in 1997 when I bought this company in South Carolina. And flew down there, and the experience I had when I went down there was I said to myself, 'Why can't business be fun? Why do we call it work?' And I created these games aligned to value creation. I saw transformation in the business performance when people started having fun. The second one occurred in St. Louis at our church when I met my mentor at the church, who was a rector. And I was very inspired by Ed Salmon, but one day I looked at Cynthia and said, 'Cynthia, the church has only got us for one hour a week. We have people for 40 hours a week. We are 40 times more powerful than a church to help people live lives of meaning and purpose.' And I walked out of that church that day saying business could be the most powerful force for good in the world if we simply cared about the people we had the privilege of leading. And the third occurred in Aspen at the Roaring Fork Club, a wedding. And Cynthia and I were sitting in the tent up by the pool at a wedding of a good friend. And as he was walking his daughter down the aisle, everybody oohed and ahhed how precious this young lady was and how cute this young man was at the altar and how proud the father was walking his daughter down the aisle. As he got up to the altar, he took the hand of his daughter and said, 'Her mother and I give our daughter to be wed to this young man.' And he sat down next to his wife and hugged each other. And my mind again went to a different place. I said, 'That's not what that father wanted to say. That's what he was told to say at the rehearsal dinner. What he wanted to say is, Look at young man, her mother and I brought this precious young lady into this world. We've given her all the love and care we could give her so she could be who she's intended to be. And we expect you, young man, through this marriage for you to allow her to continue to be who she's intended to be through your powerful relationship. Do you understand that, young man?' That is what every father wants to say as he gives away his precious daughter. And then my mind went to the most powerful transformation. I said, 'Oh my god, all 12,000 people that work for us around the world are somebody's precious daughter or son who's been placed in our care.' Now, that last story, the way that built from why can't business be fun to business could be a source for good to everybody's somebody's precious child. As I've given dozens and dozens of these talks around the world, that wedding story at the Roaring Fork Club is the one everybody remembers because when you stop looking at people as a cab driver, a waiter at the Roaring Fork Club, a pro at the golf shop, and you look at them as somebody's precious child, you treat them dramatically different than you would when you see them as a function. So, that's what transformed me from management to leadership. And then accidentally, people heard about this, started coming in, and our story started spreading around the world through people like Simon Sinek. So, that's kind of how the shift from traditional management and I define the word management means the manipulation of others for your success to leadership, which is the stewardship of the lives entrusted to you. I'll tell you a really neat story. I was interviewed by Washington University organizational development professors, and after an hour and a half, they said, 'You're the first CEO we've ever talked to that never talked about their product.' I said, 'We've been talking about our product for the last hour and a half. It's our people.' I won't go to my grave proud of the machinery we build. I will go to my grave proud of the people that built that machinery. And that startled them because we tend to think of our company as defined by our product, not our people. So, I hope that kind of gives you a feeling for how I went from what I call management, which is what I was taught, to leadership, which is about caring for people. Amy, that's a long answer to your first question.

Well, a piece of that answer is in there. About 15 years ago, we had tried some of these games to have people have fun and we saw some dramatic change of behavior and we started trying other little ideas. We started seeing dramatic changes in joy, fun, performance. And we gathered together in Clearwater, Florida and said, 'Something bigger is going on here.' So, we started writing down on the board what are we experiencing? Why were all of a sudden these games and fun creating value? And we stood back from the board eventually and we said, 'Those are leadership principles.' We called them our guiding principles of leadership. And as we published this constitution of our leadership principles, it was about the time of the Enron scandal which we're all aware of that led to the demise of Arthur Andersen. And the lady that works for us, Mary, our human resource director, looked at me and said, 'Bob, Enron had great values on the wall, they just didn't live them.' And I took that as a challenge. I looked at it and said, 'We're not going to put them on the wall, we're going to put them in people's heads and hearts.' So, I started traveling around the world saying, 'These are values we believe in. Talk to me about them and tell me how we're living them.' And we started changing. And so I really got into this prophesizing on these guiding principles. So, when '08-'09 hit, it caught us completely off guard. Our orders dropped slightly, but we had a pretty good backlog. And so, in January of '09, I flew down to Naples, Florida for a board meeting. I walked in the board room, we have an outstanding group of directors. My directors looked at me and said, 'Bob, don't you think you need to lay off people?' I said, 'Why do you say that?' And he said, 'Well, because everybody is. I mean, don't we have to?' And I said, 'I don't think so. I think we've got a pretty good backlog of orders, and I think we'll get through it.' So, we got through the meeting, everybody's fine. About a month later, I'm in Italy, Lucca, Italy, at our operation in Italy, and I got an email from the states and said, 'A major consumer products company just put on hold a $20 million order in our largest operation. Just put it on stop.' We already had the order, down payment, we're already working on it. And so, it's one thing not to get additional orders, then all of a sudden, when your backlog disappears, you're like, 'Oh my god.' I remember sitting in my room in Italy and saying, 'Oh my god, what are we going to do?' And I remember all the preaching I'd been doing about caring about people, and I said to myself, 'If we let people go, we're going to hurt people.' And it caused me to think differently. And I sat in my hotel room, and I thought, 'Well, what would a caring family do if a family had a crisis?' We'd all pitch in and take a little pain, so nobody would have to take a lot of pain. And so, I emailed back to the states from my hotel room in Italy, and I said, 'What if we ask everybody to take a month off without pay? And we could get through this, whatever this is going to look like, because it's yeah, we didn't know. Downturn.' I said, 'By the time I land, tell me how we can do that thoughtfully and properly.' So, by the time I landed, our team had thought about it, and we announced that everybody was going to take a month off whenever they wanted to, okay? Because we wanted them to have quality time with their family. So, in exchange for them taking a month off, I wanted to give them time. And I was astounded at the reaction because I would have done what everybody else did. You lay off people when your orders go down. It's not personal. It's just you don't have the work. Lay off people. People's reaction was unbelievable because what they felt was even though they were going to give up one month's pay, they sat and looked at the person on the right and the left and thought, 'I'm helping them save their job.' And it was an act of compassion on their part to take a little hit, well, 1/12 of their salary. And our morale went up when we announced it. We'd never done it, never heard of it, never thought of it. And so everybody took a month off at some time. We got through that without letting anybody go. And when the economy started to come up, our business started rising quickly because we hadn't lost our people, we'd validated our culture. So, that story's been told. Simon Sinek talks about that story all over the world because we're taught you downsize, you rightsize people. And there's an expression that Simon Sinek has that you'll love. In the military, we honor those who give of themselves in service of others. And in business, we give people bonuses who sacrifice others in service of themselves. Why can't business, like the military, see its primary responsibility as the men and women in their care? And my position is they can. And we got through that event and we did more to validate our culture than anything we could do because who you are in your worst of time is more of a statement than anything else. We had people volunteer to take somebody's time that they couldn't afford. They had a young family, they couldn't really afford to lose 1/12. So, a senior person would go and say, 'I'll take one of your weeks, so you only have to take three weeks off and maybe that would be easier.' And then somebody else, people did volunteer work at their church. It was astounding, but it was stimulated by our guiding principles of leadership, which said, 'We measure success by the way we touch the lives of people.' And we touch our customers, we touch our team members, we touch our investors, we touch our bankers, we touch our suppliers. And we need to think about our actions and that guided us to a totally unique approach. And that's always somebody always asks me about that because we're kind of taught you got to downsize, rightsize when economic conditions challenge you. And that's why virtually every company in the country. And the problem is you never think about the fact that when you let Joe go who sits in this desk, Mary on one side and Fred on the other side see Joe get let go, Joe's got two young kids, they know he'll be hurt and the collateral damage much less to Joe, but to the people who don't get laid off in this world. We teach people you got to do that. You got to keep your company solid. People got to go, they got to go. You got to keep the company solid and we got through that without doing that. And then COVID, you know, we sold capital equipment and we let nobody go in COVID and our company's extremely strong in COVID because part of it is our business model. Part of it is our business model is so robust that we are performing well. So, that's the '08-'09 downturn where we took a totally different approach stimulated by our guiding principle of leadership, which said, 'We measure success by the way we touch the lives of people.'