General Stanley McChrystal (Ret.) commanded the International Security Assistance Force in Afghanistan from 2009-2010 after leading the Joint Special Operations Command in Iraq from 2003-2008.
The Ewing Morris team was delighted to host a table of clients and friends at a recent Canadian Club Toronto luncheon. Stanley McChrystal, author of Team of Teams, spoke about “What the army can teach us about leadership.” Amanda Lang, producer and host of Bloomberg North, interviewed the former US Army general who gave a candid account of his experience. He touched on two topics that resonated with us, which we wanted to share.
1) The importance of avoiding stagnancy within organizations and how to anticipate business declines (whether structural, operational or strategic). This tactic is difficult to employ as organizations that are doing well often do not consider what could go wrong, until it does.
At Ewing Morris, when we analyze a business, the most important question we must answer is, “what could go wrong?” If the answer is “almost nothing” the business becomes a candidate for investment. However, if there are many potential answers, it becomes a candidate for our shorting strategy. We look for leadership that is versatile and can anticipate changing industry dynamics, often ahead of when changes occur. Furthermore, as a firm, we think about anticipating and managing risk at three levels: the firm, the portfolio and the security.
2) Unlike some of his predecessors, McChrystal chose to lead from the trenches. He revealed that he made this decision not only to gain trust, but to experience the events with his own eyes and enable an ability to make sound decisions.
Our investment team takes a similar approach to analyzing businesses, as site visits and management meetings help reveal a company’s culture. You can learn a lot about a company by observing first-hand how the office or warehouse is organized, if the CEO is physically separated from other employees, if presentations are printed in black and white and if offices are empty at 5 o’clock.
The Canadian Club continues to be a preeminent public affairs podium and we enjoy participating in their events. Please let us know if you would like to be included next time we are attending.