Though Hay planned from the beginning to transition the company into largely renewable production, he shared with us at the time, “The vast majority of the players in our industry thought it was a fool’s errand. There was still skepticism as to whether renewables were just a fad and government incentives would go away.” In his first few years, he focused on bringing in a team of innovative thinkers with entrepreneurial experience. “We had some of the best utility people around,” he shared, “but they were very risk averse.
Related Quotes
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The Life Cycle of a CEO— Claudius A. Hildebrand & Robert J. Stark
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Introduction
In fact, Dave hadn’t been the first choice for the CEO position, or even the second or third choice. Word was five others had been offered the job before him. What’s more, a couple of years earlier he’d been unceremoniously fired from his position as divisional president at a leading competitor. No one would have suggested from his educational background, either, that he was CEO material. Not only did he not have a degree from an elite school, but it also took him six years to graduate. He hated college and he’d dropped out for a time.
As Dave’s first year in the CEO seat progressed, the sneering assessments of that Florida night prevailed on the Street; the company’s stock slid 40 percent.
4. Reinvention
Lew Hay, who led NextEra Energy for eleven years, from 2001 to 2011, shared that it was only after his first few years, having successfully steered the company through some rough headwinds and built his own team, that he felt he could forcefully make the case for his strategic vision: transforming the company into a leader in production of renewable energy.
He started building renewables capacity right away, but with small steps. “In the very early days,” he recalled, “I had to downplay what we were doing and say, ‘Hey, it’s kind of a nice little niche for us, and we’re making some money, but it isn’t a core element of our strategy.
As former Intel CEO Andy Grove wrote in his influential book Only the Paranoid Survive, “Business success contains the seeds of its own destruction.” CEOs who make it to the Complacency Trap stage have navigated the rough-and-tumble of the Launch, Calibration, and Reinvention stages of the first few years. One unintended consequence of leading their firms adroitly can be an overly assured attitude about the course they’ve set and the organizational improvements they’ve made.
For acquisition, he shared, “We would look at almost anything that came up within the industry for sale, and we had four factors that drove our decisions. One, we would only buy number one or two share brands in their category. We did not believe we could take a dying brand and turn it around. Two, we wanted to buy businesses that had higher gross margin than out company average, so would help our gross margin. Three, we looked for asset-light companies. We didn’t want to buy a company with lots of factories or ones for which we’d have to build new factories. We preferred to bring operations into our own facilities. And four, we went for products that had some sort of advantage versus the competition that we could leverage with our marketing, sales, and operations muscle to make better.” That formula guided the well-measured acquisition of numerous leading brands during his tenure, including Spinbrush, OxiClean, Orajel, Batiste, and Vitafusion. These were businesses that his own business leaders had the expertise to run, and he folded them into Church & Dwight’s existing operations. Focusing on employees with R&D expertise, they kept, on average, only 10 percent of employees, many of whom joined the team at headquarters. “We doubled the size of the company,” he reported, without adding substantially to the number of employees.