You can’t tactically work your way out of a strategic problem. When your team is facing a big shift in strategy, you must gather your team to build a new strategic plan, align the team around that strategy and establish an execution rhythm for accomplishing the goal. Afterburner COO, Joe “Gusto” Connolly, shares his mistakes and lessons learned from leading teams through challenging situations.
[Below is a transcript of the episode.]
Thor: How do you guide your team to shift their strategy when the current one is no longer working? What happens when the work that got you here, won’t get you to the next level? Today, we’ll talk with Joe “Gusto” Connolly, as he details the biggest challenge he encountered while leading a company with 6,000 employees and hundreds of millions of dollars in revenue. Gusto is our COO at Afterburner. He’s a personal mentor of mine. And we’ll learn about his journey out of a business catastrophe today on The Business ThorCast.
Thor: Ladies and gentlemen, I’m really excited about this episode of the ThorCast, because we have brought Joe “Gusto” Connolly to the table. And he’s got an incredible background. He was an Army Ranger for many years. He was a company commander during that role, right during the fall of communism. He was in Germany during the fall of the Berlin Wall, has an incredible story about that experience. Went on to have a fantastic business career on the other side of that. He’s been the CFO of large organizations, the COO and president, and even the CEO of multiple organizations over the years. He ran a 6,000 person, $300 million top line revenue organization. That’s just one of his many roles over the years as he’s been leading strategically both large groups of people and exciting missions. And he has joined us at Afterburner. He’s been on the Afterburner team… How long have you been on the team now, Gusto?
Gusto: Just over three years, Thor.
Thor: Just over three years helping us to accelerate teams. And behind the scenes, he’s absolutely my right-hand man. He’s my mentor. He’s the person I go to with every question on leadership, or the team, or which direction we should go. And we make a great leadership team, and I’m excited to share the insights that you’ve given me over the years with our audience. Welcome to the show, Gusto.
Gusto: Yeah, thanks for having me here today, Thor.
Thor: Absolutely. And the most important question that we gotta kick off with is, why am I calling you Gusto?
Gusto: It’s not really an exciting story, but it goes like this. I think it was my second week in the Army and an Army buddy, a captain looked at me and he said, “You know what? You’re no longer Joe Connolly, you are Joe Gusto.” It had something to do with the fact that that we had just had a big night out, and I think I showed up the next day still with a lot of energy and gusto, so to speak. And it’s been Joe Gusto ever since. In fact, there are many Army buddies that didn’t even know my last name was Connolly. They just knew me as Joe Gusto.
Helping Organizations Transform Their Business with Flawless Execution
Thor: And that makes sense to me, that after a rough night out that you’d be one of the few people showing up to the office the next day with a big smile on your face, ready to go. Cause that certainly captures your personality that we’ve seen at Afterburner, so Joe Gusto is a natural, and that fits well.
Thor: You are now our COO at Afterburner, and I wanna hear about all your exciting roles in the past, and we’re gonna touch on that in a moment, so why Afterburner? Why did you come to this organization?
Gusto: Well, Afterburner is an organization I’ve been familiar with for a number of years. In fact, when I first learned of Afterburner, I was in one of my first big jobs out of the Army. I was a CFO for a private equity backed business. And I was in an airport and I saw this book called “Flawless Execution,” written by our founder, Jim Murphy. And I picked it up and it really resonated with me, because I had found myself applying tools and techniques that we learned in the military and leadership lessons learned. But to Murph’s credit, he had really captured those lessons in a very simple holistic framework and language that I could take back to my team and say, “This is the framework that we’re going to use to be more aligned, to execute at a much higher level.” And it really resonated with me. And so over the years I always stayed in touch with Afterburner.
Gusto: When Murph came out with “Courage to Execute,” one of his follow up books, I saw that now he was talking about Navy SEALs and Army Rangers, and that prompted me to reach out and engage with Afterburner. And led to some opportunities to work together and ultimately an opportunity to join Afterburner full time. And for me, it was really an awesome opportunity because the more I had an opportunity to be part of that Afterburner team, see the values, the high expectations the team had for one another, it really reminded me that I missed that from my time in the military. Those values, the people that push you to be better, to be part of a high performing team. I saw the work that Afterburner was doing helping organizations transform their businesses, was really exciting to me and I wanted to be a part of that, so I was living in Chicago at the time, flew the family down to Atlanta and never looked back.
Thor: I love the part of the story where you were telling me you’re basically an executive in Chicago. What was your title at the time?
Gusto: I was a CEO of a start-up business up in Chicago.
Thor: So you’re CEO of this business. It’s successful. You’ve accomplished the things that you wanted to do with this one and you have your eyes on another opportunity because up until this point, you’ve been an executive, you’ve made the lucrative decisions that you were looking to make for you and your family. And now there’s a principles aligned organization in Afterburner. You still see a larger opportunity in a market that Afterburner has gone after that you wanna be a part of and you said, “I’m gonna walk away from this other business as an executive.” And what role did you take in Afterburner after that?
Gusto: It was to be in a consulting and business development role, so I was going to be one of the team members.
Thor: And when he came down, I remember we’re all like, “That guy… Didn’t he just come from an executive role? Wasn’t he in charge of this $300 million organization, 6,000 people?” It took all of us a matter of a couple of months to figure out that he needed to rise up through the ranks exceptionally fast. But to his credit, to his everlasting humility, he crushed the role he was in and took a step backward to join the Afterburner team. As we fully realize the potential and the person we had onboard, we very quickly moved him up the ranks. But I just love the value-based decision making that you made to come down to Atlanta, move your family and join the Afterburner team. I wanted to capture that.
Gusto: Well, as I said, Thor, it’s been a tremendous experience and as you know, we’re fiercely protective of the team and the culture we’ve created here. It’s been really special to be part of the team, and I really appreciate your kind words as well.
Lessons Learned as an Executive Leader
Thor: Two things I’m always curious about. We get a chance to talk a lot, and I know most of your stories, but I’m trying to ask myself, what are the things that would resonate the most? You’re one of my mentors, and I wanna just capture in this short session some of the things that I connected to from your stories. Tell me about your biggest lesson learned, and along the way where you made an inevitable mistake that we all make, and what you took away from that situation as an executive leader.
Gusto: The one story I would share is when I was the president of a private equity backed business. It was at that time when I had just taken over the president’s role, and we were in a challenging operating environment. There had been some shifts in the market. This particular business was in the call center industry, and there was a big push offshoring, and we were a little slow to move offshore. As a result, we had lost some key accounts, we were facing some pretty strong financial pressure. I found myself facing a really challenging situation where I started to just apply a little more elbow grease, work a little bit harder, work one more day. I was already working six days a week, and I turned it into seven and thought that if I just worked a little bit harder, then I could figure out exactly what the direction and strategy was for the company and quickly realized that I was not going to work because I found myself really losing altitude and about ready to crash because I could just not sustain that pace and I was not being effective.
Thor: You’re trying to outwork this problem and to give the audience a little background, of what was taking place you’re coming from, you’ve told me in the past it’s a high point. Right? That the team is doing successfully well, and when you first come onboard, you’re leading a lot of success. True statement?
Gusto: It actually was a great success story. We had completed a number of acquisitions, we’d grown at a rapid rate, our evaluation was increasing, and we were high fiving. We were going to live the American dream and thought that within a matter of months that we would maybe even successfully exit the business to a sale. And within nine to 10 months, it became very apparent, we were in a very different place. We went from the highest of highest to all of a sudden flying really low to the ground. I didn’t have a great perspective, things had changed so quickly.
Thor: You are trying to work your way out of this problem, and by the way, this problem isn’t current because the environment shifted around you. Right? Now, this is not a tactical problem. This is a strategic problem. Give a little bit of insight into how the world has changed that led to this.
Gusto: Well, as I’ve mentioned previously, what really was driving, this, again was that the market had shifted. If you recall back several years ago, there was a big push to offshoring the call center businesses, and we did not get offshore quickly enough. We’re trying to figure out our strategy. We were a great performer but it was a cost play by many companies pushing service providers offshore. The bottom line is, we lost a number of significant accounts in a very compressed period of time, and that really put a financial strain on the business. We had built the business to continue to grow well above double digits and we quickly found that we could not scale back quickly enough our infrastructure. It was too large, we had too many buildings, too many employees, we had too many fixed assets, we had a fair amount of debt, and the combination of the shifts in the market and our cost structure put this stress on the business.
Thor: You’ve levered up, you’ve gotten and taken out of debt, you’ve taken on too much-fixed cost because from your perspective, when you look at the charts and the revenue, everything is going straight up, so of course, let’s buy new assets and invest in the company. But it was the wrong decision cause the market shift around you, and now, here you trying to lead out of this firefight basically. Is that accurate?
Gusto: That’s true and it wasn’t just me. I had an awesome team, I really did. When I look back, it’s one of the threads to all of my experiences. For me, it’s always about the mission and the team as we learn as young officers that it’s always mission first and team and they’re hand in hand. And throughout my experiences, again, I had an incredible team to help navigate that period. But that’s correct, extremely challenging period.
You Can’t Work Your Way Out of a Strategic Problem
Thor: You’re in this strategic problem. And I say strategic because the world’s shifted around you. This is not a matter of not executing right, is not a matter of you going to your sales teams and saying, “Work harder on the pipeline. Go after opportunities in a more aligned fashion.” The world shifted around you and it’s a strategic problem, and I want the audience to listen to how Gusto said he was addressing it at first. Say it again. What was your response to that strategic problem at first? What did you try to do?
Gusto: Well again, as a young leader, what my first inclination was just to work harder, to add another day. It was already really a long schedule, so I went to seven days and longer hours and really saw this as an opportunity to prove my medal as a leader and lead the organization, determining whether it was a turnaround or a sale. Whatever the best strategic direction, I thought, by working a lot harder, I could solve the problem and find the answer.
Thor: Yeah, and it’s a really common challenge that we see and we are asked to help out with when strategic leaders find themselves in a strategic problem, and they’re trying to tactically execute their way out of it. And it’s because they bring… You brought all that proficiency to the table, that what you were confident in is your ability to execute, and your ability to bring tactical prowess to the team. The challenge is relying on strategic skills and bringing a strategic vision for the group. And here’s the analogy I would leave with the audience: It’s not about rowing on the boat, it’s about providing the rudder and steering, and allowing the rest of the team to row. It’s a very different atmosphere that you’re creating. You have to create the system that succeeds without you executing it. It’s the opposite of what you’re trying to do. You’re executing as hard as you can, working even harder, doubling down on the tactical execution. How did that work out for you when you did that?
Gusto: Well, once I took a step back and understood that I needed to operate at a more strategic level and align the team around that common picture of success, let them get their fingerprints on it as well so they had ownership. What that allowed us to do was effectively define and execute a strategy, but there was some turbulence there as I worked through that period. What I had relied on in the past was no longer gonna serve me well and so through some counseling from some mentors and just understanding the importance of defining what success is and operating at a strategic level, not a tactical level, we were able to navigate through a sale process, several months later.
Thor: You learned that you can’t work your way out of a strategic problem… And by the way, what were the other headwinds you faced for the executive team? Were they looking for a strategic shift? Talk about the CEO and what his vision was at that point.
Gusto: Well, at the time, we had a challenge really even aligning around a common vision before I moved into the president’s role. We had a team that really wasn’t operating as a high performing team. The CEO was old school and thought that the leadership team knew what we needed to do, and so we weren’t aligned around what success was. We hadn’t really had an opportunity as a team to come together collectively and define that, especially in a situation like this where things are moving quickly. And so it just was a dysfunctional environment at that time.
Thor: We get that perspective a lot from executive leaders, cause you can sense their frustration. Like the CEO is saying basically, “Look, this is common sense. This is stuff that my team should already know to do. The market’s shifted, yes, but they see that, and they need to make a move and shift according to the market. If they’re not doing that, we got the wrong people on board.” But what we need to gently tell these leaders is, “Hey look, common sense isn’t common. It’s not common at an individual level. It’s certainly not common at an organizational level. If you’re expecting your entire organization to pick up on these cues that you’re seeing with the market and a shift, and then move in response to these cues as one, then you’re relying on the organization to make strategic moves that they no longer need you for at that point. You don’t even need a leader if that would take place. The good news is, Mister Leader, or Misses Leader, they will need a rudder because they will need guidance, and that’s where you had to step in and provide that for them.”
Thor: For the leaders on this call, it’s not just an executive position, you don’t have to have a C in your name and your title in order for this to make sense. You can be a sales leader and run into a strategic problem and have to change the direction for your group, for a regional sales team, or for a small operations unit. But what does that really mean? How do you become strategic, Gusto? If you were to give some takeaways for the team, what would that be?
Gusto: Many of our clients today, what they fail to realize is the importance of aligning the team around what that picture of success is and the importance of letting the team command and participate in that. They own that. And the key lesson for me that I see over and over, is that, again, you don’t have all the answers as a leader. Sometimes you think you need to and so you have got to make certain that you collaborate with the team so that you align and engage the team around what success really looks like. And then what they’re able to do then is they can align their team’s actions to that and, again, cascade down, so that you can execute at a much more rapid pace.
Thor: That common vision for success in the long term. Don’t look at what you need to do next quarter. It’s really tempting when you’re in this firefight and you don’t know how long you’re gonna survive as a company to say, “Well, here’s what we need to do this quarter.” That’s not the conversation you should be having. Start with what’s gonna take place in three years. What is the long-term vision for success? Have the ability and the patience to pause with your team and look at that long-term vision because, as Gusto’s alluding to, if you can build that out with clarity and precision, then the team’s gonna be able to build off of that and make more informed decisions about what they should do this quarter. But they can’t do that until they know what the long-term vision for success looks like.
Thor: It reminds me of this organization we were helping, I won’t name the name, but I’m talking to the CEO and the CFO about their long-term vision for success is. And I talk to the CEO and I said, “What are you guys gonna go after?” I said, “You’re at 10 billion dollars in revenue right now. What does the future hold for this team in three years?” And the CEO said “We are gonna double our revenue. It’s gonna be phenomenal. We’re gonna hit 20 billion dollars. I got the whole plan. I know exactly how we’re gonna do it, what markets we’re gonna take over, and I truly believe, in three years, if this market’s moving fast enough, we’re gonna hit 20 billion dollars,” I said, “That’s fantastic. How exciting.” Went to talk to the CFO, and on the other side of the wall, someone who literally shares a wall with the CEO, and I said to the CFO, “Alright, what’s your vision for success, sir?” And he said “We’re at $10 billion in top-line revenue right now. What I’d like to focus on is increasing that about 13 billion dollars, while tripling our EBITDA, our earnings at the same time. Cause there is really an opportunity for us to tighten things up behind the scenes and create better efficiency and get these earnings and squeeze this… The real market value out of this as we increase to $13 billion.”
Thor: They’re both describing totally different companies. The CEO going after 20 billion and the CFO going after 13 billion with higher earnings. Totally different environments, totally different investment plan, totally different structure, and yet they shared a wall and they still lacked alignment. Imagine what their team members are saying beneath them. And this isn’t that uncommon. It’s not as uncommon as you’d think, that they lack alignment to a common vision for success. Something as simple as, “What number are we going after as a team?” How do you build that? Now you’re in this position where you’re taking a step back and you’re saying, “I wanna build a common vision for success with my team. I’m gonna focus on that. The CEOs old school. He’s trying to hold me back and telling me that they should know this already.” How do you take a step back as the president and help them to build that vision and communicate it?
Gusto: There were a number of steps we took, we came together as a team and we start to align around were our priorities? What does success look like? What is it that we were trying to achieve? And so in this particular case, we realized pretty quickly that the best strategy for us to pursue was a sale to a larger competitor. And so that started to inform our decisions and then collectively aligned the team around the critical few things that we had to do. Not all the things that we might do, but the critical few things and really call those out in detail. Identifying those critical few strategic priorities, so that the leaders could then identify the tactical missions to support those with their team. What we also did once we established that picture of success was what we at Afterburner call, establishing an execution rhythm, a cadence around how we were going to execute that strategy and cascade that down to the organization. That again would be the second lesson I learned, is the importance of establishing an execution rhythm with the team to make certain that you address any changes in the environment, enter any pop-up threats, or you lose resources. How you’re going to address those, to continue to drive that alignment, that collaboration and the accountability to stay focused on executing that overall strategy.
Establishing an Execution Rhythm
Thor: Yep, as we’ve said many times, success is comprised of two things that a team. Inspired alignment, alignment to a common Vision a common goal the team believes in that they are excited about, and disciplined execution. That cadence for execution. You cannot have sustained success without both of those things. Vision without action is daydreaming. Meaning if we just build that vision, we just go around communicating this lofty dream that we’re going after, but we never do anything about it, that’s just daydreaming. The team says, “We’re better off working on our own.” But the other side of that coin is just as painful and that is, action without vision is a nightmare. And that’s what you were part of. You were in a world where you are just acting your way out of this. You’re rowing as hard you can, “Let’s just do more action, let’s work harder, and work our way out of this problem.” And we didn’t have the vision to do that. We didn’t have the right strategy that we were aligned to. And because of that, we couldn’t work our way out of a strategic problem. They needed that rudder to shift the direction of the battleship for them and that’s what you were able to provide by going to a new strategy and saying, “It’s going to be about an acquisition. It’s going to be about a sale mentality.” And that informed all of your decisions from that point forward.
Gusto: That’s exactly right and, again for me, it was a tough lesson learned, and over the course of the 12 months that we pursued and executed that strategy, probably one of the most challenging periods in my life. But as we know, under those adverse circumstances is when we learn the most, and for me, it’s just a tremendous experience in terms of my leadership development and just how to be more effective in leading a high performing team.
Thor: Fantastic stuff, Gusto. I really appreciate your insights on this. I know that it always resonates with the strategic leaders that we talked to that you had situations like this in the past and you had to make the transition from being a tactically proficient leader to a strategic leader, and it’s a very different thing and it requires a different focus as a leader for your team. And we appreciate you opening up on the inevitable mistakes and challenges that you’ve experienced over the years as you’ve alluded to. That’s where the learning occurs and what I’m impressed by is how you’re able to use those to drive other teams to success. And obviously, you created great success for the rest of your career. But now you’re able to leverage those lessons and help executive leaders to succeed as we support clients.
Gusto: Yeah. Thank you, Thor.