Carlos Sepulveda taught his Interstate Batteries team to embrace conflict Featured

8:01pm EDT September 30, 2011
Carlos Sepulveda taught his Interstate Batteries team to embrace conflict

In the last five fiscal years, Carlos Sepulveda has grown Interstate Batteries from

about $700 million in revenue to $1.5 billion in revenue. In that time, he’s invested in facilities and people, and now has more than 1,600 employees at the Dallas headquarters.

The growth, while impressive, has created its own problems, including the conflict that comes from deciding which opportunities to pursue.

“It really comes down to a matter of we need to vet the opportunities we’re going to pursue because everything can’t be a priority,” Sepulveda says.

Different people evaluate opportunities based on different criteria most relevant to their position and experience, which can create conflict over which opportunities should be pursued.

“Conflict generally has a negative connotation in society, but I really don’t see it that way,” he says. “I see it as an opportunity to vet different perspectives and opinions and synergistically come up with a superior answer just from the dynamics of a well-functioning team. My challenge has been having our leadership team get to that higher level.”

While difficult, during that time he succeeded in making his team better at resolving conflict by having open meetings, having the best team and embracing reality.

“I see that we’re making progress on some very big initiatives, and we have other initiatives queued up that we believe are going to be next … so [we have] a focus and the results reflecting that we are doing better at communicating alternatives and having more open conversations around the leadership table that are reflecting a deeper degree of respect and even trust and the ability to talk about these things.”

Have open meetings

One of the first keys to getting his team to embrace conflict was increasing the flow of communication in meetings.

“When most people hear [communication], they’re thinking of transmitting, so we really tried to put the emphasis on receiving,” Sepulveda says. “It’s making it a part of the leadership culture to emphasize listening well and asking appropriate questions to enhance absorption of what’s really being attempted to be communicated. That’s not a natural skill.

“People typically default to being better at transmitting than receiving. You can see that in a variety of ways, but one way you can see that is when a discussion of reasonable intensity is going on and one party is communicating to another, you can almost see that other party stop listening to start formulating what their response is going to be on what they’ve heard so far.”

One way he deals with this common problem is to “hit pause.” The team may be having a substandard discussion, so in the middle of it, Sepulveda will simply say, “Let’s hit pause here.” He’ll then ask the team to make observations about how they’re communicating. How are they doing with listening? What do they see that indicates that they’re listening well? What indicates that they could do better listening? What kind of effect is that having on everybody?

“I don’t mean to make it sound psychoanalytical — it’s business driven, and it’s about generating the maximum value, so it’s about sharpening the ax — not just swinging the axe harder,” he says.

That took about a year to perfect, because it’s hard for a team to adjust to.

“First, it’s a bit awkward and unusual and people are wondering how safe this is, and it takes time for any team, in my opinion, to have enough revolutions to build a respect of that team to understand we’re genuinely pursuing the delivery of value here,” Sepulveda says. “When people see that metaphorical ax get sharpened, over time people say, ‘Wow, there is a value here,’ and next time we debrief and critique ourselves stylistically, there’s more inputs.”

The other way he increases communication at the meetings is to have open agendas instead of set ones. Each Monday, Sepulveda meets with his 12 top officers at 1:30 p.m. Nobody submits anything in advance, but instead the agenda is broken up into four main categories: housekeeping, revenue/gross profit updates, major things happening this week, and then challenges, problems obstacles and opportunities.

“The value there is for everyone to be present to be able to participate on the achieving of what we do or what we don’t do,” he says. “No system is perfect. As long as people are involved, they’re not going to have a perfect system, but it’s valuable.”

Because of how the agenda is structured, sometimes the meetings may go until 3:30 and sometimes 7:00, but everyone always blocks off the entire afternoon so they can make sure to get through everything anyone wants to bring up.

“The primary benefit is you get superior results,” he says. “The primary benefit a CEO can get is a greater confidence that the leadership team’s decisions are market relevant — they have a robustness for success and a competitive marketplace that they would not necessarily have if that decision were made in a vacuum.”

But that’s not the only benefit to taking this kind of approach.

“Those officers then go off and own the culture within their subculture, and then what you get is a leader in that subculture that knows, ‘Hey, I was there, I know what we’re doing, I can explain it,’” he says. “They can handle any question that comes up and do it within their capabilities of handling it in an excellent fashion so that other parts of the organization know that their subculture leader is genuinely at the table when things are being decided and genuinely has an opportunity to have an impact on that.”

Hire the best people

Another factor that was critical for Sepulveda in getting his team to better resolve conflict was to make sure he had the most qualified, competent people sitting around the table. He started with 10 senior officers, and he now has 12, but of those 12, seven of them were not here seven years ago.

“Sometimes that happens because the CEO decides it needs to happen, other times it just happens,” he says. “Regardless of what initiates it, when that change takes place, it’s vital for the president and CEO to get the right fit to impact that team. Every time one of those members around that table changes, it changes the dynamic of the entire team, and then there’s a resettling to get your pace back.”

To make sure you get the right people, it’s part art and part science.

“The science part is looking at experience, looking at education, asking the right kind of questions in interviews, listening very carefully,” he says.

Make sure potential employees have the right expertise so that if there’s a financial issue at the table, you’re confident that the person with the financial expertise knows what they’re talking about. Do this for any area that could affect evaluating opportunities.

Then the art part is just paying attention to the sense you get when you’re around them. He likes to take a candidate and their spouse to dinner with himself and his wife to see how they act in that setting.

“If someone I’m with treats the wait staff in a way that’s not reflective of appropriate, respectful appreciation, I’m done,” he says. “That’s all I need to see. That’s how they’re going to treat other parts of the enterprise. Maybe not their direct reports, but that’s how they’ll treat other team members.”

Other factors that contribute to the art side of the equation are how they spend their time outside work.

“If they’re doing things with vigor outside of their career, that’s a real positive,” he says. “If they take personal responsibility for their physical health, that’s a real positive.

“One of my personal theories is that no one will ever lead anyone else better than how they lead themselves, so I look to see how they’re leading their self.”

If you bring in top people, you’re going to get better results when it comes to resolving conflict and choosing opportunities.

“It really doesn’t do you any good to have a facilitated, interactive leadership forum if it’s void of competence,” he says. “I don’t think any company would get very far, and I certainly wouldn’t want to participate in that.”

Embrace reality

The last key to getting his team to embrace conflict was a principle Sepulveda actually learned as a teenager.

As a child, his parents divorced and his father was an alcoholic. He saw how addictions affected people and distorted reality, so as a 15-year-old leaving home to find a better living environment, he learned that being tethered to reality was critical.

“Addictions are a tremendous deflector of absorbing reality,” he says. “So [it was] just seeing what I would categorize as suboptimized leadership to maybe even just dysfunctional leadership — good benefits don’t flow from inoculating yourself from the reality of the situation.”

That lesson is something he keeps in mind as a leader today.

“We cannot deliver value if we don’t have a good, solid absorption of what the current state is,” he says.

Often leaders like to avoid reality, but he says as the CEO, you can’t do that.

“It’s not if, but when, CEOs can be confronted with reality,” he says. “Maybe you can defer it or delay it, but it is unavoidable that whatever the market realities are, they’re going to reach your desk. … Let’s not be so enamored by our current understanding of what’s going on in the market that we miss shifts or changes and therefore are delayed in being able to respond or harvest value as a result of those shifts or changes.”

This is one of the hardest things to get your team to do though.

“You can’t make your team do anything,” he says. “You can only provide the opportunity, invite them into it and allow the team to see the successes that happen as that opportunity gets laid hold of, and then those successes generate momentum and that momentum builds, and then the velocity accelerates because of proven successes.”

He’s also quick to point out that this isn’t the only way of leading a business.

“I’m not saying you have to embrace reality,” Sepulveda says. “You don’t have to have an open culture. I’m just saying results are enhanced if you embrace reality, if you have a leadership culture where you have confident, ambitious individuals who are invited into a full discussion of the relevant business issues. … There are companies that are having success without doing this. The difference is, that’s awesome, but how sustainable will that success be? It’s important to factor in. We’re in our 60th year here. We plan to be around another 60 years at least.”

How to reach: Interstate Batteries, (866) 842-5368 www.interstatebatteries.com

The Sepulveda file

Born: Houston

Education: Bachelor’s degree in business administration, University of Texas at Austin

What’s the best advice you’ve ever received?

Colossians 3:23 — Do your work unto the Lord rather than men, knowing that it’s from the Lord that you shall receive your reward. That’s a paraphrase. It’s an awesome verse. I came across a Bible when I was 15 years old, and I’ve been a student of the Bible for the past 39 years. I view my studying and equipping myself with that knowledge as a strategic advantage in living a better life. It’s really almost unfair — but it’s out there and everybody could do it, but it doesn’t appear that many are.  Quite frankly, I’d say it’s the only reason I’ve made it from 15 to 54.

What was your first job?

I was 15. I had just left home. I left my mother in Oklahoma City, went to my dad’s in El Paso, stayed there nine weeks, that didn’t work out, so I went back to Austin where I had been previously until my mother had moved to Oklahoma City and contacted the football coach because I was a pretty good football player. I told him I needed a job before I checked into school, so I got a job bagging groceries, pretty much through high school. In the summer, I did fence construction.

What did you learn from that job that still applies?

By way of example, at the grocery store, maybe three nights a week I would close the store. There were like seven or eight steps to closing the store – taking out the trash, stuff like that. One of them was sweep under the candy racks. I did that, and it didn’t take me long to figure out I’m the only guy sweeping under the candy racks, because there’s no way they’re getting this dirty in one day. I thought, ‘It is what it is, so I’m going to keep sweeping.’

It wasn’t too many weeks after that the manager said, ‘Do you realize you’re the only guy who does that?’ I said, ‘Yeah, I figured it out.’ He said, ‘Why do you do it?’ I said, ‘Because it’s on the list for closing and that’s what I’m going to do.’

It wasn’t too long after that I got moved to cashier, even though some of the bagboys had more tenure than me. Any individual can only decide how they’re going to be valuable, then it’s up to that organization, whether it’s part of their culture, to reward that individual being valuable or not. If I worked for a government entity, there’s no way they’d move me from bagboy to cashier because other bagboys had been there longer. That’s one reason I’m a big fan of delivering value in an entrepreneurial business, because you let value adjudicate when opportunity gets harvested.