On Leadership
By @ProfBruce
Professor Bruce M. Firestone, B.Eng.
(Civil), M.Eng.-Sci.,
PhD.
Entrepreneurship Ambassador, Telfer
SOM, University of
Ottawa
Executive Director, Exploriem.org
Founder, Ottawa Senators
Broker, Century 21 Explorer Realty
Columnist, Ottawa Business Journal
Author, Entrepreneurs Handbook II, Quantum
Entity
Blogger, EQJournal.org, @ProfBruce
March 2012
Leadership is about
getting people to do
things they know are
not in their best
interests
 Scott Adams, Dilbert
creator
 Right?
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WRONG
“A leader is a person who chooses from among many
alternatives, some of which s/he has generated and some
of which either came from inside or perhaps from outside
their organization, the right path for his or her tribe* getting
buy-in from the whole organization as well as its entire
stakeholder group and making sure that all its resources
are deployed optimally to achieve their common objectives
which serve not only to sustain and augment the interests
of its individual tribal members and the organization itself
but also a broader, ethical purpose for humankind.”
(* I am using ‘tribe’ here in the same sense as Dave Logan et al in their 2008 book, Tribal
Leadership: http://www.eqjournal.org/?p=1155.)
Good leadership  most valuable
company on planet
 Steve Jobs
 Build insanely great products and
services
 40% of his time on Apple Biz Models
 What caused incredible run up in
Apple’s capitalization?
 Mac? iPod? iTouch? iPhone? iPad?
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 iPhone!
 Perhaps
greatest tech product
EVER
 288% p.a. (est.) IRR
 Try to get that from your Bank!
 Motorola
gets $100, once from
sale of Razr
gets CMRR
 Holy Grail of Tech!
 Apple
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Jobs visit to AT&T
Sale of devices
Share of monthly subscriber revenues
App store sales/revenues
iTunes sales/revenues
iOS ad server
= Committed Monthly Recurring Revenues
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Why would AT&T agree?
Strong Apple brand
 Trust in product
 Two year exclusivity
 Keep device out of hands of Verizon
 STEVE JOBS’ REALITY
DISTORTION FIELD
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Kevin Rose, Founder, Digg.com
Kevin Rose made $60 million in 18 months
How did he do that?
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DIGG.COM’S DIFFERENTIATED VALUE?
New newspaper model adapted to Internet
Not an online version of New York Times
Digital community made up of homogenous
demographic—80% male, mainly young techies
Readers are contributors
Readers dig up interesting stories/post brief
synopses to site whereupon other readers vote
them up or down
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Site harnesses competitive instincts of readers
Works because of homogeneous
demographic—contributors post stories of
interest to group
Site is dynamic—leading stories change by the
minute
Digg.com’s cost for headline writers = ZERO
Digg.com’s cost for journalists = ZERO
Digg.com’s cost for editors = ZERO
Digg.com’s cost for distribution = ZERO (at
least, marginal cost practically zero)
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Digg’s sustainable competitive advantage is
its business model and its readership
You might be able to knock off its business
model but it is extremely difficult to knock off
its millions of dedicated readers which form a
community
The key is that the readership and community
are relatively homogeneous and have similar
interests
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“If you spend our last $10,000 launching this
site instead of a deposit on a home for us, I’m
going to leave you,” Kevin’s girlfriend
Kevin and his partner populated their site by
CALLING 3,000 of their friends
They didn’t push on a string–email campaign
might have gotten them 30 users
I wonder how she feels now?
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What are some
attributes of
successful
leaders?
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vain
visionary
creative
proud
angry
impatient
driven
rebellious
lonely
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good psychologists
manipulative
emotional
risk taker
inspirational
charming
forceful
changeable/ADD
moody
sensitive
funny
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Look at list
Someone you’d like to spend a lot of time
with?
Probably not!
Leaders are exhausting people
Look again
We try to socialize these characteristics out
of our kids
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Star Trek’s Captain Kirk split into two persons
by Transporter beam
Goody 2-shoes Kirk and conniving womanizer
Kirk.
Dr. McCoy (‘Bones’) asks: ‘Why don’t we just
kill evil Kirk?’
Logical Vulcan first officer Spock declines
Why?
Good Kirk is indecisive, wishy-washy,
new age water-fountain kinda guy
 Not person you’d put in charge of a
starship
 But ‘Good Kirk’ has to control ‘Evil
Kirk’
 Otherwise you get nasty
tyrant/dictator/bully
 Unavoidable internal inconsistencies
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Difference between smart person and
intelligent one?
Intelligent people can cope with ambiguity
(Neal Stephenson, The Diamond Age)
Good leaders are trained for ‘emergency’
situations but are often bad managers
Entrepreneurial enterprises these days
(large or small) are in constant state of
controlled panic
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Bad leaders?
Michael Zafirovski, last Nortel CEO
Spoke at Telfer
Worst speech by CEO of major company
55 minutes on six sigma/getting
administrative financial ratios right
Vision? 0
Great new NT products/services? 0
Updating NT’s biz model? 0
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Good speech, Mike, if you are a COO
WWSJD?
None of his 55 minutes would be about six
sigma!
That’s why you have a COO
All would be about insanely great new
Apple products/services/biz models
What should Mike have done?
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Take page out of Lou Gerstner’s book
Saved IBM in 1990s
Took IBM into services, software,
outsourcing
IBM became trusted advisor to clients—
even to the point of spec’ing non IBM
equipment
Sit on same side of table as client
Macy’s vs Gimbels/Miracle on
34th Street/Kris Kringle
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Who knows more about
maintaining/repairing legacy equipment
than NT?
Their bankruptcy opens the door to Len
Anderson and Renaissance Repair
Leadership matters!
Almost no matter what you pay
Jobs/Gerstner/Rose/Zuckerberg, it isn’t
enough
Anything you pay Zafirovski is too much
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Anti-Leadership
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Many people say they are pursuing
success
But actually many people fear success
Biggest obstacle to success is staring you
in face every time you look in mirror
Fear of Success?
Here’s how it works:
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“I won’t try hard.”
“That’ll show ‘em.”
“If I don’t try hard and I fail, well I can always say that
I failed because I didn’t try hard.”
“But if I had tried hard I would have succeeded.”
“I won’t take any risks.”
“My ego is protected because I have a safe fall back
position—i.e., I didn’t really want to do it anyway.”
“No one can make fun of me even if I am a failure
because I didn’t want it anyway.”
Notice how perfect reasoning is, how circular it is?
Leaders Need to be Creative
 Peter Patafie: up by bootstraps guy
 Hired to sell moving/packing supplies– 100%
contingent (all commission)
 Peter has confidence in himself
 At age 45, suddenly laid off
 Why?
 Making too much money (more than President)
 Wife and three kids to support
 Only had High School
 What to do?
Started own business selling moving
and packing supplies
 Started with less than $5,000
 Had great reputation,
 Knows how to sell
 Gets product on credit from suppliers
 Brings creativity/differentiated value to
new biz
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First great insight: his clients’ salespeople
spend lot of time redelivering packing and
moving supplies to their clients
Worries about his clients’ clients
What if instead of delivering moving boxes to
client warehouse and then having their
salespeople redeliver them to their customers
who are moving, deliver boxes and moving
supplies directly to customers?
Client salespeople can then spend more time
selling (moves) and less time delivering boxes
Peter ends up with a 97% market
share (> Microsoft’s OS)
 Within six years, business that does
$13 million per annum with 30%
margin
 Never expected to make that kind of
money
 Twice each year gets together with
employees and shares the cash
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Peter’s priorities:
Priority # 1: TAKE CARE OF YOUR BUSINESS
Priority # 2: SO IT CAN TAKE OF YOUR FAMILY
Priority # 3: SO YOUR FAMILY CAN TAKE CARE OF
YOU
Priority #4: SO YOU DON’T BECOME A BURDEN ON
YOUR FELLOW HUMAN BEING OR SOCIETY
Priority #5: SO YOU CAN HELP YOUR FELLOW HUMAN
BEING
Priority #6: SO THEY CAN HELP YOUR BUSINESS
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This is the ethics rationale underpinning Adam Smith’s
Invisible Hand and all entrepreneurship itself
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Student asks Mr. Patafie:
“Surely, you mean TAKE CARE OF THE
FAMILY is your number one priority?”
“No!” he says
What is the number one cause of divorce: a)
Alienation of Affection, b) Financial Difficulties?
Answer is b)
So take care of your business so it can take
care of your family and they can take care of
you!
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Opening scene of now-completed TV series LOST
Writers get it about right when, > Oceanic Flight 815 crashes on
mysterious island, pecking order instantly forms around Jack
Sheppard, doctor, John Locke, adventurer and Kate Austen, jail
bird
These 3 characters between them have characteristics you’d
expect in leaders:
Great training, intellect and education of Jack
Physical courage and prowess of John
Wiliness and toughness of Kate
Leaders Need to be Bold
 Joe Kowalski from Philly falls in love with
Algonquin Park
 Decides to be outfitter– taking visitors on
canoe trips
 First summer disaster– turns out no one wants
guide
 Learns force 3-4 rapids on Ottawa River that
no one traverses
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Joe and pal Robbie Rosenberger scout
territory
Joe sees BIG OPPORTUNITY
Less than 90 minutes away market of 1.3
million outdoorsy people with disposable
income
Next Spring, he and Robbie ask farmer to
allow them to get in river from his property
Launch Wilderness Tours with two rafts–
Robbie in one and Joe in other
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100s then 1,000s show up
Problem–rapids are terrific, ride is short
Joe embraces programming: swimming rapids/one
channel for adventurous paddlers/another for
families/bungee jumping/kayaking school/ mountain
biking/rock climbing/volleyball/ badminton/
horseshoes/paddle tennis/basketball/soccer/ball
hockey/lawn chess/softball/hot tubbing/outdoor
movies
Joe buys land
Joe builds a town
Adds time share/fractional ownership
community too– Whitewater Village
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4,000+ acres owned by WT
Both sides of River (Québec and Ontario)
No development permitted (other than WT)
Problem– how to keep good staff in seasonal
biz?
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Buy Mount Pakenham– winter time staff
reallocation
Another problem– smallest vertical anywhere
in region
Solution—turn Mount Pakenham into largest
ski school anywhere– safety becomes
competitive advantage
Schools show up whatever weather
More programming?
Add snow board park
Add tubing for
non-skiers/boarders
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Entrepreneurs would rather ask for
forgiveness than beg for permission
Start with nothing/bootstrap your way to
success/make a profit/cash is King or
Queen
See and seize opportunities where others
fail to see
Be innovative and creative
Turn problems into opportunities– your
biggest weaknesses becomes your
greatest strengths
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Jim Balsillie, Phoenix Coyotes, Hamilton Bid,
Advent of iPhone– bad CEO decisions can kill
your enterprise
If you want to join private club, litigating your
way in probably not best way
NHL a private club with 30 voting members
plus Commissioner
Similar to political campaign to become
Mayor– just fewer voters
Member clubs held in trust by owners for fans
NHL believes should not be moved until all
options exhausted
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NHL leadership—two lawyers (Gary
Bettman and Bill Daly)
NHL leadership– no fear of litigation
Jim soundly defeated in Phoenix courtroom
Expansion route probably would have
worked
Financial incentive for owners since they
share in expansion proceeds but not
relocations
“I haven’t seen one (iPhone),” Jim
Balsillie, Co-CEO, Research in Motion,
7 July 2007
 “Try typing a web key on a
touchscreen on an Apple iPhone,
that’s a real challenge. You cannot
see what you type,” Jim Balsillie, CoCEO, Research in Motion, 7
November 2007
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Litigation is soul-destroying, time-sucking
black hole
Play to your strengths not your opponent’s
Be strategic
Why would you ever release a tablet called
Playbook that has smaller screen than your
competitor?
With almost no apps?
That doesn’t even send/receive email on its
own/your forte?
That doesn’t even make phone calls?
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Leaders are formed in the crucible of life
They have a persuasive Mental Map of the
Way the World Works
How do they get that?
They have RL experience
They make mistakes
They gain more experience
They never repeat same
mistake twice
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They stand up to bullies
They have a sense of fairness and fair play
They can put a team together
And keep it together
Putting round pegs in round holes…
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They have a sense of adventure
They do dumb stuff
They don’t listen to authority
They follow the beat of their own drum
They climb mountains in NZ in snow storms
where only way to survive is to go up
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They see opportunity before others do
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They see opportunity before others do
Terrace gets $18 per s.f. for its office
space/five years later it’s $6
What to do?
What does Toronto have that Ottawa
doesn’t have?
A zoo/Princess of Wales Theatre/
Wonderland/NHL Team
Conversation w/ Cyril Leeder and Randy
Sexton
Bring Back the Senators
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Cyril asks how much will it cost?
$35 million (est. based on NBA)
Actual NHL ask?
$50 million USD
Randy says let’s go for it
Cyril asks how will we pay for it?
Bootstrap capital, that’s how
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Buy 600 acres at $12,500 per acre
Put a NHL team and NHL-calibre building
in the middle of it
Drive up the value of the land to $112,500
per acre
Keep 100 acres for Scotiabank Place and
parking lot
Sell extra 500 acres for a profit of $100k
per acre or $50 million!
NHL franchise cost = ZERO!
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Also get 32 Original Corporate Sponsors at
$15k each
And 500 Corporate Sponsors at $500 each
Sell 15,000 PRNs at $25 each
Raise $1,105,000 to help with bid
As Al Davis once said: “Just win, baby.”
If u want a short, pleasant annual meeting
w/ yr Bank, make a profit every year, no
excuses
Don’t take ‘No’ for an answer, late
Professor of Economics O. J.
Firestone, U Ottawa to his son
Sept.1990
 “You will never, ever get a NHL Team
in Ottawa,” anon. BOG member the
night before the NHL awards the
Senators to Ottawa, Dec. 6, 1990
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“Make sure that the last face the BOG sees
before they make their decision is yours,”
Norm Seagram, former member of TOOC to
Bruce Firestone
Last two faces the BOG see: Phil Esposito
(Tampa) and Bruce Firestone
“The NHL is pleased and proud to
announce… franchises have been awarded to
Tampa and Ottawa,” five hours later
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a)
b)
After winning the franchise, you:
Party all night?
Do a few media interviews, leave for Miami,
fly to Montreal, drive to Ottawa, prepare to
sell $22 million in cash worth of season
tickets in ten days in late December 1990 for
a team that won’t play (and win) its first game
until October 8, 1992?
“John, what was the vote?”
 “It was unanimous.”
 Surprise phone call three weeks later
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People like to buy from people they like and
trust
Suppliers trust you to pay them/you trust them
to deliver on time
Clients trust you to deliver and you trust them
to pay you
Sold NHL on Ottawa and … on BMF
Conclusion
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When something isn’t working, do something new
Learn from your competitors
Commitment is important: “YOU’LL NEVER, EVER GET A
FRANCHISE IN … OTTAWA”
You can bootstrap big projects
Even Fortune 50 companies do that (Disney and the Anaheim
Ducks 4 example)
Sponsorship can apply to many industries and is a form of
Bootstrap Capital
Keep your core competencies in house– outsource the rest
If you are profitable, you will get financing not the other way round
Entrepreneurs make their own rules
Conclusion
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Entrepreneurship takes guts
Sweat equity is important
Creativity and innovation are key
Sometimes you need to trade to get ‘table stakes’
Avoid competing directly with behemoths
Try to add some differentiated value to your PB4L
Be trustworthy
Surround yourself with a competent, trusted team–
REALTOR/MORTGAGE
BROKER/LAWYER/MENTOR/ETC.
The harder u work, the luckier u get
Let 100 opportunities go by but when the right one comes
along, strike!
EXECUTE!
MAKE A PROFIT!
Last words
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Trust is the foundation of a successful career
Once you establish trust, you become part of a (business) ecosystem that
will sustain you, your business and your family for a long time
Every business is an experiment… until proven otherwise
Good decisions come when all three are in agreement:
YOUR GUT / YOUR HEART / YOUR HEAD
An (unconventional) mentor can help give you confidence but at the end of
the day, every enterprise is an act of faith
Enterprises that set goals, track their metrics and are held accountable by
their mentors and themselves are growing 7x faster*
GO FOR IT!
THANK YOU,
Dr. Bruce M. Firestone
B. Eng. (Civil), M. Eng.-Sci., PhD.
Twitter: http://twitter.com/ProfBruce
* Internet startups that track their metrics grow 7x faster than those that don’t, Startup Genome Report 01,
Max Marmer, Bjoern Lasse Herrmann, Ron Berman, 2011.