Speaker Name: Fenton N. Hord
Speaker Title: President and CEO
Speaker Company: Carolina Holdings, Inc.
I am very pleased to be here with you today, actually doing one of the things I have enjoyed most in my career -- that is sharing some thoughts with the next generation of business leaders. It has always been most gratifying to be with a group of young, enthusiastic, energetic men and women who are about to enter the business world.
Earlier today as I was walking around campus, a student handed me an envelope which I thought was a friendly gesture. When I opened the envelope, the salutations were, "Don’t worry too much about your presentation, we’re not expecting much from someone who sells building materials." Seriously, to be able to share some of my insights with such a group is very exciting because I remember about 30 years ago when I was in your shoes.
I’m a bit humbled by the prospects of being a "distinguished" lecturer, but I guess with the definitions of words like "alone" and "is" currently being debated in the political arena, I shouldn’t find myself concerned. My predecessors in this lecture series are indeed very distinguished business leaders and there is no doubt that the namesake of this program, Mr. Harlan Boyles, has distinguished himself throughout the years.
Mr. Boyles has served the State of North Carolina for more than 40 years, and for more than 20 of those years has served as the State Treasurer. He is considered to be one of the best state treasurers in the country which is confirmed by the fact that North Carolina is one of only a few states that has a Triple A rating for its bonds. I’m honored to be in his company as well as yours.
My job today is to speak to you for about 30 minutes on a subject of my choice. Your job is to listen. If you should finish your job before I finish mine, please sit there quietly and bear with me for I will catch up with you. I hope to serve up for you an appetizer of thoughts. I want there to be some take-home value from what I say. In preparing for this visit, I was struck by the mission statement of the Walker College of Business, and I will paraphrase...to prepare individuals for leadership responsibilities...to develop interpersonal and decision making skills as well as to develop ethical responsibilities. These are excellent principles on which to build a foundation for a career.
I will attempt to weave together the aforementioned by defining the word "success." What is success? This, too, is a very elusive word which means very different things to many people. I would assume everybody here, students and otherwise, wishes to be a success, whatever that means. Ultimately, I believe success is defined by each of us for ourselves.
Let me dispense with some required details by giving you a thumbnail sketch of our business and myself. Carolina Holdings is an organization that grew out of a North Carolina base that dates back to 1922. In that year, Carolina Builders Corporation was founded as a single operation in Raleigh, distributing building materials to professional contractors. It was a family business, and remained as such, until January of 1986. In that year, the family sold Carolina Builders, which by then had grown to seven branches, all still in North Carolina, with sales of approximately $100 million. The acquiring company was Wolseley plc, a publicly traded English company headquartered in Droitwich, England. Wolseley is one of England’s largest companies, with annual sales of over $8 billion. Dating back to 1879, Wolseley today is the world’s largest distributor of plumbing supplies.
I joined Carolina Builders in early 1987 and, in the succeeding 11 years, have had the pleasure of leading our organization in what has been a period of substantial growth. By early 1987, Carolina had grown from seven to eight branches, but was still doing approximately $100 million in sales. Today, we have 119 branches in 12 states, and this year our sales should surpass $1.6 billion. Denver, Minneapolis, Wisconsin, Michigan, Ohio, Philadelphia, Delaware, Virginia, North Carolina, South Carolina and Atlanta are all markets we serve. Although we’ve grown dramatically, the customer and the business are very much the same as in 1986 and, for that matter, very similar to 1922.
We sell over 30,000 different products, with lumber and lumber related products making up a significant share. We sell to contractors who build single family homes, multi-family residences, and smaller commercial projects. In addition to lumber, we sell windows and doors, millwork, mouldings, hardware, roofing, sheetrock or gypsum, power tools, hand tools, fasteners, wall and floor coverings, as well as a large variety of other products. We also manufacture and assemble roof and floor trusses, specialty millwork including staircases, spiral staircases, and exotic entrance features, pre-built interior and exterior wall panels and, as a service to many of our contractors, we supply construction financing, meaning we are, in some respects, our customers’ bank.
Most recently we were cited for being the largest company in the country that specifically markets to the professional contractor. We rank eighth among all companies selling building materials and home improvement products, falling in behind the likes of Home Depot and Lowe’s. In one of our industry’s trade publications we were cited for being the most productive entity in the entire industry (including Home Depot and Lowe’s) based on sales growth and sales per associate. Carolina Holdings was the successor of Carolina Builders when we completed our largest acquisition to date, Erb Lumber Company in Detroit, Michigan.
On a personal note, I was born in Richmond, Virginia, a World War II baby boomer, some 52 years ago. My father was a branch manager for a local bank and spent his entire career of 41 years with that same company. His service with the bank was interrupted only by a three-year period of time which he spent in the good service of our government in the Asian Theater. My mother was a professional mother and homemaker.
I believe that I had a rather normal ’50s and early ’60s childhood, and can probably be blamed along with the rest of my generation for bringing some bad habits out of the ’60s and early ’70s. I graduated from the University of Richmond which I really don’t believe, today, would even take me. My wife, Pat, and I married in our junior year and I wouldn’t recommend that, necessarily, for anyone else, but it has worked out great for us. Within a year we were blessed with a son and, at the age of 21 and in need of income to support my family, I went to work for Eskimo Pie Corporation, a subsidiary of Reynolds Aluminum Company. For my last two years of college, I worked full time while going to school part time. Again, I wouldn’t necessarily recommend that.
After graduating, I continued to pursue my education and earned a master’s degree at night from Virginia Commonwealth University. Five years after receiving my graduate degree, I became president and chief operating officer of Eskimo Pie Corporation. At that time, I was 31 years old, had a second child, a daughter, and nine short years later I moved on to Raleigh to accept my current position with, at that time, Carolina Builders, which six years later became Carolina Holdings, Inc.
Now let us move on to the subject of "success." Some ten years ago Harvard Business School produced a study whereby they were attempting to determine the characteristics of a successful person. The results of their study produced five simple and logical characteristics.
- A successful person has high, positive expectations.
- A successful person accepts failure.
- A successful person creates a healthy environment -- a win, win environment
- A successful person is persistent.
- A successful person surrounds himself with believers.
American businesses and CEOs were used for this study, but I would suggest that these characteristics could aptly apply to families, churches, or any kind of organization. Certainly they do apply in business and we’ll look at them one at a time. I believe these five characteristics to be very important, indeed.
Each is powerful, independent of the others, and collectively they produce a very clear and discernible picture.
First, let us consider high, positive expectations -- being optimistic -- if you will. Has anyone ever read "The Power of Positive Thinking" by Norman Vincent Peale? Having a good attitude is clearly a bit cliché. But in many, many cases attitude does really determine altitude. The power of positive thinking cannot be overstated. Believing you can achieve your goals is critically important.
Henry Ford said, "Whether you think you can or you think you can’t, you’re right," and Benjamin Franklin was quoted as saying, "Blessed is he that expects nothing for he shall never be disappointed." Obviously, you do not want to be unrealistic but believing in yourself, believing in your team and what you’re trying to accomplish has to be the centerpiece of any successful endeavor.
In a study carried out at Emory University in Atlanta some years ago, doctors and scientists studied octogenarians. They wanted to determine why people live long lives and the characteristics in this group that caused them to live beyond 80, while others did not. The entire study took place at Emory Medical Center over a period of two years. At the end of the study, there was one compelling conclusion borne from the scientific approach taken by the researchers. People don’t live longer because of their diet and they don’t live longer because they exercise daily. The only common characteristic that seemed to address their longevity was their ability to deal with the anxieties and traumas of life. Some smoked cigarettes and used other forms of tobacco; some used alcohol. Still there they were, in their 80s and 90s, doing better than most of their contemporaries who may have conformed to a regimen or lifestyle which, on the surface, was much healthier.
These people handled all that life threw at them and did so with a mindset that was very positive and optimistic. There was one lady who, at 102 years old, had outlived two husbands and five children. Each and every time she lost one of the loves of her life, she was able to deal with her grief by remaining positive, remaining hopeful, and remaining optimistic. She continued to expect good things from life.
This common thread that wove its way through the entire group supports the belief that high and positive expectations can lead to successful outcomes. Certainly living a long, healthy life could be part of being successful.
The second characteristic of success is to accept failure. No one can expect to go through life and not experience failure from time to time, that is, of course, unless you suppose that someone becomes a recluse and stays inside and never ventures into the real world -- an unlikely situation. Stop and think about it. Keep in mind and understand that there’s a big difference between acknowledging that you have failed at something you attempted and viewing yourself as a failure. The former relates to action and the latter is about who you are. You don’t have to accept defeat in order to accept a failure. Better yet, why not use defeat as a stepping stone on the path to success. Mistakes are certain in life, risk taking is inevitable in life and, believe me, a decision not to take risks can, in many cases, be the most risky decision. Risks will sharpen your instincts and also help develop your talents and, yes, develop your character. In the final analysis, character does count.
Thomas Edison, who invented the light bulb in 1897, tried and failed more than 1,000 times before he finally accomplished his goal of inventing the light bulb. Someone once asked him if he had become discouraged and considered giving up along the way. Edison’s answer was, "No. Each failure was just a single step. In each attempt, I was successful in finding a way how to not invent or create a light bulb. I was always eager to learn, even by my mistakes."
A second example comes from one of Paul Harvey’s "The Rest of the Story" episodes. An old man who was a great admirer of democracy and public education had a dream. So close to his heart did he hold the institutions of democracy and education that he tried to bring them together into one grand experiment -- a public college where students would practice self-government. There would be no regulations. The goodwill and judgment of the studies would suffice. After years of planning, the school was finally opened and the old man was overjoyed. However, as the months went by, the students proved time and time again that they were not the models of discipline and discernment the old man envisioned. They skipped classes, drank to excess, and wasted hours in frivolous pursuits. One night, 14 students disguised in masks and animated with drink went on a rampage that ended in a brawl. A professor was struck by a brick and another was beaten. In response, the college’s trustees convened a special meeting. The old man, now 82 and very frail, was asked to address the student body. In his remarks he recalled the lofty principles upon which the college had been founded. He said he had expected more -- much more -- from the students. He even confessed that this was the most painful event in his life.
Suddenly he stopped speaking. Tears welled up in his failing eyes. He was overcome to the point that he had to sit down, unable to go on. His audience was so moved that at the conclusion of the meeting, the 14 offenders stepped forward to admit their guilt but they could not undo the damage already done. A strict code of conduct and numerous, onerous regulations were instituted by the college. The old man’s experiment had failed. Why? Because he took for granted the one essential ingredient necessary for success -- virtue. Only a virtuous person and a virtuous people can secure and maintain their freedom successfully.
A short time later, on the fourth of July, the old man passed away. Engraved on his tombstone were the simple words that reflected the success and failure of his more important experiments. "Thomas Jefferson, author of the Declaration of Independence and father of the University of Virginia." Now you know the rest of the story.
Accepting failure is something that we all must expect in life because I assure you that in your business life and in your personal life, you will have failures and you must know how to treat them.
A poem I learned long ago speaks to defining success in terms of defeat. The poem was titled "Success" and it goes like this:
Success is counted sweetest by those who ne’er succeed.
To comprehend the nectar requires sorest need.
Not one of all of the purple host who took the flag today,
Can give a definition so clear of victory.
As he defeated dying on whose forbidden ears,
The distant sound of triumph burst agonized and clear.
To punctuate this thought with how to deal with either side of success, remember the line from Rudyard Kipling’s great poem "If" where he writes: "If you can meet triumph and disaster and treat those two impostors just the same."
I’ve suggested to my colleagues throughout the years that when we’re experiencing good times, enjoy them, but don’t become too enthralled. And when we’re having difficult times (sales and profits are down) don’t let those get you down too much either. Learn from both experiences and take those lessons forward with you.
The third characteristic of success is to create a healthy environment -- an environment where there are win, win relations. I don’t know about you, but for me it’s hard to watch television and read newspapers today and witness all the controversies going on in every walk of life and believe in truth -- that there really can be a healthy environment in which there are win, win relations.
Political, religious, ethnic, geographical, educational and legal conflicts seem to keep people torn apart and organizations in a dysfunctional state. Nevertheless, in personal and in business relations it is critical to create a win, win environment.
If you think in terms of a company’s internal organization, not inclusive of outside relationships with customers, vendors and providers of service, you have the various functions and disciplines at work each and every day creating an environment that is anything but healthy. Whether it’s finance, accounting, purchasing, information systems, manufacturing, operations, sales, marketing or human resources, all of these disciplines are supposed to work together in a well-lubricated organization. However, it is rare when there is not conflict at the border where there are overlapping responsibilities and one function wishes to control the total situation.
Here is where it becomes absolute that you create an atmosphere in which those parties come together so that the goals of the organization are met. This generally has something to do with customers and is therefore essential to meeting the needs of the one entity that is ultimately supporting the actual existence of the company.
I had the pleasure of hearing an address given a number of years ago by Ichak Adizes, a professor at UCLA. He suggested that there are two absolutes necessary within a successful organization and we might say that they are also absolute in a successful person. These are trust and respect. His premise was that trust and respect had to permeate the organization in order for it to be successful. Without trust and respect among colleagues, without trust and respect among the different functionaries within the company and, he added, without trust and respect between the company and all of those on the outside with which it deals, the company could never be successful.
Because if at a point in time one subset wished to hold dominion over the other and there was no trust or respect between the two, they would not work together to accomplish a common goal. And there had to be trust and respect in order to have days and circumstances where one or the other would lose, while the other would win. But the loser that day would accept his loss knowing that on another given day he would be the winner and his colleague the loser. Both would trust that this was the best for the organization. And both would respect the final decision because both respected and trusted those making the decisions. Again, character really does count.
A great line I read recently was that a championship team will beat a team of champions every time. You can have great individual strength, individual smarts, and individual superstars. But if egos are not under control, it’s doubtful if they will continue to produce for the team rather than for themselves. In the business world, it is clearly desirable to have a championship team.
A concrete example of this would be the conflict that can occur during the process of an acquisition. There are numerous lawyers involved which creates natural conflict and it is very difficult for buyers and sellers to come to a win, win position. We have completed 24 acquisitions in the last 10 years, thereby averaging about two and a half a year, and I would suggest to you that our success in this particular area has been due to a desire on our part for both parties to win. We have entered negotiations with individuals and companies that have varying personalities and makeups.
The trick is recognizing what they need to accomplish in the transaction and what we need to accomplish -- communicating in a way so that at the end of the day both sides feel and believe they have been treated fairly, equitably, and that when the transaction closes both parties feel as if they’ve won. I am very pleased that one of the best means we have used to promote ourselves as an attractive buyer is to be able to tell any potential seller, "Please, don’t take my word for it. Call any of the individuals from these 24 organizations and ask them what their experience was." To be successful, you cannot always dominate and occupy the high ground.
The fourth characteristic of success is persistence. It is almost assured that no one or no organization can be successful without being persistent. To persevere under all sorts of circumstances is one of the great lessons of life. Thomas Edison certainly had to persevere in order to invent the light bulb. Jonas Salk spent years working on the polio vaccine. Ghandi persisted to bring freedom to India. Churchill was a man for the moment with unbelievable convictions.
Moses would be an example too, as he wandered for 40 years before leading his people to the Promised Land. Great people, each faced with great challenges, but they also had great strength, great courage, and great discipline -- all necessary to be persistent. Perseverance, when implanted on the right foundation, is perhaps the best way of all to achieve your goals and dreams. There can be no substitute.
This may sound a bit idealistic, and whenever I think of an ideal, I think of a quote that has stayed with me through the years, "Idealism is in direct proportion to your distance from the problem."
Certainly one idealistic person was Abraham Lincoln, and he was tremendously persistent. He faced challenges and obstacles throughout his life, before he became president and brought the Civil War to an end. He endured the death of both his mother and sister when he was a young boy. He had to deal with depression in his early thirties. He suffered the death of two of his young sons. He failed as a businessman and was defeated as a candidate for Congress in 1843 and 1859. He was defeated as a candidate for the Senate in 1855 and 1859, and for the nomination of vice president in 1856. Yet Lincoln persevered and succeeded, and is today remembered for his successes and not one of those experiences that would have stopped many a person.
I worry a bit about this particular characteristic because we seem to live in an age of instant gratification. Recently I was stunned to read the conclusions of two surveys. Believe it or not, 54 percent of athletes asked in a Sports Illustrated survey replied in the positive to the question, "If we could give you a drug that would guarantee your victory at the Olympic Games but would also guarantee your death in five years, would you take it?" Fifty-four percent said yes.
Another survey conducted by the Lutheran church asked, "Are there absolute standards for morals and ethics, or does everything depend on the situation at hand?" In the age group of 18 to 34, 79 percent of respondents said there are no standards and that the situation should always dictate behavior. Three percent were not sure. If this poll is correct, then 82 percent of the respondents believe that right and wrong are relative terms and that ethics aren’t important. The end justifies the means. Unfortunately, I think we have some high level examples of this going on in our nation’s capital today. One of the qualities needed for persistence would have to be character, and character does count.
A business example I can offer regarding perseverance relates to two Carolina Holdings’ acquisitions. One company was in Atlanta, Georgia. From the initial introduction to the business, it was three years before we actually closed the deal. The sellers had hired consultants who represented to them a value of their business upon which we were not able to agree.
Our suggestion was that if the consultants felt their valuation was correct, then they should find a buyer agreeable to pay that amount. There were other minor issues but really the only issue of significance was value. To make a long story short, three years later we acquired this business, which is the largest manufacturer of windows and doors in Atlanta, and we acquired it at the value which we had determined three years earlier. We persevered and were persistent through the years in inquiring as to where they were in the process. And we never deviated from our position and were not about to unless circumstances, meaning increased earnings, had changed which would have caused us to change our valuation.
A similar situation was a very large business in Green Bay, Wisconsin, that took four years to actually bring to close from the original meeting with the owners. There was a lot of propositioning and positioning throughout a long period of time but, nonetheless, we remained steadfast to our desire to own the business, but unwilling to be anything but realistic about the value and terms to which we could agree. In the end, earlier this year, we closed on this transaction.
The final characteristic is to surround yourself with believers. In other words, build a strong team. Build a team of people who can see the vision and know what needs to be done to get there.
A championship team will beat a team of champions every time. This obviously doesn’t mean that everyone has to be just alike and see things alike. It means that they have to see the same vision. There will be, can be, and should be great debate among colleagues. No doubt, many discussions will take place about how to get to the vision. The main thing is to surround yourself with those who believe as you do, and realize collectively that you are seeing the same visions.
Here’s an example that really exemplifies someone who believes in what he’s trying to accomplish. This fellow was following a van down the street and at every stop light, the driver of the van would exit the cab with a baseball bat and proceed to beat the side of the van for several seconds, then jump back into the cab and carry on. After witnessing this for several stop lights, the fellow following him could not control his curiosity. He jumped out of his car and ran up to the van as the driver was jumping out of the cab with the baseball bat. He said, "Hey, what’s going on? I’ve been following you for several blocks now and every time you hit a red light, you jump out of the van and start beating the side of the van with a baseball bat. What on earth is wrong with you?" And the fellow said, "Well, buddy, I got a job to do here. You see, I got to get this truck across town and it has a 2,000 pound load capacity and I’ve got 4,000 pounds of canaries in there. So, I’ve got to keep 2,000 pounds of them flying at all times."
This may be a better example of persistence than vision, but you need people who are believers in what needs to be accomplished and know how to get to the end goal by making things happen. Think of all the examples in our world of how groups have come together to achieve great accomplishments. One of the best may be the space program. Almost monthly, we put men and women into space to perform experiments that will add to the quality of life for generations to come. You can only imagine all of the people who are working on this task and the process to achieve their goal. They’d have to be believers and have to have the same vision as all their colleagues at every level.
One of my very dearest friends is the head of neurosurgery at the Medical College of Virginia in Richmond, and I am constantly amazed at the team that he has put together and the work that they do. It may start with the neurosurgeons, but they are supported by doctors with other specialties such as anesthesiology, by the nurses who work in the operating rooms, by all the support people in the hospital, their intensive care units, and on and on. They are generally dealing with very critical situations, but the whole team sees the clear picture of what they’re trying to accomplish and they work together almost as one to take care of the patient.
Perhaps the best example might be found in the Bible. Can you imagine a poor carpenter, Jesus of Nazareth, putting together 12 pretty unimpressive people and creating a group that changed the world forever? Those 12 believers with a vision started something that is here today and bigger than ever. I don’t know if Microsoft will be around 2,000 years from now, but you can count on Christianity being here.
Again, this is not to mean that all minds have to be of one. Varying views and varying thought processes add incredibly to the creativity and the personality of an organization or an individual. The point is, though, you can’t have a bunch of renegades with totally different ideas of what it is you should be doing to get to your desired end.
I mentioned that we had acquired a company in Atlanta after waiting three years to finish the deal. This business was basically a window and door manufacturing operation, and we needed to add lumber and building materials to round out our product line. We went into Atlanta, bought another company, and put the two together. It took us three years to get the lumber people to understand the benefit of having millwork (windows and doors). The same was true of the millwork people regarding lumber.
Three years later, though, we’re the largest building supply house in Atlanta. We now have eight branches that are working together in unison and attacking the entire Atlanta metropolitan market as one operation with a complete product line. I give all the credit to the regional manager who brought his people together and gave them a clear picture of what we needed to look like in Atlanta. Now we’re beginning to reap the dividends.
Let me wrap up by saying again that the measures of success as defined by today’s world are pervasive, at best. Success is much more individual and internal. Go back to the mission statement for the college, and you will surely find complementary characteristics to add to or enhance those of the Harvard study.
Let me leave you with the words of Emerson as he attempted to define success.
- To laugh often and love much.
- To win the respect of intelligent persons, and the affection of children.
- To appreciate beauty.
- To find the best in others.
- To give one’s self.
- To leave the world better whether by healthy child, a garden patch, or redeemed social conditions.
- To have played and laughed with enthusiasm, and sung with exultation.
- To know even one life has breathed easier because you lived.
- That is to have succeeded.
Thank you very much.