May 14, 2024 • 32 mins
In this episode of the FMI Built-In podcast, Bob Uhler joins FMI Consulting President Scott Winstead for an insightful conversation on leadership in the C-suite. We talk about the evolving role of a CEO, the difference between a visionary CEO and a maintenance CEO, and how to be agile in evolving markets and sectors.
Bob is an accomplished leadership consultant and the former CEO and chairman of MWH Global, one of the largest water and wastewater treatment contractors in the U.S.
Tune in to glean insights on how to be an agile leader and adapt to the evolving built environment and read Bob's article on the four levels of organizational success.
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Transcript
Episode Transcript
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(00:00):
Hello, I'm Scott Winstead, FMI Consulting President.
(00:05):
I'm really excited to share my conversation with Bob Euler with you.
Bob is the former CEO and Chairman of MWH Global, a post that he held for 12 years inside
of his 36-year career within the firm.
During his tenure, Bob led the transformation of the MWH business platform from one country
to 36 and from 100 million in revenue to over 1.6 billion in revenue.
(00:27):
Through a combination of organic geographic and client expansion strategies and the integration
of over 20 acquisitions, by the time he retired, MWH was ranked as the global market share
leader in global wet infrastructure services by U.S. and international industry journals
and the 12th largest ENR design firm in the world.
Through it all, MWH was a unique global pure play water environmental infrastructure firm
(00:51):
dedicated to a singular sector.
Bob holds an undergraduate degree in engineering from the United States Military Academy at
West Point where he was also a varsity athlete.
He holds a graduate degree in engineering from the University of Florida and an advanced
management program certificate from Harvard Business School.
Following his time at West Point, Bob served his country as an airborne Ranger Combat Commander
(01:12):
with decorated distinction of two bronze medals and four combat air medals for Valor in Vietnam
with the 101st Airborne Division.
I've been looking forward to this conversation since we first started talking about it a
number of months ago.
Every time we've had the opportunity to connect over the years, I've always left the conversations
with a number of helpful frameworks or mental models that I've managed to incorporate into
(01:33):
our work with clients and within our own firm, which is why I'm so excited to share this
conversation with our audience.
Bob welcome to the show.
Thank you for being here as always and thank you so much for your military service.
Thank you Scott and I appreciate that kind of introduction.
Well I'd love to start off if you would.
Just with a quick thumbnail of what you're up to these days professionally.
(01:55):
Today I work on several boards both non-profit and nonprofit and I also do some mentoring
for CEOs.
Usually more experienced older CEOs who are thinking about succession or retirement who
really don't have anyone to talk to essentially and pretty busy but also have some free time.
(02:17):
That's great.
We definitely are in the free time for sure.
I'd love for you to kind of share your take on what's the role of the CEO today and how
maybe that's evolved over time in your eyes.
Yeah well I think the CEO role is still the same as it's been.
You know the CEO's job is to define a future vision and then to get a strategy and implementation
(02:43):
plan to make it happen.
Really anything happens in the long run without the CEO's advocacy and actually ownership.
So I think the only difference is that today I feel things are moving a bit faster because
of digital world around us and also starting to get involved with the digital space interruption
(03:07):
of value chains in the personnel business.
That's a great point Bob will you share more about your view of the disruption of value
chains.
The problem we face is we have to innovate and we have to meld new capabilities and to
keep the value of our services as high as competitors are higher.
(03:29):
And that's the challenge especially for larger companies because they have more internal moving
parts they have to be aligned.
Even when we find innovation we find it in smaller companies that are more agile because
they don't have the bureaucracy or the power structure that might be threatened by it.
I would agree with that and one of the things that we see is I think the shelf life of any
(03:53):
differentiation is a lot shorter than it used to be just with respect to the speed of change
and how fast everything's moving.
You know Moore's law being what it is.
Well that's correct I think you know the first mover may not be the best position because
you can catch up fast.
We used to always say first out competitive advantage.
(04:14):
Now maybe maybe not maybe we can catch up and not take the risk of the first mover.
That's a great point.
Well historically speaking anyway for large swaths of the industry you know we've always
seen that at least on the construction side maybe less so on the engineering and design
side that you know a lot of the benefits of technology and technological process and know-how
(04:39):
can sometimes accrue to the owner and not necessarily to the contractor.
I think that's that is a little bit different on the engineering side but it's it's interesting
to kind of see how the you know how that sort of shapes the value equation.
Yeah I think there is a difference because in construction you know we see progressions
of technology especially in the procurement side and the modularization side of how fast
(05:07):
and how efficient we can do it.
Clients want that capital cost return to them.
On the advisory side or the consulting side I think we have our greatest enemies are
internal people who demand not to risk rate changes because it basically puts a target
on them and they don't feel truly that that the client will say yes and partly because
(05:33):
I don't think they're confident they are superior.
They have a superior relationship but maybe not a superior technology.
Well it certainly gets put to the test in that situation.
Something you touched on a bit ago as you talked about the role of the CEO and his or
her responsibility to cast a vision and to align the business around that vision.
(05:57):
Something that I've heard from you and have used with a number of our clients is just
this exercise that you shared with me once about sitting down with CEOs and asking them
to write an article like a Wall Street Journal article.
And so just so I don't say too much I'd love for you to in your own words kind of talk
about how you've used that with your CEO clients and what what you're trying to get them to
(06:19):
be able to do.
Well as I said I think that you know CEOs want the job for one of two reasons.
Either they want the rank and road the prestige of it and they somewhat see the job as a maintenance
job maintaining the organization maintaining its momentum.
(06:40):
And then there are some CEOs that basically have a vision a compelling vision that they
want the company to go for.
It could be more focus.
It could be more geography.
It could be more products.
It could be more internal synergies.
But in the second category which is the one I think boards would like CEOs to do not maintain
(07:02):
but transform to a higher value enterprise.
I think you get there an issue of time management and your ability to focus where you put your
attention and I think that's really one of the challenges we face with CEOs who have
a line outside their door every Monday morning of new activities and issues and news and
(07:28):
people just want to be noticed rather than drive a change strategy.
That's great.
Just to kind of build off of that you were kind enough to share some remarks at a CEO
conference we hosted a number of years ago after receiving an award and you talked about
the four levels of leadership and how CEOs often do spend their time versus how they
(07:52):
maybe should spend their time.
When we talk to CEOs we have to put it in terminology that they can handle rather than
the fluffy just not doing enough futuristic things.
So I came up with just an arbitrary foundation of levels of thinking or levels of time spent
(08:13):
and level one is just the exchange of information problems issues that come to a CEO on a daily
basis.
It's almost the operations talking to you and it's pretty demanding because the bigger
the operation the more time is spent in that area.
(08:34):
I call that level one just arbitrarily.
Level two is where you basically take issues, problems or challenges and you sit down and
try to develop a plan a short term plan to either avoid the problem in the future or
accelerate the benefit of whatever is happening.
(08:54):
So it's planning.
It's futuristic where level one is almost historical level two is short term plan.
And then there's level three which I call the intermediate zone which is the three to
five years where hopefully as CEO we're having a vision you have some initiatives that you've
(09:15):
started to try to get you to where you need to be and you're basically looking at these
initiatives and trying to nurture them in the organization.
And because they're small and because they're not particularly powerful the CEO has to be
the pusher of those initiatives and this is what I call level three the short term evolution
(09:38):
of the plan.
But truthfully we should as CEOs start with level four which to me is the enterprise and
trying to create a more valuable enterprise for the shareholders and a more favorable
environment for people especially in a people business as such.
(10:00):
So that's visionary stuff that's that's you know what what should be our capital base
how how many shareholders should we have and why what geography should we play in.
Should we be one two or three sectors.
Why why not.
And it's the foundation of what the enterprise is going to be in the future.
And this is the one that I try to get CEOs to pay attention to by asking them to write
(10:25):
an article in the Wall Street Journal or whatever which would describe five years from now this
is their success.
What was their legacy what did they accomplish how they measure it and therefore they can
articulate it.
And I think it's very important to actually start from there and work backwards.
(10:47):
And I know that this is level one two three and four are are you know I could talk for
a day about them.
I could look good news that I have a colleague who worked for me for five or eight years
who's writing a book right now called engineering behavior change.
I mean Gary Sanderson will be coming out later this year will you probably go into more detail
(11:07):
about what we just talked about.
You shared that a lot of times that exercise or that assignment is harder for CEOs to do
than you might think it is to just think out five years and and you know starting with
the end of mind right as if it's in the present tense but it's five years out and then you
reverse engineer it so it says he does hard as they say.
Yeah that's a great comment.
(11:29):
Not easy it's not easy to implement and it's not easy to declare when you declare you actually
put yourself you put a target up and on yourself as to whether that's really what you can do
and whether you can accomplish it.
So that's declaring that's a little risky for a CEO to declare what they think it ought
(11:51):
to be.
There are some people that are unhappy with that and some people that are saying wait a
minute that changes our power structure if that's true and so it can cause consternation.
One of the things that I find really interesting when you talk about the four levels you can
sit down with the CEO and explain this and they get it they get it completely.
(12:11):
They may not like it or they may like it doesn't matter but one of the things they find themselves
is not being able to change their time management that the truth is that level one is demanding
comes to them they don't have to do a thing there's a line outside level two the same
way if it's serious problems you're in the planning phase but nobody except the board
(12:35):
of directors is talking to you about level four and level three and therefore you don't
have a constant demand unless you prioritize your time to do it and one of the ways that
I try to do this with CEOs is ask them to look back in other words look back over a
month or look back over a couple of weeks and ask yourself what levels did I spend my
(12:59):
time in where did I drive the meeting versus I was taken to the meeting that I was an audience
rather than a driver of it and by the way there's you cannot ignore level one and two
either it's just a matter of time management and it's very challenging because it's self
disciplined.
(13:20):
Well that's a great point I think it's you know because let's face it most of these
folks get to the level of CEO because they're world class problem solvers right so when
the problems find them the natural instinct human nature is such that you're going to
jump in and solve the problem because you've solved a million of them before.
There's also this philosophy around time management and delegation speaks to org design and org
(13:44):
structure and if you don't have the organizational structure and the leadership structure such
that the CEO can delegate to you know his or her direct reports then you're going to
naturally get you're going to have to jump in to solve solving problems.
Yeah that's another area that we often talk to CEOs we ask them about their decision
(14:07):
matrices and are they up to date are they actually exist or are they purely the way
we run kind of thing.
I actually like decision matrices to be laid out as to who's the decision maker who's
the veto who who needs to know and get and who need to get advice from to do things and
(14:27):
I like it current I like it reviewed every year and a gradual evolution where more more
decision making is subordinated to your to your staff rather than live rest on you and
then you have a you have a design you can rely on and say that's not my issue you know
(14:48):
have you talked to so-and-so you know look at the decision matrix but I think well the
issues we face is that just as you said people get to the top of these organizations because
they've been really good decision makers in the past they get a lot of kudos and benefit
from making decisions and contemplating the future and trying to figure out how to get
(15:12):
to the future is much more fluffy and difficult to spend time on and be rewarded for I mean
it's it's a long-term reward not a short-term reward.
Well and just to just to build on that again coming from another one of your writings that
that I really enjoyed is you as you talk about the the visionary CEO versus the maintenance
(15:34):
CEO you know that that CEO's got to align the organization around said vision and compel
people you know they're people to do something do things that haven't been done before right
if it's visionary therefore by definition that hasn't been done before and then you get
into this continuum or this this you know tug of war between you know two concepts popularity
(15:58):
as a leader versus respect as a leader and I'd love for you to kind of share your your
take on that and how that can sometimes or oftentimes will affect CEOs and their relative
success in the job.
Now especially consulting firms or knowledge-based firms that have a great number of people rather
(16:19):
than hard products people work in organizations and they gain a reputation of being likable
run likable it is a little bit separate from their their did I accomplish something or
didn't sometimes it meshes beautifully and other times it doesn't but one thing for
sure is if the company's seeking an inside player they get two things that could be a
(16:43):
problem one of them is they could be picking a chief operating officer who still wants
to be one and wants to say it level one and two because that's what they're used to and
the second is that they may be picking someone that's popular rather than totally effective
(17:04):
at that role and it shouldn't be of any odd oddity in terms of collegial organizations
that someone unpopular regardless of their of their achievements probably isn't going
to be the CEO and so you get into this what is the driver of the CEO's decision making
and you find out that if a CEO is really worried about unpopular decisions wants someone else
(17:32):
to make them or fearful of them they probably are not going to be as effective as someone
who says I'm not in the job to be popular I'm in the job to be effective and be respected
and I'll be respected for what I'm trying to accomplish I can describe it and it may
not make people happy with me but I'm into that effect that I'm in charge of so I mean
(17:55):
there is an issue where I have found situations where CEO's asked me to consider a subordinate
for a higher level and immediately detect that that popularity is a really important
issue that person and it'll be hard to transform it into I don't care about popularity I care
about respect it's a hard mid-career course to change.
(18:20):
Absolutely and it's a great it's a great observation I want to switch gears now a little bit and
talk about strategy and where organizations place their bets and specifically about how
do you think about the balance between focus and diversification.
Well for me you know a base consideration for an enterprise is where do you want to
(18:43):
be on the extremes of the side of an enterprise one of them is relatively commoditized services
at low cost that are highly competitive or highly specialized services that are a premium
and they tend to be higher priced and if you pick the middle you sometimes become a
(19:06):
me too so picking one either you're going to be Costco or you're going to be Cartier
is a pretty important decision.
I lean toward the Cartier and Cartier's require focus they can't be numerous sectors and numerous
things because they need to keep pouring attention into that one topic that they're in.
(19:31):
Well if you're dealing with the cost goes to the world they work more on overhead costs
and the efficiency of the back room and things like that so you can only focus if you can
get economics stability over economic cycles so if you're in a highly volatile business
you probably wouldn't be wise to be in one sector you would probably bet better yourself
(19:55):
in two or three sectors to accomplish that.
The beauty of my old sector was the water sector and hardly has a recession you know
people will still drink water and have water to clean up and everything else and so it
allowed us that focus quite frankly.
If I'd been in transportation I'm not sure we could have focused as much as we did but
(20:20):
it's still even if I was in transportation I would still want to be really good at what
I did and charge for it and not be distracted by five or six different sectors.
Well a couple things that you said that I just wanted to re-emphasize one you know economic
stability over economic cycles that's the key to right if you're going to focus on a
(20:41):
few or even one or two pick the right sectors either strategy or philosophy can work focus
or differentiation but just know which know which bed you're going to lay in and build
a business model around those things.
Yeah and I think it all has to do with your brand and eventually what the world thinks
of your company in other words when I say Costco you think of commodity buying and packaged
(21:08):
buying low cost which you think of I say Tiffany's you think of high end jewelry and high end
things and that supports your pricing too by doing that and that's the other thing I think
you cannot have a different price model or a value model in more than one sector without
(21:32):
confusing the client so you can't be a commodity player in one sector and a high priority high
tech player in another sector and get a brand that the client believes.
And just to continue on that sort of strategy theme one of shift gears towards the notion
of geographic diversification would love Bob if you would share your philosophy around
(21:54):
geographic diversification.
Really good point and it has much to do with your clients and their demands and the scale
of the opportunities you're trying to pursue.
If you're trying to pursue mega opportunities geographical dispersions not terribly important
(22:15):
except for the marketing side getting leads you can be more centralized.
If you're going after medium and small jobs that might lead to big jobs then you need
to be the client's friend and understand their problems better than anybody else and doing
(22:36):
that remotely is very difficult but we also and you know my previous company MWH Global
had 140 plus offices.
You really got to struggle to keep 140 plus offices profitable.
You have a third that aren't profitable a third that are profitable and you hope the
other third are so profitable they feed the others replace the others.
(23:00):
But geography by itself is a dispersion and a decentralization and it's very difficult
to push a common brand through 20 different people.
It's a great point that's probably a whole separate podcast at some point but you know
just on the topic of geographic diversification while we're on it you know having done a lot
(23:26):
of it throughout your career how would you break down the short list of critical ingredients.
Now when you decentralize geographically you actually are creating a whole bunch of
many CEOs so I find that part of our issue of success and decentralization is to have
(23:48):
models that allow a regional manager to affect 20 people or 10 people who is more of a long
term bigger thinker while other people are doing a smaller medium sized jobs.
So organizational design you know you can you know we've experimented with many of what
hub and spoke where you have center which basically does a lot of the work but the relationships
(24:17):
are done in a geographical dispersion but then they're all part of one it's a hub and
spoke it's the sum and you don't try to get profit and loss out of every one of them.
It's spokes because you can't get critical mass.
You can feed a center but you can't be profitable in any given spoke.
Bob if you're okay with it I'd love to go back to the sector team for just a moment
(24:40):
and would love your take as if you were in the CEO chair today where would you be looking
to place your bets from a sector standpoint.
That's a great question Scott and I have to admit that my breadth of knowledge of all
the sectors is a bit limited because I was a focuser in the water sector but I will make
just some general comments about attractiveness of sectors.
(25:05):
Attractive sectors are sectors that are changing fast and tied to your ability to be agile.
So if you find a sector that's highly affected by their demands and or technology it's a
pretty good place to be as long as you are an agile adapter to it because you're going
(25:28):
to have to change and the faster you change with that sector the more you have opportunity
because they have they have different problems evolving very quickly as such.
So I like sectors that are growing I don't want to stagnant to monetize sectors I think
they create real challenges of displacing personality rather than technological organizational
(25:53):
advantage.
Over time some sectors move faster than other sectors just due to technology as such like
even the pharmaceutical sector is a very fast moving evolving sector where their products
are expiring very quickly or the food sector is that but you get in transportation and
(26:17):
the technology slow to change and the competition is varying and the clients are very used to
monetize services so you get a challenge there if you're not a player to enter that market
and grow very fast.
That's super helpful as a framework or philosophy if you could sum it up to just one or two
(26:40):
things what's the best piece of advice you've ever received?
I think the best piece of advice is to be comfortable being uncomfortable because the
CEO has to declare a future that does not necessarily exist today and convince others
that is a target that has a reasonable chance of success and so if you're uncomfortable
(27:03):
talking about the this kind of thing it's very challenging to convince people that's
what we do.
You know I think there's two parts of CEO one is in front of his people and one is in
front of a mirror and the one in front of a mirror is convincing yourself that you can
keep a straight face have high confidence and can be a check even though you have doubts
(27:28):
and you know we talked about you know my practice what I do today a part of what I do is talk
to CEOs about how comfortable are they with unknowns and challenges in front of them
and can they be convincing that they can manage it as such so I think that's a piece of advice
(27:50):
I got a while back from a couple board directors basically said hey Bob don't show your insecurity
in your your grandiose scheme you know it's very important but we understand you do have
it.
I was just reminded of a quote around this whole being comfortable being uncomfortable and
(28:13):
casting a vision that's bold but it kind of frames pessimism versus optimism right pessimism
often sounds smart because optimism requires belief in the unknown.
Yeah we usually set it beautifully nobody wants to follow a pessimistic leader they
want a chance of success they want to feel that the company is moving not still that
(28:38):
it's evolving and then they need to be felt comfortable that there's a place for them
because it all comes back to me in a people organization you know this is why power structures
are so threatened by change because it affects me who reports to me do I get credit for it
does it affect my salary am I threatened by it and so one of the problems and the challenges
(29:04):
we face is what I call frictionless agility where we're trying to make decisions not so
painful for people in organizations to get used to being uncertain rather than challenging
every uncertainty as such.
So I actually think that you know early on you talked about what I think about a CEO
(29:29):
today and I look at it and I go why with the changes as fast as they are with melding sectors
together you know it's really challenging to basically feel that what you can declare
in your Wall Street Journal article is doable I mean as Boone Pickin once said being 15
(29:55):
years early is the same as being wrong in strategy and so you know often I have felt
I am absolutely right I'm just before my time you know.
So it's back to the you know the self in the mirror right you got to continue to convince
yourself that you know just stick to it it'll play out.
(30:18):
Well Bob again I just want to thank you so much for your time and I have one more question
before we wrap up to just build on what you just shared it's regarding advice and the
question is if you could go back and give your 30 year old self a piece of advice what
would it be?
Yeah it's very simply don't be afraid to think bigger than people around your thinking.
(30:43):
Somebody has to take either the organization or the unit to another level but they all
don't perceive and if you're going to be a leader you got to think bigger than the normal
situation and I'm not and not be afraid of what I call failure.
Failure comes as one person said from we didn't know what we didn't know when we found out
(31:10):
and paid a dumb dividend.
Okay he can't be afraid of paying dumb dividends as long as they're not going to stop it and
he can't stop you from thinking bigger and wider than the company currently is as such.
I think one of the trends that we're going to find is that we're going to see more cross
(31:35):
sector cross technology movement.
In other words if you're a strategist I think you're sitting down and saying okay let's
just say I'm in the I don't know I'll go back to my business the water business.
What's the transportation business doing now that can affect the water business?
Is there a combination between transportation and water?
(31:58):
How about the pharmaceutical business and the water business?
How does that relate?
Is there a connection or that?
Could we have a pharmaceutical expert with us and starting to move to cross sector advantages
and differentiation I think is a noble approach to thinking bigger out of your sector.
(32:21):
It's a great piece of advice to end on Bob and every time you and I get a chance to sit
down I always walk away with about 10 more things that I make me think and wonder about
how I could incorporate this with our own business or even with some of our client organizations.
So as always I just can't thank you enough.
It's been fun Scott and I look forward to talking to you in the future.
(32:41):
Likewise.
As always thank you for listening.
Please join us next month for a conversation with Bob Murray, former president of Bond
Brothers Inc.
And lastly please remember to like or subscribe to the podcast so you don't miss an episode.
Hello, I'm Scott Winstead, FMI Consulting President.
(00:05):
I'm really excited to share my conversation with Bob Euler with you.
Bob is the former CEO and Chairman of MWH Global, a post that he held for 12 years inside
of his 36-year career within the firm.
During his tenure, Bob led the transformation of the MWH business platform from one country
to 36 and from 100 million in revenue to over 1.6 billion in revenue.
(00:27):
Through a combination of organic geographic and client expansion strategies and the integration
of over 20 acquisitions, by the time he retired, MWH was ranked as the global market share
leader in global wet infrastructure services by U.S. and international industry journals
and the 12th largest ENR design firm in the world.
Through it all, MWH was a unique global pure play water environmental infrastructure firm
(00:51):
dedicated to a singular sector.
Bob holds an undergraduate degree in engineering from the United States Military Academy at
West Point where he was also a varsity athlete.
He holds a graduate degree in engineering from the University of Florida and an advanced
management program certificate from Harvard Business School.
Following his time at West Point, Bob served his country as an airborne Ranger Combat Commander
(01:12):
with decorated distinction of two bronze medals and four combat air medals for Valor in Vietnam
with the 101st Airborne Division.
I've been looking forward to this conversation since we first started talking about it a
number of months ago.
Every time we've had the opportunity to connect over the years, I've always left the conversations
with a number of helpful frameworks or mental models that I've managed to incorporate into
(01:33):
our work with clients and within our own firm, which is why I'm so excited to share this
conversation with our audience.
Bob welcome to the show.
Thank you for being here as always and thank you so much for your military service.
Thank you Scott and I appreciate that kind of introduction.
Well I'd love to start off if you would.
Just with a quick thumbnail of what you're up to these days professionally.
(01:55):
Today I work on several boards both non-profit and nonprofit and I also do some mentoring
for CEOs.
Usually more experienced older CEOs who are thinking about succession or retirement who
really don't have anyone to talk to essentially and pretty busy but also have some free time.
(02:17):
That's great.
We definitely are in the free time for sure.
I'd love for you to kind of share your take on what's the role of the CEO today and how
maybe that's evolved over time in your eyes.
Yeah well I think the CEO role is still the same as it's been.
You know the CEO's job is to define a future vision and then to get a strategy and implementation
(02:43):
plan to make it happen.
Really anything happens in the long run without the CEO's advocacy and actually ownership.
So I think the only difference is that today I feel things are moving a bit faster because
of digital world around us and also starting to get involved with the digital space interruption
(03:07):
of value chains in the personnel business.
That's a great point Bob will you share more about your view of the disruption of value
chains.
The problem we face is we have to innovate and we have to meld new capabilities and to
keep the value of our services as high as competitors are higher.
(03:29):
And that's the challenge especially for larger companies because they have more internal moving
parts they have to be aligned.
Even when we find innovation we find it in smaller companies that are more agile because
they don't have the bureaucracy or the power structure that might be threatened by it.
I would agree with that and one of the things that we see is I think the shelf life of any
(03:53):
differentiation is a lot shorter than it used to be just with respect to the speed of change
and how fast everything's moving.
You know Moore's law being what it is.
Well that's correct I think you know the first mover may not be the best position because
you can catch up fast.
We used to always say first out competitive advantage.
(04:14):
Now maybe maybe not maybe we can catch up and not take the risk of the first mover.
That's a great point.
Well historically speaking anyway for large swaths of the industry you know we've always
seen that at least on the construction side maybe less so on the engineering and design
side that you know a lot of the benefits of technology and technological process and know-how
(04:39):
can sometimes accrue to the owner and not necessarily to the contractor.
I think that's that is a little bit different on the engineering side but it's it's interesting
to kind of see how the you know how that sort of shapes the value equation.
Yeah I think there is a difference because in construction you know we see progressions
of technology especially in the procurement side and the modularization side of how fast
(05:07):
and how efficient we can do it.
Clients want that capital cost return to them.
On the advisory side or the consulting side I think we have our greatest enemies are
internal people who demand not to risk rate changes because it basically puts a target
on them and they don't feel truly that that the client will say yes and partly because
(05:33):
I don't think they're confident they are superior.
They have a superior relationship but maybe not a superior technology.
Well it certainly gets put to the test in that situation.
Something you touched on a bit ago as you talked about the role of the CEO and his or
her responsibility to cast a vision and to align the business around that vision.
(05:57):
Something that I've heard from you and have used with a number of our clients is just
this exercise that you shared with me once about sitting down with CEOs and asking them
to write an article like a Wall Street Journal article.
And so just so I don't say too much I'd love for you to in your own words kind of talk
about how you've used that with your CEO clients and what what you're trying to get them to
(06:19):
be able to do.
Well as I said I think that you know CEOs want the job for one of two reasons.
Either they want the rank and road the prestige of it and they somewhat see the job as a maintenance
job maintaining the organization maintaining its momentum.
(06:40):
And then there are some CEOs that basically have a vision a compelling vision that they
want the company to go for.
It could be more focus.
It could be more geography.
It could be more products.
It could be more internal synergies.
But in the second category which is the one I think boards would like CEOs to do not maintain
(07:02):
but transform to a higher value enterprise.
I think you get there an issue of time management and your ability to focus where you put your
attention and I think that's really one of the challenges we face with CEOs who have
a line outside their door every Monday morning of new activities and issues and news and
(07:28):
people just want to be noticed rather than drive a change strategy.
That's great.
Just to kind of build off of that you were kind enough to share some remarks at a CEO
conference we hosted a number of years ago after receiving an award and you talked about
the four levels of leadership and how CEOs often do spend their time versus how they
(07:52):
maybe should spend their time.
When we talk to CEOs we have to put it in terminology that they can handle rather than
the fluffy just not doing enough futuristic things.
So I came up with just an arbitrary foundation of levels of thinking or levels of time spent
(08:13):
and level one is just the exchange of information problems issues that come to a CEO on a daily
basis.
It's almost the operations talking to you and it's pretty demanding because the bigger
the operation the more time is spent in that area.
(08:34):
I call that level one just arbitrarily.
Level two is where you basically take issues, problems or challenges and you sit down and
try to develop a plan a short term plan to either avoid the problem in the future or
accelerate the benefit of whatever is happening.
(08:54):
So it's planning.
It's futuristic where level one is almost historical level two is short term plan.
And then there's level three which I call the intermediate zone which is the three to
five years where hopefully as CEO we're having a vision you have some initiatives that you've
(09:15):
started to try to get you to where you need to be and you're basically looking at these
initiatives and trying to nurture them in the organization.
And because they're small and because they're not particularly powerful the CEO has to be
the pusher of those initiatives and this is what I call level three the short term evolution
(09:38):
of the plan.
But truthfully we should as CEOs start with level four which to me is the enterprise and
trying to create a more valuable enterprise for the shareholders and a more favorable
environment for people especially in a people business as such.
(10:00):
So that's visionary stuff that's that's you know what what should be our capital base
how how many shareholders should we have and why what geography should we play in.
Should we be one two or three sectors.
Why why not.
And it's the foundation of what the enterprise is going to be in the future.
And this is the one that I try to get CEOs to pay attention to by asking them to write
(10:25):
an article in the Wall Street Journal or whatever which would describe five years from now this
is their success.
What was their legacy what did they accomplish how they measure it and therefore they can
articulate it.
And I think it's very important to actually start from there and work backwards.
(10:47):
And I know that this is level one two three and four are are you know I could talk for
a day about them.
I could look good news that I have a colleague who worked for me for five or eight years
who's writing a book right now called engineering behavior change.
I mean Gary Sanderson will be coming out later this year will you probably go into more detail
(11:07):
about what we just talked about.
You shared that a lot of times that exercise or that assignment is harder for CEOs to do
than you might think it is to just think out five years and and you know starting with
the end of mind right as if it's in the present tense but it's five years out and then you
reverse engineer it so it says he does hard as they say.
Yeah that's a great comment.
(11:29):
Not easy it's not easy to implement and it's not easy to declare when you declare you actually
put yourself you put a target up and on yourself as to whether that's really what you can do
and whether you can accomplish it.
So that's declaring that's a little risky for a CEO to declare what they think it ought
(11:51):
to be.
There are some people that are unhappy with that and some people that are saying wait a
minute that changes our power structure if that's true and so it can cause consternation.
One of the things that I find really interesting when you talk about the four levels you can
sit down with the CEO and explain this and they get it they get it completely.
(12:11):
They may not like it or they may like it doesn't matter but one of the things they find themselves
is not being able to change their time management that the truth is that level one is demanding
comes to them they don't have to do a thing there's a line outside level two the same
way if it's serious problems you're in the planning phase but nobody except the board
(12:35):
of directors is talking to you about level four and level three and therefore you don't
have a constant demand unless you prioritize your time to do it and one of the ways that
I try to do this with CEOs is ask them to look back in other words look back over a
month or look back over a couple of weeks and ask yourself what levels did I spend my
(12:59):
time in where did I drive the meeting versus I was taken to the meeting that I was an audience
rather than a driver of it and by the way there's you cannot ignore level one and two
either it's just a matter of time management and it's very challenging because it's self
disciplined.
(13:20):
Well that's a great point I think it's you know because let's face it most of these
folks get to the level of CEO because they're world class problem solvers right so when
the problems find them the natural instinct human nature is such that you're going to
jump in and solve the problem because you've solved a million of them before.
There's also this philosophy around time management and delegation speaks to org design and org
(13:44):
structure and if you don't have the organizational structure and the leadership structure such
that the CEO can delegate to you know his or her direct reports then you're going to
naturally get you're going to have to jump in to solve solving problems.
Yeah that's another area that we often talk to CEOs we ask them about their decision
(14:07):
matrices and are they up to date are they actually exist or are they purely the way
we run kind of thing.
I actually like decision matrices to be laid out as to who's the decision maker who's
the veto who who needs to know and get and who need to get advice from to do things and
(14:27):
I like it current I like it reviewed every year and a gradual evolution where more more
decision making is subordinated to your to your staff rather than live rest on you and
then you have a you have a design you can rely on and say that's not my issue you know
(14:48):
have you talked to so-and-so you know look at the decision matrix but I think well the
issues we face is that just as you said people get to the top of these organizations because
they've been really good decision makers in the past they get a lot of kudos and benefit
from making decisions and contemplating the future and trying to figure out how to get
(15:12):
to the future is much more fluffy and difficult to spend time on and be rewarded for I mean
it's it's a long-term reward not a short-term reward.
Well and just to just to build on that again coming from another one of your writings that
that I really enjoyed is you as you talk about the the visionary CEO versus the maintenance
(15:34):
CEO you know that that CEO's got to align the organization around said vision and compel
people you know they're people to do something do things that haven't been done before right
if it's visionary therefore by definition that hasn't been done before and then you get
into this continuum or this this you know tug of war between you know two concepts popularity
(15:58):
as a leader versus respect as a leader and I'd love for you to kind of share your your
take on that and how that can sometimes or oftentimes will affect CEOs and their relative
success in the job.
Now especially consulting firms or knowledge-based firms that have a great number of people rather
(16:19):
than hard products people work in organizations and they gain a reputation of being likable
run likable it is a little bit separate from their their did I accomplish something or
didn't sometimes it meshes beautifully and other times it doesn't but one thing for
sure is if the company's seeking an inside player they get two things that could be a
(16:43):
problem one of them is they could be picking a chief operating officer who still wants
to be one and wants to say it level one and two because that's what they're used to and
the second is that they may be picking someone that's popular rather than totally effective
(17:04):
at that role and it shouldn't be of any odd oddity in terms of collegial organizations
that someone unpopular regardless of their of their achievements probably isn't going
to be the CEO and so you get into this what is the driver of the CEO's decision making
and you find out that if a CEO is really worried about unpopular decisions wants someone else
(17:32):
to make them or fearful of them they probably are not going to be as effective as someone
who says I'm not in the job to be popular I'm in the job to be effective and be respected
and I'll be respected for what I'm trying to accomplish I can describe it and it may
not make people happy with me but I'm into that effect that I'm in charge of so I mean
(17:55):
there is an issue where I have found situations where CEO's asked me to consider a subordinate
for a higher level and immediately detect that that popularity is a really important
issue that person and it'll be hard to transform it into I don't care about popularity I care
about respect it's a hard mid-career course to change.
(18:20):
Absolutely and it's a great it's a great observation I want to switch gears now a little bit and
talk about strategy and where organizations place their bets and specifically about how
do you think about the balance between focus and diversification.
Well for me you know a base consideration for an enterprise is where do you want to
(18:43):
be on the extremes of the side of an enterprise one of them is relatively commoditized services
at low cost that are highly competitive or highly specialized services that are a premium
and they tend to be higher priced and if you pick the middle you sometimes become a
(19:06):
me too so picking one either you're going to be Costco or you're going to be Cartier
is a pretty important decision.
I lean toward the Cartier and Cartier's require focus they can't be numerous sectors and numerous
things because they need to keep pouring attention into that one topic that they're in.
(19:31):
Well if you're dealing with the cost goes to the world they work more on overhead costs
and the efficiency of the back room and things like that so you can only focus if you can
get economics stability over economic cycles so if you're in a highly volatile business
you probably wouldn't be wise to be in one sector you would probably bet better yourself
(19:55):
in two or three sectors to accomplish that.
The beauty of my old sector was the water sector and hardly has a recession you know
people will still drink water and have water to clean up and everything else and so it
allowed us that focus quite frankly.
If I'd been in transportation I'm not sure we could have focused as much as we did but
(20:20):
it's still even if I was in transportation I would still want to be really good at what
I did and charge for it and not be distracted by five or six different sectors.
Well a couple things that you said that I just wanted to re-emphasize one you know economic
stability over economic cycles that's the key to right if you're going to focus on a
(20:41):
few or even one or two pick the right sectors either strategy or philosophy can work focus
or differentiation but just know which know which bed you're going to lay in and build
a business model around those things.
Yeah and I think it all has to do with your brand and eventually what the world thinks
of your company in other words when I say Costco you think of commodity buying and packaged
(21:08):
buying low cost which you think of I say Tiffany's you think of high end jewelry and high end
things and that supports your pricing too by doing that and that's the other thing I think
you cannot have a different price model or a value model in more than one sector without
(21:32):
confusing the client so you can't be a commodity player in one sector and a high priority high
tech player in another sector and get a brand that the client believes.
And just to continue on that sort of strategy theme one of shift gears towards the notion
of geographic diversification would love Bob if you would share your philosophy around
(21:54):
geographic diversification.
Really good point and it has much to do with your clients and their demands and the scale
of the opportunities you're trying to pursue.
If you're trying to pursue mega opportunities geographical dispersions not terribly important
(22:15):
except for the marketing side getting leads you can be more centralized.
If you're going after medium and small jobs that might lead to big jobs then you need
to be the client's friend and understand their problems better than anybody else and doing
(22:36):
that remotely is very difficult but we also and you know my previous company MWH Global
had 140 plus offices.
You really got to struggle to keep 140 plus offices profitable.
You have a third that aren't profitable a third that are profitable and you hope the
other third are so profitable they feed the others replace the others.
(23:00):
But geography by itself is a dispersion and a decentralization and it's very difficult
to push a common brand through 20 different people.
It's a great point that's probably a whole separate podcast at some point but you know
just on the topic of geographic diversification while we're on it you know having done a lot
(23:26):
of it throughout your career how would you break down the short list of critical ingredients.
Now when you decentralize geographically you actually are creating a whole bunch of
many CEOs so I find that part of our issue of success and decentralization is to have
(23:48):
models that allow a regional manager to affect 20 people or 10 people who is more of a long
term bigger thinker while other people are doing a smaller medium sized jobs.
So organizational design you know you can you know we've experimented with many of what
hub and spoke where you have center which basically does a lot of the work but the relationships
(24:17):
are done in a geographical dispersion but then they're all part of one it's a hub and
spoke it's the sum and you don't try to get profit and loss out of every one of them.
It's spokes because you can't get critical mass.
You can feed a center but you can't be profitable in any given spoke.
Bob if you're okay with it I'd love to go back to the sector team for just a moment
(24:40):
and would love your take as if you were in the CEO chair today where would you be looking
to place your bets from a sector standpoint.
That's a great question Scott and I have to admit that my breadth of knowledge of all
the sectors is a bit limited because I was a focuser in the water sector but I will make
just some general comments about attractiveness of sectors.
(25:05):
Attractive sectors are sectors that are changing fast and tied to your ability to be agile.
So if you find a sector that's highly affected by their demands and or technology it's a
pretty good place to be as long as you are an agile adapter to it because you're going
(25:28):
to have to change and the faster you change with that sector the more you have opportunity
because they have they have different problems evolving very quickly as such.
So I like sectors that are growing I don't want to stagnant to monetize sectors I think
they create real challenges of displacing personality rather than technological organizational
(25:53):
advantage.
Over time some sectors move faster than other sectors just due to technology as such like
even the pharmaceutical sector is a very fast moving evolving sector where their products
are expiring very quickly or the food sector is that but you get in transportation and
(26:17):
the technology slow to change and the competition is varying and the clients are very used to
monetize services so you get a challenge there if you're not a player to enter that market
and grow very fast.
That's super helpful as a framework or philosophy if you could sum it up to just one or two
(26:40):
things what's the best piece of advice you've ever received?
I think the best piece of advice is to be comfortable being uncomfortable because the
CEO has to declare a future that does not necessarily exist today and convince others
that is a target that has a reasonable chance of success and so if you're uncomfortable
(27:03):
talking about the this kind of thing it's very challenging to convince people that's
what we do.
You know I think there's two parts of CEO one is in front of his people and one is in
front of a mirror and the one in front of a mirror is convincing yourself that you can
keep a straight face have high confidence and can be a check even though you have doubts
(27:28):
and you know we talked about you know my practice what I do today a part of what I do is talk
to CEOs about how comfortable are they with unknowns and challenges in front of them
and can they be convincing that they can manage it as such so I think that's a piece of advice
(27:50):
I got a while back from a couple board directors basically said hey Bob don't show your insecurity
in your your grandiose scheme you know it's very important but we understand you do have
it.
I was just reminded of a quote around this whole being comfortable being uncomfortable and
(28:13):
casting a vision that's bold but it kind of frames pessimism versus optimism right pessimism
often sounds smart because optimism requires belief in the unknown.
Yeah we usually set it beautifully nobody wants to follow a pessimistic leader they
want a chance of success they want to feel that the company is moving not still that
(28:38):
it's evolving and then they need to be felt comfortable that there's a place for them
because it all comes back to me in a people organization you know this is why power structures
are so threatened by change because it affects me who reports to me do I get credit for it
does it affect my salary am I threatened by it and so one of the problems and the challenges
(29:04):
we face is what I call frictionless agility where we're trying to make decisions not so
painful for people in organizations to get used to being uncertain rather than challenging
every uncertainty as such.
So I actually think that you know early on you talked about what I think about a CEO
(29:29):
today and I look at it and I go why with the changes as fast as they are with melding sectors
together you know it's really challenging to basically feel that what you can declare
in your Wall Street Journal article is doable I mean as Boone Pickin once said being 15
(29:55):
years early is the same as being wrong in strategy and so you know often I have felt
I am absolutely right I'm just before my time you know.
So it's back to the you know the self in the mirror right you got to continue to convince
yourself that you know just stick to it it'll play out.
(30:18):
Well Bob again I just want to thank you so much for your time and I have one more question
before we wrap up to just build on what you just shared it's regarding advice and the
question is if you could go back and give your 30 year old self a piece of advice what
would it be?
Yeah it's very simply don't be afraid to think bigger than people around your thinking.
(30:43):
Somebody has to take either the organization or the unit to another level but they all
don't perceive and if you're going to be a leader you got to think bigger than the normal
situation and I'm not and not be afraid of what I call failure.
Failure comes as one person said from we didn't know what we didn't know when we found out
(31:10):
and paid a dumb dividend.
Okay he can't be afraid of paying dumb dividends as long as they're not going to stop it and
he can't stop you from thinking bigger and wider than the company currently is as such.
I think one of the trends that we're going to find is that we're going to see more cross
(31:35):
sector cross technology movement.
In other words if you're a strategist I think you're sitting down and saying okay let's
just say I'm in the I don't know I'll go back to my business the water business.
What's the transportation business doing now that can affect the water business?
Is there a combination between transportation and water?
(31:58):
How about the pharmaceutical business and the water business?
How does that relate?
Is there a connection or that?
Could we have a pharmaceutical expert with us and starting to move to cross sector advantages
and differentiation I think is a noble approach to thinking bigger out of your sector.
(32:21):
It's a great piece of advice to end on Bob and every time you and I get a chance to sit
down I always walk away with about 10 more things that I make me think and wonder about
how I could incorporate this with our own business or even with some of our client organizations.
So as always I just can't thank you enough.
It's been fun Scott and I look forward to talking to you in the future.
(32:41):
Likewise.
As always thank you for listening.
Please join us next month for a conversation with Bob Murray, former president of Bond
Brothers Inc.
And lastly please remember to like or subscribe to the podcast so you don't miss an episode.
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