"Sitting Next to the CEO" with Mark Zerbe

Rather watch this episode? Stream here!

Episode Transcript

Tim Geisert (00:05):
Hey, welcome to The Selling Excellence Podcast for business executives. We all know B2B selling isn’t getting any easier, and what’s worse, it’s getting more expensive. Hello. I’m Tim Geisert, your host and partner at AuctusIQ, a selling excellence as a service company. Our goal today is to give you insights on how you can turn your sales force into a company asset. We hope you enjoy.

(00:30):
My guest is Mark Zerbe today. He has a long history of growing, acquiring, and selling businesses in the technology solutions area. How are you today, Mark? How are things with you in your world?

Mark Zerbe (00:42):
Hey, Tim. I’m happy to be here, and I appreciate you already took a shot: “a long history.” I think that’s a nice way of saying “old.”

Tim Geisert (00:49):
Oh, no, no. We like to say “seasoned.” Seasoned; you’re a seasoned executive.

Mark Zerbe (00:55):
Yeah.

Tim Geisert (00:56):
It’s great to have you here. So one of the things, for those listening in … I always try to figure out what’s kind of interesting about the guest, and as I was talking with Mark, I asked him this question. So Mark, I’m going to ask you on air here. What are some of the things, or one thing, that really shaped who you are today? What was something that just profoundly changed and made who you are today?

Mark Zerbe (01:26):
Yeah, well, so there’s a lot of things that I could answer that, but I reflect back on my career professionally. I had a great blessing early in my life. I graduated from University of Texas and I went to work for a small Texas-based distribution company, and I was there for 15 years. That was a 10 million dollar private company that grew to a billion and a half dollar public company. We went through a dozen acquisitions and a handful of divestitures, and during that time, the two founders, gentlemen by the name of Morrie Abramson and Jim Corporron … After about six years, I’d relocated a couple of times. They brought me back to corporate, to the corporate office, and the president of the company … I was not aware-

Tim Geisert (02:15):
And that was Jim, right? Jim was the president?

Mark Zerbe (02:18):
Jim Corporron. Jim put my desk in his office.

Tim Geisert (02:22):
What?

Mark Zerbe (02:23):
And right next to him. For nine months I reported to the president’s office and sat right next to him. And I’m telling you, Tim, I couldn’t belch without saying, “Excuse me.” But he gave me a PhD in how to operate a profitable business in a low margin industry, and it was just such a great gift. I’ll never forget that, and that was early in my career. I think it began a trajectory of how to operate and manage and lead. He was a tremendous leader and he taught me servant leadership at an early age.

Tim Geisert (03:01):
That is interesting. All the people that I’ve spoken to, no one has ever said that. No one has ever said, “Hey, my experience is the CEO … ” or president in this case, with Jim, just sat you down right at the foot of the top of the pyramid and said, “Watch, listen, and do.” Wow. That’s pretty interesting.

Mark Zerbe (03:22):
Yeah. And then nine months later, he woke up and said, “All right, you’re done. Get out. Go get another office.”

Tim Geisert (03:26):
You irritated him enough for you to get kicked out down the hall, huh?

Mark Zerbe (03:30):
Yeah, yeah. But that kind of began a 40-year career I’ve spent with four different companies. During that time, I’ve led teams of less than 10 to over a thousand, revenue streams from a couple of million to a couple of billion, and I’ve had the honor to work directly for eight CEOs in my career and intimately worked with hundreds of others in various roles, and that all brought me to this theory. I think the reason you asked me to be here today is I’ve come to this conclusion that there are only two types of CEOs in the world.

Tim Geisert (04:11):
Only two, huh?

Mark Zerbe (04:12):
Only two. So the question is, which one are you, or which one is yours?

Tim Geisert (04:15):
Well, our audience is primarily CEOs of mid-size companies and executives that work with them, so this is going to be interesting and extremely topical. So, walk us through it. What are the two? Start with one.

Mark Zerbe (04:29):
Well, let me start with the premise, and that is for CEOs, growth is everything. They’re obsessed with growth, and for good reason. If you’re growing faster than the competition, you are taking market share, which puts stress on your competitors; you’re attracting investors … I’m an investor; I like to invest in companies that are going faster than the marketplace … you’re attracting talent because winners want to be with winners, kings want to run with kings; and maybe most importantly, it allows you to take risk. Because growth is not only the fertilizer of future investments; it’s also the antidote to past mistakes. So as a CEO you can afford to take risks and make a few mistakes, because we’re all going to, if we’re growing at a rate that allows me to sort of take that risk.

(05:21):
So growth becomes everything, and then that sort of then tells me there’s two kinds of CEOs. The first one is the CEO that is, I’m going to say, momentarily satisfied with the growth of their company. And by the way, they’re the minority, because as a general rule, CEOs aren’t satisfied with anything, even when they should be. It’s not in their DNA.

Tim Geisert (05:47):
Well, at least the good ones, right? They’re never entirely satisfied. Maybe for 15 minutes.

Mark Zerbe (05:52):
Correct. I like to say the last day of the year, when you’ve made all your numbers, you get 15 minutes of [inaudible 00:05:58].

Tim Geisert (05:58):
Right. Yeah, we used to call that, in one of the companies, a mandatory 15-second celebration before we go on to the next task.

Mark Zerbe (06:05):
Right. So that’s the first type, kind of momentarily satisfied. And then the second type, and this is the majority fall into, the currently dissatisfied with company growth. So maybe not as profound as you expected with my theory, because it’s kind of you’re one or the other, but that’s my initial take on CEO growth.

Tim Geisert (06:27):
Well, I think what you’ve got, and you’re going to talk a little bit further, is … Let’s get under the covers of each one of those two different types, because that’s where it gets really kind of interesting on how you break this down. So you want to start with the first one?

Mark Zerbe (06:44):
Yeah. So we’ll talk about the type one CEO first, kind of define what’s acceptable, because if we’re going to say we’re momentarily satisfied … From my perspective … I was in the technology solutions and services business … acceptable growth was three to four times the industry growth rate, and that made me feel like we were accomplishing our growth goals. But if you’re a small, born in the cloud, hyperscale company, you may be trying to double or triple your business in any given year. So “acceptable” is dependent on your industry. But if you are achieving those acceptable growth rates, you’re probably doing a lot of things right, and I tend to sort of categorize those big level rocks into people, processes, and tools. And so if you’re having acceptable growth, you probably have a strong focus on people: identifying, attracting, retaining, advancing the right talent. It’s very easy to say, but very hard to do. Focus on people, a focus on execution and operational excellence, and then finally the right tools.

(08:05):
Focus on people … I like to talk about, you understand your worms. What’s a worm? What really, really matters in the business, and then you have two or three things that you’re really focused on and have the business tied to. So that’s how I would define a type one CEO: what’s acceptable growth, and what do their companies tend to be doing right?

Tim Geisert (08:29):
So it sounds like, to some degree, that type one may be a little bit more rational. They’re measuring their growth against the industry, measuring the growth against the history of their company. Right? Am I summarizing that in a good way, or am I missing something?

Mark Zerbe (08:47):
No, no, I think you’re right. And they’re focused; they’re not focused on a hundred things. They really can narrow it down to a handful of things that everybody understands and that we can all wrap our arms around.

Tim Geisert (09:01):
Okay. Okay. All right, so the second type, let’s talk about them.

Mark Zerbe (09:05):
Well, I’m going to back up, ’cause I said “momentarily” satisfied. Let me give you a reason. One of the reasons you can only be momentarily satisfied, and that is: markets constantly transform.

Tim Geisert (09:17):
Sure. Sure. Yeah.

Mark Zerbe (09:19):
In my particular case, the industry went from a product-led to a services-led industry, and then from a hardware to a software business, then from transactional revenues to recurring revenues, and finally from on-prem solutions into cloud solutions. So you got to be aware that markets are going to transform. I love the story of AWS; this move to cloud may be the greatest industry transition or inflection that I’ve seen in my lifetime. An ecommerce retailer, almost by accident, disrupts the technology industry.

Tim Geisert (09:58):
Yeah, it’s really fascinating, isn’t it?

Mark Zerbe (10:00):
Yeah, and they were doing it just addressing the needs of customers who wanted to turn up ecommerce solutions quickly. And 15 years later, this is a $72 billion recurring revenue business, taking it right out of the hide of IBM and HP and Sysco and Microsoft and Oracle. So this is why you can never be permanently satisfied, is because the market’s going to change. And the second reason is because competitors never sleep. So, those CEOs never rest. Mark Zuckerberg wrote early in the history of Facebook, “If we don’t find the thing that kills Facebook, somebody else will.”

Tim Geisert (10:45):
Isn’t that a great quote? That should be up on every CEO’s wall.

Mark Zerbe (10:51):
Yeah. Yeah. So, watching for competitors changing, and watching for inflections points … and another quick Andy Grove story. The CEO of Intel wrote a book, Only the Paranoid Survive, and he talked about how what are seemingly modest changes from a competitor can become inflection points and change the industry. So, CEOs are never satisfied. All right, we get it. That’s the type one. And if you stay in the corner office long enough, you’re absolutely going to face an inflection point in your industry … an economic cycle, an industry transition, maybe a big acquisition … and you’re going to find yourself in a period where your growth is unacceptable and you’ve got to make bold changes, because investors won’t allow it to continue in that way.

Tim Geisert (11:52):
Yeah. Right. Right. And between type one and type two, as your example, what about ownership structure? Have you seen anything in how the ownership structure can shape the first CEO versus the second one, which you’re going to talk a little bit further about, I’m sure?

Mark Zerbe (12:12):
Yeah. Well, it is kind of rare. In my case, I’ve seen a CEO take a 10 million dollar business to a billion and a half dollars, but I would say those CEOs that stay in the corner office a long time do have the ability to transform their leadership and move through industry cycles. It’s kind of different playing with a lead than playing from behind. In the blink of an eye, you can become a wartime CEO, and all of a sudden, “Where do I invest my people, my constrained resources? What am I focused on?” become sort of mission-critical. And I think one of the things I’ve seen is the CEOs that focus on the people aspect of the business first are the ones that can make that transition from small to medium to large business leadership.

Tim Geisert (13:09):
So why is that, do you think? Why focusing on the people can make a huge difference in the ability to have … I think what you’re talking about is agility, right?

Mark Zerbe (13:20):
Yeah. Yeah. Well, I would say this. Think about, in your career, the one or two most significant hires that you’ve made. Call them your Michael Jordans. I like to say we’re all one or two Michael Jordans away from a championship. So I think leaders who are able to prioritize people … talent identification, development, and performance management around people … are able to make that transition because they attract the right kind of talent. When you have the right people, most of the other operational problems … They don’t take care of themselves, but the right people take care of those problems. So you get the people part right, so many of the other dominoes tend to move into place.

Tim Geisert (14:13):
Yeah. And by the way, you’re a Michael Jordan guy; I’m kind of a more LeBron James because I’m much more of a hip guy, more modern. No, but the point is, you’ve got to find those players. You’ve got to find that talent. And that can provide that sort of battlefield reaction if you’ve got the right people on the team that are addressing that, right? That’s what you’re saying.

Mark Zerbe (14:42):
Correct.

Tim Geisert (14:45):
Can I ask you a question? I’m going to take you back to your time with Jim, sitting in his office. And what did you learn about that very thing by sitting at the feet, literally, of his office?

Mark Zerbe (15:02):
Well, one of the company culture elements was … and this was in the early days … we did a personality profile when we would hire people. And we knew what our top performers … We knew their personality traits, and we would not hire salespeople and sales management if they didn’t match a certain type or profile. And I think understanding talents … those are sort of born gifts, if you will, and competencies, learned skills … if you understand the talent and competencies of what your business needs and what works in your business … and it’s different for every business. Some companies are very relational; others are very technical. But understanding talents and competencies, and then being able to hire for those skills, is critical. We did that at this company, Kent Electronics, we talked about earlier. And I know, not pressing TalentIQ, but Auctus has a great tool that allows companies to do that, and I think that’s the critical first step, is getting the right talent in the door. Then you can start talking about performance management and enablement and training after you get the right ones in the door.

Tim Geisert (16:27):
Yeah. And I appreciate the shameless plug for our solutions, but the joke aside here, what you did at Kent Electronics … You were looking at what was best provided at that time, which was a personality assessment. Now, we’ve gotten so much more sophisticated over the last 20 years of how to break down that personality into, really, two key chunks. One is those talents, so things you’re born with and that you’re hardwired for, and then the competencies, which are the things that you’ve learned, and then rolling those together for a much more in-depth, more scientific, more psychologically-driven science offering. And that’s a tool that you didn’t really have then, but you used the best you had. And companies and CEOs use those today, they’re game changers for making sure either you get the Michael Jordans or the LeBron Jameses, whichever fits your culture. So, thanks for kind of allowing me to preach there for a second.

Mark Zerbe (17:29):
Yeah. And it’s easy to fall into the trap of “my gut” or “hiring people that look and talk and act like me,” so the science and the art of hiring is sort of really a critical step.

Tim Geisert (17:45):
Yeah. Yeah. So then, let’s talk a little bit here. Going from the talents and the competencies and all of that, what about that performance management process? What have you learned from these two kinds of CEOs, and how do they really instill that performance process?

Mark Zerbe (18:05):
Right. Well, so once we are hiring for the right people, we think we have that part right, now we move to performance management, because I’ve come to the conclusion we have two options as leaders: either we hire smart or we manage tough. You don’t get to do both. Or you don’t get to do just one or the other. You’re either going to hire the right people or you’re going to have to manage tough, and candidly, we’re going to have to do performance management, and it’s critical. And I think if we have performance management that’s well-documented, and everybody in the company understands what good performance looks like and how we’re going to address when people are falling behind or falling off the curve. I’ve found that sales managers … One of the most difficult challenges they have is having that performance management discussion with their sellers, because they tend to be emotionally invested in the individual and they’re blind to certain areas of weakness.

(19:05):
And so when we give a very clear performance management process, and we give the sales manager what I’m going to call “air cover” to have that performance management discussion with one of their employees, their sellers … “Sally, you’ve been behind for the last two quarters. You’re red and red. Therefore … ” You know the performance process. We need to have this coaching conversation. So it just kind of gives them that air cover to sit down and have a good performance discussion, and then it’s obviously critical that we train our sales leaders on how to have effective performance discussion. So if we get them hired right, we don’t have to manage tough, but if we have legacy and underperformers, we have to have a good performance management system that’s simple, that everybody understands, and that our sales managers are held accountable to.

Tim Geisert (20:05):
Yeah. You kind of bring up something that has just been a theme. You’re talking about “managing tough”; how do you instill that in a sales manager, sales leader? Especially somebody that’s … We see it so many times, where a really good seller gets promoted up into sales management. And what have you seen that really works, in your experience, at helping get them good at that performance coaching?

Mark Zerbe (20:36):
Well, first you can measure performance management execution in a sales leader, a sales manager, just like you can measure sales performance in an individual seller. And so I believe in stack ranking, or finding a way to compare, and when you have an individual that is falling below a certain level, then they move into a performance management environment themselves.

(21:11):
I’ll give you an analogy here, and you may not agree with my parenting strategy, but when my kids were in high school, I would routinely drug test my kids. And it wasn’t because I thought they were bad kids. I told them, “I’m giving you an out, a get out of jail free card.” Because when the inevitable happens out in the world, you at least have the opportunity to say, “No, thank you. My parents drug test.” Sales managers need to have a mandatory performance review process that they can say to their team, “Hey, this is part of the process. I’m accountable to execute against it,” and if they don’t, then we help them.

(21:55):
Now, we move to enablement and training, the third step. We identify talent … we talked about talents and competencies … we manage performance, and then the third piece: now we enable and train. So now we’re looking for areas of strength and weakness, and if we have a good talent and competency tool like we talked about earlier, we now know the strengths and weaknesses of our leaders, and we can now begin to give them very targeted training around their areas of weakness-

Tim Geisert (22:28):
Yeah. Yeah.

Mark Zerbe (22:28):
… that they can build their skillsets.

Tim Geisert (22:31):
So, yeah. All right, by the way, for those listening, mandatory drug testing of your children will keep them on the straight and narrow. I can only imagine the effects it can have. But one of the things that you’re talking about is not treating, essentially, everybody the same. Right?

Mark Zerbe (22:55):
Right.

Tim Geisert (22:56):
Now, understanding their individual talents, you coach LeBron James different than you coach Michael Jordan. They’re two different individuals. Great on talent, love the game, have a lot of the intangibles, but you coach them differently. And Phil Knight will tell you that; when he had the Bulls in the championship, he had a collection of talent there that he didn’t treat them all the same. He treated them individually, and I think that’s something that many salespeople, sales managers especially, don’t really understand. Would you agree? And the question is, okay, how do you kind of target that in? How do you make sure that’s individualized?

Mark Zerbe (23:37):
And they need help. Sales managers need the help. You’ve heard the phrase, “Trying to change a business is like changing the tire while you’re driving the car.” They need a tire changer; they need some help. So they’re focused on hitting the number, on sort of getting the deals done, but a good training and enablement tool that they can follow the steps really helps them, because a lot of sales leaders aren’t well-versed in the process of performance management and training and enablement. We have to help them as a business. Another shameless plug, EnableIQ. That’s the kind of tool. There are tools out there that do that. I think very focused, targeted training for clearly understood weaknesses and holding people accountable to that is critical.

Tim Geisert (24:41):
Yeah. You and I were talking the other day about this as we were getting ready for this podcast, and you were talking about, you got to have a clearly defined, communicated training process. It’s got to be clear. Just like anything, the better the clarity, the more positive the action, and that’s the example there. And be consistent; don’t just hit and miss. A lot of times on enablement, it kind of comes and goes, but the more consistent, the more kind of ongoing drum beat … because people have … especially salespeople. They’re catching fastballs all day, so they learn in little bite-sized chunks. And the more you can have a consistent over time bite-sized chunks, the more they’re going to retain it and use it.

Mark Zerbe (25:26):
Yeah.

Tim Geisert (25:26):
Right?

Mark Zerbe (25:27):
Yeah. And I think for CEOs, if you can build into your culture … if it fits your culture … rewarding the right kind of performance and training behavior, MVP awards, circle of excellence awards, rewarding the right behavior … or stack ranking. Maybe you consider that the “stick versus the carrot” strategy. I happen to think they both work, and a balance of carrot and stick is great, but reinforcing the right behavior in your culture is critical. I would even take that back to hiring. I think leaders in general should have very specific targets around recruiting, hiring, and coaching, just like they do targets for new logos, revenue growth, profit growth. The soft stuff is the hard stuff, and we need to make sure and include that in how we measure performance of our people.

Tim Geisert (26:30):
Yeah. So Mark, with your varied and long career … and I still love the fact that you sat in the same office with the CEO; that had to be such a profound effect … what are the one or two things that you would recommend to those executives who listen in on this and are looking for ways in which to drive growth, whether you are the first CEO or the second CEO?

Mark Zerbe (26:59):
Your question, is in part, the answer, and that is, pick one or two things. First, don’t try to overdo it. Find the one or two things that really matter and work on those first. I prioritize people, personally. My experience is if we get the people part right, a lot of the rest of it happens. And I think most CEOs have a pretty good idea of what the one or two things they want to work with are. If you don’t know, ask yourself this question: “If the board were to replace me and add a new CEO, what would that CEO start doing today that we’re not doing? What would they stop doing that we are doing? What would they continue to do?” That old “start, stop, continue” exercise. So if you take that, you can tend to boil it down, and for most CEOs, if you’re not sure, ask a trusted advisor. Do some quantitative analysis. There are tools out there that allow you to sort of look at your company’s strengths and weaknesses and stack rank them.

(28:07):
And then if I know what our strengths and weaknesses are, I talk to the right people around me, I’m going to be able to figure out the one or two things I want to work on, and then it’s just about getting busy. They say there’s no change without pain. Don’t let the pain get to the point where it’s debilitating. People will jump out of a burning building because the pain of staying is greater than the fear of going. When the going gets tough, you got to move decisively and with conviction. So, pick one or two things, and move with conviction. Those would be the two things I would suggest from my experience.

Tim Geisert (29:00):
I’m probably doing a little bit of surmising here, just having worked with you, in this conversation. One of the things that I, as an executive, always had … especially when I was in the CMO role … is I always had a partner that I could run to, somebody who I could just either have a beer with, pick up the phone, just talk to, and just get a third person’s view. In some ways, I wonder if Jim kind of put you in his office for that kind of role, because you’re really good at it. And having that kind of sounding board, because with all the distractions, sometimes you need somebody on the outside to come in and just say, “Hey, Jim, let’s work on these two things, not these seven things. Let’s work on these two things, and let’s assign this to these people. Let’s work this out. Let’s get this plan.”

(29:49):
And I’m guessing that’s probably the real lesson that came out of that. The benefit to him, and what you’re seeing here and what you’re doing in your life work right now, which is coming alongside and being that outside-in partner to help them really do that focus to work through … no matter which CEO type, in your theory, that they are. That’s kind of leading to a big yes, but I’m guessing that’s a yes, right?

Mark Zerbe (30:13):
Yeah, absolutely. And I just think that a fresh set of eyes and ears can really make a big difference. Most CEOs are pretty darn good at building their sort of unofficial board of advisors that they can go to and be transparent with. The great thing about CEOs … Andy Grove wrote it in his book … is healthy paranoia. Healthy paranoia is a good thing, and being willing to hear and get a different perspective. That’s a trait of all good CEOs. And actually, I’ll kind of close with one final thought. I kind of lied. I told you there are two kinds of CEOs, momentarily satisfied and currently dissatisfied. There’s a third kind, and that’s the kind that goes extinct, and those are the ones that don’t address the pain head-on and take it on.

Tim Geisert (31:18):
And we don’t want extinction. That’s a bad thing.

Mark Zerbe (31:21):
That’s right.

Tim Geisert (31:24):
Thank you so much, Mark Zerbe, for being here. Congratulations in your career, congratulations on where you’re going now, and the world of business thanks you for what you do to help. All right?

Mark Zerbe (31:38):
Thank you.

Tim Geisert (31:39):
All right, thank you.

Mark Zerbe (31:40):
Appreciate it, Tim.

Tim Geisert (31:44):
Thank you so much for listening to this episode of The Selling Excellence Podcast for business executives. I hope you gain some insight on how to help turn your sales organization into a company asset. Don’t forget to subscribe to The Sales Excellence Podcast wherever you get your podcasts, and for more information about AuctusIQ or to schedule a discovery call, visit our website at auctusiq.com. Until next time, this is Tim Geisert, your host and partner at AuctusIQ, here to help you sell more and grow your company.

Speaker 3 (32:14):
A Hurrdat Media production.