Management Lecture Series – Eric Schnur, Chairman, President & CEO, The Lubrizol Corporation
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Management Lecture Series – Eric Schnur, Chairman, President & CEO, The Lubrizol Corporation


[MUSIC PLAYING] Good evening, everyone. I’m Chris Barnes, professor
of business management here at Lakeland
Community College, and I’d like to welcome everyone
to the 21st presentation of the 2018/2019 Dworken &
Bernstein Management Lecture Series at Lakeland
Community College. The series is brought to you
by an endowment of the Dworken & Bernstein law firm. Our speaker tonight
is Eric Schnur chairman, president, and CEO
of the Lubrizol Corporation. Mr. Schnur joined Lubrizol
in 1987 as a co-op student and was hired full-time in
1989 as a development engineer in the R&D division, which I
think you need to think about that we’re hearing from
the president, CEO, and chairman of
Lubrizol Corporation and he started as a student
worker just like all of you could be able to do. He’s held a variety of positions
across numerous product lines within Lubrizol, including
technical and commercial roles. He has been product manager,
global business manager, vice president, general manager,
and president of Lubrizol’s Advanced Materials. Most recently, he was president
and chief operating officer prior to assuming his
role in January 2017. Throughout his
career at Lubrizol, he has also worked at
several company facilities, including an international
position in Singapore. Mr. Schnur earned his
Bachelor’s of Science in chemical engineering from
Pennsylvania State University in 1989 and his MBA from
Case Western Reserve University in 1994. He serves on the board of
directors for the American Chemistry Council and the
Greater Cleveland Partnership and also serves on the Case
Western Reserve University board of trustees. Please join me in welcoming
Eric Schnur, president, CEO, and chairman of the
Lubrizol Corporation. [APPLAUSE] Thank you very much. Your clicker is here. Hi. Good evening. Evening. And thanks for spending a
little bit of your evening here. How many of you have
heard of Lubrizol? How many of you think you
know what Lubrizol does? How many of you think you
used a Lubrizol product today? What kind of shoes
are you wearing, in the white sweatshirt here? What kind of shoes
do you have on? Nikes. Did you raise your hand? No. So it’s Nike Air, right? [INAUDIBLE] It’s Nike Air? Yeah. Yeah. So some of you may have wondered
why I was looking at your feet when you came in
the room tonight. Lubrizol has their polymer in
every pair of Nike Air shoes, as just one example. Course, most people
think of Lubrizol as a lubricants company,
lubricant additives company. I’ll talk briefly about that. But what I want
to do this evening is tell you a little bit
about Lubrizol as a company. So those of you who
haven’t heard of it will know something about it. Those of you that
raised your hand maybe know a little bit more about it. And I want to give
you the opportunity throughout the entire hour here
to ask questions, whatever’s on your mind. If you have a question about
something I don’t talk about, feel free to ask a
question about it. We’ll save some extra time
at the end for questions. OK? I’ll also give you a little
bit more of my background, not in great detail,
but to give you a little bit of a sense of
what I did in my career. And also, when I talk
to groups of students, I have some things–
the top five things I wish I knew
when I was a student. It may be different for you,
but those are the things that I wish I knew when I
was sitting in your chair. So let’s first talk a
little bit about Lubrizol. We celebrate our 90th
anniversary in July. Lubrizol started in
Cleveland on Manor Avenue in what is now East
Cleveland and moved to Wickliffe, which is
our corporate headquarters today, in 1931. I think we’re going to
stay there for a while. We first became a
billion dollar company in 1987, which was the– I had nothing to do
with it, of course, but that was the year I joined
the company as a co-op student. And we were a public company. You could buy Lubrizol stock–
it traded under the ticker symbol LZ– until 2011. Guess what happened in 2011. Does anybody know? Mark and [? Capi, ?] you
can’t answer this question. What happened in
2011 to Lubrizol? Did you get bought out? We did. By who? [INAUDIBLE] Oops, wrong way. We, since 2011, have been
part of Berkshire Hathaway. So Berkshire Hathaway is
one of the largest companies in the world, a
market cap, depending on what the stock
market is doing, over $500 billion dollars. And Warren Buffett, to
most business students, is at least a familiar name. Or so I told you, Warren
did come to visit. This is a couple
photos from when Warren came to visit
us in Wickliffe and also at our Brecksville
facility back in April 2017. So that gives us something
that actually, nobody else in our industry has. We went from a public company
to basically a private company. Berkshire Hathaway is a
public company, of course. But we don’t report
our financials. We don’t report a lot of
things that a public company has to report. And we also don’t have to worry
about stock price and stock analysts and quarterly
conference calls and quarterly earnings per
share estimates and numbers and projections. A typical CEO will spend
30% to 40% of their time on nothing but that and
have a staff of people doing nothing but that. We spend zero time on it. So that’s a benefit. The biggest benefit, however,
is that Berkshire Hathaway has over a billion dollars of cash. What’s Warren Buffett’s
job, those of you that are in business
classes and maybe know a little bit about
Berkshire Hathaway? His job is to invest. His job is to invest
and get a return. So if we have an idea, if we
want to buy another company and we can get a good return,
we don’t have any problem getting access to capital. And those of you that are
studying companies and capital structure and financing
and so forth like that, you know that’s
a tremendous advantage. So Lubrizol’s very,
very lucky to be in the situation we’re in. And I’ll figure out how to
work this as we go along. So when we think about why
does the Lubrizol Corporation exist– you’ve probably talked about
mission and vision statements as you’ve talked in
some of your classes. So we actually improve lives. We impact the end user of our
products, whether you wear Nike Air shoes– enable you to run a little
bit faster, jump a little bit higher, hopefully– or your– and half the vehicles
on the planet right now, today, use a Lubrizol product. Half the consumers
in the world will use, today, a Lubrizol product. We basically deliver three
different things, efficiency– I’ll give you an example
in a few minutes. But the Lubrizol Corporation has
invested hundreds of billions– hundreds of millions of
dollars– hundreds of millions of dollars. I’ve got to go from
the Berkshire scale to the Lubrizol scale– so
hundreds of millions of dollars over a few decades. And our lubricant
additives business is really doing two things,
developing technology that enables vehicles to operate
more fuel efficiently and also to reduce emissions. I saw a digital
printer going when I went through the HIVE a
little bit earlier this evening. We make technology for
digital print inks. Personal care
formulations is something you might not think about
when you think about Lubrizol, but half the shampoo
bottles in the US today have a Lubrizol component
in them, of some sort. And what you will often
see when you go down the aisle of the
personal care products, whether that’s in a big
box store or a drugstore or whatever, you’ll see lots and
lots of bottles, clear bottles, with stuff suspended,
whether beads or air bubbles or whatever. It’s our technology that
makes that possible, among other things. And in cleaning solutions,
we have a technology that ables lower cleaning
laundry temperatures, less water consumption, a lot of
things around sustainability. Reliability– we
make sure equipment runs and doesn’t break. We have a coatings business. So we are putting
durability on surfaces. Nearly every surface you
see, this floor, the wood that you’ve got
your arms rested on, the fabric you’re sitting
on, has a coating. The carpet has a coating. Carpet backing has a coating. We’re in a lot of
those businesses. The reason that you don’t
feel your transmission, your vehicle, shudder or
jerk when you start off, unless you’re driving
a stick and don’t know how to drive
it so well yet, is because of the technology we
put in the transmission fluids to enable smooth,
durable shifting. And we don’t make the wires
inside of that in that photo that you see. We make the polymers
on the outside. We have urethane polymers. We have a variety of different
polymer types for wire and cable applications,
for durability, and a variety of
different things that we do to protect
critical systems. And wellness– so we’re
in every Nike shoe. Nike’s a big, important
customer for us. Lubrizol is partnered with
Nike on two of their top four corporate innovation
projects, some around unique fabrics, where
our polymer technology is using unique fabrics, some around
the footwear application, the polymer that’s in the
shoes that– what’s your name? What’s your first name? Nick. Nick? The polymer that’s in the
shoes that Nick’s wearing is fully recyclable. And what we’re
working on with Nike is a fully recyclable shoe. In an ideal world– there’s a
little bit of other technology that has to happen– Nick can take those shoes,
once he’s tired of them, go into a Nike
store and punch up the new ones he wants and
they’ll go back and be recycled and 3D printing
will kick it out. But we got the materials
to enable that to happen. It’s not something a lot
of people think about. I mentioned reducing
vehicle emissions. We have a medical device– life science business. So I also walked
through the medical lab today, walked into that
simulated hospital room. And some of the materials
in the catheters and other medical devices
could likely come from Lubrizol And we do a lot of
things around coatings. And if you’ve ever
painted something with a solvent-based coating,
you know how that smells and how that might make
you feel a bit lightheaded. Our coatings technology
is water-based. And so we’re reducing
emissions and making it more user-friendly and so forth. We, today, are about a $6
and 1/2 billion company. We’ll probably hit
$7 billion this year. We have about 8,700 people. And you see our breakdown of
both revenues and employees. We’re reasonably well-dispersed
around the world. About a third of our
revenue’s from North America, third of our
revenue’s from Europe, and third of our
revenue’s from Asia. There’s some in Latin America,
as well, as you see there. Our employee population
is a little bit more heavily in North America. The reason for that is there’s
two headquarter locations for us. One is Wickliffe. That’s our corporate
headquarters. In 2004, we bought
the specialty chemical business of BF Goodrich–
was on an earlier slide. That business, coincidentally,
is headquartered in Brecksville, Ohio. And so it wasn’t
intended that we buy– that was the largest acquisition
the company’s made to date– wasn’t intended we buy a
company based in Cleveland, but just so happened
that that was the one we bought because
that was the one that fit. So that’s why you
see more people in North America than what you
see in the revenue dispersion. We’re broken into two
different business segments. Lubricant Additives–
most people that know Lubrizol in Lake
County from many, many years ago, or our facility
out in Painesville, they think about
lubricant additives. So an engine oil that goes
into your car– how many of you change your own oil? That’s about typical. Not too many people do anymore. But an engine oil that goes in
your car, about 30% of that can or that bottle, these days,
has components from Lubrizol or our other competitors. It’s lubricant additives. That’s what makes that work. And then what we call
Lubrizol Advanced Materials came from our purchase
of BF Goodrich. About 80% of that
business for us is based on what was in
that 2004 acquisition. So what’s BF Goodrich make? When you think of the name BF
Goodrich, what do they make? Tires. They still make tires. Well, their brand name
is still used for tires. And so what we got was
the specialty chemical business of BF
Goodrich, so has a lot of polymer technology for those
engineers in the front here. And so we have a
lot of applications that use a pretty specialized
polymer technology. So what is it that
we think about when we think about our business and
the bigger world and how we fit and what we’re going to
do and invest in or invest Berkshire’s money in? I think you probably
are familiar with many of these things,
rising middle class, increased focus on
health and wellness, particularly as
people live longer. China’s one example,
but there’s lots of places where
infrastructure is being built. We have solutions to
a lot of these things, clean and efficient
transportation. Sustainability is
something I’ll touch on, but that’s a really
important element of our business
and most businesses these days, of course. These are all great
opportunities. I’ll give you one as an example. And it really has a very, very
strong sustainability component and it’s in lubricant additives
and you might not think of. But this is the impact
that our company can have. So on the left-hand side,
that’s a plot of emissions from a diesel engine,
particulates, nitrous oxide. And typically when you look
at trying to reduce emissions from a diesel engine, those
are two things you look at. On the right-hand
side, it shows you over time what’s happened with
CO2 emissions and fuel economy and heavy duty fleet. This is US data. Those different colored
squares or rectangles, depending on what year it
is, shows how the emission regulations in the US have
tightened progressively over that time frame,
from 1988, when there’s a fairly broad range– so you ever seen a big truck
with black smoke coming out the stack? That’s that kind of technology. And every time you see a new
shape and a new color there, there’s been a new US
emissions regulation that has required that the
people that make diesel engines make a different design
that reduces emissions. Every time there’s a
different design of an engine, we have to do something with
the technology to lubricate it. And so we are not the ones
that are reducing the emissions and improving fuel
efficiency, but we’re the ones making
the lubricants so that those engines can perform. And so you see today,
that’s just a dot. And we’re working to further
improve fuel efficiency, working to further
improve emissions. And that’s what you see as
you go into the dashed area on that chart. That’s just one example. Sustainability is
important because you have to think about what
is the impact of what your product does and
the end user and also the broader lifecycle of
that product’s lifetime. That’s a really
important consideration. It’s an important consideration
for most of the businesses that you guys will
talk about and study, particularly the ones
that are manufacturing a product of some sort. So what is Lubrizol like? There’s a couple of
people in the audience who also are my colleagues. They could, I think,
vouch for this. And it’s hard to represent
a company on one slide, but I think these are some
phrases that represent it fairly well. We’re medium sized. So $6 and 1/2, $7 billion
is fairly medium sized by most measures. But we have an intended
small company feel. It’s very informal. I had somebody from
the finance group who’d been with the
company a couple years, he was an intern prior to
joining, sent me an email– real story from last week–
sent me an email saying, hey, I’d like to sit down, talk
to you about this, that, and the other thing. And so three days
later, we sat down, talked about what
was on his mind. So in a lot of
companies, you couldn’t get to see the CEO with just
an informal email like that. And we like that. We think that’s important. We think it’s important that
the executives have an open door and anybody can walk in. I mean, it’s not literally
open all the time. There’s some times that we
have it shut because we’re talking to people. But it’s a very, very
informal culture. We’re proud of the
history that we have. We’re very proud of
the history we have. We’re proud of the
fact that we’ve been 90 years in the Cleveland–
or headquartered in Cleveland. We like to work together. Typically, you will
see Lubrizol people like spending time together
during work and maybe after work, as well. But we like to collaborate. We like to solve problems. [? Capi, ?] Mark,
hopefully you don’t disagree with any of this. Doing things
ethically is a given. We want to treat
people the right way and we want to always
do the right thing. We also want to
deliver the results necessary to ensure
the financial future of the company. But those three things are
really what define our culture and what we’re trying to
do as an organization. And we’re very committed
to our communities, which I’ll talk about. And I think this is important. We are large enough to provide
opportunity for people– I’ve had lots of
great opportunity; most of my colleagues
within Lubrizol, I think, would say the same thing– but small enough to
provide visibility. So somebody who’s been with the
company a couple years can send the CEO an email and three
days later, sit down, have a one-on-one discussion. And we like that. We think that that’s
fairly unique. There’s some other
companies who might be able to say a
similar thing, but I think that’s fairly unique. And what keeps people
like me and others who have spent a long,
long time at the company– it’s not unusual for people
to start their career and spend their
whole lives there. Now, for a younger
generation, I know that seems a little
bit odd sometimes, that somebody would actually
want to go somewhere and spend 30 years. But if you find somewhere
that you like and you find somewhere you think
you can make a difference and you believe in what
the company stands for and you believe in what
the company’s doing, it’s pretty easy to do. And actually, time
goes pretty fast. So I talked about
sustainability. Sustainability is a big topic. You all hear about
sustainability probably as it relates
to environmental impact and probably as it relates to
product lifecycle and impact on the planet and so forth. And all of that’s
really important. There’s a big social element
to sustainability, however, as we see it and as a lot
of other companies see it. So when we think
about the environment, how we operate our facilities,
how we operate our plant, in Painesville, how
we operate our plant in Avon Lake and the
other nearly 60 plants we have around the world, of
course we do that in a way where we’re constantly finding
ways to reduce emissions, constantly finding
ways to reduce waste, constantly finding ways to
reduce energy consumption. And that’s something we’ve
been doing for decades and that’s something
we’ll continue to do. But the impact of our
products, reducing emissions, reducing volatile
organic components when people are
painting or coating surfaces, recyclable
materials, all of that has a sustainability impact
in terms of the environment. But the social one’s
really important. We were founded by
six individuals. Three of them were brothers. Strong, strong Case connection. Two of them were chemical
engineer graduates from Case. From the time of our founding,
when our founders put the guidelines upon which
the company would be based, ethics and supporting the
communities in which we operate was center to what
they believed in and what we continue
to believe in. And so we have the
Lubrizol Foundation, which donates millions
of dollars every year to causes around education– Lubrizol has been active in
Lakeland here, as an example– and around trying to improve
the situation of those less advantaged in our communities. And we believe strongly in that. And so we do it with
money, but we also do it with employees’ time. We have designated days where
we give the employees basically the day off to go do
something in the community to help local nonprofits. And then our employees
spend countless hours of their own time
doing a similar thing. We’re very proud of that. That’s not something
we obviously require, but it is just something
that our culture brings out. And it’s really important
that we are good neighbors and that we’re doing our part
to help not only continue to grow the company,
but continue to grow the communities and the
neighborhoods in which we work, in which our employees live. So the five things I wish I
knew when I was a student. Write this down. In 30 years, you can
write down your own list and see if they’re similar. But communications skills
will be at least as important as your technical skills. And when I say
technical skills here, I’m not talking about
chemistry or physics necessarily or mathematics. Anything that you’re studying,
whatever your subject is, whatever your area of
expertise is, IT nursing, engineering, whatever, that’s
your area of expertise– your communication skills
will be at least as important and over time, more so. So this is a slide I
actually have used internally multiple times. And it’s not all encompassing,
but a couple of things for you to think about relative
to communication. If you’re in front of
an audience like this, try and simplify
as much as you can. I don’t know how
prevalent PowerPoint is in Lakeland or in
other universities, but in our organization and in
most of corporate America now, it has gone way overboard. When somebody has
to talk for an hour, they say, OK, well
I need 45 slides. PowerPoint is great at
eliminating dialogue. If you’d rather your
audience didn’t participate, PowerPoint is a great
way to ensure that. So we use the phrase
“PowerPoint light,” which means ideally, you can do
it in just a few slides. Now, I violated PowerPoint
light this evening so I could give you some
background information. There are times
when you need some. But try and simplify. Try and think about from
your audience’s perspective. How many times have you
been in a presentation when somebody says, this
slide’s really busy, I’m not going to
spend much time on it, then they read the
whole thing to you? That ever happen? If you think your slide
is too busy, don’t use it. If you need a pointer,
your slide is too busy. That’s my rule, at least. And then the audience
is really important. You’re not just trying
to fill your time. You’re not just trying
to fill your time. What does the
audience care about? And the phrase at the bottom,
I think, is really important. If you’re in front
of a group of people, your job is not to impress them. Your job is to try to help them. Now, whether this will be
helpful this evening or not, I don’t know, but that’s
what I was going for. I wasn’t going for
impressing you, so that takes the pressure off. But when you’re talking
to a group of people, you’re trying to help them. So you have to understand what
they might be interested in. And then lastly, nobody wants
to have slides read to them. Don’t think of it as
giving a presentation. I have college-age kids. And so my youngest
daughter in particular is nervous in front
of a group of people. And I just say, you’re
having a discussion. You’re not giving
a presentation. You’re having a discussion. You have discussions
all the time. Just think of it as
having a discussion. And ideally, you’re
telling a story. I’m trying to tell
the Lubrizol story. I’m trying to make
it interesting. I don’t know if I’ve
been successful. But communication
is really important. And people skills will
be just as important as whatever your
area of expertise is, particularly as you
advance in your career. The higher you go in an
organization, the less you do. And I’m not saying that
to trying to make a joke. It’s the truth. The higher you go in an
organization, the less you do. Everything that gets
accomplished at Lubrizol happens because of people
in the Lubrizol organization that are all somewhere in the
organizational charts that ultimately report up to me. But I do none of it. I consume my day. I’m not just in my office with
my feet kicked up taking a nap. I actually consume my day. But the real work is
done by other people. If you can’t accomplish
something through others, you’re not going to be
able to be a leader. And so your people
skills are going to be just as important
as your technical skills. Once you start
working– some of you probably are now–
when you start working for an organization,
you are there to add value. Understand how your job
adds value and helps the organization accomplish
their objectives. That’s really important. You have to add value and
you have to keep learning. And I’m not just
saying that because I’m standing at Lakeland Community
College telling you, oh, you have to keep learning. But it’s true no matter what. No matter how long ago you
were actually in school, in formal school,
or how recently you may have graduated, you
have to keep learning. Your job would not exist if it
didn’t have a positive impact in some way on the company. Because in a
competitive market, you can’t afford to have jobs in a
company that don’t add value. So understand how yours does. And that will give you a broader
picture of the organization. Particularly if you start
in an entry-level position, it might not be obvious to you. But ask questions. You’d be surprised
how much people enjoy talking to you about what
they do, what the company does. One of the reasons
for my first– I started as a process
engineer, which was one of my favorite
jobs ever, by the way. But I moved into a
more commercial area of our organization because
one question bothered me. I didn’t know how we made money. And it was just curiosity. And so I started asking
questions about that. And that led me to exploring
other areas of the company and ultimately led me to getting
into different positions. So understand how your
job affects the company. I think you probably know
this, but I would just tell you it’s true. Mentors are important. I never in my career
had a formal mentor. We do have a formal mentoring
program within Lubrizol and a lot of companies you
will work with or have worked with probably do as well. And a formal mentor is fine,
good, probably very, very good assuming you’ve got
the right match. I’ve always had
informal mentors. Sometimes I proactively
was seeking advice. And within our company
and within lots and lots of other companies, there’s
people that are really willing to spend a lot of time. But whoever you select to be
a mentor, formal or informal, they have to know
something about you. You can’t decide you’ve spent
three weeks with the company, I’m going to have the
senior vice president of marking be my mentor. You have to find people
that know something about you, your capabilities,
your interests, what you want to accomplish, what
you’re able to accomplish. But find them. There’s plenty of
them out there. And lastly, be yourself. Why am I at Lubrizol
for over 30 years, if you count my co-op time? Somebody asked me that question
when I first got into this job. And I said, I still
remember my very first day when I walked in
the doors of what is our pilot plant at Wickliffe. And I was greeted by one of
the more experienced chemical operators. His name’s Herold
[? Chrismar. ?] He’s long since retired. And I was greeted very friendly
with a few other people. I remember Harold in particular. It just felt like home. It probably doesn’t feel like
home to everybody at Lubrizol. That’s why not everybody
works at Lubrizol. There will be places
where you can be yourself. You should always
think about improving. You should always
think about learning. But ultimately, to be
the best you can be, you’ve got to be yourself. And so find a place where
you can be yourself. If you try to be something
you’re not, it will be obvious. It might not be obvious on
day one, but it’ll be obvious. So find somewhere
you can be yourself. I was lucky. I found it almost by
accident when I was interviewing for co-op jobs. I didn’t know it at the time. I knew it when I
walked in the door. But you’ll be able to tell also. What questions do you have? So this is a question that
every company has to answer. And it really comes down– to me, the question you
have to ask yourself is, what makes us unique? You guys have all probably
heard of Michael Porter. So Michael Porter’s
a famous professor, works at Harvard
Business School, and is viewed as one
of the world’s experts on just business or
corporate strategy. And one of the very simple
phrases that he will use– his strategy is about
deciding how to be unique. You do not want to
compete with other people based on their strengths. So in our business, BASF is
one of the largest chemical companies on the planet. And they’ve got strengths
that we don’t have. But we’ve got strengths
that they don’t have. And so we compete
based on our strengths. And if we’re ever competing
head-to-head with BASF, as an example, because they’re
really good on certain things, then we might lose. If they’re competing
head-to-head on the things we’re really good at,
they will likely lose. But the trick is you’ve
got to figure out, what are you really good at? And so we’ve made some
acquisitions over time when we needed to add
different capabilities and different technology,
different talent. You tend to invest that way. So you want to invest
new technology– invent new technology, develop
and market new technology in market segments where you
think you can differentiate versus ones you don’t. So it really comes down
to, how can I be unique? Because if you can’t do
something as a company that nobody else can
do, ultimately, you don’t have a reason to exist
because other people could do it. So if you and I both
make the same thing, same cost structure, same
basic capability, [? Capi ?] won’t care who she
buys from, right? You’ve probably got
a nicer personality, so she might want
to buy from you. But basically, if we’re both
offering the same thing, then there’s not a reason
for the one to exist. So you really have to think
about what makes you unique. Good question. What else? I was enjoying what I was doing. I can still remember my first
job as a pilot plant engineer. I can remember the products that
I was involved with developing. I can remember the
problems we had. I can remember the challenges. I can remember every
job that I’ve had, I’ve actually enjoyed. I’ve had the opportunity
to go overseas. I’ve had the opportunity to
work in different locations. I’ve enjoyed the
people I’ve worked with and I’ve enjoyed the
work that I’ve done. I’ve been very lucky. I’ve been very lucky. If I didn’t enjoy
what I was doing or if I worked with a
company that I didn’t believe in what they were doing
or how they did it, it’d be impossible
to stay motivated. I would have to have
gone somewhere else. And that doesn’t mean that you
have to go somewhere and stay your whole career. That’s not the test
of whether or not your career’s been successful. Because you may, to
learn different things, choose to go different places. But you have to have fun
in what you’re doing, believe in what it is and
how the company does it and what the company stands for. And then it’s pretty easy
to stay motivated, actually. If I stand this
side of the stage, I’m getting some feedback. So over time, of course,
we’ve adopted, in a variety of different ways– we have historically used data
in a pretty sophisticated way. So we are a company that is
full of mechanical engineers and chemical engineers
and chemists. And we’re always doing
performance tests and R&D work. And so we just have a
incredible amount of data. So everybody talks about
big data these days, right? So we have an incredible
amount of data. And we are changing the way
that we’re utilizing that data. So the discipline
of data science is one that you probably
didn’t hear so much about 5 or 10 years ago. We have a data science group
now that we’re building. And we’re actually competing
with some of the high tech companies for talent. And so the way we do
product development, the way we do maintenance
in our plants, the way we do our supply
chain, will change completely. It’ll change and become
incredibly efficient compared to what we do today. And it’s going to become
very cost efficient– well, in addition to time
efficient, very cost efficient compared to what we do today. That’s probably
the biggest change. Now, we’re also doing a lot
of things with SAP systems and automating business
processes, even, and so forth that you hear about. And a lot of new
technology that we, and a lot of the companies
and the applications that we work with– 3D printing, for example,
we’re very involved with. So those technology
developments will continue to impact our
business and gives us lots of opportunity. But the way we think
about data today is probably the
biggest change related to the whole thing about
big data and data science. I never thought to
myself, I want to be CEO. Even before I got the
job, a year before– it wasn’t just something I
thought I was going to do. And I never thought to myself,
if I don’t get to be CEO here, I’m going to go somewhere
else because I need to be– I just didn’t think
of it that way. And I never did. So when I was in my
first job as an engineer, like I said, the question
that bothers me is, I didn’t know how the
company made money. So I went and I talked to
the commercial organization and I got interested
and I thought I could learn something. So there’s two reasons that I
moved to different positions. One was when I
thought I could learn something, something new and
something that was exciting, was motivating in some ways. And also, there were a
couple times in my career where I was in a position for
multiple years, six, seven, maybe– seven years probably
is the longest time. And I knew that I
needed somebody else to come in to do the
job in a different way. Because I’ve got
a certain mindset. I’ve got a certain skill set. I got a certain approach. And if I stay in
one place too long, it starts to become a
little bit repetitive. You need fresher ideas. You need diversity of
thinking and all those things. So those were a couple reasons. I never thought to myself,
I want to be in management. I never thought to myself,
I want to be in marketing. I never thought to myself,
I want to be anywhere. I was just looking for am I
learning, am I contributing, am I adding value in some way? And do I feel like I’m having
some kind of an impact? That was always my objective. I want to have some
kind of an impact. Now, I wasn’t completely
altruistic about it. It wasn’t like, I want to
have some kind of impact and I don’t care if you
don’t pay me anything, right? There’s something
about advancing in a career and all that. But that actually
won’t mean that much if you’re not learning,
if you’re not having fun, if you’re not motivated
by what you’re doing and what you’re learning. So I think generally
speaking, the people skills are not that different. So as the CEO of
the organization or if I was back as a
pilot plant engineer talking to the operators that
were working on the projects that I was responsible for,
I don’t think the people skills are that different. You first have to
respect everybody. It doesn’t matter who it is– genuinely respect, not pretend. Doesn’t matter if they’re
sweeping the floor or if they’re the senior
vice president of something. You have to respect everybody. You have to listen to everybody. You don’t have to
listen infinitely. You don’t have to listen
for hours and hours on end when it’s not beneficial,
but you know what I mean. You have to listen
to what the point is and the person has to feel
like you’re listening to them. And try and view the world
from their perspective. If you view the world only from
your own– and that’s not easy, right? It’s not easy because you’ve
got your own perspective. But if you only ever view
it from your perspective, you’re going to think
half the world’s insane. There’s some crazy things that
people say day to day as we’re working with each other. And if you really
understand what they mean– I don’t mean crazy like
crazy, but just strange things that don’t make sense. But if you understand
where they’re coming from and you listen and you
talk a little bit more, you actually may have
misunderstood what they said. So those three things,
respect everybody, listen, and try and see
it from their perspective. I talk to operators
in our plants today. That applies. I talk to senior
people in our company and senior people
in other companies. That applies. I never said no to
any opportunity. And I never said yes to
one that I’ve regretted. But the one thing that people
might be surprised at– I had lots of opportunities
I was interested in, jobs that I wanted,
that I didn’t get– multiple, five or six. I wanted to go
overseas I wanted to go to England for an assignment. Somebody else got it. I wanted to go to Singapore
before I went to Singapore. Somebody else got it. I wanted to go into sales
in one particular case and somebody else got that job. Most people will look at
somebody with my title and assume, well, your career
must have been a straight line and was very well thought
out, very well planned. I went the first 12
years of my career without ever
getting a promotion. I did lateral moves. I was 33 years
old, 11 or 12 years with the company, before
I managed anybody, before anybody reported to me. But I was learning. I was moving from this
part of the business to that part of the business
to that part of the business. I got a chance to go
overseas and learn what it’s like to work in Asia. So I never said no and I
don’t regret ever saying yes. But you don’t always
get the opportunity when you want it
at the right time. And career paths are crooked. They’re not linear. Focus on what you’re learning. I know that’s easy for
somebody with my title to say, but it’s true. There’s plenty of them. There’s lots of outside factors
that cause us some challenges, the global economy and what’s
happening with oil prices because a lot of our raw
materials are based on that and what’s happening with
currency because we do business in lots and lots of countries. So those are all
challenges, but they’re all outside of our control. And so when we think
about the challenges, we like to think about
what’s within our control. And the challenge
for us is to change quickly enough so
that we can take advantage of the opportunity. As an example, we are
the largest supplier of lubricant additive
technology for vehicles powered by internal combustion engines. How would you feel if that
was your position today, given everything you
read in the press? What would you read
in the press that would make you wonder if
that’s the most stable business to be in? Electric cars. Electric cars. Right. So what would you
do if you were us? Transition to [INAUDIBLE]. [INAUDIBLE] vehicles. [INAUDIBLE] What if electric vehicles
didn’t have lubricants? [INAUDIBLE] So there’s a couple
things that you do. First of all, when
you have something like that that potentially
threatens your core business, you have to fully understand it. You can’t pretend it’s
not going to happen. You can’t just read and hear
the things you want to hear. You have to take a
realistic view of it. And we have. I think we have
a realistic view. And we have it
from authorities– I won’t drop names,
but from authorities that know this very, very well. And there’s a couple
things that’ll happen. There will be a
significant amount of electric vehicles,
in all likelihood, in the world in a
couple of decades. Over that same time
frame, will also be more vehicles powered by
internal combustion engines. And that’s just as certain. There will be, over that
time frame, more focus on reducing the emissions and
improving the fuel efficiency of vehicles powered by
internal combustion engines than there ever has been. And I made the comment
a little bit earlier, we have spent the last couple,
three decades doing that, helping enable that. That actually creates a much
greater opportunity for us. And electric vehicles create
interesting opportunities not in lubricants, but in
plastics, vehicle interiors, autonomous cars. There will be a whole range
of autonomous options. The durability of the
interior of a vehicle is going to become a
bigger differentiator for whoever’s
offering– potentially bigger differentiator. And we do things around
synthetic leather for interiors, for the
dashboards for interiors, more environmentally friendly
than the current materials that are used. So it’s actually a
very good opportunity for what has been
the core business of the company for a
long time, but also for us to do different things. Transportation is a
much bigger opportunity for us going 30 years into
the future than it is today. So that’s just one example. But the way you
look at challenges like that is first
of all, really understand what’s happening. And it’s got to be a
unbiased view of it. Because you can talk yourself
into what might happen that’s going to
favor you, but it’s got to be an unbiased view. And then figure
out how can you be unique in that, back to the
question that we started with. So thank you for assuming I get
everything done efficiently. That’s not all that easy. But it doesn’t matter
if you’re the CEO or if you’re an
entry-level engineer or if you’re in the finance
or IT, whatever it is. You have to know what
your priorities are. So I’m accountable for
the long-term success of the company. And there’s a few
priorities around that. Those are longer term,
some of these things around strategic
direction, understanding where the company needs
to go, understanding what pieces we need. I spend a lot of
time on acquisitions. I spent half my day today on
acquisitions, for example. But I know what
my priorities are. I have three or four that
I write down every year and I share with the
entire organization. And occasionally, I’ll do things
that are unrelated to that because stuff comes up. But most of what I do is around
those three or four priorities. And they’re very
thoughtful in terms of what we need to do to
improve the long-term success of the company. Now, as you go in different
parts of the organization, people will have
different objectives. They’ve got the same challenge. They need stay focused, as well. And so we define
accountabilities, what’s everybody responsible for. That’s how we keep the folks– Ask yourself a question
when you get a job and you’re thinking about
how do I keep my focus? Why does your job exist? Another way to think
about that question is if your job didn’t exist,
what would the company miss? And that’ll probably
help to find what you’re accountable for and
what you should be focused on. My wife reminds
me to maintain it. It’s not easy. And again, it’s not
just a job like I have, but it’s true in a
lot of situations. It’s back to focus. You just have to prioritize. I’ve got some important job. Some of them have to do with
my family and some of them have to do with Lubrizol and
I’ve got to try and balance those as best I can. I wish I had a better
answer, but there isn’t one. You just have to be
mindful of it all the time. And having a spouse or partner
that reminds you of it once in a while is not
a bad thing at all. The biggest surprise–
and my predecessor was James Hambrick, who
was a CEO for 12 years and did a fantastic job. The company wouldn’t
be where it’s at, wouldn’t probably exist
as a standalone company, without James. James warned me of this. He said, you won’t know what
it’s like until you actually sit in the chair. And I worked for James
for quite a while. I can see what he
does and I had a feel for what it must be like. But he was right. You don’t actually understand
it until you sit in the chair. And what he meant by that
was the responsibility for nearly 9,000 people
and the long-term success of the company. Because when I was in the job
prior to taking over where I’m at now, it was a big job. I had responsibility for one
of the major business segments in that organization
and so forth. But it wasn’t the same. It wasn’t the total response–
and under Berkshire, it’s even more so because we
operate independently. Berkshire allows us
to make the decisions. A lot of things are
delegated to me completely that would typically,
in a public company, be the final decision of the
board, a board of directors. But that really sits with the
CEO in the Berkshire model, which in many ways is great. But in other ways,
there’s a little bit of extra pressure to it. So you have full say in
pretty much what you do and potentially access
to lots of capital, there’s really no excuses. But we’ll take it. It’s a great situation. There’s actually lots of things. It’s the variety. Because there’s different
things almost every day. It’s the variety of
things I get to do. And it’s the people
I get to work with. And I’m not just saying that
because a couple of them are sitting here. But that’s internal
and it’s external, too. I get to meet some
incredible people that are part of Berkshire
Hathaway, not just Warren, but some of the people on
the board and some others. The other business leaders– because of the job I’m in,
because of the boards I sit on, I get to meet some
phenomenal local leaders here in Cleveland and in our
industry in general. So it’s just the people
I get to interact with. That’s the most fun. That’s the most fun
without a doubt. And you don’t have
to be in a CEO job to have that kind of response
to a question like that. It’s like finding
a place where you feel like you can be yourself. And it’s motivating
most by itself. I think there’s a short-term
and a long-term aspect to that question. In a short-term,
you may at times need to be the leader the
organization needs you to be. I’m not, in my
normal personality, somebody that’s going to
bang their fist on the table and get excited
and start yelling. And I actually don’t
do that hardly ever. But there are times
when I might need to be more firm than
I typically would be. And there may be times
when I would rather be– it’s almost like
being a parent– times when I’d
rather be a little friendlier with somebody. [INAUDIBLE] Was that a hallway
discussion with somebody? He asked another question. [LAUGHTER] I thought somebody
was joining in the discussion. I just [INAUDIBLE]. You may need to be the person– you can’t be the person
you most enjoy to because you’ve got
to be something else. But on a long-term basis,
on a long-term basis, if you can’t be yourself,
it’s probably the wrong fit. And mean long-term like if
month after month, you’re finding yourself doing
things you don’t feel good about, faking a management
style to get results, you’ll know it. You’ll know it. On a long-term basis, you have
to ultimately be yourself. And ideally, the person you
like being and being yourself should be fairly
similar, ideally. A lot of this is about
getting to know yourself too and being honest about
what you’re good at, what you’re not so good at,
what you need help with. Everybody needs help
with something, right? Doesn’t matter what job you are
or what experience you have. Everybody needs to
continue developing. And you have to be
realistic about that. I hope that was a
answer to your question. Hey, this was a great
series of questions. I hope the answers were half
as good as the questions. But I really appreciate
you spending the time, appreciate the engagement. And I hope it was helpful. [APPLAUSE] Just a couple things that I
want you to try to remember as takeaways from this. And the first is
that you can start at a company as a co-op
student and work your way all the way up to the top. So as you’re picking out
those co-op and internships jobs that you’re trying to
go for, keep that in mind. This could be the first
step to the career that you want to have. And secondly, I think you need
to remember the very important message that he gave
us, which was he never said no to any opportunity. And that’s why I asked
you that question because I wanted you to say
that in front of the students. You don’t say no. You keep saying yes and that’s
what gives you the opportunity. So everyone please help
me thank our guest, Eric Schnur from
Lubrizol Corporation. [APPLAUSE]