As a leader, your team’s performance is your responsibility; if you take this responsibility seriously, you can transform your organization. Today’s guest is Dan Cremons, former private equity investor and CEO and the bestselling author of The Blue Flame and Winning Moves. While writing his first book with the aim of helping leaders improve their approach to managing people, Dan had an epiphany that led him to change the trajectory of his career and become an entrepreneur. Dan is passionate about helping leaders bring out the best in their employees; he encourages conversations that revolve around figuring out what energizes people and where their strengths lie. Tune in today to hear about the fundamentals of building a thriving team.
Key Points From This Episode:
- Dan shares an overview of his journey from pre-med student to entrepreneur in the private equity space.
- An explanation of The Blue Flame concept that shares a name with Dan’s first book.
- The life-changing realization that Dan came to while writing The Blue Flame.
- What Dan believes to be the fundamental responsibility of a leader.
- The self-serving element of servant leadership.
- A story that highlights how Dan’s mindset has evolved since his first job of transforming a company.
- Why Dan once gave each of the managers on his team a mirror during a weekly meeting.
- Some of the most important lessons that Dan has learned through his journey as an entrepreneur.
- What a ‘one-page plan’ is and why it is such a valuable tool.
- Understanding the adversity quotient.
- The hiring model that involves giving big responsibilities to people early on in their careers.
- The motivation behind the creation of the Alpine CEO In-Training program and the results it has garnered.
- Three keys to building a thriving team.
[00:00:01] ANNOUNCER: Welcome to Branch Out, a Connection Builders podcast. Helping middle market professionals connect, grow, and excel in their careers. Through a series of conversations with leading professionals, we share stories and insights to take your career to the next level. A successful career begins with meaningful connections.
[00:00:20] AD: Hey, everyone. Welcome to the Branch Out podcast. I’m your host, Alex Drost. Today, we are joined by Dan Cremons, a former private equity investor and CEO and the bestselling author of The Blue Flame: The Remarkably Simple Idea That Can Transform Your Leadership and Ignite Your Team, and Winning Moves: 105 Proven Ways to Create Value in Private Equity-Backed Companies.
In our conversation today, Dan shares his background and career journey. Then we discuss the key lessons he has learned along the way. Dan also tells us why taking ownership is key to success and why his leadership style focuses on giving people opportunities and helping them rise to the occasion. I hope you all enjoy.
[00:01:07] ANNOUNCER: Connect and grow your network. We are on LinkedIn. Search for Connection Builders.
[00:01:14] AD: Dan, welcome to the Branch Out podcast. Excited to have you here today.
[00:01:17] DC: Thanks for having me. I’ve been looking forward to this.
[00:01:19] AD: So, talking to our listeners for a minute, Dan and I have gotten to know each other over the last handful of weeks here. We’ve had a handful of conversations and just share a lot of, I think, common thinking and common thoughts. But also, Dan has a very, what I’ll call, unique career path that I thought could shed a lot of insights and value, just given our listener base. So maybe, Dan, it’d be helpful if you could leave us off and just share a little about you, where your career started, and fast forward to what you’re doing today. Then let’s go back and peel it apart a little bit.
[00:01:47] DC: Sure. I’ll take you back to the early days, only because I think it sets some useful context for where I’ve gone and what I’ve done and what landed me here today. So I was born and raised in Cincinnati, Ohio. I’m the son of a 42-year nurse at Cincinnati Children’s Hospital and a product manager at a medical device company. So my family was – I was steeped in medicine and healthcare stuff growing up, and I was destined, of course, to be in healthcare. Growing up, I really didn’t have any sense for what I wanted to do exactly. It might have been, be a doctor, or I had a notion of being an engineer or even in a rock band, where interesting and compelling to me in their own ways.
But I went into college without a ton of long-term direction, but took my first premed class thinking, “Hey, that’s as good of a launch point for a college tour as anything,” and realized pretty quickly that I can’t stand the sight of broken bones and blood and guts. So I took about as hard left as you can take into the least gory thing I can think of, which is business and finance, and ended up getting a degree in business, and started my career in institutional investment research, far away from the land of blood and broken bones and medicine.
[00:02:56] AD: I can’t imagine why.
[00:02:58] DC: Yeah, right. Exactly, exactly. I ended up getting my first gig. So I spent a few years doing investment research and then got my first gig in the private equity world in 2007, I think. I landed my first job there, kind of lucked my way into a job with a West Coast-based firm called Alpine Investors. In retrospect, I was wholly unqualified for that job. I didn’t –
[00:03:18] AD: Aren’t we all? Aren’t we all –
[00:03:19] DC: Yeah. It brings into question their hiring standards at the firm. But I didn’t know any EBITDA from a mezzanine debt from a you-name-it back then. But I worked for this really cool firm, whose hiring model – There’s probably something to talk about here, but their hiring model was hire young, high potential people that are a bit underdeveloped, perhaps, give them a ton of responsibility early in their career. More than the conventional standards and the rest of the world thinks that somebody this young is ready for, and know that more often than not, people tend to rise to the occasion. Along the way, they grow faster by giving them a lot of responsibility, and all sorts of good stuff comes from it.
Long story short, I spent about 14 or 15 years working in private equity, and much of which was with that same firm. I’ve done a bunch of different things in the PE space. I’ve been an investor in deals. I’ve sat on the board of private equity-backed companies. I’ve been a CEO, and I played different CXO roles in different PE-backed companies over time. So I’ve seen the same movie from a few different seats, that being the private equity investing in small and midsize company-building game.
I ended up spinning out of that world full-time, at least working within a firm, about a year and a half ago to embark on my own entrepreneurial journey and ventured off into the cold dark wilderness of entrepreneurship myself and started a firm that’s focused on serving private equity groups and their newly acquired portfolio companies of really helping them figure out two things; number one, where are we going to take this business once we close the deal on the company to call that vision strategy value creation planning? Number two, who do we need a board to make that vision in that strategy, that value creation plan come true? This is where the human capital element comes into the picture.
That’s a lot of the work that I’m doing today, and there was an interesting kind of turning point in my career that there may be some usefulness in talking about, which was leaving the friendly confines of a private equity job, a known private equity job with a known career path, to now starting my own thing, and I learned a heck of a lot about myself and about just being an entrepreneur in the course of making that leap, which I’m happy to talk about, if it’s interesting.
[00:05:29] AD: Let’s dig into that. I think it’s a great place to go. So you took a leap. You go from a more traditional, stable, predictable path to you’re going to carve it out on your own. What’s going through your mind? How’d you do it? What was the jump like, and what have you learned in the journey?
[00:05:44] DC: Let me replay the tape for a second on this because I learned many things that were worth learning through the arc of that journey but I learned one really important thing in taking the leap. So just to time stamp us, this is 2019-ish. I was working for a private equity-backed company at the time. I led the carve out of a business unit from a formerly publicly traded company. My job was to go in and get this business unit carved out. Get it stood up under private equity ownership. Build the team. Get it separated from the former parent. Then 18 months later, to come up for air and go on to the next one or figure out what was next within that private equity ecosystem.
So I got in there. I got the job done. 18 months later, I ended up transitioning out, and this is May of 2020, I believe. Coming into the summer, perfect time for a summer sabbatical. I had been at these sort of transition moments in my career before, where it would have been a golden opportunity to take some time off, and I’d never taken that opportunity. So for a variety of reasons, not the least of which is we were in COVID at the time, I decided to take the summer off.
I’m sitting there five days into my summer sabbatical, twiddling my thumbs, and I’m not good at not doing anything or playing video games all day or whatever. So I said, “What can I do that would make this summer count?” I long had it in my mind that, “Man, I’d love to write a book. I don’t know that I have anything, frankly, that intelligent to say, but let me go back through the arc of my career and think about what have been the things that have served me the best as a leader. I want to write a leadership book or something that could serve other business leaders.” This is an audience that I feel passionate about serving and sharing with.
There was just one concept that really served me in my career that I decided to make this book about, and I ended up calling it The Blue Flame, and the concept is called The Blue Flame. It’s this whole idea, if I take you into the workplace where I’ve used this, as a leader of teams and people myself, I’ve had people on my teams that had been disengaged or underperforming or didn’t know where their job was taking them within our company. So every time that came up in the workplace, I would pull this person into my office, and I learned over time to have a certain type of conversation with them in those moments.
I’d bring them in and I’d say, “Hey, the topic du jour here is the fact that you seem disengaged, or your performance numbers aren’t where they need to be,” or whatever the case was. I’d say, “Instead of talking about that, we’ll get to that, but let’s talk about you. Let’s just make the next hour about you. In order to figure out how we get you more engaged or how we get you in a spot where you’re rocking and rolling and crushing it in your role, let’s just spend some time going back to the basics of the fundamentals of what are you great at? What are your soaring signature strengths? What most energizes you, and what brings you a sense of meaning in your life, in your work, etc.?”
So in the course of an hour, hour and a half conversation, we would peel back each of those questions, unpack those. I’d be sitting there up at the whiteboard. I would draw this, just so your listeners can follow along, I’d draw these three intersecting lines on the whiteboard, and I’d label one of them, “What are you great at?” The next one I’d label, “What brings you a sense of energy?” and the third, “What brings you a sense of meaning?” I’d take those one by one, and I’d get them talking. I’d use questions to draw stuff out of them, raw material out of them. I would notice things, I’d see connections, and I’d kind of facilitate this conversation.
Inevitably, after an hour of time of excavating and helping people gain a greater level of self-awareness while they answer these questions for themselves, we noticed the same thing over and over, that the work that people were doing, if you picture the role that somebody’s playing or the work that they’re doing as a dot that could land on that whiteboard, and you picture the intersection point between those lines as being what we all want to strive for, we want to be doing work that’s aligned with our strengths, our passion, our purpose. The reason oftentimes people weren’t engaged and/or not performing is because their dot was off center. They were doing work that was misaligned with one or more of their answers to those three questions.
Knowing that is step one on the road to recovery. Knowing that, “Oh, I think I understand why you’re not performing. It’s because you’re doing work that you just don’t find energizing. What if for a second we were to move you on to this team or recraft your role in this way in such a way that allows you to do more of the type of work that you find really energizing? By the way, if we add this one component to it, we think it can really leverage your core strength in area X.” So that was a conversation we would have. Sure enough, you’d recraft the role, or you’d move somebody over here or in some cases, move them out of the organization and help them find work elsewhere so that they can actually live out their Blue Flame, as I call it, in another place.
What you’d see, no surprise, is that people go on to light up when they’re in a position that aligns with the intersection point of those three forces; your strength, your passion, your purpose. So that was the concept of The Blue Flame, and this concept just time and time again, was like one of the constants in my career, a thing that I – A management tactic or practice that just consistently yields results.
So back to the Dan story here, I’m sitting there. I was committed that this is a great message to bring to the world. I started the process of writing the book. As I’m unpacking – As I’m just developing this concept and writing about it, I’m realizing something about myself that at that moment in time, my Blue Flame, the imagery, the metaphor for doing work that you’re kind of meant to be doing, that’s going to light you up, my Blue Flame was barely flickering at the time. It explained why I just felt this kind of, and had felt it for a while, this visceral, almost kind of dullness about the work that I was doing. That was not a knock on the company. The work was just I was doing was fundamentally misaligned with what at that point in time was my Blue Flame.
So the great blessing of writing this book, this book probably has given me 10 times more than it’s given the rest of the world, the dozens of people who have read it since then. But it gave me an awareness that, A, my Blue Flame was flickering and B, if I myself just go back to these three fundamental questions and say, “What is Dan Cremons great at? I know many of the things I’m not great at by now. What are the things that I’m great at? What brings me a sense of energy? What brings me a sense of meaning?” If I can go back to those fundamental questions and answer those, that seems to be as good of a basis as any for figuring out what I want to do next, after I emerge from my summer sabbatical, my summer of authoring this book.
That is, for a variety of reasons, what led me in the direction of leaving private equity and starting my own thing. I found in building my own business a greater likelihood of being able to live out my own Blue Flame in the world, just do more of the types of work that align with my strengths, my passion, and my purpose, than I would have been able to if I had been in a firm.
[00:12:37] AD: That resonates with me, and I appreciate you sharing kind of everything behind there. I want to come back in a second and talk a little more about that. But I want to – If you are sitting here, and I’ve got kind of two sides of the equation. I’ve got the leader who just hasn’t made the time or hasn’t created the environment to understand what’s going on with someone’s Blue Flame, right? I mean, meaning that they realize someone’s not engaged, but they haven’t figured that out.
So my first question to you is, well, what do you say to that person? Why is that important to figure that out? Then after that, I’d love to also hear your thoughts for the individual that maybe doesn’t have someone helping them find The Blue Flame? What do they to do to look internally to find it themselves? How do we brighten this flame as a whole?
[00:13:17] DC: Yeah. I think on question number one, I think leaders have to accept a – I think there’s two angles in this. First is just, my personal belief is it is the fundamental responsibility of a leader to put people in a position where they can do their best work. If you buy this idea that at the end of the day, businesses are nothing more than just people doing work with other people to build stuff for people, then it calls our attention to the fact that people are the resource I have to – If I’m a leader or a manager, people are the resource that I have, the fundamental input to delivering results, which is what my whole existence as a manager depends on; delivering results. So I think just recognizing that and accepting some responsibility for putting people in a position to do their best work is kind of step one.
I also think it’s plenty fair, you know, I tried to approach leadership with kind of a servant leadership service mindset of, “How can I serve the people on my team and help them to be successful?” So that’s all good and well. And at somewhat of a selfish level, if I as a leader want to thrive in my role, I have to take accountability for getting the people in my charge playing at a high level. I make the argument in hopefully a rather compelling way in this book, that one of the fastest ways to do that is to understand what lies within the people on your team already, pull that out via a Blue Flame conversation, via whatever mechanism feels right to you, and apply that at its area of greatest impact in your organization.
So there’s just like an accountability that we have as a leader to be having these sorts of conversations and building this sort of awareness on our team and developing this awareness ourselves and using that awareness to do something positive and productive with it. The awareness being an understanding of what is each of my people’s Blue Flame.
[00:14:57] AD: I want to jump on one thing I think you said that’s really important there. It’s the taking responsibility and recognizing that oftentimes, in leadership, the things that seem that the servant leadership, genuine true servant leadership type mindset, right? The mindset that it is your responsibility to serve others, to help others succeed. In the case of running a business, your objective is to put people in their highest and best uses across the organization that allows them to show up and kind of bring their best selves, right? That’s all about how do you get people to really give their best, give their all?
At the end of the day, if you’re genuinely doing that, and it’s not always perfect, it’s not always easy, and it doesn’t always have a direct correlation or an overnight effect. But if you really do make that your genuine purpose, I find for myself, and for many, many that I’ve talked to about this, it actually is very selfish in the long run because you personally will benefit a ton. I’m saying that in a very positive way, right? It feels like, “Well, it’s just altruistic. I’m just doing this –” Well, yes, you are because you genuinely believe it. But at the end of the day, that is how you really succeed.
[00:16:01] DC: Totally. As a manager, you succeed by helping the people in your charge to succeed. If that’s not the role of a manager, then what is it?
[00:16:08] AD: I 100% agree, and that can’t be overlooked. It is the responsibility of leadership to do this.
[00:16:13] DC: There have been times in my career when I’ve forgotten that, and I was sharing –
[00:16:17] AD: It’s hard. You got a lot going on. In your world, you’ve got – You’re juggling a lot of things at all times, you’re always trying to put out some kind of fire. There’s always a million things to do, and there’s a lot to juggle there, right?
[00:16:26] DC: Right. Yeah. If I think about my own evolution and maturing process as a leader, my first operating tour of duty was in 2010 or so. We were – Myself and a couple other guys from our firm at the time had to jump into one of our portfolio companies. Global recession, I think it was 2009, right in the depths of the recession. We had to jump in and stabilize and transform this portfolio company we had that at the time was the largest portfolio company of ours, high stakes, and we had to get this thing turned around.
So we jumped in, and each took on a different part of the business. At the time, I was a young, wide-eyed, bushy-tailed, pimply-faced, young guy. I’d managed people before, but I had not played this sort of role in nearly this high stakes situation. I remember at the time jumping in there, and I was running sales and marketing. I was running effectively the go-to market piece of the business. We had a number to hit. We had debt covenants to meet. I jumped up there, and step one is kind of sizing up the team, okay? If our mandate is to deliver this amount of revenue in this quarter, what do I have to work with here? So you’re sizing up the team. I’m noticing, as is the case of a lot of companies, just kind of a barbelling of performance on this team. We have some people that are really bringing in the bacon and some that are just really struggling.
I remember at the time having this mindset, and this was kind of unconscious, iIt wasn’t like a conscious – I didn’t use these words in my own brain, this mindset of like these people that aren’t performing like, “What’s wrong with them? Is there a problem?” They’re like, “What’s wrong with them? What’s deficient about them?” Again, this wasn’t a conscious thought process. But it was –
So fast forward a number of years, and I had this moment of realization that if people on my team aren’t performing, that, ultimately, is my responsibility as a manager. In a lot of cases, the reason why they’re not performing, the first place to go to figure out why they’re not performing is to look in the mirror. I had this come up in a company of mine I was leading a number of years back. When I first joined the company, it was a similar kind of turnaround transformation type situation. I first jumped in there. Company was struggling a bit. We knew what we needed to do. We knew what the issues were, but it was about getting the team aligned behind what we needed to do. Get the team performing, such that the company could perform.
I’m spending a lot of time with the team up front, trying to understand, where is everybody? There’s this consistent theme that keeps coming up. People come into my office or in our weekly one-on-ones. The conversation becomes, “Okay, here’s this KPI in the business that’s off track. What’s going on? What do we need to do to get it back on track?” The answer I would often hear is, “Well, I know it’s my KPI. But Mary on my team is just really struggling.” Or, “Mary on my team, she won’t give me these reports in time.” Or, “Steve is just not really doing it. He’s not cutting it right now.” A lot of deflection to their team to explain performance challenges.
I saw this theme and pattern happening, and I went back to my then recent learning that, “Oh, like that’s actually the job of a manager to get the team performing. You can’t just pin it on the people. That’s ultimately your responsibility.” I did this thing, which at the time probably felt a little bit brash and was arguably controversial. But in our next executive team meeting, weekly exec meeting, we’d sit down. We’d have an agenda. Send out your agenda items the night before, and one of the agenda items I had sent to the rest of my team in kind of an innocuous way was, “Hey, I want to talk about these performance challenges you all have been bringing to my desk on your teams.”
We get into the meeting, and this agenda topic comes up, and I had this stack of folders that I had brought with me to that meeting. It’s sitting right in front of me throughout the preceding 30 minutes, the meeting before we got to this topic, and people were probably wondering, “What are those folders? Why does Dan have a bunch of folders?” So it comes time for that topic to be discussed, and I hand out these folders, and I said, “Hey, I’ve been thinking about this. I pulled together some stuff on this. I want to take you through it.” I said, “I think I figured out one of the root issues of these performance challenges that you a,, keep bringing up. These people on your team just aren’t cutting it, and I want to walk you through that. So open up your folders.”
They open up their folder, and there’s a mirror in it. It’s about this big. It’s about probably 10 inches high and 6 inches wide. I said in rather stern, perhaps dramatic way, but I meant it with every fiber of my being, I was not trying to threaten anyone. “The next time you want to bring up a performance challenge, I’m happy to brainstorm. I’m happy to coach you through challenge. But the next time you want to bring up a performance challenge on your team and pin it on somebody else’s deficiency, before you bring that to my desk, the first thing I want you to do is look in that mirror and ask yourself the –
By the way, I had a mirror for myself, too, hanging on my desk every day thereafter. “Ask yourself the question, ‘What am I doing or not doing that is contributing to the very problem I’m trying to avoid?’” The problem I’m trying to avoid in this case was performance issues. “What am I doing or not doing that is contributing to the very problem I’m trying to avoid?” Sorry for the long little detour here. But that was a powerful moment for my team. It was a powerful lesson for me.
Again, I had this mirror hanging on my desk forevermore. Every time I’d think about doing the same thing, which is going to my board or going to whoever is – Barry on my team is not – I tried to build this habit of looking in the mirror and say, “Hold on a second. How am I creating this situation? What am I doing or not doing that’s contributing to Barry’s underperformance?” This is just kind of a vivid example of just taking accountability and responsibility for the people in your charge.
[00:21:52] ANNOUNCER: This is Branch Out, a Connection Builders podcast.
[00:22:00] AD: I love the topic of the idea of taking responsibility. I like the mirror. You know, look in the mirror, and this actually might be a really good transition into this idea of entrepreneurship. But what I want to say to kind of tee this up is I hear often, and our work is largely with professionals that are firms and organizations with teams of professionals that are trying to develop their people, and one of the single biggest, I guess, complaints maybe I hear is a lack of proactivity or a lack of ownership or that organizations want people that are thinking like an entrepreneur, which is the path I want to go down here with this.
But I think a little bit of what you said and where this ties in really well is at the end of the day, if you’re truly the entrepreneur, in whatever sense and whatever style you want to look at that, if you’re sitting in that driver’s seat, which I think many of us want to be in some form of a driver’s seat, if you will, then it’s on you. It doesn’t – Just because someone else doesn’t do it, it’s on you. It’s your problem. Like you gotta figure it out, right? If you’re driving the bus and the bus goes off the road, you can’t say it’s because too many people sat in the back corner of the bus. You should have steered the bus. You should have hit the brakes. It’s your job to drive the bus, right?
That is entrepreneurial thinking. That is in many ways I think one of the big root lessons of entrepreneurship is true ownership, knowing that it doesn’t really matter what’s going on. It’s your problem. When you try to push it elsewhere, that’s not an ownership type mentality. I think you are a better leader, you are a better individual, you can get more out of people when you take responsibility. But just in general, again, this entrepreneur topic, I think that is a lot of what it takes to truly be successful in that type of role.
[00:23:32] DC: Well said. Well said. I think you put it well.
[00:23:35] AD: Let me ask you, what have been some of your lessons? You’ve gone into – You’re an entrepreneur. You’ve looked back. You’ve played a lot of different roles here. What are some key learnings that you’ve had throughout this journey?
[00:23:44] DC: Yeah. I mean, the first, which maybe is just an extension of the story I shared earlier about how I ended up heading down this path. The first is, understand your Blue Flame. What are you great at? What brings you a sense of energy? What brings you a sense of meaning? Allow that to shape the career decisions you make. Knowing that if you’re doing – I would argue that if you’re doing work that aligns with your strength, your passion, your purpose, it’s going to make for a career well worked and a life well lived.
I say that as somebody who was for a period of time there, not for a long time, for a period of time, doing work that just felt inauthentic to me at this stage of my journey. I now see on the other side that having a clarity on what is my answer to those three questions and having a latitude to go places that align with that is just liberating and awesome. So that’s been a lesson I’ve learned.
The second lesson I’ve learned is this has served me well for a long time. This might fall into the category of things that just aren’t that original, but it is, be intentional about creating the career you want. That’s a very generic articulation, but let me make it really concrete. I’ve used this thing in my own life, in my own career for a long time now that if there’s like – We all in our careers, we accumulate this list of or this kind of arsenal of tools that over time have really served us in our career. I’ve certainly accumulated many of those myself.
But there’s one tool that I would, come hell or high water, I would tell the people who I love and know, “You just got to do this. You got to do this.” This will be one of them, and it is this idea of, yours doesn’t have to look like mine, but this idea of the one-page plan, the personal one-page plan. For a while, the firm that I came from has used the idea of a one-page plan to run a business. I as an operator use a one-page plan to run a business still to this day. I have this real –
One-page plan is about taking – If you look at a one-page plan, there’s kind of four columns to it. The first is the foundation of, “What is our purpose as a business. What are our core values as a business?” The second column is, “What’s our five-year vision and the strategy to get us there?” The third column is, “What are the one-year goals that are going to move us in that direction?” Then the fourth column is, “What are the quarterly goals? How do we take those one-year goals and break them apart and establish quarterly goals, no more than five to eight quarterly goals that are going to move us in the direction of our one-year goals, thereby moving us in the direction of our five-year?”
This is a tool that we’ve used as business builders for a while now. I had this epiphany back in probably 2010 or so that, my gosh, the same concept applies to just living an intentional life. Never mind building an intentional business. Just living an intentional life. So I created a personal one-page plan, and I said, “Okay, what is my purpose, and what are my core values as a person that any career decision I make needs to really honor and line up with? What’s my five-year vision for my career? What’s the strategy I’m going to use to make that five-year vision come true? What are the things I’m going to commit to doing and delivering on and achieving this year?”
Those weren’t just career-related, but I have ones for relationships and ones for physical, ones for spiritual. So I create my one-year goals and my quarterly goals. This tool has just served me so well in so many ways, just helping me to, A, just be intentional about what is the life I want to live? And, B, giving me some of the machinery that I can use to keep myself on that path, goal setting and prioritization and the like.
So back to your question of just what have I learned, and this precedes my entrepreneurial chapter, but it’s just like, be intentional about what you want in your career and have some tools, in this case, a one-page plan and some habits, in this case, every quarter coming back to it and saying, “How am I doing?” and reestablishing your quarterly goals coming up, some tools and some habits that will put and keep you on that path. I mean, that’s a big one for me.
[00:27:40] AD: I couldn’t agree more. I’m personally a big believer in, I guess, two sides of the idea of planning, is number one, recognizing that life and your career and most things tend to be relatively unpredictable in the longer term. If you try to make a plan that’s three to five years, it’s great to lay that out. But truthfully know that the reality of it coming together exactly as you think, there’s always going to be curveballs. So what you learn is that –
Actually, I think it was Churchill, Winston Churchill had the quote that, “Plans are useless. But the act of planning is invaluable,” right? It’s this idea that it’s not the plan that’s so valuable. It’s the energy it takes to really create the plan and continue to look at the plan and revise the plan and try to use the plan that helps you see the things that you maybe otherwise didn’t see or helps you become more conscious and aware of what you need to do.
Then the flip side, and this is something in my personal life, it’s probably what’s gotten me through being an entrepreneur many times, it’s a hyper focus on daily activity, meaning, “What are the habits? What do I need to do every day?” Not really work-related but like the habits for me to make sure me shows up as the best version of me because that’s often what drives you. If you really build out your long-term plans, oftentimes, it all ties back like what you do on a daily basis, and how you spend your time is what will drive you towards reaching those goals.
But if you don’t put the time into doing that, how can you have clarity around it, right? It’s easier said than done, and there’s no right or wrong way. There’s a lot of great – It sounds like you have a great framework, and there’s a lot of great ways of looking at it. But I would just encourage anyone listening, if you don’t have something written down about where you’re going and what you’re trying to do, just start writing it down. Start putting it in paper. Start getting a plan together and start putting energy into it because you’d be shocked how much of a difference it makes in terms of the trajectory that you find yourself on.
[00:29:30] DC: Well said. I mean, a lot of good stuff there, and I agree with you. I think this idea of planning taken too far in the wrong direction can be a bit stifling, in a sense that if I had a five- year plan, and I view that five-year plan as being the only plan, and it has to stay fixed and if I don’t achieve my five-year thing, I’m going to be a failure.
[00:29:46] AD: And you said it in 2019.
[00:29:47] DC: It kind of defeats – Yeah, exactly. Exactly. It kind of defeats the purpose. So, yeah, these two ideas of having a plan which creates direction and allowing for that plan to evolve and take further shape as time goes on are not at odds in my mind. It’d be like I love being on the water, and I used to be a big sailor, not a big sailor, but I loved sailing when I was living in the Bay Area in San Francisco. I kind of equate it to a cliché and overused sailing metaphor of like if you want to head someplace important, you don’t leave the safety and the comfort of land, not knowing where the hell you’re going.
That can change 20 degrees to the right, or you can get halfway along your voyage and realize, “Hey, there’s this really cool port over there that I really want to go to instead. But at least I’m in motion now. I’ve already left. I’m in motion. I’m halfway there. I can easily kind of pivot over here.” But it’s about in the same way that sailors need to have some kind of direction before you push off of the dock and leave the safety of land. Like a plan can create a sense of direction, and that direction can change and shift. But have a sense of direction. Don’t just get out in the middle of the water and put your sails down and just drift.
[00:30:56] AD: I completely agree, and I think what I add to that is having a plan and knowing where you’re going can be very motivating. Motivation, the energy to push forward, is usually what it takes to truly reach the goals, right? We all need that push, right? Things are hard oftentimes and that when you know, “Hey, I know I’m going. I’ve got some plan.” It does make that a lot easier to keep pushing on it.
[00:31:18] DC: Yeah, no doubt.
[00:31:20] ANNOUNCER: This is Branch Out, bringing you candid conversations with leading middle market professionals.
[00:31:27] AD: Dan, last question here before we wind down. You made a comment early on about the firm you were previously with. But just the idea, that culture that we’re going to get some young hungry people and put them in a role that they’re probably over their head a little bit in, and give them the environment and support they needed to grow. Just give me some thoughts around that because I think that’s such a unique concept that yields very high results.
[00:31:50] DC: Yeah. The learning – I’ll give a few examples of how this has shown up in a moment. But the big idea here is people are oftentimes far more capable of doing amazing things than we think and the rest of the world thinks. When I say the rest of the world thinks, there’s these career paths. In the financial world and private equity, you have to spend two years as an analyst, and you’re building the model. Then once you’re an analyst, you can – Two years later.
[00:32:20] AD: Talk to clients and then – Yeah, yeah.
[00:32:22] DC: Yeah. So what this firm has had a lot of success with is this idea of if you put people in an environment, if you take the right people, let me qualify right for a second, and not to say there’s a right or wrong type of person. But to say there’s a fundamental set of attributes that lend themselves really well to this model of giving young people a lot of responsibility. The fundamental attributes are a thing called adversity. We call it adversity quotient, which is like the run through walls factor, the push through obstacles factor, the get up when you get kicked down.
Because by the way, if you’re young and taking on a role that’s with shoes that are way too big for you to fill by conventional standards, you’re going to get knocked down a few times. Your ability to win the race is dependent upon your ability to get back up when that inevitably happens. So you have to have adversity quotient or persistence or grit or whatever you want to call it, number one. Number two, you have to have a growth mindset, this learning aptitude, this kind of, “I’m going to learn faster than everybody else, and that’s my competitive edge.” If the company that I’m leading needs to grow 20% in order to hit our financial targets, I as a CEO have to be growing 25% because I have to constantly be staying ahead. So that’s this growth mindset.
If you get to both of those things resident in person, that’s a good foundation from which to make a model like this work. The model then is give people a ton of responsibility early. Give them the mentorship, the support in the, “We have your back-ness,” to be able to rise to that occasion. Each of those is perhaps its own topic of how do you mentor people or how do you make sure they know that you have their support, and you got their back and all that sort of stuff. But putting people in that environment with that combination of attributes tends to be a really powerful combination.
We saw this, I mean, just as an example, and we started this firm that I used to be with. We started this program in probably 2013 or so called the CEO-in-Training program. The idea, we noticed this void in the market, which is that coming out of top MBA schools, if you want to be a CEO, there’s kind of two paths to doing this, three paths really. The first is go do a startup, and that has its own set of pros, cons, and risks, and benefits. The second is you can go start on some Fortune 500 career trajectory, and there’s 20 years to becoming a CEO. Even then, it’s improbable that you ever make it there. Option three is the search fund model or the entrepreneurship through acquisition model, where you go buy a business and step in as CEO.
We saw there was this void, which is if I want to be a private equity-backed CEO, what is a path by which we can make that happen within three years, which will be a little different than a search fund in a sense that we actually want to get – As opposed to just jumping right in, put you under the wing of an experienced CEO for a period of time. Give you a bunch of responsibility, and then help you to learn the fundamentals that you need to maximize your chances of success when you do become a CEO.
So it’s not zero years. If you want to go do a search fund, that’s fine, but it’s not zero years. It’s also not 20 years, in the case of the Fortune 500. So we created this thing called the CEO-in-Training program, and the goal there was to mint the future, the next generation of portfolio company CEOs for our portfolio. We went out and hired a few into this program year one, and then we kind of saw it working. We’re getting some really great people into our companies. They seem to be growing and developing pretty quickly. So double the number of hires the next year.
Fast forward seven or eight years of this program existing, it’s the number one most sought after role at several top MBA programs. I think it was the number one most applied for role at Stanford’s GSB, which is one of the best MBA programs in the country. The learning from this program, we have since seen over the seven or eight years this has existed, many of the people in this program have gone on to be really successful CEOs in Alpine’s companies. The average age of people that have graduated from this program into CEO roles is probably early 30s. By conventional standards, the idea of a young 30s person running what in some cases are 25 million, 50 million EBITDA companies, in the grand scheme of private equity, is pretty uncommon.
For many people, quite unfathomable perhaps, where the definition of a private equity grade CEO, as they refer to them, is like some person that’s 50 years old and has kind of been around the block. We are just amazed. Maybe not surprised by now but just amazed at how often, how frequently young people, when given the right type of structure and support, given the right mentorship and training, and put in the right environment, can really rise to the occasion. We’ve had many of these matriculate or graduated CEOs just crush it at age young to mid-30s as a mid-market private equity-backed CEO.
It’s a long example but a really powerful one of the idea that if you get those attributes right, you put people in positions to stretch, oftentimes, they rise to the occasion in really cool ways.
[00:37:09] AD: I love the rise to the occasion. I think that’s right. When I talk about entrepreneurship, there’s a couple of elements that make one successful. Tenacity is important. Creativity is important. Then I’d say kind of the third primary pillar is decision making in the what oftentimes is valued and this word that is thrown around in careers and professional places is experience, because experience brings wisdom, and it oftentimes brings some better decision making.
I think any one of us can look back at our lives and acknowledge that with time and experience comes wisdom, which becomes typically, if learned, better decision making along the way. That can be, to your point, whether it be in the CEO role or in any role, you can create the right structure, the right systems, the board, the way that that process in which decisions, the magnitude of the decision has to go through a group of individuals that can share collective wisdom to get the best part.
The other side, the tenacity and creativity, it’s not by any means saying this is ageist, and it’s only for the young. But there is a level at which younger hungrier folks tend to have a little bit more creativity and a little bit more tenacity, just by virtue of where they are in their lifecycle as a professional, but also as a person and as a human. I think, again, we can all agree to that. Again, this isn’t black and white. You can’t put everyone in a bucket necessarily.
But to your point, when you put someone in there and say, “Hey, this is above your head.” Again, whatever the role is, “This is a bit above your head, but I trust you. I think you’re a creative thinker. I think you’re tenacious,” and then your adversity quotient, the idea of, can I overcome, can I solve things? Then you help create that right structure, that mentorship, that accountability. I think it is a way to allow – I’m a product of that, in many ways, from my previous careers, where someone did put me into something over my head. I think many of us have that experience.
So speaking to anyone who’s in that position of leadership, look for ways to do that. Look for ways to put people a little bit over their heads and give the system around them and help them. But know that that’s an excellent way to allow someone to thrive and to grow and to really reach a level that’s greater than what either of you probably expected.
[00:39:15] DC: No doubt. No doubt. You used an important word there a moment ago; system. Step one is embracing the mindset that people are oftentimes capable of more than we might give them credit for. So my job is to put them in a position to let their best stuff shine. That’s the mindset piece, which is the price of admission here. Step two is actually putting people in that position. Then step three, which some people forget about, is you actually have to build the system around them. System being defined as – Sometimes, in some cases, management systems.
Hey, for young underdeveloped people, I’m going to spend a little more time with them on this certain cadence of I’m going to have weekly one-on-ones with them. I’m going to use them for this certain purpose. There are some management systems you can create around that. There’s culture to create around that. There’s just adapting your leadership style too to accommodate and align with that sort of model. Just to use a really quick but concrete example, if I’m kind of operating one of these systems where young hungry people, I’m putting them in a position to do big work and take on big roles, and I as a manager might be a little bit farther down the field than they are in my career, and I might know some things that they don’t.
I have found when I’ve been in that position that my tendency, whenever they’re faced with an obstacle that can be a growth obstacle for them or a real stretch moment for them, my tendency, my default mode is to want to jump in. Jump in and tell them, “Oh, here’s how I would do it.” In this system where we’re trying to stretch people and grow them and accelerate their learning, sometimes that can be useful, in the case where you have something to give them that could really help them to push through the speed bump. Or, hey, the thing they’re struggling with is a real, existential business risk where I need to jump in and give them a lifeline? Sometimes there’s good reason why you’d want to jump in.
But in a lot of cases, it takes going against our default tendency to jump in and just say, “You know what? I’m going to let them flail around here a little bit, and I’m going to know that if I’m playing the short game, their flailing around may cause us to under-deliver on this one thing.” But if I’m playing the long game, which in this sort of system you are, I’m playing the long game, then I know the process of learning that will come from flailing around and figuring out themselves will be well worth it.
[00:41:22] AD: We learn the most from mistakes we endure.
[00:41:24] DC: Bingo. Bingo.
[00:41:26] AD: I love that. So Dan, I appreciate the dialogue. I appreciate the conversation. On kind of an ending note here for listeners, what would you say is the mindset to embrace? Kind of a single mindset to hang on to and to bring with you from day to day, what is it?
[00:41:42] DC: I’ll borrow from something we talked about earlier. One of the threads of this conversation has been this idea of ownership and accountability. If I were to boil it down to maybe a single statement that we can all, myself included, bottle up and keep on our desk and take a swig of it when we need it, it’s this idea that a leader is somebody who just fundamentally takes ownership for and accountability for the people in their charge in the things in their orbit. I just think that’s a really empowering place to be coming from as a leader. I think our businesses and our people need that from us.
[00:42:14] AD: I could not agree with you more. I could not agree with you more. Ownership and accountability. Dan, I appreciate you coming on here today. Appreciate you sharing your thoughts. For our listeners, where can they get a hold of you? Where can they find a little bit more about you?
[00:42:25] DC: Yeah. Best place to connect with me is on LinkedIn. Pretty active on LinkedIn. I love linking up with folks who are doing cool work in the world and trading ideas and being helpful however I can. I also post quite regularly on the topics of human capital and building businesses. So link up with me there.
[00:42:41] AD: Awesome. Well, we’ll make sure that’s linked in the show notes below. Dan, again, appreciate you coming on here. Appreciate you sharing your time and your thoughts and your wisdom with us.
[00:42:48] DC: Alex, thanks for having me, man, and I love the work you’re doing in the world. So keep it up, and thanks for letting me be a part of it.
[00:42:53] AD: Thank you. I appreciate you being here.
[END OF INTERVIEW]
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