Joel Peterson is the 12-year Chairman of JetBlue Airways, retiring in May 2020, former Chairman of The Hoover Institution, and the Founding Partner of Peterson Partners, a Salt Lake City-based investment management firm with $1 billion under management.
He is a business leader, investor, and teacher who has worked firsthand with over 2,300 businesses, hundreds of partners, and thousands of leaders. Since 1992, Peterson has been on the faculty at the Graduate School of Business at Stanford University, teaching courses in real estate investment, entrepreneurship, and leadership. He was the original seed venture investor for several unicorns (including Bonobos and Asurion) helmed by former students.
He formerly served as Chief Executive Officer of Trammell Crow Company, the world’s largest private commercial real estate development firm at the time. Peterson earned an MBA from Harvard Business School and received his bachelor’s degree from Brigham Young University. Joel has been awarded the 2005 Distinguished Teaching Award and the 2016 Robert K. Jaedicke Silver Apple Award at the Stanford Graduate School of Business.
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Welcome to another edition of the Impact Podcast. I am John Shegerian. I am so honored to have today, Joel Peterson, with us. Welcome to Impact, Joel Peterson.
Joel Peterson: Really nice to be with you, John.
John: You know, Joel, you are literally one of the legends in the business community, in the world, and I’m going to take the show to go into all the things you’ve done and accomplished. But I’m just going to give a little bit of a highlight here to our listeners, to kick off the show. You have been the chairman of JetBlue for somewhere around the last 12 years and this is your second-to-last day. So I am going to ask you about JetBlue because I’m a huge fan of the great brand that you helped build there. You are also a storied and very very awarded Stanford business professor. You’re also the founder of the P Firm Peterson Partners and also one of the seed investors and early investors in some great brands that so many of us love and adore such as Bonobos and Asurion. So, welcome to Impact and I’m just so honored that you’re here today with us, Joel. Can you just share a little bit about your journey in life and in the business world?
Joel: So, yeah, I started out in Iowa. I was born in Iowa. My father was a graduate student and we then moved to Michigan where he went on the faculty at Michigan State University and I started my first business when I was 11 years old. And it was basically selling vegetables in the neighborhood. I hired my younger brother to carry them around and deliver them in his red Radio Flyer wagon, and I paid him a nickel for the whole summer. So I had an entrepreneurial instinct early on and then I worked as a busboy, a dishwasher, a biochem lab assistant, a French teacher, a sugar beet thinner. I did all kinds of things. Ultimately, I ended up at Harvard Business School where I learned not as much as I did delivering vegetables around the neighborhood. Probably a little more sophisticated, but I think I learned really the essence of delighting customers from those early days doing all those, kind of, very manual jobs.
John: And when you got out of Harvard, what did you do after Harvard?
Joel: So I was hired by a fellow by the name of Trammell Crow who’s a legend in the real estate business and he sent me to the French Riviera and–
Joel: Yeah. It was a tough assignment, but I never really made it there. I made it to Lyon, which is a great city and then in Paris where I developed office buildings and warehouses for a couple of years, came back to the United States, was appointed treasurer of a company without any cash and then became the Chief Financial Officer of a company in duress, where I ended up working out debt. And then for about 10 years, I served as the Chief Financial Officer of this really the largest private real estate development company in the world. And, ultimately, I became the managing partner. After that, I formed my own private equity and investment firm. We actually do real estate investing, venture investing, and private equity investing and I started teaching on the faculty at Stanford. I was asked to teach just for a year to fill in for a fellow and I’ve been there for 28 years. Since then, I’ve joined lots of boards, invested in hundreds of companies, developed hundreds of more real estate projects, and just tried to stay busy. I was kind of the original guy in the gig economy.
John: Oh my gosh, no kidding, my god. And that’s why I’m so honored to have you here today, too, because I know how busy you are in all the brands that you’re involved with. But today I’m so excited because I’m a serial entrepreneur and we’re living through very different times right now. You and I are taping this show as we said, your second to last day as the executive– as the chairman of JetBlue, which I want to get into in a little bit but you’ve also written this wonderful book and I’ve read part of this book and I want to ask you questions about it’s called, Entrepreneurial Leadership: The Art of Launching New Ventures, Inspiring Others and Running Stuff. You know, as a country that is known for innovation, for the innovation nation and actually it’s very arguable that Silicon Valley is the heart of that innovation and you’ve been a teacher there now, 28 years, a professor there. Tell me why was it important for you to write this book and then we’re going to get into some of the key themes of this book but why did you want to write it now? What was on your mind?
Joel: What was on my mind was the 4,000 MBA students that I’ve taught over the last 28 years and realizing that many of them go out into the market and they struggle. We’ve taught them all the things they need to know but they’ve never really had to face high winds, face cold nights, face cash shortages, faced all the things that that you do. So I actually use the analogy of a trek, of actually a hike that my wife took in the mountains and she got lost and ended up having to spend the night on the mountain. Even though she knew to take a down jacket, to hike with somebody else, to have a compass, to have a cell phone charged but, you know, in the heat of the moment or in the cold of the moment, she didn’t have any of those things. And so I thought, “You know, so many of our young entrepreneurs get out there and they don’t really have all the skills or the checklist,” so I thought, “I’m going to put them all together. I’m going to try to boil it down to four simple things that you must do and then give a set of checklists that people can follow so when they are faced with adversity or driving change or needing to negotiate deals or communicate in bad times or whatever, they kind of have a checklist, a series of mindsets they can use.” And I just thought that would be a helpful guide to young entrepreneurs and we need entrepreneurs, we need entrepreneurial leaders.
John: I love it. And just for our listeners out there, the book is out. You could get it at great bookstores around you. I know this is a time where bookstores are not really open yet. So, online, of course, you could get it at barnesandnoble.com. And, of course, the huge giant amazon.com. It’s a great read and towards the end of the show, we’re going to be giving away a few copies signed by Joel himself. So, listen in and we’ll talk about that later in the show. You say these four pillars that you talk about in the book – hallmarks of an entrepreneurial leader. Can you walk us through what you believe are the hallmarks of an entrepreneurial leader, Joel?
Joel: So I’ll just quickly give you the four and I described them as piers. If you’ve been in the construction business, you know, the piers are the things that contractors drill all the way to bedrock – the foundation sits on piers. So these are the things that you really need to get established. And the first one is trust. Great businesses are built on trust. That’s trust with their customers, they have loyal customers but it starts with the entrepreneur or the leader being trustworthy. That means he or she delivers on promises and then it devolves into creating high trust cultures; high trust organizations where all of the team relies on each other. The second thing that these great enterprises do is they have a common mission and they are clear about it. They can describe their mission, they own their mission, they have helped develop their mission and they are clear about it. They know what they’re about and this gives meaning to the organization. People work for meaning and you don’t need to worry about motivating people who are working for something that means a lot to them. So, having trust, developing a mission, then what you got to do is you’ve got to have a great team and that means sourcing great people, interviewing them, doing due diligence on them, onboarding them, coaching them along the way, promoting or demoting them, and ultimately, it means you have to learn how to, unfortunately, fire people who don’t fit. Because, if you really think about it, your job is to put the best possible team on the field at all times. So, once you’ve got a high trust culture, a clear mission and you’ve got a great team on the field, what you have to do then is execute and what I determined was that there really are ten things that every entrepreneur runs into. You know, they are going to have to make decisions under conditions of uncertainty. They’re going to have to make sales, without sales there’s no business. You got to have revenue, they got to have to negotiate, they are going to have to raise capital, they got to communicate in bad and good times, they have to run great meetings, they have to work with the board. They have to overcome adversity, survive growth, and then really drive permanent change which is the essence of being an entrepreneurial leader. So really there are checklists there and the way I tried to describe that is that using the analogy of a pilot. You know if you have a pilot that’s flown a plane for 25 years, you may not need the checklist, but he always goes through it. There’s not a single pilot ever that wouldn’t sit down with the checklist and go through it. So this is really to, sort of, give the entrepreneurial leader a way to add up. To really consider what they’re going through and saying, “Have I thought about this. What’s my mindset about change? How do I make these decisions? How do I raise capital?”
John: When you’re investing as an angel investor and also sitting on boards that you do, is this a checklist that you promote to the teams that you touch as an investor and then also as a board member, is this something that you constantly– is this a drumbeat that’s been a constant throughout your life?
Joel: No, I’ve actually developed and I’ve developed largely by making mistakes, you know, I don’t know that anybody’s ever really studied all these things and wired them all together. This is just my observation over 50 years and seeing a lot of things work and seeing things not work and it’s a little bit like seeing a movie a bunch of times. Once you’ve seen it a bunch of times, you know the plotline, you know where the hero runs into trouble and so I actually have a bit of pattern recognition now on these things. So that’s one of the reasons I thought, “You know, I had to write this down. This might help somebody else get off the mountain when they’re astray.”
John: Hey, for our listeners who have just tuned in, we’re so honored to have with us today, Joel Peterson. He just wrote a book called, Entrepreneurial Leadership: The Art of Launching New Ventures, Inspiring Others, and Running Stuff. No greater time than right now during this tragic pandemic to learn about entrepreneurial leadership if you’re sitting at home and you have time on your hands during this pause in society, read this book. We all can learn to become better leaders.
Joel, you are still, today the chairman of JetBlue. Talk a little bit about the last 12 years there and some of the highs and lows that you’ve had there and as you say goodbye now to that position there, how does it feel?
Joel: Bittersweet, in a word. So, I joined JetBlue before we had any planes. So I’ve been there right from the very beginning. I was actually brought on board to develop T5, Terminal 5, out of JFK because I’d come, as I mentioned from a real estate background, and nobody else on the board had ever built a building. This is a fairly complex project and they wanted somebody at board level who could kind of oversee it and work with folks. So we grew, like all airlines do, with debt and it’s about 2007 or 8, we had a big mountain of debt. We were probably 80% leveraged and we were losing, I think, that year we lost maybe eighty-five million dollars, something like that. So we actually made a change in CEO, David Neeleman was our founder, he’d been there for about 10 years.
Joel: Fantastic guy. A brilliant entrepreneur. A wonderful human being. But we just decided as a board that it was time for new leadership, 10 years is a long time particularly as a CEO. So I stepped in at that time as chairman. Actually, David became chairman for a year and then I stepped in as chairman and we started working on reducing our debt load, building our income statement, and we really ended up going into this pandemic with the second strongest balance sheet in the airline industry. So we did a lot of surgery on things and the thing that I’m proudest of though is that we build a phenomenal culture and you know if you’re in a commodity business, typically the only way you win in a commodity business is on price and we decided we wanted to offer the customer something better. David’s initial comment was he wanted to bring humanity back to air travel. So we initiated with seatback TVs, more space, free snacks, and nice people, you know, people who really like their customers. So I think we’ve developed, kind of, a JetBlue experience that is differentiated.
John: You definitely did, Joel. I mean, I grew up in Queens. So, even though I live on the West Coast, I go back and forth a lot. I have an office in New York, and I’ve been a huge fan since day one of your airline. So you did build one of the greatest and nicest airlines with some of the greatest people on them and also some of the best equipment that having a television on board sure makes the time go by a lot faster than without a television.
Joel: Yeah. Well, do you remember when Maria – not Navratilova – Sharapova.
John: Yeah, of course.
Joel: It turned out her mother had been on that flight out to the West Coast and got to see her daughter win that and Maria was being interviewed and she gave us free advertising by saying, “You know, my mom got to watch me on JetBlue.” So–
John: That’s awesome. That is just awesome. Well, you built a great airline. And it is bittersweet, I’m sure, after 12 years. But you have so much going on, there are so many things still for you to accomplish including this great book you’ve just written. So in the book, you talk about trust and you talk about assessing your core values. Can you share a little bit about what you mean by that in terms of leadership and trust in assessing your own core values first?
Joel: Yeah. I think, really, we each have a brand, you know, if you were to ask the twenty people who know you best–
Joel: The likelihood is they would come up with some of the same words to describe you. That is your brand. That’s what Tom Peters calls Me Inc. and that’s your promise to people who meet you, to the marketplace, to customers. So you have a brand and I think every company has a brand, some are a little bit frazzled, they’re frayed, they’re unclear, they are amorphous. But if you really think about it and you become predictable, if you’re predictable other people can make decisions for you. If you’re not – if you’re mercurial, if nobody can really put their finger on your brand, nobody dares make any decisions because you might countermand them. So I think one of the main things is to really become predictable as a leader so that people can then step in and make the calls and the more that you can empower your team – that’s what Stan McChrystal talks about, driving the decision as far into the field as you can until it hurts.
John: That’s interesting. That is very interesting. You talk about the brand though. And you talk about having a consistent brand but there’s something in the book that was really interesting to me that I want you to discuss more and enlighten us on. You talk about rewriting your operating system and the mantra that you had that was repeated. Can you share a little bit about – it’s not about me, and what that means to you and how that’s important as a leader?
Joel: Well, that was intended to be idiosyncratic to me. It may be helpful to other people but really when I looked at sort of how I behaved and what was getting in the way of me being really affected, I really realized when I was really honest, you know, in the dark, thinking about it, that I was egocentric and I was thinking about how everything affected me and I really realized that I couldn’t be as effective as a leader unless I made it not about me. And, you know, you’ve been around people who are quiet, just waiting for you to finish saying something so they can jump in with their own point of view. That’s a little bit how I was I think and so I decided, “I’m going to make it so that I’m a great listener. I can capture and it’s not about me. It’s about the mission.” And so I became other-centered. I actually became really a fiduciary for other people trying to sort out what’s in their best interest. What’s in the best interest of the enterprise? It is not about me and it changed the way I work. So that was one of the things that I needed to address because of that characteristic that I had grown up with. I was the oldest of five children. I was much older than my next sibling, I had always gotten great grades. My parents had praised me and so I just grew up thinking I was, you know, the center of the universe and that’s not a good way to lead. So that was the mantra that I repeated. It took me several years and a number of instances of doing that to unwind that and replace it.
John: That’s a classy way of really saying that as leaders, people really have to learn to get over themselves.
John: You know, my wife and I have had the honor and luck to have attended one of Warren Buffett’s annual events in Omaha, Nebraska, and our favorite part of the event when he was talking about leaders – this was about seven years ago, and he said when he’s trying to pick a leader of one of his portfolio brands, he has three things he thinks about constantly when he’s interacting with the person that he’s focused on to potentially be his choice. He says they need to have energy, they need to have brains, and they need to have character. And he said if they don’t have the third thing, the first two will kill you. And that stuck with us in terms of our hiring practices and our leadership of our little brand. For you, one of the words in terms of great leadership that you focus on in your new book, Entrepreneurial Leadership is integrity. Can you share a little bit about what you mean by integrity and how is that applied for entrepreneurial leaders across the planet?
Joel: I think the most powerful way to think about it is thinking about whether or not you have what I call a say-do gap. Is there a gap between what you say and what you do? Because any distance between those actually creates a leak, creates mistrust. People say, “Well, he says this but he does this.” There’s a cynicism that comes with that. So reducing that say-do gap is really powerful. I think another thing is not having one set of standards in your private life and another in your public or professional life. People are smart. They realized that if you don’t have integrity in your private life, they can’t really trust you in your public life because, at some point, something’s going to come along that will tempt you to do something else. So it’s, kind of, a structural integrity. The way engineers talk about structural integrity that really holds it all together. So, to me, that’s the notion of integrity.
John: Oh, that’s wonderful. And for our listeners who have just joined, we’ve got Joel Peterson. He’s a storied business leader. He’s written a new book called, Entrepreneurial Leadership. Of course, it’s available now on amazon.com, barnesandnoble.com, and bookstores near you when all the bookstore is open up across this great planet. He also is the founder of Peterson Partners. If you want to find Joel there, it’s www.petersonpartners.com. It’s an amazing website. I love the landing page – capital for changemakers. It’s a wonderful line. I love that.
Joel, you know, you just talked about personal brand and personal life and how people are smart and they’ll smell you out if you’re living one way but promoting other ideas at your company and they know that at some point that will collide. In your book, though, you talk about establishing a personal brand but protecting your personal life, can you parse out that subtlety for our listeners?
Joel: Yeah. I think your personal life is a place that you can be safe, you know, that you can go to and I think having those strong relationships there is one of the things that gives you the thick skin you’re going to need as a leader. The ability to make decisions that may not be popular at the moment. The way to get things done with a safe place in your life to go back to and so I found early on in my career, I got a call from Trammell Crow who is a guy with the name on the door. And he said, “Could you come in?” It was a Sunday afternoon and I had reserved Sundays for my wife and kids and I think I only had one at the time and he was taken aback. I could tell he didn’t really like that very much, but it’s amazing. He respected it and I ended up being the managing partner of the whole firm, so it didn’t really get in my way. I decided that you know, this was a place that I was going to reserve and preserve, it made me nervous for a little while, but it actually turned out to be a good thing.
John: Psychologists of modern time who have now risen to the top in terms of business pop psychology and stuff of that nature, would say that you were early trendsetter in setting boundaries.
Joel: Well, I think one of the most important things you do in life is set boundaries, and those really help you establish your priorities in life. Without them, you drift and people get off course and they try things that won’t make them happy in the end. They may make them happy momentarily. So people tend, you know, to follow pleasure and short term happiness unless they have a notion of what is joy? What is peace in life? And so, to me, it’s always best to solve for joy and peace and let pleasure and happiness, you know, sit on the sideline a little bit.
John: I like it. You know, at the top of the show, you mentioned that you’ve had, what? Four thousand students over 28 years at Stanford?
John: You know, as students, we have a favorite teacher. We have a favorite, somewhere. How about as of professor, do you have one or two students that stood out that you want to talk about today in terms of who they were and what they became after they went through or why they were one of your favorites during the process of you teaching them?
Joel: Well, the dilemma I’ve got in answering that question is there are so many, you know, it’s like if you ask me about my favorite child, I have seven children and I love them all.
John: I gave you Sophie’s choice. It’s really not fair. But talk about a couple of just– I regress, I take it back. I’m not going to say favorite but talk about a couple of standouts that you could share with our listeners of experiences. A wonderful experience that you had with some of your great students.
Joel: Well, you know, so I just started out my first year. I was on the Advisory Board of the Business School and they lost the guy who is teaching the Real Estate Finance Course. So, they asked me if I would step in and I thought, “Well, this will be a piece of cake,” and then I soon found myself in a room full of people who are all brighter than I and expected a lot of me. And so I worked like a dog but I didn’t give very many high grades. I was very stingy because I expected professional work from all these brilliant young people and I only gave, I think, two or three H’s and one of them went to a guy by the name of Jim Ellis and I ended up backing him in the founding of Asurion, as a favor. I mean, I thought this was, sort of, a tax on being a teacher there and I backed him and it turns out to have been, I don’t know, maybe a thousand times return on value.
John: I guess, it wasn’t a bad tax you pay. I guess that was a tax with a return.
John: I’ve never heard of that but I’m going to take it as you say it. So, I love it. That’s awesome. So he was one of your first students.
Joel: He’s in my very first class. A number of years later, I had a guy that asked me to do an independent project with him and he was going to import South African Biltong which is beef jerky. And I had just bought a salty snack food company that had been brutal, Frito Lay had decided we didn’t deserve to live and so we didn’t live. Put us into bankruptcy. So I pulled him aside after class. I said, “Look, I’m going to give you a top grade on your project. You did a great job at it, but please do not do this business.” So he disappeared. I never saw his second year. He walked into my office and said, “I want to sell pants over the internet.” And I thought, “Oh my gosh, this is worse than Biltong,” and so I said, “Why don’t you practice your pitch on me,” and forty minutes later, he had me convinced that he was another David Neeleman. He was going to upset a category and really do something great. So I became his first investor in what became Bonobos, which is a favorite brand for many many men.
John: It’s a great brand. Wow. So, that’s how Bonobos was born. Wow. Wow. That’s two great stories out of the 4,000. I’m sure you could write a book just on those stories of your students and ideas that they had and ideas that you backed and that probably another book coming in. For our listeners who have joined, we’ve got Joel Peterson today. He’s written a book recently called, Entrepreneurial Leadership. I think we all can stand to hone our entrepreneurial skills, especially on the issue of leadership as we make it through these historically unnavigated times that we live in now. You know, this is still, I don’t know, maybe the top of the third inning of this COVID crisis, what do you see that’s going on, Joel, you know, you’re a leader with a massive biography and also history of seeing the ups and downs in the business world and in society, where are we going post-coronavirus times in America and around the world? What are some of the thoughts of hope that you could share with our listeners today?
Joel: So, you know, I actually think of Franklin Delano Roosevelt when he gave his first inaugural address on the East Portico of the Capitol Building in March of 1933, we were in the throes of depression and that’s where he uttered that famous line, “We have nothing to fear but fear itself.” And, you know, he was really right about that. And I think we’re overly afraid of this. I’m not diminishing and I am certainly not criticizing the decisions that were made.
Joel: So I think everybody did the very best they could I think we’re learning more and more about this virus. And we’re learning more and more who it attacks and there are better and better ways coming out of how to protect ourselves and how to protect that most vulnerable class. So, all of that said, I think job one for any business leader is survival. You know when you’re under attack when there’s a crisis, whatever, you have to think about survival and the way I think about that in the business sense is when you’re out of cash, you’re out of business. And so you have to extend the runway and that means deferring capital expenditures and cutting down on operating expenses, borrowing capital, being very frugal and thoughtful. And then I think you have to really reconsider your brand. You have to reimagine what it is that you’re doing. You’re going to emerge with a brand. You’ll have a covenant with your customers, suppliers, investors, employees and you really want to think that through. For example, at JetBlue, our brand our first value is safety. And so do we want to emerge with that brand value and the answer is absolutely, yes. It’s now just extended to a new category that includes health which means wearing masks, it means probably not for a while at least, selling middle seats. It means taking temperatures. It means sanitizing planes. It means cutting down on our routes. It means a bunch of different things, but we’re still the safest form of travel on the planet and we’re the most environmentally friendly. The air on an airplane is the cleanest air on the planet with the filtering system. So, that’s a brand attribute that we want to maintain – we’ve got to really think about that. Then I think you have to really do things that radiate the mindsets of leaders in these times and I think that means number one, you confront reality, but you remain optimistic. And then I think your action-oriented. You can’t dawdle, you can’t dither, you can’t delay decisions. You have to take action and making those timely decisions means you’ll make some mistakes. And so my rule is always: no recriminations. Everybody’s doing what we can, we’re belayed on a cliff. We’re holding the ropes for each other. So, you don’t get to criticize. You get to a place where, you know, we can decide people may want to step off but while we’re on the cliff, we don’t do that and then I think you have to communicate. You really have to be lavishing your communications.
John: That’s great. I mean, those are some– well, first of all, that’s a hopeful message. And those are some great tips for our leaders out there, entrepreneurial leaders to help their brand get to the other side and that’s what it’s all about right now, getting to the other side, for all of us. For all of us. You know, a mission. There’s no great company ever that hasn’t had a mission. Can you talk a little bit about how you view mission – creating a mission, and the importance of that, and how you laid that out in your book, Entrepreneurial Leadership?
Joel: So I really distinguish between a mission and a mission statement. Mission statements are often delivered from the corner office and they belong to Senior Management. Missions are owned by everybody. This is really what gives us meaning. And so I like people to craft, to wordsmith the mission. And again, it’s what are our values? What are our priorities? What do we all believe in? If you get people to own the mission, there’s no issue ever of motivating them. They are motivated by the mission. It’s what gives them meaning and they stay longer, you get better people, they stay longer having clarity. So, whenever I’m starting a business or working with a business, I regard what we’re doing as picking a peak. There’s a whole mountain range in front of us of possible peaks, but it’s getting everybody to say, “This is the peak we’re going to climb and we’re going to climb it together and it’s going to require all of our skills and we’re going to all agree on it.” So everybody has a line of sight from their job to the peak. And, boy, once that’s clear, you really don’t worry about motivation, but it’s so vital. And by the way, it’s so hard, you know to get the mission just right is really hard work.
John: Yeah, and with that, you know, one of my favorite words of just the last couple of years and I never used it historically, but I’ve been using it more and more and you mention it in your book and you talk about it is building alignment. Is that part of the mission, building that alignment among your colleagues and to get to that peak?
Joel: Yeah. In fact, I talked about MAD goals: memorable, aligned, and doable. And if your goals are memorable, they have some emotional content and meaning to them. They’re aligned, they’re aligned with your values, they’re aligned with the strategy you’re going to get them done and the tactics and the things you measure, you get what you measure in business. So if you get alignment between values, objectives, strategy, tactics, and measurements or controls, you’re going to find that things almost run themselves. So, to me, alignment is a really really powerful notion and that also is hard, you have to keep reviewing it and making sure you don’t have a compensation system that pays people to do one thing while you’re jawboning them to do something else.
John: You know, Joel, one of the themes just from having this lovely conversation with you today that I’m taking away is that if there’s no such thing as, okay, being a great leader and saying, “I’m done.” It’s an evolution that there’s always work involved in terms of honing it, polishing it, working it, and assessing it all the time. Is that sort of the way you approach this, that the evolution is always ongoing and vigilance and the energy behind that is always a necessity?
Joel: Yeah, for two reasons. One is we’re imperfect beings and so we’re always knocking off the rough edges and learning things. If we’re humble, we’re always going to be learning new things and so that refines you. And the second thing is we live in a dynamic world, the world is changing and so you got to be willing to adjust which requires a level of humility. Humility is hard and you got to be committed to it.
John: Yeah. You know, one thing I love to leave our listeners with today is lessons learned. Now, besides having the proactive lessons that you’ve learned, can you share with our listeners some of the– let’s just call them, common mistakes that leaders make that you’ve laid out in the book and how could an aspiring leader or someone who, today,is listening to this show who is a leader of an entrepreneurial venture avoid making and how to do that? Lessons learned by you.
Joel: Yeah. So I made virtually all the mistakes you can make and I’ve tried not to make them more than once but I’ve even done some of them more than once. I would say that early on, out of business school, I wanted to get the right answer and that meant I always needed more information, and that always meant I needed more time until I realized that delaying was a decision. That the world changed and I had, in fact, made a decision. So that’s one of them. Another one that I’ve made over and over is I’ve waited too long to let somebody go. It’s really interesting, most of the time when you realize somebody’s not a good fit, and it may not be their fault at all, things don’t get better. And I believe in coaching, I believe in redemption, I believe in working with people, but I do believe that I’ve tended to wait too long. And so that’s been one that I’ve learned the hard way.
John: And that’s a common mistake, though, among entrepreneurs because you choose someone, you sort of fall in love with them, and you want them to do what they said they’re going to do and then when they don’t, it’s hard to separate your own ego and your own decision-making with the understanding you made a bad choice and you got to say goodbye, right?
Joel: Yeah. And what helped me a lot with that is realizing that I have a whole team that’s relying on me. And I’ve got to score a touchdown and if that wide receiver keeps dropping the ball, I need to put a different wide receiver in for the benefit of the rest of the team. And so once you realize that it’s a team sport and you owe it to everybody, then you can get over that natural hesitancy.
John: You talked about motivating employee performance but when you fire, you fire with empathy.
John: Why is that?
Joel: Well, to me, I have a whole bunch of self-talk that I use and one of the things I tell myself is, “This is my mistake too. I joint ventured this outcome.” And it may be that I selected a person who couldn’t grow into the role, it may be that I didn’t give him good coaching or direction, whatever. But it’s not all their fault and I really want the best for them. It’s not the best for them to stay someplace where they’re underperforming. I want to help them get to a better place. So I try to have that kind of self-talk to help people elegantly and gracefully move into a different place. And in many cases, it’s worked out that they’re grateful. I’ve actually been fired and it was the best thing that ever happened to me.
John: Did they fire you with empathy or was it not a great experience at the time?
Joel: Well, you tell me, they fired me and sued me in county state and federal court.
John: It wasn’t with empathy then. Let’s just say that. Let’s just say that. Hey, you know what? For our listeners out there, we’ve got Joel Peterson today. He’s not only the chairman of JetBlue but he’s a storied and awarded, many awarded Stanford Business Professor, 28 years there. But he also is the founder of the P Firm, Peterson Partners. You could find them at petersonpartners.com and I love on the landing site. Like I said later and I have the website open in front of me, capital for changemaker. So if you think you’re a changemaker, that’s where you’ve got to go. But, you know, before we wind up today, I want to talk about the final ten chapters of the book where you talk about what you’ve seen in your experience, common execution challenges that entrepreneurial leaders have faced and some strategies that you have laid out. And since we’re going through very tough times and many companies, great companies, that should survive, are going to be facing some headwinds because of this pretty much unprecedented crisis that we are all up against, there’s going to be somewhat of a feeling of some of them are going to need workouts, some of them are going to need a turnaround, some of them just going to need extra TLC. Can you share what you’ve put in the book in terms of your smart steps, your six smart steps for managing a turnaround?
Joel: So, managing a turnaround is really just doing great management under adverse conditions. There’s nothing unique about this. This is exactly what you should be doing to be running a great enterprise.
John: That’s great advice. I want to hear it, so, give us your six. Give us your best six.
Joel: Okay. Well, I think the first one is the one that I mentioned which is, you know, confronting reality. You know, what is the market telling you? And then making sure that you’re doing that. So, to me, again, it’s a team sport and it’s particularly a team sport when you are belayed on a cliff and you really try to work your way through it. So, I think, bringing people into the tent and really leveling with them and making sure that they know exactly where things are, and this may be another point that I make but I’ll make it right now and that is setting with them, specific goals so there’s clarity. I believe in winning while you’re losing. It may mean that you lost a certain amount last month and we’re going to lose less this month than last month. Well, it’s hard to say losing is winning. But if it’s less than before you’ve actually chopped up a win.
John: You’re right. You’re right.
Joel: Yeah. Measuring those wins along the way is really an important thing.
John: And celebrating them as well. Do you celebrate those wins as you go?
Joel: Absolutely. The team has to feel great about itself, great about making progress. See the end. I mentioned getting to the– you know when you’re climbing the cliff, you know, we want to get to this meadow, though it may be an interim step, we’re going to celebrate when we get there and if people want off, at that point in time, they can leave. But not while we’re belayed.
John: The third one reminds me of my personal trainer. It says, “Focus on your core,” you know, that sounds like something our trainers would say, “Hey, you got to get your core stronger.” Explain what you mean by core?
Joel: Well, most businesses in good times, start developing a bunch of things that aren’t core to the business. That’s what I call hobbies. They have a lot of hobbies that they developed and a lot of the times they don’t sunset those hobbies. So you have committees that are set up and they start to have a life of their own and you find out that you have a lot of things that aren’t essential to your business. So, to me, figuring out, “What are we providing our customers? What’s the thing without which we would not survive?” And then make sure that you deliver that in a perfect way.
John: The fourth one you had here in the book that I have open right here in front of me is set metrics.
Joel: Yeah, you get what you measure in life and in business, it really helps you decide what your priorities are, but I like to even have physical charts, you know, visual aids where people can see, “Here is where we are last month. Here’s where we are this month.” And I found that it’s actually helpful in many cases to do ratios. So you can measure two things at once, sales and employee that shows our sales and it shows how efficient each employee was. And you see that going up and you say, “We are becoming more efficient. Our sales are going up and our employees are becoming more efficient.”
John: The fifth one you have here, which I love because you throw in, in your great book, Entrepreneurial Leadership, you throw in an airline analogy – extend the runway. Extend the runway.
Joel: So that’s where I kind of started with this idea of cash, you know, that’s what I mean by extending the runway. There are a lot of ways to do that – you can delay payments, you can get more loans, you can cut back on things, you can get back to just the core. But again, this idea is you don’t know how much time it’s going to take in the turnaround. So you really want to make sure you’ve got plenty of runways to get there. Because, again, survival in a turnaround is what it’s all about.
John: And the last one of the six is – take action now. Talk about that. And then I want to ask you a couple of questions about action. Go ahead.
Joel: Yeah, so that’s the idea of not dithering. In turnarounds, you really find that time is of the essence, you know, people who take too long and assume things are going to get better often run into big problems. Whereas, if you take action, in some cases, I think we’re in the emergency room, you know, emergency room doctors don’t make sure that everything is perfect and clean and exactly how it needs to be, they take care of people who are under duress. And so I think you’re in the emergency room, take action, you know, save the patient.
John: But Joel, I mean, it’s great advice, but you know, this is from someone with a massive book of experience like yours. There are some leaders out there, that when you have seen them face adversity or even while they’re leading but facing tough decisions even leading during good times, that they freeze out of fear. Is being frozen as a leader, one of the great potential fatal mistakes?
Joel: Yeah, that’s the problem of dithering – not making timely decisions. And that’s one of the places a board can really be helpful because boards typically have people who’ve seen the movie several times and they can be really quite helpful coaches.
John: Talk a little bit about a board, you know, in modern times, what do you believe entrepreneurs should be looking for when he or she is putting together a good and resilient and helpful board of directors? Do you have a favorite one or two or three tips on entrepreneurs building the right board to help them get from point A to point Z?
Joel: Yeah. To me, the most important thing a board does is serve as a team. You know, they are one of the teams, a management group has. And so, I think, the idea that the board is there to lord over and control or whatever– yes, they represent shareholders, but they’re there to provide wisdom and judgment, to do it gracefully, to evaluate things, and to remove obstacles. And a great board can actually accelerate a company rather significantly; a bad board has political infighting and can actually damage, they can push a management team too hard, too fast, too far and could actually damage a company. So, to me, getting the right people and one of the things that I would say there, John, is I think hiring for particular expertise while there’s a role for that, it’s not nearly as important as hiring graceful, wise, thoughtful, experienced human beings who know how to get along with others. I mean, it’s really vital.
John: So, really, choosing your board which is your choosing upwards as opposed to when you’re an entrepreneur leader choosing colleagues and other people that are going to hopefully help you get to your goals. But choosing a board is really a tremendous necessity but not one that many new entrepreneurs who find themselves in a leadership position are used to, so who did they lean on for advice while they’re trying to put together this very important group of people? I mean, that sounds like almost a conundrum that you’ve dealt with a lot because you’re taking these– the four thousand young people you’ve mentored and taught for the last 28 years and some of them like Jim Ellis and other great folks have gone on to create businesses, without having ever done this before, how do they know how to put together a board?
Joel: Well, in a lot of cases, I think what they do is whoever their investors are, become their board, initially. And so I think what I tell entrepreneurs to do is interview those investors as much as they’re interviewing you. A lot of times people think they’re pitching so they can get money and I always say, “Money has faces. And it’s not Jefferson and Franklin and Lincoln.” And so really think about who those people are, you are hiring them as much as they’re backing you, so make sure that you do that carefully. Then have off-ramps have a way that you can adjust your board over time. You don’t want to get those initial investors locked in. In many cases, the initial investors are looking for a return on capital. They’re not necessarily looking to build a great enduring company. So they’re looking for ROI, they have limited partners that they’re serving, they have fund lives, et cetera. And so that’s not the best overall board. I would also, lastly, say find a mensch, find somebody who’s really wise and experienced that the others will look to as a lead director. That lead director can shape things in ways that you can’t, so you want to have an ally who’s really a mensch and that people won’t question. They may not always agree, but they will go along with that person so I would say that’s an important role too.
John: Great advice. And for our listeners out there, you know, Entrepreneurial Leadership, Joel’s book is literally one of the best books I’ve ever had the pleasure of reading. It’s so helpful. There is so much for us to learn from his great career, both as a professor but also as a business leader at JetBlue and the other companies he’s been involved with. For our lucky five listeners, I would say write to me at the Impact Podcast and tell me what you’ve learned from today’s interview. Give me the best thing that you’ve learned out of today’s interview and the five best will get a signed copy of Entrepreneurial Leadership from Joel Peterson. He’s signed a bunch of copies for us and we have some to give away today. You could find the book, of course, on amazon.com, barnesandnoble.com, and great bookstores around you, and hopefully soon after this episode airs, those book stores will be open and selling books again for all of us to enjoy like this book. You know, Joel, before we say goodbye, we were talking off the air before we started the show and there’s a lot of things we were just touching on and one of the things I brought up to you is Michael Jordan. The basketball player’s recent biography that’s been taped and shown on HBO that since we’re all been in lockdown and there are no sports on television, it seems like America and the world has been enjoying and he had a very interesting line. He actually got emotional when he said it in the eighth episode. He said, “Winning has a price, and leadership has a price.” And since this show today and your book is on leadership and more important, entrepreneurial leadership and I think more important because America is known as the Innovation Nation, we’re known as the great entrepreneurs of the world, so this book has so much meaning and especially during these challenging times, but he was very emotional talking about that. How do you apply those words that one of the greatest athletes of our generation said, “Winning has a price and leadership has a price.” How do you relate that to the business world and the price that great business leaders sometimes have to pay that others aren’t willing to pay? Can you throw some wisdom against the sports analogy that I just used?
Joel: Yeah. So, I think, leadership is a lonely place. Leaders that are carrying these burdens around feel rather lonely and they feel like they have to grow fairly thick-skinned but I have found that people in business also want to be respected members of a winning team doing something meaningful. And if you can hit on all three of those notes: showing them respect, figuring out how to get to the summit. and making that summit really meaningful, you really have a team. Michael Jordan didn’t win those championships by himself. He had Scottie Pippen and Steve Kerr and they were there supporting him and carrying him at points in time. So being the leader requires what he says, but it also requires a great team and it’s much better if they feel like they’re doing something that’s really meaningful that’s theirs, that belongs to them. And I think it’s the key to a winning team.
John: You know, this book, the reason why I invited you on the show, Joel, is because I learned a lot from reading your book and I’m 57 years old and it made an impact on my life. It’s going to make an impact on how I lead my company and I really really can’t impress upon our listeners whether you’re just a new entrepreneur or you’re an oldie like me who’s been doing it his whole life. There’s so much still to learn from someone with your wisdom, with your experience, and with your clarity. You’re so clear in this book and it’s not a long book and it’s really easy to read. For our listeners out there, I really highly suggest you pick up a copy of Entrepreneurial Leadership. You know, Joel, you’ve been so generous with your time today. You’ve been so generous to come on our show, especially since you’re in the second to last day of your tenure of Chairman of JetBlue. It’s been an honor to have you today. I thank you for the impact you’ve made on our business community over the last 28 years, training 4,000 students, and also on our business community. Thank you for building the great brands you build and thank you for being with us here today and the impact you’ve made on this whole world and making it a better place.
Joel: Well, thank you so much for having me on, John. It’s been a pleasure to talk with you.