Like many voracious readers, Mike MacDonald, executive chairman of Medifast, gravitates toward different types of books for different purposes.
An avid reader, David Levin typically works his way through multiple books simultaneously.
The dynamics of the win-win that public-private partnerships can offer are clear: Faced with the need to embrace technological advances to stay competitive, companies need both access to capital and workers with the skills to help them leverage the capabilities of innovations in areas like data science, cloud computing and smart manufacturing. Meanwhile, state and local governments looking to spur economic growth need to attract new businesses, as well as nurture existing ones. Recognition of that potential for mutual benefit is the driving force behind a growing number of public-private partnership initiatives. In Indiana, that process starts with a dialogue with the CEOs of companies operating in the state or considering expanding there about what would move the needle, Ian Steff, executive vice president and chief innovation officer at the Indiana Economic Development Corporation (IEDC), told CEOs gathered for a recent Chief Executive Magazine roundtable co-sponsored by the IEDC. “These are industry-driven partnerships centered on areas like energy storage, cybersecurity and the Internet of Things,” said Steff. “We ask industry: ‘What do you need in terms of matching resources or shared infrastructure to ensure that Indiana continues to lead in the sectors we’ve led for so many years in advanced manufacturing, life sciences and information technology?’” Often, the answer is a skilled workforce. Farooq Kathwari, CEO of Ethan Allen, pointed out that while tax incentives get a lot of media attention, skilled labor and a friendly regulatory environment are the real deal-breakers for his company. “For us, the right labor is number one, and then the overall environment for working with the government needs to be good. After that it’s always good to get some benefits, but that will be third or fourth on the priority list.” SEEKING SKILLS Ensuring that the skills being taught at local colleges and universities are those the companies based there need is one way to address the workforce issue, noted Steff, who cited efforts in his state as an example. “Our former lieutenant governor, Sue Ellspermann, is now the president of Ivy Tech Community College, our largest college system,” he said. “She’s been transforming that place to ensure that we’re keeping up [by] changing curriculums to meet the skill set needs of companies.” Companies, too, can spur academic change at the local level. Danbury, Connecticut-based Ethan Allen is among an increasing number of companies working directly with colleges and universities to develop the talent it needs. “We are next-door neighbors to Western Connecticut State University, and we have utilized that quite well in terms of internship programs and recruiting,” said Kathwari. “We’re deeply involved with the university.” ProspEquity Partners has also been building relationships with schools around the country over the past decade to find and nurture talent. “We think the relationships we’ve developed with five or six engineering schools give us very solid insight into where the talent lies and the ability to develop successful internship programs,” reported Chris Ramonetti, CEO and managing partner, who added that academic partnerships can also bring insights on innovation. “We have an academic board of advisors from various universities who provide a touchpoint for what’s coming next in technological innovation.” However, as important as educating locals in industry-specific skills is to many companies, it’s just one piece of the equation, the roundtable participants agreed, citing regional ecosystems that can offer talent, shareable resources and access to financing as ideal environments in which to locate. These were defined as “communities where collisions of resources and relationships build for greater innovation overall.” Over time, those pockets of progress have the potential to develop into thriving, self-sustaining ecosystems, in the same way that Silicon Valley became a mecca for both talent and investment capital. Young, talented workers flock to clusters populated by promising companies able to offer them potential career stepping stones. “In the 1990s there were so many firms [in Silicon Valley] that a person could progress in his or her career while staying within that area,” Ramonetti noted. “If you don’t have enough firms locally, it’s not only harder to bring someone to an area, it’s also harder to maintain a workforce and spread knowledge from one place to the next. No turnover is actually bad because you don’t have cross-utilization and growing through collision.” As essential as an adequate pool of labor is, financial incentives, access to capital and other resources are also critical for many companies. Growing enterprises, especially early-stage ventures, often need financing to expand, noted Rick Nui, CEO of Star Strategic Partners. “Social financing is also key, especially for small and medium-size enterprises,” he added. “When you have less than $5 million in revenue, the struggle is cash flow, initially. [Locations that are] able to give them some help in that regard will benefit.” Indiana is among a growing number of states looking for ways to support new ventures centered around high-growth sectors. The state recently unveiled a plan to invest $1 billion in innovation and entrepreneurship in Indiana over 10 years, an initiative that will focus in part on accelerating investment in early-stage, mid-market and high-growth companies. The state also offers a Venture Capital Tax Credit that aims to prompt investment by offering those who invest in qualified Indiana companies a state tax credit of up to 20% of that investment. “We are now proposing making that transferable so that those who can’t claim the credit because they don’t have a tax liability in Indiana can sell that credit to someone who does,” explained Steff. INCITING INCENTIVES Indiana made headlines in December when then–President-elect Donald Trump stepped in to forge a deal to help prevent 1,000 jobs at air conditioning company Carrier’s Indianapolis facility from going to Mexico. While the incentives offered by the state in return, which involved significant tax credits, spurred some controversy, “at the end of the day, the package put together was very fair and very much performance-based,” noted Steff, whose state will conduct an audit to ensure Carrier keeps its end of the deal. “All of our incentives are performance-based—you actually have to deliver to claim the incentives,” he added, noting that incentives doled out without careful consideration can backfire. “Sometimes you see 10-year tax holidays for new companies—what message does that send to the companies that have been part of that ecosystem for many years?” Kathwari agreed, noting that the states in which Ethan Allen has manufacturing facilities tend to take the company’s presence there for granted. “We are manufacturing in North Carolina, Vermont, New Jersey, Connecticut, many places, and we see those states spend a lot of effort on attracting new folks,” he noted. “There’s no interest in those of us already there until we decide to leave or threaten to leave, which is not how it should be.” [caption id="attachment_60996" align="alignright" width="366"] Click to enlarge[/caption] Acknowledgment of Kathwari’s point is reflected by a shift in how states like Indiana are approaching economic development and incentives, noted Steff. “Increasingly, we are looking to leverage state resources in ways that benefit not just one company, but many companies,” he said. “Public-private partnerships are a tool in our quiver as we look to accomplish that.”
Ask Appian’s Matt Calkins for book recommendations and he’ll happily reel off a lengthy list—none of which you’ll find on a list of best-selling business books. “I don’t think many business books are worth reading,” says Calkins, who instead seeks business lessons in historical accounts. “If you go to a popular book to learn about how businesses succeed, the business in question is described, but you don’t end up knowing why they won or get the information you need to replicate that success.” Calkins, who also uses books as fodder in creating board games (his hobby), shared a handful of favorite and recent reads with Chief Executive.
CASE STUDIES IN CONFLICTWar in European History Michael Howard The Guns of August Barbara W. Tuchman Books like Michael Howard’s overview of European conflicts and Barbara Tuchman’s close-up account of the first year of World War I can offer conflict-resolution lessons, says Calkins. “The best way to understand how the world resolves its conflicts and its tensions is by looking at how a conflict that has been studied thoroughly, like World War I, unfolded and resolved,” he explains. “Business is like this too. If anyone were to ever get to the heart of Coke vs. Pepsi, they would see a parade of mistakes in the same way World War I looks in retrospect—so many ways you could have done better.”
DECODING INNOVATIONThe Double Helix: A Personal Account of the Discovery of the Structure of DNA James D. Watson The scientist’s memoir about the race to beat Linus Pauling to unravel the mysteries of DNA “gives you an insider’s look at how innovation happens, the struggles in it and the rivalry in the race to get to the heart of molecular structures,” says Calkins. “It felt like a business story but it’s really about science and innovation.”
UNDERSTANDING INDUSTRIESHard Landing: The Epic Contest for Power and Profits that Plunged the Airlines into Chaos By Thomas Petzinger Jr. Calkins recently undertook a reading-informed immersion course on the airline industry. “I grabbed a bunch of books because I was writing a board game on building an airline in the 1930s,” he explains, noting that the airline industry is a case study in overcoming structural challenges. “The dependence on experienced labor, and thus the vulnerability to strikes; the dependence on the cost of fuel, an enormous input that fluctuates; and nationalism, the fact that nations subsidize their airlines—these factors make the airline industry so vulnerable.”
LEADERSHIP LESSONSTitan: The Life of John D. Rockefeller, Sr. Ron Chernow “This is how a creative and intense person wrestled with the emergence of an industry,” says Calkins, who came away from Chernow’s biography of the oil magnate liking Rockefeller, despite the titan’s relentless pursuit of a monopoly and ruthless treatment of competitors. “By owning the oil refining stage, he figured he could protect oil from the otherwise inevitable boom-and-bust cycle that would tear up investments made in the industry. It was a business feat to put together Standard Oil, and this history makes it clear what kind of person it took to achieve that feat.”
IN SEARCH OF TRUTHThe Great Philosophers: An Introduction to Western Philosophy Bryan Magee “Philosophy makes you think about what it is you are really seeing,” says Calkins. “One of the keys to running a winning business is to relentlessly pursue the truth. Don’t kid yourself about how good the business is. Understand your competitors, the fundamental trends that exist in your space and what the next opportunity is, which may not be what you are selling.” Rather than being about telling a good story, books like Bryan Magee’s interviews with leading philosophers are about questioning assumptions and getting to the truth—a valuable lesson for CEOs.
It's no secret that the most important asset most companies have is their people. Whether a business is predicated on providing fabulous service, pursuing rigorous production goals or maintaining an innovation edge, it’s often employees who, at the end of the day, determine whether it will thrive. That simple fact is borne out by the emphasis that Chief Executive’s CEO of the Year Selection Committee places on a leader’s ability to foster engagement among his or her employees. “The higher your employee engagement the better performance you will achieve in every aspect of the business,” notes Bill Nuti, CEO of NCR and a longstanding member of the Selection Committee. “From how you create personal loyalty to how you deliver great solutions to your customers, be it innovation, process or technology, the real key to attaining all of that [comes from achieving a] higher level of discretionary effort. People will make extraordinary efforts if they want to—not because they have to.” The most effective CEOs find ways to nurture engagement by rallying employees around a common purpose, making that purpose feel attainable, motivating the extra effort that requires and modeling the behavior they seek. Reflecting on CEO of the Year award recipients, Nuti cites two leaders who demonstrated an extraordinary ability to drive employee engagement: Ford Motor’s Alan Mulally (2011): After taking the helm of the troubled automaker, Mulally worked quickly to align employees behind defined goals and encourage honest assessments of progress. “His ability to engage employees allowed the company to navigate a very difficult transformation more seamlessly that otherwise would have been possible,” says Nuti. “As a result, he was able to significantly improve the performance of the company—the innovation that came out of the design team was phenomenal and they were more productive, more efficient and achieved higher quality due to that higher engagement.” Walt Disney’s Bob Iger (2014): Tasked with restoring a tarnished brand to greatness, Iger told Chief Executive that his biggest challenge was fixing the culture of “a company that did not believe in itself.” “Bob Iger really understands how employee engagement makes a difference,” says Nuti, who praised the Disney CEO’s success at energizing “cast members” to become external ambassadors of engagement. “In fact, Disney even teaches other companies how to drive a higher level of customer intimacy.”
This feature is part of a series on the 11 qualities that come together to determine Chief Executive's CEO of the Year.