Episode 26: How We Empower Our Team
One of our core values is "Extreme Ownership" and in order for our team to be able to take ownership of their goals and tasks, they have to be given autonomy. Joe and Ryan talk about how they are doing this at Graceada Partners.
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Joe Muratore:
Well, the question is, are you going to be a top down organization or are you going to be a flatter organization? Is it a culture of policies and procedures, or is it a culture of responsibility? Policies and procedures... We have a lot of them. They're our risk mitigants. We do not allow major mistakes. We try not to allow minor mistakes. But that only gets you to the table that doesn't get you to excellence.
Speaker 2:
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Ryan Swehla:
So today we're talking about a topic that's very important to our business, powered leadership, this idea that we want everyone with in an organization to be, within our organization, to be empowered, to make good decisions. And it comes from one of our core values, which is extreme ownership. This idea that everything that happens, we own it ourselves. And we own the outcome of those decisions. And it starts really with our hiring process. Through EOS entrepreneurs operating system and the book traction, there's this idea of GWC, which is gets it, wants it, has the capacity. And when we are interviewing people, we obviously overlay our core values first and foremost. But the very next thing, does this person get the job? Do they want the job? And do they have the capacity to perform the job? And that second one is what I'd like to talk about a little bit for a moment is the idea of wants it.
Ryan Swehla:
Jim, our VP of operations had a really inspiring talk recently at one of the departmental level tens meetings. And he spoke about this idea of wants it. And this idea of do you have passion when you get up in the morning and you come into work? Is this the thing that you want to be doing? And a result of that was one of our interns for the summer, he came back the next day and he said, "I've really been thinking a lot...
Joe Muratore:
I think he felt guilty.
Ryan Swehla:
He said, "I've been thinking a lot about what you said, and I want to be rock climbing and I want to be a firefighter."
Joe Muratore:
Well, who doesn't? I think I do, too.
Ryan Swehla:
And in some company environments, it could be like, "Oh great. Now I got to fill this role, and we have to figure out what to do. And oh, great." Jim appropriately said, "Way to go! That's great," because we want people who are in their role and passionate about it.
Joe Muratore:
I've been thinking a lot about Jim Collins and he says the number one metric in business, in his book, Beyond Entrepreneurship 2.0, is, are 90% of your people in the right seats? Are they the right people? And are they in the right seats? The reason this is so important is he says, history is the study of surprises. Last year, we had a pandemic. We had the 2008 financial crisis. Whatever we think is about to happen, it's only going to be partially right. So what's most important is not knowing the future, but having the talent density, having the group who can make decisions that can get you there. he says, if you're going to climb Mount Everest, you are going to have to make decisions along the way that you can't forecast right now. So it's crucial that you have the right people on the bus that can make those right decisions when they get there.
Ryan Swehla:
And large companies, often as they grow, they want to solve or mitigate risk around policy and procedure because it's this idea of, "Well, if I make it so that people can't make bad decisions, then I'm somehow protected." Well, the thing that you miss with that is that policies and procedures are based on history. They're based on past things and history is the study of surprises, as you said earlier. So if you're built around policies and procedures, you're built around historical and you're not built around what might happen in the future. And if you have people, because then what does that organization create? It creates people that are designed around following a policy or procedure versus people that are designed around making exceptional decisions.
Joe Muratore:
Yeah. I was talking to an asset manager in our office earlier this week and he made a hard decision with a key vendor and had a talk with him and said, "We're going to a different vendor." And it was a very difficult decision. And I had heard him talk about this idea. But he made the call and he did it. And we happened to meet in the parking garage and he was nervous. This vendor was an important one and he figured I would hear about it. And he looked in the eyes, he said, "I made this call." And I said, "Thank you for your courage." There's no way to know exactly if you made the right decision or not. That will be born out in how you react from here and how you lead this property from here. But I was delighted that he made that call and that he believed in it and he experienced the blow back for it, but he believed it was the right call and he did what he was supposed to do. So it was great.
Ryan Swehla:
Yeah. And that's not to say that policy and procedure is a bad thing. Quite the opposite. Policy and procedure does allow for repeatable outcomes. And it is a compelling form of risk mitigation. So we certainly, as an organization, have plenty of policy and procedure and continue to develop that out. But if the culture is around policy and procedure versus great decision making, that's where you end up inhibiting a company's ability to respond to situations and circumstances.
Joe Muratore:
Yeah. Well, we often say companies are a reflection of their owners, and if we are a low culture, low courage environment, if we are a disorganized environment, if you and I are not living up to the leadership potential, if we're not pushing the edge of our leadership ability, we are not modeling that for the organization. For me, I develop a little bit of a gut level of the right amount of pushing it. But if too many days in a row, I walk in the office and it feels too easy, I'm not doing what I should be doing, and that translates down to the team.
Ryan Swehla:
Yeah. And we adopt the Netflix idea of a great work environment is stunning colleagues. And you're touching on that a little bit because part of that feeling of am I giving it my all, am I working as hard as I can for the outcome that I'm looking for, comes from the pureness of those around us and the exceptional work ethic and decision making and leadership that the colleagues around us exhibit
Joe Muratore:
And that comes from exceptional challenges. Netflix reinvented TV. And I think of Anheuser-Busch, AB [inaudible 00:07:18], a group out of Brazil owns it. They started out as a very small investment bank, and they worked to now owning the largest brewery in the world. And the CEO was quoted as saying, in fact, this is back to Jim Collins, but Jim said, "What drives you?" He said, "Number one," he talked a lot about culture, but then he said, "We have so many talented people in our office that if I don't keep giving them really, really epic challenges, they get bored. These people want to do great things."
Joe Muratore:
And I look at the buildings that we're buying and the way we're turning buildings around and the geography we're working on. And my goal is that we never have a project that's just a filler project, but each project is like, we are truly convicted around the future of this property, the future of this opportunity. It's pushing the bounds of our investment strategy by a little bit. We're going to learn something new from this that we're going to take to the rest of the portfolio. Every acquisition we do is a chance to grow and challenge, test other strategies, meet new people in the market that are doing things a little bit differently. And that's been a powerful mindset for the firm.
Ryan Swehla:
And as we grow, keeping the culture and the environment that we have becomes increasingly challenging, because as you grow to be a larger organization, there's this natural push toward bureaucracy, toward... Again, I'm using policy and procedure in the negative sense, and being able to keep that culture alive and active is challenging.
Joe Muratore:
Well, the question is, are you going to be a top down organization or are you going to be a flatter organization? Is it a culture of policies and procedures? Or is it a culture of responsibility? Policies and procedures are... We have a lot of them. They're our risk mitigants. We do not allow major mistakes. We try not to allow minor mistakes. But that only gets you to the table that doesn't get you to excellence. That won't get you close to excellence. Excellence comes from responsibility, a sense of ownership of a belief in doing your, your very best work. So for us, I think that we're more of a coaching style, which is that people are running projects. They're running teams. And especially when I'm talking to people, I think not like, how am I going to tell this person what to do, but I'm going to listen. I'm going to actively listen. And rather than give them advice or especially say do this, or do that, I'm going to say, I'm going to push back. I'm going to coach. I'm going to think, what about this? Did you consider that? There needs to be a...
Ryan Swehla:
What do you think we should do?
Joe Muratore:
Right! I mean, it's our job to be leaders of this company. But outside of our direct role, our job is to be thoughtful peers, I believe, of those that are doing the work because when they're solving a problem, for a second, we get high to eye and we say, "Well, what do you do you think? What do you think?" And we're working with such talented people that it feels very pure-like in that environment. I really enjoy that.
Ryan Swehla:
Well, and everyone is inspired to be leaders in the organization. This goes back to that idea of extreme ownership. No matter what level you are within the company that you lead your role. And that goes back to the, gets it, wants it, capacity. If you don't want it, certainly if you don't get it or you don't have the capacity, but if you don't want it, you can't get to that level of leadership, that level of excellence.
Joe Muratore:
So how do you see that three letter word ego enter into an organization?
Ryan Swehla:
Yeah. And it's interesting because we're in the real estate world. We're in the investing world, both of which in many ways are characterized by ego. And ego is a four letter word in our organization. And one of our core values is humility. And the reason that's there is because we believe that that is a critical, critical part of being able to make good decisions.
Joe Muratore:
It's interesting. Ego is like self-concept or self-confidence. You cannot scale big mountains. You can't do the work we're doing without a strong sense of self-concept and self-confidence and leadership. But of course, this is where we see people go wrong is, they have a few wins. They start to think that they know a lot of things. They don't hold their success loosely. They hold it tightly, or they put it in their shirt pocket like it's theirs and they own it. And then they get smacked, and we work to be really careful to hold our self-concept and self confidence loosely. And to spread that through the organization because when there's high ego or there's barriers, then people won't check you. They won't say, "I don't know." They won't say, "Wait, watch out for that." They'll be like, "Oh, they know," or whatever. And that's where things go wrong. So being able to both hold confidence and hold humility together is essential. Any thoughts on scaling and maintaining the culture? How do you take your core values and build them over a larger group?
Ryan Swehla:
So for us, we've mentioned it many times, but this idea of the traction entrepreneur's operating system is a critical part of what we do. We have quarterly meetings. We have weekly meetings, departmental, and these are structured efficient meetings, but one of the key aspects of them is always circling back to our core values, circling back to talking about certain core values and, and what they mean to us. And back to the conversation at the beginning of this episode, when Jim, our VP of operations gave an inspiring talk about gets it, wants it, capacity, it had unintended results. Good unintended results.
Joe Muratore:
Every company has core values. If they don't have stated core values, they have implied core values. Yeah. They're modeled core values. Every company has an operating system, good, bad or other. What I've enjoyed about our, our company is we've been intentional and we've sought to be very intentional over many years about bringing out the very best in ourselves and in those that work here. We could go down a negative road, but instead we identified the positive traits that we want to model in our firm that we want to celebrate in our firm. And those are now in the DNA of who we are. We're talking about Jim a lot today, but he says, "When I come up the elevator, it's like, I leave my ego at the door. It's like, I'm coming up to..." He says this in meetings, like, "I'm coming up to be my best self here." And we all spend eight to 10 hours a day here many days a week. We want to create an environment where you want to be your best self and where you are celebrated for that.
Ryan Swehla:
We're up to, I believe, 35 employees at this point, and we've been fortunate with each hire to continue to strive for excellence in those roles. And the joy in the environment that we work in is just unparalleled because walking in that idea, again, of stunning colleagues, that idea of everyone being an empowered leader within their role, it makes coming to work every day exciting.
Joe Muratore:
I think we operate in an equity system. Let's talk about that. With stunning colleagues comes, trust comes a sort of social equity comes a corporate equity in that... Or to think like a stock market. Every day, the stock goes up and down and we all have a stock. You have a sense of who I am. I have a sense of you are. We've worked together for... We've been friends for 35 years and worked together for almost 20. And we have a sense of who each other are. And if I make a bad decision or I come in and have a bad day, stock rises or falls a little bit.
Joe Muratore:
And so I often think of our stunning colleagues of the people we work with. When they make four or five great decisions in a row, their equity's pretty high. When they walk into the office or I walk into theirs and there's something to talk about, I know that there's going to be... What they're going to say is most likely going to be right. So I think we celebrate in our company a sense of equity that people who make great decisions get to make more decisions. And if you make a few bad decisions, we talk about it. And if you make too many, you might need to work somewhere else, but there's that sense in the company.
Ryan Swehla:
And I think that ultimately inspires people to do great work.
Joe Muratore:
Excellent people are glad to be in decision making roles and thrilled to be trusted with making excellent decisions.
Speaker 2:
Thank you for listening to Durable Value, an investor's podcast where we demystify commercial real with safe, sound investment strategies, to help you balance your portfolio. If you enjoyed this podcast, be sure to rate it on iTunes or wherever you get your podcasts. To learn more, visit graceadapartners.com, where you'll find more information, investors tools, case studies, and more. This podcast is hosted by Joe Muratore and Ryan Swehla. It's produced, edited and mixed by Melodic with intro music by Ian Post. Thanks again for listening, and we'll see you next time.