Dec. 15, 2020

Leadership that wins hearts, minds, and produces breakthrough results with David Fagiano | Thoughtleader

Leadership that wins hearts, minds, and produces breakthrough results with David Fagiano | Thoughtleader

In this episode of Partnering Leadership, David Fagiano, former Chief Operating Officer of Dale Carnegie Training and former CEO of American Management Association, talks about his career, leadership lessons learned, and how he led organizations to achieve significant growth. 


Some highlights:                 

How David Fagiano started out his career in the mail order business and ended up in a career in the training industry

How David Fagiano managed to engage an organization in working towards a shared vision and achieving breakthrough growth

David Fagiano’s leadership insights on how to improve team performance with the concept of ownership and empowering people

David Fagiano’s views on the fundamentals of great leadership


Also mentioned in this episode:

Bob Farmer

The Canterbury Tales by Geoffrey Chaucer 

Wiliam Shakespeare




Connect with Mahan Tavakoli:

MahanTavakoli.com


More information and resources available at the Partnering Leadership Podcast website: 

PartneringLeadership.com



Transcript

Mahan Tavakoli: Welcome to Partnering Leadership. Thank you for sharing all the positive comments as I see you all are enjoying these conversations. As much as I am with these magnificent leaders. Many of whom I have known for decades. As I mentioned in the trailer episode, it's not one single conversation that will be the reason for change in leadership.

It's listening to all these leaders and seeing the commonalities and learning from their experiences, so we become better leaders ourselves. And this week I am super excited to be speaking with David Fagiano. David has had a long career, including being CEO of AMA, American Management Association, where he took the organization from bad 93 million in revenues to over 260 million in revenues.

Eventually, he also served as chief operating officer at Dale Carnegie. Yes, he was my boss, and that's where I saw his authentic leadership, and learned a lot from David which I can't wait to share with you. Keep your comments coming, mahan@mahantavakoli.com. There's an icon on the website, partneringleadership.com.

Feel free to leave me a voice message there. And for those of you that enjoy this podcast on Apple podcasts, don't forget to leave a rating and review when you get a chance. Now, here is my conversation with David Fagiano

Mahan Tavakoli: David Fagiano, welcome to Partnering Leadership podcast. Thrilled to have you with me. 

David Fagiano: Thank you, Mahan. I'm glad to be here. 

Mahan Tavakoli: David, you have been an incredible leader for many years, including for a decade-plus, my leader. So I saw your leadership in action, which is why I want to find out a little bit about your background before getting into some of your leadership experiences and leadership thoughts.

How did your upbringing influence the kind of leader that you became? 

David Fagiano: I think it had an absolutely enormous influence. My grandparents came over from Italy around 1912, 1913, and they settled in Providence, Rhode Island. Providence had more Italians than I think Naples did for some reason. Everybody was attracted by the textile industry so they could get work in the mills and it was hard work, but they didn't mind, there was work. So I grew up in Providence and I grew up in a cold-water flat. And when I talked to my kids about this, they're incredulous that there was no hot water in the place. So if you needed to take a bath, they heated the water up in the stove because there was also no central heating. You know, that was your once a week ritual. 

I can't tell you how amazed I was when I went to elementary school, and I had my first gym class. And I walked into this place, and you turned this handle on the wall and out came hot water.

It was like, “Wow, what is this? Why don't I have one of these?” It's absolutely fabulous. It was an eye-opener. But you know, everybody was in the same predicament. I was surrounded by my 27 cousins. And it was like they were lifted up by AEs, which is the town, the neighborhood from Italy and dropped it into Providence. Cause everybody knew everybody. It was kind of always related. 

We all had nothing. Nobody had nothing. So it didn't matter. You didn't know you had nothing because everybody had nothing.  My parents worked hard. My dad was a truck driver, maintenance crew. And my mother believed it or not kicked an oppress.

And again, people don't know what that is. But when Providence became the costume jewelry capital of the world, people went to work in these little job shops, making inexpensive jewelry, and that's what she did. In fact, the entire family did that because at night, After dinner, who would sit around and we would link and link men, exactly what it sounds like. We'd make bracelets. We'd make off of the manufacturer, necklaces, that sort of thing. And we get paid a piecework, so we get paid like 2 cents a necklace or whatever. And that's the way we help supplement the income for the family. 

It was a different time, a different world completely, but I have to say in spite of not having anything, my mother insisted on a good education for me. And she really did right by that, I went to the same high school that she did and my oldest sister did. And in fact, I had many of the same teachers that my mother had. It was called classical high. 

My freshman class was 600 plus students. 52 of us graduated. The rest couldn't hack it. So it was a tough way to go. From there I went to Brown. I was actually accepted to Brown in my junior year in high school. I was supposed to do my senior year of high school at Brown. But when I went for the interview, they decided I wasn't mature enough. I knew it, right? So they sent me back to high school, where I completely screwed up to the point where no teacher would give me a recommendation in my senior year.

So luckily I was accepted to Brown because I had no place to go other than Brown. It was a good place to go. It was my only choice. Now I graduated from there. I went to grad school for a bit. But I went to Brown as a Physics Major. That lasted a semester. Then I became a Psych Major, and Brown was up 40 and psychology was pretty much instrumental.

So I spent my sophomore year, summer in a lab, with 40 rats, teaching them to liquid a sucrose solution so they could get a water solution. It was probably the other way around. Anyway, one of the rats bit me right through my hand and I killed it. And that was the end of that career. I decided to become an English major, and that's the degree that I actually graduated with, it’s a degree in English. 

And believe me, they were not breaking down my door upon graduation. English majors were not exactly a hot ticket. I had two job offers. One oddly enough, in the training industry. And I say, oddly enough, because that's actually where I spent most of my career. And the other was a company called Grace Homes.

Then the division of popular merchandise, which became J crew. It was something peculiar to the age. It was a method of shopping that only worked in rural communities, without an access to something like a Walmart or a Target. There were no Targets but it was like a Walmart. 

So we sent out direct mail. We contacted a woman, it was always a woman, who became the secretary of a club. She would invite friends to contribute a dollar, $2, $3 a week. And once a week, one of the members got to shop from our catalog. It was an interesting business. It died because of the Walmarts of the world. 

But it was direct mail. It was data-driven. And it gave me the opportunity to write, which is what I really wanted. And I was writing in advertising. In fact, I was Grace Homes. So I was this woman who wrote to all of her secretaries and all of our club members and that sort of thing. It was fun. I had a good time, but it was also very heavy on the math side of the business.

From there, I went to Mel court which was a fortune 500 company. They own Tom McCann, Chess King, a Mole Quarter deem textile company. And oddly enough, CVS drug stores, because CVS is the only thing left that was in Western Mass. I went in and I sought it out with another fellow, a direct mail division, and we sold shoes and ready to wear, by mail.

Can you just say, how could you sell shoes by mail? Well with a liberal return policy, you can actually do it. Unfortunately, our biggest customer turned out to be prisoners. Collections were an issue. It was an interesting business, it really was. 

Mahan Tavakoli: You were way ahead of Zappos and Amazon on all of this.

David Fagiano: Well, yeah, I mean, it was the early days of merchandising by mail, and it was exciting. Cause you got to, you got to experiment. There were no rules. So one of the items I sold were shirts, dress shirts. And I said, these shirts are so wrinkle-proof that I'll ship them to you folded seven ways.

And if they're wrinkled, when you get them, you can keep them, and don't send any money. Well, if you ever looked at a shirt that's been pinned to the cardboard backing, it's actually folded six times already. So I folded it in half, stuck it in an envelope and shipped them out. It was folded several ways. So I mean, it was just a really fun time. 

But again, a vendor said, “Hey, I know this guy Bob Farmer was looking for a director of marketing in the management education and training field.” I talked to Bob and we hit it off really, really well. And, I went to work for Bob as director of marketing, then EVP and finally president of the company.

Bob Farmer was a true friend and a mentor. And this was his concept. This company was his concept. What it was, was selling Management education by the mail, with exams and tests where you'd actually get a grade at the end of the course. That was critical because one of our biggest markets was AICP, American Institute of Certified Public Accountants, who are required to get a minimum number of credits each year to maintain their license. Well, we qualified for those credits. So they were a big customer. American Address Association was a big customer. But we also had like the technical association of the paper and pulp industry, chartered accountants of England and Wales. So we had a pretty diverse group. 

And, in 1984, Bob's request, I sold his company for him to American management Association, part of the deal was that I would go with the deal. So I moved to New York and became a vice president of publishing, and then VP of seminars, and finally President and CEO of AMA. 

Mahan Tavakoli: So you took over at AMA when the revenues were $93 million. And by the end of your tenure as CEO, you had grown AMA to $260 million. And I know there was an acquisition or two in there, but that is significant growth in that organization, David. How were you able to generate that growth in this organization? 

David Fagiano: Well, honestly, it's one of my proudest accomplishments.

Yes, I did. I bought a patch of Thompson, which is a one-day seminar company for about 50 million. It was doing about 50 million at a time. So I bought that in. But all of the other growth was organic growth. It came from within. And the way that we were able to accomplish that was working with a consultant.

We put together a plan that involved every single of the thousand-plus employees of AMA, in deciding the future of the organization. So we went through a nine months or 12-month planning process that broke the company into small groups, ten to 12, 15 people at a time. Totally mixed. I mean, I even had the headquarters carpenter.

A carpenter sitting in meetings with the head of the HR division, for example. But we all went ahead. Now, obviously, I had given some thoughts upfront. My vision of, “Hey, this is where I see AMA going. But if you don't agree with it, let me know, and let's fix it. Let's get going. Let's all get on the same page.”

So in that time period, we worked through. And at the end of it, we worked through a plan that created a plan that said, “Okay, here's where we want to be in five years. Here are the steps we're going to take. And here's how I, me, the carpenter, me, the head of HR, is going to contribute to making that plan a reality.”

So what did that do? That made you the owner of the plan. If you own it, you're going to live it, you're going to work hard to make it right, and I work hard to make it work. And that was the key. That was honestly the key. We took off after that.

And everybody was moving in the same direction. We all wanted the same thing. And frankly, there were those who didn't agree. And they left, they left to their own volition because when you have a group of 900 going one way and your group of a hundred, trying to go the other way, pretty soon, it's obvious that you're going to need to be swept up with the tide or it's time to get out.

And that was a good thing. That was a good thing. As I said, it is one of the proudest things., as proud of that as anything I've ever done. And the growth was just gigantic. Just gigantic. As you can tell. 

Mahan Tavakoli: Now, David, that is also way ahead of its time, even right now, organizations and leaders struggle with engaging their people to set a vision, buy into division and work together.

You had a strong marketing background. You obviously had a strong writing skills background. What was it that, in you, got you to come up with this idea or embrace this idea of getting everyone in the organization to create a shared vision and then work with each other to achieve that shared vision.

David Fagiano: It's the concept of ownership really. And I know that came along later with, you said engagement number, it's one of the core tenants of engagement. But I knew early on that when you own it, you love it, and you'll live it. And perhaps that was given to me by somebody I worked with along the way.

I don't recall specifically where that idea came from. But I saw it in action so many times, even just as a manager of a small group, that I said, “This has gotta be right. This has gotta be the way to do things.”

And you know, Mahan, It comes down to a very basic point. Everybody wants respect. You want to be respected. You want your opinion respected. You want people to understand that you have an idea, that you're not just a robot. You want to be treated like a human being. And human beings have a basic need, which is to be involved, to be respected and to control their own future. 

And what is the definition of anxiety? Anxiety is the inability to control your life. Well, give people that control. Tell me what you want to do within this vision that you said you agree with. Tell me what you want to do to make it real. Now you own that, that's yours. 

So at AMA, we taught this concept called the unit president concept, which is fundamentally, now that you've picked where you're going to operate, you own that space. I'm going to define it for you. I want to say, here are your legal restrictions or your budgetary restrictions, what are the four sides of the box that you're operating. But within that, you are the president of that unit. You control it. You do what you want to do. Check back with me. Make sure you tell me what you're up to. Make sure you let me know if you're having problems, cause that's my job. My job is to eliminate problems for you so you can do your job, but you are the president. 

So when you give people that power. It is remarkable, it is absolutely remarkable what they can do.

Mahan Tavakoli: It is, although it does take a lot of strength and courage on behalf of leaders to do that. I hear a lot of leaders talk about that, David. Obviously, I was fortunate enough to see you lead that way. So for you, it's not just words, it's actions. But a lot of people talk about it, doing it is a different story.

David Fagiano: Yeah, but you know, what I found is that those who paid lip service to it, but really didn't buy into it, and didn't want to, and quickly perform up to the standards of being a unit president, they eliminated themselves or it was obvious that they needed to be put somewhere else, or given another opportunity.

So it's really self-regulating. Again, people want respect. They don't want to be losers. They don't want to be the failure of the group. Never. So give them enough room. Give them one-off tools to work with, and they'll either make it, or they'll be happier somewhere else. So I think a lot of folks get nervous about two things with this concept of empowering people like this.

The first is, “My God If they don't do it, it's going to reflect badly on me.” Well, you know what? Most of the time they do a better job than you could anyway. But the second thing is, related to that, a lot of leaders fear that their reports are going to be better than they are. “Oh my God, this guy, he's going to be better than me. Now, I'm really going to look stupid.”

Well, guess what? In a lot of cases, they are better than you. So give him enough room, let them run. Get out of the way. You'll be double rewarded because when they're successful, you're successful. And the greatest reward is actually seeing the success in people, letting them grow, letting them be their own unit president.

Why not? And it's remarkable. The change that makes them focus. 

Mahan Tavakoli: And you did have a remarkable run at AMA. Eventually, transitioned out. Ran your own small shop and then came unto Dale Carnegie training as chief operating officer. How did that come about? 

David Fagiano: Yes, I had left AMA, and I was involved in a training industry roll-up. This was when everything was being rolled up and I believe this is probably the fourth or fifth attempt at doing a roll-up of the training industry. The prior ones, they all failed. And so, why didn't work at all, we were going to roll up the technical training industry. So people who did, bank teller, training, hard skills. And it sounded like a great idea, but it just didn't work. 

So I lived in a place called Garden city, New York, which happened to be the headquarters at that point of Dale Carnegie. And I would pass this building daily as I would commute into New York City to get the train. So one day I just stopped in and I'm talking to the receptionist, and Ollie Crom, who was part of this family, owned part of the company, came walking down the staircase and he said, “David, what are you doing here?”

And I said, “Ollie, I forgot that you’re involved with this”, cause we had served on a board together. Well, we got talking and he said, “Well, I'm interested in the seminar business. Can you help us?” I said, “Sure”. And pretty soon it became a job. So that's how that happened. 

And, I have to say, again, it's one of those really fortuitous things, because I found the franchising business to be such an alien model from anything I'd experienced before, that it really helped me grow as a person, I have to say that. I was used to being in charge. And basically, when you have a franchise organization, the franchisees are in charge. And they're not ashamed to tell you that repeatedly, that they are in charge. So you learn some humility and to say things like, “Oh yeah, I guess you're right”, to go and try to go with the flow a little bit.

But it was an exciting opportunity for me because what I wanted to do there was expand the international business, which I did do. But it gave me the opportunity to meet fabulous service people from around the world. All over the world are such smart people. And I think most folks who have only domestic experience or US experience tend to forget that. That we haven't cornered the market on intelligence by any means.

And there are smart people in Cairo, and in Thailand, I mean, you name it, who are brilliant, hard-working dedicated small business people. 

Mahan Tavakoli: Yeah. So there are a couple of things that made a significant difference too, David. One of them was the seminar business that you talked about.

I still remember the first time you were presenting at a convention in a group where you drew a pie chart on a flip chart, and you put 9% up there and you said, this is 9% of time-based business of training. I want to go after 91%. But that by itself did not necessarily make you a popular person in an organization that had a legacy of doing training over a period of time.

How were you able to handle that? 

David Fagiano: Well, you're absolutely right. It did not make me a popular person, especially with the US  franchisees, who had been there a very long time, who were absolutely opposed, diametrically opposed to the seminar business, because they had fought against it their entire lives.

On the other hand, there were all the franchisees like the fellow in Chicago who said, “Well, it's an opportunity. I'll give it a try.” So by working with a group of I'll call influencers who are willing to try this concept out, I built a base of folks who would say to their other franchisee peers, “You ought to give this a try because it does produce extra income. And by the way, you can convert the seminar people into our traditional business.” 

And that was the most important step because our franchisees would dedicate it to the time-based model, learning all the time. And they did not want to tamper with that. And they believe that was the Holy grail.

Right or wrong, that's what they believe. But by giving them extra income, and a doorway into that business that they love, I was able to convert some. All of them? Absolutely not. Absolutely not. Even at the end of my tenure at Dale Carnegie, it was still a controversial subject. Even though we were putting on catalogs and doing fairly good business.

Some folks just said, “Nope, I'm never doing it. Don't bother me again.” So I did. That's fine. 

Mahan Tavakoli: Now, David, with respect to your leadership, I can mention that at the beginning, when we had a reorg and our group, our team that I was on was going to be reporting to you, I wasn't thrilled about reporting to David Fagiano, didn't know much about you. And fast forward, six months to a year, I would tell people back then and even though today when I don't work for you, or report to you, that I adored you, I adored your leadership and had such loyalty, faith and trust in you back then as I still do. 

So my question on the leadership front is, what is it about your leadership? What did you do that this team that I know, in most cases, didn't necessarily want to be reporting to you? Over a period of time, they really became loyal to you and saw your leadership as a way to impact the organization for the better.

David Fagiano: Well, I think fundamentally it's what one of your colleagues said, which is, 
“What you see with David is what you get.” So I believe in absolute honesty to a fault. And I don't play games. I just appalled games in business, and I will stay away from them forever. And lying to me just creates an entanglement that grows by the minute. I really am against it. And I think it wastes so much time. It creates so many hard feelings within the business world, within any world, actually. 

So I hope what happens is, and I remember that first meeting, I know you weren't happy, I could see it on your face. But I hope what happened was, you said, “You know what? I may not like him, but I know where I stand, and that's that counts for a lot. And I know he's going to be honest with me. And when I'm out of the room, he's got to defend me. He's not going to stab me in the back.” 

And I think those fundamental traits really did a lot to create loyalty for the folks who know me. And again, I think that goes back to what I said earlier. Human nature. I want to be respected. You want to be respected. Everybody wants that. You don't want anxiety. You don't want, fairly unknown. You want to know upfront. Tell me what it is, give it to me straight. I'm a big boy. And that's what I did throughout my career. And I think it created results, and it created employees who respected me even if they didn't like me, but were willing to work with me.

Where it failed, and I will mention this because I think it's important for your listeners to hear, is on the other end of the business. So as CEO of several organizations, I interacted with a lot of boards, my boards. And I will tell you that I'm not very good at it. It was a big failure that I had.

I remember at AMA, the board, it was 20, 20 or so folks, and non-profit boys tend to be very large anyway. And one of the fellows said to me, “You know, you're never really gonna make it big in this world.” Don't forget, I’m having some pretty good success in building the business and very proud of the results. And he said “You're not going to make it big, because you don't know how to bump with the elephants.”

And what he meant by that is you don't know how to play the board room the way it should be played. The glad hand, and the list exchange of stock tips, I'll invite you to my club, that kind of stuff. It’s a who you know, not what you know mentality. 

And believe me, that goes pretty far in this world. I've ignored it my entire career and I've paid for it because I do think I could have accomplished more if I had been a better, better at board relations. But again, that gets back to what you see is what you get. Frankly, I don't want to bump with the elephants. You know, I'd rather find a direct mail piece or an internet marketing idea that works gangbusters than go bumping around.

Mahan Tavakoli: Well, whether you're great at bumping with elephants or not, that's part of your authenticity, David, admitting that. But, I do have to say you were able to produce great results with a team that didn't only do what you wanted the team to do, also respected, and admired you. Now, when you reflect back on your leadership career, if you were to give advice to younger David Fagiano, what kind of leadership advice would you give? 

David Fagiano: First of all, you need a skill. I mean, you need to be good at something that is visible, and can be respected. So I think I was a very good marketing person. Regardless of whether I was a good leader or not, I knew my stuff, people knew I knew my stuff. And they went out of their way to seek guidance in those areas because they knew I was good at it. So that forms a foundation. 

Secondly, as you start to move into management roles. Don't be the octopus. Don't try to control every aspect of the groups that you're managing. It's a futile effort. And all it does is anger your employees because if you're so good, why do you need me, just do the job yourself. So you're not giving people the opportunity to grow. You're not respecting their abilities. So you want to adopt an attitude that I've referenced before, which is give people room to achieve, get out of the way.

Give them tools, give them guidance, help educate them, help train them, but essentially let them be their own boss, let them get ahead and respect that, and applaud it. Cheer them on. You gotta be a good cheerleader too. 

I say one of the hardest things about being a leader for me personally was the fact that you have to repeat the good word over and over and over again. It takes an average at, you gotta say something, 13 times before 20% of a group actually remembers what you said and that's ridiculous. So think about trying to move a larger group or a company. How many times do you have to say the same thing over and over again? You have to praise. You have to be there to support.

It's hard work. It is hard work. But it pays off, pays off big time because not only do you grow, not only that your company, your organization, your unit grow, but the people around you have the opportunity to be better than they are.  Think about the legacy that you want to leave when you're gone.

I've always said I want to leave it better than when I got here. That refers to the company or the people that I touch. I want to leave them, or it, better than I the way I found it. And I think if you strive for that, if that's your goal, you can't really go wrong. You can't really go wrong. 

Mahan Tavakoli: So, David, are there any books or resources that you find yourself recommending on leadership?

David Fagiano: Yes. There are plenty of good business books around. But I will tell you, I would recommend Shakespeare. If you want to learn about jealousy in the office, if you want to read about human nature, read Shakespeare. Read any good author. There's a lot of truth, a lot of knowledge in those works of fiction because they deal with you in nature. 

And as a leader, yeah, you have skills. You have your core skills, but you're probably not using them on a daily basis anymore. What you're really dealing with, the relationships, people. And if you want to learn about managing people, how people tick? What makes something good or how you can get people motivated? Look to those authors, they know what they're talking about. They've dissected human nature. And I know I'm partial to it because I said I was an English major. And I will admit this Mahan, I went to grad school for Chaucerian, and pre-Chaucerian English literature. So you can imagine how few job opportunities I really had.

But, I mean, even Charles of  the Canterbury tales are insightful in many ways so I would recommend that honestly. I recommend that to my kids all the time, since they should get their nose out of the finance area for a minute and do some solid reading. 

Mahan Tavakoli: I appreciate that advice David. You said, when you lead people, you want them to be better off than before you're having had an opportunity to work with them. That's why I could spend hours having a conversation with you. Sharing your brilliance with others, because having seen your leadership, I know you left being better. I use your example, oftentimes. Your leadership example. And I'm thrilled that we had a chance to have this first conversation to share a little bit about your background and your leadership with the Partnering Leadership community. Thank you so much for joining me on this conversation, David.

David Fagiano: Hi, thanks for having me on. I enjoyed it.