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Monday, April 23, 2018

BOOK/ CEO SPECIAL Learning from CEOs: What It Takes to Get to the Top and Succeed PART I


Learning from CEOs: What It Takes to Get to the Top and Succeed PART I

Author Elena Lytkina Botelho and Andrew Silvernail, CEO of IDEX, discuss how leaders can deliver results.

Most first-time CEOs tend to play it safe. That, however, could be a mistake. CEOs who succeed focus on their company’s performance, its culture and employee engagement in a way where everybody is driven to cater to the customer at the frontlines. Those were among the insights that helped Andrew Silvernail, CEO of IDEX, a Lake Forest, Ill.-based maker of specialized fluidics systems and components, and fire and safety products.
Silvernail shared these lessons in a conversation with Elena Lytkina Botelho, co-author of The CEO Next Door, and Knowledge@Wharton. Silvernail is one of the leaders featured in the book. Edited excerpts from the conversation follow. (You can listen to a complete podcast of the discussion using the player at the top of this page.)
Knowledge@Wharton: Elena, when we spoke about a year ago about your research on the CEO Genome Project, you told us about four behaviors that define great leaders. Your book, The CEO Next Door, is about those behaviors and much else. Could you tell us about the book and also the reasons why you believe Andy is a leader who illustrates its principles?
Elena Lytkina Botelho: With the book, we sought to apply 21st century analytics to this holy grail of leadership, which is who gets to the top and why and how, and what does it take to be successful at the top. We took our database of 17,000 leaders that we’ve assessed up close and personal, took a sample of 2,600 leaders, and then did follow up interviews with about 100 CEOs to look at the patterns of what it takes to get to the top and succeed there.
One surprise is that 70% of the CEOs didn’t intend to become CEOs when they set out on their career paths, or even mid-tenure in their career. It was only when that role became within striking zone for them that it became a relevant career aspiration.
These CEOs master the balance of getting extraordinary results and getting noticed for those results. There are few people who have mastered both sides of it as well as Andy has. If you look at the stock chart of IDEX … he has had the privilege and pride, I hope, of being a CEO who delivered the hockey stick. [IDEX was] trading [just below] the 40s in [August] 2011 when he took the reins, and now it’s $140 (as of February 26, 2018).
Knowledge@Wharton: Andy, clearly we want to talk about the results at IDEX and how you got noticed for them. Could you also take us through the arc of your own leadership journey and some of the inflection points that helped you get to the position that Elena was talking about? You grew up in a small town in Maine. Did you even intend to go into business?
Andrew Silvernail: I grew up in a small town in Maine, and my dad was a social worker. I’m the youngest of four boys, and my mother passed away when I was very young, so my father was in charge of raising four boys as a social worker. It was a rough and tumble environment as you might imagine. When we moved to a mill town when I was seven or eight years old, what I knew about business was a mill – a paper mill. And what I knew [is that] people who worked in the mill were folks who worked on machines.
But my perspective wasn’t about going into business at all. I went to college with the idea of being a doctor; my grandfather was a physician and I admired him immensely. In my second term of chemistry I realized I was not cut out for being a physician. I did some soul searching around what I wanted to do with my life. It took quite a while.
By happenstance, I ended up doing an internship through a friend [whose parents ran] MacClean-Fogg in Chicago, which is a family-owned business. Here we are 30 years later and I sit on the board of that company. I realized I liked business because it was about people. What I realize now is that I am just a really highly-paid social worker, and in some ways very much in the line of the work that my father did.
I had my first real job out of college [as] an equity analyst for Fidelity Investments. But I realized early on that I was not cut out for being an investor. I didn’t want to be a reporter, so to speak; I wanted to be in the game. I had a series of experiences [and] went back to business school, and ended up with an internship at Danaher (a Washington, D.C.-based maker of industrial, health care and consumer products.) What I saw at Danaher was this interesting combination of process and people – a fabulous combination. I spent several years at Danaher and then, frankly, I made some mistakes along the way. I went to work for a business that I won’t name. It was a mistake – the people were a real challenge, the culture was a challenge, and it didn’t fit.
Then I was recruited by the former CEO of Danaher. He had retired, and I was recruited to a private equity-backed business and I went in as a president of a business. We had a lot of success; we ended up selling the business to another private equity company, but myself and my boss – not the chairman – had a very difficult time from day one. We did not connect in any way. Ultimately, we had a tough parting of ways. It was tough, and frankly, they fired me, and that was not fun. That was a very tough time in my life. That is when I came to IDEX.
Knowledge@Wharton: I want to turn to Elena to talk about what you said about growing up in a family with your father being a social worker in Maine. Elena, one of the things that struck me [is that] Andy does not have a typical background that you might imagine for a CEO. How common is that for CEOs in your book? Does a privileged background necessarily lead to leadership?
Botelho: The story that [Andy] just told is not the story that most of us imagine. And that in big part is what drove us to dig into the data. The story in many ways is more common than we would expect. Many parts of what you just said resonate with some of [our] research. One common advice everybody hears is, you’ve got to find powerful mentors. Reading a little bit about you, I think you’ve had some of those mentors.
When we look at the data, those who get ahead and those who are more likely to get picked are those who stand out not necessarily because of powerful mentors, but early on in their career, their lives and sometimes even in school, they become mentors to others.
One reason you were featured in the book is how candid and forthcoming and thoughtful you were about your failures. When you look at somebody who has been successful, it is easy to assume that it was an unfettered path to the top, and that it was one success after another, one carefully planned career move after another. What differentiates successful CEOs and those who get a shot at the top job isn’t that they don’t make mistakes, and it isn’t even that they make fewer mistakes than others. It’s [about] how they go through those mistakes, how they process them, and how they learn from them. We call them blow-ups in the book.
Then we dug in and thought – surely their careers took a dive. We were shocked to find out that what separated success from failure long-term wasn’t lack of failure; it was all about how you process it and how you deal with it. We found that CEOs who use the word ‘failure’ to describe their experiences were half as successful as those that were very matter-of-fact and very forthcoming and just used it as a learning opportunity.
Silvernail: When I look at leaders whom I want to groom and I want to put in positions [of responsibility], it’s so critical that people have had serious moments of challenge in their life. That comes in many forms – it may be athletically, it may be in a family, it may be at some point in their work. When you’re at this level, every day something comes up that 20 years ago you would have thought of as impossible to deal with, and yet you have to deal with it today. So that sense of perseverance, of grit, is a very important trait — and it’s a learned trait. It’s learned through experience. We look for people who have had to persevere through things, because it’s a really important part of success.

Transparency and Candor
Botelho: One of the board members I work with said the most dangerous thing you can have is a CEO who has never failed.
Silvernail: Absolutely. When I interview people … I look for people to have transparency and candor about things that didn’t go well. That’s an important part of someone’s character development and the likelihood that they are going to succeed.
Botelho: What struck me in how you described [one] experience is … that your first concern seemed to not be about, ‘How do I save my face?’, but that you wanted to do the right thing. You went to the board that wanted to pay your team and said, ‘No, we shouldn’t get paid full bonus,’ and you went to the team that thought they should get paid full bonus and told them, ‘Well, actually it shouldn’t be quite that good.’ Maybe what helped you power through that failure is that your first concern wasn’t to save your hide, if you will, but how to do the right thing by others.
Silvernail: That’s a great point. Just to be clear, it wasn’t quite as black-and-white about people being paid. It was more a big question mark about should you or shouldn’t you. We didn’t deliver for our shareholders what we said we would deliver; we didn’t deliver for ourselves….
That was not a popular choice. But when you get into these situations where you have real difficulty, especially as a leader, if your first reaction is to CYA, it is going to move through your organization like crazy. If your first reaction is to look at the facts and do root-cause analysis and say, ‘What have we learned? What do we do with this information so we get better as an organization?’ it is pivotal.
The Right Corporate Culture
Knowledge@Wharton: You mentioned in your opening remarks [that] you made a couple of career choices that didn’t quite work out. What did you learn from those experiences? What did you learn about being in a toxic corporate culture?
Silvernail: When I say the environment that I was in was toxic for me, that’s very individual. For somebody else it might not have been [toxic] at all. What matters there in the learning is understanding yourself really well, and knowing who you’re going to surround yourself with. All around – 360 degrees – are the people and the culture aligned with who you are authentically? It’s when you’re in those inauthentic situations that you have that friction and it becomes an impossible situation to live in. So one answer is to surround yourself with the type of people that you align with.
As a leader it means thinking about what kind of culture you want to create, and then being very explicit [about it]. That way people can buy in and opt out of the culture, and they know it.
CONTINUES IN PART II

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