Become a Leader – The Former CEO of Continental and Home Depot Talks Business and Family
The cliché of a man needing no introduction is rife, yet it’s apropos to Greg Brenneman. In business circles, his status is practically mythical and his list of accomplishments is vast. Brenneman has served as the President, CEO, COO, or a combination of the three at companies as diverse as Burger King, Home Depot, and Continental Airlines, and from each he has learned lessons he’s taken into his current role as a mentor and business acquisition expert working with Fortune 500 companies.
Lessons he’s ready to divulge to you.
I had the privilege of sitting down with Brenneman for almost two hours, with the following being some of the lessons extracted from our conversation.
“Leading in a time of crisis is about absorbing fear and exuding hope.”
Focus on the Five “Fs” That Rarely Make To-Do Lists
The humble to-do list is a necessary weapon in the arsenal of any business leader – it’s how so many of us track what’s still to do. Yet, it’s far from infallible, with its key issue being that the to-do list often focuses on business alone, casting all else aside. Brenneman felt this after successfully turning around Continental, Burger King, and PwC Consulting. All were successful. Brenneman has proven he could get results.
He still felt lukewarm.
An inescapable feeling that something was missing pervaded, which is when he had the genius idea to transform a tool he’d so often used in business into one that could affect his personal life:
“I’d been writing these one-page plans to turn around businesses. I needed to see if I could write a one-page plan to turn around me.”
Pulling out a sheet of paper, he began by writing what he calls the “Five Fs:”
- Faith
- Family
- Friends
- Fitness
- Finance
Under each, he wrote two of three things – the “blue chips” that he considered essential to accomplish in those areas to the benefit of his personal life. Many items entered that list, though there was one that meant an enormous amount to Brenneman.
Ironing sharpening iron.
In other words, Brenneman believes he’d done a poor job of surrounding himself, not just with friends, but with other leaders who could offer insight and perspective he didn’t have. Not only did that set him on the path to becoming a mentor to others, but it also allowed him to hone his skills. An already talented professional gaining further wisdom will always have an impact on the business world.
Therein lies the lesson.
It’s so easy in life to overlook the things that really matter, especially when you’re so absorbed in work that your to-do list takes precedence over all else. That’s what makes Brenneman’s one-page exercise so valuable – those “Five Fs” bring you back to the core of being. Each is impactful on your life in its own way, with each also being easy to overlook simply because they don’t always directly relate to what you’re doing in your personal life.
Make your list.
Find the “blue chips” that are necessary to your “Five Fs” and you will prosper.
Iron Shall Sharpen Iron
Brenneman drew inspiration from Proverbs 27:17 when he realized that his failure to surround himself with those who know as much (or more) than he held him back:
“Iron sharpens iron, and one man sharpens the face of his neighbor.”
For Brenneman, that concept manifested as regular morning meetings with fellow CEOs, usually between 6:30 and 8:30 a.m. – the perfect time in which to discuss life and the world before putting his “game face” on for the working day ahead.
The purpose of these meetings is not as lofty as you may believe, as Brenneman explains:
“We either read something, such as right now we’re going through A.W. Tozer’s knowledge of the holy book… We listen to a lot of Tim Keller sermons, and we do a lot of different things. Then, we’ll talk about it and we’ll just share life.”
If you are put in mind of the intellectual “salons” of old, where distinguished people met to share ideas and discuss the most important matters of the day, you’re not far from the truth. These are meetings with no set agenda, at least on the business level. They’re time spent with friends, with a focus on something meaningful to each member of the group.
It’s here where we see the concept of iron sharpening iron come to fruition. It’s in the sharing of ideas that we gain new perspectives. One cannot learn without listening, with the informal setup of Brenneman’s meetings allowing him not only to ruminate on his own interpretations of whatever the group is reading or listening to but to refine those interpretations based on the input of others.
That’s an approach we can apply to all aspects of life – communication in business, at home, and even with ourselves develops and refines our mindsets.
Lessons From Brenneman’s Continental Story
From iron sharpening iron, our conversation segued to Brenneman’s experiences with Continental.
That is an interesting tale.
When Brenneman came on board, Continental was propping up the bottom of the Department of Transportation’s (DOT’s) list of the 10 best airlines in the United States. “Best” was far from the descriptor anybody would have used for Continental at the time, with the scale of the task ahead of Brenneman being clear when he discusses the origins of the DOT’s list:
“The DOT invented the rankings of the airlines because Continental was so bad. That’s a true story.”
An “inspiration” for all of the wrong reasons seemed to be the fate that Continental faced as it teetered on the edge of bankruptcy. Yet, Brenneman flipped that particular script. Under his stewardship, Continental transformed into an airline that did the basics well – getting people to their destinations on time, with their luggage intact, while serving them good food and showing them movies when they’re bored.
Rinse and repeat 2,500 times per day and you have a sustainable airline business.
That’s an oversimplification, yet the turnaround was extremely impressive. Brenneman oiled the machine for a team of 55,000 people, who collectively transformed Continental from a business with a stock value of just $6 a share to one with a $120 valuation. As for the DOT’s list, Continental rose like a phoenix, shooting up from 10th to first for six years running under Brenneman’s guidance.
We are led to the obvious question:
How did Brenneman do it?
In truth, it would take an entire article – perhaps even several – to cover every aspect of Brenneman’s game-changing at Continental. However, there was one aspect of his approach that stuck out to me during our conversation – the concept of building a fortress:
“The idea is to essentially make sure you don’t run out of cash and your debt matches your maturities. It’s some of the most basic things, but they’re things people forget as they’re doing business.”
The mistake many make when they realize they’ve allowed their fortress to crumble is to rampantly cut costs and try to keep as much money from going out as possible. That approach only leads to ruin, as Brenneman explains:
“You can make a pizza so cheap that nobody wants to eat it. You can make an airline so bad, in terms of service level, that nobody wants to fly it.”
That’s true of almost any business, meaning the true goal when building your fortress is to focus on generating revenue as much as you focus on cutting costs. After all, no fortress can be built without bricks and mortar – you have to invest in your business to develop a product that people want to actually buy before you start pinching the pennies.
To Key to Hiring New Talent
As Brenneman learned during his time at Continental – and as he would take into every business he’s turned around since – it’s people who ultimately determine the success of a company. Processes and products all matter, of course, but if you enter a business that’s in a terrible state due to its people, your focus should switch to hiring new talent. Or, as Brenneman puts it:
“It’s pretty hard for that sled dog that took you into the ditch to pull you back out.”
Brenneman draws from his experience at Continental, where he implemented what he calls the “IQ dipstick test.” The idea is simple – if you check the oil in your car with a dipstick and it comes out two quarts empty, the car probably isn’t going to work properly.
The same is true of a business.
Brenneman aimed to find those people within Continental who would be capable of working well enough with others that he could leverage them to build the business. A team of 60 officers stood before him. How many would turn out to be the “sled dogs” that would fail to pull the business out of the ditch it had gotten itself into?
As it turned out, around 50 of the 60 were let go, with those 50 being replaced with 20 people who not only aced the “IQ dipstick test,” but had the simple qualities of being capable of treating others with dignity and respect.
The challenge here is that it’s technically illegal to use IQ tests as the basis for hiring in the United States. Specifically, the law says that employers are prohibited from discriminating against an individual based on personal qualities that aren’t related to the role – somebody’s IQ could be classed as a personal quality under that ruling.
Moving away from the literal is the solution here:
“I’m sure you can apply a lot of theory, but we were much more organic in our approach. We looked at the people who were talented in the organization.”
Perhaps instinct – backed by evidence of performance – is the stronger measure when choosing to retain or hire an individual. It’s a feeling, with things like the “IQ dipstick test,” cognitive assessments, and resumes melding with the aura of integrity a potential new hire may exude. Combine this with relevant work and education and you have ingredients to place in the melting pot of your company’s hiring strategy.
Finally, there is perhaps the simplest test of all:
Can this person work well with others?
“A demonstrated ability to work with other people successfully, somebody you’d really want to be in the trenches with, is so fundamentally important because life’s too short to work with jerks.”
I don’t know if there’s a “jerk test” one can implement during hiring other than you simply sense a jerk when you’re speaking to them. Instinct, as mentioned earlier, is key. The greatest candidate in the world on paper could be a nightmare in your company if they’re the sort of person who’s going to lay down in the trench rather than help you dig it.
Create an Environment in Which People Can Fail Fast (with Guardrails for Support)
As our conversation progressed, I brought up how I implemented an e-signing platform into the leasing side of my commercial real estate business. Why? In real estate, your top line is based on the revenue you generate from leases, so any action to speed up the leasing process results in faster revenue accruement.
We come back to the earlier point made about building your fortress:
Investing significant money into our CRM and e-signing platform paid off in several ways. Shaving just a few minutes of the lease document preparation process was one of them – even one more set of documents sent out in a day is another brick successfully placed in the fortress. Then, there was our e-signing platform. Measuring just a handful of months ago, I discovered that prospective tenants were signing these 30-page collections of documents in an average time of three and a half minutes. Often, these would be multi-million-dollar deals, with a handful of minutes being far too short to read all of the documentation.
It was the convenience of the option to e-sign that resulted in fast sign-ups and increased speed in our leasing process.
Brenneman’s belief as to why that happens?
Time is precious, particularly if you’re in a company that’s growing or in the process of being turned around. It is a resource – one that’s finite to us all – so there often has to be an acceptance that failure is an option as long as you can fail fast and learn from your mistakes.
“Having people be able to fail fast, with some guardrails as you don’t want people betting the company on anything to do that, delivers the feedback that improves their decision-making. It’s critical to optimizing a business.”
Brenneman’s takeaway from his experience is that the cost of the wait is almost invariably higher than the cost of making a mistake fast, learning from that mistake, and fixing the problem. The weight of indecision can be a heavy load on the backs of all of the people in your organization. Relieving that weight by making it clear that it’s okay to make mistakes – as long as you’re not betting the farm on them – as mistakes create feedback loops that feed back into the business.
You may take a slight hit to your bottom line when you make a mistake fast.
Yet, you may see it crumble altogether if you’re so bogged down in indecision that you never move forward at all.
The Importance of Mentors
Helping other people lies at the core of any successful business. At the most basic of levels, a business exists to help its customers solve a problem. Yet, help is not the sole right of the people who are external to the business – those inside require guidance to reach their full potential. It’s due to understanding this that Brenneman now focuses much of his time on mentoring others.
Perhaps it’s a lack of mentoring – or at least a lack of openness to hearing others’ viewpoints – that has resulted in the country finding itself in the divided position it’s in today.
Brenneman shares a story of his friendship with Lloyd Bentsen III, the son of famous Senator Bentsen who delivered the immortal “Senator, you are no Jack Kennedy” line to former Senator Dan Quayle in 1988 during the vice-presidential debates. While having lunch with Bentsen III, in walks Neil Bush, one of the sons of George H.W. Bush. For those who remember their politics, Bentsen III and Neil Bush are the sons of two of the foremost political rivals of the late 1980s and early 1990s.
Alarm bells may start ringing, especially for those who are only aware of the nature of politics in the modern era. The sons of icons, set to duke it out based on their opposing liberal and conservative beliefs.
Yet, there was no fight to be had.
Rather, an exchange of ideas occurred, a comparing of the notes, that Brenneman believes was a semi-historic moment. Each son, though passionate about their position and raised on opposite sides of the political spectrum, understood the truth:
“The country is way more important than political position.”
How does this relate to business?
Without delving too deeply into a political tangent, it’s teamwork that has always made America great. It lies at the heart of democracy – people with differing viewpoints coming together and compromising to find the common ground that ultimately leads to the decisions that are best for the country.
Therein lies the lesson on mentorship.
Without it, people are doomed to fall too far toward the extremes of the spectrum in all walks of life. We see this in politics today – the refusal to simply hear others becomes a line in the sand that neither side is willing to cross.
That line should be the common ground we all share.
In business, the lack of a mentor – one who can provide opposing or alternative viewpoints – leads to extremism in the form of believing that every decision you make is correct simply because there’s no challenge to your belief. A mentor can be a Senator Bentsen to your Dan Quayle. The person who forces you to think of your business (and yourself) in a different light.
The “Old School” Is Still Effective in the Investment Space
Today, Brenneman is the Executive Chairman of CCMP Capital Advisors, so it would have been remiss of me not to ask about his approach to investing. It would be like failing to ask Picasso about painting – a terrible oversight when confronted with a master. Brenneman delivered a key piece of advice that I believe applies to all investors from the beginner to the private equity magnate:
“I’m old school. I invest in strategy and I look for high-regulatory businesses.”
There are examples aplenty in Brenneman’s portfolio, including an elevator business and a brokerage firm. Each has its own barriers to entry surrounding it, and it’s those barriers that make them such attractive propositions. Many are regulatory – that applies both to elevator and brokerage businesses – but barriers can also come in the form of the market, technology, patents, or simply the level of competition you’ll face.
Brenneman’s old-school strategy encompasses those barriers:
“You can actually look at businesses and say ‘What are the barriers to entry? The barriers to exit?’
Why are those barriers so vital to investing?
Ironically, the barriers provide a few extra degrees of freedom, not least because there’s less chance of you getting disintermediated. Your role as the intermediary is sacred – you understand the barriers to entry and exit better than anybody else because you discovered them when researching the investment. Once you’re entrenched, it’s unwise for the business into which you invest to simply get rid of you because that leaves them with the task of finding another “you.”
The very barriers that keep so many out reward those who find their way in by protecting them.
In that scenario, generosity – both of money and time – becomes a mechanism to both solve natural greed and elevate you as an investor into a position of prominence. The old-school method of investing shines through here, as it’s less about the money and more about how you can use your money to serve others, and thus yourself.
“Money is the number one thing talked about in the Bible. God tells us you can either love me or love money, but not both, which is really what tithing is. It’s fasting from money so it doesn’t become a controller. Money can be a wonderful servant or a relentless master.”
Expressing generosity from the heart by helping others transforms money into your servant. That’s as true of investing as it is the simple act of giving to those who are less fortunate.
