September 14, 2023

TPL Insights #188 – How a High-Performance Mindset Leads to Great Cost Leadership and Dramatically Enhanced Profitability

By Rob Andrews

By Rob Andrews with contributions from Bob Aylward, former CEO of Quiddity Engineering

Eleven years ago, I concluded that there are nine principles at work in organizations that perform at the very top of their sectors. One of these nine is cost leadership. Peak performers eliminate as much cost as possible without affecting the customer and employee experiences. Southwest Airlines, FedEx, Quiddity Engineering, H-E-B, QuikTrip, Mustang Engineering, and Nordstrom are extremely proficient at removing costs from the supply chain, reducing building costs, and limiting employee turnover, to name just a few categories. True cost leadership requires a growth mindset and a process driven by purpose, mission, vision, values, and strategy.

  One CEO, who we placed in January of 2015, has taught us many things over the years and continues to be instrumental in augmenting our leadership architecture. We spent a couple of hours together a few weeks ago, and one of his statements keeps ringing in my ears. He said, “If you want to make more money, stop losing money.” I heard that and said to myself, “now there is a blinding flash of the obvious!” The more I thought about it and the more he talked, the more it occurred to me that his words are quite profound.

Bob went on to say that when he assumed the reigns of his $58 million, 465 employee civil engineering firm, which was delivering 18% EBITDA, he discovered a myriad of practices that were deeply ingrained in the company’s culture and that of its industry, which represented significant costs for which there was zero return on investment. One such set of practices was the enormous amount of money the firm spent on industry-related functions. I remember performing the organizational review before we conducted the search that produced Bob as its top candidate and exploring the question of whether the new CEO needed to be an engineer. The knee-jerk reaction from the board, all of whom were engineers, was “Of course they have to be an engineer, we’re an engineering company!”

It is important that you understand the context here. We routinely perform a careful needs analysis while conducting any C-level search, to ensure we are doing everything in our power to facilitate a match that is going to work well for both our client company and the successful candidate. In this case, we had been retained to conduct a broader scope organizational health index (OHI) designed to measure our client organization’s effectiveness, including its collective mindset, leadership effectiveness, and cultural health and climate. We’ve been assisting clients in building powerful cultures for 11 years with exceptional results.

Our traditional model, which has since been greatly enhanced by technology, involved administering questionnaires, surveys, and one-on-one interviews. During the questionnaire phase, the results of which are always kept confidential to ensure anonymity, it became clear that the organization was ready to follow a consummate leader who would unite the organization around a clear vision and strategy. The organization needed clearly defined goals, people systems, organizational infrastructure, and communications to build a sustainable, high-performance culture capable of attracting and retaining top talent and maximizing shareholder value. During the one-on-one interviews, six of twenty-six survey participants, all of whom were shareholders, unequivocally stated that the new CEO did not have to be an engineer.

Because Bob was not a civil engineer and also very new to the Houston area, he approached his new CEO post through a “new pair of lenses.” Having determined that the ideal CEO needed to bring vision and strategy, people systems, organizational infrastructure, and communications to build culture, we knew from his assessments that he would start with a clean sheet of paper and make no assumptions. We also knew that he was a naturally inquisitive leader who really enjoyed learning new things. We knew that, while he is the farthest thing from a micromanager and would not live down in the weeds, he would develop a clear understanding of his company’s business model and how it makes money.

Bob Aylward tripled Quiddity’s revenues and EBITDA over eight years, and he built a culture that is so rock solid that the firm now has a waiting list of civil engineers who want to work for them. Bob operated with a high-performance mindset that led to unprecedented performance in the civil engineering sector. We know from a forensic examination of Bob’s candidate dossier, which included his 22-page self-assessment, psychometric profile, and 360-degree reference audits, he brought a well-stocked tool bag perfectly suited for the scorecard we had developed. In addition to the right mindset, he brought the ability to unify his leadership team, a disciplined approach to human capital, systems to measure everything that matters, and a relentless commitment to a highly differentiated customer experience.

Elements of Bob’s mindset that didn’t surprise us included his personal commitment to never waste an opportunity to influence the way people think, ask probing questions that move the organization toward greatness, help his subordinates shape their own leadership framework. Bob says that you can think of this framework as a philosophy driven by guiding principles. Principles, not rules and rigid policies, help focus leaders on the right priorities and overcome challenges in such a manner that ensures a positive trajectory and a track record of success.

Bob’s realization that leading an organization of any size is an awesome and sobering responsibility is just one principle by which he lives. Bob always felt a strong sense of duty to his employees to do whatever he could to make his company as successful as he could, and to provide economic security, psychological safety, and career opportunities for them all. Bob’s philosophy did not materialize all at once. It was refined over 25 years by talking with mentors, coaches, and other leaders, reading books, listening to podcasts, and of course, trial and error. Readers of this blog will hear more about Bob in the future. We’re excited to bring Bob back to Houston next spring to speak to our leadership breakfast group and celebrate his new book. Stay tuned for more!

Warmest Regards,

Rob