Speaker Name: John W. Guffey, Jr.
Speaker Title: Retired Chairman and CEO
Speaker Company: Coltec Industries, Inc.
Good afternoon to Chancellor Borkowski, Dean Peacock, faculty, distinguished guests and, most of all, to you the students.
It is a great honor and privilege for me to be here today and join the ranks of those who have participated in the Harlan E. Boyles Distinguished CEO Lecture Series. For over a decade now, the students and professors of this outstanding institution have heard from some of the finest business leaders in our state, if not in our country. I am proud to be with you today and, through this opportunity, hopefully I will prove to be a small part of your academic experience.
First, I extend my congratulations to the students, faculty and administration on the occasion of Appalachian State University's Centennial. What started in 1899 as the Watauga Academy with an enrollment of 125 has become a superb institution of higher learning with 12,000 students and a growing national reputation for academic excellence.
That kind of success story would not have been possible without great leadership -- the kind of leadership that we need now more than ever as we enter a new century and a new millennium that will surely be defined by rapid change. You know better than I that the rate of change we face is accelerating. I believe that how you respond to this phenomenon will greatly determine your future.
Back in medieval days (not that I was there, mind you) and even at the turn of the century, there was very little change compared with today. Not that long ago, only a few generations past, people learned a business or trade skill from their parents or grandparents.
As the rate of change increased, we began going to school to learn what we would need to know for an entire career. Now, best estimates are that you will experience a minimum of five fundamental career changes during your lifetime. Most of you, in fact, will probably face more change in the next decade than your parents will experience in their entire working careers.
Today, I'd like to share with you some of the lessons I have learned during 45 years in business -- lessons about leadership, successes and, yes, also failures -- lessons that I believe will keep you in good stead, no matter how chaotic events around you become.
It is my sincere hope that some of what I have learned over the years, through my own experiences and by observing others, will have some measure of value to you as you continue with your education and your journey through life.
Perhaps one of the most important lessons I've learned, as will you, is that life's lessons never, never end. Today, learning is a continuous lifetime process -- not only to keep up with technology, but also to keep pace with a changing world, a changing workplace, and an increasingly global economy. In fact it is said you will not earn a living -- rather you will learn a living.
For the business world, part of this learning process has been making the shift from "management" to "leadership." Some four decades ago when I entered the world of work, the focus of American industry was on "management," i.e. budgets, organizing, staffing and controlling. That business model worked well for a long time...until the world of business changed, customers changed, shareholders' demands increased, and most importantly employees' expectations changed.
After some "toe stubbing," we realized the "management model" was no longer enough to sustain America's leadership. The management skills we had honed were essential...but there's a distinct difference between management and leadership, and recognizing that difference will be what separates the winners from the losers in the next millennium. Managers are critical to implementing policies and procedures, keeping schedules and making sure things get done right. Leaders make sure the right things get done.
While managers give directions, leaders direct -- instilling a sense of vision, aligning people with strategies, and creating an environment for solutions. From the employee's perspective, it is a change in focus from "having to follow" to "involved participation and wanting to follow."
It's that curiosity, that excitement, that enthusiasm, that invigoration and commitment, as individuals and as an organization, that is absolutely essential to achieve and sustain the excellence necessary to remain competitive and stay ahead of the pack.
At Coltec Industries, the $1.5 billion company I have led as president or chairman and CEO for most of the 1990s, we recognized the importance of controlling our own destiny. We took a focused look at where we were and where we wanted to be. And we made dramatic changes to get there.
Having redirected the company through strategic acquisitions, divestitures and various other initiatives to position Coltec as a leading manufacturer of highly engineered aerospace and industrial products, we determined last year that a merger with BFGoodrich would provide the scale and financial strength we needed to successfully compete and grow in today's consolidating global marketplace.
It was a merger that I knew would prove outstanding for Coltec's employees, customers, suppliers, shareholders, and our headquarters community, Charlotte, North Carolina. It was a merger that would create a $6 billion, Fortune 300 company with exceptionally strong businesses in aerospace, performance materials, and engineered industrial products. However, this merger process confirmed for me once again that life's lessons never end.
Despite my extensive experience in the business world, just this past year I entered one of the most demanding and educational periods of my professional life as we strived to put this merger together.
Let me explain. When we announced our plans to merge last November, it was widely believed that the BFGoodrich and Coltec combination would be completed by March 1999. Sure, we recognized there would be issues, because each company had a very dominant aircraft landing gear market share, a fact that could trigger a thorough review by the United States Federal Trade Commission (FTC). But no one expected, nor could have anticipated, what would take place over the next many months as we attempted to close the transaction.
In the end, the merger took over nine months to complete and may well have been one of the most heavily contested transactions in recent memory. The announcement was only three weeks old when the first sign of difficulty arose in the form of a legal challenge from one of our competitors, the Crane Company. For reasons that were completely invalid and summarily rejected twice in federal court, Crane contended it had first dibs on buying Coltec.
Shortly after defeating Crane in federal court, another competitor, Allied Signal, came on the scene demanding that Coltec sell its landing gear business to them, or sell the entire company to Crane. If Coltec refused, as we did, Allied Signal threatened to block the merger using a variety of regulatory, legal, and political tactics.
And so they did, leaving no stone unturned in their effort. All along, though, we knew that right was on our side. The struggle continued for over five months in the courts, news media, and in several U.S. Senate and congressional hearings. All parties eventually reached a reasonable settlement, and the merger was finally completed on July 12, 1999.
However, this came at a tremendous cost with legal fees alone exceeding $15 million. Nevertheless, the completion of the transaction is a tribute to the leadership and commitment of our combined companies. Despite every possible obstacle, we persevered, stuck to our beliefs, and prevailed.
The experience is also a great example of how, no matter what you've learned or think you know, life is a never-ending teacher. During the past 12 months, I have learned so many new lessons -- for instance, the process by which mergers are approved in Washington, the tremendous influence that congressmen and senators can exert on public opinion, or the power that a non-objective federal judge can wield.
In this last example, a single decision made by a federal judge in South Bend, Indiana -- made almost casually without hearing one shred of evidence -- delayed a $2 billion merger for months and created great uncertainty for 27,000 employees and thousands of shareholders of both companies.
It was a time when I drew on the principles and lessons I had previously experienced -- the ones that don't change with the passing of time, for example, the importance of trusting one's judgment and instincts. Contrary to conventional wisdom, while negotiating the merger, I did not focus exclusively on getting a high initial premium for our shareholders in terms of the exchange in Goodrich shares that they would receive for their Coltec shares, Better, I thought, to get a reasonable premium, and then rely on the appreciation of Goodrich stock to bring our shareholders a greater return.
Given the short-term orientation on Wall Street, I knew this approach would come under some criticism from many in the investment community. Nevertheless, I trusted my instincts, and what was a 10 percent premium on the day we announced the merger turned into a 40 percent premium by the time the deal was completed. During this time, the value of our shareholders' investment in Coltec increased a very healthy $600 million.
This experience also reminded me that the best rewards in life usually come with a struggle, and that tenacity and perseverance can make the difference between winning and losing.
It also became clear, as I am sure all of you know, that these are qualities that we do not develop overnight. They are developed over a lifetime, largely through self-awareness, self-discipline and sharp focus. When you need to draw upon these qualities, as you will throughout your personal and professional lives, you'll want them to be there in abundance.
As a result, because we won our merger struggle, over 80 percent of the employees at Coltec's former headquarters now have new career opportunities with BFGoodrich.
And Charlotte, North Carolina, now has another Fortune 500 headquarters -- its fifth.
Had we not prevailed, it is likely that Coltec would have indeed been bought by another company, and our headquarters, rather than becoming the home for the merged company, would have been eliminated. And most, if not all, of our fine employees would be searching for new careers.
Let me shift gears away from some of the specifics of the last year and talk about other qualities that I believe are necessary for success.
No doubt each of us has our own view of what success looks like, whether in our personal lives or our careers. So I'll broaden my remarks to go beyond what I have learned from my own victories and failures, to what I have observed in others whom I would consider successful -- including men and women in education, public service and the arts.
Successful people surround themselves with successful people.
Associating with the best, those that I call "A" players, adds to the excitement and stimulation of one's work and it enhances opportunities for continuous self-improvement. Always seek out the best -- in your mentors, in your colleagues, and even in those with whom you compete. While this approach will not result in hitting a home run every time at bat, I can assure you that your batting average will constantly improve.
Successful people are passionate about what they do.
For me, ever since I graduated from Youngstown State University with majors in engineering and metallurgy and visited my first factory at the age of 17, I've always enjoyed being in a manufacturing environment. I have always been fascinated with the combination of human intelligence and energy, coupled with the power of machinery and technology leading to the creation of products that make our lives better. This fascination explains why I have spent my entire career working in manufacturing companies, including General Motors, Carlisle Corp., Coltec Industries, and now BFGoodrich.
Successful people make decisions and they make a lot of them.
Often this means making decisions with less than all the information necessary to ensure the perfect decision. Rather than search for 100 percent of the information and shoot for a perfect track record, they make decisions with 80 percent of the information coupled with their instincts and end up with the right decision, say 90 percent of the time. It goes back to what I said earlier about the difference between management and leadership and making things happen. Following this route, you will make many more effective decisions than if you had taken the alternative approach -- waiting until you had more, if not all the, information.
Successful people take ownership.
Very simply, this concept means that you think and act like you own the business or whatever activity you might be involved with. It's a very distinct level of commitment, which I have always applauded and encouraged.
Last summer, I was involved in a business review with one of my executives who was explaining why his business in South America had fallen off dramatically. He referenced reports from the field, conversations that he had with his distributors, and so on. When I finally asked him if he had gone down himself to see first hand what was behind the slump, he answered no, at which point, I then asked him, if he owned the business would he have personally gone? His answer was yes.
Successful people always sense the power of appreciation.
Whether in the executive suite, the classroom, or the shop floor, successful people always remember the incredible power of a thank-you. They are quick to praise, slow to criticize, and they never ignore the lowest position on the totem pole. They know full well that the successes of most organizations rise and fall based on everyone's contributions, and always remember there are a lot more worker bees than there are queen bees.
Successful people are people of integrity.
This is the most important quality of all and without it you will surely fail. Let me repeat. Successful people are people of integrity. They are people who can be believed -- not most of the time, but all of the time. They are people who do not shift the blame for their failures, but instead accept individual responsibility for their deeds and the state of their lives. They focus on what has to be done and act, rather than make excuses.
Early in my life, my father, a minister, and a man of the highest integrity, sat me down and said, "Johnny, in your life you will have the opportunity to do absolutely anything you desire to do. But you must always be willing to accept the consequences... and remember, you will ultimately be judged by your deeds --not your words." My father was talking about integrity, and I have never forgotten his words.
In closing, let me share with you a writing entitled "Success," by Bessie Anderson Stanley:
- He has achieved success;
- Who has lived well, laughed often and loved much;
- Who has enjoyed the truth of pure women, the respect of intelligent men and the love of little children;
- Who has filled his niche and accomplished his task;
- Who has left the world a better place than he found it; whether by an improved poppy, a pretty poem or a rescued soul;
- Who has never lacked appreciation of earth's beauty or failed to express it;
- Who has always looked for the best in others and given them the best he had;
- Whose life was an inspiration; whose memory will be a benediction.
Thank you sincerely for inviting me and my fiancee, Monique Yelling, here today. I have appreciated your attention, and I wish you the very best life has to offer.
As I mentioned before, you are inheriting a world where change will be rapid and constant. To be successful as companies, universities, governments and individuals, we need to embrace that change and, as leaders, strive to control our own destiny. At the same time, we must never lose sight of those qualities that are timeless for successful people... qualities like integrity, tenacity, passion, appreciation, and, yes again, integrity.
Those are the basic lessons I've learned, and I hope they will be just as valuable for you in the next century as they have been for me in this one. With all the opportunities ahead, I believe that you, as individuals and as a generation, have unimaginable potential to make the 21st century the greatest century in the history of the human race.