The Journey from Underdog Athlete to Turnaround CEO w/Mike MacDonald Ep#155
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Anthony: Thanks for joining us, folks. My name is Anthony Taylor, and I'm your host today. I'm really excited to share with you today's guest, Mike McDonald, who is the author of Bench to the Boardroom: My Journey from Underdog Athlete to Turnaround CEO. Mike, how are you?
Michael: Very good. It's great to be on your show.
Anthony: I'm so excited to chat. When Jason, who does all of our podcast bookings, sent me your way I was like "Oh man", and just around the all star game time. So for those of you watching at home, you know what, Mike, why don't you tell our listeners about who you are, where you come from, and I will park my excitement for just one quick minute.
Michael: Yeah I grew up in in Philadelphia, played high school basketball in the Philadelphia Catholic League and got recruited to Rutgers University by Bill Foster, who eventually took Duke to the Final Four before Coach K. I played on the first Rutgers NCAA team in 1975, the year before Rutgers went 31-0 and then last two games in the Final Four. So I played at the peak time of Rutgers basketball in its history.
I also had a great opportunity to sit the bench because I played behind Phil Sellars, an All-American, Ed Jordan, who played the NBA, Hollis Copeland, who played for the Knicks and a lot of guys who were really, really good players. And basically, I didn't get to play as much as I would have liked to play. But I had an absolutely wonderful experience. And I had some coaches that I learned a lot of things from that translated into business. I was recruited by Bill Foster, who used to run camps with an individual in the Poconos who really was the founder of the basketball camp system back in the 60s and 70s.
Then I had a chance to play for Dick Lloyd in my first two years, and I had an opportunity to spend a lot of time recruiting with Dick. Today, Dick and I now are board members of the Jimmy V Foundation together. But Dick was a guy who had unbelievable enthusiasm. As much success he's had in broadcasting, he had that same enthusiasm as a young assistant coach when he was at Rutgers.
Then I had a chance to play my last few years for Tom Young, who won over 230 games at Rutgers and was a very successful coach, a terrific disciplinarian. The guy was very, very well organized and a great leader. So I had a great opportunity, the good and the bad. I didn't get recruited by one coach, I had two or three different coaches in college, which didn't necessarily help me.
But I had a chance to learn from three different coaches and three different programs. That was probably one of the most important things that happened in my life, because I learned many aspects from all these people in the teams that I was on that then helped translate to helping me manage teams at Xerox and later on at Medifast.
Anthony: Yeah, absolutely. And just so everybody doesn't think this is a basketball podcast that you've tuned into. Mike had an impressive career at Xerox, at Office Max, and then the CEO of Medifast. So, Mike, tell our people about your corporate career as well, obviously, the basketball being a foundation.
Michael: Yeah, well, my corporate career was quite a ride. I started as a sales rep at Xerox in 1977, and a division of over 50,000 people. By 2001, I was the President of that division. So I went from the very bottom to the top of the North American Solutions Group, and had an opportunity to work for the CEO of Xerox Anne Mulcahy for 10 years and was one of the most successful female CEOs in history.
We were able to do a massive turnaround at Xerox. We hired a CEO from IBM, it did not go well in 98/99, and we ended up having to downsize the company from over 100,000 employees into the 50s over a three or four year period. We completed a turnaround where we focused on really doing a lot of great things for the people that were left in terms of development and compensation and focus strategies. We were able to turn the company around.
Eventually, the company grew. We acquired ACS and other companies, and the company grew to 140/150,000 people after that. I retired from there in 2009, after working that turnaround. I think one of the things I thought was important was, and I covered this in my book, is a lot of the attributes that I learned from sports, being a good teammate, working together, being very disciplined and focused on objectives, accountability, having the courage to make the decisions, you need to make - a lot of attributes that are important in sports translated very well for me into the business world. And I was able to manage in very, very difficult times, and deliver substantial results. We improved the profit of the company in my division by over $500 million in a four and a half year period.
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Anthony: Well, okay - you touched on some of those key attributes and learning that you get from team sports. And I just really think fostering those within all teams is important, too. Let's take that very important inflection point where all those layoffs had to happen. And then you had to jump into turnaround mode.
I want to ask you about like, confronting being humbled. When you're at the bottom, for lack of a better word, and you're beginning that turnaround, what are some of the considerations a leader needs to make? What are some of the questions that you ask yourself in those moments that allowed you to kind of regain your footing, and support that amazing transformation that happened next?
Michael: Well, the interesting thing when you're doing a turnaround is, first thing you have to ask yourself is, are you loyal enough to the company? Do you love the company enough? I was in that culture for 33 years. Are you going to stay and do the very hard work? There are many people that the minute the company has trouble and goes south, they want to go to another company that's growing and doing well. They really don't want to be part of the turnaround.
That's the first thing I found out was, I wanted to look at my team - I had 20 senior vice presidents, and in the first year, I changed seven of them because they weren't capable or ready to do what I needed to get done. They were used to the Xerox that grew. But I joined in 77, we went from 5 billion to 18 billion between 77 and maybe 2000. So we had a huge growth over all those years. And you know, when things go bad, it's very, very difficult.
I think that's the first thing, is saying Okay, you're determined yourself, you're going to stay and really work on the turnaround. And then second, I'm going to put a team together that has the same type of view, that you want to maintain the culture that you stayed those years for. You really want to get the right people in the right seats on the bus, as Jim Collins used to say, and get the skill sets that are required.
Then ensure that you're creating an environment where you have recognition, where you give them the right personal coaching and training, and making sure they feel you're committed to their long term career success. So they want to stay and be a part of that. And that's what I was able to do. I was able to put together a very good management team of people who had been in the company a long time. They really wanted to turn it around with the same views and love for the company. Because we are a company for 33 years, it's more than just a company. It's your family. It's your life. I mean, you have so many people that you've known and been around and been involved in. So it requires a lot of work.
We had 150 offices in the US and Canada. I visit them all every year. I used to be on a plane, Tuesday through Thursday, every week visiting offices and talking to customers, visiting employees, taking managers to dinner, doing all kinds of things. So you were a visible leader. I think that's very important and is something you have to do. But you also need followers, you have to create followership.
If you're a leader, and nobody follows you, you aren't a very good leader. If you're a leader, and the people sign up and they get behind you and they're following you, and they're doing that because they really see you're doing the right things and you care about them and they care about you.. That's where success really happens.
I was able to sort through a very bad situation and come up with a management team, create objectives and strategies that we all work together as a team, and by the way, hold people accountable. You know, one of the things that I think is important is you don't turn anything around if people don't achieve the objectives. So you've got to create objectives that can be achieved, and that you all agree to, and then you walk collectively go after them. And you hold each person who's got those objectives accountable. If we had a western region, Head of Sales or Midwest Head of Sales or an Eastern Head of Sales, they've got to deliver the results. And there had to be accountability for that performance and recognition for that performance.
Anthony: Yeah, absolutely. So seems like one of the keys to your success was making sure that coordination, collaboration and commitment as an undertone was there top down. And of course it wasn't overnight, you know, 30 years overnight kind of thing. But really transforming it, an incredible transformation, moving that forward. But really putting in the hours, putting in the time, having the focus and making sure that you had the right people was critical to even to making that happen.
Michael: The other thing is you have to empower those people. I'll give you an example - Bill Steenberg used to run service for me. I just talked to him yesterday, he just retired from Pitney Bowes. And he managed the large service organization. We started with 27,000 people in service, then ran Pitney Bowes service. But he said to me, "Mike, one of the things I enjoyed about working with you is, you empowered me to get the job done". I didn't tell him how to do everything. I said, Hey, look, let's agree on the broad objectives. And then let your good managers figure out how to do it, and how to get there and making sure they're doing it in a way that makes their organizations feel good.
So empowering your people that work for you. And having them feel like they have control, even though you're trying to accomplish a broad objective is very important. And you got to make sure they feel good about working in that kind of environment.
Anthony: Well, especially at the scale that you were talking about, right? I always tell people, there's more of them than there are of you. But especially if you're looking at, you know, hundreds of locations scattered across the country, that even if you wanted to do it all yourself, you couldn't, so it's critical.
Michael: I had a six and a half billion dollar division with 340, vice presidents. Just vice presidents, I had 340. Now that went down when we downsized but you think about a lot of people. In fact, one of the hard things is when I did the downsize and we had 2000 people in the marketing staff in Rochester, just for the marketing administration support.
I walked in a conference room when I had to do the downsizing. And I told them all. I said by the way, right now you have 2000 in this room, there's only going to be 1000 of you next year. I'm going to come down 1000 people, but I'm going to help everybody here without placement - trying to get everybody jobs, trying to do the right things. We moved some things to our finance department, we did everything we could outsourcing things. But a year later, I only had 1000 people.
Now, it was very interesting. I got feedback from some of the people in Rochester and they said, you know Mike, the nice thing we respected about you was you called us in a room and told us before it was ever in the paper, before anybody could talk about it, you said it up front. And then when you hit the news, everybody knew you were doing it to save the company, doing the right thing.
I never had a lot of negative feedback from that, it's a very, very interesting thing. Too many companies will say oh, we're going to lay off 1000 people. Then it ends up in the paper and nobody's told them or the process they're going to use to help them. I think there's ways to do things where you can do very difficult things and do it in the best possible way. Hey, laying off 1 person is not fun in any company, whether it's one or 1000, it's not a fun thing, but it's how you do it. It's important.
Anthony: Yeah, absolutely. I think you know, you and I have an age difference between us and the managers in the realm at different stages of the their careers. And I found that sometimes it's easier to do the faster thing, but from your experience, and really speaking from practice is, it's not easy, but you have to do it the right way. And if you don't do it the right way the first time, it's going to be a lot more challenging on the backend.
So take the time to do it right, especially when you're dealing with those most sensitive conversations, like the ones that you're talking about there. I think that's amazing advice to really consider, hey, do it right. It'll make the even the hard stuff arguably slightly easier.
Mike as we as we think about this journey and this incredible transformation that you've taken with these organizations, what was like an 'aha moment' for yourself, where it was a really big inflection point, whether it was something that you screwed up on, and then you learned from it significantly, or something profound that a coach or mentor shared with you that fundamentally shifted your perspective on things. But what's a big 'aha' that you had in your life?
Michael: I was like any other manager, I made lots of mistakes. I mean, a couple of things I always tried to do is I tried to treat the security guard as well as I treated the vice presidents who work for me. I'll give an example. One quarter, my finance guys, we miscalculated our service annuity. What I mean by that is, if you have a couple million machines out there, they all generate service every month and supplies, and we made a $10 million error.
Now, a $10 million in the United States for Xerox, that's all profit. That impacted the CEO and the results of that quarter, you know, so it wasn't a good thing. The finance guys made the mistake. But I was always the kind of person I took responsibility for everything. So I called the CEO, and said I just want to tell you, we really screwed up. We blew the revenue by $10 million, we made an error. So we reported it, and it's wrong. She said well Mike, you've been there a couple of years, you haven't missed a quarter yet. Just don't do it again. I said, I will work on that. I will make sure we don't do it again.
The message would be I didn't sit there and say my service guys all screwed up, and my finance guys. So they're responsible for this error. And it's $10 million. I never blamed anybody else. I always took full responsibility for the results of my team, and they knew that. So I always had their back. And we said we had problems, you know, everybody makes mistakes. I never fired anybody for making a mistake. What I would fire somebody for was ethics or bad behavior, or things that were just not appropriate in a company. But people made or took risks and tried things. I was okay with that.
I remember at Medifast when I went there, we were a diet company. We tried to do a sports nutrition product, and we made a great product. We went out then we realized, geez, you know, we don't know how to do diet products. We're not real good at distribution of these other things. You had to go to universities, and we were competing against the Gatorades of the world and all these people that were so used to being involved in those environments. We realized we couldn't make money at it, so we killed the product after about a year. And that was it. We focused then again on building our network and staying in the diet space.
So I don't think making mistakes or experimenting or - there's nothing wrong with that. I mean, I think any good executive is gonna have those things happen. You just hope that you improve your judgment, you do things better, and you improve your processes if you had a problem. That's always sort of the kind of manager I've been, and I think people that work for me, I think they appreciate that about me.
Anthony: Yeah, absolutely. Well, one of the things that I heard out of that is, you have to be willing to fail and failing isn't the problem, especially when you're going to turnaround. It sounds like you've really built a reputation and your career and your legacy around being a straight shooter, but also being somebody that you can work with as long as you're open and transparent. I think a quality in good leaders is that they're respected. It's hard to follow somebody who is inconsistent with their values, behaviour, communication, and action.
Michael: I totally agree with what you just said - very important. People will respect you if you have high integrity and ethics and your you're consistent all the time. And I think that's important. You know, I always try to stress even to my own kids, behaviour is important.
A lot of times today, people aren't with each other. You're trying to manage people through Zoom, and over the phone and all this stuff during a pandemic. That's not easy. It's much easier when you're with people to read their body language and things like that. Today, you got masks on even in school - you can't read body language. So it's, it's a more difficult environment for today's executive than it was for me.
It requires an even better skill set and even more communications. If somebody does something, well write him a letter or send him an email, saying they did a great job or whatever. But you got to do a lot of things to encourage people, and have them feel good about what they're doing.
Anthony: Yeah, absolutely. It just popped to my mind, how you probably would have communicated in the early 2000s or 90s. Now, it appears so easy, but thinking of like basketball, it's the work that you put in, not on the court. It's those extra pieces, it's those hustle plays, it's putting in the work that gets you the results. And I think that it's a lot easier to try to take the shortcut. But the longest distance between two points is a shortcut. So you got to put the work in, you got to take those reps, you got to take those shots, to help improve your game as a player and game as a corporate athlete in the boardroom.
Michael: I think you're totally right. Yesterday, I spoke to a basketball academy coach. He asked me to speak to these guys all out of high school. And they're practicing to try and get scholarships to college. And they're from Italy, and Denmark all over the world. It was very interesting. I said look, I got cut my freshman and sophomore year high school, I only played JV my junior year. I practiced five hours every day, all those years.
And I finally made it as a senior, had a great year in the Philadelphia Catholic League and got a scholarship to Rutgers and got other scholarship offers. But I said it was all that effort. Also not quitting when I got cut, dealing with failure, dealing with the fact that you're still not good enough, and you got to get better. I said to the kids, you're trying to get a scholarship, you want to get a scholarship, but the chances of any of you playing in the pros is slim. You really have to take advantage of going to a great college, getting a great education.
By the way, there's no limit physically to being successful in the business world. It's going to be the people, the people who continuously learn, the people who have mentors and really develop mentors, that people who listen to people and take their advice, who volunteer to go to programs. I was in my 40s and went to Columbia, I was in my late 40s and went to Harvard. I said I tried to go to any programs they actually allowed me to go to to make myself better. And that's very important.
A lot of people sit back and say, Well, I'm unhappy, I'm not getting promoted. I'm not doing this. But by the way, they ever talked to their boss about getting promoted. Did they ever sit down and say what they can do to develop themselves? Are they ever taking ownership themselves for their situation? You got to have a positive attitude when you're working every day. I worked 42 years, and I never didn't enjoy going to work. The reality is, you got to have that approach that says, I'm excited about the next day at work.
Anthony: Yeah, I got that. You gotta show up, you gotta be ready to play and ready to give it your best. And I think that makes a big difference in performance, and especially when you're trying to play at a high level and really be the best. So, Mike, where can people connect with you? Where can they pick up your book?
Michael: My book is on Amazon, From the Bench to the Boardroom. It's on Amazon. And it's also at Barnes and Noble. But Amazon's really the biggest distributor of books as you know now, so that's probably the easiest place to go and to get it.
It's six chapters about sports, three about the turnaround at Xerox and three about how I was able to take Medifast from a company that was $12 a share to $177 a share (but it was up to $300 at one time). When I took it over it was $250 million, and this year it crossed $5 billion. So it was it's a pretty good story. I think you can take a lot of good things out of it. I think it's an interesting read.
The guy who wrote it with me, Dick Weiss, is a Hall of Fame sports writer. So it's the first time he did business as part of his books, and he's written books about John Calipari, and lots of famous people in the sports world. But this one, he had to write six chapters on business and he did a pretty good job.
Anthony: Awesome. I appreciate the conversation. I was gonna try to do a Dick Vitale impression for you, but I will spare you and our audience for that.. "Oh, baby". Anyway, I just appreciate you being here. Thanks for making the time.
He always says "awesome, baby".
Michael: I wasn't gonna try, so I appreciate that. It was just really great speaking with you, and I appreciate you coming on to share your really impressive experience with our audience today. Thanks for being here.
Thank you very much. Take care, folks.
Anthony: Thanks again to our guest, Mike McDonald, who's the author of From the Bench to the Boardroom: My Journey from Underdog Athlete to Turnaround CEO is an incredible story. Be sure to check it out. I think there's a lot of lasting lessons of leadership to take from it. Even if you're a seasoned executive or you're brand new, you can't skip the work.
Be sure to check it out. Thanks again, Mike. So this has been the Strategy & Leadership Podcast. My name is Anthony Taylor.
Thanks for joining us, and we'll see you next time!