INTRODUCTION

 

Hanna Hasl-Kelchner: [00:00:00] Balanced leadership may sound wonky, but it’s necessary if you want stability and growth in your organization. That’s why I’m excited about today’s guest, Rocco Romanella, who’s going to tell you everything you need to know about balance leadership.

 

Announcer: [00:00:16] This is Business Confidential Now with Hanna Hasl-Kelchner helping you see business issues hiding in plain view that matters to your bottom line.

 

Hanna: [00:00:28] Welcome to Business Confidential Now, I’m your host, Hanna Hasl-Kelchner, and today’s guest, Rocky Romanella, describes himself as a witty, blue collar guy who rose through the ranks at UPS to a senior level after starting there unloading trailers after high school. He then became a CEO and a board member of a small telecom company. And today he’s the small business owner, the founder, the president and CEO of 360 Management Services LLC, where he focuses on thought leadership, process improvement and leadership development.

 

Hanna: [00:01:03] But let me tell you, Rocky’s description of himself is just really humble because he downplays one of the huge roles he played during his 36 years at UPS, an organization you’re no doubt familiar with as the world’s largest package delivery company and a leading global provider of specialized transportation and logistics services. While he was there, he led one of the largest rebranding initiatives in franchising history, The UPS Store, revolutionizing the $9 billion dollar retail, shipping and business services market. Now, that’s a huge WOW.

 

Hanna: [00:01:39] Rocky is also the author of the book Tighten the Lug Nuts and he says he delivers results by developing and implementing his balanced leadership model. I can’t wait to learn more about what this balanced leadership model is all about. So let’s have him join us now.

 

Hanna: [00:01:57] Welcome to Business Confidential Now Rocky.

 

Rocky Romanella: [00:02:00] Well, it’s a pleasure to be on the show, and I look forward to our discussion and I’m sure we’ll talk about some things confidentially.

THE THREE ELEMENTS OF BALANCED LEADERSHIP

 

Hanna: [00:02:08] Right. It’s just between you and me. So tell me about this balanced leadership model. What are we balancing?

 

Rocky: [00:02:16] Well, it’s interesting because I feel like as I grew in my career, I started to recognize that this whole concept of balance was so important.

 

Rocky: [00:02:25] You know, you either focusing on cost, or focusing on growth, or maybe focusing on your people. And I felt like when you when you have this hyper focus on one or two things inside the organization, you actually got out of balance. And so what I recognized early on in my career was that there are three key constituents in every decision you make: your customers, your people, your shareholders or stakeholders.

 

Rocky: [00:02:52] And as I was going through the decision-making process, I wanted to make sure that all three were represented at the table, the decision-making table. And so I felt like you want to think like a customer. You want your people to feel like valued individuals, but you want to act like an owner and all in the decisions that you make.

 

Rocky: [00:03:08] And a quick example would be if someone brought me a new product or service for our business. I mean, clearly, they would have all the information you needed from the product development, where it fit in the portfolio, you know. Where would she be in terms of the needs of the customer. And so you recognize early on that that the customer was clearly represented in this decision.

 

Rocky: [00:03:31] Of course, your CFO he or she’s sitting there pounding on the calculator. Oh that price point, if we sell at that price point we can really make money. So before the decision was made, I would stop and say, OK, our customers are well represented and our shareholders stakeholders represented.

 

Rocky: [00:03:45] How about our people? What’s the training that they’re going to need? Do they understand why it’s an important product, how it fits in the portfolio, if there’s a service that’s connected how are we going to solve that?

 

WHY THINKING LIKE AN OWNER IS THE CAP STONE OF BALANCED LEADERSHIP

 

Rocky: [00:03:55] And then once all three key constituents are represented, then I would simply ask the person who was making the presentation, “Hey, if this was your company, this was your candy store, and if you were writing a check from your checkbook, would you do this?”

 

Hanna: [00:04:10] And so that was sort of was the final question that the customers, people, shareholders, stakeholders were represented. Now, I was looking at the person making that presentation, hey, if you own this candy store, if this was coming from your paycheck, would you do it? And that’s the acting like an owner.

 

Hanna: [00:04:27] I like that acting like an owner piece. Years ago when I taught in an MBA program, one of the final exam exercises was a fact pattern that was cobbled together of the worst cases I ever worked on in terms of acquisitions. They had all kinds of landmines involved and  the task was, would you do this deal? How would it look? And so there really wasn’t a perfect answer.

 

Hanna: [00:04:56] But I wanted to see whether anybody would say I would walk from this deal. And out of all the classes that I taught, I think there were only two people whose team said, no, I wouldn’t put my money into this. Everyone else. When I said, OK, so you wouldn’t put your money into it. But why would you do it? “Well, because you told me to.”

 

Rocky: [00:05:15] Oh, yeah. Well, you would be amazed. You know, maybe 20% of the times I ask that question, people say, “well, no, I wouldn’t do this.” I remember one in particular. I said to the business owner, President, “Excuse me, you wouldn’t do this?” He goes “aw, I wouldn’t lose my money if it went through.” Then what are you presenting it to me for?

 

Rocky: [00:05:33] He said, “Well, we think we have to get some more growth. We want to take these new products or services, I wanted to think outside the box. So I thought this would be an outside the box, but I wouldn’t do.” It’s always interesting when you ask that question to your point.

 

HOW THINKING LIKE AN OWNER IMPACTS DECISION MAKING

 

Rocky: [00:05:46] It’s amazing when people start to think about it from, you know, acting like an owner, if this major candy store. And look, you and I both know and I know, you know, your audience is entrepreneurs and small business owners.

 

Rocky: [00:05:57] I know you grew up understanding small businesses. No one is more all in than a small business owner. I mean, if you think about it, they take everything they own in life, they slide it across the table and they say “I’m all in.” They hit the cash register at the end of the day and the drawer opens and they pay their people. They pay their vendors. And what’s left in their cash register is what they bring home for them for the families.

 

Rocky: [00:06:20] So if you can get people to think like that, to think like an owner, their decisions are much different than they would if they’re just part of an organization. You want them to feel like they’re part of the ownership of an organization. So whatever you can do to get them to feel like that changes the way they act, the decisions that they make and the way they interact with the customers because they’re acting like an owner.

 

THE BIGGEST BALANCED LEADERSHIP CHALLANGE FOR SMALL BUSINESS

 

Hanna: [00:06:47] So of these three elements, the customer, your employees, and this ownership philosophy or approach to the decision making, what do you find is typically out of balance when you’re consulting with different clients? Is it the ownership angle?

 

Rocky: [00:07:06] Well, in large organizations, a bigger company, it could be that. When you’re dealing with small business owners, sole proprietors, many times it’s the people side of it. Right?

 

Rocky: [00:07:19] And if you think about it for a second, I’m a small business owner. And the first big decision I have to make is adding the first person. Well, what’s my strength? My strength, as a small business owner? No one knows business better than I do. No one knows the customers better than I do. No one is more committed than I am. What’s my weakness? No one knows the customers better than I do. No one works better than I do.

 

Rocky: [00:07:38] So they have the acting like an owner down. They have, you know, think like a customer. What they miss is making your people feel like valued individuals. When I hire you, I have to give you authority. That goes with the responsibility. I have to be willing to allow you to make decisions. I have to be willing to allow you to be that employee that that feels valued. And I think that’s the hard part with small business owners, adding that first employee and adding the second employee, the training that goes with that. Potentially so is a larger issue of succession planning.

 

Rocky: [00:08:16] So in the small businesses, I find that the people sometimes are the issue that kind of gets lost in this battle, it’s not because they’re not good people to work for or they’re not caring owners. It’s just that ability to have the authority and responsibility for those people that you’re hiring.

 

THE BALANCED LEADERSHIP “AHA MOMENT”

 

Hanna: [00:08:36] So how do you rebalance? What’s a reliable process for the small business owner, even the startup who’s starting to hire employees outside their immediate circle of family and friends that helped them get a business off the ground? How do they start to change their mindset about the hiring process and the people they bring on in order to let them feel like valued individuals, as you say?

 

Rocky: [00:09:05] So the first step for me in this process is always three key questions. So you and I are sitting down with this small business owner and before we get to those questions of calibration or what maybe some of the problems, I asked them three key questions.

 

Rocky: [00:09:23] The first question is, well, who are you? You know, who is this company? You know, what do you stand for? And then what are the things you won’t compromise? And what ends up happening is, is when you know, as leaders, we should answer those three questions as well. Who am I? What do I stand for and what are the things that I will compromise?

 

Rocky: [00:09:41] And it’s interesting, when you go through that exercise, what a small business says to who are you? “We do this. We do this. We do that.” OK, you know, what do you stand for? “Oh, high quality, service, integrity,” whatever those things are. When you look at them and say, but “what are the things you will compromise?” Well, we won’t compromise service. We won’t compromise safety. So then you look at him and say, “OK, let’s think about this for a second. You won’t compromise service, but yet you’re looking to grow to two times your current size. And you can’t service those people yourself as an individual, right?” Yes, OK, well, if you truly want to not compromise that service but you want to go two times your size, which you’re basically saying is I have to hire additional person?

 

Rocky: [00:10:26] Yes, I do. But if you’re not willing to train them, if you’re not willing to give them the authority that’s going to equal this responsibility then they’re not going to be able to service your customer. They’re going to have to come to you. Well, then you just compromised the thing you said you won’t compromise.

 

Rocky: [00:10:41] So before I get into the solution, I want them to understand, like, who are you? What are you trying to accomplish? Why? Why do you want to get bigger? What’s your strategic decision for what you’re doing?

 

Rocky: [00:10:54] But if I just tell them those things, I’m trying to get them to get to the understanding of what are the things that are important to me as the owner and what are the things I won’t compromise.

 

Rocky: [00:11:07] Number three question is the most difficult one to answer, because you think about world class organizations that you and I both know of, thinking about some of the companies that you worked with or some of the individuals you advised through your career.  The thing about one or two they could clearly articulate who they are they knew what they stood for. They could go through the values, mission statements, number three is what always gets people in trouble. What are the things you won’t compromise. And I think that that’s the thing. What’s so important. And so I need to understand that about your business before I even go any further.

 

Hanna: [00:11:41] Well, I like the way you phrase that instead of telling them what they need, have them come to the realization, because once they do answer that question and I can appreciate that, you know, what are you not willing to compromise?

 

Hanna: [00:11:54] You know, the default answer is, well, nothing. Well, OK, then. And how are you going to get there, you know, to lead them through the analysis where they’re doing the analysis instead of you handing it to them. And I think that’s a lot more powerful than giving them the answer. So good for you.

 

THE HOLY GRAIL OF KNOWING WHO YOUR CUSTOMER IS

 

Rocky: [00:12:14] Well, I think that question making  . . . the question is the way you frame it. It’s funny  when we’re building a solution all the time, whenever I’m advocating a solution for a particular problem, the first thing I ask is, “well, who’s the customer?” And it’s funny to watch their faces. Right. You know, I remember we’re building a solution when I was that UPS on Supply-Chain side, we were building a solution for a health care customer.

 

Rocky: [00:12:36] And I asked a question, “well, who’s the customer?” And of course, everyone gets that nervous laugh, like, really, I don’t know who the customer is first. Okay, sure. So, of course, one third of the people in the room said it’s well, it’s the doctors. We need them to be selling or prescribing our drugs or whatever. The other two thirds look at that one third and said, wait, not the doctors. Not at all.

 

Rocky: [00:12:59] It’s the distribution channel. It’s CVS, Walgreens. So then the other two thirds are looking at them and said, wait, isn’t it the patient? So if you think about it for a second, that’s so important. Like who is the customer that you’re building the solution for?

 

Rocky: [00:13:15] Because if you think about it from our perspective, at UPS at the time, if we’re 99% on time, that’s a great metric if Walgreens or CVS, or the doctors, are who your solution is solution for. If that’s your customer. But if it’s a patient, you don’t want to be the one patient that didn’t get their get their product. So it makes a difference on who the  customer is.

 

Rocky: [00:13:38] And when you ask that question, you always get that little bit of nervous smile, like here, come on, let’s move on. It sounds like something a consultant would ask. And I would get back to “we’re not going anywhere until we understand who is the customer,” because once you understand who the customer is, then you understand what you stand for.

 

Rocky: [00:13:52] Think about all those M&A situations. Why are we buying this company? Did we just get caught up in an M&A frenzy? Is it because everyone else is buying? You know, you think about it, the telecom, everyone’s going upstream. They’re all buying content. Now, AT&T is buying DirectTV. Comcast is buying NBC. Well, then, of course, ESPN gets bought and ABC gets bought by Disney. Everybody’s buying content. You just get caught up in that frenzy.

 

Rocky: [00:14:19] Well, do you really understand who the customer is that you’re trying to service and why are you buying that? And I think those types of questions, I think really give everybody pause. Take a second and say, “well, who’s the customer? What are we trying to solve for?”

 

WHERE BUSINESSES OFTEN FAIL IN ACHIEVING BALANCED LEADERSHIP

 

Hanna: [00:14:34] Absolutely. So when people are trying to rebalance between the customer, their people, their shareholders, where do you think that they typically go off the rails in rebalancing?

 

Rocky: [00:14:47] I think many times it’s the people side of it, right, because they think, they believe, sadly, that that of the two of the three of them, I should say, two of them, you know, are less variable than people. Right? Because with people you can look at the overtime costs. You could look at the number of people. You could say, hey, we’re not going to do training this . . . , you know. So you think about it.

 

Rocky: [00:15:10] But I think it’s the opposite. I think that, you know, the profit of your organization is sort of the applause that you get from your customers and your people. If you are following your processes and you’re growing the business appropriately with the right customer base and the right growth and your people are executing on behalf of your organization, the profit happens if you have a good process.

 

Rocky: [00:15:30] And so I think that, but they tend to spend time on both, right, because those are the things that you have the best metrics for. I have a revenue number that I can see. It’s tangible. I have a churn number. If I’m not hitting my revenue, I know who’s been here and who’s left. Usually, the customer side is more measured and has more metrics and of course, the profitability side everyone knows and sees and it becomes big part of the plan.

 

Rocky: [00:16:01] The people, sometimes because it’s hard to really kind of gauge that or manage it maybe or have metrics for it, sometimes ends up being the part that gets out of balance because you think you can make up the difference in that piece there. So I think that’s usually many times that’s where you kind of get out of balance.

 

MANAGING YOUR LUG NUTS WELL

 

Hanna: [00:16:20] I understand. Now tell me about and Tighten the Lug Nuts. This book that you wrote, where did that come from? Tighten the Lug Nuts? This is, you know, going back to your UPS days in the trucks?

 

Rocky: [00:16:32] No. Think about it for a second. Well, yes, it starts there a little bit. And I won’t say the whole story and you can read it in one of the chapters. But if you think about it, when the lug nuts are loose on a vehicle they’re reported. I can easily walk over and tighten them in five minutes.

 

Rocky: [00:16:47] But I get distracted. I feel other things may be more important at that time. I don’t get back to tightening the lug nuts. So what was important yesterday becomes urgent tomorrow when the front wheel falls off. So there are many loose lug nuts inside an organization. There’re many loose lug nuts in our lives that if we could just simply tighten them, we could we could move on, but we don’t.

 

Rocky: [00:17:09] And because we don’t tighten and we allow important things like a loose lug nut at that moment to become urgent. And unfortunately, in business, as leaders and in our personal lives, we can only handle so many urgent things. So don’t allow important things to become urgent.

 

Rocky: [00:17:26] And it’s funny, people who worked for me over the course of time and I’ll have given a keynote speech and people send me an email, “Hey, listen, things are going really well and we got no loose lug nuts.” So it’s become an interesting way to think about those things that are impacting your business and your life every day that were important, but we didn’t take care of it. They became urgent and now we’re overwhelmed. So tighten the lug nuts.

 

DIFFERENENT LEADERSHIP PERSPECTIVE OF LARGE VS SMALL BUSINESSES

 

Hanna: [00:17:55] There you go. That’s good advice. Now, I’m curious about your journey from being part of a gigantic organization, from UPS to now being an entrepreneur. What stands out from the leadership perspective? What have you learned about going from a gigantic organization to a smaller, to now being on your own, as you say you pay yourself last?

 

Rocky: [00:18:20] Well, it’s interesting. There are three things that are similar and important in all of them that that I think are foundational. It’s you know, it’s like this balanced leadership to me was very helpful in my UPS career, was helpful during my tenure as a CEO at Unitech, and it’s also helped me now as an entrepreneur, because all three of those constituents are key constituents, whether in the large organizations, you know, small one, or in your own business. I think the entrepreneur side of the world, and by the way, I mean, for me, I have such great respect for entrepreneurs because as you spoke about in my introduction, I had the opportunity to be involved in the largest rebranding of a franchise network in franchise history.

 

Rocky: [00:19:12] And the thing that was so exciting about that is here I am, the UPSer working in a large organization who had responsibility for this, and I received the opportunity to and I had the opportunity to work with all these wonderful franchises. The one thing that makes The UPS Store unique besides a rebranding is that it’s 100% franchisee owned.

 

Rocky: [00:19:32] I met some of the greatest people and I have such great respect for entrepreneurs. I say I don’t know if I could do what they do and how they do it. And I think that that’s the thing that always I was so impressed with. And I always hoped to have the opportunity to maybe start my own business so that I could at least, you know, practice some of the things they taught me. I love their energy. I love their enthusiasm. I love they’re all in-ness that we talked about. And I love the fact that, you know, they clearly had to manage the business day to day. They’re chief cook bottle washer. They do everything inside the organization.

 

Rocky: [00:20:20] I think that I was excited for to continue to do that. I think one of the things that I learned inside of being in a large organization especially being in senior role, that’s helped me as an entrepreneur, is don’t let your highs get too high and your lows get too low.

 

Rocky: [00:20:39] I think inside of small businesses, the swings can be much more drastic than maybe inside an organization. You know, inside of a big company, it’s kind of like moving a battleship in the canal. It’s slow, it’s sometimes . . . But in small business things happen quicker and the extremes could be much more difficult. And so one of the things I learned from my days inside of UPS or inside a large organization is don’t let your highs get too high and your lows get too low. I think that’s what’s so important.

 

Rocky: [00:21:08] What I learned from the franchisees and from small business owners that I wish I would have known a little bit more inside, when I was in UPS, is you really have to understand what are the nice to do things and need to do things. As an entrepreneur you really many times you can’t afford to do the nice to do things. So you put them off to the side to take care of the need to do things. In many cases the need to do things are pay my rent, make sure I cover my fixed expenses, make sure I understand where am I, where my revenue is coming from.

 

Rocky: [00:21:44] So what I learned from the entrepreneurs and the small business owners is it’s important to put things in nice to do columns and need to do columns and make sure that you take care of the need to do things and don’t get bogged down with the nice to do things. In large companies you try to do everything.

 

Rocky: [00:21:59] So I think that in retrospect, what I learned from the small business owner and entrepreneur is understanding the difference between nice to do and need to do. And, of course, on the big business side, I learned don’t let your highs get too high and your lows get too low, because it’s a cycle you’re going to go through and so don’t make everything be, you know, the hill to die on kind of idea. So I think those are the things I learned from both that now I feel like, boy, there were some great learnings in there. I’m very fortunate to have had that opportunity, looking at it and learning from both sides.

 

Hanna: [00:22:38] Well, thank you for sharing that, Rocky. I really appreciate that. So, again, thanks for joining me. This is Rocky Romanella, the author of Tighten the Lug Nuts. It has been a blast. Thanks so much for being on.

 

Rocky: [00:22:53] Well, I appreciate it. Thank you for your thoughtful questions. And I hope your audience finds value in our conversation. And if there’s anything they need; I can certainly email me at RockyRomanella@gmail.com or contact me through the website about anything I could do to help you or your audience. Please count me in.

 

Hanna: [00:23:12] That’s our show for today. But don’t go anywhere. I have a really easy ask for you.

 

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Hanna: [00:23:44] I’ll catch you on the next episode. And in the meantime, have a great day and even better tomorrow.