Kris Safarova  01:34

Welcome to the strategy skills podcast. I’m your host, Kris Safarova, and this episode is sponsored by strategytraining.com and you can access the key insights and practical action steps from today’s discussion at firms consulting.com forward slash action we are also prepared few resources to help you build your skills. Number one is how to build the consulting practice level one. Watch episode one at firms consulting.com forward slash build a practical guide for anyone considering building a boutique consulting firm. You can also get the overall approach used in well managed strategy studies at firms consulting.com forward slash overall approach. And you can get McKinsey and BCG resume example at firms consulting.com forward slash resume PDF. And today we have with us bob chapman, who is a CEO of Barry vahmila, a 3.6 billion capital equipment firm that he transformed from, basically when he took over, it was $20 million business. So that is an incredible story in itself. And today the organization is a combination of 140 acquisitions, actually more than 140 and 12,000 teammates in 28 countries.

Bob Chapman  02:46

Bob, welcome. It’s good to be here and to share our message of leadership.

Kris Safarova  02:51

First of all, what you have accomplished and the way you accomplished it. Caring so much about your employees is really inspiring. I would love to start with you, sharing with us a concise version of the journey that took you to this day today, when we’re speaking.

Bob Chapman  03:06

Well, as you mentioned, I stepped into the company in 1969 when it was a pretty broken, 80 year old business with old technologies serving the brewing industry. I joined the company from Pricewaterhouse, and my from my education, which most of your audience will have, my business education, undergraduate in accounting and MBA from Michigan. And then I joined Pricewaterhouse, so pretty much a traditional, financially oriented background. And so when I joined Barry waymiller, my, my, you know, a broken company. I tried to bring the skill sets that I learned in my education to reshape the business. And one of the things I would say to you is that it’s very important as a leader to have a vision of where you’re going, okay, and at one stage in this journey, in a transformational stage, I said, not a coach didn’t give me this, not a mentor. I just had a moment where I said, you know, I’m proud of our 80 plus year history of making equipment for the brewing industry, but our history does not give us the future that we deserve. And so I made a decision that that turning point from trying to take the business I inherited and making it better to realizing that the business didn’t have the vital the fundamentals to succeed in long term, given the competitive nature and the industry, etc. And so we began doing, I call them adoptions, some people call them acquisitions, to try to get into industries with a better future. That vision a key thing that I would say to everybody, one of the key attributes. In the design of my business was balance, okay, and word I don’t hear very often, but I learned it from studying Chuck Knight of Emerson and electric. I made sure that when I started developing this business with my vision, that we weren’t concentrated with any one customer, any one industry or any one technology. So should something change, we would hurt our people and our stakeholders. So a key, key thing I learned in this journey is you got to kind of know where you’re going, not just react to day to day. And our goal was to build a balanced business with different types of revenue, recurring revenue, daily revenue, and then more lumpy capital goods revenue. And that the business model, design as a leader of a company is the most important thing we do. I hear very few people say that, they talk about their strategy, but we designed a business model from our experiences that would capture our skills and build something that would give people a good future. And it was around balance. And, you know, we were started 20 million. We’re touching 4 billion right now, and we’re almost up to 150 adoptions. We don’t buy companies to sell them. We buy them to adopt them, to keep them. So anyway, the biggest thing I learned and and the other thing I would say to your audience, which I think is very significant, from my greatest challenges, came my greatest growth. Okay, I could spend an hour sharing with you some incredibly challenging moments in this journey. It was not a straight lineup, for sure. It was a roller coaster, but the way I embraced the challenges shaped the learning that shaped our future. So again, what I learned in the challenges was foundational to us evolving continually to be better stewards of all of our stakeholders. And you know, again, to your audience, our company, we have a share price even though we’re privately held 70% by my family, we have a share price that simulates a public company. So this will be important. Our share price has gone up over 12% a year, compounded for 25 years, we’ve outperformed Berkshire Hathaway in that same period of time in terms of percentage growth and and it is, again, it’s not because we’re in great markets, it’s because we designed a business model from our experiences that gave us a future for our people, and we had that vision always, and it gave us a guidance, okay, and our culture that we’re known we’re actually known more for our culture than our product today, but our culture is kind of the premium fuel that goes into that engine that allows us to perform as we have. So again, the future of our company looks exceptional, and it was tested in Oh 809, when people like General Electric and other major corporations crashed. Our share price went up 11% that year, and we let nobody go. So our business model was tested in the worst economic environment any of us have seen in our lifetime, and during covid and during the tariff because our business model is robust and it gives our people a sense of safety and a sense of the future. So it’s been quite a journey. Massively exceeded my wild expectation, and I want to add one other thing, if we did an intelligence test today, I would come out very average. Okay, I was never a great student, but what I was blessed with was common sense, creativity and a positive attitude. If you blend those three together, it explains how I was able to see things other people couldn’t see who had much more intellectual capability, but it almost blinded them to, kind of the simple things that I could see. So that’s kind of our story, where we got today, and we’re trying to be an example for everybody of the way the world could be if companies genuinely cared about the people they had the privilege of leading.

Kris Safarova  09:31

Well, can you tell us about the first acquisition? So the first company you decided to acquire when you realized we need to diversify and we need to serve different customers in different industries using different technology.

Bob Chapman  09:43

I’m glad you asked that, because my oldest son asked me the other day the same question. He said, of your 150 adoptions, what was the most significant one? And I thought a minute, and it was our first one in 1984 and the. All of 84 we had just been refinanced by an asset based lender. So we barely survived bankruptcy. We got this very difficult financing. And again, I walked up to my my team, locked in, signed all the agreements asset based lending. And I said, you know, guys, we need to start doing acquisitions and and my team looked at me, and my finance team looked at me, said, Bob, I agree. We have one problem. I said, What’s that? And they said, We have no money. Bob, repeat after me, we have no money. And again, given the personality I just described to you, I looked at them and I said, I didn’t tell you I needed money. I told you, we need to do acquisitions. And I walked out of that room unencumbered by the fact that we had no money. And I began doing acquisitions. And the first one was a company that I had looked at just quickly some years ago that made electronic inspection equipment for the glass industry. After you blow glass, you have to inspect it to make sure there are no defects as you ship it to Coca Cola or whoever. And I approached this company, it was like $3.5 million company that was breaking even, owned by a South African firm, but it was based in Denver, and I was going to buy it again. I just escaped bankruptcy. I was intense not to make a mistake, and my goal was I brought traditional thinking for my first year. Well, I’m going to cut costs by moving it from Denver to Florida and combine it with our small electronics company and get cost savings. That was my thought process. We acquire. Well, a tiny point, I went to meet with the senior executive in charge of sales. And I said, Tell me about your market. And he said, well, in America, we don’t really have much competition. We know the glass companies pretty much buy our equipment, and so we don’t really have much competition. And I said, Well, what’s your sale price? And he said, 55,000 I said, Great. And what’s your cost? And he said, about 22,000 I said, Ooh, that sounds great. 50% margin sounded really good to me from where I came from. And then I said, Well, what about internationally? He said, Oh, that’s a different story. Bob, internationally, we have a lot more competition, because the glass companies in Europe build their own inspection equipment, so we’ve got to compete with their own internal technology. Said, Okay, what do you what’s your sale price in Europe? And they said, 63,000 and now again, my first deal. I had no script. This was just a conversation, and I but I had a moment honestly, of brilliance. I said to this gentleman, I said, Oh, I must have misunderstood something. You said, where you have no competition, you’re selling it for 55,000 where you have intense competition, you’re selling it for 63,000 and this older gentleman looked at me kind of like I was naive, and he said, Bob, it costs more money to do business in Europe. I said, Oh, you’re right. But could you do, just do me one favor? Could you raise the domestic price to the international price so we have one price? He said, Sure. Again, company was breaking even three and a half million sales, selling 30 units a year. And then he said, and this is another moment. He said, Look, if we’re just about to get a major order from this class company, and it’s good news. I said, Ooh, major order right now might screw up the deal. So could I go talk to the customer? And he said, Sure, so I fly to meet with the president of this glass company. And I said, I understand you’re about to place an order. Could you just slow it down a little bit until we close so we don’t screw up the deal? And he looked at me, and he said, Bob, I’d like to help you, but we got a six month payback, because that machine is going to replace people, and I won’t make my budget if I don’t buy it. So to your audience, I took those two points A there was breaking even as a company, but saw 50% margin is great, but tried to get more money in Europe because it costs more, and customer was going to get a payback in six months within the reason I’m here today, the reason the company’s 4 billion is this moment we event. I went back and said, Nobody needs, from my experience in finance, nobody needs a six month payback to justify machine. We ended up raising the price to $110,000 from 55 so. Demand went up from 30 machines a year to 100 putting two three and a half million dollar companies together created a $35 million company with this growth, and it became the driving force of an IPO in London in 1988 that transformed us financially. So the two things I’d say to your audience to get out of that is cost should never be the reason that you price it. You should price to what the market will value. And that is a huge I teach that all the time in MBA classes, most people feel more comfortable finding out what your cost is and then kind of putting a margin on it and then asking the public seller. But that released in that the capacity that see it differently. And so that transformed our business, gave us the sizzle for a public offering, and gave us a chance to start again. So that was the first acquisition, and we massively blew away our expectations.

Kris Safarova  16:07

Of course, Bob and how did you pay for that company? Given that you guys struggled financially at

Bob Chapman  16:14

that time the so the company had, so we offered 1.8 million for company breaking even, and it had 1.2 million of cash on the balance sheet. So the net amount of cash was 600,000 so I had to fly to Chicago, to this asset based lender who I had very little, you know, they just financed me, but I had no credibility, and I had to say, because we had to borrow money outside our outside the deal. So it’s called, we had to borrow money that we didn’t have assets to cover. And the guy, the senior guy in Chicago, said, You know what? I know the electronic industry, this sounds like a good deal. Now, you know you’re going to go into an overfunding situation. You’ll pay a premium for the cash that we use to pay the 1.8 million. But if you get back in into compliance, you know, we will, you know, you’ll get back into it still a high interest rate. So the asset based lender, just because the senior guy had an experience in the electronics industry, he decided to support it. So we got funding from the asset based lender. But we had to pay a premium in interest until we got, until we got kind of the cash debt down, back down into a comfort zone in terms of asset coverage. So anyway, we we convinced the asset based lender to finance it, and we blew it. We we blew everything away. I mean, it’s seriously just phenomenally successful deal. But remember, I went into it with, if it failed, we were done. When I went to my board, my board said, you know, Bob, we’re going to support you because, but if it doesn’t work, I’m sure, you know, it’s all over. Not, not they were going to fire me, but because the company would be bankrupt. So it did just the opposite. It transformed the future of the company.

Kris Safarova  18:07

Such an incredible story. Did you have complete clarity that it will work at the time of going through with it? Or did you have doubts? Well, I’m

Bob Chapman  18:17

gonna go back and remind you I’m an eternal optimist, so and I had never done an acquisition, and I had no coaching or anything. The answer is, I was pretty convinced. Well, again, I took the traditional approach. We could reduce costs by consolidating the operations and putting together it was all justified based upon a reduction in cost, which is very traditional, to put two companies together eliminate sdna expenses. And so my initial approach, now, the reason that we blew it away had nothing to do with reducing costs. It was capturing the value of the technology and bringing intensity into the company. That was not there. Again. You go from 55,200 10,000 and you go from selling 30 machines a year to 100 machines. You can imagine the massive financial gain. So it was again, and I had no coach. It was, I was just, I told you my greatest gift is my common sense, okay, and creativity and positive attitude. So I, I, I honestly was not worried at all, because I felt in cost reduction, I could make the numbers work. But we never pursued the cost we never even looked at the cost reduction. We looked at the opportunity at the end of the day, and not many companies. But again, that was my first acquisition, and it transformed our future. I wouldn’t advise any of your listeners that they’re going to find many deals like I did. It was, you know, massively transformative because we we brought this creativity, you know. Seen the value not driven by cost. So many people, in our 150 acquisitions, adoptions, I have never seen anybody price their product based upon what it’s worth, as opposed to a cost plus an industry normal margin. It’s just that was when I teach MBA students, I share that all the time, there’s no relationship between cost and what something’s worth. We don’t really know how to price things, because unless we say, well, in our industry, we make a 50% margin or so anyway, that was a big learning for me, but I had to learn it my you know, it just came out of my creativity and my common sense, and

Kris Safarova  20:40

I think also your ability to build relationships with people along the way,

Bob Chapman  20:45

yeah, you know, is so we were up. We were bidding for this company against the major glass company who wanted to buy it and own it, and the gentleman, Tony AlTi, who lived in Denver, who’s from South Africa, he represented the owners at the end of the day, the initial bid we made was more of an earn out deal, which would have been more comfortable for us, but Mr. This other class company was bidding for it, and the guy’s name was Tony AltY, and Tony called me one day said, Bob, you know, I really like your earn out deal, because there’s more upside for us in the deal. But the owner in South Africa, he just wants out. He just wants out, and the other company offered just cash, you’re out. So I went back to my team and I said, Can we do can we match this other offer? And we did some analysis, and said, Yeah, it looks like we can. So I went back to Tony and said, Tony, I can match that deal. He said, then Bob, you’re going to get it so and why? The other company was a major public company with phenomenal financial resources, there was a very strategic acquisition for as a glass company who would internalize this technology. But Tony liked me, okay, I would say to you, in our acquisitions, adoptions, 150 of them, when people like you, it affects how they behave. Okay, it’s not just cold, you know, financial transaction. So believe it or not, I’m smart enough, I’m good enough, and people like me,

Kris Safarova  22:22

yeah, definitely are. Do you remember? How did you find that opportunity to begin with?

Bob Chapman  22:29

Yes, I had gone to a trade show in the packaging industry, and they happen to have had a booth, and I met him and they and I heard that they were for sale. They were doing extremely well at the time, but were for sale, and at the time, I realized I couldn’t pay what this fast growing, very profitable company was. So the South African company ended up buying them. And it was, it was a disaster for it actually went down, not up in revenue. They paid 8 million for the company. I ended up buying it for 1.8 million and but it was at a trade show that I became aware of this company. It was fortuitous. I mean, I when you’re looking for opportunities, sometimes the best place to look at the trade show everybody shows you their products and their people. So that’s, you know, again, I didn’t, I haven’t had an extremely strong board of directors, external board of directors, who stayed with me in these times, but they didn’t really know how to guide me or coach me, because we were experiencing some incredible challenges. They liked me, and they stayed with me, but they couldn’t really give me guidance. This had to come from me, you know, my passion, not to give up my passion. But again, my wife and family would tell you that they never knew that we’re under such pressure, okay? Because I just thought it was part of the job. I didn’t come home and complain that we couldn’t pay our bills and we’re near bankruptcy because I thought it was just a challenge. So the way I dealt with challenges allowed me to over, learn from the challenges and overcome the challenges.

Kris Safarova  24:20

How did you select acquisition number two?

Bob Chapman  24:24

Again, I still have no money. This acquisition is going along, and a major public company in England had a division that made packaging machinery that they wanted to divest, and the senior executive flew to America to offer us to buy this company that nobody wanted to buy. It made bottle washers for the milk industry return me. So if you return your milk bottle to the milkman, they made machines that washed the bottle and then would fill the bottle of milk. So anyway, company called. Dawson, this gentleman flew over from England and said, you know, Bob, we’re aware of your company, and we think you ought to look at buying this business and and we’ll actually sell you the business and take stock in your company and will help finance the restructuring you need to do. So here’s a guy with no money. I mean, I still have, I mean, even though I next is starting to do well, I still have, you know, limited finance. I’m barely any finance fees. So when I So, when a company offers you a 25 I think it was $25 million business in England that is in technology that I understand, and they’re willing to actually take stock in a privately held company as consideration and lend you 500,000 pounds for transition costs. And again, I knew how I could make that company better from my experience, so we did it. And so the second one was with, you know, again, the seller financed it. In effect, I didn’t use that. Again, I’m still financially very fragile, even though Inex is starting to do well. Our historic business was still bleeding cash because of the dynamics of the market. So that was the second one, the Dawson acquisition in England from a company called Vickers.

Kris Safarova  26:33

And again, it happened because of how you build relationships that they wanted to sell to you. They trusted you.

Bob Chapman  26:39

Yeah, you know, I, I was just, I would say to everybody that it’s not just numbers, because I had no money. People like me, I handle people with respect and dignity. And when people like you, they want to work with you, and I think, as I look back in most of the opportunities, that has been a material factor, okay, and I don’t know how, you know, I can’t tell your listeners, you know, other than it’s it’s just I was blessed with this combination of common sense and positivity and creativity, and it just blended together. People want to do business with you and so and again, the public coming to England ended up eventually selling their stock back to us, and which was fabulous. They did well. We did phenomenally well with the acquisition. And again, it became another key piece. So it was in 84 I told you we did that first acquisition. And by May of 87 we went public in London with this blend of 35 sales, $35 million business. So again, it was 55 $50 five, $50 million business in 87 and 87 20 million was our historic business, and 35 million were these acquisitions. And so we had a chance to sell off the acquisitions on the London Stock Exchange looked like 1,000,001 because I went, I buy a bunch of broken business nobody wanted, and I put them together. When you put them together, they were described as sunrise and sunset business. You know, Sunrise business with electronics, sunset business was the returnable milk bottle business. So it create in this we were only looking for 20, well only. We were looking for $28 million in investment in our com, in this company that would become public, and we retain 30% people sent in $1.1 billion in cash trying to buy our $20 million stock. We made more interest income on that money that we held until it was sent back to the buyers. Then the IPO cost us, and Harvard wrote a case study because people were astounded that I bought these struggling companies, starting in 84 put them together and ended up with this phenomenally successful IPO on the London psyche change. So that was a that was a transformative event, because we could pay off all of our debt now we had the $20 million historic business. It was still sick, and we had 30% ownership in this $35 million business that was public in London.

Kris Safarova  29:32

Such an incredible story. How did that organization in London that cleaned milk bottles found out about you? How did you meet them and build relationship with them to the point that they reached out to you with that offer

Bob Chapman  29:46

after my dad died in 75 this gentleman, Mike Windsor, flew over from the British company because we had, there was litigation on a patent between thereby. Lean business in our so we made bottle moistures for the brewing industry and soft drink industry. They made bottle washers for basically the milk industry. And we had a patent infringement, and he flew over to try and resolve it. So that’s when I met Mike, and the way we handle each other in this conflict was out of respect, and we and that the way we handle resolving that technology conflict built a relationship, a positive relationship, and so when they had tried to sell the business and couldn’t sell it, Mike thought about us because of his memories of meeting me so that the foundation was set, you know, several years before, in a litigation which normally doesn’t positive, but the way we handle it was positive, and that is how they were aware of us.

Kris Safarova  30:55

Such an incredible story. So what happens next? How do you go from two acquisitions to more than 150 that is a lot for one person to manage.

Bob Chapman  31:06

Good question. So another key point for your listeners, so we have the London IPO, which blew my board. Was astounded that we bought these broken companies, put them together with the electronics company so and that that we went from, do you think we could really go public? Originally, they thought it was going to be over the counter, kind of a secondary market in London. Then we kept getting through barriers buried all of a sudden, we’re going to have a full listing. And then people sitting 1.1 but people were astounded. And so we went from, and right before May of 87 when we went public, I couldn’t borrow $5 million to pay off. My banks wanted out. So I had exhausted the asset based lender, and they were saying, you know, we really would like to get out of this. And I tried to go to a bank to pay off the asset Nobody. Nobody wanted to lend me any money still. So we have the public offering pay off all of our debt. We’ve got $28 million in the bank and a sick $20 million business, which is the historic business. This is a another point I think, is of value to your listeners. I sat down for nine months and thought about the first 20 years of my career and what I had learned. I had people approaching me now because I had cash. Well, you got to invest in this. You got to invest all kinds of people. I said, Nope, I’m just going to think. I spent nine months just thinking, what did I learn? And from what do I learn? How can I create a better future? And I created what I call the strategy for growth, value and liquidity. All the challenges that I experienced, I now had a chance to start again, still with a broken $20 million business, but to build something, and I and I said, I’m going to create a balanced business with as much recurring revenue as I can. And recurring revenue is spare parts in our business, selling spare parts is a significant contributor to our financial stability. And so I’m I was looking, I said, I’m gonna look for companies that have a big install base good aftermarket business, because it gives us that recurring revenue happens every day, reduces the swings of capital spending. So anyway, I sat back for nine months, looked around our industry. There were a lot of struggling companies and a lot of install base, so it was a pretty fertile field to look and so I identified probably six companies that I thought maybe we could go after, and it would take us from 20 million to 100 million, with diversity I would get into filling and case packing again, balance and different customers and different industries. And then we went to execute that strategy, that strategy in hindsight, that business model, in hindsight, was so powerful that it took us to 4 billion, not 100 million, 4 billion. And so I’d say to everybody, it’s not just about your profit, your EBITDA, your it is. Do you know where you’re going with your business. Do you know why you want to go there and then? Do you know when you get there? Will you have taken your stakeholders to a better place? So having a vision of a business model, okay, which is, I hear very few people talking about business model. They talk about the industry they’re in, or the products they got. We talk a lot about our the business model and our culture. Then of caring for 12,000 team members is that is the premium fuel that activates the business model. Okay, if you are a nice guy running a company. Your market drops by 50% you got to let 50% of your people go. So now my fault. The market changed. Well, why didn’t you see this? Why weren’t you designing your company to be aware of that? You just hurt 50% of your people because your business model failed. And some people say it’s about getting the right people on the bus. I say it’s about building a safe bus, and the bus is your business model. And then you need drivers who are your leaders, who know where they’re going and how to drive that bus safely. And then anybody you invite on that bus is going to be fine, because you got a safe bus with drivers who know how to drive it safely. That is what we do. Our focus is making sure we have a place where people, when they join us, they have a responsible opportunity to stay with our company and live life fully. You know, we believe a grounded sense of hope for the future. Now I’m going to get laid off because orders went down or and we live in a society where layoffs are happening every day everywhere, which is very destructive to human mental health and family health. It’s demoralizing. It’s one of the lowest points in your life to be told, sorry, we don’t need you anymore. I’m sure you work things out. So the business, I can’t emphasize enough, you’ve got to have a business model, okay, that gives your stakeholders a future, not just that creates human and economic value. We call it people, purpose and performance, and the first word is people. We owe it to our people to have a business model that they have they can decide to get married, raise a family, buy a home, educate their family, because they can count on a career with us, not going to be walked in one day and said, Sorry, it’s all over around, a purpose that inspires them, not manages them that gives them a job, but inspires them to bring their gifts to not only progress their career, but help those people they work with, because they do their job well. And then you got to create value. If you’re not creating value, you’re going to hurt your people. If you don’t create value in alignment with what your investors believe is a fair return. You’re going to be forced to take actions that you don’t want to do. So when you see people laying off people, that’s a failure of a business model. Okay? It’s a failure of leadership. We tend only the market changed, and this changed, guys with with your greatest gift is to design a business model where your people are safe in your care and have a future, and we could heal so much of the brokenness we’re seeing where we use layoffs to make numbers work.

Kris Safarova  37:53

I agree, and everyone within the organization is so like it to be part of it, and I think that is especially such a blessing for somebody who doesn’t have a lot of support at home, because the organization in the ways like a family where you’re not replaceable.

Bob Chapman  38:09

Yeah, it’s interesting. When we started 20 years ago, our own university to teach leadership instead of management, and we taught human skills of empathetic listening, how to recognize and celebrate others, and how to serve others. Those three classes, 95% of the feedback we got from our team members was how it affected their marriage and their relationship with their kids. It never occurred to me, from my education, my experience in the world, that the way I would run Barry waymore would affect people’s marriage and their relationship with their children and their health. What we have learned is that leadership has a profound impact on the way people in your care live. Okay, and that’s that’s a revelation, because I thought the you give me your talents, I’ll give you a fair salary, and when I don’t need you anymore, I’ll just lay you off. But that’s that’s kind of what I was taught. It’s about pay and benefits. What we’ve learned, it’s really about caring, genuinely caring for the people that you have the privilege of leading. Because, as you said, we have people for 40 hours a week in our care. Okay? 40 hours a week the way we treat them will profoundly affect their health and the way they home and treat their kids and their families and behave in our country. And what Tom Friedman said recently, New York Times writer, is that we don’t have a poverty of money. In this country, we have a poverty of dignity, and when people are used and not cared for, they feel a sense of humiliation, and when they feel humiliated, you’ll see anger and arrest like you’ve never seen before. What are we seeing in this country today, anger and unrest we don’t understand it. Is it the self? On? Is it drugs? You know? Is it government? We have a society where we use people to achieve goals and discard them and we don’t need them anymore, because we have a society based upon successes, money, power and position. It doesn’t matter how you get those, as long as it’s legal, because then you can write the checks to charity, and people will say, You’re a wonderful person. Okay, the greatest act of charity is not the checks you write. The greatest act of charity is how you treat the people you have the privilege of leading.

Kris Safarova  40:34

How did you approach getting customers, keeping customers happy, that side of the business. So for example, with your first acquisition, the number of units bought in a year increased dramatically. And I’m sure similar situation was with many other acquisitions. How do you view that part of the business? Many people struggling with that?

Bob Chapman  40:55

One of the things that I’ve learned working in the commercial area and running all these businesses, and I never really heard it talked about before, is when you earn people’s trust, good things happen. A lot of people think it’s about price and delivery and competitive technology, but I think people do business with people they trust, okay? At the end of the day, that is a key, and you can’t teach trust, okay? You earn trust. And some people have the ability to do that, and some people it’s just not a natural skill. So from a customer standpoint, one of the things that’s fascinating is as we’ve embraced these given our team members these human skills, and they feel cared for within our company and that they have a safe future. Guess what they do? They treat our customers better, okay? The good the bad news about covid, it was highly contagious. The good news about caring. It’s even more contagious than covid. When people feel cared for, it releases in them the capacity to care for others. So these human skills we teach and practice internally impact. I mean, I’ll give you an example. We went to, I gave a keynote speech in one of the industries we’re in to a big convention, and then one of our largest customers wanted to have a lunch, private luncheon with me after my speech. They didn’t say why. They just major customer. So I went with the president of our division, and I was walking around. I said, Do you know what they want to talk about? He said, Not really. So we sit in a table with about six of their team members and and they said, Mr. Chapman, we’ve been waiting to meet you for years. We’ve probably given out 1000 of your books in our company, it’s made a profound impact on our culture. They never talked about our machinery, the technology, the price, the issues we have. They talked about how much our culture has impacted them. Okay, our team had no idea, because we think it’s about price and delivery and competitiveness, and when you treat your team members with care and and they go out into the world and their customers see the way our people feel, it’s it again. I don’t even know how to put a value on so we don’t do it. We don’t do this to enhance our relationship with our customers. We do this because all 12,000 of our team members around the world are somebody’s precious child who simply wants to know that who they are and what they do matters. And it turns out that these humanistic skills we teach gives us the skills to let people know they matter, and when they feel they matter, they feel they’re cared for. And when they feel cared for, it impacts their personal life, their professional life and their health. 100%

Kris Safarova  44:11

agree. And what happened with the struggling initial business,

Bob Chapman  44:16

the Inex company became part of our public offering, which was called Barry, one letter national in London, and it grew from the 35 million went public to about a $250 million public company in England. And after probably 10 years of being involved on the board, I made a decision that having our money in a public company in England, really we could better deploy that money in our company to adopt other companies, so it was a better use. So we took our liquidity, took our sold our 30% and we deployed it to our own company and the public company A. Uh, was ended up being bought out by a German, uh, private equity firm. And no, no, it’s initially bought out by a German equipment company, and that division ended up getting sold back to that electronics division ended up being sold back to the original company that I that I won against in 1987 so they eventually got it, but it was about 20 years later. So it was sold to a glass company, that division was sold to a glass company, and again, that whole experience was before our transformation from management to leadership. Okay, it was all about numbers in those days, you know that we’re now talking about this truly human leadership, caring for the people we have the privilege leading wasn’t born until around 2000 Okay, where we had already divested the English company. So I would say to you that are so again, we were doing well. We’re doing fine. Prior to this revelation that we could care for people and create human and economic value and harmony, we were doing well, but when we had these revelations, that changed the way we saw our responsibility to our 12,000 team members. It’s accelerated good to better because we put a higher premium culture in that business model than the traditional using people to achieve goals instead of caring for people to achieve human and economic goals in harmony. So I would say to you, some people say to me, how do you justify the cost of these initiatives your university, these caring I said, I don’t need to justify caring for people. How do you justify not caring for people? And they have no answer. You don’t have to justify safety, right? Nobody. Nobody has to go to their board and say, Look, we want people who wear hard hats. We want people to wear safety glasses, shoes, and it’s gonna cost us a million dollars. You don’t have to justify safety. Why do you have to justify caring? Safety is physical. Caring is your soul. We need both. I could not you could not have an eye injury, a finger injury, a toe industry, which is great, but you go home not feeling valued, and the stress of that ends up, remember, when I talk to CEOs of companies, I say you’re all worried about the cost of health care. You are the problem. 74% of all illnesses are chronic. The biggest cause of chronic illness is stress, and the biggest cause of stress is work. And Jeffrey Pfeiffer at Stanford wrote a book, dying for a paycheck, and he talks about us in his book. He doesn’t mean anxious to give it. He estimates we are killing in America, 120,000 people a year of work related stress. Okay, does does anybody care? We’re so chaste numbers that people don’t know how to care. It’s not that they’re bad people. They weren’t taught to care. They were taught and promoted to achieve results. So we are kind of self destructing as a civilization for economic gain. We thought money would create happiness, but it doesn’t caring, creates happiness 100%

Kris Safarova  48:36

and I really hope that as many people as possible will hear you speak. Read your book. So let’s talk about your book. What do you want to say? Building on everything we spoke about today, let’s say if someone reads your book, what are the key things you want them to take away the

Bob Chapman  48:51

goal of writing the book was to touch people’s hearts, to awaken them to a different way of leading in the world. That’s the goal. And when we first, when we wrote the first edition, 10 years ago, we had no idea how it would be received in the market. And we were told by our publisher, Penguin, one of the top business book publishers, that a good business book sells 10, maybe 15,000 copies. We just topped 110,000 copies in seven languages around the world, because the message is so healing, so inspiring to people. Hey, I’ve heard 1000s the reaction to our message around the world. So the book, the book as it was written 10 years ago, I was told by Raj suzoti, my co author, the first third is the it’s called the hero’s journey. How did you go from management to leadership? Take me on that journey? So I can understand. So the first third is my journey, and the second two thirds of the book is, how do you do it? Now? Okay, I understand how you got there. How do you bring. This to your company. So it was really a how to my journey, and then a how to and 10 years later, seeing how our message is spread around the world. And also, I think I mentioned that Harvard wrote a case study, not about a public offering, but about our culture about eight or nine years ago, and it’s become one of their better selling cases, with 70 universities in the world using it to teach leaders how to care. And so we’ve had this 10 years of hundreds of speeches. I’ve given all over the world, the United Nations, to Congress, military. I mean, I’ve spoken every part of society. I’ve seen the brokenness, but we’ve learned so much about the impact of our message that we wanted to capture that. So the five additional chapters, we spent a year reflecting on what if we learned from when we wrote the first book, that will kind of be the last piece of this equation. The impact of doing this is and we’ve seen it. And so the new book, everybody matters still, the 10th year anniversary edition that comes out in two weeks from now, I believe it is going to become a foundational textbook for business schools and other parts of our society, like education, healthcare, we’re learning that people go through the transition from using people to achieve goals to caring for people to achieve results, to begin to heal this poverty of dignity that is our hope for the book, and we’ve had massive interest in This message in the last 10 years. You know, from the Harvard case study, the TED Talk, Simon Sinek talks about us all over the world. I would say to your audience in the hundreds of speeches I’ve given all over the world, nobody at McKinsey level, Harvard level, Stanford. Nobody debates what I just said to you, nobody, it’s just so far from what we’re taught and what we see in the world that we don’t know how to go to this better place. And so our goal in the book, our goal is to continue to live it so people can see it’s not an academic theory of the way the world should be. All we’re sharing is what we have experienced through these series of revelations I had that took us from management to leadership to the theme of the new book is the way we lead impacts the way people live, which I was never told. I think this will become a foundational book used in education to bring people from the journey of where we are to where we need to be, of caring for the people we have the privilege of leading.

Kris Safarova  52:50

I will wrap up with one or two questions I love to ask when there’s a few minutes left over your entire life so far, what way to three aha moments, realizations that you feel comfortable sharing, that really changed the way you look at life, or the way you look at business.

Bob Chapman  53:08

Well, relative to the audience that you’re talking to, I would say to you that from a business standpoint, the revelation was going from seeing people as a function for my success to seeing the people in my span of care as somebody’s precious child, knowing the profound impact I could make on their life. So from a business standpoint, that profound change way of seeing the responsibility of leadership, the privilege of leadership, was a profound change. And as you know, it, happened at a wedding, when I was watching a young man, a young lady, being married around 2000 and I saw how everybody thought they were so precious. And I had this revelation in this during the ceremony. Oh, my God, all 12,000 our team members in the world are just as precious as that young man and young lady, and they simply want to know they matter. And I have the opportunity to profoundly impact people’s lives. That was, from a business standpoint, the major revelation from a personal standpoint, we live in a world where our education system teaches us to speak, how to articulate your thoughts and to debate critical thinking, and we have debating contests to win debates and what we’ve learned because in our university, when we teach empathetic, listening, not listening to judge, not listening to debate, but listening to understand and validate that we do a DISC profile test to begin this class, which is. Is a test for your personality. There’s like four basic D, I, S and C, it stands for dominant, so forth. And so we start the class by you taking the class or this test. And so we give the results to everybody as we start to and we said, and they say, Is this me? They say, Well, go ask your spouse at home, and they come I said, Well, I guess that’s me. So it’s an x ray of your personality. Again. I thought before that. I know we’re born with different physical characteristics, athletic capabilities, mental capabilities. I know I understand, but it never occurred to me that we’re born with different personalities, okay? And what I this is an accountant’s view of a psychological but it’s simple, that personality type D, I, S or C, whichever you have, creates a lens through which you experience the world. Okay, you didn’t pick the color of your hair, the color of your eyes, you didn’t pick your personality. You were born with it, and it shapes the way you see the world. But what we learned is that you need to understand that two people can look at the same facts and see them entirely differently. But what we teach you to is to debate the way I saw it is right, and I won the debate, instead of listening to how the other person saw it, who has a different lens than you. So it opens your compassion and understanding I thought the way I saw the issue on abortion or taxes and all these issues, but it makes me much more open to realize I only know the way I saw it and the way I saw it doesn’t mean that I’m right, okay. It just means the way I the lens through which I was blessed, the person I type shaped the way I saw it, so it makes me much more understanding and compassionate to people seeing things differently and and when we do that, we don’t spend all of our time trying to convince everybody that the way we see it is right and the way they see it As wrong. So from a human side, that was a major revelation, and allows me to deal with people who have dramatically different views than I have with compassion and understanding, because I learned from the way they see it, because it expands the lens through which I can see things when I begin to try and understand things through their lens. So believe it or not, we all walk around with the lens on. That is our personality that shapes the way we see things, and the way you see it, and the way somebody next to you see it could be entirely different of the same situation. So that allows us a dramatic change in our ability to deal with the beauty of diversity, not the conflict of diversity,

Kris Safarova  58:03

definitely and often, even our spouse thinks very differently, and that kind of understanding is very handy, Bob. Thank you so much. Such such an incredible conversation. I really appreciate you being here. Where can our listeners learn more about you, buy your book. Anything you want to share.

Bob Chapman  58:22

Our book comes out the third week in October. It’s gonna be on Amazon. It’s the 10 year anniversary. There is my TED Talk that is on TEDx, talk that’s been animated. So the 20 minute TED talk is animated to a nine minute version. There must be 50 videos of my talks on the internet that are available, and I would say to anybody in the audience, the joy that you feel when you go from managing people to leading people with empathy and care is the greatest joy in the world. I would only hope that some of the people in your audience have the chance to experience the joy of caring and being cared for. And I think if you can embrace the message of teaching people human skills, teaching people to listen without judgment, teaching people to find the goodness in others and teaching people to actually seize the opportunities of others. We could have the world the way it was meant to be, where people genuinely care for each other. That was my wish for all your listeners,

Kris Safarova  59:31

and my wish as well, Bob, thank you so much. Really appreciate you being here.

Bob Chapman  59:36

It’s my joy. Thank you for sharing our message. Take care.

Kris Safarova  59:39

Our guest today again was bob chapman, CEO of a 3.6 billion capital equipment firm and co author of everybody matters. You can find a distilled set of insights and action steps from this discussion at firms consulting.com forward slash action. And this episode is sponsored by strategy training.com You can download the overall approach used in well managed strategy studies, which is a gift we prepared for you at firms consulting.com forward slash overall approach. You can also get McKinsey and BCG, meaning resume at firms consulting.com forward slash resume PDF, and you can access episode one of how to build a consulting practice level one at firms consulting.com. Forward slash build. Thank you so much for tuning in, and I’m looking forward to connect with you all next time.