Irv Rothman is the president and chief executive officer of HP Financial Services, a wholly owned subsidiary of Hewlett-Packard Company. Prior to joining HP, Rothman was president and chief executive officer of Compaq Financial Services Corporation where he led it from its founding to growth of over $3.7 billion in total assets.
Irv is the author of Out-Executing the Competition. What I really admire is that Irv is donating all of the royalties he earns on the sale of the book to Room to Read, an organization dedicated to children’s literacy.
The best way to out-execute the other guy is to know your customer’s business as well as you know your own. -Irv Rothman
Attracting the Right Talent
Much of success in business is about finding and cultivating the right talent. How did you attract and retain the talent needed to accomplish your goals?
Attracting and retaining the right people starts with a leadership commitment to first develop high performers in-house. And this has to be more than an annual “talent management” exercise. It’s an activity that leadership must consistently demonstrate is important by developing people and promoting from within. This sends key messages to an organization:
1) Leadership can be trusted to do as they say they will.
2) Career opportunities exist…. No need to look elsewhere.
3) Leadership recognizes and acknowledges that outside hires are a 50/50 proposition.
In short, provide an atmosphere where people can learn and achieve advancement based on merit. Not only will the good people stick around, their hearts will be in it.
Developing a Culture of Execution
Your book title is all about execution. How do you develop a culture of execution?
A culture of execution starts with devotion to the customer. Since it is theoretically easier to keep a customer than to find a new one, all messaging and reward systems need to be packaged around a “customer for life” philosophy. And a pay-for-performance compensation system is a must. Moreover, it can’t be black box; people need to be clear as to what rewards can be expected from results and behaviors. Once you’ve got all that organized, creating an environment where people have freedom to act on behalf of the customer is crucial. You can’t have a circumstance where people are bound by the linear strictures of a traditional command and control organization. It not only frustrates your employees, it also makes for dissatisfaction on the part of the people on the other end of the phone.
Many executives are intently focused on growth, and may miss the signs that it is time to slow down or maybe say no to an acquisition opportunity. When do you say “no”?
Self-aware executives understand that the business cycle is a way of life. But it is not atypical to lose sight of that during an up cycle, and when that happens, leaders tend to make questionable choices based on the assumption that the good times will go on indefinitely. So they chase growth by taking more risk, getting “deal fever” and overpaying, forgetting what it is that made them successful to begin with and expanding into businesses that are neither a strategic nor core competency fit. Better to adapt to the ups and downs of the business cycle with adjustments rather than radical change. Despite tendencies to be short-term focused, steady/reliable growth is ultimately more highly valued than spectacular spikes which are often followed by equally spectacular nosedives. There’s a reason that 70% of the Fortune 1000 from just ten years ago either don’t exist or have shrunk to irrelevancy today.
“There’s a reason that 70% of the Fortune 1000 from just ten years ago either don’t exist or have shrunk to irrelevancy today.” -Irv Rothman
Your career accomplishments include leading AT&T Capital to become the second largest leasing company in the US, leading HP Financial Services, and building Compaq Financial Services from an idea to a company with over $3.7 billion in assets. Where did you develop your business philosophy? As you look back, is there one memory you would like to share?
Though I’d held leadership roles before, it was at AT&T Capital that I came of age if you will. It was there I saw theory develop into practice in real time. It was there that the notion of developing an organization “from the customer in” was originated for me, and it was there that I grew confident in the ideas of team, empowered people, sharing the wealth with those who created it and the importance of systematic linkage and consistency in all you do and say.
The first chapter of my book recounts an important memory for me. It talks about my introduction to an operating philosophy linked to a business model in a way I hadn’t previously considered. I won’t spoil it, but the first chapter is entitled “This Is the Craziest Idea I’ve Ever Heard. Let’s Do It.” You’ll have to buy the book and read chapter one to find out why I reacted that way.
Developing a Winning Strategy
Let’s talk about competition. What process did you use to develop a strategy? How did you out-execute the competition?
In theory, there are only two ways to out-execute the other guy. One is by being a low cost provider. I’ve never believed in this as a viable, long term, sustainable advantage. The other is to provide the customer with something of value or some knowledge that will help him achieve his business goals. Of course, it certainly helps to know what the other guy is doing in the marketplace, but “me too” will not win you much business. The best way to out-execute the other guy is to know your customer’s business as well as you know your own, which will enable you to develop solutions that match his needs or address his issues. By focusing on that approach rather than acting as if you are trying to sell something, you are more likely to engender the customer’s trust, a key to competing effectively.
The Influence of Books and the Library
What are you reading? What books most influenced you?
Jim Collins is one of my favorite authors of business books. I thought his recent book, “Great by Choice,” was brilliant. I was a history major and still enjoy biographies of people who have made history. Reading about the lives of Franklin, Jefferson and John Adams was inspiring, and Teddy Roosevelt is one of my heroes as well. And I am a sucker for spy novels. “Red Sparrow” was a good one.
Growing up in a blue-collar neighborhood in New Jersey, what influence, if any, did a library have on your development?
Growing up, the Bayonne Public Library was a marvelous institution, a physically beautiful building that opened many worlds to me as a boy. As I got older it became a key source for research and a study retreat during those visits back home when I was away at college.
For more information, see Out-Executing the Competition.