An excerpt from Transfluence
Whatever you’re wearing right now—your pants, your shoes, your socks, your shirt—more than likely made a stop in a Prologis warehouse. For that matter, most of the items around you, including the products you use on a daily basis (not to mention physical copies of the book, Transfluence), were housed in a warehouse during their journey through the supply chain.
I rose through the executive ranks at Prologis as it grew to become one of the best-performing companies in the S&P 500. In fact, as 2007 drew to a close, Prologis had provided stockholders with about a 19 percent compound annual return on their investment over close to a fourteen-year stretch since it went public. If you invested in the company’s IPO, your return would have yielded more than ten times the original value over that period of time.
My career at Prologis, meanwhile, also had been storybook stuff. I thrived in the fast-paced and diverse world of international real estate investments and fed off the energy that comes with being involved in a high-growth organization filled with like-minded people. In 2004, however, our CEO retired. Little did I know how dramatically the management team changes that followed would impact the direction of the company, not to mention my career.
Everything seemed great at first. I was promoted to president and chief operating officer, the leadership position second only to the new CEO, a highly intelligent growth-oriented leader who previously had run our international operations. Both of us joined the Prologis board, and we worked together reasonably well during those initial years.
By 2006 and 2007, however, there were chinks in the armor. More often than not, we found ourselves at odds, both on business decisions and on how to lead the company. We operated with a “growth-at-all-cost” mindset that was uncomfortable for me and many others on the leadership team. To me, the market felt frothy. We were expanding so rapidly that major decisions didn’t get the due diligence and debate they deserved, and our balance sheet was looking more and more risky as we financed our growth with debt. Many others in the organization were sounding alarm bells as well, but it all seemed to get swept under the rug by our CEO, who saw such concerns as detrimental to the path of growth.
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As time went on, we became isolated from one another, and our culture of shared trust devolved into one fueled by doubts. We found ourselves working in silos and failed miserably to compromise on a shared vision. I felt we needed to listen to each other and, in particular, listen to the concerns of our people. To the rest of us, it seemed like our CEO felt any opinion that didn’t align with his was wrong.
Eventually, it became apparent that our CEO and I couldn’t work effectively together. So, despite the company’s success and my well-paying position, I decided to step down as president and chief operating officer in early 2008.
It was a good time to leave. At roughly $72 per share, our stock was trading near an all-time high, and the company was well-respected by our investors. I was only fifty at the time, but I had no immediate plans for my future. Technically, I was still on the Prologis payroll, so I spent a few months “phasing out”—cleaning up loose ends and helping identify my replacement. But by April I had pretty much checked out.
As spring rolled into summer, the company’s stock had taken a sizable drop, falling by roughly 50 percent. The overall stock market also was down from the barrage of hits from the Great Recession but not nearly by as much. Were investors signaling a larger problem with the company? It was hard to tell. Actually, I didn’t pay that much attention or give it much thought. I was personally more relaxed than I’d been in years. I had substantially increased my workout regimen and deepened my commitment to my family and my spiritual life.
When autumn rolled around, the company’s stock price continued to nosedive just as I was looking into new opportunities. For the first time, I began to worry about the future of the company I’d left behind. The stock value had fallen more than 75 percent since the beginning of the year, investors were losing confidence, and members of the management team were sharing their concerns with me over internal issues that were getting worse by the day.
Things came to a head on November 8, 2008, when I got a call from the lead director of the Prologis board. The value of the company’s stock had taken a ten-month tumble from $72 per share to nearly $5 per share. In the days that followed, it would bottom out at close to $2 per share. At that point, it was the third-worst performing stock in the S&P 500. Only General Growth Properties and AIG performed more poorly during that stretch. General Growth, you might recall, would file for bankruptcy protection, while the federal government would bail out AIG. And our situation wasn’t much better. In what felt like the blink of an eye, Prologis had gone from king of the hill to the brink of bankruptcy. So, in an abrupt but anticipated move, the board decided to part ways with the CEO and, in that call, the lead director asked me to take his place. The management team was behind me, he said, and, in fact, was prepared to leave if I didn’t take the job. He gave me twenty-four hours to make my decision.
Lead with Transformative Influence
Transfluence shows leaders how they can have transformative influence by overcoming their fears and pride, building transparency into their leadership, developing a strong core of authentic values, and passionately pursuing a meaningful purpose.
Available Now.
