Ron Daugherty had hit a ceiling. Daugherty Business Solutions had been on a steady growth trajectory ever since he had launched the company, but it had reached a point where there was no more room to grow the organization.
“I found I could personally by brute force and a lot of hard work keep my hand in things and drive things forward in three or four different business units,” says Daugherty, founder, president and CEO at the 500-employee company. “But as we started to expand beyond that, it was impossible to scale further.”
The IT consulting company had a presence in St. Louis, Chicago and Atlanta and was now looking to get up and running with a different kind of opportunity in Dallas. Instead of providing service, the Dallas business unit would be a product-based venture that would support distributors and wholesalers across the country on behalf of Anheuser-Busch Companies Inc.
But the transition wasn’t going well and Daugherty quickly began to sense that he had bitten off more than his company could chew with this latest expansion.
“I had to gracefully ramp down what we were doing in Dallas and back away from it,” Daugherty says. “We had never had to do that before. It had been all growth. We didn’t hurt anyone, but we couldn’t maintain the operation with the amount of leadership required for this new product company. It was clear until our leadership bandwidth and infrastructure was strengthened, we were not going to be able to scale this thing much further. That was a pretty dramatic point in time for us.”
Daugherty realized there was a leadership void in his company that stemmed from what he had traditionally looked for when making hires and developing leaders in the business.
“We didn’t have enough leadership ability at the very highest level, the level of running a business entity or building an organization,” Daugherty says. “We started this company 26 years ago as a technology-focused organization. So most of the things we looked at and hired for and valued at the time were really smart technology people. We were very good at that, and it’s still a real theme of what we do.”
But it wasn’t enough to grow the business beyond what it was. And that growth was something Daugherty very much wanted to achieve. The trick was infusing new leadership without disrupting the culture that he had worked hard to build over the years.
“This had been a successful organization,” Daugherty says. “But it wasn’t even close to achieving the vision that I have and had for the company. So we had to address that.”
Know what you’re looking for
Daugherty wanted to find leaders to help his company grow, but they couldn’t just be any leaders. They had to be a fit for his organization and its culture. So pure business acumen wasn’t the only criteria he had in mind.
“Successful companies have a strong identity,” Daugherty says. “What that means is if you hire someone from the outside, it’s not an overnight thing that they will internalize your culture, your values and your vision.”
Daugherty sees his company as an alternative to national consulting companies in that it offers more local support from people who live in the communities in which they work. That family-oriented spirit was something he wanted to maintain in the service the company provided and the culture employees worked in.
Surely, he would have to bring in some people from the outside. But he believed it would be a mistake to automatically dismiss the untapped potential talent that might have just been waiting to be discovered.
“If you don’t promote from within, not only are you going to miss an opportunity to leverage some of the talent that you have, but some of that talent has experience that they have internalized that is associated with how your company does business,” Daugherty says.
At the same time, Daugherty recognized he needed some new blood. If everything he needed were within the company’s walls, he wouldn’t have had to shut down the Dallas site in the first place. He was going to need to look both outside and inside for this leadership talent he needed.
“You have to hire talent from the outside or you’ll become limited in terms of how fast you can grow,” Daugherty says. “You do need fresh ideas. It’s absolutely critical that you do both on an ongoing basis. If you don’t have a legitimate sincere commitment to promoting from within, why would someone join you for the long term? At the same time, you’ll limit yourself tremendously if that’s the only approach you take.”
One of the first things Daugherty did was begin looking more closely for leadership potential in the people the company looked to hire from the outside.
“It’s something we kind of paid attention to from the beginning, but we started to focus more on it,” Daugherty says. “When we hire these really smart technical people, let’s place even more emphasis on what kind of interpersonal skills they have. What sort of leadership potential do they have? What sort of business acumen do they have?
“Those became even more important for us to look for. Those are qualities we try to develop in our existing employees, but also certainly in new employees we looked to bring into the company.”
An added emphasis was also placed on developing leaders from within.
“We saw some great talent in our organization, but a need to do more to help groom and develop and bring along those business skills,” Daugherty says. “So that was part of it.”
The key to recognizing whether someone, either internally or externally, has the skills that could be groomed into being an effective leader is their mindset on new opportunities.
“Look for the evidence of how they translate the concepts that I’m talking about,” Daugherty says. “How do they relate that to specific things they’ve done? What have they done that shows that this isn’t a new idea for them, that it’s very consistent with the way they operate, the way they do business and the way they’ve led other organizations? Get it past the concept and the philosophy. What are the specific examples of how you’ve done this?”
You need to get to this depth of knowledge because it’s going to take more than energy and spirit to be a good leader. If you see it in the interview, you may think you’ve got a winner. But if there’s no substance behind it, you’ll have a problem. You need the complete package.
“It’s really tough to make somebody smarter after they join your company,” Daugherty says.
Groom new leaders
As Daugherty found people who he felt could serve as leaders in his company, the next step was to get them on the path to actually becoming those leaders he needed. He felt mentoring would be the best way to go with his direct reports doing the grooming.
The key to making it work would be their ability to demonstrate patience as the new leaders were trained. Daugherty had to get the leaders he had on staff to work just as hard as he would be working to infuse and develop more leadership in the company.
“You bring someone in and they are bright, talented and hard-working and you tend to break away too soon because we’re all busy and we all have a number of things to do,” Daugherty says. “So No. 1 is: You’ve just got to stay with it. You’ve got to spend the time.
“You can’t fall into the trap of, ‘OK, at last. I’ve got a new leader here. I’m going to spend a couple of weeks or months getting him up to speed, and then I’m going to turn things over to them so I can get more done.’ You have to spend more time. You’re probably going to have to spend six months to a year of some really significant overlap time with what they are doing.”
To that end, leadership training needs structure. Being a leader can be defined in a lot of different ways, so you need to figure out what you want to accomplish through the training.
“You have to have clarity around goals and objectives and the definition of success and what we're trying to achieve here and how we reward and incent people and how we reward folks,” Daugherty says. “You have to have structure around that or you’ll just run out of steam. Make sure the structure you put in place for how you recognize success and reward, incent and define success lines up with exactly what you’re trying to accomplish.”
Daugherty wanted people who could get the Dallas office back on its feet and make his offices in Atlanta and Chicago and back home in St. Louis stronger. He wanted people who would be ready when the next wave of expansion hit. He also wanted them to fit in with the culture and so it was key that the training was done the right way.
“If you have the values and the vision and the commitment and you have the structure, that’s been the breakthrough for us,” Daugherty says. “We see a lot of companies have the structure, but they are not connecting it to their values and how they live and think every day. And we see other organizations that don’t have the structure and all the good intention in the world will not get them where they need to go. So it’s a combination of the two.”
Daugherty reflects on his father for much of his perspective on leadership development. He was heavily involved in education, first as a high school teacher and principal and later as a superintendent, mostly in smaller towns.
“It was a job that as I think back on it and became a little bit older and more experienced, I realized what a leadership role that was,” Daugherty says.
“He had principals, teachers, bus drivers and cooks all working for him. Keeping that group motivated and working together and not fussing and fighting with each other. Helping folks on the school board, who in small towns ranged from farmers to grocery store owners and didn’t know a whole lot about the school business. Helping to educate and lead them while basically reporting to them. He didn’t have positional authority, but he needed to be their leader.”
It was a philosophy that Daugherty wanted his direct reports to understand as they worked to groom these new leaders the company needed. It was clear as he heard from the people who were getting trained that they had bought into what he was selling.
“As I bring in folks who are very senior people who interview with my leaders here, one of the things that I hear consistently is they say, ‘Ron, I’ve talked to your leaders here. Everybody is on the same page. You can see everyone here has bought into the vision,’” Daugherty says.
“They are totally committed and so we have a core team that is growing every day. It’s going to be an engine for driving a tremendous amount of growth.”
Daugherty points to people like John Wirth, his regional manager for Atlanta, Minneapolis and Chicago, who has helped make it possible to reopen in Dallas.
“He’s taking some of the leadership talent that he has developed, especially in Atlanta where he is furthest along, and we’re taking some of those leaders to Dallas,” Daugherty says.
He references Carol Morgan, who joined the company as a consultant and is now a regional vice president, as well as Jeff Hatfield and retired U.S. Navy Rear Adm. Lee Metcalf as examples of leaders who have been groomed through this system.
“We have a plan together that we’re drilling into more detail every day that shows how we can take the company from $100 million to $700 million in revenue over the next 10 years,” Daugherty says. “We’re really on a growth track with leadership development happening every day and new talent joining us as we accelerate on our journey.”
How to reach: Daugherty Business Solutions, (314) 432-8200 or www.daugherty.com
The Daugherty File
Ron Daugherty, founder, president and CEO, Daugherty Business Solutions
Born: Paragould, Ark.
Education: Bachelor’s degree in math, Arkansas State University; master’s degree, bioengineering and advanced automation, University of Missouri
Who would you have liked to meet and why?
Albert Einstein. He had a philosophy as well as just having an exceptional level of intelligence. He related the science that he understood better than almost anybody else to the real world and to human behavior.
I’m not as smart as Albert Einstein, but I’ve been smart enough to understand a lot of things around new technology. I’ve had the ability to translate those things into how they matter for businesses and for people. While I have people working for me who are a lot smarter than me on the on the technology side, to be able to pull the two sides together, I see some of that in Einstein. Really smart but able to relate as well to what that might mean to people.
Daugherty on motivation: We do have a very specific vision, culture and set of values here. When we consider someone for a leadership role, they really have to be motivated by what it is we’re trying to build. That may sound simple, but I see that point missed by people a lot. It’s not just that you’re smart or that you’re talented. Do you really want to be part of what we’re trying to do here? We’re going to be as crystal clear as we can possibly be with you about what we’re trying to do. If you want to be part of that and it motivates you to help build that, we can probably make a lot of things work here. If you’re extremely talented but you’re not particularly motivated by it, you’re never going to be a top-tier leader.