You must always keep an eye on the future pathways of opportunity — especially in tumultuous times. Every venture that I have created has kept a shortlist of merger and acquisition candidates to help supplement organic growth, as well as a list of potential partners and acquirers. More often than not, some of the pathways end up as reality, especially in eras of significant market change that require strength in numbers to sustain your ventures through difficulties.
As part of our series about the “Five Things You Need To Be A Highly Effective Leader During Turbulent Times”, we had the pleasure of interviewing Patrick Esposito.
Patrick Esposito, author of THE STRUCTURE OF SUCCESS, is president of ACME General Corp. and also serves as counsel with Spilman Thomas & Battle law firm. He has helped found, lead, and advise businesses in technology, consulting, and other sectors. Esposito was co-founder of Augusta Systems, Inc., which was acquired by Intergraph Corporation and was co-founder of Resilient Technologies LLC, which was acquired by Polaris Inc. Esposito recently launched Initiative Labs LLC to help leaders apply the approaches and tools in this book. You can learn more at www.patrickesposito.com.
Thank you so much for your time! I know that you are a very busy person. Our readers would love to “get to know you” a bit better. Can you tell us a bit about your ‘backstory’ and how you got started?
While I have worked for more than two decades founding, leading, and advising small- and medium-sized businesses in technology, consulting, retail, banking, real estate, and other sectors, as well as U.S. government organizations, I did not, initially, plan for a career in business. I was trained as an attorney with a vision of engaging in public service. However, I quickly realized that I lacked the required patience for working inside of government, after brief stints in a mid-Atlantic law firm and in state government. My spouse (whom I was dating at the time) suggested that perhaps working with technology companies might be a better fit for me. She was correct.
As I changed my focus, I saw that the call to service was leading me to create technology jobs in Appalachia, a region of the country that lacked new businesses.
My book THE STRUCTURE OF SUCCESS encapsulates much of what I have learned as an entrepreneur and advisor. The purpose of the book is to provide a tool to help leaders of small- and medium-sized businesses structure their ventures for long-term, sustained success.
It has been said that our mistakes can be our greatest teachers. Can you share a story about the funniest mistake you made when you were first starting? Can you tell us what lesson you learned from that?
Mistakes are, indeed, some of the best ways to learn amazing lessons; provided, however, that the mistakes are not so great that you cannot recover from them. As part of the research for THE STRUCTURE OF SUCCESS, I surveyed leaders of 100 diverse companies. I asked them about the mistakes that they made and what they learned. The four most common mistakes they identified were not building a strong management team or not building the “right” management team, picking the “wrong” business partners, selecting the “wrong” business model, and not being able to pivot a business model.
As for me, my first business venture included learning from many mistakes. My partners and I launched Augusta Systems at the end of 2001 as a consulting company focused on the energy sector. After some market assessment and study of global trends, we decided to make our first adjustment choosing to reinvest our profits and raise some angel funding to build a software platform to help companies and governments manage their environmental liabilities and assets.
Unfortunately, we were about twenty years too early for the marketplace. We quickly realized that it was time for another adjustment. Instead of trying to sell our software, we looked for opportunities to expand and focused on building software applications for our clients. We grew the business with a combination of software sales and related software services and, ultimately, navigated to an acquisition by a publicly-traded market leader, Hexagon AB.
None of us are able to achieve success without some help along the way. Is there a particular person who you are grateful towards who helped get you to where you are? Can you share a story?
I have benefited from great mentors, friends, and family members, each of whom has provided me with wisdom and counsel — and many of whom still do so. There are far too many people to thank to select just one. I am truly grateful to each person who took the time to guide me — especially through my first start-up company.
Extensive research suggests that “purpose-driven businesses” are more successful in many areas. When your organization started, what was its vision, what was its purpose?
There is no question that purpose-driven businesses tend to be the most successful. Most of us are inclined to work more intelligently when we are passionate about a venture. “Do something that matters” is truly great advice.
One of my current ventures, ACME General Corp. is focused on providing tools and techniques to support public sector innovation, while another business, Initiative Labs LLC, along with my new book, helps small- and medium-sized businesses develop their internal structures to support success — both missions that I am proud to support.
Thank you for all that. Let’s now turn to the main focus of our discussion. Can you share with our readers a story from your own experience about how you lead your team during uncertain or difficult times?
My business career has overlapped with two global financial and life-impacting disasters — the Great
Recession and COVID-19. Each time, the same core principles applied — we communicated with our customers, engaged with our team, and monitored market opportunities.
Only after listening (and making sure we continued to listen) did we decide how to adjust our business and the way that we worked. The early weeks and months of COVID-19 were especially daunting, as we all juggled uncertainties, necessary activities, and risks.
At ACME General Corp., my partner, David Bonfili, and I communicated constantly with customers and our team about closing offices, going remote, and working in more collaborative ways than we had previously — in order to make sure that we kept our team safe, our customers happy, and our business alive.
Did you ever consider giving up? Where did you get the motivation to continue through your challenges? What sustains your drive?
When I look at what causes me pain, it is the flip side of what compels me to work: failure. I do not care about making mistakes. Errors and missteps will happen. What brings me pain is real failure — negatively impacting the lives of team members — having to eliminate jobs of team members or losing investment funds for financial backers.
I’m an author and I believe that books have the power to change lives. Do you have a book in your life that impacted you and inspired you to be an effective leader? Can you share a story?
As a fellow author, I agree with you that books are very powerful. Two books that have helped to impact my approach to work and my advice to others are: Outliers by Malcolm Gladwell and Dare to Lead by Brene Brown.
Gladwell’s “10,000-hour rule” — the premise that expertise is generated by a minimum of 10,000 hours of practice — from the Outliers book is something that I use as a rough guide and recommendation when assessing how effort is needed to really develop expertise in a given field.
Brown’s Dare to Lead book, to me, is the best of her many great ones. While she explores four skill sets of daring leadership, it is her “Rumbling with Vulnerability” element that is most meaningful to me, as it encourages leaders to be open to deep conversations and new ideas.
What would you say is the most critical role of a leader during challenging times?
During challenging times, the priorities should be listening, first, and communicating, second. Unfortunately, there is a tendency in times of crisis to attempt to “solve” the problem — sometimes individually — that we see right before us, rather than to observe, listen, discuss, assess, and decide (even if doing so quickly) how to address current and, potentially, future issues as a team.
When the future seems so uncertain, what is the best way to boost morale? What can a leader do to inspire, motivate and engage their team?
In uncertain times — and especially times that require adjustments and pivots — engage with your team members. Engagement, though, must be a two-way process with clear communication about the intention of listening to team members and clients, as well as contextualized discussion of decisions about any changes being made. Having a little humility, some vulnerability, and openness to new ideas will, ultimately, help you, your business, and your team to succeed when dynamic changes appear and require responses.
What is the best way to communicate difficult news to one’s team and customers?
Commitment and context are generally the most important elements of communication of difficult news to your team and your customers. Once you make the commitment to make changes, your resolve and that of your management team need to be on full display for your entire team and your customers. You can do this by communicating clearly about the necessary directional changes that are coming, why these changes are being made, and what the outcomes are anticipated to be for the business, every team member, and each customer.
If the adjustments and pivots mean changes to the team, it will be critically important to manage those changes in the most humane way — through retraining opportunities, working severance, or other compensation packages that lead to good transitions for team members who may be negatively impacted. It is crucial not only for those who will be directly impacted, but also for your entire team. If your changes impact your customers, you need to communicate the same type of details on changes and outcomes.
How can a leader make plans when the future is so unpredictable?
As I explain in THE STRUCTURE OF SUCCESS, the best way to make plans is to admit that no plan is perfect and that every plan will need to be adjusted. Planning for the future is never over and the best plans (including pivots and adjustments) will come from teamwork.
Is there a “number one principle” that can help guide a company through the ups and downs of turbulent times?
During my business career, I have helped lead and advise companies in many industry sectors — including defense and aerospace, energy, and banking and finance — that are subjected to significant amounts of government oversight.
Business continuity plans — that identify potential disasters and threats and include the documentation of mitigation and management options to sustain business operations — are required by government regulators in many of these industries.
As I detail in THE STRUCTURE OF SUCCESS, the basic model provided by these heavily regulated industries is an important principle for all businesses to follow. It involves doing three things: (1) identifying, assessing, and prioritizing potential disasters and risks; (2) developing response and mitigation plans for the potential disasters and risks; and (3) reviewing, experiencing, and updating the disaster assessments and plans.
Can you share 3 or 4 of the most common mistakes you have seen other businesses make during difficult times? What should one keep in mind to avoid that?
The most common mistakes that I have seen businesses and their leaders make in difficult times are: (1) not having plans ready to respond to disasters and (2) not being able to pivot or make adjustments to a business model. These mistakes, generally, are caused by two other mistakes — (1) not building a strong management team and (2) picking the “wrong” business partners. So, the best way to survive and thrive when things get tough is to build the right team and have plans ready for the potential disasters and difficulties that you believe could occur.
Here is the primary question of our discussion. Based on your experience and success, what are the five most important things a business leader should do to lead effectively during uncertain and turbulent times? Please share a story or an example for each.
The general model that I recommend in THE STRUCTURE OF SUCCESS involves eight critical and strategic decision categories related to the internal structures of the business: (1) governance models and governance team composition; (2) management team models, composition, engagement, and compensation; (3) adjustments and pivots; (5) growth and infrastructure development; (5) business disputes and breakups; (6) acquisitions, mergers, exits, and other business transactions; (7) disaster preparedness and management; (8) succession planning.
If you distill those eight categories into just five things, it would likely be: (1) your team; (2) operational plans; (3) infrastructure; (4) future pathways; and (5) contingencies.
Clearly, your team — including your partners or co-owners, governance team, management team, and your teammates — is the most important element to help you lead in uncertain and turbulent times. You should not play “hero ball” (by trying to lead by yourself) and operate without the benefit of the wisdom and counsel of others. My Achilles’ heel in business has been not building the right management team. This failing has often caused me to attempt to simultaneously juggle too many roles and struggle with the resulting workload. I am sure that many of you have experienced similar situations. The single most trying issue for me in terms of management team composition has been my shortcomings as a sales leader and my inability to find strong sales leaders for the management teams I have led. It likely limited the growth of each business and may have undermined the potential success of the businesses.
Operational plans — including options for adjustments and pivots — are incredibly important to have documented and detailed to help you be ready to operate as efficiently as possible and to make changes quickly when needed based on the feedback from your team, your customers, and your markets. Without documented reference points for the current plans and new plans — and when adjustments or pivots occur — are important to allow for clear communications with your team, your customers, and other stakeholders. As much as I dislike most meetings, the sessions in which you discuss strategic and operational changes with your team (and sometimes your customers) are incredibly important. Equally significant should be the concept that these sessions are dialogues (with the opportunity for meaningful questions and discussions), not simply monologue broadcasts. Generally, I recommend these types of convening events at least annually for every small business and also whenever directional changes are made, no matter how small.
None of the best-laid operational plans will work, nor can adjustments and pivots be executed, without infrastructure to support these plans. Twenty years of making reasonable internal infrastructure decisions (though I missed the mark on a few decisions during those decades) have taught me that while building internal infrastructure is important, having a process in place to support the analysis, decisions, and implementation related to the investments is just as significant as having the right plans to execute. That process will ensure that you make the right infrastructure investments for your team, your customers, and your other stakeholders.
Next, you must always keep an eye on the future pathways of opportunity — especially in tumultuous times. Every venture that I have created has kept a shortlist of merger and acquisition candidates to help supplement organic growth, as well as a list of potential partners and acquirers. More often than not, some of the pathways end up as reality, especially in eras of significant market change that require strength in numbers to sustain your ventures through difficulties.
Lastly, and maybe most importantly, you absolutely must develop contingency plans — in the form of business continuity plans for disasters, succession plans to combat the loss of key personnel, and business agreements to manage co-owner disputes. For each of these areas where plans for continuity and mitigation are important, looking at the future and ways to proactively plan will help to ensure the long-term success of your ventures.
Can you please give us your favorite “Life Lesson Quote”? Can you share how that was relevant to you in your life?
Former Yahoo! chief executive officer and Google executive Marissa Mayer provided some great wisdom in a 2012 Bloomberg article about avoiding burnout. Mayer suggested that resentment is an underlying cause of burnout, “and you beat it by knowing what it is you’re giving up that makes you resentful. So, find your rhythm, understand what makes you resentful, and protect it. You can’t have everything you want, but you can have the things that really matter to you.” Mayer went on to suggest that if you figure out what really matters to you, you will be able to sustain an intense workload for a long time. I use this same concept when working with business partners and within any team (and recommend it to all leaders I advise).
Deciding what you want to protect is difficult. During the early years of parenting, I realized that what I wanted to protect was the time with my kids before their school day. And once I started protecting (even imperfectly) that time in the morning by indicating that I really needed to avoid calls during the 7:30 a.m. to 8:30 a.m. window, it greatly reduced the stress I felt with my business partners. It also meant I could be more fully engaged with my daughters before school and fully engaged with my business partners either before or after that time frame. Now that my children are a little older and driving to school on their own, what I need to protect has changed. What you need to protect likely will be different, but if you and your team each define what you want to protect, you will find you will work better together and for much longer.
How can our readers further follow your work?
You can pick up your copy of The Structure of Success at your local bookstore (after October 3, 2023), Amazon, Barnes & Noble, Books-A-Million, Bookshop, or Porchlight Books. Also, you can learn more at https://patrickesposito.com and my business ventures at https://initiativelabs.com and https://acmegeneral.com.
Thank you so much for sharing these important insights. We wish you continued success and good health!