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Q1 2020

THE BUSINESS OF SPORTS

TILMAN TELLS IT LIKE IT IS No-Nonsense Business Lessons from the “Billion Dollar Buyer” COWORKING WITH THE COWBOYS A Chat with Jr. CATCHING UP WITH THE RELAUNCH 7 Questions for the Legend ISSUE Warren is cleaning up Texas– and KEEPING IT SAFE.

Warren Paynes | Lead Residential Driver | Texas Disposal Systems, Inc.

Warren Paynes doesn’t just make Texas a cleaner place — he makes it a safer place. As a driver for Texas Disposal Systems, he knows that driving safe protects him, his route partner and everyone around them. He stays focused, performs inspections on his vehicle and puts his cell phone away. Warren takes his driver safety training seriously, and that’s why Texas Mutual is proud to support him and all the Texans who make the road their workplace. Texas Mutual is changing the way workers’ comp works for you. See Warren ON THE JOB at WorkSafeTexas.com/OnTheJob.

© 2019 Texas Mutual Insurance Company Warren is cleaning up Texas– Letter from the and KEEPING IT SAFE. OWNER Great CEOs create great jobs. And meaningful work is something almost everyone craves. That’s why I have always felt that building a business is a noble cause. By creating and running great businesses, we satisfy our need to help others even as we provide for our own needs.

This dynamic is, in large part, why we are excited to relaunch Texas CEO Magazine with the mission of helping CEOs across Texas grow their businesses and master their role as head of the organization. Whether that organization is public or private, for-profit or nonprofit, large or small, we all face similar challenges. We hope that Texas CEO Magazine can become your best and most trusted source for information on the CEO role and the state of business in Texas—and become a part of your personal CEO journey too. We intend to do this not only through ideas and insights in the magazine but through events, podcasts, and newsletters that allow you to access our content in whatever way is most convenient for you.

Texas is one of the great states for sports, and that’s one reason we chose sports as the theme of our relaunch issue. Here, football is king: We’re the state of Friday Night Lights, epic rivalries, and the Cowboys (the world’s most valuable sports team, worth an estimated $5 billion). But that’s only part of the Texas sports story. Whether it’s our forthcoming third team or our growing scene, Texans love sport of all kinds—and spend a lot of money on it. There’s also an even deeper connection between sport and business. Great coaches and great athletes hold lessons for every CEO, about leadership, strategy, endurance, and so much more. We will explore a few of those lessons throughout this issue.

As Texas CEO Magazine moves forward, we would like to include you in the conversation. Don’t hesitate to reach out if you have story ideas, WE WOULD LIKE CEOs you think we should profile, or CEO issues you want us to cover. TO INCLUDE YOU IN Get in touch anytime at [email protected]. THE CONVERSATION. DON’T Leading an organization is a challenging endeavor, and we look forward Warren Paynes | Lead Residential Driver | Texas Disposal Systems, Inc. to being alongside you in your journey to becoming the most effective HESITATE TO REACH OUT CEO possible. IF YOU HAVE STORY IDEAS, CEOS YOU THINK WE SHOULD Warren Paynes doesn’t just make Texas a cleaner place — he makes it a safer place. As a driver for Texas Disposal Systems, he knows that driving safe protects him, his route partner and everyone around them. He stays focused, performs inspections on his vehicle and puts his cell phone away. PROFILE, OR CEO ISSUES YOU Warren takes his driver safety training seriously, and that’s why Texas Mutual is proud to support him and all the Texans who make the road their WANT US TO COVER. workplace. Texas Mutual is changing the way workers’ comp works for you. See Warren ON THE JOB at WorkSafeTexas.com/OnTheJob.

© 2019 Texas Mutual Insurance Company TexasCEOMagazine.com 3 INSIDE Features

Q1 2020

Publisher Lauren Daugherty Editor Aaron Hierholzer Operations Tamara Trammell Graphic Design Michele Rodriguez Contributors Wade H. Allen Akira Asada, PhD Craig Casselberry Ed Curtis Gordon Daugherty Tasha Eurich, PhD J. Michael Godfrey, PhD Lisa Jaster Blaine McCormick, PhD 86 Gary Oden, PhD Timothy J. Quigley, PhD Bill Simon Tony Streeter LISTEN TO TILMAN! John Thornton, PhD A Conversation with Tilman Fertitta, Landry’s CEO, Kirk Wakefield, PhD Rockets Owner, and the “Billion Dollar Buyer” To subscribe to the print or digital edition of Texas CEO Magazine, please visit our website: www.texasceomagazine.com 8 and click subscribe. LEADERSHIP LESSONS POSTMASTER FROM A TEXAS RANGER Please send address changes to: The American CEO, LLC A Conversation with Hank Whitman, dba Texas CEO Magazine Former Chief of the 28 8012 Bee Caves Road 7 QUICK QUESTIONS Austin, TX 78746 © 2019 The American CEO, LLC dba Texas WITH MARK CUBAN CEO Magazine. All rights reserved. The 18 A Lightning Round with the Legend Content in this issue may not be reproduced, distributed, or otherwise used without the prior written consent of the American CEO, LLC. THE EYES OF TEXAS The various contributors own their respective ARE UPON US Content that is published in this magazine. A Conversation with Chris Del Conte, 30 The beliefs, content, comments, opinions, Athletics Director at the University of Texas statements and viewpoints (collectively, the WANT TO WORK “Content”) published in this issue are those of the respective contributors and we do not necessarily agree, endorse, support or verify FROM COWBOYS HQ? such Content. The Content presented in this HERE’S YOUR CHANCE. issue is for informational purposes only and is 22 A Conversation with Jerry Jones Jr. not advice of any kind. WHAT CEOS Your use of the Content is at your own risk. The Content is provided on an “AS IS” basis, without CAN LEARN FROM any warranties of any kind, either express or implied. Neither The American CEO, LLC 35 nor any person associated with us makes any EXCEPTIONAL warranty or representation with respect to the completeness, reliability, quality, or accuracy COACHES CEO ACTIVISM of the Content. Without limiting the foregoing, John Thornton, PhD AND THE CLOAK The American CEO, LLC does not represent or warrant that the Content will be accurate, OF SOCIAL RESPONSIBILITY reliable, error-free, that errors will be corrected, Bill Simon and Blaine McCormick, PhD or that the Content will otherwise meet your needs or expectations. The American CEO, LLC 24 disclaims all warranties of any kind, whether express or implied, statutory or otherwise, including but not limited to any warranties of STARTUP SUCCESS: merchantability, non-infringement and fitness HOW MUCH SHOULD WE RAISE? for particular purpose. The foregoing does not affect any warranties which cannot be excluded Gordon Daugherty or limited under applicable law.

4 Texas CEO Magazine Q1 2020 INSIDE Departments

6 [MANAGEMENT] OUTSIDER CEOS 53 GENERATE MORE THE SPORT OF EXTREME RESULTS RELOCATION Ed Curtis Timothy J. Quigley, PhD 77 CATCHING THE 56 PERFECT PASS 14 LEGISLATIVE A Conversation with S. C. Gwynne, THE BODYGUARD Best-Selling Author of The Perfect Pass A Conversation with Mike Ramirez, FOOTBALL, Personal Protection Expert TEXAS-STYLE Craig Casselberry 80 [CULTURE] IS YOUR 29 [] THESE 60 EMPLOYEE WELLNESS BUILDING A PROGRAM WORKING? ENTREPRENEURS Gary Oden, PhD BRIGHTER FUTURE ARE MAKING FOR CENTRAL TEXAS KIDS SAFER A Conversation with Richard Tagle, Showcasing Safety Innovation CEO of the Andy Roddick Foundation 84 [PERFORMANCE] in Alamo City UNITY VS. UNIQUENESS IN MARKETING— 65 WHICH IS MORE EFFECTIVE? Akira Asada, PhD 41 [PERFORMANCE] WHAT HAS ANDY DESIGNING AN RODDICK LEARNED SINCE STARTING EFFECTIVE SALES [LEADERSHIP] HIS FOUNDATION? 90 PROMOTION: MISSION, PRIDE, LESSONS FROM TEAM SPORTS MARKETING PEOPLE: 3 KEYS TO MILITARY AND Kirk Wakefield, PhD 68 CORPORATE SUCCESS BUILDING Lisa Jaster THE ESPORTS 43 [SELF-AWARENESS] SKYSCRAPER THE NEGLECTED A Conversation with Jason Lake, 94 KEY TO STRESS Founder and CEO of Complexity Gaming BRINGING MANAGEMENT A RENEGADE J. Michael Godfrey, PhD 72 [RESOURCES] SPIRIT TO XFL 2.0 A Conversation with Grady Raskin, CRAFTING President of the 47 [SELF-AWARENESS] THE BLUEPRINT FOR A SUCCESSFUL SELF-AWARENESS EXECUTIVE SEARCH AND THE CEO Wade H. Allen 96 Tasha Eurich, PhD THE BUSINESS OF COLLEGE ATHLETICS A Conversation with Judy MacLeod, 74 Commissioner of Conference USA 51 TICKET TO WHAT’S MY CMO THE LIMIT TALKING ABOUT? A Conversation with Randy Cohen, Tony Streeter Founder and CEO of TicketCity

TexasCEOMagazine.com 5 [MANAGEMENT] CEO SUCCESSION RESEARCH OUTSIDER CEOS GENERATE MORE EXTREME RESULTS

Timothy J. Quigley, PhD

When a firm replaces a CEO, everyone involved typically Rather than revisit the issue of whether insider or outsider goes through a period of high stress. The board faces a highly candidates are “better,” I, along with my coauthors Donald consequential decision, the organization faces uncertainty, Hambrick, Vilmos Misangyi, and Alessandra Rizzi, recently and the newly appointed CEO faces a fresh challenge—all set out to give the issue of insider-outsider CEO succession a under the watchful eye of shareholders and the market. new frame: that of risk-taking (see “CEO Selection as Risk- Taking,” Strategic Management Journal). Instead of asking One of the most frequently studied factors in CEO succession the usual question of which type of CEO delivers better is whether the new CEO is promoted from within or appointed results, we hypothesized that outsider CEOs were more from without. After dozens of attempts, researchers have come likely to deliver more extreme results, whether positive or up with little conclusive evidence that either of these profiles, the negative, as compared to the more neutral results delivered insider or the outsider, typically outperforms the other. Absent by an insider CEO. That meant that boards, making the call in much of the literature is the acknowledgment that each type of between an insider or outsider candidate, actually faced a candidate has its pros and cons. While insiders are familiar with risk-taking problem. Would they prefer to bet on an outsider the firm’s current state and resources, they are also more likely in the hopes of outsize performance, with the concomitant risk to preserve the status quo. Outsiders, on the other hand, bring of large losses, or play it safer with an internal candidate? fresh blood to the top of the organization and are usually more willing to rock the boat, but they also may have blind spots and Testing Our Prediction incorrect assumptions about the firm, which can lead to errors.1 To test our expectation that outsider CEOs delivered more variable performance, we examined 1,027 CEO successions of Nevertheless, CEO succession remains a worthy subject of small, midsize, and large public companies in the . study, not least because of the “CEO effect”—the measurable Of these successors, 43 percent were outsiders. We wanted to effect a particular CEO has on performance.2 We know that, see how much the firm’s performance (measured, like most generally, the CEO accounts for around 25 percent of variance succession studies, by return on assets) changed relative to its in a firm’s performance. That may not be as large a number as previous performance and to industry-wide performance. you expect, but it is clearly significant enough to warrant the Multiple analyses revealed that our prediction was correct. The board’s careful consideration of CEO candidates. We also know insider CEOs were generally safer bets, while outsider CEOs that, while most CEO appointments are inconsequential (with were risker, producing either higher or lower results than no major effect on firm performance upward or downward), a inside hires overall. The figure below shows the post-succession minority are quite consequential—either negatively or positively. performance-change scores for the full sample of incoming

6 Texas CEO Magazine Q1 2020 [MANAGEMENT] CEOs; as you can see, the outsiders’ scores are distributed and the candidate has an incentive to misrepresent or inflate more widely across the spectrum, signifying a broader range of their capabilities during the hiring process. Because of this outcomes, while the insiders tend to cluster toward the middle. information differential, the board may make errors in judgment regarding the successor. When a board chooses an outsider, they often use the logic that they want a world-class executive to lead the company—and what are the chances that that executive is currently employed there? But in the process, they may overestimate the outside candidate’s capabilities, cultural fit, and other factors, leading to lower-than-expected performance. Or they may miss a significantly beneficial characteristic of the CEO, leading to unexpectedly high performance.

When we combine these factors—considering that outsiders are more likely to take the helm in times of crisis, more likely to make sweeping, decisive moves, and may not be as capable (or may be more capable) than the board expected—it’s not surprising that a CEO plucked from outside the company is Distributions of performance-change scores for insider and outsider successors more likely to cause larger swings in firm performance.

To prevent the possibility of other factors, such as recent The Takeaway performance, skewing this comparison, we performed several Understanding that outsider CEOs are more likely to other analyses. One involved finding “matched pairs” of deliver extreme results does not necessarily make the similar firms in the same industry who hired outsider or board’s job of overseeing succession any easier. On the insider CEOs in the same time period. For these “lookalike” other hand, it can help if boards consider the succession comparison firms, we found the same results: there was more decision and source of the new CEO in the frame of risk- variance (up or down) when the successor was hired from taking, much like any other important strategic decision. outside. We also used another form of matching that compared firms with similar pre-succession probabilities of hiring an Understanding this dynamic, the board can consider follow-on outsider CEO against each other. Again we found the same questions such as: “What is our tolerance for surprises right trend: When these firms chose an insider CEO, there was a now, whether welcome or unwelcome?” “Is the company in greater chance of neutral performance changes. If they chose a state that we need to take the relative risk of an outsider?” an outsider CEO, on the other hand, variance in performance and “What attributes, capabilities, and experiences may was more likely to be more extreme in either direction. we be overlooking in this outsider candidate?” And with internal candidates: “Are there impediments the board can Why Are Outsider CEOs a Riskier Choice? remove to ensure they are able to see and take appropriate There are several reasons why outsider CEOs tend to generate risks?” Because the CEO role is so unique, it will remain more extreme results—and thus represent the riskier choice for difficult to predict how any one candidate will fare. But, a board of directors. First, outside appointments are somewhat viewing the insider-outsider choice through the frame of more common when the company is in distress and needs a risk-taking is one way to empower the board of directors to fresh perspective, while inside promotions are more common make more informed and confident succession decisions. when company performance is stable and healthy. Clearly, if the

company is already unstable, extreme outcomes are more likely. Timothy J. Quigley is an associate professor at the University of (Our analysis took this into account and found that outsiders ’s Terry College of Business. His research is focused on CEOs, top executives, and managerial discretion. More specifically, Dr. Quigley’s are still riskier, showing that this is not the sole factor.) A interests lie in understanding how and when CEOs and other top second and related cause is the fact that outside CEOs may be executives impact organizational outcomes, the causes and outcomes of less constrained by their history with the firm and more likely CEO succession, and how these have changed over the course of time. Dr. Quigley received his PhD in Strategic Management from Penn State to take bigger and bolder action than someone promoted from University and is on the editorial board of Strategic Management Journal. within, thereby causing more extreme outcomes, up or down.3 1 A. W. Gouldner, Patterns of Industrial Bureaucracy (Glencoe, IL: Free Press, 1954); R. H. Guest, “Managerial Succession in Complex Organizations,” American Journal of Sociology, Third, there is always “information asymmetry” when a 68(1), 47–54 (1962); W. Shen & A. A. Cannella, “Revisiting the Performance Consequences of board seeks to hire an outside successor to the CEO. In other CEO Succession,” Academy of Management Journal, 45(4), 717–733 (2002). words, while the board is likely to be familiar with an internal 2Timothy J. Quigley, Donald C. Hambrick, Vilmos F. Misangyi, and G. Alessandra Rizzi, “CEO candidate currently serving as COO or president within the Selection as Risk-Taking,” Strategic Management Journal, 40, 1453–1470 (2019). firm, they will likely know very little about a candidate who is 3 D. L. Helmich and W. B. Brown, “Successor Type and Organizational Change in Corporate new to the company. Outsider CEO candidates also know much Enterprise,” Administrative Science Quarterly, 17(3), 371–381 (1972); A. Karaevli and E. J. Zajac, “When Do Outsider CEOs Generate Strategic Change?,” Journal of Management more about themselves than the board knows about them— Studies, 50(7), 1267–1294 (2013).

TexasCEOMagazine.com 7 Leadership Lessons Tintype of Chief Hank Whitman by Brigham and Jenna Mayfield FROM A TEXAS RANGER

Former Texas Rangers chief Hank Whitman on his transition from law enforcement to head of the Texas Department of Family and Protective Services In his long career, Hank Whitman not only spent eleven years with the Texas Rangers, rising to become chief of the agency. He also, most recently, held what he describes as an even tougher job: overseeing the Texas Department of Family and Protective Services. When Whitman retired from DFPS last June, Governor Greg Abbott recognized his service, saying he’d “helped create a safer future for Texas.”

We spoke with Whitman about his time as a Ranger, the leadership challenges he encountered at DFPS, and the fulfillment of his role in, as he describes it, protecting the unprotected. Feature

Did you know when you were small that you wanted to be a this day, I say they have the hardest, most thankless job in Texas Ranger? No, I didn’t. I’ll tell you that I didn’t have a real government service. I’m proud to have been their leader for long career with the Texas Rangers. I only did 11 years. I don’t those three years. They have saved so many children and think anybody’s ever made it to chief that quick, but things elderly people from abuse, neglect, and exploitation. happen quickly within our division. I was a police officer in Corpus Christi for ten years before I came to DPS, where I was later What were some of the first challenges you faced when you promoted into the Criminal Intelligence Division. I completed my took on the commissioner job at DFPS? One of the things I graduate degree and was promoted into the Rangers in 2001. asked the governor was, “Will you allow me to build my own executive team?” He said, “Absolutely.” There was no influence Before the governor asked me to be the commissioner of from above. There was no “Hey, you need to do this or that the Texas Department of Family and Protective Services, I or consider this person or that person.” We were allowed to thought being the chief of the Texas Rangers would be the develop sound policy that was proven, develop an effective, pinnacle of my career. But this whole new family [DFPS] that dedicated executive team, and challenge the status quo. I took on for the last three years really captured my heart. The generals underneath the executives were a different challenge. It’s two different worlds. The Rangers are completely apolitical. About half of them were engaged, and the other half were like, They do a lot of public corruption work and investigate mostly “We’ve seen cowboys ride in here, but eventually they ride off high felony crimes. Public corruption cases are a huge part into the sunset. We’ll watch this guy ride off into the sunset of their daily work and are often referred to the Rangers by a like the rest.” That attitude did not sit good with me at all. district attorney or a law enforcement agency head. Those cases are sensitive and sometimes controversial and, understandably, When I called all the field leaders in for a face-to-face meeting, should not be investigated by the local law enforcement agency. I could tell which ones despised me even being there. And I On any given month, we’re also working 40 to 60 homicides understand that. Here’s a guy coming into their world who around the state. But this latest job [with DFPS], I went from doesn’t even have an inkling of knowledge about child welfare overseeing a $22 million Ranger budget and a $20 million or adult protection services. I respected that wholeheartedly. border budget to an almost $3 billion budget. A large increase I’m not a caseworker. I’m not a social worker. I was a cop in personnel too. DFPS has 12,250 employees while the Rangers and I didn’t want them to think I was arrogant and not now have 150. There really aren’t that many Rangers. When respectful of what they do. But I do know public administration I came on to the Rangers, there were a little over 100. and I have a solid understanding of human behavior.

Wow. That’s not many for a big state like Texas. That is true! One of the things I noticed was that there was a lot of complacency But I had to learn how to deal with politics in the new job in upper and middle management—middle management being at DFPS. Something that I didn’t have to do in my previous the hub of a successful agency. They weren’t the ones getting position. Lawmakers would either be hugging each other yelled at by the lawmakers, so they saw no need for change. from both sides of the aisle or arguing. It was tough and that is a big understatement. I met with lawmakers on a regular How did you handle that situation?I said, “Accountability basis. A lot of them were fantastic to work with. Many I is big to me, and no more are we going to blame the consider personal friends. Obviously, I didn’t see eye to eye caseworkers when you, as their supervisors, oversee the cases with all of them, and likewise they didn’t with me at times. yourself.” We’re supposed to be leaders and mentors, not But I don’t think I left that capitol with any enemies. We all just people filling leadership roles. Two different things. respected each other. They too have a very tough job. Boy, did that change the agency immediately. I picked up six It was difficult to see our caseworkers get pounded on a daily new enthusiastic regional directors, and the other six would basis, when they’re doing the best job they can with very not return. Those six great new leaders were like, “Put me in, limited resources and funding. If a legislator would start coach. I’ve been sitting on the bench waiting for this.” Some yelling at me in a hearing, I would think, “Well, I’m going to people still saw me as an outsider, but I wasn’t the enemy. “We’re yell back too. I may be an appointed commissioner but I’m a going to be bold,” I told them. No more status quo. “We’re going citizen of this state too.” Fortunately, I had nothing to lose—I to change, and we are going to change big.” Surprisingly, the didn’t apply for the job. So, I thought, “Well, I’m going to changes we made proved to turn the ship in a big way. DFPS is yell back. Fire me! I don’t care. I’ll go home right now.” like a huge aircraft carrier—you can’t turn it on a dime. But it turned, and it turned in the right direction. It still needs lots of I was mindful of not crossing the line too far and knew improvements, as any agency does, but it turned for the better I had to maintain a professional demeanor for my because of its dedicated employees and a new direction. employees. It wasn’t about me. It was about them and to

TexasCEOMagazine.com 9 Tintype of Chief Hank Whitman and Mike Ramirez by Brigham and Jenna Mayfield. Read Ramirez’s story starting on page 14.

I would make each of my executive those numbers. It was also tough and It made my job as chief of the Rangers team members take over in each weekly heartbreaking to see kids who age out of seem like a cakewalk. The normal executive meeting. I wanted to watch how foster care without being adopted. Our life expectancy in the position of they made decisions. In this manner, I biggest push was to get them into college commissioner is 18 months, so I was able to build a succession plan and or vocational school. Every foster child surpassed that, with three years and they got to know how I operate. One in the state of Texas can go to any state two grueling legislative sessions. thing they noticed was that I didn’t talk college or vocational school tuition free. No There was one commissioner who a lot. I listened. A lot of CEOs need to school loans to worry about. Unfortunately, completed four years, but it’s not a do more of that, especially when they fewer than 7 percent take advantage of it. position people hold for a long time. have good experts. Sometimes they would even forget I was sitting there. Wow. We’ve raised that number now. They What did you tell your successor on often don’t take advantage of it because your way out? What did you learn? As I Did it help that your leaders at DFPS they’re mad and don’t trust the system. We told the governor’s staff when I decided were presumably drawn to the work of as a community, not just DFPS, weren’t to retire, “I want the next person to helping these kids and families? Yes. We doing a good job of mentoring those kids. do ten times better than what we did.” were all affected by that. On any given Because that’s all they need—someone And they’re going to want the next day, the state of Texas has 30,000 kids to be there for them. These kids have person to do that. I’m confident that in our conservatorship. Thirty thousand. never lived a normal life, and we want will happen. When I retired, I got a lot It was horrifying for me to even see them to have that life of normalcy. of good feedback on the changes we

10 Texas CEO Magazine Q1 2020 Feature implemented. People told me, “It worked. “Well, Commissioner, where are you What were some differences between We didn’t like it. But we understand now going?” people would ask. I wouldn’t tell leading the Rangers and leading the that it worked.” them. Because if I did, they might want DFPS? With the Rangers, I had seven to call the field: “Hey, Commissioner’s commanders, and they were proven What were some of those changes you out. Make sure you clean up the place.” leaders of their own command. But made? One thing my crew learned quickly The first time I did it, I did tell them I the biggest difference is the nature was that I hold people accountable. I take was going to San Antonio. Well, hell, it of the work. At the Rangers, we lived notes. I don’t forget. When I first came was like a reception when I got there. in a very intense investigative world. in, there was a lot of what I call “slow Everything but the flowers. But those Most of the cases we dealt with were rolling.” Every project was estimated ride-alongs were important. They let homicides. But we didn’t have to worry to take six months or a year. “Really?” the field know that I wasn’t the Wizard about keeping kids safe, healthy, and I’d say, “I think that’ll take three weeks. of Oz in a big tall white building away from harm. That’s a tougher job! I’ll give y’all one month.” Well, hell, behind a curtain. They knew even the So there’s a lot more urgency at DFPS. they’d have it done in two weeks. top guy was willing to come out and On any given day—seven days a week, work with them from time to time. I also noticed in executive meetings that 365 days a year—our 7,000 caseworkers we had these employees lined up all I encouraged my executives to do ride- are having to lay eyes on children within around the walls. They were “subject- 24 hours. It’s not like the Rangers, where alongs too. I made it part of their annual matter experts.” They attended the we can start working once we get there— evaluation. I told them they were required executive meetings in case one of the unless there’s a shootout, of course. to ride along twice a year. Each one of executives needed them. As far as I them got a profound appreciation for recall, they never talked at all. After It’s two different levels of stress. The what a caseworker does on a daily basis. I the first couple of meetings, I asked if Rangers live in a stressful world too, of recalled that my CFO had never been on a they really needed to be there. I found course. Rangers work independently. ride-along. After completing his first one out they were doing it that way because They do not have an assigned partner. he told me, “Now I know why they keep they’d always done it that way. And You can only imagine the Ranger who asking for the funding they need. I get it.” they all dreaded it. So, I told them to walked into the scene at the church in go back to work and we’d call them if Sutherland Springs [site of the 2017 mass We did a lot of things right, and needed. It saved everyone time, and for shooting in Wilson County that killed sometimes we didn’t. When we fell us productivity was critical. Of course, 26 and wounded 20 more]. One of the through, we’d work with the Office of we did call them in when we needed to first ones who walked in there goes, “I’m Consumer Affairs to look at what went hear from them. Those subject-matter going to need a lot of help.” Even those wrong and how not to make the same experts are your successors. You’re guys had difficulties seeing that gruesome mistake again. When we saw that a case mentoring them to move them up. scene because of the children and the wasn’t handled correctly, I’d look at that elderly who were shot and killed in there. There’s a saying I learned when I went person’s annual evaluation. Sometimes through Police Staff and Command it would say they were great, and then Just because you’re wearing a Ranger School many years ago: “Either move I’d know the evaluation wasn’t being badge, it doesn’t mean that all of a them up or manage them out.” At first, used correctly. So I’d have that talk sudden you have no emotions. You do, I found that to be very distasteful, but with the supervisor and let them know and they too go through PTSD like other the goals and objectives of a department how critical the annual evaluation is to first responders. Every police officer like DFPS must be met or children and their success as an effective leader. does, and so do my caseworkers. elderly suffer or possibly die. If they’re good, you promote them and continue Eventually they understood that I bet. They suffer from an extreme to mentor them. And if they’re not everybody’s accountable, including me. amount of PTSD. A lot of them mask making it after all attempts are made to I take full responsibility for everything it, but that’s one of the things we make them good, productive employees, they do. But everybody’s going to be implemented: a peer group to keep an eye then you have to manage them out. accountable for themselves too. That on those who lose a child on their case. was a whole different concept to them. That’s almost a career killer for them, How did you know who to manage up If I’m going to fight for you, I told them, not in that they’re going to be dismissed and who to manage out? One thing was, then I have to know you will take care necessarily. More often they just say, I did a lot of ride-alongs. I’d say, “Okay of our children and vulnerable adults. “I quit. This baby just died under my team, I’m heading to the field to do And I didn’t run the Ranger division care and case supervision.” Well, true some ride-alongs with the caseworkers.” any different when I was chief there. in a sense, but they were usually doing

TexasCEOMagazine.com 11 everything they could. Society forgets and program directors who selected with the existing supervisors—“Oh, God, that caseworkers are human and they, upcoming supervisors. I brought everyone I have to take this test,” they said. But like police officers, cannot predict what in and had them explain the process to I once sat in a room with 700 of them a person will do with a child despite me. And I said to them: “Truly, it’s the at a conference, and I said, “Can I see a having followed all the directions of ‘good ole boys’ system, right?” They show of hands of how many of you got the court and despite the services all looked at me like, “Well, yeah.” promoted under the new system?” Three- they provide the parent or parents. quarters of them raised their hand. I knew we needed to stop that Not one out of them in that category When critical incidents of that magnitude immediately. Supervisors were picking have I ever had to demote or dismiss. happen, I would personally call them: their favorite person, and it wasn’t always “Are you okay? You doing all right?” a person who had leadership qualities. Where did you learn to hire and train It helps. But I also knew when it was The other unit members saw that—and it like that? DPS. That’s the way we did time to get them mental health services. was destructive to the entire unit. I called it in DPS. It’s a fair system. If your These houses they’re going into, they’re all my training people in and said, “I middle management isn’t working, not mansions. You’re looking at some want your team to develop a 120-question that’s like the engine of a huge truck very difficult situations. They’re going test for every role of supervision in freezing up. That’s what was happening. into homes I wouldn’t go into as a cop this department, with 1,000 questions The previous promotion process unless I had backup with me. And in a computer bank. I want it to cover was gumming things up, and our they’re doing it with no weapon. They everything from leadership to the job engine was running very sluggish. often have no sense of fear. They just itself to the family code.” For those who do it. They get called all kinds of names. desired to become a supervisor, they were I take being promoted very seriously. At times assaulted, threatened, and required to take the exam and make at On the last Tuesday of every third stalked. It’s awful. It’s the hardest job in least an 80 percent score. To my surprise, month, every person who is a newly government service without a doubt. we had a one-in-three failure rate. promoted supervisor comes to Austin Wow! That would have been a third of with his or her family and attends Some of these caseworkers, they’ll be personnel who were not prepared to lead. a formal promotion ceremony. Our sitting in a client’s home, have a roach promotion ceremony is broadcast fall on their shirt or watch a rat run by, Second, I told them that we were going throughout the state on our intranet, and they’ll just go back to talking to mom to put together a promotion board. so all employees can watch from or dad. It’s like, “They don’t scare me.” The candidates would be required to their phone or office computer. We’d answer a series of critical questions have a guest speaker and the new I’m sure some people would start and pertaining to their field of supervision. supervisors would take pictures with then immediately say, “This isn’t for me.” The board would not consist of anyone their families, friends, and coworkers. My predecessor, Judge [John] Specia, they would directly work for. They went home with a feeling of, “I’ve was instrumental in redeveloping the accomplished something. I’m a leader.” academy’s training process for new Their faces were turning white listening incoming caseworkers. He started to this. I said, “There’s going to be After we implemented that, morale putting trainees in the field right off a proctor in the room, too. They’re just kept going straight up. Then I the bat. Instead of doing three months going to take the score sheets from the implemented the commissioner’s award in the classroom before they went out interviewers and put them in a sealed of excellence. It’s the highest award to the field, they now go two weeks in envelope.” I didn’t want people looking that can be bestowed on an employee or the classroom, one week in the field, at each other during the process or outside stakeholder. In the three years three weeks in the classroom, and so knowing how the other evaluators were I was there, I awarded 70. The award on. I wish the colleges that teach social scoring. I wanted it to be a fair process. ceremony was televised, and again, we’d work would start doing that. Let them have the recipient up with their whole intern with us, so that they can get that When we implemented that, my family. I’d invite them up to see my fear factor out of the way. Now, if we’re supervisor turnover went from 28 percent office and visit with the executive team. going to lose them, we’re going to lose to 7 percent. That 7 percent was due to Their kids really enjoyed it as well. them real quick, and then we don’t spend normal retirement turnover. Caseworkers tens of thousands of dollars training in the field were happy because they knew These caseworkers save lives daily. It them just to have them walk out. their supervisors were now competent didn’t cost anything to recognize them and went through a fair process—it wasn’t and bring their morale up. An employee I also overhauled how we promote just the ‘good ole boys’ system anymore. wants to be told when they’re doing good. supervisors and that helped with turnover Pay is good, but that recognition is more too. Before, it was the fellow supervisors Of course, that didn’t go over real well important. Every CEO needs to know that.

12 Texas CEO Magazine Q1 2020 P ODCAST

Each week on Ask a CEO, veteran tech CEO Joel Trammell explores a challenge of one of the least understood jobs in business—that of the CEO.

Some topics we’ve covered: • TAKING A COMPANY PUBLIC • MASTERING WORK-LIFE BALANCE • THE DIFFERENCE BETWEEN MANAGEMENT AND LEADERSHIP • BEST PRACTICES FOR COMPENSATION

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In 2020, personal and diplomatic security protection isn’t just for heads of state. Increasingly, businesspeople are enlisting the help and services of professionals like Mike Ramirez, who provide personal and executive security protection in dangerous situations and places, whether at a conference abroad or in a warzone. We asked Ramirez to tell us about his job—and what business leaders should know about it.

How did you get into the profession of personal protection? After my first year in administrative segregation, I took I grew up about an hour southeast of San Antonio in a small another position as a correctional field officer. As a CFO, town called Kenedy, Texas. From a young age I always knew you ride on horseback every day and take offenders that I wanted to be a Marine. In my senior year of high to work out in the fields. The penitentiary I worked at school, I contacted a recruiter who then came to talk to me sat on a large amount of land, so the prison used the about the Marine Corps at my parents’ house. After about offenders to do the labor and farm the land. We would an hour of the recruiter telling me all about what the Marine take a squad of anywhere from 25 to 50 offenders per field Corps had to offer and all the places I would get to travel officer and have them plant seeds and harvest crops. to, I signed my contract, and the path to where I am today Later, I was promoted to K-9 sergeant. My job was primarily began. I spent the next four years as an Infantry Marine and breeding, raising, and training dogs to track humans. If a Security Force Marine. In the mid-1990s, I got my first an offender tried to escape from our prison or any other taste of military personal protection while on a special duty prison, we would deploy our human-tracking dogs to assignment providing armed protection for a high-ranking track and capture them. We also assisted local and state officer. At that time, it wasn’t called “personal protection”— police with our K-9s. If they conducted a traffic stop and you were just a military enlisted man assigned to an officer someone bailed on them, they would call us, and we’d because their rank warranted protection by a Marine. take our dogs out and assist in capturing the suspect.

After four years in the Marine Corps, I came back to Texas That sounds a little more pleasant than administrative and went to work for the Texas Department of Corrections. segregation. It was! It was one of the most rewarding I worked in a maximum-security state penitentiary in my jobs and if I ever win the Lotto, I would go back and hometown of Kenedy. My first year, I worked in administrative do it for free. Getting to ride horses all day and work segregation, where offenders are locked up 23 hours a day with dogs was a very rewarding experience. because of hostile behavior or because they had threats on their lives. You’re worried about your own personal Around 2003, the war in Afghanistan had been going for protection at that point. Needless to say, it was not a very a couple of years and the war in Iraq had started, I was cordial environment, but I learned a lot in my first year at still working for the penitentiary. I kept in touch with the penitentiary. For one, I learned how to read people very guys I had been in the Marines with. When I shared with quickly and that no two situations are ever the same. Nothing them that I was working at a penitentiary, they would say, is what it appears to be when you walk into a cell block. “Man, that sounds like a dangerous job for not very much

14 Texas CEO Magazine Q1 2020 money.” They went on to share with me about private our weapons when out in public. It proved to work well. military contracting. They informed me that the US This method is still used to this day in many different government was paying former military guys, like myself, countries as a way of transporting diplomats around cities good money for the skills the Marine Corps taught us. in combat zones and hostile areas in a low-profile status.

I thought, “Well, I’ll go give it a year, save that money, During that time, I was recruited and switched gears from and come back and decide what I want to do next.” I went diplomatic protection to intelligence and counterintelligence through the extreme vetting and grueling selection process, work. This work took me in a whole new direction. After about then headed to Iraq. Before I could blink, I’d been there 10 10 years of doing private military contracts, both diplomatic years. My first clients that I provided personal protection protection and intelligence, I was ready to slow down and for were US civilian contractors who were rebuilding returned home to the US. the infrastructure, water-treatment facilities, and power plants that had been damaged in the bombings during the I was fortunate enough to bring those security and personal beginning of the Iraq War. From there I went on to providing protection and intelligence skill sets back with me from all diplomatic protection for US ambassadors, secretaries of my years in combat zones and hostile areas and put them to state, diplomats, senators, congresspeople, and many other use in corporate America. In this day and age, the need for government officials traveling in, to, and around Iraq. personal protection here in America and abroad is in much greater demand than when I started in this business. Many We also provided 24/7 protection for the US ambassador more private families, business professionals, and company assigned out of the embassy in Iraq. We conducted the leaders are seeking professional protection services. advance surveys and risk assessments, coordinated the routes we’d be taking, put together evacuation and emergency It’s very rewarding work, whether it’s a businessperson or a plans should we come under attack, which we did on many family, making sure they can go about their business and not occasions. When the war in Iraq kicked off, there became have to be concerned for their security. a need for former military guys like me with special skills to provide protection for designated government officials What causes somebody to say, “I need to hire professional because our military was doing the offensive missions, protection”?There are many reasons for an individual or tracking down terrorists and fighting the war on terror. a company to decide that security and personal protection Looking for the bad guys wasn’t our job. Our job was to is needed. A lot of times the requests come if there’s been protect those who we were assigned to. We weren’t looking a direct threat against themselves or to their business. for an engagement. Our job was to get the person we were If a company’s executives must travel, they may want assigned to protect to their meetings safely, keep them out protection, especially if it’s a speech or event in a public of harm’s way and return them back to a secure location. forum and there may be protesters or activists who could potentially cause them harm. It could even be simply so When it comes to diplomatic protection, we figured out the protected person does not have to travel alone. over time that in some cases, depending on the mission and the location we would be traveling to, that it was better Other times, there is no specific threat, but if they’re traveling to have the diplomat travel without the four or five black for example in Mexico or South America, danger can arise Suburbans and two helicopters—“little birds”—flying above. at any time. Kidnapping for ransom and maintaining a positive public image are a big concern in those areas. It’s kind of announcing the target. Yes, you could say that. It could even be something like the client wanting some private In the beginning, the thought process was to overwhelm our time or to avoid business pitches while traveling abroad. If attackers with our physical presence, sirens and lights and men someone recognizes him or her and starts doing a pitch or with superior firepower. With time, we realized that wasn’t asking to borrow money, it’s easier for me to be there and enough. The would-be attackers were getting braver and their step in to handle the situation. Beforehand, we would have tactics were changing. They started identifying our Suburban already established our code words and signals, so they can motorcades and using IEDs [improvised explosive devices] on signal that they want out of the situation and I can intervene. the sides of the roads or in dead animals. We had to adjust our tactics and ways of moving our clients around the country. What makes a good client? Someone who’s open-minded and willing to listen to our recommendations instead of The decision was made at the higher level that a new method putting themselves in bad situations. That happens in some of transporting clients needed to be developed. My team and industries more than others, especially when you compare I were tasked with that adjustment. We implemented using people in the business world to those in the entertainment vehicles commonly used in that area so we would blend in world. When people are willing to listen to our advice and more. We started dressing like the locals and concealing expertise, it allows us to do a better job for the client.

16 Texas CEO Magazine Q1 2020 When you get a new client, how do you assess their needs? will squeeze a few more years out of the operational side We start by scheduling a conference call or a sit-down, by continuing to stay in shape physically and mentally, where I ask questions so I can have a better understanding training on a regular basis, and keeping my network going. of what the person’s needs and concerns are: What is the purpose for the travel? Is this business or personal? How do you handle privacy issues? Do people worry about Who do you plan to meet? How long are you going to be having some guy standing a foot away every time they go there? Are there known threats against you? Why are you down to the beach on their vacation?That comes up a lot, requesting security? Are you being proactive, just wanting whether the security is for a family or corporation. People to travel safely, or has something recently happened? struggle with losing their sense of privacy and personal Once I get the information, I can start devising a security space. And it’s understandable. No one wants to have private plan specific to their needs and begin reaching out to my conversations with some stranger hovering around. I try network of security professionals. I have a large network to make it clear to potential clients that there are several in this industry that I utilize for real-time intelligence and ways of conducting personal protection and security. security information in just about any part of the world. We go over this in client assessments. It’s always tailored If it is multiple people traveling that require security, I to the client’s needs. There’s the up-close-and-personal will put together a team of security professionals to travel protection where I’m dressed in a suit walking a foot with the clients. If requested or warranted, I will send away from the client, always by their side, opening the someone ahead of time to conduct an advance of the area door to let him in and out of the vehicle, and there’s and places that we will be taking the client to. One person no doubt that I am there to protect that person. cannot provide adequate security for multiple people. There’s also what’s called low-profile protection, where Is there anywhere people don’t use security where you security is going to dress down and blend in more with the think they should? Many Americans go to Mexico and people of that area. We will travel a little more low-key, think, “Oh, Mexico is okay.” Honestly, Mexico is one of the probably utilizing the same types of vehicles everyone else is most dangerous countries in the world today. People just driving in that area. When we get to where we’re going, the don’t realize it. Americans can be targeted for kidnapping, client will open their own door. I may have another security extortion, or just plain robbery. The cartels have been person already at the location. Once you exit the vehicle, I’m jockeying for control over different parts of Mexico for going to hand you off to the security member already at the years and it has caused so much turmoil. You can be at the location. Security will give the client plenty of space depending wrong place at the wrong time and get caught up in a bad on the circumstances and have little to no contact with the situation with the continuous fighting among the cartels. client unless the situation requires it, or the client requests it.

If they’re traveling in Mexico or anywhere in Central and And then there’s what we call shadow security or protection, South America, I recommend that CEOs and companies take where we never have contact with the client in public unless the time and spend the money to ensure the security and the situation calls for it. This way of protection requires safety of their personnel. It’s much better to have a security multiple security team members in order to have men pre- plan and team in place and not need it than to need it and staged in the locations the client will be traveling to as well not have it. The cost will be a lot less than it would be to as to provide several security personnel to follow the client in pay a ransom. A lot of times it comes down to dollars, but separate vehicles. The client drives themselves in their own when it’s time to save money, it shouldn’t come from your vehicle and we follow in different vehicles. Another example security. Businesspeople shouldn’t have to be concerned of shadow security—let’s say you’re on vacation in Cabo with their security and safety when traveling. They should be San Lucas with your family. We’ll have established where focusing on the business and representing their company. you’re staying, how you’re traveling, and security will have men on the ground before you get there. Security will be in Do you see yourself doing this for 20 more years? Whether it place around the house and they’ll look like locals from the be on the physical side of protection or overseeing operations area. If a client is hanging out on the beach, a security team and passing my knowledge to the next generation, I will member or members might be getting sun, wearing shorts continue bringing an undeniable passion and great value and hanging out like everyone else just a short distance away, to the table for many years to come. I’m very thankful to and unless security identifies a threat or we get the code word have had all these years doing this work operationally. or signal from the client, we’ll give them some room so they At some point I’m probably going to have to step back don’t feel like they have lost their personal space. So, as you and allow the younger men to keep doing the hands- can see, there are several ways to provide security and still on work, and I’ll take more of a management role and maintain the client’s sense of personal space and freedom. continue to pass on the knowledge to the younger men. I

TexasCEOMagazine.com 17 The Eyes

18 Texas CEO Magazine Q1 2020 Feature

By most accounts, Chris Del Conte has revitalized Longhorn athletics. Since his hire in December 2017 as vice president and athletics director at the University of Texas, he’s not only overseen a record- breaking $219 million in annual revenue—he’s also led the charge OF on building new sports facilities, amped up game day with a festival concept on Bevo Boulevard, and found time to run one of the most responsive accounts out there. (Seriously, try tweeting at him. He’ll probably respond.) We recently spoke to Del Conte about leading an organization that entertains millions of spectators even TEXAS as it prepares its student-athletes for success—on and off the field.

To start off, can you give us an idea of the scope of UT Athletics? We’ve got about 400 full-time employees, 2,000 part-time employees, 523 student-athletes, and a budget of $225 million. ARE We’re the front porch of an institution that has 52,000 students and about 500,000 living alumni. Plus, there’s about 30 million people in the state of Texas that the University of Texas UPON represents on a daily basis. The eyes of Texas are upon us! You ran smaller operations before you got to the University of Texas. What were the big differences moving to a larger institution?I’ll go back to the movie Hoosiers for a moment. When I was director of athletics at Rice, it was a lot like the town of Hickory, Indiana, US in Hoosiers. It was a small town, 3,000 students, and you have basically 30,000 living alumni and an $11 million budget. You know who your constituents are. When I moved to TCU, it was like the sectionals in Hoosiers. It was a bigger stage, where you have 8,000 students and 50,000 living alumni. And now I’m at the University of Texas University of Texas, with a lot more than that. But at the end of the athletics director Chris day, the fundamentals of the game are the same. It’s still a 10-foot rim, it’s still a 15-foot free throw, and it’s still a 94-foot court. Del Conte on servant leadership, the future At the end of Hoosiers, they take the whole team into that big of collegiate sports, and gymnasium and they’re all looking around at the size and scope of the place. But the dimensions of the court are the same as anywhere what it takes to run an else. In the same way, the football field is the same at Rice as it is institution representing at TCU as it is at the University of Texas. It’s just the size and scope nearly 30 million Texans. of the operation that’s bigger. With that comes all the challenges of a larger organization, but the basic footprint is the same. And in all three institutions, we’re educating young people, helping them get a degree through their interests on the playing field. It’s just the size and scope of who you represent and the complexities of the institution that are magnified when you move to a larger institution.

Finding good jobs for your student-athletes is a key priority of yours. What do you want Texas CEOs to know about your student-athletes? When they come to our school, every one of our student-athletes believes that they’re going to be a pro athlete in whatever sport they participate in. But there’s always that “aha” moment where they realize it’s about more than that. Our job is to say, “A sport is what you do—it’s not who you are.” When you come to college, we’re going to find and accentuate who you are. Every one of our kids has tremendous grit. They are driven

Photos courtesy of Texas Athletics Texas of courtesy Photos to be the very best. They have put their entire efforts into athletics and they know what time management is, they know what hard work is.

TexasCEOMagazine.com 19 THERE’S A SAYING IN OUR WEIGHT ROOM: “THE WINNING TRADITION OF THE UNIVERSITY OF TEXAS SHALL NOT BE ENTRUSTED TO THE TIMID NOR THE WEAK.” TELL ME WHAT EMPLOYERS WOULD NOT WANT TO HIRE SOMEONE WHO’S BEEN TRAINED UNDER THAT MOTTO?

The American dream of bettering one’s life is always predicated on education. That’s exactly the opportunity we’re offering at the University of Texas. We’re getting young people to come change the world. That’s what we say here: “What starts here changes the world.” We truly believe that. When you get a degree from the University of Texas, from the finest faculty the land has to offer, you are then prepared to change the dynamics of any institution be externally judged on their success. back to campus to celebrate the University you go work for based on that educational How do you deal with that? I think of of Texas through the eyes of sport. That background at the University of Texas. my role as one of servant leadership. It makes us the front porch, like I said, but So, an employer getting a student-athlete should be about our coaches and our the most important thing is the house—the from the University of Texas can be sure student-athletes. My job is to be the university. The house has transformed that person has been tested under the wind beneath their wings, whether it lives and bettered the community through eyes of Texas. The pressure of being a be our coaches, our student-athletes, or education. Then Texas Exes is the back student-athlete is not for the faint of heart. our constituents at large. When you put porch, where we invite people to the them before you, that’s the greatest form barbecue to relive the glory days. There’s a saying in our weight room: of leadership—serving your community. “The pride and winning tradition of the That’s what team sports are all about. When you’re running an enterprise will not be entrusted It’s a collective group that makes your based on passion, whether it’s the to the weak nor the timid.” Tell me what team successful, not an individual. passion of the kids on the field or the employers would not want to hire someone coaches or our donors or our students who’s been trained under that motto? As athletics director, I’m running an or the state of Texas as a whole, you’d economic enterprise based on people’s better have a servant mind and heart. The athletics director position has a lot passion. No one has to buy a season ticket. You will not be successful if you think of similarities to the CEO position. One No one has to buy a T-shirt. No one has it’s about you. It is always about the unusual aspect of it is that you are often to come to the games. We’re providing University of Texas first and foremost. not the face of the organization. It’s an opportunity for people to form a sense often the coaches who are most visible, of community around the University of You had a “lemons into lemonade” and the success of the institution might Texas. We invite 100,000 people to come situation this year, where you had to

20 Texas CEO Magazine Q1 2020 Feature replace a coach in the middle of the the safety of the game has always been leader, then you’re not allowing people to year. The team rallied and then ended up paramount. Hell, that was paramount grow. If you hire someone to run an area of winning a national championship. How when Teddy Roosevelt was president. your organization, let them run that area. do you handle a situation like that?You You’re always going to have these dynamic At the University of Texas, our goal is to be always put the student-athletes first. Kids topics. They’re always going to be there. a top-10 team in every one of our sports, are resilient. That particular issue was My job is not to be rigid in thought but so collectively we give our staff and our difficult to deal with, but the kids knew to be malleable for the betterment of coaches all the tools necessary to be great they wore that burnt orange and white the institution and our program. and then we let them do it. And we hold across their chest and were going to rally them accountable to that standard. Period. around each other and the university. We WHEN YOU’RE were already having a successful season, If I worked for you, what stories would so that was a bump in the road. But it was RUNNING AN I hear? What has influenced you an opportunity for them to realize that throughout your career? I have mentors together they can do something special. ENTERPRISE BASED I constantly work with, but probably my ON PASSION, YOU’D biggest mentor was my dad. Growing up, As you look five, ten years down the he always told us: Be humble, be honest, road at collegiate athletics, do you see BETTER HAVE A and serve people. If you do those three any big changes? Do you see the esports things well, you will be successful. But craze getting folded into intercollegiate SERVANT MIND AND if you don’t do one of those three things athletics? Are you worried about the HEART. YOU WILL NOT well, then life will be difficult for you. struggles people are having with football Those three things are important to me injuries? It’s ever-changing every day. BE SUCCESSFUL IF YOU and I always carry them with me. And my The enterprise has always gone through dad and mom lived those things. When I big shifts since it was established over a THINK IT’S ABOUT YOU. was a kid, they started a children’s home century ago. The football program here was in New Mexico, where they helped look established in 1893, but college athletics What do you tell people about what it’s after over a hundred and fifty foster kids. in its current form really took hold in the like to work for you? I expect you to do the early 1900s. One thing that we’ve always job! You’re the expert in your particular Did you know that athletics director had is change, whether it be changes in field, so do your job. As a leader, I don’t was a job you wanted at a young age, or conferences or rules or affiliations. You just need to be a jack of all trades—I hire did you stumble into it? It wasn’t one of have to be able to adapt to the changes. experts to do their job. It’s like in football, those things I knew from the beginning. where you’ve got 11 people on the field and When I was in college, a house parent at As far as the two trends you just if each of them does their job, the team will the ranch I was at became a team doctor mentioned, some of those are politically be successful. You’ve got to hire the right at State, and he gave me motivated. I don’t know if esports will people, give them the tools necessary to be a job in the maintenance department. ever take hold in the South. But it’s successful, then stand back and let them I worked my way up from there. But I happening in other cities and states, work. That’s what a leader should do. If always knew that I wanted to be around so you have to be aware of that. And you’re manipulating every little thing as a an organization that was giving something good to humanity. Outside of the GI Bill, more kids go to college for free through athletic scholarships than anything else. It doesn’t matter where you’re from or your socioeconomic background—through sport you can change your paradigm because you got a free education.

But to me it’s always been about being humble, being honest, and serving others— those three traits my father instilled in me. Those are always going to be with me. I was always going to do that type of work. Sport just happened to be the arena that galvanized my interest.

TexasCEOMagazine.com 21 WHAT CEOS Can Learn from EXCEPTIONAL COACHES

John Thornton, PhD

I have always been fascinated by the coaches who have “it”—that Does that sound familiar? Perhaps a little like the CEO role? -factor that separates exceptional coaches from the also-rans. Indeed, coaching within a Tier One athletic program like Texas What do they do differently as they put together a staff, organize A&M—with its seven-figure revenue and nearly 600 student- practice, recruit talent, and manage high-stakes games? While a athletes—is a lot like leading in corporate America. Leaders in both favorable bounce here and there helps out, it’s become obvious over settings face the same pressure to perform, the same responsibility my forty-plus years in athletics that consistent winning happens to deliver wins through other people. And I believe that each role by design. In some form or fashion, the exceptional coaches all has much to learn from the other. had a system, a routine that worked for them. John Wooden, Pat Summitt, and Paul “Bear” Bryant—with their respective Pyramid of Here are five characteristics of the exceptional coaches I have Success, Definite Dozen, and Junction Boys—are the stuff of legend. known, each of which translates to consistent winning in the Each is absolutely authentic. Each put in the vast amount of time, business realm. expertise, and effort it takes to achieve success. 1. Exceptional coaches define and embrace their My interest in great coaching runs through my entire career, from uniqueness. Exceptional coaches are special: They stand my early involvement in high school coaching to my experiences out in some way, whether you call it their style, their persona, with intercollegiate coaching and administration, ending with or something else. They might be folksy, hard-ass, no- my time as interim athletics director at Texas A&M University. nonsense, or mystical, but whatever they are, they are totally It continues through today in my role as executive professor and themselves. They find the authentic core of themselves, share director of the Texas A&M Coaching Academy, where I deal with it with their teams, and use it to separate themselves from the complexities of directorship over intercollegiate athletics the merely average coaches. This authenticity fosters the programs. If I have learned anything, it’s that the job of building kind of trust and loyalty that—to again quote Coach Metcalf— a successful athletic program is not for the faint of heart. As the prevents fans “from naming a street after you one year and homespun Coach Bum Phillips once said, “There are two kinds of running you out of town on it the next.” coaches: those that are fired and those that are going to be fired.” 2. Exceptional coaches are consumed with their The exceptional men and women who succeed in this high- profession. For better or worse, exceptional coaches live pressure role have my utmost respect. They must channel their their job every day. They have an unrelenting, laser-like players’ competitiveness, please their donors, and persist through focus. They constantly fight for what they and their teams public scrutiny and the incessant chatter of social media gurus. need to win. As an administrator, dealing with these passion- And as my mentor Coach Shelby Metcalf—hall of famer and the filled firebrands could get tiresome at times, but I had to winningest coach in the Southwest Conference—was fond of realize that this was a part of what made them good. They saying, they do all this with “a scoreboard tied to their ass.” take no days off. They are always striving for excellence.

22 Texas CEO Magazine Q1 2020 Feature

3. Exceptional coaches are competitors. The best In my time at Texas A&M, I have seen exceptional coaches perform coaches I know hate to lose more than they enjoy winning. incredible feats. One coach inherited a team that hadn’t won They attract players with that same competitive drive, which a game in conference play the entire year before—but after six can be a curse or blessing depending on your perspective. months of preparation, he helped the team qualify for postseason Recruiting, developing talent, and scheming up the x’s and o’s play and set the stage for six straight NCAA appearances. all contribute to game-day success, but as Coach Metcalf also Other coaches recently led Texas A&M teams to three national says, “talent that doesn’t compete gets you fired.” Coaches championships, a feat this institution had not achieved since that recruit competitors—and develop the competitive nature 1939. These exceptional coaches, to a one, displayed the five of their teams—are the ones who win consistently. characteristics I have outlined, which is why I strive daily to impart them to future and current coaches. 4. Exceptional coaches develop a culture you can feel. Just as exceptional coaches have their own unique I also believe that these characteristics are not confined to the style, they also build a unique team identity. They make world of athletics. Like exceptional coaches, exceptional CEOs do players feel like they are part of something special. Whatever all of the above: They find their authenticity as a leader, build their the specifics of that culture are, players are motivated by the passion for the business, harness their competitive spirit, build a sense of belonging and shared identity. They know that their strong culture, and surround themselves with top-level talent. It is coach and their teammates have their back. no surprise to me that so many business leaders draw inspiration from the world of sport. At the heart of leading, coaching, and 5. Exceptional coaches surround themselves with winning lie many of the same principles—principles that can talent. Great coaches don’t just focus on the one or two inspire us to higher performance, whether we are pursuing a superstars—they make sure they have talent in every role. national championship or building a world-class business. That goes for the MVP, the “glue guy” (who holds the team together), and everyone in between. They are not afraid John Thornton is the inaugural director of the Texas A&M Coaching Academy. He earned his doctorate degree from Texas A&M in 1997 and to tinker with the process to ensure that talent is properly received the 1998 Academic Inspiration Award by a vote of the Texas A&M utilized. And they do not have a problem making the tough Scholar-Athletes of the Year. Previously, he served as Senior Associate call and benching the underachievers. Athletics Director and Interim Athletics Director at Texas A&M.

TexasCEOMagazine.com 23 STARTUP SUCCESS: A STARTUP FUNDRAISING SERIES

HOW MUCH Should We Raise? Gordon Daugherty

For most startups, the decision to raise But regardless of whether the the investor needs to see a cohesive money is made out of necessity. The entrepreneur is pursuing funding out fundraising strategy that doesn’t just let entrepreneur needs more funding to of necessity or desire, they still face a the startup survive for a while longer but continue pursuing their dream, whether difficult decision: how much to raise. rather allows them to reach future key the money will be used just to survive Not only is the decision critical to the milestones for continuing to get funded a while longer or truly shift a gear and startup’s own planning and forecasting, and eventually grow a great company. move into the next stage of evolution. but investors will want to understand why the entrepreneur has chosen to Investors typically get a lot of unacceptable Other startups pursue funding out of raise the stated amount of money. responses when they ask why the desired want more than need. Usually, this is The ability to demonstrate that they amount of funding is the right amount, because they either want to get more determined the right amount of funding such as “Most other startups at our stage aggressive in their growth or because for the company at its particular stage seem to raise that amount,” “It’s the there’s some opportunity they want is important for establishing credibility most we think we will be able to raise,” to exploit sooner than when they with the investor. The entrepreneur “It only dilutes us 25 percent,” and “It might otherwise organically. These will essentially become the steward of gives us one year of runway.” These startups are in the fortunate position the investor’s money through multiple responses might be true, but they are of turning down the funding if the rounds of funding, until they eventually all also terrible. This article provides a terms, timing, or amount isn’t right. exit and the investor gets a return. Thus, framework for determining how much

24 Texas CEO Magazine Q1 2020 Feature a startup should raise and how they the new funding to aggressively dial should describe that to investors. up headcount and spending, but that There are pretty dramatic differences means they’ll almost immediately have in the outcomes Silicon Valley investors The basic formula to raise more money. Part of the trick expect and the outcomes investors in most For startups seeking growth, the figure is dialing in the optimal combination of other places in the country expect. A set below summarizes the first major steps for extra time and extra resources in order of projected outcomes that are exciting deciding how much to raise. As you can to achieve the desired outcomes. to an investor in Memphis, Tennessee, see, the amount of money raised affords or , Colorado, could easily seem the startup a combination of time and Figuring out the best combination involves way too safe and conservative to a Silicon resources. And with time and resources, creating a financial forecast model that Valley investor. There is much more of they can accomplish things (outcomes). allows experimenting with various a swing-for-the-fences, build-a-unicorn, assumptions and alternatives. For a pre- global-world-domination mentality in seed or seed round of funding, the startup Silicon Valley, and fundraising startups will have lots of assumptions that have should understand this philosophical no support from prior results. Because difference in risk tolerance as they go of this, the investors will really want to about setting their desired outcomes. understand any information or insights the The basic concept is simple. And since startup has to support their assumptions. Time for the first we are trying to solve for the right Later, the prior track record will serve check and balance amount of funding to raise, let’s analyze as a basis for many of the projections. Why not just raise enough money to last the other variables a little further. a long time, like three or four years? Time and resources Outcomes Well, ignoring whether the startup could When I say time, I actually mean an Outcomes are discretely identifiable results be successful raising that much, the amount of time the money will last, or the startup hopes to achieve with their answer relates to the valuation they’re what is often referred to as runway. newly raised funds. How about acquiring a able to negotiate with investors. The amount of runway needed varies certain number of new customers to reach Let’s assume $10 million would fund a widely for each venture but usually the next meaningful revenue milestone, particular venture for four years. The gets longer with subsequent rounds of or significantly reducing your average cost question is, What sort of valuation can funding and later stages of evolution. to acquire a new customer? How about securing a strategic partnership that will the company earn at the time they raise The most obvious type of resource is provide significant leverage, or getting final that money? As you can see in the figure the one every founder obsesses about, approval on a patent filing? What about below, today’s valuation is mostly based additional headcount—regardless of launching a new product or entering a new on the state of the business today. If whether they are part-time or full-time. market? These are outcomes that reduce investors will only agree to a $5 million “If we only had two more developers, we the investor’s risk or increase their upside valuation, for example, the company would be in great shape.” In the same potential when the startup eventually exits. will experience significant dilution and category as headcount are contractors, immediately give control to the investors consultants, and various service The best way to understand the formula due to the amount of equity they will get. professionals like lawyers and accountants. is the way it is diagramed above, left to The amount of money raised compared What many early-stage startups don’t right. But the best way to actually go to the valuation they’re able to negotiate think about are things like increased about the exercise of figuring out how provides a check and balance. spending for marketing programs, much money to raise is to work backward, specialty tools, and software systems. starting with the desired outcomes. It is These are usually important resources that those future outcomes that the investors are also needed to advance the business. want the company to achieve and, therefore, the things they want to fund. For startups, time and resources are in Once the desired future outcomes are competition with each other. In other determined, the startup simply needs words, a startup could use all of the new to use their financial forecast model to funding to gain time, but that means determine the best combination of time not adding headcount to the team, and resources needed to generate the Because of this, the process of figuring not adding more contractors, and not outcomes. With this, they can determine out how much money to raise is often spending more on programs, tools, and how much funding is needed for that iterative. First, an uncontested look into the like. Instead, they could use all of combination of time and resources. the crystal allows the startup to figure

TexasCEOMagazine.com 25 out how much to raise in order to accomplish a desired set of Evolving from a bootstrapped startup to a funded one is a big outcomes. Next, a test-drive with investors helps inform whether and important transition. A startup might end up as a funded the valuation they’ll be able to negotiate derives reasonable one out of need or want. If they don’t need funding, then dilution or if they’ll need to adjust the amount, either up or they have alternatives. Most startups eventually need outside down. If they adjust the amount down, the significance of the funding and, once that happens, many things change. One of projected outcomes will also be adjusted down. That might cause those things is they get to accomplish more and grow faster, the round of funding to seem less exciting for investors, and an assuming they have a scalable business. But they will also adjustment may be necessary. These iterations continue until experience a change in accountability. No longer are they only the startup finds the right balance of outcomes and valuation. accountable to the founding team and other team members; they suddenly have to answer to their new investors, who Multiple rounds over time might have different interests, beliefs, and motivations than Now that you understand the basic formula and framework, they do. The more investors they take on over time, the more let’s project forward to see how multiple funding rounds tie varied those interests, beliefs, and motivations will be, and the together. As you can see in the figure below, with each round of more they’ll have to accommodate or negotiate with them. funding, the projected outcomes eventually become the state of the business in the future. That is what the company uses to gain Like many things in business, up-front time and effort spent the desired step-up in valuation for the next round of funding. on fundraising strategy can pay huge dividends later. It This cycle continues again and again until the company is either translates to increased odds of raising the right amount of self-sustaining or experiences an exit (acquisition or IPO). money to reach the next significant milestone for making another want-versus-need decision and generally controlling their destiny. Surely, they know things won’t play out exactly as planned, but that doesn’t relieve them from the obligation to start with a strategy. After that, they can do what every great entrepreneur does—adjust and adapt as necessary.

Iterations to fundraising strategy may also happen as you test-drive ideas and assumptions with investors before actually launching the fundraising campaign. That takes place during the planning phase of fundraising—and is the topic of my article in the next issue of Texas CEO Magazine.

Gordon Daugherty is a seasoned business executive, entrepreneur, startup advisor, investor, and the best-selling author of Startup Success: Funding the Early Stages of Your Venture. A proud native Texan, Daugherty graduated from Baylor University. He has vast experience with early-stage fundraising from both sides of the table, making more than 200 investments and raising more than $80 million in growth and as a company executive, fund manager, board director, and active advisor.

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26 Texas CEO Magazine Q1 2020 Improve Your PROFIT MARGIN Via...

• Process Automation • Platform Standardization • Digital Transformation • Data Analytics & Governance

Case studies on the aforementioned can be found at: ylconsulting.com/tx Feature Quick Questions WITH Mark7 Cuban We don’t need to introduce Mark Cuban, do we? Entrepreneur, investor, author, Texan, owner, Shark Tank star—you know the drill. We threw seven quick questions to Cuban. Let’s see what he had to say.

1. YOU HAVE THE RESOURCES TO LOCATE ANYWHERE IN THE WORLD. WHAT KEEPS YOU IN TEXAS? The people. The energy. The business climate. And of course my favorite basketball team.

2. WHAT DO YOU THINK CAUSED YOU TO GO DOWN THE ENTREPRENEURIAL PATH? My parents always encouraged me to try new things, and more importantly, they were insistent that if I wanted something, I had to find a way to earn the money for it. That pushed me in the direction of selling everything and anything a little kid could.

3. WHAT WERE THE FORMATIVE EXPERIENCES THAT DEVELOPED YOUR MANAGEMENT APPROACH? Lots of mistakes. Recognizing that if my vision wasn't aligned with those of my employees and customers, nothing works.

I have to add that management is a skill that requires constant / Shutterstock.com Hutchins Kathy developing. Managers have to be adaptive to what is happening— not just in their marketplace but also culturally. And they have to 5. YOU LOOK AT A LOT OF DEALS AND VISIT WITH A always learn from their mistakes. LOT OF ENTREPRENEURS. WHAT ARE YOU LOOKING FOR TO MAKE YOU THINK THEY WILL BE SUCCESSFUL? I want 4. WHILE THE MAVERICKS ARE A PRIVATE BUSINESS, THEY to see deals where my first reaction is “Why didn't I think of OPERATE VERY PUBLICLY. WHAT ADVICE DO YOU HAVE FOR that?” I want entrepreneurs who are agile. Always willing to CEOS WHO FIND THEMSELVES MOVING INTO THE PUBLIC learn. Always willing to sell. Always willing to connect with LIMELIGHT? There is nothing like running a sports team. For people and be nice. Nice is a very underrated skill. any other CEO that finds themselves moving into the limelight— or wishing to move into the limelight—develop relationships 6. IS THERE A PART OF BUSINESS YOU WISH YOU HAD with any and all media that impacts your industry. It could be a SPENT MORE TIME LEARNING ABOUT EARLY IN YOUR blogger and Instagram influencer or it could be a magazine. CAREER? Video editing. It would be fun to be able to whip up any video anytime, so I don't have to wait on others to get things done. Don’t wait for them to come to you. Go to them and let them know that your knowledge can help them create content and 7. IS THERE A NEXT ACT FOR MARK CUBAN, AND WHAT make them look better at their job. MIGHT IT BE? I haven’t had my first act yet. Stay tuned.

28 Texas CEO Magazine Q1 2020 [ENTREPRENEURSHIP] THESE ENTREPRENEURS ARE MAKING SAN ANTONIO Josh Ramos, Rick Narpaul, John Adams, and Beto Altamirano SAFER

Plenty of innovators have made our Josh Ramos the user through emergency non-critical lives more convenient, productive, and Founder & CEO, RMS Innovations first-aid care, whether it’s minimizing connected—but for some, the primary blood loss, stimulating breathing, or concern is making our lives safer. Josh Ramos usually begins his elevator mending wounds. The interface is visual Each of these four San Antonio pitch with a number: eight. As of 2019, and intuitive, meaning that even a pre- entrepreneurs developed a new way to Ramos explains, eight children in the US teen can offer on-the-spot, potentially keep people safe from preventable harm, are shot in their own home accidentally life-saving assistance. RubrixAiD uses at home, at work, or on the road. The every single day. Gunlocks may seem the latest and greatest technology on the world may still be a dangerous place, but the obvious solution, but they have their market, including artificial intelligence these Texans are making it a little less so. flaws. Many can be easily unlocked and machine learning, to accomplish this with the universal keys available at any feat in real time across any geographical Rick Narpaul Home Depot or Walmart. Some guns location. As it works to offer safety and can still be discharged with the lock Founder & CEO, Mach1 Services care to the public, the company has in place. And the traditional key or garnered significant attention, including Ever been stranded on the side of the road combination dial mechanism can prevent strategic partnerships and working thanks to a blown tire, a drained battery, the firearm owner from quickly using relationships with companies such as or an empty gas tank? Even if you have a the gun in an emergency situation. Google, T-Mobile, and Twilio. membership to AAA or other insurance, www.rubrixaid.com you still have to wait for someone to The Solution:Ramos’ solution is twofold. First, biometrics allow the owner to unlock dispatch help from a call center, which Beto Altamirano seemingly takes forever. When you’re in the spring-loaded mechanism in less than Cofounder & CEO, Cityflag that stressful situation with cars and trucks half a second by pressing their finger on speeding past you, you want help as soon the sensor. Second, the RMS gunlock uses Let’s say you see a pothole, an abandoned a dual-rod blocking mechanism, which as possible. car, vandalism, or any other unsafe area ensures that accidental firing doesn’t in your neighborhood. What’s your best The Solution: happen while the lock is engaged (setting option for getting it fixed? Most likely, Rick Narpaul describes Mach1 Services it apart from dangerous single-rod trigger it’s calling 311, having a drawn-out phone as “the Uber of roadside service.” With gunlock). When Ramos’ gunlock hits the conversation, and simply hoping that your the Mach1 app you can access roadside market soon, it will fit about 80 percent of local government is able to follow through. assistance dispatched automatically, rifles, shotguns, and handguns. connecting you to the closest service The Solution:As cofounder and CEO of provider that can help. This cuts down John Adams Cityflag (and one of Forbes’ “30 Under 30 your wait time and lets you track the help Founder & CEO, RubrixAiD Social Entrepreneurs”), Beto Altamirano that’s on the way in real time. The process is using mobile technology to open up For 60 years, since the inception of the is simple for service providers too: Receive the lines of communication between modern EMS and 911 phone system, the request, follow turn-by-turn directions, citizens and government—and get issues citizens have only had one major response and arrive at the driver in need. The service resolved quickly and more efficiently. With to crisis in their homes or in the street: is currently available in San Antonio, Cityflag’s 311SA mobile app, San Antonians call and wait. Most people—even trained Austin, Houston, Dallas/Fort Worth, and can instantly report issues in their ones—are not always mentally ready or Corpus Christi. neighborhood to the city. It’s a 15-second equipped to deal with injury as it happens. task rather than a 20-minute call. The app Next up for Mach1 is expansion across the EMS is not readily available on every street has already drawn 20,000 users, who have US and into more automotive services. corner, so time is a factor. Seconds count, generated over 40,000 requests. Bringing Users will soon be able to use the app so proper and immediate aid could make the agility of the tech world to bureaucratic to order a mobile mechanic to do oil the difference in saving limbs or life. and risk-averse government may not have changes, trip inspections, and lots more, been easy for Cityflag, but it’s now paying The Solution:For the first time in human right at their home or workplace. off in saved time, saved taxpayer dollars, history, RubrixAiD has developed and and increased civic involvement. www.mach1services.com manufactured an automated first-aid www.cityflag.co Download the iOS or Android app kit that helps users with medical care, anytime, anywhere. RubrixAiD walks

TexasCEOMagazine.com 29 Want to Work

from COWBOYS HQ? HERE’S YOUR CHANCE Feature

A CONVERSATION WITH JERRY JONES JR.

The have the most loyal fans in the NFL. We didn’t just make that up—an Emory University poll from last July proved it. In the 30-plus years since Jerry Jones bought the legendary franchise, he and his family have grown it into the most valuable sports property in the world.

Recently, we had the great privilege of chatting with Jerry Jones Jr., who serves as the Cowboys’ executive vice president and chief sales and marketing officer. He told us how his operation capitalizes on Cowboys fans’ legendary enthusiasm, especially through Formation, a new collaborative workspace in the team’s world headquarters. Formation opened its doors this past summer, offering open workspaces, dedicated desks, and private offices to individuals and entrepreneurs. Get a seat at Formation and you’ll not only hitch your business to the excitement of the Dallas Cowboys—you might find yourself in the lunch line next to an NFL legend.

The Dallas Cowboys World Headquarters at The Star has been open for a couple of years now. What was the process of building the headquarters like? When we built our stadium [AT&T Stadium in Arlington, Texas, completed in 2009], we were all asked what our biggest challenge was. In our minds, that challenge was meeting the expectations of our fans for what the home of the Dallas Cowboys should be. That was the approach that we took to build AT&T Stadium and create an experience for our fans.

Five years ago, when we got the opportunity with the City of Frisco to build The Star as the future headquarters of the Dallas Cowboys— business operations, training and practice facility, and a lot more— we wanted to create yet another way our fans could experience the Dallas Cowboys in ways they hadn’t before. We sat there really whiteboarding different ideas of what that might mean and how we could take advantage of the Dallas Cowboys brand.

At the time, we had more than 25 years of experience to draw from, things we had done with our sponsors, their customers, and our fans. It’s from those conversations that The Star evolved and became what it is today. The things we have done there are things we believe in 100 percent, things like the Omni Hotel, Cowboys Fit [the health and fitness center at The Star], Cowboys Club, and work we’ve done with Baylor Scott & White on health protection and injury prevention. Those ideas were all whiteboarded long before they came

Photos courtesy of Formation of courtesy Photos to fruition, using the concept of leveraging the Cowboys brand.

TexasCEOMagazine.com 31 Our approach, starting with Jerry at sports training facilities like we about not only what the experience for Sr., has always been to leverage the did when we were building the our fans was like, but how we could passion and excitement of the Dallas stadium. We looked for ideas all over ensure that our employees and our Cowboys. We’ve found we can use that the place. We studied corporations and football team had a great experience tradition, history, and brand affinity to their headquarters, places like Apple and as well. What setting could we give help sponsors like Pepsi, Ford, or the Google. We went and saw what some of them that would make them thrive? Miller Brewing Company. By leveraging our sponsors, like Ford Motor Company, the association with the Dallas Cowboys, were doing. In looking at those places, That really bled to the idea you really create an uneven playing we wanted to see how they treated of a coworking space, which then led field, and that’s what we’ve done here corporate environment and culture. into the development of Formation. The with Formation [the new collaborative In building The Star, we focused concept was picking up steam and a lot workspace]. Our family has always been on the atmosphere, the look and feel of of people were jumping into that industry, passionate about entrepreneurship and everything from the players’ cafeteria but we really didn’t look at it as coworking business and now, with Formation, we to business operations. We had to think as much as we looked at it as an have the chance to help foster success entrepreneurial membership club. What with everyone from entrepreneurs to does that mean? It means you have an CEOs of up-and-coming businesses. WE REALLY opportunity to leverage the Cowboys the DIDN’T LOOK very way that our family does. Formation My understanding is that really lets people tap into the history, Formation is already highly utilized, AT IT AS COWORKING the passion, and the excitement of the even though it’s only been open since Cowboys brand as well as the dynamic last August. How did that business come AS MUCH AS WE of a family-run operation. With about? It really grew out of our focus LOOKED AT IT AS AN Formation, we had a chance to let on the culture and environment at The people access those amenities and Star. As we were collecting ideas for ENTREPRENEURIAL take part in that very excitement of what we wanted our headquarters at MEMBERSHIP CLUB. being a part of the Cowboys family. The Star to be, we weren’t looking That’s what Formation represents.

32 Texas CEO Magazine Q1 2020 Feature

Now, with Formation, smaller operations talking about? What is it? TO THINK can get in on that and really benefit in But there are still a lot of uncharted the networking and relationship-building waters out there. We’ve had discussions THAT YOU’RE space—whether you’re an entrepreneur with high schools, with UILs, with GOING TO LUNCH AND just starting out on your own or a CEO school districts about this becoming a of a newly launched corporation. In fact, high school sport and a college sport RIGHT NEXT TO YOU IN our open workspaces are designed for that’s no different from rowing or LINE IS DAK PRESCOTT maximum flexibility and connectivity with lacrosse. We’re certainly staying others. We also provide many ongoing educated on it, we see the opportunity, OR JAYLON SMITH? opportunities for relationship-building and we’re putting a chip on the table if like weekly happy hours, monthly network you will, seeing what will transpire. THAT IS PRICELESS. huddles, a monthly series called “The Cowboys Way,” in which our front office The younger generations are following executives share professional insights, and it closely. When we first started periodic keynote addresses for members. discussing esports, my boy was 11 and What is the appeal for individuals or he definitely knew more about it than my companies that take advantage of That’s the opportunity Formation brother and I did—how you could watch Formation?Leveraging the Cowboys gives. If I were starting up a company and how influencers worked related to brand makes a big difference. It lets the and my name wasn’t Jerry Jones Jr., esports. It was a good education for us. guard down in a business dynamic. We’ve that’s where I’d be officing. It’d be the Your brand is obviously associated with done that very thing for the last 30 years best chance to get that uneven playing the Dallas metro area. What do you see by giving our business partners access field that I’ve been fortunate enough to happening there that has you excited to the brand. To me, that’s what we’re have throughout my business career. about business going forward? We all emphasizing with Formation. It’s why Another topic that’s come up a lot lately know the great environment that the state Formation is more of an entrepreneurial is esports. I know you’ve done some of Texas creates for corporations, not just club than a typical coworking space. partnering in that arena. Where do you in sport but in any industry. You see big Its connection to the Dallas Cowboys, see that going? ​It’s a really interesting corporations moving to Austin, you see The Star, and our family has allowed industry, especially with Complexity them moving into Dallas, you see them it to stand out from similar spaces and Gaming now headquartered here on our moving to North Dallas especially. Back provide a unique edge in business. campus. I’d say that right now it’s a really in 2013, we had to make the decision to broad-strokes term. When someone make a huge financial commitment here. Our headquarters at The Star is 400,000 says “esports,” they’re often being too square feet. The Dallas Cowboys are only general. Which part of esports are you As we sit today, we have over $1.5 billion in 70,000 of that square feet. What’s going on in the other 330,000? Those are companies like FM Global, Bank of America, Merrill Lynch. And we just announced Keurig Dr Pepper’s new 350,000-square-foot Texas headquarters adjacent to our building, on another side of the practice field. When those companies invite a client to come to have a discussion, they walk through the main entryway of the Dallas Cowboys headquarters. There are five trophies sitting there, five Super Bowl rings, a tribute to the Cowboys Ring of Honor. They feel like they’re visiting the Cowboys even though they’re going over to have a meeting at Merrill Lynch. Those companies have seen what a brand association with the Dallas Cowboys does for their business.

TexasCEOMagazine.com 33 invested into The Star development, have growth throughout, that becomes Formation is located next to more than and that’s with only two-thirds of it a real issue. But it’s also a good problem 30 restaurants and just steps from being developed. We still have 30- to have, because it creates a stimulus fitness, entertainment, and business plus acres of the 90 acres to go. in that area for thriving economics. innovations. Members also have special access to presales for select AT&T But you get comfort in seeing the growth These high costs for new construction are Stadium and Ford Center events, and of and Texas overall. There’s yet another reason why coworking is often unique members-only events created by no better place to do business right a good option for businesses. Formation, Dallas Cowboys staff with opportunities now. We felt that Frisco really was the for example, offers an elevated level of to hear from in-house experts. There heartbeat of all that when we made the hospitality and aesthetic that is truly are many other particularly unique commitment to bring The Star here, unmatched in this market. We’ve also membership perks, like professional and now we’re doing the same with seen firsthand how our workspaces are headshots from a team photographer, Formation. We’ve created an uneven well-liked by any level of professional— an on-site barista, notary services, lunch playing field with the Dallas Cowboys from an entrepreneur to a seasoned CEO. delivery from the team chef, and more. name and fostered an energy there And, better yet, Frisco is the ideal place to And secondly, as big as we have that has allowed businesses to thrive. be, as one of the fastest-growing suburbs grown, between my brother, We’ve also found that several of our in Texas and in the US overall. When my sister, myself, and of course members see Formation as the perfect you combine this with The Star campus Jerry Sr., we’re still a family-run, way to extend their business into the and Dallas Cowboys organization, there’s hands-on operation. In today’s growing north corridor of Dallas. truly no better place to do business. workplace, the more you look at your colleagues and employees as family ​With growth often come challenges. Are The workforce is probably the number- members, not just as tools to a bottom there any major challenges in the DFW one concern we hear from CEOs. How are line, the better culture you’ll have. area or Texas in general you think we we going to keep filling the pipeline with Because you ask—how would you should be leery of as we continue to workers? They’re hard to come by. manage them if they were your own experience this significant growth? Well, At Formation, one of the lures of the children, your own siblings, your own I can tell you one thing you see when workplace is how closely it is tied to parents? If you take that approach there’s growth everywhere, especially as the Dallas Cowboys organization. To of trying to invest in them and take we look at North Texas and the DFW area: think that you’re going to lunch and satisfaction in their growth and success— In the development phase, construction right next to you in line is Dak Prescott even if it ultimately means they leave for costs usually go a little higher than you or Jaylon Smith? That is priceless. a bigger opportunity somewhere else— had budgeted for, because there’s that It’s also all about the amenities. you ought to take pride in that. That’s kind of demand for contractors. When you our approach, and so far it’s working well.

34 Texas CEO Magazine Q1 2020 CEO Activism & THE CLOAK OF Social Responsibility

Bill Simon & Blaine McCormick, PhD

In August 2005, when ravaged to make this country and this earth an even better place for and the Gulf Coast, leaving unprecedented destruction and all of us: customers, associates, our children, and generations human misery in its wake, Walmart was one of the first unborn? What would that mean? Could we do it? Is this companies on the scene. Springing into action, the company consistent with our business model? What if the very things used its emergency management team and renowned logistics that many people criticize us for—our size and reach—became capabilities to bring relief efforts to ravaged parts of New a trusted friend and ally to all, just as it did in Katrina?” Orleans and Mississippi. Walmart representatives arrived on Using the experience with Katrina as a springboard, Lee the scene long before most government agencies could react. Scott led Walmart to take an active role in the environmental sustainability movement. Walmart, by most measures, has had In an October 2005 speech entitled “Twenty First Century a significant impact in moving sustainability to the mainstream Leadership,” then-Walmart CEO Lee Scott asked of his consciousness of the consumer. company, “What would it take for Walmart to be that company, at our best, all the time? What if we used our size and resources Taking a stand on something like Katrina, or even the

TexasCEOMagazine.com 35 environment, still allows a company to avoid some measure moves we ever made, and the six-dollar day wage is cheaper than of controversy. After all, who is opposed to hurricane relief? the five. How far this will go, we do not know.” In 1915, however, Further, the sustainability movement is seen favorably by most Ford would start taking controversial activist stances on how to end Americans. However, since Lee Scott moved Walmart into World War I, would run unsuccessfully for Senate in 1918, and in sustainability in 2005, CEOs have increasingly taken more the 1920s would publish anti-Semitic material in his newspaper, controversial positions on issues that historically have been off The Dearborn Independent. limits. We have seen Target take a position on gender identity and bathrooms, CVS on cigarettes, and more recently, Walmart CEOs are not the only activists in the business community, and Dick’s Sporting Goods on guns. though. Author Jeff Gramm contends that shareholder activism has been alive and well in the United States since Benjamin Though the issues may be new, American business leaders have Graham clashed with Northern Pipeline in 1927, pressuring been engaging in social issues for well over a century. In 1914, Ford the company to distribute excess cash to shareholders. Gramm Motor Company announced that it would pay a minimum wage of chronicles that history in his recent book, Dear Chairman. $5 per day—more than double the industry wage at the time—and Shareholder activists can be very pro-shareholder like Benjamin later reduced the workday from nine-hour shifts to eight-hour Graham or more pro-consumer like Ralph Nader, who grew shifts. Contemporaries praised founder Henry Ford as a great toward shareholder activism in his later years. Milton Friedman humanitarian, but Ford claimed that humanitarianism had nothing captured some of the history between activist shareholders to do with it. He was setting policies to attract and keep the best and activist CEOs in his now 50-year-old essay, “The Social possible workforce he could—and refused to frame his business Responsibility of Business Is to Increase Its Profits.” Specifically, decisions as socially responsible. In his memoir, My Life and Work, he noticed how corporate executives would raise wages “to be he explains, “The payment of high wages fortunately contributes a socially responsible business” when it was clearly in their to the low costs because the men become steadily more efficient on self-interest to raise wages to attract better talent and reduce account of being relieved of outside worries. The payment of five shrinkage or sabotage. He also observed that, more blatantly, dollars a day for an eight-hour day was one of the finest cost-cutting executives frame corporate donations as efforts to improve their

36 Texas CEO Magazine Q1 2020 Feature

A convoy of Walmart trucks waited to enter New Orleans on Sept. 1, 2005, after the city was battered by Hurricane Katrina. Government agencies said the massive storm taught them that big-box retailers need to be an integral part of hurricane preparation and relief efforts. Nicholas Kamm/AFP/Getty Images

communities rather than as self-interested gifts that maximize What would motivate CEOs and their respective companies to their tax deductions. In his essay, Friedman coined the term “the take controversial positions? Companies, especially publicly cloak of social responsibility” to describe how CEOs transform traded companies, live and die on quarterly and annual results. self-interested actions into exercises in social consciousness. A few percentage points on the top or bottom line can mean the creation or destruction of billions of dollars of value. Many of the So, CEOs taking positions on social issues and committing controversial issues that are in the public eye today reflect the corporate resources to support these positions is nothing split that exists in our country. The split is not only political—that new. The relationship between CEO and shareholders took is, Democratic or Republican—but also geographical: the two its most recent turn on August 19, 2019, when 181 CEOs coasts versus the vast middle. We see a bifurcation in our cities signed the Business Roundtable’s “Statement on the Purpose versus our rural areas, in our age demographics, and in our racial of a Corporation.” The statement posits that a company has makeup. Against this backdrop, taking a position on an issue stakeholders beyond its shareholders and that profit and return could have a massive impact on a company. Companies taking is not its only objective. This is an extreme departure from the positions on political issues (or politicians) can find themselves historical objective of a company: it has long been held that on the wrong side very quickly. Since World War II, the majority fiduciary duty to the shareholder is the driving factor in the party in Congress has changed seven times (even more if you count strategic objectives of a company. Some even argue that acting only one party controlling either the House or the Senate) and the on behalf of “stakeholders” who are not shareholders may presidency has changed parties nine times. If you are going to take violate that fiduciary responsibility. Yet at least one signatory a position, be sure it is one that you can stand on, because recent of the agreement has doubled down on its commitment to history has shown that political cycles are much shorter than social responsibility. Almost two months after the release of the business cycles. “Statement on the Purpose of a Corporation,” Amazon created a webpage outlining “Our Positions” on a wide variety of social Across two centuries of American business history and issues, including the minimum wage, climate change, and thousands of executives, CEO activism remains a relatively rare immigration. activity, with only a handful of CEOs—public or private—ever

TexasCEOMagazine.com 37 5 Things TO CONSIDER BEFORE TAKING AN ACTIVIST STANCE

Before jumping into the activist role, here are can flourish? Texas is such a place at present, but so was some things you should consider: Michigan at one time. Rather than becoming embroiled in social issues, you might consider speaking out on an economic issue 1. CEO activism remains a rare phenomenon. Despite lots that’s important to you or your business. Be mindful, however, of press to the contrary, CEO activism remains an exceptional that even seemingly benign topics can be met with resistance. activity. In 2018, researchers at the Stanford Graduate School Walmart’s recent efforts to encourage US manufacturing have of Business surveyed 3,544 CEOs and found that the vast been a contributor to the resurgence of US-based production. majority never go on the record regarding social or political issues Surprisingly, some critics accused Walmart of trying to minimize in a meaningful way. Only 12 percent of S&P 1500 company its reliance on Chinese imports. Others said that those were not CEOs engage in activism, and much of this activity was less the kind of jobs we wanted back in the US. Even when you think controversial (i.e., surprisingly mainstream) than headlines such everyone will be on board, activism will often result in criticism. as “The New CEO Activism” might suggest. And the Stanford researchers surveyed only publicly traded companies, not the far 4. Private ownership affords special freedoms. Founded in more numerous group of private businesses, where CEOs can 1972, Hobby Lobby had almost 200 stores when it initiated its more easily avoid publicity. So, if you’re not receiving outside policy of closing on Sundays in 1998. The company later noted pressure to engage in CEO activism, don’t let your internal team that it estimated $100 million in lost sales when it made the talk you into it without clear and compelling reasons. decision. Company leadership could have put on the “cloak of social responsibility” and stated that they did this for the sake 2. Potential backlash requires preparation. Activist executives of climate change (reduced energy usage and less car travel to go at least as far back in American history as Thomas McKenney their stores) or to take a stance against war (by promoting peace and John Jacob Astor’s differing views on Native Americans and and mindfulness among its workforce). But, largely because it the fur trade of the early 1800s. The difference today is the speed is a privately owned company, Hobby Lobby’s leadership felt at which social pressure can be brought to bear. Social media and comfortable clearly communicating that they implemented this the 24-hour news cycle have changed the model. CEOs almost policy for religious reasons—the least favorably regarded category immediately know when something has gone viral as tweets and of corporate activism according to the Stanford survey. Similarly, retweets begin to rain down in indescribable quantities. Protests, Chick-fil-A’s religion-based decision to stay closed on Sunday email campaigns, and boycotts can organize in an instant and would be very difficult if it were a public company. As a private have an impact not only on business but on organizational morale company, Chick-fil-A can make the decision to forgo its Sunday and dynamics. Several years ago, Target responded to internal earnings without pressure from shareholders. and external pressure and made an activist decision regarding the use of restrooms by transgender individuals. A boycott followed 5. The cloak of social responsibility increases the risk of swiftly and Target would spend $20 million to install private political capture. The objective of any CEO activism should be bathrooms in stores. Thankfully, CEO statements and company to take a position that benefits the corporation as well as society positions can also be disseminated in seconds, changing the as a whole. As Friedman pointed out, CEOs often don the cloak narrative instantly. Being prepared is key. The blade of corporate of social responsibility to earn public goodwill for decisions activism swings in both directions, but the speed at which it does that ultimately serve the interests of the business. These two can be dizzying. things can be very difficult to separate. Friedman would argue that when CEOs allow “social responsibility” to dominate 3. CEOs can advocate for state or national economic issues their decision making, the result is to “extend the scope of the instead. CEO activism is framed as a political activity, even political mechanism to every human activity”—meaning that the though it is far removed from the political decisions made by corporation becomes a tool for certain social interests and can executive, legislative, and judicial players in Texas or Washington, thus open itself to political influence. Why, for example, would DC. In fact, the Stanford survey intentionally disregarded CEO legislatures pass potentially controversial gun control legislation advocacy on matters such as trade negotiations, tariffs, and when they could pressure CEOs to take their preferred stances corporate tax rates. Yet these are the very things that CEOs can instead? CEOs can minimize the risk of political capture by using address far more effectively than political actors can. It’s almost the cloak sparingly and being up front about the benefits of this like asking CEOs to do the job of Congress and vice versa. Who is activity to their companies. speaking out to create economic environments where businesses

38 Texas CEO Magazine Q1 2020 Feature announcing a public position on a political matter. Though some like Harry Potter, US corporations live in a cupboard under headlines claim that CEOs are “breaking with tradition” and the stairs, are blamed for all manner of societal evils, and are taking stances on social issues, ours are not the first corporate often reminded of their status as guests. Note that the Business executives to assume the cloak of social responsibility. Roundtable’s “Statement on the Purpose of a Corporation” starts and ends with the hosts: “Americans” and “our country,” For years, Harry Potter was forced to live in a cupboard under respectively. Like Harry Potter’s invisibility cloak, the cloak of the stairs while his hosts blamed him for all manner of their social responsibility might prove useful from time to time when unhappiness. Along the way, he goes to wizarding school, troubles come—so use it as you must. However, our hope is hones some of his powers, and is given a Cloak of Invisibility. that US corporations remember that their true power remains Ultimately, he realizes that he’s a very powerful wizard who in generating long-term value for shareholders. The ultimate doesn’t really need a Cloak of Invisibility to succeed—though that statement a CEO can make is staying in business. cloak certainly proved useful on several occasions. Somewhat

Bill Simon is the former President and CEO of Walmart, US. He is currently a Senior Advisor with KKR and Executive in Residence at Baylor University.

Blaine McCormick is Chair of the Department of Management at the Hankamer School of Business at Baylor University.

4 APPROACHES TO CEO ACTIVISM ACTIVISM-INCLINED ACTIVISM-DISINCLINED

The Cloak of Social Maximize Long-Term PUBLIC Responsibility Shareholder Value (e.g., the 2019 Business (e.g., Apple during Steve COMPANY Roundtable statement) Jobs’ 1997–2011 tenure)

Engagement Strategy Separation Strategy PRIVATE (e.g., Patagonia and (e.g., Chick-fil-A and COMPANY environmental activism) LGBTQ+ issues)

Imagine a product that has an 18-month lifecycle and is constructed company, they clearly showed that they will separate business with many rare-earth (or “conflict”) metals. The product is not and political issues and not allow others to force their integration. easy to recycle given the complexity of its construction, and Though Cathy did dip his toe into activism, the company has the company continues to raise the price of newly introduced since modeled the Separation Strategy to distance itself from models. Further, the product’s company gives virtually no money criticism. At present, they have pretty much stayed focused to charitable causes. Its leadership states that it is the company’s on “food, service, and hospitality,” even as protests roiled product, not tax-deductible donations, that will make a difference restaurant openings throughout their expansion into Canada. in the world. You’ve probably guessed by now that this is Apple Computer and the iPhone during Steve Jobs’ tenure. During that Engagement Strategy: For decades, Patagonia has leveraged its time, Apple created billions upon billions of dollars of value for position as a private company to say and do things important shareholders by focusing on two fundamentals: making insanely to its founder, Yvon Chouinard. The company is clearer than great products and delighting customers. At his best, Ford took ever that “we’re in business to save our home planet.” In a a very similar approach, stating, “Most certainly business and recent interview, Chouinard even noted that when it comes charity cannot be combined; the purpose of a factory is to down to two candidates for a job, they hire the person most produce, and it ill serves the community in general unless it does committed to saving the planet. Fully engaging in social produce to the utmost of its capacity.” These are both examples activism has associated costs and benefits, but Patagonia of one approach to the issue of CEO activism: focus squarely on works hard to align company activities with its core values. maximizing long-term shareholder value while taking no substantive positions. This is just one of four places a CEO might find him- The Cloak of Social Responsibility: The 2019 Business Roundtable or herself on the above matrix. Let’s explore the other three: statement is a good recent example of the “cloak of social responsibility,” often worn to relieve political pressures or Separation Strategy: After navigating a period of intense criticism to transform self-interested activities into something that centered on founder S. Truett Cathy’s support for “traditional seems less shareholder-focused. CEOs of public companies marriage,” Chick-fil-A released this statement in July of 2012: can and have used the cloak in tough situations. CEOs might “We are a restaurant company focused on food, service, and find that it promotes both brand loyalty and employee loyalty hospitality; our intent is to leave the policy debate over same- but increases the risk of being captured by political actors. sex marriage to the government and political arena.” As a private

TexasCEOMagazine.com 39 [PERFORMANCE]

HOW BUSINESSES EXPERIENCE TEXAS

ATTEND SPONSOR GET INVOLVED OMNI FRISCO HOTEL AT THE STAR | SEPTEMBER 24, 2020

PRESENTING SPONSOR FOR TICKETS, ROOMS, AND MORE INFORMATION VISIT: YTEXAS.COM/SUMMIT [PERFORMANCE] DESIGNING HOW BUSINESSES EXPERIENCE TEXAS AN EFFECTIVE SALES PROMOTION Kirk Wakefield, PhD

LESSONS FROM ATTEND TEAM SPORTS MARKETING

When a fan buys a ticket to a professional sporting event, they What is the common denominator here? All but one of the items have learned to expect some form of promotion. This trend in this list (price discounts) add value to the experience. SPONSOR reflects a larger shift in the sports world, as promoters work to make the experience more entertaining rather than relying solely Bobbleheads, for example, give fans the opportunity to exhibit upon team performance to attract fans. Today, promoters are the passion they have for the team when they put them on on a continual search for the next big promotional idea and, so display at the office or at home. Giveaways can add value far, the most effective appears to be . . . bobbleheads. Seriously. to the experience as well. Fans prefer giveaways that are in some way related to the event (e.g., bats, gloves, and caps for GET INVOLVED Past and current research on the effects of single-game )2—this fuels the fantasy and feelings they associate promotions in finds that the following with the experience. Special events like concerts or celebrity have the strongest effects on attendance (in order): appearances, especially when combined with giveaways OMNI FRISCO HOTEL AT THE STAR | SEPTEMBER 24, 2020 or another event (e.g., a pre-game concert and post-game • Bobbleheads fireworks), also have great impact on the experience. • Combination of giveaway and special event The idea is to make promotional events truly memorable • Combination of two or more special events experiences that excite fans rather than just offering another PRESENTING SPONSOR FOR TICKETS, ROOMS, AND MORE INFORMATION VISIT: • Giveaway valued at $5 or more forgettable promotion. Assuming a brand sponsors the promotion, • Giveaway valued at less than $5 the extent to which the experience provokes strong internal (sensations, feelings, and thoughts) and behavioral responses • Price discounts determines the benefit to the brand.3 Not surprisingly, again, price YTEXAS.COM/SUMMIT • Single special event1 discounts come near last in the previous list, as the price cut offers only economic and no direct emotional or experiential benefits.

TexasCEOMagazine.com 41 The Characteristics of a Well-Designed Promotion assist in the process. For example, attendants could inquire Adding value is important to think about in designing any sales among new visitors, including non-Lexus owners who pay for promotion, whether for a sports event or not. But it’s only one of the valet, “May we exchange mobile phone numbers to make the factors to think about. Well-designed sales promotions have five certain we provide you with the best service possible? Here is characteristics, which you can remember with the acronym CASES: our number at the valet station. Check the box on the form if you want to hear about other great service offers from Lexus.” Clear target and objective Adds value Adding Real Value As you design your own sales promotions, remember that adding Simple value—the A in CASES—does not mean reducing prices. That said, Experiential the perception of value is in the eye of the beholder. Focus groups Sponsored or online panels can help you gauge fan or customer reactions before you spend valuable resources on ineffective promotions. The best way to see how this plays out is to look at an example. Sometimes sponsors and corporate salespeople come up with Lexus hits all the above points with a promotion offering Lexus ideas that might have made sense on the golf course or at dinner owners complimentary valet parking at Park in with perhaps one too many drinks, but ultimately don’t add value Arlington for all Texas Rangers home games. This promotion: to the experience. Too often these “creative” promotions have • has a clear target and objective; in this poor perceived value due to a variety of reasons, including low case to reinforce loyalty to its brand among payout odds and associated low payoff value. Take the time the Lexus owners who attend Rangers games. partnered with Arby’s. The promotion involved giving away small curly fries if (1) a player scored a triple- • adds value by offering a service perceived to be double, (2) fans printed out the box score from the paper, and worth the $30 charged all other car owners (but (3) then went to Arby’s to redeem. Fans waited over nine years does nothing to reduce perceived ticket value). until Greg “Curly Fries” Monroe recorded a triple-double. The • is simple to understand: “I give them my car point is that marketers must develop promotions that deliver before the game and I pick it up after the game.” certainty of positive outcomes and experiences at the event. • is experiential: “Wow, I can drop myself off at the gate and walk right into the game.” Crazy promotions such as this may add some entertainment value, • is clearly sponsored with prominent signage and but they do less to reinforce loyalty to the team and organization. Lexus uniformed attendants at drop-off and pickup. The promotions that add real value are typically experiential. Shirt giveaways for a “color-out,” with all fans wearing the home-team Over the years since initiating this popular promotion, Lexus colors, add value to the experience at the event. So do promotions has improved the process by requesting mobile phone numbers where sponsoring retailers offer tickets to team practices held via text and generating social media engagement, as well as at outside facilities (e.g., WNBA teams practicing at a college to connecting the promotion directly to the local Lexus dealer. generate interest), which add value in an experience all its own.

Ideally, a well-designed promotion should also include data The primary thing to remember about the sales promotion— capture. While it’s always desirable to collect customer contact and the lesson every CEO can take from sports promotions—is information (cell phones, , or social media), it is not that the strongest offers add value to the experience. You always feasible. There may be a trade-off between offering a want to help your customers create lasting memories they simple service and adding a complicating factor that aids data associate with your brand, not just give them a chance to pocket capture. Proper positioning of the data capture request can the money from a discount and forget about it forever.

Kirk Wakefield is the Edwin W. Streetman Professor of Retail Marketing and executive director of Sports Sponsorship & Sales at Baylor’s Hankamer School of Business. His research in retailing, covering more than two decades, focuses primarily upon sports psychology, team sports marketing, entertainment marketing, and fan and consumer response to pricing and promotional tools. He has conducted fan research in almost every venue in sports, including the NBA, NFL, MLB, MLS, NHL, and NASCAR. Wakefield is the author of Team Sports Marketing, now widely used in universities nationwide and available online at www.teamsportsmarketing.com.

1 Thomas C. Boyd and Timothy C. Krehbiel (2006), “An Analysis of the Effects of Specific Promotion Types on Attendance at Major League Baseball Games,” Mid-American Journal of Business, 21 (2), 21–32.

2Kirk L. Wakefield and Victoria Bush (1998), “Promoting Leisure Services: Economic and Emotional Aspects of Consumer Response,” Journal of Services Marketing, 12 (3), 209–222.

3Zarontonello & Schmitt (2013), “The Impact of Event Marketing on Brand Equity,” International Journal of Advertising, 32 (May), 255–280.

42 Texas CEO Magazine Q1 2020 THE [SELF-AWARENESS] NEGLECTEDKEY TO STRESS MANAGEMENT J. Michael Godfrey, PhD

Meet Nathaniel. Nate wants to be successful and respected at work but not lose himself, his family, or other things he values in the process. He’s hardworking and was very successful in his job. As a result, the board promoted him to CEO, which seemed glamorous to Nate, and he was sure it would bring money, prestige, power, and recognition. He looked forward to greater happiness and success.

Very soon, Nate found himself facing the realities of the job. He was paying less attention to his self-care and his family. He struggled to get everything done. After about 16 months in the new position, Nate was depressed, having panic attacks, and showing all the signs of burnout. He was irritable and impatient with his family, and angry more often than usual. He had headaches often, wasn’t sleeping, and had a IF YOU WANT TO cold he couldn’t shake. He had more trouble concentrating and paying attention than usual and he frequently lost MANAGE STRESS TO track of important things. He came to tears more quickly than typical for him. Disenchanted, he was not sure why YOUR ADVANTAGE, ESTABLISH it had to be this way. There ought to be a better way.

A SOLID FOUNDATION OF How Has It Been for You? How has being CEO been for you? Challenging and fulfilling? GROWING SELF-AWARENESS. Stressful?

TexasCEOMagazine.com 43 Who gave you the heads-up on the unrelenting stress of the to pay undivided attention to what you are experiencing in the CEO job—the demands of global business, the requirement moment, in the various aspects of your being—as objectively as to be “always on,” and the travel involved? How about the possible—and being open to new experiences of growth. Such frequent frustration, disappointment, irritation, overwhelm, attentiveness is a disciplined process that one must learn. As isolation, loneliness, and the effects of all this on your health awareness grows, you can take time to understand the source(s) and well-being? How about the pressure on your family life? of these experiences as well as their present and potential effect.

Do you recognize stress when it shows up in you? Do you A growing self-awareness can help you learn to recognize know the essentials of managing the stress of the job? signals of stress and appreciate them for what they are. Then you can choose a positive, helpful path of action. To Manage Stress, Increase Self-Awareness If you want to manage stress to your advantage, establish a If you are not self-aware, you can miss these signals. Then, stress solid foundation of growing self-awareness. All other stress can become unhealthy, leading to burnout, ineffectiveness, and management efforts are built on this foundation. Yet, many stress depression with accompanying low energy. If allowed to continue management techniques skip over self-awareness and treat only unmanaged, the stress can wreck your health and even kill you. symptoms. As a result, they do not yield long-term results. If you have been in the red zone of stress for a while now, you have likely come to accept it as a “new normal.” You may not be aware I work with people like Nate (and like you) in coaching of how far you have driven yourself up the distress ladder until it relationships to seriously affects your support their growth A GROWING SELF-AWARENESS health, relationships, in self-awareness and work and help them CAN HELP YOU LEARN TO effectiveness. Most manage the stress of people wait until the the CEO job. They RECOGNIZE SIGNALS OF STRESS AND train is completely learn to increase off the tracks their self-awareness, APPRECIATE THEM FOR WHAT THEY ARE. before thinking critically examine of getting help. their situation, and implement stress management strategies and techniques that help Stress Is Natural and Normal them put stress to work for their advantage. They come out on Stress is a natural and normal part of being human. You the other side with a clearer focus, a better pace of life, increasing need a little stress all the time to assist you in meeting the quality in their relationships, and ultimately, greater success. demands of life and work. But you can get too much of a good thing. Your brain does countless things without your Pay Attention to Your Whole Being conscious knowledge, and one of these is to trigger the The term self-awareness is most commonly used to refer to a stress reaction based on your unique version of reality.6 person’s awareness of their inner states and how those states express themselves, which is very important in leadership Your brain is always on alert, rapidly scanning the environment, and life. Some have suggested that self-awareness is “both a checking to see if you are safe or in danger and working to tool and a goal” and I agree that it is just that important and minimize danger and maximize reward. Five times per second, beneficial.1 “The ability to reflect on and accurately assess one’s life events trigger nonconscious emotions.7 As it scans your own behaviors and skills as they are manifested in workplace surroundings, the brain may predict that danger is present interactions” is a characteristic of high-performing managers, and “throw a switch,” so to speak, to prepare you to fight, run, according to the organizational psychologist Allan Church.2 And or hide. All of this happens outside your consciousness. self-awareness can improve your overall sense of well-being.3 When your brain throws the switch, your first awareness will Here, I am using a broader idea of self-awareness, one that be a feeling. Physically, you will feel it in your gut and your involves your whole being—physical, emotional, mental, chest, and through physical symptoms such as rapid heart rate spiritual. This type of self-awareness is foundational and elevated blood pressure. Emotionally, you will feel it as for the management of your stress, for improving your anger, fear, or frustration. These experiences can range from a persistence in distress,4 and for living and relating well. little discomfort to a full fight, flight, or freeze reaction.8 Once you have this conscious feeling, which is about half a second9 Helpful self-awareness is not neurotic rumination about an after the brain “throws the switch,” you are in a position to issue or getting stuck in the negative; that dynamic can lead choose how you will behave. You can let the fight-flight-freeze to greater anxiety and depression.5 Helpful self-awareness reaction run its course, or you can choose another behavior. involves getting to know yourself more deeply by taking time

44 Texas CEO Magazine Q1 2020 The brain sometimes makes good predictions that are helpful Cognitive Impairment and Stress and even lifesaving. In cases of physical threat, the fight-flight- When you are in a stressed, defensive posture (feeling freeze reaction is essential and must run its course if you are the urge to fight, run, or hide, which for some of us to react fast enough to escape danger. But the brain often is most of the time), your brain is channeling your makes bad predictions and erroneously prepares our bodies to mental and bodily resources away from critical thought, fight, run, or hide. Bad predictions can occur in interpersonal problem solving, and self-management. As a result: relationships, in various social settings and situations, and in response to other issues such as schedules, deadlines, • Your ability to concentrate, learn, think, hear, disagreements, and personality or style differences. In these communicate, and see problems clearly declines cases, the fight-flight-freeze reaction is not necessary, productive, dramatically. or helpful. It is better to engage your problem-solving abilities • A demand for certainty replaces curiosity and creativity. to make a different choice than fighting, running, or hiding. • Your perspective narrows. You tend to oversimplify, minimize, and neutralize problems, Stress Is Like Fever and you lose the big picture as a result. Just as you don’t choose to have a fever, you don’t choose • You look for a scapegoat to blame when things go wrong. to have stress. Your body produces it automatically when needed. It’s a signal, a symptom, showing that something Imagine how these things can affect your leadership, especially unusual is present—a perceived threat, something unfamiliar, in times of crisis. Fortunately, if you are growing in self- something that pushes the limits of your capacity. awareness, you will learn to recognize these symptoms of stress and choose better, more rational responses. As with fever, once you recognize your stress as a symptom, you don’t panic every time it happens. Instead, you can use this How to Improve Your Self-Awareness self-awareness to manage the situation with problem-solving • Practice mindfulness. To be mindful is to pay deep, skills, trying to get back to “normal.” In the future, you can avoid intentional attention to what’s going on in the moment, whatever precipitated your stress and hopefully prevent it. inside and around you. It means paying attention to But if your stress remains unchecked, it can become contagious, what’s going on in your mind (not just your brain)10— affecting not only you but also those around you—your to your thoughts, motives, defenses, emotions, physical spouse, children, colleagues, and others. Your stress can states, and how all of this might affect you and others. create distress for them as they witness your misery, dodge Increased reflection results in increased self-development. your defensive behavior, or catch the brunt of your fury.

TexasCEOMagazine.com 45 • Use reflection questions. • Be courageously honest with yourself, even o Reflect on your practice. At various times during if it’s painful. Celebrate the good. Correct the day, especially at the end, take time to think back thoughts and actions as required. through your interactions. Examine the beliefs you • Try keeping a journal of your thoughts and reflections. espouse compared to beliefs you act out, your thoughts, sensations, reactions, and emotions. Ask “what” and “how” questions to understand how these played out. o Reflect in your practice. Monitor the above aspects A FEW OF MY FAVORITE of your being while you are working and interacting REFLECTION QUESTIONS in real time. Present-tense versions of your end- of-day questions work well to guide real-time In any specific situation: reflection. Find questions for reflection here: • How else could I look at this? https://discoveryourtruecourse.com/ • What were my clear expectations? resources/questions_for_reflection. • What impact did my inner conversations have on • Exercise discipline. my effectiveness? o Throughout the day, take breaks and replace thoughts • How open am I to learning? of work with positive thoughts about something or someone you appreciate. Be grateful for them. • How stuck am I in my way of thinking? o Stay present during interactions with others. Pay • How true am I to my values? attention to what others say without judging them, • What triggered the emotions I experienced? letting your biases distort the message, or having • What positive impact did I have? an inner side conversation with yourself. Avoid jumping to quick conclusions, correcting, or trying to fix. Stay curious. Be open to new and unfamiliar ideas and ways of doing things. The CEO job is stressful, but that doesn’t mean you have o Practice behavioral agility, which is the ability to be constantly miserable. You don’t have to give up your to modulate your behavior, especially stress sense of self, your family, or the other things you value. behavior, to best serve a particular situation. Any solution for stress management, as I have outlined • Learn how others see you. above, always starts with self-awareness. As you build o Have conversations with others you trust to your self-awareness and lower your stress, remember see if your beliefs about yourself are accurate. that few of us, if any, can grow our self-awareness on our You may not feel comfortable opening up to your own. Once you find that trusted person or people to be coworkers, your board, or even at home. If so, your partner in building self-awareness—and to hold you get a coach, a counselor, or a trusted advisor. accountable for sticking to the process—you have taken the o If you think others may be guarded in their critical first step to managing stress in the long term. opinion, engage a third party to facilitate a qualitative 360° interview process.

J. Michael Godfrey, DMin, PhD, PCC, is the founder and president of True Course. He supports leaders to be more, see more, and achieve more that matters in their personal lives and professional lives, and helps them posture themselves to finish without regret. True Course supports executives as they lead their organizations to become places where people love to work, serve, and be customers. He is the author of Without Regret: Be More, See More, Achieve More that Matters and Put Stress to Work: Turning Headaches into Advantages. For more information visit DiscoverYourTrueCourse.com. Contact Dr. Godfrey at [email protected].

1 Fenigstein, A., Scheier, M. F., & Buss, A. H. (1975). “Public and Private Self-Consciousness: 5 Trapnell, P. D., & Campbell, J. D. (1999). “Private Self-Consciousness and the Five-Factor Model Assessment and Theory.” Journal of Consulting and Clinical Psychology, 43(4), 522–527. http:// of Personality: Distinguishing Rumination from Reflection.” Journal of Personality and Social dx.doi.org/10.1037/h0076760 Psychology, 76, 284–304. http://dx.doi.org/10.1037/0022-3514.76.2.284

2 Church, A. H. (1997). “Managerial Self-Awareness in High-Performing Individuals in 6 Barrett, L.F. (2017). How emotions are made: The secret life of the brain. : Houghton Organizations.” Journal of Applied Psychology, 82(2), 281–292. http://dx.doi.org/10.1037/0021– Mifflin Harcourt Publishing, p. –25 29 (Kindle Version). 9010.82.2.281 7 Gordon, E. (2016). The Brain Revolution: Know and Train New Brain Habits. Indianapolis: Dog 3 Kelly Richards, C. Campenni, and Janet Muse-Burke (2010) “Self-Care and Well-Being in Mental Ear Publishing, p. 11–12. Health Professionals: The Mediating Effects of Self-Awareness and Mindfulness.” Journal of 8 For more on stress symptoms see Godfrey, J. M. (2016). Put Stress to Work: Turning Headaches to Mental Health Counseling: July 2010, Vol. 32, No. 3, pp. 247–264. https://doi.org/10.17744/ advantages. Willmington, DE: Thomas Noble, chapter 3: How Stress Shows Up to Work, pp. 23—32. mehc.32.3.0n31v88304423806 9 Gordon, pp. 11–12. 4 Feldman, G., Dunn, E., Stemke, C., Bell, K., & Greeson, J. (2014). “Mindfulness and Rumination as Predictors of Persistence with a Distress Tolerance Task.” Personality and individual 10 Lisa Feldman Barrett suggests that the “mind” is “a computational moment within your differences, 56, 10.1016/j.paid.2013.08.040. doi:10.1016/j.paid.2013.08.040 constantly predicting brain.” Barrett, L.F. (2017). How Emotions are Made: The Secret Life of the Brain. New York: Houghton Mifflin Harcourt Publishing, p. 280 (Kindle Version).

46 Texas CEO Magazine Q1 2020 [SELF-AWARENESS] AND THE CEO How do we gain insight about ourselves when people are reluctant to tell us the truth?

A stranger approaching you in the street will in a second’s glance see you whole, size you up, place you in a way in which you cannot and never will, even though you have spent a lifetime with yourself . . . and therefore ought to know yourself best of all. —Walker Percy

Tasha Eurich, PhD

The saying that “feedback is a gift” is such a painful cliché that we often forget how true it really is. As leaders, we need not only the self-awareness that comes from looking inward—we also need what I call “external self-awareness.” That comes from turning our gaze outward to understand how we are seen. And no matter how hard we try, we simply cannot do this on our own. We need that gift of feedback from the people around us, whether it’s an employee, a board member, a CEO at a different organization, or even a total stranger. Unfortunately, though, learning how others see us is usually thwarted by one simple fact: even the people we’re closest to are reluctant to share such information.

We all need the “gift of feedback” for one simple reason: other people generally see us more objectively than we see ourselves. Psychologist Timothy Smith and his colleagues powerfully demonstrated this in a study with 300 married couples in which both partners were being tested for heart disease. They asked each participant to rate both their own and their partner’s levels of anger, hostility, and argumentativeness—all strong predictors of the illness—and found that people’s self-ratings were infinitely less accurate than those of their spouses. Another study asked more than 150 Navy officers and their subordinates to rate the officers’ leadership style, and found that only the subordinates could accurately assess their bosses’ performance and promotability.

WHETHER OR NOT WE RUN A MULTIBILLION-DOLLAR COMPANY, PROTECTING OUR FRAGILE EGOS BY DECIDING WE ARE RIGHT AND OTHERS ARE WRONG CAN BE RISKY. SELF-AWARENESS

TexasCEOMagazine.com 47 Three Actionable Strategies for Building Self-Awareness nearly instantaneously he noticed that something was different. Casual chatter had a habit of going silent whenever he entered the 360º THE RIGHT THE DINNER room. He was getting mostly good news and hardly any bad news. FEEDBACK FEEDBACK OF TRUTH PROCESS And his team was no longer inviting him to their social gatherings.

The most popular and All feedback is not Josh Misner, a professor Catmull didn’t like this very much. He didn’t feel like a different well-known method created equal: we have and a prominent member person than University of Utah Ed or New York Tech Ed. But he for soliciting feedback to choose the RIGHT of the Good Men in the business world— people, ask them the Project, recommends realized that his new role as The Boss, coupled with his increasing and worth every CEO’s RIGHT questions, a practice for gaining prominence in the academic community, had changed the way time as a tool for and use the RIGHT self-awareness in our people perceived him. He told me, “I recognized that, okay, this understanding how process to get valuable personal lives. they are perceived. information. is the way it is, and it will probably get worse over time.” The Invite a friend, family reluctance to speak up was presenting a giant obstacle not just in member, or mentor to a It’s not the “be-all, Find the “loving critics” his own performance, but to the collective self-awareness of his end-all,” though: the in your life—the people meal, and ask them the numeric outputs can who care about you but thing that bugs them team. Since then, Catmull has made it a top-tier priority to combat sometimes be difficult are willing to be brutally most about you. Tell this reluctance and seek the honest truth, not just about himself to interpret and put honest—and then ask them that anything is fair as a leader, but about the challenges and issues his company is into action. them specific questions game—and that you will to solicit real insight. listen with openness, not facing. And it has made quite a difference. He now says that one get defensive. of his core tenets is what he calls “leading by being self-aware.”

Developing external self-awareness becomes particularly critical, Whether or not we run a multibillion-dollar company, protecting yet infinitely more difficult, when you’re the boss, and especially our fragile egos by deciding we are right and others are wrong can when you’re the CEO. Studies show that self-aware leaders are be risky. Nevertheless, we fall back on the same old excuses. We tell more successful and promotable, and some research has even ourselves we’re doing fine and don’t really need the feedback. Or we shown that self-awareness is the single greatest predictor of tell ourselves that asking for feedback would be weak. Or, perhaps leadership success. The problem is, the higher up you are on the most understandable of all, we rely on the excuse that we just don’t corporate food chain, the less likely you are to be self-aware, an want to ask for feedback. After all, it’s scary and uncomfortable. affliction that’s been labeled “CEO Disease.” After all, who really wants to tell the boss that his management style is alienating The good news is that we can decide to pull our heads out of the sand people, or that her latest staffing choices are causing friction, and recognize that others’ opinions are just as important for insight or that his clients find him controlling? Complicating matters, as our own. The best leaders push through their fear, defensiveness, the overconfidence that results from past successes can make it and vulnerability and go for it anyway. As U.S. President Franklin challenging for leaders to hear and accept difficult feedback— Delano Roosevelt once opined, “Courage is not the absence of fear, and thus make their employees more reluctant to give it. but rather the assessment that something else is more important than fear.” In our case, that “something else” is insight. Pixar president Ed Catmull has witnessed this reluctance to speak truth to power firsthand. Years before he co-founded his company and became president of Disney Animation Studios, he was a young PhD student at the University of Utah’s nascent computer graphics Take the Insight Quiz program. He adored the comradery he had with his professors and Looking to get a high-level snapshot of your own fellow graduate students—there were no strict hierarchies, they worked self-awareness—and how it matches up with independently, and everyone generally got along. Catmull liked this how others see you? Take this 5-minute quiz, and environment so much that he created a similar structure in his first job out of school. As the head of a small computer animation research choose a friend to fill out the same survey for you. team at the New York Institute of Technology, he hired smart people, You’ll get the results when both sets of data are in! treated them as equals, and let them do their thing. As a result, they Access the quiz at www.Insight-Quiz.com. told him pretty much everything that was going on. He was involved in social activities and was basically one of the guys—it felt good.

But when Catmull was hired to lead Lucasfilm’s brand-new computer division, he realized that he’d need to rethink how he managed people. This article is adapted from Dr. Tasha Eurich’s book, Insight: The His new team would be bigger, better resourced, and have a much Surprising Truth About How Others See Us, How We See Ourselves, higher profile. To achieve George Lucas’s ambitious vision of bringing and Why the Answers Matter More Than We Think (Currency). An organizational psychologist and sought-after keynote speaker, Eurich computer technology to Hollywood, Catmull reasoned, he would need gives leaders around the world the tools they need to succeed in an ever- to adopt a more formal, hierarchical structure with a manager running changing world. Visit www.TashaEurich.com to learn more about her. each of the graphics, video, and audio groups. And when he did that,

48 Texas CEO Magazine Q1 2020 Early bird registration (until Jan 31, 2020): $299 Regular registration (after Jan 31, 2020): $399 Registration fee includes the reception Friday evening and lunch on Saturday.

Baylor University Executive MBA Program - Dallas Louise Herrington School of Nursing – Academic Building 333 N. Washington Ave, Dallas, TX 75246 Have questions? Email us at [email protected] and we’ll respond promptly.

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“The CEO seminar was a great experience because it gives you a chance to step back from your day-to-day and think strategically with the help of Joel Trammell. I learned tactics that I now put into action every day.” —Chuck Gordon, CEO, Storable; former CEO, SpareFoot

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As head of the entire organization, the CEO is expected to have a working knowledge of each functional area of the business. But as technology evolves at dizzying speeds, it’s not always easy to keep up. You may have thought, for example, that you understood marketing nomenclature, but now noticed that it’s getting harder to differentiate between a conversation with your CMO and your CIO. Let’s take a brief tour of some of the words and phrases your CMO is probably using these days—so you can have an informed conversation about how the marketing department fits into the strategic plan of your organization.

Martech(1) is the buzzword created to describe the combination (modeling and forecasting of what may happen in the future) of marketing activities with technology. Although traditional to arrive at recommended courses of action, especially methods of advertising and marketing (billboards, ads, radio, when combined with sophisticatedpropensity models(6). TV, sponsorships, direct mail, etc.) are still effective, the digital boom has paved the way for the development of a number of Machine learning (ML)(7) can also be used to automate sophisticated digital tools that provide a depth of insight for the multivariate testing by first performing a cluster analysis that savvy marketer. Mass marketing via standard approaches has groups variables before placing them into a multinomial logistic now been surpassed by digital marketing practices that allow for regression—essentially, a method of predicting probable outcomes highly targeted campaigns and detailed effectiveness reporting. given a certain set of variables. So instead of waiting weeks or months to see what actual customers do, the proper data analytics Integrating data analytics(2) with your internal customer data— techniques can tell you what they are most likely to do in minutes typically held in a customer relationship management (CRM) or seconds. Of course, the accuracy of the recommendations (3) database—and third-party data now gives you the ability to depends heavily on the accuracy of your internal data and (1) get a profile of your customer (what they buy, when they the stringency of your data governance(8) practices. buy, how much they are willing to pay) and (2) understand who is buying (demographics such as age, gender, income, Here are some other digital tools your CMO may be talking about: and education level); where they are buying from (geo- location), and what motivated them to buy (discount, incentive, IP Address Hyper-Targeting bundle, online content, testimonials/endorsements, etc.). Here’s a neat little development that came out around the 2016 election: IP address hyper-targeting. Every household that has In the past, marketers relied on laborious multivariate an connection has a unique IP address. The digital testing (MVT)(4) to gauge prospective customers’ reactions advertising tactic known as IP address hyper-targeting delivers to different offers, different content, and so on. Now, with personalized content to a website user’s mobile device or desktop prescriptive analytics(5), market testing has largely been based upon its physical location. IP targeting is better than automated. Prescriptive analytics uses both descriptive traditionalgeo-fencing (9) in that it targets specific households or analytics (data about the past) and predictive analytics businesses. So, for example, a political message can be directed

TexasCEOMagazine.com 51 toward a target audience’s IP addresses (based upon voter Competitor Monitoring addresses in a database) while avoiding those who don’t wish to Competitor monitoring and analysis can be an arduous see or hear it. It works by converting physical addresses into IP undertaking. In the past, sporadic information would addresses and then messaging to mobile devices and desktops come in from a number of sources. Sales may have known that use those IP addresses. Let’s say you run a B2B business something about a competitor’s pricing. Marketing may and are trying to win favor with a particular company; you can have snagged a competitor’s brochure at a trade show. determine their IP address and put your message in front of every Whatever was culled together told a patchy story at best. employee registered at that IP address when they go online. (For more about how this works, take a look at www.eltoro.com.) Today, with most of a company’s information online, competitive Converting Analytics into Directional Leads data can be gathered, organized, and presented more easily. Google Analytics can tell you a lot about how your Software platforms like WatchMyCompetitor.com can now pull website is received by the general public. It can tell you product information (pricing changes, launches, availability, the number of sessions you’ve had, the number of unique retiring products), marketing information (promotions, events, visitors, your bounce rate, your most popular pages, the website layout changes, banner changes, online ads), social average time spent on your website, etc. However, this media information (impactful posts and videos), and company information doesn’t directly convert into leads. information (personnel changes, restructuring, financial results, investor updates, new partners, new locations) and put all There are online sales intelligence tools that will allow you of it into a concise, personalized dashboard. In addition, the to uncover more about your anonymous website visitors and can help you turn Google information into directional leads. information is consistently updated, and you can set alerts for Tools like Leadfeeder integrate with both Google and LinkedIn strategic changes. You no longer have to be caught unaware. and take in IP address information to provide a customized dashboard that furnishes insights on who’s visiting your site. It’s worth every CEO’s time to learn the basic language, approaches, and tools of the modern CMO. Once you have a The lead dashboard will show you the names of the companies working knowledge of the latest developments in marketing associated with the IP addresses that are visiting your website technology, your conversations with your head of marketing (important for B2B companies). And, although it can’t tell you will be a lot less confusing—and significantly more productive. the exact individual who visited, it can tell you what they looked at, how long they looked, and on what date. Software can also provide, via integration with LinkedIn, a list of the company’s Tony Streeter is the Chief Marketing Officer, SVP, at Y&L Consulting Inc. in San Antonio, Texas. He has led new product development, employees, their titles, and their email addresses. So, let’s say ecommerce marketing, and integrated platform marketing initiatives someone from Company X spent six minutes looking at one for major companies such as Harland Clarke, Deluxe Corporation, of your services. You could infer that Company X may have a and RR Donnelley. Currently, Streeter leads marketing and branding initiatives for Y&L Consulting, a comprehensive IT services and need for that service. Next, you would go through the list of solutions company specializing in IT development, data analytics, company contacts and select the individual or department that emerging technologies, and help desk services. would most benefit from your service, then reach out to them. GLOSSARY (1) Martech - A portmanteau of marketing of multiple variables. Similar to A/B (7) Machine learning (ML) – A subset and technology, most often used to testing, but uses more than one variable to of artificial intelligence dealing with describe projects and campaigns that use arrive at the best combination of variables. computers’ ability to learn from data, technology to achieve marketing goals. recognize patterns, and adapt to new (5) Prescriptive analytics – A form of situations without human intervention. (2) Data analytics – The practice of examining analytics that makes prescriptions or raw data sets with the objective of identifying recommendations for future actions. While (8) Data governance – The management of patterns and arriving at conclusions. predictive analytics can model possible an enterprise’s data, including its integrity, future outcomes based on historical data, security, and the various rules that govern (3) Customer relationship management prescriptive analytics advises organizations how it is handled. (CRM) – Customer relationship on the best path to take. management (CRM) tools offer companies (9) Geo-fencing – The practice of using a system of record for storing data about (6) Propensity models – A tool for GPS or radio frequency identification and interactions with their future and forecasting customer behavior, involving (RFID) to create a boundary around a current customers. scoring likely future customer behaviors geographic area, then trigger responses numerically. A higher number means the when a device enters that area. (4) Multivariate testing (MVT) - A customer is more likely to engage in the technique for testing how prospects and behavior in question. customers react to different combinations

52 Texas CEO Magazine Q1 2020 THE SPORT OF

RELOCATIONEd Curtis

Anyone doing business in Texas knows that the competitive landscape is changing. Out-of-state-based businesses, from a wide array of industries, are looking to set up shop in Texas. According to the YTexas Relo Tracker, 2018 and 2019 brought over 50 corporate headquarter relocations into the Lone Star State. If you were to include corporate expansions, the number is well into the hundreds. Leading industries include technology, advanced manufacturing, consumer packaged goods, and professional service firms.

In recent years, another industry has emerged in the world of corporate relocation and expansion. It’s the sports industry. Here are six sports-related relocation and expansion projects that will shape the future of the Lone Star State.

PGA of America — You would think Palm Beach Gardens, Florida, would be the home of all things golf. Not so anymore. While still maintaining a presence in South Florida, the PGA of America is relocating its corporate headquarters to Frisco, Texas, after more than a half century of operation. That’s only the tip of the iceberg. The HQ will be part of a 600- acre mixed-used development that is projected to include two championship golf courses, a short course, Class AA office space, and a 500-room Omni resort, to include a 127,000-square- foot conference center and a whole lot more. Rumor has it there is a possibility that the PGA will bring a future Ryder Cup to Texas. Meanwhile, the PGA Championship is slated to be played at PGA Frisco in 2027 and 2034. Since the area hasn’t hosted a PGA Championship since 1963, that is a big deal. This relocation will create a ripple effect on the economy, creating a market ripe for vendors, suppliers, players, and residents close to the game of golf. The project will reside near US 380 and the Dallas North Tollway. When will we see this? Believe it or not, not in the too distant future. Could be as early as 2022—with the hotel and convention center not far behind.

“PGA Frisco is destined to become the future home of American golf,” said PGA chief operating officer Darrell Crall. “We are working collaboratively on every step, on roads and design, making sure we are all committing to the community and executing in a way that everyone can be proud of. Frisco is a perfect match for our corporate culture. The PGA of America is thrilled to bring our headquarters and championship golf to Northern Texas.”

TexasCEOMagazine.com 53 Austin FC — In 2021, Major League Soccer (MLS) will have a home in Austin. The Austin FC team will be the first top-division major sports team in the Austin area. Anthony Precourt, previous owner of the , brought Austin’s first major league team to the city in January of 2019, when he sealed a deal with the City of Austin to bring the 27th MLS club to the state capital. The club is building a new state-of-the-art soccer park and multi-use stadium for the team in a public/private partnership with the city at McKalla Place, near the Domain mixed-use development. The club will also build a $45 million training facility called St. David’s Performance Center in Northeast Austin, which will have four full-size soccer fields and first-class amenities for the club’s first team and academy teams. Both the stadium and St. David’s Performance Center are scheduled to open in 2021. For a town that falls short of a professional sports franchise, this is huge for Austin. Season tickets can still be reserved with a $50 refundable deposit at austinfc.com. Go get ’em.

Envy Gaming — Look no further than Dallas, Texas, for the next wave of esports teams sweeping the nation. , which moved to Dallas from Charlotte, North Carolina, in 2017, was recently named the eighth most valuable esports organization in the world. Envy acquired the Dallas franchise spot in 2018, launching its franchise. In 2019, Envy Gaming raised an additional $20 million in VC funding and also acquired the Dallas League team spot, which will debut the team in the 2020 competitive season. Esports has exploded in popularity in recent years, with fans filling arenas to watch players square off in popular multiplayer video game competitions. Envy Gaming will host seven home weekends of live esports competition in various stadiums across North Texas in 2020. It is estimated that there are over 50 million registered players of popular video games in the US, which creates a market for tremendous growth. For more information, visit Envy.gg.

United States Tennis Association Texas — If you’re a tennis fan in Texas, and that would include me, then get ready to make some trips to Central Texas. The United States Tennis Association (USTA) Texas is planning to relocate its headquarters to Cedar Park, Texas. The development project will bring around 40 outdoor and six to eight indoor courts and be part of a 150-acre mixed- use development. The new HQ will anchor a multibillion- dollar project (Indigo Ridge) that will encompass over five million square feet of mixed-use development, including dining, retail, and entertainment. The facility will be in earshot of the major Apple expansion and will be an added draw for more corporate relocations to the area. If this will look anything like the USTA HQ in Florida, we’re in for a real treat.

54 Texas CEO Magazine Q1 2020 Perfect Game — Nestled in the Austin suburb of Hutto, Texas, will be the largest baseball development the state has ever seen. -based scouting organization Perfect Game is partnering with the city and other investors to anchor an $800 million development in the City of Hutto. In addition to the baseball facilities, the new development will feature a 200,000-square-foot indoor sports and events center designed to seat 13,000, and a convention hotel. The organization is already talking with major sports franchises and universities about expanding opportunities for children to advance in the sport. Yes, the Field of Dreams will still remain in Iowa, but about 24 baseball fields used to train students of the game will soon be here in Central Texas. When will it be done? Some say as early as 2021.

Dallas Renegades and — If you are wondering if there is any more room for football in Texas, the answer is an astounding yes. The XFL, financed by the chairman and CEO of the WWE, Vince McMahon, chose two of the eight markets to launch in Texas. The two Texas teams join , , New York, St. Louis, Tampa Bay, and Washington, DC, as the league’s inaugural cities. Texas nemesis and former OU head coach is head coach for the Dallas Renegades, with much of the leadership coming from other Texas sports franchises, including the and Texas Rangers. The team will play its home games at Globe Life Park in Arlington, which is being repurposed as a football venue after its previous tenant, Major League Baseball’s Texas Rangers, relocates to the newly built . The Houston Roughnecks will be led by former SMU coach , with their games being held at TDECU stadium on the campus. The opening season, beginning on February 9, will have a 10-week season, with each team hosting five home-field games. What’s interesting is that the game will feature a few new, tested rules for a faster pace that should complete in under three hours. The league will draw from former college and NFL players, many of whom have talent to show the world. My analysis—the talent level will be top notch. Season tickets start as low as $20 per seat, and premium seats can be purchased for less than $100 at xflrenegades.com and xflroughnecks.com. You’ll definitely be seeing me at one of these games.

Sports bring a healthy sense of competition to our neighborhoods and build strong communities. With a growing population, ripe with future talent and a fan base eager for entertainment, sports will continue to expand in our great state. Will there be a new NFL team making it to Texas? Well, that may be a longshot. Only time will tell.

Ed Curtis is the founder and CEO of YTEXAS. He launched YTEXAS after 20 years in banking and private sector business, where he held various positions such as Market CEO, Chief Lending Officer, and Chief Executive Officer.

TexasCEOMagazine.com 55 LEGISLATIVE FOOTBALL, TEXAS-STYLE Craig Casselberry

56 Texas CEO Magazine Q1 2020 There’s an adage in football, now America’s favorite sport (at least if you believe the TV ratings), that winning comes down to the fundamentals. If you block and tackle properly, success will follow.

Members of the 86th Texas Legislature certainly did a lot of blocking and tackling. They filed more than 7,300 bills in 2019 and enacted over 1,400 into law, addressing some difficult issues and coming away with some big wins.

The “Big Three” in Texas state government—Governor Greg Abbott, Lt. Governor Dan Patrick, and House Speaker Dennis Bonnen, all Republicans—focused their legislative energies on fundamental policy issues like property tax relief and school finance reform, and largely avoided the more divisive social issues.

Why the newfound synergy? Look no further than the November 2018 elections; Republicans lost 12 House seats, two incumbent senators, and two incumbent congressmen, and other statewide elected officials survived closer-than-expected elections.

It was apparently enough to scare Republicans straight. What resulted was a more “moderated” leadership team and a Legislature that focused more on issues like taxes and education reform and less on social issues, as they had previously done with the so-called “bathroom bill.”

While it was pragmatic politics, let’s also give credit where credit is due—the 86th Legislature solved some longstanding, thorny issues. And, importantly to our state’s CEOs, they didn’t tread on the nation’s leading economy, which continues to create jobs in record numbers.

Highlights State Budget. House Bill 1 establishes a two-year balanced state budget (as required by the Texas Constitution) with $250.7 billion in overall spending. This is an increase of more than 16 percent over the prior biennium, made possible by a healthy Texas economy and growth in the energy sector.

Much of the new spending went to the top legislative priorities: $6.5 billion for public schools and $5.1 billion to “buy down” Texans’ property tax bills (more on that in a moment).

TexasCEOMagazine.com 57 The Legislature also authorized a record-breaking $6.1 billion State vs. Local Control. The revenue limitations in SB 2 and withdrawal from the Economic Stabilization Fund (or “Rainy HB 3 are fairly extreme examples of state preemption over local Day Fund”) for large-scale infrastructure projects and Hurricane control. On the other hand, cities were successful in defeating Harvey recovery. legislation that would have removed their ability to enact local ordinances requiring employers to provide paid sick leave or Economic Incentives. The Texas Enterprise Fund—the regulating short-term rental companies like Airbnb. governor’s “deal-closing” fund to attract large companies and their jobs—received a whopping $535 million boost. Texas Enterprise In November, Texans went to the polls and passed Proposition 6 Fund projects are centered largely in the big cities. Some will to fund the Cancer Prevention and Research Institute of Texas argue that rural Texas needs and deserves similar attention. (CPRIT) for another decade. Not only has CPRIT played a role in reducing cancer-related mortality; it has also spawned The Texas Film Incentive program, which had languished companies that create innovative technologies and related jobs. and lost pace with other states for the past several years, was Propositions 1 and 7 to fund infrastructure projects in areas increased to $50 million dollars. impacted by Hurricane Harvey were also approved by voters. Property Tax Reform. The Legislature (via Senate Bill 2) Legislative Interim barred cities, counties, and special districts from increasing Soon, Texas legislative interim committees will begin hearings property tax collections more than 3.5 percent in any year on issues expected to be debated in the 87th Legislature, without a vote of the public; school districts are capped at 2.5 including the impact of business taxes on job creation and the percent, a major reduction from the current cap of 8 percent. nation-leading Texas economy. School Finance Reform. The Legislature accomplished For example, the Senate Finance Committee will be examining something many insiders thought impossible—enacting business personal property taxes, among 20 total issues with wholesale school finance reform without a court mandate. varying impact on the business community. Where and how to The legislation provides a total of $11.6 billion in new state tax distribution of online purchases will also be examined. funding for public education: Chapter 313 of the Texas Economic Development Code—which allows for local property tax abatements to attract jobs—will also (i) $4.5 billion for a 20 percent general increase in be scrutinized in the interim year. per-student baseline funding, and targeted funding increases for pre-kindergarten programs, third-grade What’s Next? reading proficiency, and dyslexia; The 2020 elections will determine who controls the redrawing of legislative district lines (a.k.a. redistricting) when the 87th Texas (ii) $2 billion for an average salary increase of $4,000 for Legislature convenes in January 2021, so every competitive race teachers, librarians, nurses, and counselors; and will be hotly contested. Those elections will also influence the approach to a variety of issues important to the Texas business (iii) over $5 billion for “buying down” school districts’ community. maintenance and operation tax rates to provide taxpayer relief (an average of 8 cents per $100 If the economy continues to flourish and property tax bills stay property valuation in 2020 and an additional 5 cents at least level, expect the Legislature to stay close to its current per $100 property valuation in 2021). composition. But the state’s demographics are changing rapidly, with a growing Hispanic population and in-migration from more House Bill 3 will also provide future school tax relief by limiting liberal states that could change our politics—and our policy— local school property tax growth to 2.5 percent per year (absent faster than anticipated. voter approval). And because state government is increasing its share of public education funding from 38 percent to 45 Either way, these once-a-decade redistricting sessions have percent, it is decreasing the “Robin Hood” recapture payments always included fireworks. 2021 will be no exception. required from wealthy districts by $3.6 billion per biennium, or 47 percent overall.

Even with the passage SB 2 and HB 3, Texans are unlikely to see their property tax bills fall in absolute terms, as increasing home Craig Casselberry is founder and CEO of Quorum Public Affairs Inc. and values will continue to drive those bills upward. But the reform a 30-year veteran of Texas policy and politics. He is a former aide to two Texas governors and has provided government and public affairs services package should prevent the dramatic increases Texans have been to companies, issue coalitions, and economic developers since 1994. seeing in high-growth areas.

58 Texas CEO Magazine Q1 2020 GLOBAL FORECASTING LUNCH featuring Dr. George Friedman

DATE AND TIME ABOUT DR. FRIEDMAN Tue, February 11, 2020 Dr. George Friedman is an internationally 11:30 AM – 1:00 PM CST recognized geopolitical forecaster and strategist on international LOCATION affairs and the founder and chairman Baylor University’s of Geopolitical Futures. Executive MBA Campus Dr. Friedman is a New York Times best- 3107 Oak Creek Drive selling author. His most popular book, Austin, TX 78727 The Next 100 Years, is kept alive by the prescience of its predictions. Other best- selling books include Flashpoints: The ONE OF THE MOST IMPORTANT TASKS FOR Emerging Crisis in Europe, The Next Decade, A CEO IS PREDICTING THE FUTURE. JOIN US America’s Secret War, The Future of War, and The Intelligence Edge. His books have been FOR A LUNCH WITH EXPERT FORECASTER translated into more than 20 languages. DR. GEORGE FRIEDMAN. Dr. Friedman has briefed numerous ABOUT THIS EVENT military and government organizations What global and domestic events will affect markets that impact your in the United States and overseas business? How will you be prepared for these? How will you maneuver and appears regularly as an expert on to help your business survive and thrive? international affairs, foreign policy, and intelligence in major media. Your ability to predict the future and plan for it greatly impacts your business. To help you get the insights you need for success, Texas CEO Magazine and YTexas are hosting this exclusive lunch with Dr. George For almost 20 years before resigning Friedman. We invite you to join us as he forecasts the future and in May 2015, Dr. Friedman was answers your questions. CEO and then chairman of Stratfor, a company he founded in 1996. EVENT DETAILS This event will be held at the Baylor Executive MBA campus in north Austin. Friedman received his bachelor’s degree from the City College of the Parking is free and convenient, right outside the building. City University of New York and A gourmet lunch will be provided. holds a doctorate in government from Cornell University. Space is very limited, so book your tickets early!

TO GET YOUR TICKETS, VISIT TEXASCEOMAGAZINE.COM/FEB11

HOSTED BY:

SPONSORED BY: BUILDING A BRIGHTER FUTURE FOR CENTRAL TEXAS KIDS

A CONVERSATION WITH RICHARD TAGLE, CEO OF THE ANDY RODDICK FOUNDATION

For 20 years, the Andy Roddick Foundation has worked to give youth in low-income communities across Central Texas access to education and learning opportunities. Richard Tagle was born and raised in Manila and built his career in DC, but he’d only been to Texas twice when he accepted the job as the Andy Roddick Foundation’s CEO. Richard talked to us about his DC-to-Texas transition, the unique challenges of the nonprofit CEO, and how his passion for data gives him an edge—and, sometimes, gets him in trouble.

How did you get into this interesting position as a nonprofit CEO? I was born and raised in the Philippines, in Manila. I was groomed to be an investment banker because most of my aunts and uncles were in investment banking. But at 16, I left WHETHER YOU’RE the Philippines. I basically ran away. I love my family, but it was “This is the college to go to, this is the right course to take, A DEMOCRAT OR this is the right girl to date.” Those expectations weren’t what I wanted for myself. I was ready to get out and go see the world. REPUBLICAN IN AUSTIN, So I counted my Christmas money and my money from my summer job and got a one-way ticket from Manila to YOU’RE STILL OPEN-MINDED to see my grandmother. I asked her if I could stay there. She said, “You can’t run away from home and live with me. Dignify ABOUT THINGS. YOU STILL it. If you really want to see the world, then see the world.” CARE ABOUT WHAT HAPPENS So I moved to San Francisco. Later, in graduate school in Washington, DC, I shifted gears from finance to public IN YOUR NEIGHBORHOOD administration, then later on to social policy. I became more and more curious about how nonprofit organizations work and AND COMMUNITY. how communities change. Up until then, I had no idea what a nonprofit organization was or the role it played in civil society.

For my first foray in nonprofit work, I worked for the United States Conference of Mayors. I was 22, and I had to go to 88 of the poorest towns in the South to oversee the grants that USCM forwarded to them.

60 Texas CEO Magazine Q1 2020

IF WE CAN MAKE OUT-OF-SCHOOL The first is that we pay close attention to where the need is. It’s not about what LEARNING A POSITIVE EXPERIENCE we want to do; it’s about what we need to do. I’ll tell you a story. Andre Agassi, FOR YOUNG PEOPLE, THAT’S GOING TO BE Andy’s mentor, built a foundation focused on charter schools, and Andy wanted COPIED BY THE REST OF THE COUNTRY. to do the same thing. During that first board meeting I attended, Andy was When the Andy Roddick Foundation The second thing that surprised me was talking about this charter school. It just contacted me many years later, I had the level of diversity. Everybody was so happened that KIPP was right next lived in Washington, DC, for 27 years, telling me, “Oh, it’s not diverse. As a door to our donated space. I said, “Andy, doing educational lobbying, running a Filipino, you’re going to stand out.” But just look outside the window. There’s middle school academic program, and in my neighborhood, I live across from a charter school right there. Why build doing nonprofit consulting. I’d only been an Indian couple, two doors down is a something when you can just give money to Austin twice prior to coming here Chinese family, next door is a Korean to that one?” I used my newness as the for this job. It was March 2013 when family. It’s become more diverse in the chip. I told them I didn’t know Austin, but they showed me around. I remember past decade. I still go to places where that we should explore opportunities like it because everything was so green. I’m the only person of color. That still that. For the rest of 2013, we did nothing happens. But the diversity is becoming but talk to families and other foundations Right—you were probably picturing more pronounced, especially in more about their needs and where the gaps West Texas and tumbleweeds. That’s affordable pockets of Central Texas. were. That’s when we found out summer right. When I met with the staff and As we address housing affordability the board, I was really impressed—with learning was a great need, especially and as more companies move here, I them, with Andy, with the city. I said I in East Austin, and why we designed think that the diversity will increase. could move in summer, which probably our own summer learning program. was the wrong thing to say. When I Are there any special challenges working For afterschool, rather than just left the airport, it was 106 degrees. in nonprofit education in Texas?The duplicate programs, we spend hundreds burden on Texas is that we are actually We have a lot of companies moving to of thousands supporting other more diverse in some key ways. Texas. As someone who came here from organizations that are aligned with us. may have more kids—they have eight DC, what would you tell somebody who’s That’s how we scale kids’ opportunity million—but we have a bigger rural- thinking about relocating to Texas?I to be exposed to high-quality programs. urban divide, and our kids are speaking was surprised by the open-mindedness We bring these partners into the fold more languages. Thanks to our size, here. Prior to moving to Texas, I’d and expand our reach that way. whatever we do in this state is going to always had this understanding that be the barometer of what the country has Texas is conservative and Republican. The second thing is that we know how we Having lived in DC for 27 years, a town appetite for. So if we can make out-of- are making a difference. I’m the research that’s 98 percent Democrat, I really had school learning a positive experience guy. I want data. I want to see that the hesitation. “Am I going to fit in there?” for young people, that’s going to be needle is moving. We count everything copied by the rest of the country. We’re from the level of family engagement in But the number-one thing that surprised beginning to convene all of these folks our programs to how often the kids come me is, whether you’re a Democrat or and explore how we make sure that to our program on a daily basis. We can Republican in Austin, you’re still open- there is learning support for the 5.4 tell you our six-week retention rate during minded about things. You still care about million kids in our schools. We have the summer, our daily attendance rates, what happens in your neighborhood the second-largest school population in the academic skills we start with and and community. People really want the country. One of every 10 students the academic skills we end up with. We their schools to be great. They have in the country attend a Texas school. publish an annual report showing how our different ideas of what level of investment kids are doing in schools participating there should be, and how to make that When you talk to donors, how do you in our program in comparison to kids investment, but at the core of it, they convince them that making a donation who have the same profile but don’t really care about the children and the to the Andy Roddick Foundation is participate in our programs. The worthwhile? community. It’s the same for health, There’s a lot of good school district helps us with that. education, workforce development. I nonprofit organizations out there. But thought everybody here was like, “No I can tell you three things the Andy I was the same way when I was running government spending. No taxes. Nothing.” Roddick Foundation is set up to do. Higher Achievement. I raised $3.2

62 Texas CEO Magazine Q1 2020 probably true with McDonald’s and Coca-Cola, when you have the same product to manufacture, but as we grow as a nonprofit, there is also more personalized attention and time we’re adding. At my previous job, at Higher Achievement, we thought things would be cheaper if we went to multiple cities as fast as we could. We wouldn’t have to hire another CEO to run Nashville, another CEO to run Richmond. But I learned that if I’m based in Washington, DC, I couldn’t go to Nashville and raise money there. We needed to build the infrastructure that would facilitate relationships. You’re always seen as the DC guy coming here raising money for his program. The relationship aspect of this work is what makes it effective. Once a kid realizes I forgot his or her name, that breaks down that relationship. So you have to grow smartly.

What do you think about the role of technology in learning? Obviously, there was great hype around technology in million for a six-year randomized study Texas still don’t see the value of high- education a while back. Then we went that compared 500 kids who went into quality out-of-school programs. There’s through what Gartner calls the Trough of our program and 500 who couldn’t get a notion that schools can do everything. Disillusionment. Then we came out the into our program. Half the parents in DC But children spend just 20 percent of other end with things like Khan Academy. loved me because their kids got in, but their waking day in school, and the data Technology is never a silver bullet, but the other half hated me. But now we have shows that children who have extra there are times when technology attracts data to tell you that the program produces learning support outside school do students’ curiosity. You can use that when results. The US Department of Education better. Yet a lot of people are hesitant it’s appropriate. A teacher can use a video uses that as the flagship research for to invest in afterschool programs. to attract students’ attention and curiosity the value of academic programs after “Why are we having reading mentors as they learn coding, for example. And school. Those parents are probably still come at three o’clock? Shouldn’t we you can have a laptop in front of you mad at me, but seven million other have done that during school time?” to follow the instructions right there. kids will benefit from that research. We want to change that way of thinking. When you’re talking about art and The third thing would be our commitment One teacher in a class of 28 students creativity, you can use technology, but to continuous improvement. We use can’t respond to 28 different learning sometimes a kid banging an African the data to improve: We do one thing styles, so you do need community drum is just as important. So to me, in the first school, learn how we can resources outside of school to facilitate the key to technology is knowing make that more efficient in the second that kind of learning support. Now, I’m when it’s the most appropriate and school, then even more so in the third not saying that out-of-school time should when it will spark curiosity. school. If people share their resources replace schools, but many students with us, they can trust it will address need that personalized attention. I know you’ve focused on East Austin, but real needs, that we will track the data, Schools can’t have volunteer teachers, what do you see the foundation’s scope and that we will use it to continue but our program can have volunteer being like in five years?We started with our efficiency and effectiveness. mentors to work with those kids. East Austin because of the opportunity gap that still exists there. But we’re in What were some of your aha moments on The other counterintuitive thing I learned the middle of a strategic plan to double this journey as a nonprofit leader? Well, is that operations doesn’t necessarily the number of students we serve directly. one is that a lot of people throughout get cheaper the more you grow. That’s I want to see all 11,800 kids in East

TexasCEOMagazine.com 63 I OFTEN HAVE MEETINGS WITH The second week we had a chef from HIM WHERE I SAY, “WHAT DO Hilton teach the kids how to make sushi. This time Raul starts thinking YOU THINK?” HE LOOKS AT ME AND SAYS, he might want to be a chef. He asks me if chefs make a lot of money, and if he “YOU’RE THE CEO—YOU TELL ME.” can be an architect and a chef. “The world’s your oyster,” I told him. Then Austin thinking about going to college the West Side and two on the East Side. the third week we built solar-powered or being ready for college regardless of Everyone was going where it was easiest, cars out of matchboxes and reflectors. their family’s income or background. not necessarily where it was needed. Now Raul wants to design cars.

For the past 20 years, the foundation Most athletes wait until the end of their I said, “You know, you can be has been a philanthropic grant-making career to start a foundation. But Andy anything—you just need to focus. What institution. When I started, Andy told started very early in his career. He and I are your math grades right now?” me he wanted the foundation to really have talked about this several times. He be embedded into the community, so had a conversation with Andre Agassi He said, “Oh man, I hate that subject.” people know we’re not going away. that I think really opened his eyes to how People were always telling us that much time he’d need to figure things I told him, “If you want to be an architect, they didn’t like working with outside out. Andy is very much the keeper of the you need math. If you want to be a chef, organizations because they would vision, but I often have meetings with you need math. You need to know the leave when they ran out of money. The him where I say, “What do you think?” difference between two ounces and two principals would have to explain to He looks at me and says, “You’re the and a half ounces. All these people, they the kids, “Oh, you’re not going to have CEO—you tell me.” One of the things he’s have high-paying jobs because they did that reading program anymore.” Andy learned is to ask the right questions. their math homework and all that stuff.” told me he wanted to assure kids that we will be there for the long haul. I also give Andy a lot of credit for creating Raul’s family certainly couldn’t afford an inquisitive board that doesn’t just a math tutor. But we actually funded That’s a great goal. Besides taking rubber-stamp everything. They ask the an afterschool STEM program in his fundraising to the next level, what are right questions: “Why is that the strategy school, so he started in that. That kind of the other bottlenecks to your growth to get us there as opposed to alternatives?” interaction with that second grader to me and success? It’s very hard to find staff. “Why this school and not this school?” is why I do this. Raul and I were able to I have a great team, but as we grow, It’s a lot of very smart people, including explore different futures, different worlds, it’s harder to find the combination of our staff, asking questions of each other. different things that he would never passion and brains and wit and ability I could probably write a case study on have imagined, especially in a subject he to relate to people. It’s tough to entice every board discussion we’ve ever had. hated so much. Now he’s embracing it. those great people to work in the nonprofit sector rather than the for- How big is the board? The board is 15 If that kind of curiosity is being sparked profit sector with its higher salaries people. We just recruited three new in each and every one of these kids in and sometimes greater benefits. board members. Now half are women East Austin, it’s going to be one of the and 30 percent are people of color. most promising neighborhoods. A lot I think the other challenge is how We have very broad perspectives, of people think you need to move away competitive the nonprofit sector is. And different business backgrounds. from your neighborhood in order to I say this as a sharer of resources with get a bright future. When I first spoke other nonprofits. In Central Texas, I Do you ever work directly with the with the board, I said, “This is one of think there’s a nonprofit for every seven kids? What’s that like? I do. In 2015, I those things I want to demystify,” this people. It’s seen as a zero-sum game. mentored four second-grade boys. One idea that you have to move out of a My number-one pet peeve is when boy, Raul, didn’t know what he wanted poor community to have a better life. organizations don’t collaborate. Not to be when he grew up. The first week just in sharing resources but also in we had architects come and teach them I want them to experience growing up addressing challenges, and strategies that how to build the wonders of the world in in East Austin as something positive, can overcome those challenges. When Asia—Taj Mahal, Great Wall of China. As as a community that gave them all we don’t all work together to figure out we were cutting cardboard and learning the tools they needed. Then they how to serve these kids, we end up, as proportion, Raul goes, “Mr. Richard, might stick around and, in that same we did in 2013, with 127 programs on I think I want to be an architect.” community, raise their family.

64 Texas CEO Magazine Q1 2020 WHAT HAS ANDY RODDICK LEARNED

SINCE STARTING HIS FOUNDATION? Andy Roddick founded his namesake foundation at a remarkably young age—when he was just 18 years old. Today, the foundation gives low-income children in Central Texas opportunities to discover their passion—whether it’s sports, solar power, or sushi—by maximizing their out-of-school time. We asked Roddick a few questions about what it was like to start and grow this one-of-a-kind charitable endeavor.

What moved you to start the Andy Roddick Foundation so What kinds of activities do kids do in ARF programs?We early in your career? On a plane ride beside Andre Agassi, I expose them to a variety of learning activities—academics, asked him what his biggest regret was, and he told that he STEM, arts, enrichment, sports, and fitness. Our idea is should have started his foundation sooner. That got me into that you present young people with a variety of programs thinking about how I wanted to make a difference. It also and activities so they can discover what they are passionate got me thinking about setting up my foundation so I didn’t about. They code, they learn cricket, they build solar-powered say the same thing when I was asked the same question. cars, they write their own comic books and draw their own superheroes, they learn how to make sushi from a five-star What’s the primary way ARF is changing kids’ lives today? chef, they learn about opera, 3-D printing, African drumming— We look at the time when kids are not in school and we and all of these activities are provided in a learning-centered, use that to make a difference. We provide high-quality engaging way, so they get to discover what excites them. out-of-school-time learning programs and opportunities. The lack of access to these opportunities contributes What is your current involvement with the foundation a great deal to the achievement gap between affluent like? I chair the board and I make sure we have a dynamic students and students in low-income communities. Poor board that guides my thinking. We have an excellent staff students often lag behind because of the absence of quality that oversees the operations and the programs on a daily out-of-school-time support or lack of access to it. basis, but I ask a lot of questions. One good thing I did

TexasCEOMagazine.com 65 was to surround myself with people smarter than me about and other programs we supported with funding and quality operations, programs, and running a nonprofit. Our board assistance. We see the impact. We are becoming one of the go-to is very strategic in its thinking, and our staff knows the best leaders in the field when it comes to quality, and as such we are practices out there. We did win the Excellence in Summer helping other programs also reach that level of high quality. Learning Award from the New York Life Foundation and the National Summer Learning Association this year, after all. Have you found that any skills translate from the tennis court to successfully overseeing a charitable organization?Just How has the foundation changed in the years since you founded like playing tennis, running the foundation requires focus. it? What surprised you most about its evolution?When we first I can’t just do it by ear or by winging it. It requires strategy, started, we did a lot of good things in a bad way, meaning all we assessment, calculations for improvement. It needs to be very did was act as a pass-through. We raised money and distributed it intentional. In tennis though, when I do it right, I win. When to a lot of worthy causes. But beyond that, little impact was seen. the foundation does it right, a whole community wins. Now, we piloted our program in 2014 with 78 students in one school and we really focused on providing quality programming, Any advice for people who are considering starting their being strict about what outcomes we wanted to generate, and own foundation?No matter what the cause or mission is, how we generate them. We wanted to be intentional about the you have to be focused on what kind of difference you want results we wanted them. Almost six years later, in 2019, we to make. There are many ways to get there, but if you don’t had benefited over 7,000 students through our own programs know what your North Star is, it will be difficult to reach it.

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JASON LAKE, Think esports is just a bunch of kids playing video games? Think FOUNDER AND CEO again. In 2020, competitive video gaming is a billion-dollar industry, and Jason Lake of Complexity Gaming is in the vanguard. OF COMPLEXITY Complexity, founded in 2003, was acquired by Jerry Jones and GAMING, ON THE John Goff in 2017 and since then has relocated to Cowboys HQ and EXPONENTIAL rebranded to align with the franchise.

GROWTH AND Lake likes to describe his work in the esports industry as “building SKY-HIGH FUTURE skyscrapers,” edifices that take considerable time and effort to build, OF COMPETITIVE but that generate returns for generations. If you’re unfamiliar with VIDEO GAMING the whole “esports thing,” read on for a crash course—and to find out why every business leader should be paying attention.

68 Texas CEO Magazine Q1 2020 bk5gunoajn5etyhnlntacm4c0wqx 2,048×1,365 pixels.pdf Saved to Dropbox • Dec 3, 2019 at 8J57 AM THE ESPORTS INDUSTRY IS VALUED caught fire in Europe before it really started to grow in the US. If you had to pick one market that’s probably going to be the AT ABOUT $1.1 BILLION world’s largest over the next decade, that would be China. WITH EXPECTATIONS OF IT You’ve recently associated with a major sports franchise in the Dallas Cowboys. Tell me what that’s been like. It’s been fantastic. REACHING PROBABLY $1.8 Complexity was acquired by Jerry Jones and John Goff in 2017. We’re really one of the first ever esports teams to truly be OR $2 BILLION BY 2022. integrated with a sister traditional sports team. Both Complexity and the Cowboys are headquartered at The Star in Frisco, How did you get into esports to start with? I grew up as a Texas, and that enables us to have seamless coordination and football player who was also a video game player. Back in the integration with that organization. We work with the legal team, 1980s, that was kind of a unique thing. You were either a jock the marketing team, the accountants, the social media team, the or a nerd. But I was a bit of both. I discovered esports around coaches, the health and welfare departments, and the charity 2002 and saw that competitive video gaming was a thing, and it departments of the Cowboys. We’re really quite integrated across was the perfect synergy for me. I founded Complexity 16 years the operations. We have a gaming zone in AT&T Stadium. We set ago, in 2003, so I’ve been in esports since the beginning. up a gaming trailer at training camp out in Oxnard, California, for the players. Players come through our new headquarters How do you think about esports? How do you see it fitting into quite often and pick up a hoodie and play video games with us. the current landscape? Esports is essentially competitive video So I think we’re by far the esports team that’s most integrated gaming. It takes the form of organized multiplayer video game with a traditional sports franchise anywhere in the world. competitions between professional players. All esports are video games but not all video games are esports. So the age-old debate Obviously we’ve had esports for a long time, as you mentioned. has been: “Is this activity a sport?” Personally, I’m not really What do you think is driving the dramatic growth in the last few super interested in that debate. Any time there’s an activity that years? Great question. The exponential growth really started billions of people around the world enjoy, there’s going to be a with the rise of , which is a streaming platform that certain percentage of those people who like to watch excellence enabled anyone to turn on their mobile device or computer in that activity. Esports is no different. Video games have and watch these events live from anywhere in the world. Once become ubiquitous to virtually all cultures around the world, so that took off and the viewership data was filtering in, we saw watching excellence in those games is the natural progression. an influx of investor cash, which really propelled the industry to a much larger level than it was just five years ago. That I think a lot of our CEOs would be surprised about the size exponential growth makes this sector one of the more interesting and scope of the esports market and the amount of money of any sports entertainment product anywhere in the world. involved. Esports is growing quite rapidly. Currently, it’s estimated there’s over 450 million active global fans of As the world changes and young people become more esports. Seventy-nine percent of those are under the age of sophisticated with what ads they want to consume and what 35. Some estimates have that number ballooning to over 600 activities they’ve chosen to spend their discretionary income million globally in the next couple of years. As far as dollar on, gaming time and time again tops those lists. As advertisers signs, the esports industry is valued at about $1.1 billion and marketers have a harder and harder time reaching new with expectations of it reaching probably $1.8 or $2 billion generations through traditional methods of marketing, many of by 2022. It’s becoming quite mainstream in the digital era, them have found esports to be a quite compelling way to do that. due to the evolution of technology and the growing consumer preference toward new forms of competitive events. Is there anything particular about Texas that is hot for esports? Definitely. Dallas is arguably the second-hottest city for We see traditional rock stars like Post Malone doing different esports in North America next to Los Angeles. For us, the activations with esports teams. You see a cross-collaboration partnership with the Cowboys makes Texas the perfect place. with a lot of notable athletes who all grew up playing There’s so many synergies. Complexity is able to leverage the video games and admire their professional counterparts existing brand partnerships of the Cowboys and to create a in the esports world. You see influencers like Ninja going mutually beneficial relationship. We’ve signed top endemic on Jimmy Fallon regularly. I think esports is becoming brands [which sell products used directly in esports, such ingrained into the sports and media and entertainment as gaming equipment and energy drinks] and non-endemic culture all around the world. It’s fascinating to be a part of. brands like MillerCoors, GameStop, Baylor Scott & White, Mamba Sports Academy, and others—and we couldn’t have Is the US the leading esports market or are there bigger ones? done that as quickly without the support of the Dallas Cowboys Esports was originally founded in the Korean market, then across the street. There are other organizations that have

TexasCEOMagazine.com 69 ANYONE WHO franchises like Complexity are going to experience similar OVERLOOKS ESPORTS fandom and international stardom to the Dallas Cowboys, the , the . It’s a digital OR DERIDES IT AS SILLY VIDEO sport for a digital era. As we look around ourselves, we have supercomputers in our pockets and electric cars that drive GAMES FOR YOUNG PEOPLE themselves. Esports are part of that transformation.

IS REALLY MISSING THE I think anyone who overlooks esports or derides it as silly video games for young people is really missing the trajectory of the TRAJECTORY OF THE FUTURE. future. I like to say, like Gretzky, that you want to skate to where the puck is going, not to where the puck is. If you’re taking a relocated to Dallas as well, and there’s an esports stadium good look, in the entertainment and sports worlds, it’s pretty out in Arlington. I think Texas is going to continue to be a obvious to all observers that the puck is moving toward esports. very critical place as American esports start to grow out. Is the biggest misconception about esports that it’s just a bunch Not a whole lot of people necessarily remember this, but of kids playing video games? Yeah. The age-old perception by Western esports was actually born in Dallas back in the early people who don’t educate themselves is that all esports players 2000s. There were a couple of events a year, QuakeCon and and fans are 25-year-old boys living in their parents’ basements, CPL, and from all around the world would fly to Dallas with very unhealthy lifestyles and no social lives. Nothing and compete. That was in a way the birth of Western esports. could be further from the truth. Many of our professionals So it’s pretty appropriate that all these years later, Dallas is were all-state sports athletes when they were in high school. once again a leading center for esports growth in America. Our entire narrative and mission moving forward is centered around the health and welfare and performance of our gamers. Most of us who have kids, we’ve learned the traditional sports ritual—the twice-a-week practices, the games on Our gamers live in luxury apartments about a mile from Saturday, etc. Is the same sort of thing developing in esports? where I’m sitting. They have breakfast and lunch five days Are there local clubs that kids get involved in? There are. a week at the Dallas Cowboys training table, which is the First of all, esports is really an umbrella term. Complexity, same place the players get their nutrition. They have free for example, fields gamers in ten different games right now. memberships to the Cowboys Fit gym here on the property. Where the Dallas Cowboys play just football, Complexity is They have physicals and preventative medical care at the in multiple games [such as Counter-Strike: Global Offensive, Baylor Scott & White sports therapy hospital, also on the Call of Duty, Madden, and Fortnite], similar to how a property. Then they have the opportunity to come over and university is in multiple sports year-round. Each game has train in what is probably the world’s best headquarters. its own ecosystem, with its own fan base and player base. When most people come to visit us, I think they expect to walk Generally speaking, one of the more interesting things into a room with a lot of computers and some neon lights. we’ve seen over the past 24 months is the rise of collegiate But we’ve built out a next-generation esports infrastructure esports and scholarships, which has then filtered down system that closely mimics traditional sports, including how to high school esports programs because of course if they care for the whole well-being of their athletes. We call this you can qualify for a scholarship via any activity, high esports 3.0. We’re really proud to be at the forefront of it. schools are interested in that for their students. Is there a Super Bowl of esports in the United States that people So whereas traditional sports started at the grassroots level should be aware of? Since esports is an umbrella term that and then grew up to the pro level, esports grew backwards. encompasses multiple games, each gaming title for the most part We started at the pro level and just now we’re establishing has its own system. Some are franchise systems where there’s an our root system down into college and high school esports. upfront cost of up to $40 million to own a franchise, and some All the major universities around Texas, to the best of my are open ecosystems. So each game has its own structure and its knowledge, are exploring or have already started esports own “Super Bowl.” is generally considered programs, many of which include scholarships. the world’s largest esport, and they host their world finals at different locations around the planet each year. Millions of What’s the future of esports? We’re creating multigenerational people at home also tune in and watch. It’s a very interesting billion-dollar sports properties for teams like Complexity. The space to be in because it’s really 24/7/365. And since different phrase I use is “We’re building skyscrapers,” and skyscrapers cultures celebrate different holidays, I generally work a bit on take time and money to build, but then they return revenue Christmas Day. It’s nonstop. It’s very global. We spend a lot of for generations. Once they’re built out, the top esports time on airplanes. It’s a very exciting space to be a CEO in.

70 Texas CEO Magazine Q1 2020 The thing I find with older folks who start investigating our space is they don’t understand the attraction of going to a stadium to watch people play video games. I say, “Well, you like to play basketball and you drive to a stadium and drink a beer and watch Luka Dončić play. It’s basically the same thing.”

At its core, video gaming—and this is what a lot of people don’t understand—is a very social and community- based activity. When my son gets home from school, he doesn’t hop on a computer and play by himself. He hops on a computer to play with his friends from around America. This is where they socialize, where they learn teamwork, where they learn leadership.

When you have a large stadium event, it’s a really unique opportunity to go out and meet all these other people who are passionate about the same game, the same tournament you are—and maybe have some nachos and a bottled water and enjoy the event. These events can pack out 10-, 20-, 30-, 40-, or 50,000 people at cities around the world.

Where would I go to find an event like this in Texas?We typically have three to four midsize events here in Dallas a year. Since we have the Ford Center here at The Star that seats up to 16,000 people, I’m always speaking with event organizers, looking to bring more esports to the great state of Texas.

From an advertising perspective, what should a CEO interested in reaching your market do? Esports fan engagement is massive, both online and offline. As I said, the global esports audience is projected to grow to upwards of 600 million in the next year. Brands recognize that large audience. It’s an audience that’s very difficult to reach via traditional means, because they’re not sitting down and watching traditional sports like they used to. They’re computer savvy, generally college educated, generally middle class, and they also use ad blockers because they don’t like to be bothered by ads.

The question as a savvy advertiser or marketer is “How do I reach this generation before they start developing brand loyalties?” Esports is definitely a viable vehicle for that. You can meet the community and these new consumers in an area they’re passionate about. A lot of companies that have done so early have reaped great benefits. We’re seeing a virtual who’s who of blue-chip corporate America getting involved at some level at this point.

This is not a virtual sport in the sense that people are all Any parting advice for CEOs?My advice to any leader who congregated in the same location for the event, correct? Yes, looks at the esports space and rolls their eyes or would absolutely. The teams or the players go to the location, say like to ignore it is to have an open mind. The world is a stadium. The fans buy tickets and concessions just like a changing very quickly, and it’s only a matter of time until traditional sporting event. There are giant screens where you esports intersect with your business in some way, shape, or can watch the players play, and that is also broadcast around form. Have at least a cursory understanding of the space. the world on Twitch or YouTube or other streaming platforms. That’s just common due diligence for a leader today.

TexasCEOMagazine.com 71 [RESOURCES] CRAFTING THE BLUEPRINT FOR A SUCCESSFUL EXECUTIVE SEARCH Wade H. Allen

Great organizations do not happen by blind luck. Greatness those values. Hiring starts with culture, too, or at least a vision depends on alignment within the organization, from culture of it. A common fallacy is that hiring great talent starts with a to chemistry, from values to purpose, from skills to beliefs. job description or knowing someone who can probably handle the job. The real starting place should be a strong culture, When you embark on a search for a new executive communicated simply and clearly in a way that attracts talented leader, it’s vital to ensure that this internal alignment is people. Yet too often little time is spent here. already in place. Unless you have proactively built a great organization, you will struggle to attract executive talent— To get the most from your payroll expense, every employee or to even know what to look for in the first place. must fit the culture. There is an exponential return on cultural alignment for individuals up the ladder, who may Just as in building a home, the project of building a great now lead 100 or 1,000 people and set the strategy for a organization requires a blueprint. A home’s blueprint whole team, group, or company. Ensuring culture fit does must include plans for the foundation, the framework, not mean building a company of clones, though—you and the buildout. All are required, and there is an order need different talents and skills, as well as diversity and in which they must be executed, even though you can inclusion, to truly meet the needs of your chosen market. work on different pieces independently before they’re assembled if you adhere to the specifications. The CEO is always responsible for creating, articulating, and maintaining the corporate culture, the foundation of the As you build and align the organization, all of this remains business. This is not something to be handed off to the head of true. Let’s see how it works, starting with the foundation. Human Resources; it is your job to make sure it happens. The way you act and work must be consistent with that message—no The Foundation: Culture exceptions. Let’s be blunt—the buck starts and stops with you! In a home or a business, the foundation supports everything else. In building a home, whether you are starting from The Framework: Leadership scratch or modifying an existing dwelling, the foundation The framework of a home defines its structure and layout drives what can and can’t be done. In building a business, and guides everything that goes within the building. This is your foundation is the culture—the set of values that much like the leadership capability within your company. guide how people interact, work, socialize, and feel Good leadership clarifies everyone’s job responsibilities at home, like this is their place and their people. and eliminates unnecessary busywork. It offers the essential framework for what happens day to day. Clearly, culture is not the physical facility or amenities—it is a sense of belonging, team, and unity. It’s something you feel A cabinet that’s 4’1” wide just won’t fit on a 4’ bathroom rather than touch. Values define culture, and the behavioral wall—even though it’s pretty close. On the other hand, norms you expect from your employees must be consistent with a 2’ cabinet will look out of place on the same wall and

72 Texas CEO Magazine Q1 2020 won’t maximize the storage space. This is why getting absolutely had to have one. This is planning—understanding the framework—the leadership—of your business right what is needed to get ahead of the game and succeed long-term. matters so much. Your leadership determines what fits and what doesn’t in the workings of the organization. As CEO, this is a good model to follow in your search for executive talent. It’s up to you to identify what the organization needs long It’s not just the CEO’s leadership that defines the framework. before the need is pressing. The problem is the tyranny of the The leadership of your executives and managers matters as urgent. Too often, the planning stage looks like this: well. While the CEO provides the structure and layout for the entire home, other leaders are essential to providing “We need a VP of sales now! Grab a job description the framework for each of the rooms. These leaders must off the Internet and start looking. I want to see candidates help their teams understand why they are there and the next week. Of course we know what we’re looking for!” reason for working hard. They must foster the unity that motivates a team to win together. This takes time, planning, As leaders within the same company, we often take alignment asking, and listening. It takes serious, dedicated effort. for granted because we’re around each other so much. But is everyone else on your team on the same page? For 25- Developing people who have potential to be good leaders, next plus years, we’ve seen at least one such internal disconnect year or three years out and beyond, requires time and money, on almost every executive search we’ve performed. but you will pay for it now or later. If you already have people Maximizing ROI requires maximizing alignment. with the required leadership potential in-house, then by all means grow and promote from within. However, If you don’t Your sales, marketing, finance, and strategy departments have the right leaders to support your current business needs, should plan like Apple design does, anticipating the future don’t just promote someone to quickly fill the slot so you can needs of the organization. You must understand what skills, concentrate on other urgent things—this will undoubtedly experiences, and background are truly required versus come back to haunt you. The same goes for hiring your CFO’s simply preferred, as well as what is needed in the next six cousin or an old college roommate just to fill a position. to 18 months to remain successful. Does the candidate fit the requirements? Does the candidate fit the culture? A no Yes, providing the leadership framework takes time—something to either of these is a decision made: pass and move on. that’s in short supply for the CEO every day. But again, offloading this responsibility isn’t an option. You understand best During an executive search, it’s also important to surround which leaders are needed, and it’s your job to make sure you get yourself with great leaders who can provide insight into your them in place. To be blunt again—the buck still stops with you! own potential blind spots. Planning requires candid, open discussions so that you end up with the right hire—and with The Buildout: Talent honesty about your own abilities and potential. In this spirit, Once you have the foundation (culture) and the framework you should also be open to replacing yourself. If you determine (leadership) in place, it’s time for the buildout—so you can that one of your key employees can’t take the company to the start to see what the finished product, your home, will look next level, then the same rules should apply to you. If you want like. Many different skilled workers are needed to complete this and require the best talent, then you must lead by example. buildout. In other words, this is where talent comes into play. Passing the buck on an executive search is so enticing. In the buildout phase, talent must be carefully coordinated. Don’t! Make sure there is a clear vision of a great culture Electricians need to run the wiring before the Sheetrock is that attracts people who want to be part of a long-term installed; nice wooden floors will be ruined if big industrial endeavor. You need great leadership, starting with equipment still needs to be hauled across them. Define what yourself, to establish that culture and the supporting is needed for the long term so you hire appropriately up front. initiatives that motivate people to succeed. Now you Don’t replace floors that were damaged because you cut corners. are in a perfect position to hire and retain talent.

The buildout requires finding the right talent and So we see it’s all about talent, leadership, and culture— ensuring that they understand the framework to follow. what we affectionately call TLC. Time to get moving! And like it or not—the buck still stops with you!

Success Requires Planning Wade H. Allen has been president and CEO at the executive placement Apple’s product marketing teams spend a significant amount of firm Cendea for over 25 years. Since 1994, Cendea has provided senior- time and money trying to determine what products customers level executive search solutions for businesses that have high goals and require impact leaders who can take them to the next level. You can want—often before their customers even realize they want them. reach Cendea at [email protected]. Before the iPod was introduced, people had no idea that they

TexasCEOMagazine.com 73 TICKET TO THE LIMIT

If you ask Randy Cohen, founder of the Austin-based ticket broker and online marketplace TicketCity, the letters “CEO” mean something different.

For decades, Cohen has referred to himself as TicketCity’s Chief Energizing Officer. Within seconds of meeting him, you see that the moniker fits. In our fast-talking chat, he explains what it means to be the chief energizer, how his endless energy helped him conquer countless challenges—from police chases to livid ticket buyers—and how he built TicketCity into a trusted fixture of the industry.

Tell us a little about your early days in the ticket business. How did you get started? It started in the late eighties, when I took my life savings of $1,200 and bought 200 seats for the big Texas vs. Arkansas basketball game at $6 a piece. I thought for sure the game would sell out. Arkansas was number one in the country, and Texas was number three—this was during the “BMW” years of Blanks, Mays, and Wright.

And . . . it didn’t sell out. So I go down to the stadium with 200 seats in my hand—couldn’t believe I was about to lose my life savings. Then, all of a sudden, sure enough, from the box office comes the news: It did sell out. And there I was, saying, “Hello everybody! Stand back, nonbelievers! Here you go!” I sold all the $6 seats for $15 a piece. That’s $1,800 profit.

And you decided the ticket business was for you?It beat waiting tables! Not that the next time went so well. I took that profit and bought a bunch of seats for the Sweet Sixteen tournament in Dallas. Sure enough, same thing: It didn’t sell out. So I’m down there selling tickets on the street when somebody comes up and says, “Hey, what you got going on?” I told him I was selling tickets.

74 Texas CEO Magazine Q1 2020 He pulls out his badge and goes, “Well, you can’t do that.” a better deal waiting until the last second, but then one out of 10 times it will blow up and really be sold out. I’m like, “Why not? They’re my tickets!” When do sellers typically drop those last tickets?Well, today, But he took my money and my tickets. I had a few seconds to the market stays higher for longer. I’m in control of my inventory, make a decision then, and I made the wrong one. I took the so I can decide whether to lower the price or be the last man money and tickets back and ran out of there. I knew I could standing. If I have tickets and the game is in a few beat the cop on foot. But then all of a sudden I hear, “We’ve hours, I can still sell them up until game time and just transfer got a runner! We’ve got a runner!” I came to a corner as they’re them to your phone. But usually the last six hours before a chasing me, and if I would’ve made the right turn, I would’ve game or event—that’s where the best potential deals are. been home free. I made the left, and my feet came out from under me. Money and tickets everywhere. I spent the night in jail. I We like to have, say, a hundred tickets or less on the day of the thought that was ridiculous. I should be able to sell tickets I own. game. That’s the inventory we can play with. But in general you make more margin by selling early. At the end of the That taught me a real lesson: Make sure you know the rules day, it’s supply and demand on the game. You might have a and ordinances. From there, things slowly started to happen, bunch of LSU fans who bought season tickets from UT just and when I started TicketCity full time in 1990, I’d learned the to make sure they had a ticket to the game—well, now they rules. Later, we’d put together associations like the Texas Ticket might be selling their tickets themselves. We do the best we Brokers Association. There’s a lot of scammers out there in the can to keep the market up. We’re the market makers for some ticket world, but it’s trust that has made TicketCity so successful, events, like the US Open. We have a lot of tickets there every as a reputable ticket company that’s been around for 30 years. year. But we’re not the market makers for everything.

So how did you get from being chased by cops to a reputable If I’m trying to buy tickets, how do I recognize a scam?There are business? It’s been a heck of a journey. I was doing the ticket a lot of shams out there in the ticket world, and the shammers business on the side while I had a sales job, selling labels and are smart. It gets tricky. I’d say that a deal too good to be true, ribbons and mailers for a commercial printing company. But is. Recently, you had people walking hundreds of kids into ACL in 1990 we were doing enough business that I could quit my for 50 bucks. Those guys ended up getting thrown in jail. day job. And sure enough we started getting some traction. There are plenty of people on Craigslist who offer sham By the mid-nineties, the Internet was really going. We deals. I see tears at these events all the time from people were one of the first companies out there to put together a who don’t get in. At the end of the day, it’s about whether secondary-market software and real-time ticketing. We did it’s worth the stress to get a good deal. That’s what makes have trouble getting everybody to jump on that software TicketCity so successful: We’re a reputable company that’s at the time—“Cohen’s going to steal my information.” been around for 30 years. We’ve earned people’s trust. If there’s an issue, we’re going to handle that issue right away. But I started buying tickets to all the college football teams around the country, all the NFL teams, all the NBA teams, all the MLB You’ve been to just about every major sporting event that teams. I had so much inventory grandfathered in. And I still have exists in the world. If you had a year to live, what are you going a lot of that today, even though it’s a different ballgame. We’re still to make sure to catch? Man, the World Cup is amazing. The able to make a lot of money off having the right to buy, say, UT Ryder Cup is tremendous. The Davis Cup is tremendous. The tickets or tickets to ACL or the US Open or the Kentucky Derby. opening ceremonies of the Olympics too. In fact, the Olympics are where I got one of my big epiphanies. I got a call on opening What’s the process of managing your ticket inventory like? day of the 1996 Summer Olympics in . We’d set up an At TicketCity, I like to say, “It’s not sold out until we say it’s office there. We’d been preparing for years. Now this lady is sold out.” Because we have access and relationships, so we’re asking, “Hey, do you have any opening ceremonies tickets?” able to get seats even though something might be sold out. “Yeah, we have great seats,” I tell her. “How many do you need?” In today’s day and age, all the tickets are online, obviously. Today it’s all about eyeballs, so I’m putting my inventory She says, “Well, I just need one. But the thing is I don’t have a not just on the TicketCity site—I’m putting it on StubHub, ride.” That was a big moment. I’m thinking to myself, “Randy, I’m putting it on Vivid Seats. We don’t care who sells them. you’ve got to do this. This is what you talk about—doing the I just want to get them sold and maximize my margin. right thing long after the feeling of doing it leaves you.” So I said, “Ma’am, it’s your lucky day. I’m coming to get you.” But for the individual, the question is, What do you value more? “Do I have more money or do I have more time? I went and rented a black Lincoln Continental and I picked up this What’s my stress level worth?” Many times you can get 75-year-old grandmother about an hour and a half outside the city,

TexasCEOMagazine.com 75 and we drove to the Olympics. She was so excited. She couldn’t seats. And we were able to get him his tickets. But there are tons believe she was going to check something like this off her bucket of stories where we just didn’t have the inventory, from people list. She was sparkling and delightful and excited. We walked in wanting to propose at a game to people fulfilling lifelong dreams. and watched Muhammad Ali light the cauldron, we saw all the Olympians walk in with all their colors. She had such a good time. As Chief Energizing Officer, I don’t run from those problems. The next day, back in the office, word starts spreading You’ve got to meet with every customer head-on. And, at that around. “Did you hear what Cohen did? He blew off his Super Bowl, we ended up giving everyone all their money back, plans and took a grandmother to the Olympics.” And the plus an additional $2,000 a person, per ticket. And I threw a rest of the team starts following suit, going above and big party out there for them. All the food and booze included. beyond for our customers. It trickles down from the top. So they didn’t get to go to the game, but I was there, they were That was a big epiphany on being customer-centric. able to lash out at me and yell at me. It was overwhelming. It was the best-worst experience of my life. But we got everybody What sports are popular these days? Where is demand going taken care of. Sometimes it takes extra energy to go, “Woo, up or down? Esports is coming on strong. There’s definitely a woo! Stand back, nonbelievers. Let’s make this happen!” market. A lot of money’s being spent. We’ll sell tickets there So that’s a bad day at work. What’s a good day at work at if we see an event that we think is going to sell out. Wrestling TicketCity? What gets you up in the morning? I still love what is still in there too. People like WWE and cage stuff. I do. We make dreams come true. We put a lot of smiles on people’s faces. We show up and help make sure people get the best How involved is TicketCity in the ticket-buyer’s whole experience they can, with the right seats that fit their needs. We experience? Do you offer other services?Some people want to even coach them, help them get exactly what works best for them. rent a nice house or get a great parking spot, so we have a lot of that contracted. So we do some hospitality. But times are changing. What about from the employee perspective? Is it easy to hire You have to have your specific laser-like focus on what you want to people into the ticket industry?I’ve been really lucky. The be good at. If you try to do parking, hospitality, hotels, and tickets average TicketCity management employee has been with us . . . it’s a lot. Our focus is still on acquiring and selling tickets. twenty-something years. They’re still here. They’re still fighting the good fight. We have some legends in the ticket industry. And The business is changing at the speed of light, though. I’m considered one of the godfathers of the ticket business now. They don’t sell nearly as many season tickets anymore. You have big companies that try to aggregate all the inventory Is the legal landscape pretty stable right now for the ticket and then keep the market high. But I think the pendulum business? There’s always battles, man. It’s yin and yang. will swing back the other way and season ticket holders After calling us the scalpers of the world for a long time, now will start to buy packages again. History repeats itself. it’s more like “If you can’t beat ’em, join ’em.” But there’s always legislative battles. We fought things from Texas to Ever since I’ve known you, you call yourself the Chief Canada. But the law in Texas is pretty wide open. You can Energizing Officer, not the chief executive officer. Why is sell a ticket for whatever here. It’s not like in New York, that? One of my big roles has been to put together a great where you could only sell 20 percent over at one point. team, rally the troops, be the marketing guy. I have a lot of energy. When I come in, I’m high-fiving and chest-bumping People aren’t selling from the street anymore. There’s my people. I’m there for them any time they need me. They do a lot of companies out there, Gametime or SeatGeek, the heavy lifting, and I’m there as a Chief Energizing Officer where you’re able to actually sell tickets online. in case of emergencies. I’m almost like an insurance policy. Companies have basically taken the street scalper out of the loop. They’re still out there, but not as much. I’ll give you an example. At the Seattle Super Bowl, people had ordered a bunch of seats from people who put spec inventory on Since you’re probably one of the world experts on UT athletics, our site. Some of those had sold at $3,000 but the day of the game how do you feel about where the program is headed? I’ll steal comes and the market is at $10,000. So now we get the call: “I’m a phrase from our athletics director, Chris Del Conte: “Ladies sorry, Randy, our tickets didn’t come through. We can’t deliver.” and gentlemen, the bar is open.” People are excited. You can feel the energy. And the money’s flowing into that program. “What?” Any final thoughts?I tell people all the time, “Love what you do. As TicketCity, I’m still responsible for all these tickets. One guy Do it well. And keep on doing it.” I’m still showing up and fighting was like, “You don’t understand. I sold these to a drug dealer in the fight and trying to get 1 percent better every day. That’s what Costa Rica and he’s going to kill me.” And that guy was sitting there we preach around here. How do you get your company getting 1 at our office in Phoenix for three days, crying, hoping to get his percent better every day? How do you be the best you can be?

76 Texas CEO Magazine Q1 2020 CATCHING THE PERFECT PASS

Innovation often springs from the unlikeliest of places. Take the unnoticed football program of Iowa Wesleyan in 1989, where head coach and assistant coach Mike Leach developed an offensive strategy that would change the sport forever. New York Times best-selling author and Pulitzer finalist S. C. Gwynne tells that story in The Perfect Pass, delivering a portrait of two unconventional minds at work. Gwynne spoke with us about why the story of Hal and Mike caught his attention and what management lessons may lie in their reinvention of offensive strategy. Gwynne’s latest book, Hymns of the Republic: The Story of the Final Year of the American Civil War, is available now.

You’re known as a historian. How did you happen on this story routinely put up large numbers of points against you, and you about football? It started with a Texas Monthly article that I couldn’t figure out how he was doing it. And you couldn’t stop it. wrote about Mike Leach, who had his great run at the national championship in 2008 with Texas Tech. That game against Before that, there had only been one significant article written Texas in Lubbock, the Crabtree catch, that was the greatest single about Mike Leach. Michael Lewis, one of my absolute favorite game in the history of Texas Tech. Period. Everybody at Tech writers, had written a cover story about Leach in the New can tell you what happened in that game second by second. York Times Magazine, “The Most Offensive Mind in Football.” Lewis did a lot of things in that article, but he hadn’t gotten I went out to cover Mike and the team with the idea that we into where the came from. And so I asked. would put him on the cover, as we did. We put him on the cover in September 2009 with a pirate patch on his eye. I was Mike starts telling me about Iowa Wesleyan back in the hanging out, reporting the story, talking to Mike, the coaches, eighties and this guy Hal Mumme who I’d never heard of. The and everybody. I wanted to understand the offense, because I thing that really caught my ear was when he said: “In the off didn’t. And I knew hardly anybody else did, either. Mike would season, Hal and I would get into this old car and we’d drive

TexasCEOMagazine.com 77 across the frozen wastes of the Midwest, talking to high school One of the things about this type of innovation—and this transfers coaches, JUCO coaches, CFL coaches, World Football League to business—is they didn’t accept the premises of the game that coaches—anybody who would tell us about the pass.” They everybody else did: that in a game your offense typically has ended up in ’s office in Green Bay. They ended 65 plays, or that the line of scrimmage is a certain prescribed up in Dennis Erickson’s office in Miami. Any high school or length, or that three is the number of plays you get to make a junior college where someone was throwing, they went. first down before having to punt or kick. Hal and Mike didn’t accept that the power centers of the field would be concentrated I thought, wow, this sounds like a buddy movie, like the Lord in the middle linebacker. They spread out the power vortexes. of the Rings—going out in search of the perfect pass. And The time and space of the game were completely different. they found it. Iowa Wesleyan did unprecedented things. And because they were a tiny college in the middle of nowhere, For a lot of coaches, the goal of the game was time of possession. nobody had any idea that they had done it. Mumme and Leach If you controlled it, you would win. Hal and Mike didn’t care then proceeded to do the same thing at Valdosta State, which how long they controlled the ball. They thought the concept was earned Hal the head coaching job at an SEC school, Kentucky. irrelevant. They would score 65 points on you with 20 minutes of possession and have fun with the rest. They had short, light- I wanted to tell that story of Hal and Mike, but I also needed to hitting practices. No one was doing any such thing back then. know how Air Raid worked. I knew I was going to depart from most football books. I was going to do x’s and o’s, show people Before, there was this idea that you ran a specific play that how their plays actually work. One in particular, called “mesh.” was mapped out precisely beforehand. It turned out that if Because if you know how mesh works, you understand Air Raid. you have people who can adapt to what the defense shows I spent so many hours with Hal. I had a dry-erase board and a you, you have a huge advantage. That’s exactly true. In a lot of camera setup. I would go through and ask Hal to tell me how ways, the most radical thing they were doing was . different passes worked. He’d draw them out, arrows here and That meant teaching your players how to read the field on the arrows there. I couldn’t keep up. I made him break it down fly. Opposing teams did not understand this at first. A receiver second by second. I did probably a hundred total interviews would be trained to read coverage and react in different ways, for the book, many focused on how the black magic worked. and the quarterback was trained in the same way. Which meant that even the offense did not know exactly what was going to In order to tell their story, I also had to go back into the history of happen. Mike Leach’s great receiver at Texas Tech Wes Welker is football, and America’s weird relationship with the forward pass. a perfect example of an option receiver that no one could cover.

You show in the book that Hal Mumme didn’t invent anything The other management lesson here is that Hal came up per se. He just integrated other things. Nobody ever invents with an idea of radical simplicity in a world that was getting anything. Ever. No such thing. Not even Walter Camp [the phenomenally complex. Hal’s world was so simple. In a world “Father of ,” who developed the system of of telephone-directory-sized playbooks, he did not have one. downs and the line of scrimmage]. And as soon as you say that, At times his teams had less than 10 plays, designed in such eight people raise their hands and go, “Oh no, actually, in Abilene a way that they looked complex. From his opponents’ point in 1922 they were doing that.” Hal was a great synthesizer, as are of view, it looks like they’ve got 18 angry hornets coming at all great coaches. And some of his stuff was absolutely radical. them. Their offensive linemen had exactly two coverages. In that era, Paul Brown was famous for his 500-page playbook. That’s often the case in business as well. It’s the integration It was a badge of honor. It was supposed to take years to of different ideas, packaged up in a certain way, that’s understand the complexity of the NFL, and all you ever did was where the “aha” is. In this case, spacing the linemen wasn’t go to clinics and pick up plays. All the options were thought revolutionary, for example.Yes. I would argue, however, that out. The other teams were living in this enormously complex nobody had done “hurry-up, no-huddle” since the nineteenth world. But for Hal’s guys, the world was extremely simple. century. Boomer Esiason doing a no-huddle—he was just trying And this was a constant fight. Several different times, the Air to make the defense unable to substitute. In the twentieth Raid started to get too complex. Hal would sit down with his century, nobody did hurry-up, no-huddle until Hal did, which coaches and just ruthlessly go through and cut out plays. I think is a pretty significant innovation. The nineteenth century is a long way away. Nobody knew how they did that. If there’s one single overriding lesson, it’s this: If you can be simple in a complex world, you win. They didn’t have tape back then. And they didn’t huddle, because there was no such thing as huddle. But yes, everybody It’s a great point. A key talent of the best CEOs is simplifying repackages. When Emory Bellard invented the , the business for the team. The team’s in the middle of versions of that had been around going back to the nineteenth the details every day and they can get lost. You have to century. On the other hand, it was a hell of a great offense. say, “These are the three objectives we’re chasing, not

78 Texas CEO Magazine Q1 2020 the thousand other things we could be chasing.” It’s like who was a washout at Weber State and has a sore arm. SpaceX. Talk about simplicity. They have one goal: “We’re This is . Leach takes the offense from 111th to fifth going to Mars.” It’s utter simplicity. Everybody there has in one year. It’s so brilliant that Tech hires Leach. And the the light in their eyes. They all know why they’re there. next year, running the Air Raid with Heupel as quarterback, Bob Stoops wins his only national championship. Leach Besides developing the Air Raid offense, what other factors saw Heupel. Nobody else saw Heupel. He pulled him out of were part of Mike and Hal’s success as coaches? One of the nowhere, and he keeps doing that over and over again. things they were best at was spotting talent. I have written about recruitment in the business world and I have to say that the In the business world, people often look more for experience Air Raid guys are some of the best at it I have ever seen. Most than talent, even though it may be experience in being coaches want that typical quarterback, a six-foot-five, 230-pound mediocre. They’ll take the person who’s done the job guy with a big strong arm. But Leach says you probably don’t for 10 years and shown no exceptionalism. It’s the same want that guy. He’s looking for two things in a quarterback right principle as hiring the six-five quarterback. You can’t be away. One is extreme accuracy. The assumption is usually that blamed if he fails. He looked the part. One of the reasons if you find the big strong guy you can teach him accuracy. Leach I love Moneyball so much is they said, “Wait, look at his says no: If he isn’t accurate in high school, he’s never going to on-base percentage,” which people weren’t doing. be. That’s completely against what everybody else thought. The second thing was a great release. Have you seen the ball come How much is classic Air Raid still used today?Mike out of Pat Mahomes’ hand? That’s an Air Raid quarterback. Leach is still running the Iowa Wesleyan offense. That’s what Leach is looking for. Extreme accuracy and a release Nobody else is doing that. They’re all mucking with like that. Nobody else was looking at that. His quarterback this it. But you can see its influence everywhere. year at Washington State, Anthony Gordon, was a junior college quarterback no one wanted. He’s leading the nation in passing. But it took a long time to get there. The resistance to what Mike and Hal were doing was just unbelievable. They fired Leach has been able to spot quarterbacks like nobody’s Hal at Iowa Wesleyan. I would argue that the only reason business. When Bob Stoops hired him as a coordinator in 1999 anybody ever hired him was he went to work for the worst at Oklahoma, everyone was really skeptical. Then Leach goes college in America with the worst facilities and the worst up to Snow Junior College and gets this guy who had been a football team. There was resistance every step of the way. It washout at Weber State and has a sore arm. Not only that, was like, “You can’t do that.” But Mike and Hal aren’t in any Leach says, “We’re going to throw the ball 60 times a game”— box. They’re not thinking outside the box. There is no box. and we’re doing it with this guy from Snow Junior College

TexasCEOMagazine.com 79 [CULTURE] IS YOUR EMPLOYEE WELLNESS PROGRAM WORKING?

Employee wellness isn’t just about fitness. Use these six tips to create a holistic wellness program that improves your bottom line, no matter how large or small your firm is.

Gary Oden, PhD

Over thirty years ago, I took a headfirst dive into the world Here are my top six tips for optimizing your employee of employee wellness programs. I was working on my PhD in wellness program, gathered over three decades of Applied Exercise Physiology at Texas A&M when the director work evaluating and consulting on them. of our lab came to me with a question: Was I interested in working on an evaluation of the wellness program at the 1. The CEO must be on board. big Westinghouse plant down the road in College Station? For any wellness program to be successful, the CEO has got to This plant, employing over 2,000 people to create radar take an interest. This is obvious from a financial standpoint. components for fighter planes, had recently launched the The day will come when decisions must be made about program, with a beautiful new fitness center as its centerpiece. whether certain resources are allocated toward the program or not. If the CEO is unwilling to devote any resources “Sure,” I said. (even if it’s just employee time), the program will fail.

Thus began my eight-year involvement with Westinghouse, But, more importantly, the CEO and the executive team are measuring the profitability and effectiveness of their employee also critical in setting an example when it comes to prioritizing wellness program and consulting them on improvements. wellness and participating in the program. For example, And thus began a career that would later see me consulting when I first came to Sam Houston State University, where on several other large-scale employee wellness programs, I still teach, the health and kinesiology center was seldom from Norwegian shipbuilders to the State of Texas. used by faculty. Across the whole campus, there were maybe half a dozen people who you’d see in the faculty locker room If you lead an organization of more than 200 employees, consistently. But then we got a new president. He was a big it’s likely you already have some sort of employee wellness advocate of fitness, and he visited the health center no fewer program (around 90 percent of US businesses above this than three days a week. Suddenly, the faculty locker room size offer one). But all wellness programs are not created was bustling with people working out and being active. The equal, not by a long shot. You may also lead a smaller president’s participation was contagious, and faculty wanted company and wonder how you can get one started without him to see that they shared his enthusiasm for fitness. blowing your budget. Either way, it’s worth assessing how your organization supports employee wellness. Especially The same will be true at your business. If the CEO and today, a smart, well-run wellness program can be a major executive team don’t have buy-in and involvement in asset, improving everything from your healthcare spend to the program, if they never talk about it and aren’t seen employee engagement to your appeal to talented job seekers. participating themselves, it is likely to come across like an HR afterthought. And you will see limited benefit from it.

80 Texas CEO Magazine Q1 2020

2. It’s not just about fitness. Probably the most common mistake I see when I’m brought in THREE COMPONENTS to evaluate an employee wellness program—especially at larger OF EMPLOYEE WELLNESS companies—is the mindset that “employee wellness” equals “fitness.” Many leaders are narrowly focused on the construction of a fitness center or the purchase of workout equipment. FITNESS I myself am a big advocate of fitness, but there’s much more to a holistic employee wellness program. In fact, fitness is just • ACCESS TO EXERCISE FACILITIES one of three pillars, the other two being nutrition and stress AND EQUIPMENT reduction. These other two carry just as much weight as fitness when it comes to delivering the outcomes we care about. • GYM MEMBERSHIP PROGRAM We’ve known since the time of Hippocrates that we should let • ON-SITE CLASSES (YOGA, ETC.) food be our medicine, and more than ever, stress is reaching epidemic levels in terms of the impact on employee health. A • COMPANY-SPONSORED SPORTS great wellness program recognizes each of the three pillars. LEAGUE PARTICIPATION Fortunately, implementing the stress and nutrition components • STANDING DESKS usually gives you a much bigger bang for your buck—costing significantly less than purchasing fitness equipment and building • ON-SITE SCREENINGS exercise facilities. In fact, if a board came to me today and asked (BLOOD PRESSURE, BLOOD LIPIDS, ETC.) where they can get the most value from a wellness program, I’d point them immediately toward stress-reduction programs.

3. Partner with the community. NUTRITION As I mentioned, you don’t have to lay out a ton of money to put together a great employee wellness program. If you lead a smaller • LUNCHTIME SPEAKING SERIES company and don’t have budget for wellness staff or facilities, FROM NUTRITION EXPERTS there’s still plenty you can do, especially by drawing upon the resources already in your company and your community. • HEALTHY SNACKS AVAILABLE IN OFFICE First, find a person (or small group of people) in the company who is already wellness-minded. See if they are • CHOOSE HEALTHY OPTIONS FOR interested in spearheading your wellness program. Once COMPANY-SPONSORED LUNCHES you find your internal point person, relieve them of some • HEALTHY-RECIPE-SHARING of their regular duties to make room for this initiative. PROGRAM The next step is to help your point person seek out health resources in the local community they can plug your organization into. You would probably be surprised by how many organizations are willing to do health screenings and educational programming STRESS REDUCTION at your company for a nominal fee, whether it’s the American Heart Association, the American Cancer Society, or even local hospitals and health systems. Any time these organizations • TEACHING RELAXATION can get their name in front of a decent-sized group of people, TECHNIQUES (MEDITATION, MUSCLE they will usually be eager to do so. That’s something you and RELAXATION, ETC.) your wellness point person can take advantage of as you put • COURSES IN STRESS MANAGEMENT, together a low-cost program. It’s a win-win for both parties. TIME MANAGEMENT, AND MONEY 4. Measure success. MANAGEMENT When I was at Westinghouse in the 1980s, we had the advantage • INCREASED WORK-FROM-HOME of working in a highly regimented plant environment where we OPTIONS could measure productivity in a fairly objective way. As employees produced parts for fighter planes, they logged their progress • MANAGERS TRAINED IN THE in a computer system, so I could see a wealth of productivity IMPORTANCE OF WORK-LIFE data for each person. I could see that Joe Smith, for example, BALANCE completed X number of boards from August until January with

82 Texas CEO Magazine Q1 2020 a Y percent rejection rate, and I had tremendous access to all measures. It’s shocking what people will do for a T-shirt. At the granular underlying data. And I could see whether Joe’s other companies, we saw significant traction from allowing productivity went up, down, or stayed the same as he attended people to earn paid time off through participation. the fitness center and took part in other health initiatives. But there’s one other incentive that I’ve found to be the In the decades since, a lot has changed in the corporate world. most significant. Which leads us to the final tip . . . Today, it’s very rare to find an objective measure of productivity. Employees are increasingly doing knowledge work, and their 6. If you have wellness staff, productivity often comes down to their supervisor’s subjective they need to be excellent. opinion. But there are plenty of other things you can still track. In larger companies that have full- or part-time wellness staff—whether it’s nutritionists, trainers, wellness directors, Far and away, controlling healthcare costs is the metric most or otherwise—the quality of these individuals is probably the leaders care about when they implement a wellness program. biggest factor in employee participation and the overall success Tracking these costs is indeed an effective way to measure of the program. If these people aren’t well-trained professionals how a wellness program is doing (even though many other that employees actually want to be around, the program is not factors, of course, affect healthcare cost). I recommend going to be successful. Period. I’m currently working with the having a system that shows how a certain employee or Texas Department of Criminal Justice as they hire, train, and cohort of employees’ participation in the wellness program certify a new team of wellness professionals, and getting great correlates to their healthcare cost over the long term. people with a personal touch is at the forefront of our minds. Beyond healthcare cost, I also recommend tracking metrics like absenteeism, employee engagement (via Ultimately, it’s up to you, the CEO—in partnership survey responses), employee turnover, and percent of with your executive team, HR team, and/or appointed employment offers accepted—all of which can be positively wellness point person—to create a wellness program affected by a great employee wellness program. that fits your organization’s culture, work environment, Any efforts you make to support employee wellness will budget, and goals. But keeping these six tips in mind almost certainly have a positive effect, even if it’s small and will help you avoid the pitfalls I’ve seen many times. hard to measure. But it is important to track the outcomes you care about most to determine how your wellness One final word for the CEO: Don’t forget about your own program is performing and how it might be improved. wellness. You have a tremendous amount of stress placed on you. Being able to handle that stress—whether it’s by running 5. Incentivize participation. three miles a day or going to a progressive muscle relaxation In a perfect world, your staff would be intrinsically class—is critical not only for modeling wellness for your drawn to participate in your wellness program. But in workforce but for keeping yourself at the very top of your game. reality, you’ll get the best results from kick-starting participation by strategic use of incentives. Gary Oden is a professor in the Department of Kinesiology at Sam Houston State University. In addition to serving as Corporate Wellness Director for Fortunately, you don’t have to drop a lot of money. At several Westinghouse Corporation, Dr. Oden has served as a wellness-program companies, we gamified the process through a points system. consultant for MetLife, Aker Kvaerner, Memorial Hermann Health System, Once employees rack up a certain amount of points, they and the State of Texas. His current research focus is speed and agility training techniques, and he is currently conducting research comparing get special recognition and small prizes like a water bottle speed and agility training equipment. or T-shirt. Don’t underestimate the usefulness of these

TexasCEOMagazine.com 83 [PERFORMANCE] MARKETING RESEARCH

UNITY VS. UNIQUENESS IN SOCIAL MEDIA MESSAGING— WHICH IS MORE EFFECTIVE?

Akira Asada, PhD

Dr. Akira Asada tested social media marketing strategies for two MLB teams. The results have implications for any brand, sporting or otherwise.

84 Texas CEO Magazine Q1 2020 When people love a brand, they often form a community around After seeing the posts, the participants indicated their intention that brand. People who love Harley-Davidson may form groups to to support the team using a 7-point scale from 1 (very unlikely) ride motorcycles on weekends, for example, and people who love to 7 (very likely). Apple may create an online forum to discuss the new iPhone. The findings revealed an interesting difference. For the The concept of brand community is not new in the sports world. less-popular , the uniqueness approach For many decades, sports fans have boasted about their favorite resulted in greater support intentions (M = 4.12) than the teams, shared unique fan experiences, and developed a sense of unity approach (M = 3.30). When a team is not very popular, belonging. People’s attachment to these sports fan communities potential fans psychologically put themselves in a different often has a significant influence on their behaviors. In fact, category than the team’s existing fans: “They support the research published in the Journal of Sport Management found team because they are fans. I am not a fan, so I do not that a person’s attachment to a sports fan community is a better support the team.” In this case, unity among the fans makes predictor of consistent game attendance than attachment to the that distinction more overt, so potential fans would be more team itself.1 Therefore, to develop a sustainable fan base, sports hesitant to support the team when seeing “unity” messages. teams should create strong connections among their fans. By contrast, social media posts emphasizing the uniqueness of individual fans of a team like the Rays were more effective. Social media is, of course, one of the most effective tools for strengthening connections among fans of a team (or any For the very popular St. Louis Cardinals, I found that the brand). Sports teams often post pictures and videos depicting opposite also holds true. For this team, the unity approach their fans wearing team jerseys and cheering together. These resulted in greater support intentions (M = 5.75) than the images make fans feel closer to other fans and promote unity. uniqueness approach (M = 4.87). Why? When a team is very Sports teams also use hashtags to increase bonding among fans. popular, potential fans think that supporting the team is For example, the Detroit Lions use the hashtag #OnePride, something common in their community of residence, and which fans use to share their pride in being part of the Lions they perceive supporting the team to be part of social norms community. Fans who learn about other fans’ personal stories shared by residents: “They support the team because they with the team feel a stronger attachment to the community. live here. I also live here, so I should support the team.” In this case, unity among fans clarifies and emphasizes However, this approach may ignore one important market: the social norm and creates greater social pressure to potential fans. When existing fans create a strong bond, it support the team—resulting in a more effective social media may create a boundary that alienates potential fans. But strategy than emphasizing the uniqueness of each fan. if a sports team wants to build a strong fan base, it has to engage both markets, using social media not only for These findings have unique implications for non-sports engaging existing fans but also for attracting potential fans. businesses as well, because many businesses, like sports teams, run social media accounts that speak to a broader I was curious about which social media strategies are most brand community. If you own a relatively new company that effective for speaking to these two groups, so I conducted needs a wider customer base, you may want to take the Rays an experiment in which I tested two approaches. In the first approach, showing how the company’s product satisfies various approach, a team emphasizes unity among its fans by showing individual customers in various ways. By contrast, if you own a the fans wearing team apparel and cheering for the team large company that focuses on maintaining existing customers, together. In the second approach, a team emphasizes the uniqueness of each fan by showing individual fans enjoying more like the Cardinals, you may want to show how customers games in various ways. share similar experiences and enjoy a sense of belonging.

I tested the effectiveness of these two approaches for two The bottom line: Unity and uniqueness are both effective Major League Baseball teams: the Tampa Bay Rays and the social media messages for fostering brand support. But St. Louis Cardinals. The Rays are one of the least popular to harness them most effectively, choose the message MLB teams, ranking 29th among 30 teams in average that best fits the current stage of your brand. home game attendance, whereas the Cardinals are among the most popular, ranking second place in average home 2 Akira Asada is an assistant professor in the Department of Kinesiology and game attendance. I recruited 206 US residents on Amazon Sport Management at . He conducts quantitative Mechanical Turk. Each of the research participants was social research with a focus on sport consumer behavior, particularly randomly exposed to one of four types of social media posts: within the areas of word-of-mouth and sport consumer socialization.

1. Rays posts emphasizing high unity among the fans 1 Yoshida, M., Heere, B., & Gordon, B. (2015). “Predicting Behavioral Loyalty Through Community: 2. Rays posts emphasizing high uniqueness of each fan Why Other Fans Are More Important Than Our Own Intentions, Our Satisfaction, and the Team 3. Cardinals posts emphasizing high unity among the fans Itself.” Journal of Sport Management, 29, 318–333. 4. Cardinals posts emphasizing high uniqueness of each fan 2 ESPN, MLB attendance report, 2019. Retrieved from http://www.espn.com/mlb/attendance.

TexasCEOMagazine.com 85 In his recent book, Shut Up and Listen!, Tilman Fertitta lays out hard-hitting business advice like only the ListenBillion Dollar Buyer could. In addition to starring in his own CNBC reality show, Tilman is a Houston native, “the richest restaurateur in the world” according to Forbes, and sole owner of , which owns Landry’s, the Golden Nugget Casinos and Hotels, and the NBA’s .

What’s Tilman’s best advice for Texas CEOs? We asked him that—and a lot more.

You came out with a book late last year. How was that process for you? It’s harder than a lot of people think, and very different from being an entrepreneur.It was from a great process. It was interesting how HarperCollins approached it. They said, “Hey, we don’t want a life story. We want you to take this part of your world and put it in a silo.” We stuck it into about 170 pages. HarperCollins told me and my team that we were more involved in the book than they’ve ever seen.

You were one of those people who knew at a very early age you wanted to be an entrepreneur, correct? One hundred percent. I say this in the book: I think God gives a gift to everybody and you’ve got to find out what that gift is. A lot of people don’t take time to realize what their gift is. Some people have a great music ear, some people are great artists, some people are great athletes—you’ve got to figure out what it is. I feel that he gave me a business mind and an entrepreneurial brain, so I took that and ran with it.

Do you think a lot of people are still drawn to entrepreneurship and business? Everybody wants to be a businessperson. It’s funny. I’ve had the opportunity to meet so many people, from television stars to movie stars to professional athletes, and they start making money on other things and then realize, “God, I want to be a businessperson too.” And there’s as much respect out there for the entrepreneur and the businessperson as there is for anybody.

86 Texas CEO Magazine Q1 2020 Feature Listen TO TILMAN! Photos courtesy of Fertitta Entertainment Fertitta of courtesy Photos

TexasCEOMagazine.com 87 You’ve realized your dream of owning a sports franchise, the But you’re seeing nothing in your businesses today that has you Houston Rockets. That’s got to be a unique challenge. There’s two worried about the near term? I see a little bit, but it’s also the scoreboards there: the business scoreboard and the scoreboard labor inflation that’s happening. I’m in a business with 60,000 of how the Rockets are playing. It’s definitely a balance. The employees. With these cities passing crazy minimum wages, it’s two do go together in the sense that if you’re a successful team, tough. And at the same time, I’m in a business that everybody you’re going to have more sponsors and more butts in the seats. wants to be in and that everybody thinks they can do. But all And you’re going to make more money. The number-one goal is businesses are tough. Every business is competitive. The strong to always have a very competitive team, but at the same time you survive and the weak don’t. want to be careful about the business and make sure the other aspects you go into are successful. You mentioned having 60,000 employees. How do you find good people? I bet you’ve got a lot of jobs to hire every month. Two With your position in restaurants, in casinos, in the NBA, I would things really help: having a strong HR department and being the think you get a good pulse on the economy. What are you seeing type of company that people want to go work for. right now? Things seem to be strong, but everybody seems to be worried at the same time. We’ve been waiting for the economy to You’ve leveraged debt throughout your career. Some people blow up now since around 2015 or 2016, since it runs in eight- to are very anti-debt, some people pro-debt. What are your 10-year cycles. But we’ve had a great run here for 12 years. At recommendations for CEOs to use debt in a responsible, effective some point, the consumer does get full. They’re not going to buy way? You have to know your business and what kind of debt any more houses or cars or TVs. But we continue to build condos you can handle. A lot of people don’t do that research to see and cars and TVs until we’ve overbuilt everything. That’s what what they can handle and what they can’t. I have no fear of debt. really causes a consumer recession. So we’re just going to have I look at the amount of money I’ve borrowed as my greatest to watch and see. That day is coming. We just all hope it doesn’t accomplishment, because I have the credibility to go to Wall come next year—or the year after. Street and borrow that amount of money. It doesn’t bother me. I wouldn’t be where I am if I didn’t believe in debt.

88 Texas CEO Magazine Q1 2020 Feature

Doing Billion Dollar Buyer had to be an interesting experience, doesn’t care that your dog chewed up your wallet or that your especially seeing so many different types of businesses. What wife or husband is mad at you. In the hospitality business, the did you learn from seeing such a wide swath? There are so many customer experience is all that matters. young entrepreneurs out there today, and they all think they have a product better than everybody else’s. And they don’t You mentioned having a lot of people who work with you for a necessarily. It’s important to be a realist and know if you have long time. What’s your secret for getting people to stick around? something special or if you don’t have something special. That’s I think I’m very fair. You always know where you stand with me. something that entrepreneurs and even CEOs need to always I think if you talk to most people, they’d tell you I’m very difficult remember. Just because it’s yours, that doesn’t mean it’s special. to work for, but they wouldn’t want to work for anybody else. Everybody knows that we’re going to “be the bulls,” as I say. When You write in the book about the 95:5 Rule, which is about paying times are tough, we’re going to be the acquirer. We’re not going to attention to the 5 percent that makes the real difference in the be the one being acquired. That’s just the way we operate. business. In your restaurants, that can be tiny details like a drink served without a napkin or fans running at different speeds. Do Any parting advice for fellow Texas CEOs?Don’t count on you find you can teach that in your employees, or do some people your CFO to know your numbers. You need to know your own have it and some people don’t? You can absolutely teach it. I’ve liquidity. Great companies fail all the time because leaders are taught it at this company. Most of my people are homegrown, expecting somebody else to understand the liquidity of their and it’s a culture that I’ve developed in the company. The best company. Just because you’re the boss, that doesn’t mean you way is leading by example. When people see you do things as the don’t need to focus on the numbers yourself. CEO, then they do it. A FEW SAMPLE TILMANISMS “Be plappy” is one of the phrases in the book I hadn’t heard “Tilmanisms” are the phrases and ideas Tilman says over before. Could you explain what that means? It means to “play and over. Find a lot more in Shut Up and Listen! happy.” It’s something I heard 35 years ago when we were doing • There are no spare customers. a premeeting for waiters. One of them was unhappy, and you • Never put your lifestyle ahead of the growth of your business. could just see it on their face. We said, “Hey, everybody has • Consultants can consult you straight out of a business. issues and everybody has problems. But sometimes you’ve got to • No matter the circumstance, be the bull. come to work and be plappy”—just “play happy.” The customer • And of course . . . shut up and listen!

TexasCEOMagazine.com 89 [LEADERSHIP] MISSION, PRIDE, PEOPLE 3 KEYS TO MILITARY AND CORPORATE SUCCESS

Military lessons don’t always translate to the corporate world. Here are three that do.

Lisa Jaster

Every few months, a former servicemember writes a new yielded teamwork, blind trust, and confidence in commanders— leadership book and the general public eats it up. Many of us presumably so they can apply these lessons in their own lives. in the military are baffled by the popularity of these books. When every military leadership book that rolls off the press is Unfortunately, you can’t just read Extreme Ownership over the a best seller, I think what we’re really looking at is the lack of weekend and expect people to follow you on Monday like you’re meaningful leadership exposure the civilian sector receives. Jocko Willink. Number one: You’re not Jocko. Number two: Your 40-year-old mother-of-two coworker may not be ready for To their credit, these books can be exciting reads. What’s better a Jocko around the office. As alluring as it sounds, you’re just than gritty tales of tough situations and leadership challenges not going to take the leadership lessons learned in Al Anbar in combat? After a few stories, these books typically take and walk that straight into the corporate world. Those worlds combat successes and then reverse-engineer them. Here the are just too far apart. The military pay structure is rigid and reader gets a behind-the-curtain view of how military training standardized. There’s no such thing as a 40-hour workweek, and

90 Texas CEO Magazine Q1 2020 there’s no . Most members of the Armed Forces join for documents and organization, allowing for a “cowboy” specific reasons and hold similar values. Whatever differences mentality that feels good. That freedom can remain within the we start off with get marched out of us in our initial schools. boundaries of a standardized system of communication. In fact, Another dynamic specific to the military is direct authority. the format often increases free thought and brainstorming, There are plenty of opportunities to leverage indirect authority as long as you allow for flexibility in the “how” within the in the military, but when influencing skills fail, the soldier, confines of the “what” (purpose) and “why” (intent). sailor, airman, or Marine leader can always fall back on “because I said so.” In the military, there’s the potential This brings us to the second point: The mission must include for severe penalty for not doing what your boss says. a purpose and intent that is clear enough to communicate the end state but open-ended enough to allow people flexibility to All that said, it is possible to leverage military leadership figure out how they will achieve it. I currently work at a rapidly techniques in the civilian world, but they need a bit of massaging growing engineering firm that has doubled in size every five to fit the corporate environment. A great place to start are years over the last 20 years. The owners enjoy the growth but three factors that successful military units and successful want the customer to continue to feel like they are working with corporate enterprises already have in common: a shared a small, community-based company. Our “what” (purpose) is mission, pride in their unit, and a “people first” mentality. to be a full-service engineering firm providing a one-stop shop for customers in the Hill Country and surrounding areas. Our Shared Mission “why” (intent) is to create relationships with each client that Shared mission is simple in the military. It’s part of our oath allow them to feel comfortable calling us for a wide variety of office and the second paragraph of every military order. of needs—and that make them want their family and friends Every US Army soldier, officers and enlisted, raises their right to call us as well. That purpose and intent leads me, as the hand and states, “I, [their name], do solemnly swear (or affirm) Director of Civil Engineering, to build a “how” around our that I will support and defend the Constitution of the United company leadership’s guidance that differs slightly by each States against all enemies, foreign and domestic.” The oath technical division, branch office, and type of client. I am allowed continues to talk about allegiance, obligation, and duty. The to be more creative because I have some solid guidance. second paragraph of a military operations order, which is the standard mode of tactical communications in the US Department Third, the company needs to live and breathe that mission of Defense and most other military forces, is actually called in all they do. This is truer for the highest and lowest levels the “Mission” paragraph. It includes the task that needs to of employees than mid-level management. The junior-most be accomplished by the unit and the purpose for doing it. employee has the most contact with the customer, so their Simulating that in corporate America is possible if the company’s behavior directly impacts client relationships and influences leadership has built the organization around a shared “why” the organization’s reputation. The highest level of leadership that they can articulate and motivate their employees to adopt.

Two key components of every military mission statement are purpose and intent. What is the goal and why is that our goal? There are plenty of companies out there that just sell a product in order to make money. That’s okay, and that alone might pay the bills, but it is not the foundation for building a brand and a cohesive employee base that wants to drive the company to the next level of success. The employees may even believe in the product, but without a mission, they can’t have a vision. Without a vision, they cannot operate independently. Each soldier, after receiving their operations order brief, knows what they need to do to prepare for the next phase of the operation and begins their preparation accordingly. This way of operating is so ingrained in the military mindset that even the most junior officer in the office of the chairman of the Joint Chiefs of Staff uses the same format.

If a CEO wants to leverage this hard-won military knowledge, they need to make a few critical decisions and stick with them. First, identify the form of communication that works for the company and includes all critical topics and subtopics. Make sure this new standard is scalable so it can be used at every level of the organization. Many companies shy away from standardized

TexasCEOMagazine.com 91 cannot profess a mission and expect those below to follow In a business, you have an opportunity to interview each it without seeing the example. Professional appearance is employee and chose your teams based on capabilities and fit. an excellent example of this, both in and out of uniform. But no matter how good or bad the staff might be, a group It takes practice and consistency to communicate a mission of bitter, isolated people will never succeed. That’s why it’s that (1) includes enough detail to drive behaviors, (2) includes critical in either environment to have a “people first” mentality, few enough details to allow for free thought and creative placing relationships between humans front and center. solutions, and (3) is understandable at the lowest possible level. But it is possible, especially if the leader him- or herself At West Point, we took PL300, a class in military leadership from lives the mission through their actions. Leadership through the Behavioral Sciences and Leadership department. The big joke penmanship does not work. Words on a website do not drive back in 1998 was that the correct answer for any unit-cohesion behaviors. Leaders must uphold the standards themselves. issue was to hold a mandatory barbeque. Oddly enough, that lesson was truer than my 21-year-old brain could comprehend. A Unit Pride person spends one-third to one-half of their waking hours with I think it’s safe to assume that everyone who joins the military their coworkers. If the individuals can’t socialize at the lowest has a bit of a patriotic streak, which gives uniformed leadership level—at lunches, coffee-pot and water-cooler discussions, and a surefire motivator from the onset. As I mentioned, individuals so on—then they will never be able to work as a team. Making raise their right hand and pledge to support and defend the sure that someone is a character fit for the company or team Constitution of the United States against all enemies on their isn’t enough. Each employee must feel like they are getting first day of work. That’s a bit extreme to expect someone to do something back for the time they spend away from their personal for most jobs. It’s critical to turn that job into a career for that life. I have found that there are three major drivers of work employee and help them find what they can be proud of at the happiness: money, location, and job satisfaction. I am finding out smallest level—be it a team, an office, a department, or even just as I get older that job satisfaction, which prominently includes a project group. What product or service does that small section my relationships with my coworkers, has now replaced money provide that the employee can brag about to their friends? as my top priority. Knowing that your employees likely feel the same, and helping them develop positive relationships with Soldiers in the US Army wear a patch on our left shoulder to each other, will keep your turnover low and productivity high. demonstrate what major command we belong to. And inside each major command, we have mascots and team names for One thing “people first” doesn’t mean is that you must treat every military subgroup, down to a squad or team. We paint everyone exactly the same. I learned a hard lesson in Ranger our symbol on trucks, put it on memos, and decorate our work School: There are a lot of amazing soldiers who just aren’t areas with it, just as corporate America does with logos. We have meant for certain types of missions. Since corporate America coins, stickers, hats, and T-shirts to demonstrate our esprit de has the right to hire and fire people, find those who fit within the corps. But the military takes it one step further: We encourage company and nurture them, but let go of those who aren’t driving individuals to see that the mission of their small team makes the toward the same end state or aren’t motivated by the company’s larger team’s mission possible. Without me, the squad couldn’t “why.” That way, both you and that employee can find a better fit. succeed. Without the squad, the platoon, company, battalion, all the way up to the military as a whole, wouldn’t succeed. In Conclusion Military leadership offers plenty of lessons for corporate America, A manager must instill a similar unit pride in employees by but those lessons must be taken with a grain of salt. The base of showing people that their individual actions are somehow the organization—people—is significantly different in military and adding to the whole. At my current company, where we civilian environments. But regardless of which type of group you want to be a full-service engineering firm, it is imperative stand in front of, there are three critical drivers of success. Each that we ask our clients about items outside our direct scope. organization must have a clear mission, a sense of unit pride, and This way, we help the client solve their overarching problem a “people first” mentality. Build these three in your team and you rather than just putting a Band-Aid on the immediate will see success, whether it’s on the battlefield or at the office. issue. We build trust and a lasting relationship. Doing that together, across the team, grows our unit pride. Lisa Jaster is the Director of Civil Engineering for M&S Engineering and “People First” Mentality a lieutenant colonel in the US Army Reserve. After graduating from West One advantage civilian organizations have over military Point in 2000, she was commissioned as an engineer officer and served on organizations is in the people department. Although I believe active duty until February 2007. During her time in the military, Jaster deployed to Afghanistan and Iraq, earning two Bronze Star Medals, two that soldiers, sailors, airmen, and Marines are some of the Meritorious Service Medals, and a Combat Action Badge, to name a few best humans alive, they are also assigned—they are rarely of her awards. She is also one of three women to earn the army’s coveted chosen. Usually, the available person fills a military job and Ranger Tab out of the initial integrated Ranger School in 2015. then learns what they need to do through on-the-job training.

92 Texas CEO Magazine Q1 2020 AUSTIN DO YOU ASPIRE TO BECOME A CEO? THIS ROLE IS VERY DIFFERENT FROM EVERY OTHER C-SUITE POSITION AND YOU NEED TO PREPARE DIFFERENTLY FOR IT. Aspiring CEOs Seminar FRIDAY, FEBRUARY 21: 6:30 PM TO 8 PM, RECEPTION AND INTRODUCTION SATURDAY, FEBRUARY 22: 9 AM TO 4 PM, SEMINAR

To help aspiring chief executives, seasoned tech CEO Joel Trammell has taken his CEO training course and adapted it specifically for them.

Joel’s leadership as CEO has resulted in successful nine-figure acquisitions by two Fortune 500 companies. As CEO of network management software firm NetQoS, he delivered 31 consecutive quarters of double-digit revenue growth and a $200 million valuation. CA Technologies acquired the company in 2009, generating more than 10x return on capital to its private equity investors. In 2010, he cofounded Cache IQ, a storage software company that NetApp acquired two years later.

Joel is committed to using his experience to help current and aspiring CEOs. Join us for this crash course in excelling in the CEO role— and learn valuable lessons that will advance your career.

TESTIMONIALS: Early bird registration (until Jan 31, 2020): $299 “Joel Trammell’s CEO seminar is a must, especially for any first-time CEOs. You will learn what to expect as a CEO and the ins and outs Regular registration (after Jan 31, 2020): $399 of building a powerful team through Joel’s real-life experience and Registration fee includes the reception candid feedback. You will also hear from and network with some of the more successful executive leaders in Austin. I pull from this Friday evening and lunch on Saturday. experience with every challenge I face—especially the ones I never expected. Go do this!” Baylor University Executive MBA Program - Austin —Denver Fredenberg, owner, Harvest Rain; former CEO, Hyperwear 3107 Oak Creek Drive, Austin, TX 78727 “The CEO seminar was a great experience because it gives you a Have questions? chance to step back from your day-to-day and think strategically with the help of Joel Trammell. I learned tactics that I now put into Email us at [email protected] and we’ll respond promptly. action every day.” To register, visit texasceomagazine.com/feb21 —Chuck Gordon, CEO, Storable; former CEO, SpareFoot

“The CEO seminar was not only insightful and thought provoking on leadership styles and successful business constructs; it also afforded HOSTED BY: a unique opportunity to interact with my peers across a variety of companies. I learned lessons I still refer to today in managing people and the culture of an organization.” —Melanie Kalemba, former CEO, Movero Technology BRINGING A RENEGADE SPIRIT TO XFL 2.0 Dallas Renegades president Grady Raskin on staffing an office, drafting a football team, and appreciating all that North Texas has to offer.

Did you know you wanted a career in sports from an early quickly and each hire is proving to be a home run. Now, I age? From an early age, sports were my life. Whether I was do all I can to provide support and relay information from watching with my father or playing with my friends, sports the league. Ticket sales and brand awareness are our top was always the center point in my life. It wasn’t really until priority, so all activity focuses on these two crucial areas. college that I realized I could have a career in the area I loved so much. Timing and opportunity came together in As you put together that front office, what were you looking for in several instances, and I like to think I took advantage of it. people? My approach was to find genuine, selfless individuals who truly understood what it might take to create a football team in a How did you land the role as Renegades president? What was the new professional football league. I wanted confident, not cocky. process like? As in many high-level sports opportunities, recruiters Since we have such a lean staff, everyone will need to focus on their played a huge role. Over my career, I made sure to connect with own particular areas but will also be called to collaborate in other as many recruiters as possible. When approached about the role, areas. We need to take advantage of the intelligence and experience the recruiter encouraged me to speak with the XFL league staff of the entire staff and everyone needs to be open to suggestions. and allow them to show me what XFL 2.0 would be all about. All conversations with the XFL were direct and honest. Everyone from Lastly, with the short timetable and enormous amount of the HR team to and were amazingly work to be done, an electric energy and positive attitude passionate and made me want to jump on board. I was humbled was a must. We may not always agree on a thought or to be considered for the role and excited to get the ball rolling. direction, but we will deal with each other positively and respectfully. No time to be anything else. How would you define your role as president of the Renegades? What were your priorities going in?Initially, my role was What, to you, is the most exciting aspect of the new iteration recruiting a front office staff. We are nothing without good of the XFL? So many exciting aspects of XFL 2.0. In fact, the people. Since we are a lean staff, I had to make sure we had only similarities between what was done in 2001 is the name and strong directors in all areas and that they have the proper ownership. This go-around, it is all “for the love of football.” support staff. I am happy to say that we staffed up pretty So much research has been done to find out what people would want out of a new professional football league. We surveyed fans, officials, coaches, and others. It was clear that the overriding theme was to make the football fast, fun, and affordable. Less stall and more ball. Low on gimmicks and high on genuine football. It will look and feel like the current football that Americans love to watch on Saturdays and/or Sundays but will have some subtle tweaks to help speed up play and create amazing new experiences.

What was the draft process like?Over the summer, each market conducted showcases where invited players came out to show their skills. From those Summer Showcases, we created a pool of players who were eligible for our draft. Each player received a non-binding commissioner’s invite to participate in the draft. Over two days, each team drafted 71 players.

94 Texas CEO Magazine Q1 2020 Remember, we’re drafting entire teams, not just filling in It also helps that my entire family is here. I married another a few holes. The experience was amazing, and I have to Dallasite, so her parents, as well as my parents and my give props to our football operations team, who did their sister and her family all live nearby. We are fortunate homework, were amazingly prepared, and stayed incredibly to be able to get together for all holidays. I never take upbeat and positive for every single pick. It was a long two for granted how fortunate I am to be able to do this. days and every team should be proud of their efforts. What’s the number-one lesson you’ve learned over your I would also note that we had a supplemental draft in leadership career? What would you tell someone looking November to capture any unique talent that had come on to get into a leadership role today? I believe that everything the market. Like any professional league, our rosters will begins with honesty and humility. If you hold yourself constantly evolve, and we are doing everything we can to accountable for the same things you ask of your team, have the best players available playing in the XFL. it is hard to go wrong. Something will surely go wrong at some point, but dealing with the issues directly and Why the Renegades as a name? The XFL combined their honestly seems to always get the best result. I am a very internal brainpower with an outside agency to come up with direct person and appreciate this being reciprocated. all the names and logos of each team. They created a short film to show where the inspiration came from. Our short film This may be redundant, but I would add to always shows the eclectic, diverse nature of North Texas, including deal with things in a timely manner. Holding off on visuals of cowboys, a graffiti artist, motorcycle enthusiasts, tough decisions or conversations will only add to and more. While we see the voice of the Renegade to be the difficult nature of what needs to be done. unconventional, courageous, relentless, and a trailblazer, it will truly be defined by what our team does on the field and What are you looking forward to most this season? I am looking the traditions created by our fans in the years to come. forward to watching football in February, March, and April. I’m excited about watching a fast-paced form of familiar football that You’re a born and raised Dallasite. What keeps you in North many will enjoy. I can’t wait to provide some amazing access to Texas? Why would I want to leave North Texas? It’s just a our fans at Globe Life Park and to our viewers on FOX, FS1, ABC, wonderful part of the country with hardworking, positive and ESPN. All of this done with extremely affordable pricing people. The corporate climate is extremely strong, and the to allow everyone in North Texas the opportunity to watch cost of living provides people the opportunity to experience professional football and create new memories of their own. all the sports and entertainment that this area provides.

TexasCEOMagazine.com 95 THE BUSINESS OF COLLEGE ATHLETICS

A CONVERSATION WITH CONFERENCE USA COMMISSIONER JUDY MACLEOD

When Judy MacLeod became the third commissioner of Conference USA in 2015, her appointment was historic: She is the first and only female commissioner of a Football Bowl Subdivision athletics conference. She came to the Dallas-headquartered conference in 2005 after 15 years at the University of Tulsa, including 10 as athletics director. We talked to MacLeod about her backstory, the financial side of collegiate athletics, and what’s exciting at the four Texas schools representing Conference USA.

Your career began in athletics and you’re still there. Did So you were young and inexperienced when you took that you know at an early age that you wanted to be in the job. Tulsa’s not a Division III school. They could have done a business? I did not. I played basketball in college and nationwide search. Why do you think they took a chance on actually was planning on going into the finance industry. I a young person? A lot of it was the circumstances. They made didn’t even realize I could have this kind of a career. I got me interim AD first. When they later hired Dr. Bob Lawless offered an assistant coaching job right out of college and from Texas Tech [as university president] and introduced I thought, “If I ever want to do it, I should try it now.” me to him as interim AD, he probably looked at me like, “Are you kidding me?” And to his credit, he spent about 10 I decided to get into administration when I took a job with months evaluating me. Those 10 months under Dr. Lawless, the Goodwill Games in Seattle. I ran a couple of sports in every day was a test. And I guess I eventually passed. the 1990 Goodwill Games. When I tell young people that now, they look at me like I When he offered me the job, have two heads. “What’s a WE SAID, “IT’S GREAT IF I thought, “Well, I’m already Goodwill Game?” I’m like, doing it. Tons of people work “Oh, I am old, aren’t I?” YOU’RE AN OKLAHOMA their whole careers to be an AD. Why would I not?” So, I After that, I had to make STATE FAN, BUT IF YOU LIVE IN took it. He was the best boss a decision: Do I want I could ever ask for. Just to pursue coaching or TULSA, AND OKLAHOMA STATE’S incredibly supportive, helped administration? I thought me grow so much. I consider I might be better suited for NOT PLAYING TULSA, WE NEED him and his wife friends to administration. So I decided this day. It’s unbelievable, to go back to grad school YOU TO BE A TULSA FAN.” really, to get that opportunity and moved to Oklahoma at 31 years old. for a graduate assistantship at the University of Tulsa. The AD position has some similarities to the CEO role, A little change there from Seattle. Had you ever even been but it’s not the highest paid or most well-known position, to Tulsa? No. My friends and family might’ve thought I’d lost especially compared to some of the coaches. How did it, but I was like, “It’s two years. You can do anything for two that work? Honestly, that dynamic was perfectly fine years.” After a year, they hired me full-time. I was still finishing for me and my personality. I would prefer to not be up my master’s. Five years after I arrived, I became the athletics the one in the spotlight. It’s about the young men and director. People are like, “This isn’t a real story.” And sometimes women who are putting in the work, and the coaches. it doesn’t even sound real when I tell it, but it happens. Those are the people who deserve the recognition.

96 Texas CEO Magazine Q1 2020 As an AD I’m there to lead, but also to it’s not like there’s so much money that about it within our conference. We serve those people and give our coaches we don’t know what to build next. haven’t gotten to that point of having a what they need to do their jobs and league championship in esports. I don’t create a great experience for the student- Or that you have all this money to pay know if it fits under an NCAA umbrella athletes. It was never an issue. Obviously, every student-athlete a living wage. How or not. But I definitely think it’s not I had coaches and administrators who do you see that issue developing? For going away. It’s remarkable, some of the were older than me, who made more a long time we’ve all said, “This is too facilities that have been built for esports. money than me, but we were all pulling hard. How would it work?” And it is hard, on the same rope. The more basketball but that can’t be the excuse not to try to You’ve got four Texas schools was excelling at Tulsa during those figure it out. Whatever we do, it’s got to representing Conference USA—North times, and the more credit they got, the be uniform. We can’t have different laws Texas, Rice, UTSA, UTEP. What are better I was, as far as I’m concerned. in different states. We need guidelines. the exciting things happening at those We’re working on it diligently—I say schools? The overarching thing I There’s a certain challenge to not being “we” because the NCAA is a membership would say is the leadership at all four the preeminent, best-known university organization. I can’t tell you that the schools. From the presidents to the in a particular state or region. How did answers are easy or that everyone’s going ADs, they’ve been very aggressive in you deal with that? Tulsa is a small to like them, but it’s something we have marketing and improving things. private school. Within a two-hour drive, to figure out. We have to move with the we had Oklahoma, Oklahoma State, and culture and the modernization of things. All four of them have exciting things Arkansas. There were more alums from going. North Texas has gone through those places in the city of an explosion of growth with Tulsa than from University YOU CAN HAVE A GREAT their football facility and of Tulsa. It was always a indoor practice facility, used challenge, but we did our EXPERIENCE AT OUR by football, track, softball, best to be Tulsa’s team. We soccer, and other sports said, “It’s great if you’re an GAMES FOR A LESS EXPENSIVE when there’s inclement Oklahoma State fan, but if you weather. Their women’s live in Tulsa, and Oklahoma PRICE AND WITH MORE soccer team won their third State’s not playing Tulsa, we consecutive conference need you to be a Tulsa fan.” CONVENIENCE. tournament championship and play in a brand new The success obviously helped. soccer stadium, and they We finally got football going. We’d been For a while in college athletics, it felt recently announced a new golf facility. to a couple Sweet Sixteens and an Elite like you had to get the new list of At Rice, especially on their women’s side, Eight in men’s basketball. So things who’s in the conference every year. For they’ve had tremendous success. Last were moving pretty well, but it was still the last three or four years, it seems year, their women’s basketball team went a challenge. We didn’t even have the like we’ve steadied. Do you see that undefeated in the league and captured challenge we do today, where people can staying in place, or is there going to be both the regular season and conference watch every game on TV from their couch. another big upheaval? I do think things tournament championships, and have stabilized. In some of the larger participated in the NCAA tournament. How does the revenue break out at conferences, the individual schools have And they should be very good again. smaller schools—not just at Tulsa but signed over television rights and other Their volleyball team is nationally in Conference USA overall? All of our media contracts. With that stabilized at ranked, defeated Texas in the regular schools’ athletic programs receive the top, it’s a domino thing. It eventually season, and participated in the NCAA funding from their university, whether affects everyone, though I would never tournament. Under second-year head it’s an allocation or driven by student say it’s never going to happen again. fees. That’s one of the misconceptions, coach Mike Bloomgren, the football that there’s so much money flowing. Our For some of us, high school and college program showed dramatic improvement schools do not bring in enough revenue sports were a big part of growing this season. The football team was one to support their expenses, so they’re up. Now many kids would rather of only seven programs to be honored subsidized by our universities. That’s play Fortnite than go to a football or by the AFCA for recording a perfect a choice the institutions have made, basketball game. Are we going to see APR for 2017–18. The men’s basketball because athletics are important and video gaming within the NCAA umbrella program is in its third year under bring many things to campus—alumni down the road? They’ve talked about it Scott Pera and is currently 6–3 with engagement, publicity, exposure. But and studied it for a while. We’ve talked some good wins in the early going.

TexasCEOMagazine.com 97 YOU DON’T HAVE play in Hawaii sometimes. At UTSA, their AD is in her We play in the Bahamas second year and doing some TO BE AN ALUM OR every year. We play in great things down there. Florida, obviously, in the Their football program AFFILIATED WITH ONE OF OUR Metroplex. It’s just a puzzle, is still relatively young, putting it all together. but there’s tremendous SCHOOLS TO COME OUT AND potential if they can get it You can’t make 100 percent going. The interest is there. ENJOY HIGH-LEVEL COLLEGE of teams or fans happy, but When they first started we try to do the best we football, they had quite a BASKETBALL IN A FAMILY- can. I think our coaches and few people coming to the FRIENDLY ENVIRONMENT AT AN ADs realize that any bowl Alamodome, and it was a is a good bowl. You get to great atmosphere. They ECONOMICAL PRICE. spend extra time with your were picked second in the kids, and your fan base and preseason poll for men’s community gets excited. experience, and you are going to see basketball. Steve Henson’s done a really a good football or basketball game, nice job. They’ve got a couple of players Conference USA is making moves because we have really talented young who are on our preseason all-conference locally with the conference basketball men and women in our programs. team. They recently hired a new baseball tournament here in Texas at The Star So you can have a great experience coach in Patrick Hallmark, who brings in Frisco for the third consecutive year. at our games for a less expensive an excellent pedigree to their program. How has that helped your league’s price and with more convenience. profile? Please give us some insight on UTEP’s still rebuilding in football, but how y’all are approaching this event. they are another team that’s continuing Figuring out where all your schools go We partnered with the City of Frisco, to play hard. They have a brand new during bowl season has to be one of Visit Frisco, the Dallas Cowboys and president and a fairly new AD and are the most challenging duties you have. Baylor Scott & White to bring one of continuing to upgrade their facilities. How does that process work? That’s our premier events to Frisco. We have I would watch out for their men’s one of the more interesting processes four days of tremendous basketball basketball team. Coach [Rodney] Terry we go through. It doesn’t change day with 12 men’s and 12 women’s is in his second year and they’ve already to day—it changes every five minutes, teams competing for an automatic had wins against New Mexico State and from one phone call to the next. We’ve bid to the NCAA tournament. New Mexico, both of whom were very been really successful though. Last highly regarded going into the season. year, Conference USA won the trophy The unique setting, playing two games I think we’re going to see some noise for the highest winning percentage in under one roof simultaneously, the from them on the men’s basketball side. bowls. The year before last, we had 10 Fan Fest we have created on the plaza, bowl-eligible teams and were fortunate and the surrounding restaurants, Conference USA seems to have an enough to find places for nine of them. hotels, and retail have combined advantage when it comes to the I wish we could have found 10, but the for a great experience not only for game-day experience. When you go system is constrained. There’s a limit. our teams, but also for the fans. see a UT football game, it’s a daylong commitment, with getting there and We work with our bowl partners. Similar to what we talked about earlier, parking and all that. Your fans’ ability to We talk with our ADs. At the end of you don’t have to be an alum or affiliated park right at the stadium, sit in a good the day, it’s really the bowl’s choice. with one of our schools to come out seat, without a lot of fanfare—that’s But number one, we try to create and enjoy high-level college basketball appealing to people, right? Our ADs match-ups that are appealing. If we in a family-friendly environment have made a concerted effort to think have a 10–2 team, we don’t want to at an economical price. With the about the experience, from the time match them up with a 6–6 team. help of our local vendors, corporate somebody leaves their house to when sponsors and the other contributors they return to their house—how do we We also work really hard to make the already mentioned, we have created make it the easiest and best? Granted, games make sense geographically. Now, a great tournament atmosphere, we’re not dealing with 100,000 people, that’s not going to happen 100 percent of while delivering substantial economic so inherently it’s going to be easier. the time. But we’ve done a really nice job impact back to the surrounding area. But we still work to make it a great of having bowls in great locations. We

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