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The Once and Future C&F - C&F Now
M omentum was building. Talented people wanted to be part of C&F. Our results improved. Our early efforts were working — but I could feel something holding us back. Somewhere along the line, C&F had become a very centralized company. The roughly 1,000-strong home office provided both control functions and “services” to the businesses. During my years running the various divisions of C&F, I spent a lot of time tilting at the corporate windmill. I would have to wait in line behind other divisions for services that I was paying for - but which were unlikely to materialize. I considered some of the services “supply push” versus “demand pull.” This top-down corporate structure made it hard to run a business — and set up a natural conflict between the business units and “corporate.” Once I took over as CEO, my perspective magically changed — and the corporate service centers did not look like as much of a problem as they once did! Eventually, the light bulb went off: while I had switched sides, the centralized service model was still an impediment to our forward progress. We needed to change. One element of Fairfax’s secret sauce is their decentralized structure. C&F was getting to the point where we were almost as complex an organization as Fairfax was in the beginning. It was clear that decentralization worked for Fairfax, so it seemed to me that it would help unlock the same magic at C&F. What better way to open up career paths for high performers than having autonomous divisions for them to run? While it made perfect sense to me, there was a long line of naysayers. Some of the company historians recalled that the last time C&F was “decentralized” — dating back to Bill Ridgway — it had not worked out so well. But that was because it had been done with the wrong people and with
no controls (granted, controls were more difficult to establish in the age of paper). Fortunately, we had Fairfax as a model of successful decentralization. The corporate service teams were none too happy about disbanding their empires and assigning their people to the divisions, making the case that we would end up with proliferating expenses. I believed that the division leaders could better manage expenses if all the resources they needed to run the business were under their control, while the smaller corporate team focused on their strong suit: controls. While it is what I would have wanted when I was running various business units, interestingly, some of the business unit heads fought the decentralization. With great autonomy comes great responsibility and accountability. The decentralization cleared up a lot of sticking points; it also took a lot of excuses off the table, which I liked. Not everyone did. Even so, in late 2018 — after months of talking and arguing and planning — we unleashed the power of decentralization. Out of the gate, there was much kicking and screaming. Now people love it — even the original naysayers. In fact, most people don’t remember what it was like in the before times. I can’t imagine going back. One extension of our decentralized culture is that many of our best initiatives and ideas bubble up (instead of flowing down). Each of our divisions has its own distinctive take on the C&F culture. Our innovations, our employee resource groups and our charitable and community engagement activities all flow up from our employees. It is amazing what people can do when you let them. As a footnote on decentralization: while it has been a wild success overall, some of my biggest mistakes came from the few instances where we granted decentralized authority before it was earned.
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