Lessons in Leadership: Michigan Football

Michigan Football is the winningest team in college football history, built on deep traditions dating back 132 years and great coaches like Fielding Yost, Fritz Crisler and Bo Schembechler.  This program has generated 11 national championships, 42 Big Ten championships, 77 All-Americans, 3 Heisman Trophy winners and has attracted over 100,000 fans for every game at Michigan Stadium over the last 42 years.  Michigan Football is an institution, generating millions of dollars in revenue each year, and the expectations are high, year-in and year-out.

Between 1969 to 2006, Michigan Football was most personified by one man, Bo Schembechler, the great U-M coach between 1969-1989 most known for his 10 year war with Woody Hayes, Bo's mentor and head coach at arch enemy Ohio State.  In his first season, Bo turned around a struggling program, knocking off #1 ranked OSU in his first try.  He could do no wrong from there in the eyes of the Michigan faithful.  Bo went on to win 13 conference titles in his 21 years as head coach.  So, it is safe to say, whatever Bo thought, ruled decision making in Michigan Football, for as long as he was around the program (even for the 17 years he lived after coaching).

When Bo became Athletic Director after coaching, he quickly fired Bill Frieder as head baskball coach after it leaked he would become the next coach at Arizona State after the end of the season.  Bo got up to the podium and said "only a Michigan Man will coach a Michigan team", naming assistant coach Steve Fisher the new head coach the day before the NCAA tournament started.  Fisher ended up winning his first six games as head coach, and the National Championship in the process, making Bo that much more "god-like" in Ann Arbor. 

But, that "Michigan Man" quote became a mantra for all future coaching hires within the program.  Bo handed off the coaching reins to his assistant, Gary Moeller, who then was replaced by another Bo assistant, Lloyd Carr, both Michigan Men and direct descendents from Bo.  So, when Lloyd Carr announced his retirement after the 2007 season, the search for the next coach began and most assumed another Michigan Man would be hired.  Then Athletic Director, Bill Martin, after a series of public missteps and a mismanaged recruitment process, announced that Rich Rodriguez, the head coach of a wildly successful West Virginia program, would be the next coach at  Michigan.  Rodriguez was not a Michigan Man, and the first one hired since Bo died in 2006.

Now starts the key lessons that may be relevant to your businesses, which are much better detailed and documented in the new, nicely-written book "Three and Out" by John Bacon, the story of Rich Rodriguez and his failed tunure at Michigan between 2008-2010.  But, I thought it was important you had the above background, to put the below in perspective.

Reaction to Hiring.  Most U-M fans were hoping the hugely successful U-M alum, Les Miles of LSU, was going to get the job, especially since that was erroneously reported by ESPN early in the recruiting process.  After rumors of Les Miles, Kirk Ferentz (Iowa), and Greg Schiano (Rutgers) came and went, Rich Rodriguez felt like a distant fourth choice.  And, to make matters worse, he wasn't a Michigan Man.  Lloyd Carr had preferred his replacement had been one of his assistant coaches, from within the program.  And, when it wasn't, Carr did not make it easy on Rodriguez, as he helped many of his current star players transfer out of the program.  And, many of the Michigan football player alums, publicly voiced their criticism of the hire and did not offer their typical support of the new coach.

Egos and the memories of what Bo would do got in the way, and overshone the repeated successes of Rodriguez throughout his career, who on paper was a very good choice by Bill Martin.  And, the Michigan faithful didn't seem to remember, when Bo was hired (he was an outsider from Miami, Ohio) and when Fielding Yost was hired (he was an outsider, also from West Virginia).  But, for whatever reason, Rodriguez was doomed from day one without internal support for his hiring.

Reaction to First Days on Job.  To make matters worse, Rodriguez had no sense to the numerous deep-seeded traditions of Michigan Football (importance of #1 jersey to best wide receiver, importance of beating OSU, importance of getting to Rose Bowl), making him look even more like an outsider, because he never asked, and was never taught, things that mattered to the program.  And, his style was very much a "do it yourself" style, burying himself in the football building, and not reaching out and networking with the athletic department, university officials, football alumni and the fans themselves.  A style which only works if you are winning, since it is hard to fire the guy you know and like, but easy to fire the guy you never see and know nothing about.

Layer on top of that the fact that U-M promised to pay $2.5MM of Rodriguez's severance payment due to West Virginia at the time he was hired, but the university wouldn't let Rodriguez communicate such agreement publicly.  Which made it look like U-M was "bailing out" Rodriguez from his personal commitments with U-M cash, which was not the case.

Reaction to Performance.  Rodriguez went 3-9 in his first year, marking U-M's first losing season in 40 years and breaking U-M's national leading string of 33 consecutive bowl game appearances.  It didn't matter the team was light on talent for Rodriguez's system and based on early departures (assisted by Lloyd Carr).  And, it didn't matter Rodriguez told his boss it would take 3-4 years to get the program working right.  All that mattered was the U-M faithful, who were leery of his hiring to start, were out for blood. 

To make matters worse, Michigan was investigated by the NCAA for the first time in history, while on Rodriguez's watch.  Michigan was penalized for five major NCAA violations, largely around practicing 6% more time than was allowed by the NCAA (largely during the off season).  Are you kidding?  A disgruntled former player was a whistle-blower on a team that was trying to recover from a 3-9 season.  But, the noose around Rodriguez's neck was getting tighter and tighter.

Although improved, Rodriguez's second year was another losing season at 5-7 (gasp! back to back losing seasons and no bowl game).  And, his third year ended up at 7-6, including three straight losses to archrivals Michigan State and Ohio State, a record breaking worst defense in U-M history and an embarrassing 52-14 Gator Bowl loss to Mississippi.  That was about all that Dave Brandon, the current U-M athletic director, needed to see, before deciding he needed to make a change.  Despite the facts each season was better than the year before, the offense put on record smashing statistics and Rodriguez was convinced 2011 was going to be the breakout year when his system would be running at full steam with his recruited, healthy upper-classmen (which ultimately happened, albeit under a different coach).

Enter Brady Hoke.  Once again the U-M fans were hoping a big name, U-M alum coach like Jim Harbaugh (Stanford) or Les Miles (LSU) would get the job.  But, Brandon felt otherwise, deciding to hire a relatively unknown Brady Hoke from San Diego State, who was a defensive-minded assistant at U-M from 1995-2003 that was intimately familiar with the Michigan ways of doing business, and was clearly a Michigan Man.  Hoke trained under Moeller and Carr, who trained under Bo.  Hoke was raised in Ohio, and knew the importance of beating OSU.  Hoke was enthusiastically embraced by his former players like NFL all-stars Tom Brady, Desmond Howard and Charles Woodson.  Hoke knew the Michigan traditions inside and out, and smartly emphasized them in all his discussions with the media.  And, Brady Hoke knew how to win, as evidenced by his unexpected 10-2 first year results as head coach with players he didn't even recruit for his system.  U-M's defense improved from giving up 35 points a game in 2010 (under Rodriguez) to only 15 points a game in 2011 (top 5 in the country), with largely the same players.  And, Brady Hoke's future is clearly bright in Ann Arbor, bringing in the #1 recruiting class in the country for 2012.  The Michigan faithful are resting easy again.

Key Lessons.  So, the key lessons from this sequence of events: (i) make sure you understand the expectations, traditions and culture of any place before accepting a position; (ii) make sure you embrace your peers and audience, to assist you in acheiving success for yourself; (iii) make sure you manage communications so your desired message is best heard; (iv) make sure you do your homework on the business, to make sure the actual position is what you perceive it to be (e.g., Michigan spent less on football than West Virginia did, despite reputation, and had an "empty nest" of recruits day one); (v) a strong leader never publicly comes across as defeated or disappointed, regardless of the reality (e.g., never sing Josh Groban's "You Raise Me Up" at your annual football bust); (vi) make sure you know your employees' strengths, which can make or break your own success (e.g., defensive coordinator's struggles outweighed head coach's offensive success and ultimately led to his downfall); (vii) make sure your skillsets and styles truly fit the business needs (e.g., don't recruit small Big East players in the monster-size Big Ten); and (viii) most importantly, win early, win big and win repeatedly for continued support from your team and fans.

I feel really bad for Rich Rodriguez .  He is a good coach and a good person that most likely would have done well at Michigan over the long run.  But, without support or patience of the Michigan alumni and athletic department, and due to his early failures detailed above, we'll never know.  The king (Bo) is dead; long live the king (Hoke).

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NostraDeebus: Predictions for the Next Decade

As you are thinking about your business growth, startup opportunities, job moves or otherwise, I thought it would be fun to predict what the world may look like in ten years so you can focus on winning categories and avoid the losers.  I will either look really smart ten years from now, or really stupid, depending on what really happens.  But, here it goes:

One Global World and Economy. Not only will U.S. companies go overseas at lightspeed, but international companies will enter the U.S. at lightspeed.   As an example, European fashion deals leader, Vente Privee, is just now entering the U.S. to take on Gilt Group and Rue La La in their home market.   And, not to mention, assume most all of the 7BN people in the world today will be online in the next decade, a 5BN person increase from the 2BN people online today, which will continue to fuel meteoric internet growth on a global scale.  This most likely means, we are not that far away from one global currency, one global language and one global stock market in one tightly integrated global economy.  No longer will there be country-specific silos in this new world economy, as evidenced by debt default fears in Greece and Italy, rattling the U.S. stock markets more than ever.

U.S. Unemployment Will Be Worse, Not Better.  As technology continues to improve, it is usually human jobs that get replaced.  And, the current U.S. workforce is not skilled in the heavily demanded skills (e.g., like the tech gurus are in India), making it harder for them to find replacement jobs.  Layer on top of that the fact that seniors can no longer afford to retire at age 65, in order to cover their living expenses, which means these typically vacated positions are staying filled for a longer period of time.  The advice I am giving my kids is get strong technology, strong professional or strong entrepreneurial skills.  Tech will always be in heavy demand with new innovations.  Skilled professionals like doctors will always be in demand.  And, if you cannot find a job in a big company, an entrepreneur can always create their own job.

Most Brick and Mortar Retailers Will Close.  We have already seen Borders, Blockbuster and Tower Records go under, with the move toward digital books, movies and music.  It won't be long before many other retail verticals will soon follow.  As an example, office supply stores like Staples already drive more than 50% of their revenues from their websites.  And, their 20,000 foot stores are only 5,000 productive today, making them financial nooses around their necks.  Not to mention, chains like Best Buy invest heavily in trained salespeople, only to have the customer pick their brain and buy the product cheaper online (waving their smartphones in the salespersons' noses).   The only brick and mortar categories that will survive will be for things like perishables in a grocery store, restaurants, other last minute items you need same day (e.g., prescriptions) or items too expensive to ship.  So, short the retail real estate business, as many chains will go under or move to smaller format showrooms.

Hyper Social, Hyper Mobile, Hyper Local.  We have already seen heavy focus in these areas.  But, imagine it on steriods, where your smartphone is ruling everything, anything and anywhere bringing you real-time recommendations from your personal networks for products and services within 1 mile of where you are standing.  Keep your eye on Zaarly and Groupon Now, who are off to a good start in this space with real-time personalized offers from nearby locations.  And, coupons will be delivered right to your smart phone in real-time as you are walking down the shopping aisle based on products you scan, not via paper coupons in newspapers (which will go out of business).  No longer will you turn to Trip Advisor for hotel reviews or Zagat for restaurant reviews from random strangers, you will turn to your Facebook friends who live in the city you are traveling for hotel and restaurant recommendations from people you know and trust. 

Content Intermediaries Will Not Survive.   Unless they move quickly to evolve into content companies, cable companies like Comcast and Time Warner and online video portals like Netflix and Hulu are in big trouble.  Why?  Because their services will be replaced by the content owners themselves (e.g., Disney, Warner Brothers, Universal), who will simply stream their content through their own websites, or portal sites they build between themselves.  That keeps more monies in the hands of the film studios and TV networks and aggregates customers on their own websites which they can drive additional revenues from advertising.  This is why YouTube is acquiring content companies like Next New Networks, to control their long term destiny with original programming of their own, creating more competition for the traditional studios and more selection than ever for consumers.  Not to mention, the TV and PC will now be cleanly merged into one device, not requiring both a cable connection and an internet connection, putting additional revenue pressure on these providers. 

Long Live Open Source, the Cloud and SaaS.  The cost of launching a website 10 years ago was $5MM, and today a new site can be launched for $50K thanks to open source, the cloud and SaaS technologies.  Expect these types of innovations to accelerate for everything and anything, from hardware/software needs to various human services.  No longer will you need to buy a new drill from Home Depot, sites will allow you to locate and borrow one from your neighbor.  No longer will you engage one home building architect, you will have 100 designs from 100 architects competing for your project.  No longer will you buy electricity from monopolistic ComEd, you will have 100 electricity providers to choose from.  Any human service, will be available in mass and on the cheap.  Any assets or software needed, will be sourced cheaper via crowd-based competition or outsourced to a third party cloud or SaaS service.  This is not good news for traditional hardware and software manufacturers.

We Will Finally Make a Dent on Energy.  As fuel prices rise and alternative electric vehicle technologies and infrastructure improve, people will finally afford and get more comfortable with making the switch off of petroleum based transportation.  Instead of pulling into your local Shell station for a fill up, you will pull into your local grocery store for a high-speed battery recharge while doing your shopping.  And, more affordable solar technologies will start to play a much greater role in heating and powering homes and businesses.  As an example, there is one company that is trying to replace petroleum based asphalt roads with solar panel roads that will produce enough energy to power the entire planet.

Same Old, Same Old in Education.  Sad to say, I don't expect material improvements in our education system in the next decade.  Our schools are still teaching kids the same subject matter as they were 50 years ago, much of which is not relevant for this generation of jobs.  And, schools are not focused on ages 0-5, where 80% of brain development is already set in stone by the time a student starts kindergarten.  And, nobody has figured out how to make getting your PHD in engineering as exciting to students as becoming the next starting quarterback for the Chicago Bears.  Which means, we will continue to train foreign students in our prestigious universities, for them to go back to their home countries to compete against us.  Wish some smart entrepreneurs or governmental reform could fix these problems!!

Same Broken Healthcare System.  There are so many inefficiencies in the healthcare system it makes my stomach turn.  Major reforms are needed in malpractice claim caps, to lower malpractice insurance premiums, to lower fees charged by doctors.  Major integration of disparate patient data systems are needed to avoid duplicative medical testing costs (although some progress is being made to this regard, but not fast enough).  Power needs to shift from the health insurance companies, back to the patients and their doctors, to keep costs down, get the best service and attract the next generation of doctors where they can actually make a good living again.  Obamacare and a bankrupt Medicare will continue to put additional strains on an already broken system.  That said, I am always bullish on biotech, pharmaceutical and life science investments that take medical innovations to the next level.  Especially, given the overall aging of the U.S. population, with Baby Boomers now entering their senior years.

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Lesson #104: Manage Expectations & Exceed Them

Nothing is more annoying than somebody promising to do something, and then not doing it.  That could be the task itself, the scope of the task or the timing of the task.  People can't effectively do their jobs, if they are sitting around waiting for something from you, or if they are making business decisions based on your inflated forecasts.  And, more importantly, nothing hurts your personal credibility more than not living up to expectations. 

So, never make a promise that you cannot back up.  If you tell somebody you are going to get the project done, get it done.  If you tell them it will be done by December 31st, have it done by December 15th and pleasantly surprise them.  Don't have it done by January 31st, having them wondering why the project is over a month late.  If you tell someone you are going to drive $1MM in revenues from the program, drive $1.2MM, and exceed expectations and build your credibility.  Don't drive $750K in revenues and come up with a million excuses why you fell short of expectations.

So, the moral of the story: build in cushions in terms of deadlines and scope when making promises or forecasts, and exceed those expectations wherever you can.  That will show your business partners you are not only a person of your word that can be counted on, but that you have a solid grasp on your business in terms of getting your team to beat deadlines, drive revenues or cut expenses in excess of forecast.

And, worth mentioning, never tell somebody you are going to do something, if you have absolutely no intention of doing it (just to get that person off your back or to avoid an awkward situation).  Hit that awkward situation head on, with honesty about your intentions and a logical rationale why you are not moving forward as planned.  The other party will better appreciate your being honest with them, instead of feeling you are blowing them off.

If the three drivers of real estate success are location, location, location.  The three drivers of startup success are credibility, credibility, credibility.  So, be sure to not disappoint, in order to attract the best employees, partners and investors for your business.

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