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Business coup Featured

1:29pm EDT July 26, 2005
While it’s not exactly a military operation, former Navy captain Bill Donges knew from experience what was needed to transform the eight loosely connected operations that comprised Lane Co. into one lean, efficient business unit.

Lane, through its subsidiaries, acquires, develops, constructs and manages multifamily properties. Donges, Lane’s president and CEO, joined the company in 2002 as chief operating office and took command of the business earlier this year.

A turnaround specialist, Donges’ first contact with Lane was as a consultant for founder George Lane.

“I had just finished [working with the owner of a] start-up and turned it over to new management,” says Donges about his meeting with Lane. “Essentially, I was going to take some time off. I met George, and a week or so later, was working on his companies, figuring out what to do with them.”

That work turned into a full-time job and, eventually, Donges became Lane’s successor. Smart Business spoke with him about how he applies his military background to the business world and what it took to remake the company and turn it into a cohesive, industry leader.

What role has your military training played in your business acumen?

(It helps with) the depth of my leadership skills, my ability to read people and to understand how to manage. You learn so many things when you’re in the military. I taught leadership training at the Naval Academy after I came back from Vietnam. The lessons you learn (deal with) accountability, integrity, teamwork.

[When] I graduated from the academy, within three weeks, I was on the fantail of a destroyer with 143 guys reporting to me. It puts immediate pressure on you from a leadership point of view, so you have to learn very quickly. You learn how to get things done. You learn how to work with people that are more senior to you. You learn how to work in a team, and how to organize.

How would you describe your leadership style?

I’m the opposite of what you might be thinking, coming from the military. I’m very open, very inclusive, very transparent. It’s hard to fool me because I’ve been in a lot of different industries. I’ve seen different people and different approaches.

I like to bring people into the process. If you’re not going to make them feel part of it and like they’re going to make a difference, then you wind up managing [the entire process]. People have to feel empowered, but they have to have guidelines.

How did you find your way to Lane Co.?

George was in his late 50s. He wanted — and correctly assessed with the board — that if the company was to be a long-term, sustainable company, he needed a succession plan. I came to review the companies for him.

At the time, he had eight companies. We’re down to seven now. When I completed that, he asked me to stay on to begin the succession of him from CEO and chairman to me as CEO.

How common is it for entrepreneurs to do that type of advance planning?

It was in his head that this was something he needed to do. Which, I will say, is something very unusual for most entrepreneurs. They just flat out don’t get it. When they do, it’s usually too late.

What was your first goal as COO?

The key for me (was to) get the right people in place and start managing through data. This company was like a lot of other entrepreneurial companies. It had a lot of data, but what was being done was being done by gut and anecdotal management rather than understanding exactly what the reality was of the different business units and making strategic objectives based on something data driven.

I’m very process-driven. I take the time to make sure people have a process in front of them, and what I put in are key performance indicators so you can communicate to the company what’s happening.

How hard was it to succeed the company’s founder?

I have done this before in other companies. They almost never want to let go of the baby. Even though they say they do at the beginning, they don’t.

It was interesting here with George. He immediately said, ‘Look, I know this is not my skill set.’ We had ourselves tested and [found that] we are the opposite of each other, which we thought was a real strength.

How did you make it work?

He let his ego down and said, ‘Let me train you.’ We spent a lot of time together going through industry issues, company issues. He started letting go slowly.

We came up with a succession plan where I started taking over each of these companies in a progressive state. I started with the management company and worked my way to the development company. George has been supportive. Clearly, he sees the baby changing. I’m sure he’s bitten his tongue many times and felt like he wanted to jump in, but he didn’t.

How did you win over the management team?

First, George and I agreed on the process. Once we agreed, it became difficult to ‘triangulate’ me. We actually identified when I was being triangulated — I’d tell the company I wanted everybody to wear blue shirts, and George gets a phone call from his favorite manager who says, ‘Bill is ruining the company. We’re wearing blue shirts.’

George could react a number of ways. If he reacts by saying he agrees with that person and tells him that he is going to call me, then I don’t need to be here. George and I agreed that we would not violate that process.

As far as my outward face to the company, I communicated a lot about the transition. Once we set the new plan in place, I built a lot of trust by talking to the key managers, telling them what to expect and where we were going.

What were your first changes for Lane?

I wanted to change some of the key management, and I set goals for the executive team. In order to make the company data-driven, I needed the company to be technology-driven. In order to connect better with our clients, we needed to be technology-driven.

I then started investing in the people and processes to put the software into the company. We did that with a vengeance. It takes years to get the culture to come around to understanding how to use it and make it more efficient. By setting that goal, we changed the whole company. We became, instead of this paper-driven scenario, [a company] that was focused on being progressive.

How is being a privately held company beneficial?

If you’re a public company, you have to drive for quarterly earnings, whether it makes good real estate sense or not. As a private company, we do what’s best for the partners. We play the market the way it should be [played], without pressure to convince the public market it’s the right thing for that quarter. I hear a lot of the public company CEOs complaining that they struggle to do things with real estate that maybe they wouldn’t do if they were privately held.

The other issue right now is Sarbanes-Oxley. As a private company, we’re making sure our control procedures are correct, but we are not spending millions of dollars to comply with Sarbanes-Oxley.

Other than the bottom line, how do you measure success?

Each quarter, I go through with the board what talent we have attracted to the company. The ability to attract intellect, talent and creativity is made more important each year because knowledge and creativity is what’s going to make the company successful in the long run.

Once you set your plan in place, it’s your strategy and (meeting) key components of the execution of that strategy. You review that each quarter with your board and see how you’re doing. They are keenly interested in our ability to execute against that plan. That’s not just financial. It’s human resources, technology, capital; it’s hitting those key items.

What is your most important role in the company?

I’m a professional change person. I understand transition and change. It’s not easy to do that. I would say executing the vision that is currently there, because it’s a vision I helped define.

Change is something is that needs to be thought out. Positive change is a challenge to execute. I’ve done it a lot. Many people have run companies but haven’t necessarily had to make some of the transitions here we’re going through at Lane.

How important is it to really know your industry as opposed to just having general leadership skills?

The fundamentals of each business I’ve run have been the same — the leadership and people issues. There are clearly differences in some of the financial structures of real estate companies and how they work. What you don’t have are the relationships within the industry.

I spent a lot of time meeting the presidents of key organizations in the industry and meeting presidents and executive teams of other companies. Internally, within the company, the fundamentals are 80 percent. You can learn the lingo in the industry.

HOW TO REACH: Lane Co. (404) 459-6100 or http://www.lanecompany.com