Drucker in Practice: An Interview with Jay Hennick, Founder and Chairman of FirstService Corporation, Part I
Jay Hennick, founder and chairman of FirstService Corporation and chairman and CEO of Colliers International, was also the founding chairman of Mt. Sinai Health System. He’s received the Canadian award for entrepreneur of the year and has been named CEO of the year by Canadian Business Magazine, in addition to having received multiple honorary doctorate degrees.
Q. Tell me about your early years.
I grew up on the other side of the tracks. My parents, both phenomenal people, were all about education. My mother
would say, “You can be anybody you want to be, as long as you work at it.” She gave me lots of optimism. My father was a small business owner and I saw him working hard six days a week in his jewelry store. He supported a family of five with a business that was not scalable.
I worked every summer. One summer, when I was 15, I was interviewing for a lifeguard job at an apartment building and heard a lot of grumbling about how hard it was to get reliable pool staff. I offered to staff and manage the pool for them.
It was an opportunity, a service that nobody was providing. I then went to other landlords and asked if they would like me to staff their pools with qualified lifeguards.
It started as a summer job. I ended up running a full-time business serving more than 100 pools for apartments, academic institutions, hotels, and recreational facilities in the greater Toronto area while I was going to high school. It was called Superior Pools.
After two or three years, my father went from my father to my best friend and business partner. I spoke to him two or three times a day about business issues. He was always a voice of reason. He was also my first investor when I decided to start FirstService and he became a director of the company when we went public.
When I finished high school, my parents said that running a service business was fine, but I still needed an education. For 20 years, I ran that business while I went to college and law school, and then practiced law.
Q. How did you get interested in and influenced by Peter F. Drucker?
Here I was practicing law, with a nice business going on the side. I decided I wanted to do something unique in business and I had business experience and a legal education, but not a business education.
I started to read everything—everything! Jack Welch, Colin Powell, Tom Peters, Bob Waterman... This was my business school. The only author that kept ringing the bell for me was Peter Drucker.
As I read books even today, I keep a log of useful quotes. Drucker wrote simple concepts, concepts you could understand and remember. In fact, three-quarters of my quotes are from Drucker.
Q: When did you meet Peter?
In 1990. One of my FirstService board members, David Beatty, knew Peter Drucker and contacted him with the hope that we could visit him at Claremont College [where Drucker was then teaching in the business school, subsequently named The Drucker-Ito School of Management. Drucker said “maybe” and asked that we put together as much material as we could. I put together three binders, tabbed everything, and sent it via courier thinking he would never read it.
I still remember the day when I heard that Austrian accent on the phone: “This is Peter Drucker…”
Well, we met with Peter several times and had many phone calls. As the company was growing and I sometimes felt I was in over my head, Peter would ask me questions. The resulting conversations would push me back into the ring.
In face-to-face meetings, he took us down roads to make sure we understood the people and the values and principles of doing business the FirstService way. He often discussed how compensation would change the motivation of individuals—long term and short term.
At our last meeting, we ended by discussing the mindset of the CEO. We probably spent an hour discussing the role of the CEO as the bridge between the outside world and the inside of the organization. As I was getting up to leave, Drucker looked at me and said, “The role of the CEO is to take the business and the people to the next level.”
Q: How has this mindset of the role of CEO impacted your decision processes and leadership recently?
There may be, say, a big lawsuit, or a labor union issue that’s all-consuming. But, I will compartmentalize and make sure these issues are properly delegated to someone who should be dealing with it, while not impacting the rest of what we do.
It is key not to let this stuff clog your head. If my focus is on one particular problem, then my operation is focused on that, and everyone is focused on it—and we are always chasing the problem of the moment, not building the business.
When I think about the business every day, I think, ‘How do we grow, how do we make our people better? Is there a new idea that will help us go to the next level? What is going to take the company to the next level?’ I always work to take things in context, seeing the whole.
For example, this morning in a meeting we were talking about marketing and how we can better market ourselves to our clients. I emphasized that we have 4,000 brokers around the world – that is an amazing distribution channel.
If we want to be the best company out there, we have to find ways to invest in, mine, and leverage that distribution channel. I didn’t want anyone to lose sight of the fact that we have 4,000 entrepreneurial people out there.
Q: In the last year, you split Colliers from FirstSevice. Can you tell us your rationale for first acquiring Colliers, then splitting it from FirstService?
We were attracted to Colliers because it shares a lot of the characteristics of the other businesses that make up FirstService. It is a people business. It is highly scalable. It services real estate. And we saw a huge consolidation potential.
Commercial real estate is a $150 billion a year business and growing, and the top five names have only 15 or 16 percent of the real estate brokerage and service market. Compare this with other service businesses, like accounting, where the top five names have 80-plus percent of the market. This is a great opportunity.
The culture and values in this people business are the same throughout FirstService. It is built on servicing the clients every single day. The culture was woven into our DNA. Although we were doing great, I began thinking about Peter’s question: What would allow FirstService to go to the next level of development?
Our businesses had become a certain size, and the way we were operating as an organization—the FirstService way—may have been constraining growth.
The people and mindset in Colliers are different from those in our other FirstServices businesses. At Colliers, we don’t just execute, we advise clients on a variety of things, such as new acquisition opportunities. The role of client service is somewhat like an investment banker or a McKinsey advisor. Our goal is to be the ultimate advisor and help our clients understand how to negotiate a better deal, acquire a property that may be undervalued, and so on and so forth.
We called in a world-class, prominent investment bank for advice on what we should be doing. They came in and said we shouldn’t split off Colliers and that our stock was already trading at good values. We called in a second world-class investment bank, who told us the same thing.
The board made the decision to split the two companies up anyway, because it was the right thing to do for our businesses. The team here knew that Colliers was at a point in their development when they should be set free.
Colliers had different needs than FirstService—different capital needs and different human needs. Colliers was at moments overshadowing FirstService and yet could not fully fly on its own inside FirstService. We wanted to make sure that the focus of the individual companies didn’t get messed up.
We took the businesses to the next level. It took us about a year to execute the split, address tax issues, and so forth. We have great management teams on both sides. Only two people had to really change their roles: Scott [Patterson] from president to CEO of First Service and me, to the newly created role, CEO of Colliers. The split added 25 percent to our value.
As Peter told me on many calls, the CEO needs to decide what needs to be done, within the context of the company and the community. He also said, “The best way to forecast the future is to create it.”
Q: Have you pulled Drucker off the shelf recently?
I’m back looking at Drucker all the time. When I was chairman of Mt. Sinai Health Systems, I read Drucker’s book Managing the Nonprofit Organization three times.
I have been a company chairman for a lot of years. I try to think about the role of director all the time. Every time a new member joins a board, I give them a copy of my notes from Drucker on the role of the board. I believe boards need Drucker’s advice today more than ever.