In this episode we speak to Peter Kozodoy, the CEO of Stradeso and partner and chief strategy officer of GEM Advertising.
He’s a TEDx speaker and author of the new book “Honest to Greatness: How Today’s Greatest Leaders Use Brutal Honesty to Achieve Massive Success”. Peter believes that now, more than ever, entrepreneurs and business leaders need to follow the principles of loyalty, authenticity, and honesty if they’re going to succeed in the post-pandemic marketplace. And just in case you think he’s all business with his BA in economics and an MBA from Columbia Business School, Peter Kozodoy is also a three-time New England figure-skating champion, a black belt in taekwondo, and a professional actor!
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Transcript from Episode 120: “How Leaders Can Use Brutal Honesty to Achieve Business Success” with Peter Kozodoy
Peter, tell us a little about your business background and how you have come to be an author and an expert in leadership as well as owning a successful business.
How long do you have? I will give you a short story which is – I graduated from college in 2008 and that’s when I started my first company with my business partner. Because, you know, 2008 was a wonderful time to start a business, the entire economy was crumbling around us, and timing is everything. So, you know, I spent several years after that bumbling along, trying to figure out how this whole entrepreneurship thing works.
We originally started as a video production company and we were making $800 television commercials for local car dealers. And it is exactly as glamorous as you might imagine. And I remember thinking like “If only we could make more $800 television commercials for car dealerships, we would be rich.” Like that is the secret to success. I wasn’t as good in math as I should have been and didn’t take the time to understand how big, successful businesses are built.
Many painful pivots later, we ended up as a full-service advertising agency and that allowed us to do much bigger things and take on much bigger clients. We finally got a break in 2013 with a bigger, full-service, annual contract and that really skyrocketed us from there, and we ended up building a multimillion-dollar, multinational marketing agency with offices in the US and Canada and we worked with organizations, from local startups all the way up to Warren Buffett himself. Certainly, a learning curve and a lot of lessons and a lot of failures along the way and really that led me to the projects I am doing right now like Stradeso and with the book.
So, you worked a lot in creating effective strategies for businesses around the globe?
Yeah, that’s right. We really came into the marketing capacity. And what we quickly realized was that these boardrooms and these executives needed a lot more help within the construct of the organization and I think we realized that led to a lot of frustration because we would come in and do focus groups and surveys with their employees and customers and it was very clear what their employees and customers were asking for from a communication standpoint. And yet, when we would take those results back to the CEO or the board of directors, they would sort of look at it and go like “Yeah I mean, I see that’s all these folks are saying, but I don’t know, that doesn’t feel right. I think we should do this other thing over here.“
And I was like “How can this be?” We were presenting them with data and findings and we just found so much resistance to change. I like honesty because I saw so little of it in the world. I thought to myself “We can do all the great marketing that we want to but at the end of the day, we can’t get these leaders to make the kind of the important changes that they need to make to continue surviving and thriving in a very rapidly moving world.” Then, you know, what’s the point? That’s when I really just shifted my gear from a marketing mindset to a leadership mindset and helping to get to the root of the problem.
How can we encourage honesty in our corporations from the bottom-up or the top-down?
As I stated in my book, it needs to come from both. There are several big, deep insights that are not terribly difficult to understand that can radically alter the efficiency and effectiveness of an organization. I remember, for instance, the Ritz-Carlton, I wrote about in my book. The executives of the Ritz realized something super important which is that they built a brand of hotels on extraordinary customer service and they had to get pretty honest with themselves. At the executive level, they had pretty much no bearing on the relationships that were built at the individual customer level.
They are sitting in the boardroom somewhere, they are not at their property. And they realized that you know if they want to deliver extraordinary customer service they have to do it from their frontline people, the chef, the doorman, the receptionist. These are the people that have a direct line to the customers, they know what the customers want because they are speaking to them. So, what the Ritz did was say “You know what? We can’t control you, and we need you to perform.
So, here’s what we are gonna do. We are just going to hire the best leaders we can. We are going to train you for weeks and weeks and weeks to think of the leadership mindset. We are going to empower you with all the tools you need. And in fact, there will be a notice to every Ritz-Carlton employee that they can spend up to 2000 dollars to make a customer happy. No approvals required.” And they have all the power in the world to deliver extraordinary customer service.
So, with this very hand out approach with the tremendous amount of autonomy that they give to their people, it’s no wonder why they all took up arms and said “Ok, we have the power to do something” and have they ever. I mean, the Ritz-Carlton has grown into a luxury powerhouse and hospitality business. They won two Malcolm Baldrige awards and they just absolutely crushed their competition to branding and everything else. And when you start to look into the culture why it is so simple, they got honest about who really needs to matter in the culture and gave them all the tools they need to do it.
What are the other typical barriers to transparency in business, in your opinion?
A lot of it is ego, a lot of it is bias. I remember I did a study on Domino’s Pizza and back in 2009, they figured out that their customers didn’t really like their pizza that much. They got a bunch of studies and the results came back and it wasn’t pretty. What the chief marketing officer did was extremely clever. He didn’t just bring those findings to the executives, he actually did interviews with the executives themselves, understanding what executives thought about their pizza and the company they built and so on, so forth.
So, to really get the biases that existed there. Then he was able to compare the results that he had between what customers are saying, what executives are thinking. That’s very powerful. So, the question then is, as I told you earlier, I used to do the same thing, and then it’s up to the executives to be open-minded and humble enough to accept what they are seeing and then make a change. I think a lot of it is locked up in these folks at the top who have been promoted because they’ve been a certain way, had a certain thought process.
And what happens is, as in Marshall Goldsmith’s “What Got You Here Won’t Get You There”, there is an idea that you can do things a certain way for so long, before you really do have to confront yourself and change and transform. I can’t tell you how many times I’ve had to do this as an executive, as an entrepreneur, as a husband. I just am someone who’s seen first-hand how powerful it is for us to constantly look at ourselves, reinvent ourselves, ask ourselves what is true, ask ourselves if our beliefs are getting in our way and how we need to start making changes at the individual level. So as you can see, honesty seems simple enough but, you know, once you expand it and take it into the leadership ground, both your professional and personal life, the implications of using honesty strategically are huge.
How can honesty help make a company successful?
What are things that I love about that opening story, the first story I used in my book and it is about Blockbuster and Netflix is – I used to think to myself like “This just has to be stupidity. How do these well-meaning executives, Ivy League MBAs get so stuck? They just must be stupid.” Of course, you know, that was my own stupidity. Of course, they are not, they got to where they got to because they are extremely intelligent. It’s something else entirely which is brutal honesty.
Now the problem with brutal honesty is once you’re honest about, for instance, in Blockbuster’s case, how the market is shifting, how then do you look at your business model, something that pays you every month and say “It looks we will need to blow everything up and start from scratch or make a massive investment and massive transformation.” And one of the leaders I interviewed in my book was Pam Cassey, the former CEO of Sprint and he was facing this exact dilemma. He inherited Sprint and it was almost going bankrupt and he realized that when Sprint bought Nextel, there was sort of a Frankenstein effect.
They were always different networks and they weren’t really talking to each other. He realized that he had to rip the entire thing apart and start from scratch. And this would cost untold millions of dollars. Now he didn’t have to do that, right. These CEOs of companies can just patch things up, juice their profits, make the analysts happy, chugging along quarter by quarter, manipulate the accounting statements, and CEOs do this all the time. Instead, he said “No, we are not gonna do that. We are going to do two things.
One, we’re going triple down on customer service and make sure that the customers are the happiest telecom customers on the planet. And we are going to rip the crap out of the infrastructure.” And not only did he avoid bankruptcy, but the stocks also outpaced his peers for the next several years, which is very impressive if you’re doing well, but even more impressive when you consider that business almost went under. He talks about how unpopular it was for him to sit on a conference call with analysts and say things like “Yeah, we are looking at environmental impact, we are going to be doing this massive investment.”
Because why would you focus on environmentalism if you are a Telecom company. You don’t have to do that. It is very difficult to do the honest thing. And yet we see time after time that doing the honest thing actually produces the most profitable results because I want to be clear. This is not ethics, I don’t even consider myself to be a very honest person, I am a businessman. But the honesty actually produces industry dominated profitability and success. That has been the most surprising thing for me.
At the bottom line, if people are working in a company or organization that’s honest, they believe in that and they will give more than that just picking up the paycheck and checking the boxes.
Exactly. In the long net line of thinking, you know, consider this – all the employees in an organization, they are not stupid, they know what’s really going on. In fact, I can’t tell you how many employees at the customer-facing level really do know what to do, they have all the insights. And we go into an organization, we do these focus groups, inside of 90 minutes we’ve got the whole thing solved. That’s not the problem.
The problem is now how do you take those insights at the bottom and weave them up through the top. In an organization, someone is always being honest, usually, most people know what’s really going on. And that’s what creates distrust because then you have some sort of blocker in the organization with authority but not leadership, who’s really preventing those great ideas and insights from throughout the organization and making change. It’s sad.
What business does honesty have in business?
I’m the most surprised person that I am on podcasts, radio, and television shows talking about honesty. If you knew me in high school, most likely to continue being an absolute jerk you’d be surprised, too. I was more surprised than anyone when I figured out that honesty is not only this good touchy-feely core value that we still have but it’s actually the point at which businesses stick and stop. And without honesty in every conversation, in every conference room, at the top of everyone’s mind asking themselves “Is what we’re talking about the right thing to talk about? Is what we talk about even true?”
I’ll be missing an opportunity at any of the levels of honesty, unless it’s a pervasive mindset, then can companies continue? Sure. But are they going to dominate in the industry? Absolutely not. This is probably a good time to walk through like – what does honesty really even mean in this organization, how do you use it, actually stratify honesty to different levels. The first is getting honest with the community – what’s going on in the world, what’s going on in society, how are our norms and beliefs shifting and changing?
You can think about all kinds of recent scandals and big societal shifts like pollution and climate change, like the resurgence of women’s rights, like the MeToo movement, like gender norms and gender fluidity. That wasn’t even a thing 10 years ago. And of course, now we’re in the middle of the pandemic. This pandemic, fear, and distrust – that is what is going on in the world and an organization needs to operate in that pervasive mindset. So it’s really important that we don’t just ignore all those things but that we listen carefully to understand where the trends are happening and changing.
Peter’s website is https://peterkozodoy.com/.
Connect with Peter Kozodoy on LinkedIn at https://www.linkedin.com/in/peterkozodoy/.
Follow Peter Kozodoy on Twitter – he’s https://twitter.com/PeterKozodoy.
“Honest to Greatness: How Today’s Greatest Leaders Use Brutal Honesty to Achieve Massive Success” by Peter Kozodoy is available is on all platforms. Buy in on Amazon here