The CEO Next Door

It's time for a little humility in the executive suite says author and entrepreneur Jason Jennings, who shows us nine leaders who swallow their pride.

Ten years ago, Jason Jennings woke one morning to find himself in the throes of a severe midlife crisis. Jennings had spent his life as a successful radio entrepreneur and media consultant, starting at 13 years old — when he drummed up $1,500 a week from local businesses to sponsor a radio show he'd hatched, "Teen Time With Jason Jennings," in his hometown of Marquette, Michigan.

"Then, all of a sudden, I woke up and I felt like my soul wasn't being fed," says Jennings, now 50. "So I sold the radio stations. I sold the consulting practice. And I decided to go to the seminary and become a Lutheran minister." The only kink in his plan was that Jennings far preferred to sermonize on what he saw as the sorry state of business leadership. Finally, the president of the Graduate Theological Union in Berkeley, California, where Jennings had planned to enroll, suggested that perhaps Jennings would be happier proselytizing on topics outside the divine.

Jennings took up his newfound purpose with a vengeance, preaching the values of corporate humility over hubris, real profits over false promises, and long-term feasibility over short-term flippability. Lying somewhere between Jim Collins's pair of hits, Built to Last and Good to Great, and the pretension-averse ideas in Thomas Stanley's Millionaire Next Door series, Jennings has — through two best-selling books of his own — come up with an outline of the ideal leader: a strong, silent type who places the good of a company (and thus, its employees) above his or her own.

Jennings's third, and latest, book is Think Big, Act Small: How America's Best Performing Companies Keep the Startup Spirit Alive (Portfolio, May 2005). It highlights the heads of nine off-the-radar companies, out of an initial candidate pool of 50,000, who embody his leadership ideal while having racked up a decade's worth of double-digit profit growth. Included among the featured companies are outfits such as Cabela's, the wildly popular outdoor-store-cum-tourist-attraction; Koch Industries, a privately held $40 billion behemoth quietly making piles of money in more than 100 unsexy industries ranging from road paving to oil-sludge refining; and Petco, a veritable home-away-from-home for a booming population of spendthrift pet owners.

Here, in his own words, is the leadership gospel according to Jason Jennings.

Focus on the company, not on yourself.

When most corporate types think of growth, they think only about themselves — about getting that big yacht. Not the people we interviewed.

Look at Pat Tracy. He's the founder and CEO of Dot Foods, a $1.57 billion food-redistribution business in tiny Mount Sterling, Illinois. Tracy cares less about how big of a house he lives in and more about keeping his company healthy for others. He wants the local guy who starts out working in cold storage to get his college degree through the company and eventually make a $150,000 salary there. Jim Goodnight at SAS Institute, which makes business intelligence software, isn't interested in managing his bottom line for what he calls "some 27-year-old snot-nosed analyst on Wall Street." When people say these CEOs get it, the "it" they're talking about is an understanding that running a business is about something much deeper than turning a quick buck.

Keep your hands dirty.

Last year there was a new reality-TV show called Now Who's Boss?, where a CEO would spend a few days doing menial jobs on the front lines. The CEO from the show's first episode, a 15-year veteran of a major hotel chain, had such a meaningful experience, he later announced that going forward he would require senior managers to spend one day a year doing frontline jobs.

At the companies we studied, there's no need for these types of programs because they happen every day. At Sonic Drive-In, CEO Cliff Hudson insists that his executives spend at least half their time in the chain's actual kitchens — not a test kitchen at headquarters — to come up with new menu items. Robert Silberman, the CEO of Strayer University, continues to teach a business-administration class each semester. But he doesn't tell the students he runs the place so that he's able to, as he says, "get the pulse of what my students need." Jim Cabela, founder of the eponymous $1.59 billion outdoor retailing phenomenon, works until noon each day personally addressing new complaints that came in the day before.

Stay focused by letting go.

One of the great hallmarks of the people leading the companies we studied was they had enough self-assurance to let go of businesses and internal processes that were no longer working. Each year, for example, Koch Industries performs a value assessment on each of its 100-plus business units. If the division's present value — basically its return on capital and equity — is smaller than the price it could fetch in the current market, then the unit gets sold off. Simple as that. Someone like Charles Koch views that as a more compassionate way to do business than a prolonged death.

Medline Industries, a $1.6 billion medical-products manufacturer and supplier, is able to innovate while remaining focused on its core business by being "a little entrepreneurial," as CEO Charles Mills describes it. We saw this with other companies we looked at: Take lots of small chances, but don't make a bet so big that it would upend you if it didn't work.

Balance short-term goals with long-term horizons.

Tracy from Dot Foods told me, "Volume is vanity and profit is sanity, and we're far more interested in being sane than we are in being vain." The idea is that some companies get so wrapped up in their future visions of grandeur they lose sight of profitable short-term growth.

That's also a principle used to guide expansion. In the early 1990s, O'Reilly Automotive, a chain of auto-parts stores, had 127 stores. Within a decade, it had more than 1,000 stores in 18 states. That's adding 100 stores a year for 10 years straight. We asked David O'Reilly if he thought he'd have 5,000 stores in all 50 states one day, and he said, "Sure. We just won't make that prediction. We're much better knowing where we'll be in 2 years than in 5 or 10."

Ignore what most companies do; they're usually lousy role models.

We all learn by example. So when we see a self-important, pompous CEO surrounding himself with an army of assistants to make him feel bigger than he really is, the junior execs below him aspire to this.

The people leading the companies we examined either were taught well or had seen what happens when things are run poorly. Before being named CEO, Hudson watched Sonic almost unravel. Brian Devine, Petco's CEO who previously helped build Toys "R" Us, saw that whole operation come unglued as Wal-Mart ate its lunch. Once you've opened the door of a furnace and your eyebrows have gotten singed, you're not going to let that happen again. nFC

Sidebar: Jason Jennings's Quiet Heroes

Charles Koch * Koch Industries Inc.
Wichita, Kansas
Annual Revenue: $40 billion

Brian Devine * Petco Animal
Supplies Inc., San Diego, California
Annual Revenue: $1.87 billion

David O'Reilly * O'Reilly Automotive Inc.
Springfield, Missouri
Annual Revenue: $1.78 billion

Charles Mills * Medline Industries Inc.
Mundelein, Illinois
Annual Revenue: $1.60 billion

Jim Cabela * Cabela's Inc.
Sidney, Nebraska
Annual Revenue: $1.59 billion

Pat Tracy * Dot Foods Inc.
Mount Sterling, Illinois
Annual Revenue: $1.57 billion

Jim Goodnight * SAS Institute Inc.
Cary, North Carolina
Annual Revenue: $1.53 billion

Cliff Hudson * Sonic Corp.
Oklahoma City, Oklahoma
Annual Revenue: $581 million

Robert Silberman * Strayer University
Arlington, Virginia
Annual Revenue: $117 million

Ryan Underwood (runderwood@fastcompany.com) is a Fast Company staff writer.

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