05: Cosmos Corporation CEO Landon Hobson on Sustaining Success Through Three Generations

In this episode of A Life of Climb podcast, Cosmos Corporation CEO Landon Hobson shares why his family business has continued to thrive over three generations in spite of the fact that many family businesses fail. Then Vistage CEO Sam Reese talks with Landon’s executive mentor and Vistage Chair Allen Hauge about how to tackle the talent challenges so many leaders are facing now.

View all episodes >> A Life of Climb: The CEO’s Journey Podcast

Transcript

Sam Reese (00:37):

Hi, and welcome back to A Life of Climb Podcast. I’m your host, Sam Reese, CEO of Vistage, the world’s largest CEO coaching and peer advisory organization for small and midsize businesses. In today’s episode, we have a great conversation with Landon Hobson of Cosmos Corporation, a third generation family business in the pet product space. Landon will share why Cosmos has continued to thrive in spite of the fact that many family businesses often fail. And he’ll tell us how he’s managed to turn company culture from just words into actual behaviors. Leading the conversation with Landon is veteran Vistage chair, Allen Hauge. Later in the episode, you’ll hear my conversation with Allen, who offers a big-picture perspective on the talent challenges facing so many leaders right now. Plus we break down why purpose in your organization is more important than ever. Thanks for joining this for A Life of Climb Podcast. Here’s Landon and Allen.

Allen Hauge (01:36):

My name is Allen Hauge. I am a Vistage Chair in Saint Louis, Missouri. And it’s my great pleasure today to introduce all of you to a longtime Vistage member, Landon Hobson, who is the CEO of Cosmos Corporation. Landon, great to have you with us today. Thanks for taking the time to talk to our friends and members.

Power of Purpose

Landon Hobson (01:55):
Yeah, thanks for having me. So I’m Landon Hobson, as you said, Cosmos Corporation. We manufacturer, market, sell three brands that we own in the pet care space. We’re a longtime family business, 41 years. Our mission reads Cosmos Corporation strives to perpetually innovate the finest products, packaging, marketing and management in the pet industry. We have kind of a dual mission. Number one is we want to make really good pet care products. We want to make sure that the customer is being provided with a solution that solves a problem that they have. But then on the other hand, we want to make a really strong culture, where we continue to support and invest in our employees. And then we give back a lot of money around the world through our nonprofit called Gifts of Love.

Allen Hauge (02:43):

Wow, yeah. I’ve enjoyed hearing about that mission over the years. And the fact that you’re doing such a great job on both of them simultaneously is certainly a testament to a great business model and a great strategy and great leadership. In the time that I’ve known you, the company has changed a lot, both quantitatively in terms of size and qualitatively in terms of how it’s run while staying true to the mission of the founders. You’ve often said that Cosmos used the CEO as a temporary steward of the business. Can you explain a little bit more about exactly what that means in your organization?

Landon Hobson (03:14):

We talk about Cosmos as kind of a living, breathing organism. Right, yeah, it’s a corporate, legal entity, I guess, to the United States and the State of Missouri, but in reality, it’s a living, breathing organization that lives on, and it’s bigger than any of us. Cosmos isn’t one name. So third generation CEO, there’s nine other family members who work in the business full time right now. A lot of it is Cosmos is going to live on. There were people who ran it before me, and there’ll be people who run it after me and probably better than I’m doing. And so it just is that view that it’s not about me. It’s not about necessarily who’s running it, but we’re a steward to hand it to the next generation and to hand it to the next employee base as well.

Hire great people to create consistent growth and success

Allen Hauge (04:00):

Both before you arrived and after, my understanding is that Cosmos never really had a year where you didn’t have top-line growth, which is pretty remarkable. Very few businesses can say that. What do you think accounts for the consistency of that success?

Landon Hobson (04:14):

If I were to just boil it down to one thing, I think it would be people. I think we hire well. We have great people. If I were to expand on that a little bit more, I would say there’s probably three things that contribute to that success. And that’s number one, is innovation. We don’t really stop. We just want to have continuous innovation. The consumer doesn’t stop having problems. The consumer doesn’t stop their desires, and so we need to keep up with them. And I think number two is culture. We’ve built a culture where we have trust. We have caring. We don’t have silos. We don’t have turf wars, where we’re arguing over whose department gets the say there. Even up to 250 people, where we have many departments, we don’t see that. And that allows for the third one.

Landon Hobson (05:00):

Actually the third one, I would say, is business alignment, that we know who we are as a company. We know what we’re working towards, so every project, we try to be as clear as possible on goals of that project, goals as a company, who we are as a company. And if we do that, and we work together really well, we will beat our competitors to market. We will have great innovation. And then our employees will love working for us and won’t leave. We’ll retain the great talent. We’ll just keep building off of that. So I think over 41 years, Cosmos has done that very well.

Allen Hauge (05:32):

Can you share maybe some things you’d like a mulligan on, a do-over on despite all the success?

Landon Hobson (05:38):

Yeah, to be honest with you, I think a do-over is I wish I would’ve narrowed in our strategy sooner. The pet market is so abound with opportunities. The pet parent loves their pet. And so sometimes that shotgun approach, you get spread really thin. And we took on projects that kind of sucked time and money out of the organization. And I wish I would’ve been a lot more focused on … Okay, what are we really going after? You always tell me, at least you always remind me that strategy is not what you do. It’s what you say no to. And so I wish I would’ve known that or implemented that sooner.

War for Talent: Hiring those who are Humble, Hungry, Smart

Allen Hauge (06:18):

Just talk about the war for talent for a minute, which all of us are engaged in to some degree, finding the right people, keeping them. I mean it just seems like every month, when you and I get together for your one-to-one, you’ve made another key hire. I find it so interesting that you seem to be so successful at it. And people join companies, and they join managers, and I’m curious about maybe some specific things that you do, that you can share, that would help the rest of us be as successful as you’ve been when it comes into attracting talent. I have several of your people in my key and emerging leader groups, and they’re just first rate. So what’s your secret? How are you doing it?

Landon Hobson (06:56):

Yeah, we have some great people. I would say that. I think number one, let’s start with, I think, our culture. What we as Cosmos say, that our one threat we have is culture and not being aligned. That’s it. If our culture is internally, if we’re fighting, we’re creating silos and turf wars, then we become about ourselves and not about the consumer, and that’s a problem. So we’re really careful about how we bring in. The people that we hire go through a pretty rigorous interview process, where we have a lot of people across the organization in there. We also talk about who we are as Cosmos a lot with our employees. And it’s specifically our hiring managers so moving a little bit forward. If our hiring managers know how important culture is, they know how important alignment is, and they know who we are a company, and they believe that, if they believe that, then they won’t risk that by bringing somebody into the organization that doesn’t fit that. We say it starts internally. We have to believe who we are, why it’s important.

Landon Hobson (08:00):

And then what we say after that is our hiring managers get to make the call. And we look for ideal team players. So Patrick Lencioni has a book called The Ideal Team Player. It says that you need to be humble, hungry and smart. We give that to all of our employees. That was our book club reading two quarters ago. And so all of our hiring managers know what we’re looking for. And it’s really cool to hear our hiring managers kind of debate over the people we just interviewed, because … Are they humble? Are they hungry? Are they smart? What did you see that made them humble? We’re all on the same page and aligned about who we’re bringing in.

Allen Hauge (08:36):

I know that you have a saying there, that people from the top down need to be willing to make the coffee. Can you talk a little bit about what that means at Cosmos and how it impacts the organization?

Landon Hobson (08:48):

Yeah, what it’s basically saying is take time out of your day to serve someone else. And so that is. That’s a core value of ours. That’s what we say, how we behave, is that you need to be willing to make the coffee. And it’s funny. Where that came from is I’m going to the coffee pot here at Cosmos. And we have the kind of mentality of servant leaders. The [inaudible 00:09:09] has always had that mentality of servant leaders. But I go to the coffee pot, and the coffee pot is empty. And it’s super frustrating, and I say to somebody, “Somebody just emptied this, and they didn’t refill it.”

Landon Hobson (09:21):

And of course the person next to me is giving people the benefit of the doubt and says, “Well maybe they didn’t know how to do it.”

Landon Hobson (09:27):

I’m like, “No, they knew how to do it. They just didn’t want to take the time out of their day to make it, because their time was more important than the person coming after them.” And that’s not who we are as a company. So it’s kind of like a saying I said. People need to be willing to make the coffee, even when they’re in a rush.

Allen Hauge (09:45):

Landon, thanks for your time today. Having had the joy and the pleasure of watching you close up for several years now, I know you won’t give yourself adequate credit, but I certainly will. And you have certainly helped continue Cosmos on a path for greatness, and I want to thank you for the time that you’ve spent with us today and also for what you’ve brought to your Vistage group over the years. You are greatly admired there, and you’ve really made a difference for all of us.

Landon Hobson (10:08):

Yeah, well thank you. Allen, you won’t brag on yourself either, but there’s times where I know that I am frustrated and upset. And thank you for being there and helping me on the leadership journey as well. There’s nothing like having a independent coach who will tell you the truth but also be caring, so thank you.

Part Two

Sam Reese (11:20):

Welcome back, everybody. I’m here with Allen Hauge, one of the most decorated, longterm chairs at Vistage. Allen, how long have you been a chair at Vistage? And tell us a little bit about what’s kept you in this role for so long?

Allen Hauge (11:33):

Sam, it’s great to be with you today. Let’s see, it’ll be 28 years in February. And in terms of what’s kept me here, wow, there’s a number of things. But just to give you the short list, I think, and in no particular order, it’s the best adult learning experience I think anybody can have, whether you’re a chair, a member or staff. And I’m a real learning junkie, so it’s been a real trip for me, never ending. I think perhaps really the most important things is that I’m an economist by training, and I’m always mindful of where the capital in society is coming from.

Profits come from great decisions

Allen Hauge (12:08):

And capital comes from profits, and profits come from great decisions. And I tell every new member, “My job at the end of the day is to give you the best set of choices you could have as a CEO and a person to help you with the group make the best decision from among those choices.” So if we elevate the level of decision making in society, especially among people who affect so many others’ lives, I think that’s just an incredible contribution to be able to put your name on.

Sam Reese (12:35):

It was such a pleasure to learn about Landon’s story, and I wanted to ask a few questions. I know how close you are to that situation. Most family businesses are gone by the third generation. Why do you think that is, and what do you think has allowed Landon and Cosmos to succeed at a point when so many others had been failing?

Extra burden of success

Allen Hauge (12:53):

Most businesses that are started don’t survive. I’m sure you know that. And I think that as far as family businesses are concerned, there’s actually maybe an extra burden there. And there was a Vistage speaker once who told me group that the second worst thing that can happen to a company is success, because you have a tendency to think that you’ve cracked the code. You’ve locked it in. It’s an annuity. All we have to do is not touch it, and everything is going to be great. Which certainly the past two years have taught us that is certainly not true. I think, though, that family businesses are especially prone to that particular temptation. Because it’s not only creating success, which is hard enough. Now you have an entire family whose livelihood is dependent on this company. And I think there is even more tendency there to not take risk, to not change, to not innovate, if the company is doing well. So I think family businesses actually have an extra burden because of the success that they enjoy.

Sam Reese (13:54):

So they get success oftentimes. Then you’re saying whatever got them there, then they sort of get too conservative, afraid to take those risks and protect what they have.

Allen Hauge (14:03):

Exactly. They think they’ve cracked the code, and all we have to do is keep doing what we’ve done. And we know that the world changes.

Sam Reese (14:11):

That’s a great insight here. I love how Landon described Cosmos as a living, breathing organism. He said, “It’s bigger than any one person,” including him as a CEO. And how does that impact the way the business operates, that he sees the company as something that lives and breathes by itself, with or without him?

Allen Hauge (14:29):

In my experience, I think that’s a fairly common perception among longterm, successful CEOs. I think they know what a company really is. We call it organizations, because we’re trying to get it down on a piece of paper in the form of an org chart. We’re trying to get it down to a number of pieces we can get our heads around. But the simple fact of the matter is it’s actually more like an organism. I mean think of a cell that you have in your body. There is just an amazing number of pieces that have to work together there.

Allen Hauge (14:57):

And I think that successful CEOs and understood and embraced that. And they look at their culture as more like DNA. I’m going to set something up so that my people know what to do, have an instinct around it and don’t even have to think that hard about it to get it done.

Sam Reese (15:13):

One of the things that I’ve heard you talk about, and I saw this came through loud and clear in this discussion with Landon, is how intentional he’s been about the purpose of the business, this great workplace culture for employees, this solid product and then making sure they contribute to the broader community. You’ve worked with hundreds of leaders over the years, and I just wonder, how do you connect purpose to success in business? And when purpose feels fuzzy, what are the consequences leaders should be thinking about?

Purpose provides clarity

Allen Hauge (15:46):

I think what I’ve seen over the years is the people who’ve been the most successful are the ones that had the clearest and best defined purpose. And the reason that’s important is that business in general, strategy in particular, is about editing. You have to make choices. There’s all sorts of choices in front of you as a CEO, and you cannot do all of them. One, you don’t have the resources. Two, most of them shouldn’t be done. You’ve got to figure out which are the ones that are really going to serve the purpose and the mission. The purpose provides clarity. We’re going to do this, not that. We’re going here, not there. And without that purpose, you could end up doing a whole lot of things not very well.

Sam Reese (16:23):

That’s really interesting, how you came back to that. You often talk about what not to do. Tell me, what is your experience, where that always comes through when you’re coaching? I’ve heard you say that a lot in your coaching here. What is it? What is about that, where you see CEOs getting distracted? What happens that takes them off course there?

Allen Hauge (16:41):

Waiting too long to make most decisions. CEOs, it’s almost a requirement, they have to be optimists. And they don’t like anything that isn’t a good answer and so they will wait until they think circumstances will provide one. And something that I’ve told every CEO at least once is sometimes there isn’t a good answer. There’s only a best one. And you have to know when that is and say, “Okay, we’re going to take the hit, and we’re going to make this choice. And no one is going to like it, but we’re going to like what’s going to happen a lot less if we don’t make the call.” And this happens with decisions around people and capital and markets and products. Very few decisions are irrevocable.

Allen Hauge (17:29):

But what does happen is there’s a decay of energy and drive and purpose and opportunity. Opportunities will go away. They’re perishable. And when they’re in front of us, we have to make a choice. Does our purpose say yes, we should do this? And if it does, what are we waiting for?

Sam Reese (17:45):

Lots of great wisdom in those comments. That was excellent, really helpful here. You asked a great question. I think it was my favorite question, because it got me to really think about what I would do over. You asked, “What would you like to do over?” I thought that was a great question. Tell me a little bit about why you think that question is so powerful and why that sort of introspection is helpful to CEOs.

Allen Hauge (18:12):

I think it’s so important that at least once a year I have an exercise that we do called What’s Your Mulligan.

Sam Reese (18:17):

I like that. I need a lot of mulligans when I play golf, so I like it.

Good choice, bad execution 

Allen Hauge (18:20):

Usually around June or July, mid year, I’ll ask, “What would you like to do over again? What would you like another go at?” And usually, a lot of times people, they’re doing the right things. They’re just doing them the wrong way. Good choice, bad execution. That happens much more, I think, than people realize. And part of that is oftentimes waiting too long to make decisions and to take action. Like I was saying earlier, there’s an old saying that good judgment comes from experience, and experience comes from bad judgment.

Allen Hauge (18:49):

And I think introspection, people who are willing to look at themselves and not only what they did wrong, but when they did something right, to ask this question. Have I been lucky or smart? And I’m in favor of both. And the way the world works, it’s usually some admixture of both. But I’ll often ask during host presentations when I see graphs that are going like that, I’ll say, “Hey, wow. You’re doing really well. Did this happen because of you or in spite of you?” And understanding situations where we have good luck, fine. Let’s make sure next time it’s not luck. How do we institutionalize that in the business? Or if we did have bad luck, how do we learn from it?

Sam Reese (19:33):

Even the strongest companies right now are dealing with what’s been termed this great resignation. And I wanted to get your point of view. You’ve been doing this for 27, almost 28 years, coaching CEOs. And when you think about this current employment crisis, do you see this as a blip on the radar screen? Is it a turning point? Is it a risk? Is it an opportunity? How are your leaders talking about this? And what are some of the things that you’re counseling them on?

Allen Hauge (20:04):

As you know, I write a blog every week, and I feature various thinkers. There’s a guy named Scott Galloway, who teaches at NYU, who’s gathered quite a following. And he said early on that he felt that the things we were going to be seeing change were things that were going to happen anyway, but that the pandemic merely accelerated them. And I think he’s turned out to be exactly right about that. If you look at the supply chain issues, inflation and probably most troubling for a lot of CEOs is the war for talent. I think we’ve been through a period of time here that we truly do have a sea change going on. And I think it’s going to go on for a while. I don’t think we’ve outlawed the business cycle, but I think what we’re going to see is maybe employment will ease up a little bit.

Allen Hauge (20:50):

But we won’t go back to the buyer’s market that we had before. Inflation may ease up a bit, but it’s going to settle at a higher level than it was before. And I don’t think that you’ll see us going back to anything like the dynamics we were experiencing earlier, probably for another four or five years. There’s just too many things that’ve been set in motion.

Sam Reese (21:09):

Thank you for that perspective. You clearly have a ton of experience in that arena. So Allen, what a pleasure.

Allen Hauge (21:16):

Thank you, Sam.

Sam Reese (21:17):

Thank you for joining us on this episode of A Life of Climb Podcast. And thanks again to Allen and to Landon. Friendly reminder to please subscribe or follow the podcast to get all the latest episodes. And please visit Vistage.com/podcast for more resources to support you on your leadership journey.

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