In Conversation With Mark Foote, President & CEO, Wajax
In this exclusive interview Mark Foote, President and CEO at Wajax, speaks candidly about his experience as a leader moving from the retail industry where he had 34 years of experience to a completely new industry.
Knightsbridge: How was it that you decided to take a job at Wajax, a company that is quite different than Loblaw, Canadian Tire and Zellers?
Mark Foote: There were two events that were the catalysts for the change. One, I was involved as a candidate in a search for a senior retail job in Canada and having worked for three large retail companies, my interest level in joining a fourth was admittedly, a bit low. As it turns out, the search firm, who knew me really well, understood that. They were also doing a search for Wajax and actually made the suggestion that this might be a job that held a higher degree of personal interest. The second reason was the person who was chairing the board search committee for Wajax is the chairman of Empire Company Ltd. – which owns Sobey’s – and he was aware of me from my time at Loblaw. So there was a board connection and there was a search firm connection.
I wanted very much in the next stage of my career to learn something. Not that I couldn’t learn something from a new retail organization, but having done retail for 34 years, at some point your interest level just starts to go down. Conversely, I was very interested in what Wajax did. The company is heavily involved with Canadian resource markets, which is an area I had always had an interest in due to the importance it has to the Canadian economy. Adding to the intellectual interest due to the markets Wajax serves, I had a personal interest also. I started at Canadian Tire in 1978 as an automotive mechanic and that has always been a passion of mine. The biggest employee base at Wajax is heavy-duty technicians who I enjoy working with and learning from. Compared to Canadian Tire, the wrenches are a bit bigger here.
KHCS: Did you learn things while leading those big retailers that you think served you well moving into a more specialized company?
MF: There were several things I learned in retail that help me. Wajax is a distribution company, so in a lot of ways, there’s a ton of operational similarity with retail. Secondly, Wajax is a multi-branch environment. We have 128 branches. Obviously, when you’re in retail you understand branch networks pretty well and you understand distribution pretty well. Wajax’s equipment aftermarket parts and service business is similar to the automotive service business at Canadian Tire. Things are applied a bit differently here, but I wasn’t coming in completely green.
KHCS: What about differences? What was the newest or most surprising thing you experienced leading Wajax?
MF: A few things, I guess. One is that it’s a smaller organization than my prior employers, about $1.5 billion in sales and 2,800 associates. Compared to a national retailer, that’s a big difference in scale. The bigger difference however is that it is a highly decentralized operation.
The retailers that I worked for in the past are much more centrally managed companies. Wajax however is very entrepreneurial and has grown through acquisition. So one of the bigger differences is leading a company, but not having the same degree of absolute control over what’s happening.
The second thing is that the businesses I was previously a part of are essentially consumer goods businesses. You sell directly to the end consumer and in mass retail, where my experience is, you have big national marketing budgets and carpet bomb 11 million households a week with marketing. At Wajax, it’s a business-to-business operation. Traditional marketing, understanding the Canadian consumer, all that kind of stuff is generally not applicable here. At Wajax, instead of selling socks and underwear for three bucks to the majority of Canadian households, you’re selling a hydraulic mining shovel for $15 million to a very big and important customer. It’s a very different kind of end market and a very different type of customer.
The third thing is, culturally, it’s a completely different operation. Canadian Tire, Loblaw, Zellers, those are all companies that have more easily definable kinds of cultures. It was easier to define the companies’ motivation and how the people work. Because Wajax is highly decentralized and because it’s grown through acquisition, it’s tough to define a particular culture for the company. You have to understand a lot more moving parts here
KHCS: One of the preconceptions about an executive changing industries is that the organization they’re going to will be skeptical of someone who didn’t “grow up” in the business. Did the fact that you worked with engines help you gain acceptance?
MF: You don’t really encounter a lot of skepticism from the board of a public company because they’re the guys bringing you in. But after the hire, the Board leaves the room and then you’re staring face to face with the guys that you’re going to work with. I think the skepticism at that level was originally pretty high. I could have told them I’d been a mechanic for twenty years and it wouldn’t have meant a hill of beans. They’re thinking about me in a completely different way. One of the concerns at Wajax is that, as a highly decentralized company, the people here like to run their own show. To some extent, there is natural skepticism about what a new person from outside the industry is going to want to change and the effect that’s going to have on the senior managers. You have to work with them to get through that.
Below the senior management level, using your background can be a more effective way of communicating and introducing yourself. Dealing with skepticism depends on what level of the organization you’re talking about. As you would expect, the most important remedy to skepticism is familiarity. It helps to spend a lot of time getting to know the organization so it can get to know you.
KHCS: What other challenges did you experience as a leader in a new industry?
MF: You have to think about it from the perspective of the stakeholder groups you work with. You have to define the value you’re intending to bring to the organization, what you’re going to promote yourself as and what you’re not going to promote yourself as. In my particular case, my value to Wajax is in business strategy, human resources, distribution, and large-scale branch operations. I use that list of attributes to define how I add value to the company, and as the basis of how I work with major stakeholder groups – senior managers, employees, vendors, customers, the board, and our investors.
Beginning to get to know customers at Wajax has been great fun. As a leader of a national retailer, you’re generally nameless to your customers. They don’t care who you are. At Wajax, it is a relationship business. Customers in this industry want to meet senior leaders and they have been very generous with their time and experience in helping me understand their businesses and requirements.
Finally, investors are an important group to get to know early on. CEO changes in public companies can cause anxiety for investors, especially when the person is coming in from another industry. If the company is a mess, major changes in leadership experience can be seen as positive. At Wajax, we have a very well-run company and a management team generally from within the industry so a change to go outside the industry for a new CEO probably came as more of a surprise. Getting to the investor base quickly, while it might be a challenge from a time standpoint early in your tenure, can be very helpful for a new leader.
KHCS: In any public company, CEO performance can always be a market issue. Was that a concern when you came in to lead Wajax?
MF: For me, the reaction was neutral, essentially. I started in March 2012, but I began my orientation starting in January, a few months before. I travelled to see senior management and to meet with a number of industry analysts before I started. The idea being, it’s enough of a change for them to get their head around, so get part of that out of the way early. And then when you land on your first day, a) you’ve got a better understanding of who they are and b) they don’t think you’re somebody with three heads.
KHCS: Would you say that it is, most of the time, a good idea for a company to bring in a leader from another industry?
MF: I wouldn’t say that. There are definitive positives to bringing somebody in from another industry and there are definite risks. I think you have to look at the component parts of what the new leader has done and decide whether that is applicable to the new situation. As a board, you have to ask yourself the question, ‘what do we need to do differently in the future and who’s best positioned to do that?’ You cannot say in all situations that picking somebody from another industry is always a net positive. I think that’s a mistake. You really do have to think through each situation individually.
KHCS: When hiring a new leader from a different industry, what skills do they need to be successful?
MF: I know if I were picking a leader from outside my industry, I would be looking for a person with a combination of humility and listening skills. The normal tendency of a new leader who has been successful in one industry is to assume that the things that made them successful in those other industries are going to work in the new organization. That can be an awfully big mistake.
The thing you learn in moving from industry to industry is that you have one mouth and two ears for a reason. You’ve got to listen carefully to the people around you; as a leader in a new organization and industry, you run the risk of really misunderstanding the business. So you have to want to learn, you have to listen, and you’ve got to be really humble because the people around you know a lot more than you do when you’re starting out. You’ve got to have humility. It’s tough enough coming in to lead a company in the same industry. It’s a whole other story when you come in to lead a company in an industry new to your experience.