How to turn a loan from your father into $26 billion
"The Captain" on business, leadership, the importance of people... and Team Penske's 50th anniversary.
While it will be really hard to do, take a second and try to imagine that the racing organization you started fifty years ago has won over 400 races and 29 championships, including sixteen Indy 500s and two Daytona 500s -- and just two days ago won your 14th IndyCar championship during a season in which your drivers won 10 out of 16 races.
Can you picture that?
Now imagine that you gave up your own career as a driver to buy a Chevrolet dealership in Philadelphia with money you borrowed from your dad... and today you own over 325 retail auto dealerships, a truck leasing company that operates over 240,000 vehicles, have interests in a variety of manufacturing businesses... and all told you employ over 50,000 people.
Can you picture that?
RELATED: Roger Penske through the years
Now imagine that both are true.
This year marks the 50th anniversary of Team Penske, which made it the perfect time to talk to Roger about business, leadership, and what he believes has contributed the most to his long-term success: people.
You started out with one dealership and were very hands-on. As your business grew, at what point did you realize you couldn't make every decision... and was making the transition to a higher-level form of leadership difficult?
I think I realized pretty early on how important it was to work with good people and to trust and rely on them to help grow our business.
We have often said that Human Capital is our most important resource and it is just as true today as it ever was.
You have dealerships, truck leasing, racing, and other ventures... so what do you do to keep your finger on the pulse of all your operations?
I really want to be involved and informed on all areas of our business. I stay in very close contact with our team members that lead each of our operations and I travel quite a bit to visit our locations and meet with our teams. (He actually logs over 600,000 air miles a year.)
I think it is very important to see how things are operating and get that personal feedback from our team members and our customers.
You're known for spotting young drivers with potential. What do you see that others don't?
We have had some of the best drivers in racing compete for our teams.
When it comes to what we look for, we try to identify drivers that have a proven record of winning on the track, drivers that can provide good feedback to our engineers so they can work together to get the most out of the car and drivers that relate well to our partners because they are such a crucial part of our team and our ability to be successful.
Jack Welch told me picking leaders was probably the most important decisions he made. What do you look for?
We look for people that are team players first and foremost. Our people need to support each other and work together to get the best possible results.
I think the best leaders are the ones that are able to get the most out of the people on their team - give them the opportunity to shine and push themselves so the organization can continue to grow and develop.
Hopefully that environment also helps foster more leaders along the way.
You've made a number of successful acquisitions. What is the toughest thing about blending an acquisition into the larger company? What do you do to make that work?
I think in order to make sure the transition goes smoothly you need clear communication and you need to have a solid game plan.
We enter each of those opportunities with a clear direction of where we need to go in order to make this work within our organization. Each situation is different, obviously, but I think the toughest challenge is making sure everyone knows the plan and is on the same page and moving in the right direction to reach our goals.
When Brad Keselowski made a comment about other teams having more resources, the media made a big deal out of it... but you basically responded it was a non-issue and you want your guys to be themselves.
We have always wanted our drivers to be themselves and show their own personalities. We believe that is what makes them who they are and we will never stand in the way of that.
Brad is a guy that has some opinions and beliefs on a number of topics and I think that is great. He is a smart guy and a champion in the sport and people want to know how he feels on certain issues.
I think that shows how much of a leader he has become in his time with Team Penske.
You once said, "If you're not in an environment where you might fail, you really don't have a job." You're in such results-oriented businesses that creating an environment where people might fail would almost seem counterintuitive.
I believe that if you want to achieve and reach greater heights, you cannot be afraid to fail. We lose a lot more than we win on the race track. What we do is learn and grow from our losses so we can come back and be better next time.
It is how you respond from failure and how you use that to improve across the board that can ultimately make a difference on the scoreboard.
You're heavily involved with UTI, which seems like the perfect blend of helping people better themselves while also ensuring a flow of skilled people who can join your workforce.
I am a big supporter of Universal Technical Institute. Technician is one of the most important jobs at our automotive and truck businesses.
UTI has graduated more than 200,000 technicians but has built a reputation on the quality and training its program provides and the success of its graduates. UTI offers programs supported and branded by many different manufacturers using the latest and most up to date technology.
I think it is terrific that UTI also follows-up the training with an employment services team to help put graduates on track to a great career.
Every extremely successful person I know is a relentless self-improver. What is one thing where you think, "I need to be better at that," and what are you doing to improve in that area?
A couple of things come to mind on areas where we can improve. I always look at myself in the mirror and ask if we are doing everything we can to drive customer satisfaction? How are we connecting with our customer? Are we adapting to their changing demands?
We no longer only have one type of customer. We really have three customers: traditional, hybrid and millennial.
The other area where we look to improve is racing. How can we get better each week on the race track? I drive myself to provide a better return to our partners and our sponsors each and every week.
Clearly you're very systems-based; you don't go from less than 1,000 trucks to over 200,000 trucks without a system. Say you took over a business tomorrow. What are the first things you would do?
Systems are very important, however, the first thing we would do when taking over a business would be to understand its Human Capital - we need to know what type of people we have in the organization.
We need to ensure we have the proper processes set up to drive the Human Capital recruitment and training because it's the most important part of any organization. Then we can assess our Human Capital and determine what it is going to take to build a deep and strong bench so we can promote from within instead of going outside the organization to fill key positions.
Then I look at its facilities - do we have the proper facilities in place for our employees and our customers. Will our Human Capital and our facilities help drive customer satisfaction? What do we need to invest to help drive both?
We have to evaluate our capital. Where do we need to invest for growth?
You took over the Kmart Auto Centers and that didn't go well. What did you learn from that?
The Kmart Auto Centers was a humbling experience. We learned a lot from operating that business. We didn't really have control of our total operations since we were located in facilities with another brand.
It also solidified my belief in how important Human Capital is to the success of an organization. We struggled finding the right people to build careers and help us drive that business to the next level.
In addition to the substantial financial impact of closing those stores, laying off all of the people was one of the most difficult business decisions of my life.
What do you consider the highlight of your racing career as a driver? (If I were you, I'd say running a Formula 1 race.)
I certainly enjoyed racing in Formula One and in the all the racing series where I competed, including the championship years in SCCA. Racing for the Nassau Trophy was special, going up against drivers like Dan Gurney, A.J. Foyt and Bruce McLaren.
There were a lot of great memories. It is hard to pick just one highlight.
You're the race strategist for Helio Castroneves. I'm just guessing but I bet that's your favorite part of the week.
I still really do enjoy calling race strategy and working closely with the team. It can be very rewarding but also frustrating on certain days. A yellow flag at a bad time can prove pretty costly and it has happened to us with Helio and other drivers more than a few times.
But it is still a lot of fun and one of my favorite things week in and week out.
This might sound silly but I have to ask: when you see a yellow Penske truck pass by, do you still get a little kick out of it?
Absolutely, yes I do. I get a thrill every time I see one of our trucks going down the road.
However, I also take a look at the truck to make sure it meets our expectations as well. I look to see if the unit is clean and free from damages. I also look at the back panel to see if the AAA and Penske Cars logos are on the truck.
Speaking of detail, you're known for frequently visiting franchisees and talking to the service guys, the parts guys, for checking out operations at a pretty granular level... clearly that's important to you. Is there a point where you would say, "We can't get bigger because I won't be able to do some of the things I feel I need to do"?
I am a details guy. I like to be in the field to get a real pulse for the business and to see how our associates interact with our customers and each other.
Nothing is too big or too small to overlook. They say the Devil is in the Details. How you park the cars on the dealership lot? How are the facilities are kept clean? How is the customer greeted?
These are all details that we look at. What we have attempted to build at all of the Penske companies is a culture that focuses on a few common core principles that I believe help drive our success. These core principles are the building blocks for the entire organization.
We expect our leaders to instill these principles throughout the organization and it drives the culture of the businesses every day. Human Capital - it is the most important asset on your balance sheet.
We focus on the customer and exceeding expectations. We never want to accept the status quo. We want to connect up and down within the organization and understand everything about the business from top to bottom.
So much of what we do is about building partnerships. We place a great deal of importance on ethics and integrity. I have complete confidence in our leaders to instill this culture throughout the organization.
How do you allocate your time? What is an average day like for you?
Well, there really is no "average day." Each day is different and has its own challenges.
I travel quite a bit between visiting our businesses, meeting with our teams and partners and going to races. It really just depends on the week and the day on how I allocate my time and where I will be.
This is Team Penske's 50th year. What were your goals when you first started out? At what point did you realize you were building something that would last?
I am not sure I would have dreamed that we would be celebrating 50 years in racing back when we first formed Team Penske.
Much like our businesses, you really just focus on what is in front of you and how to improve and get better results and before you know it you have some special milestones. It really has been a terrific season and I have enjoyed celebrating the history of our team in 2016.
Now we need to get started on the next 50 years.
You could have taken the Indy rookie test but decided to stop driving and focus on your dealership. Everyone faces a few pivotal moments in their lives... what went into making that decision? Any regrets?
That decision was certainly the right one for me and my opportunities in business at the time and, looking back now, I would have to say it worked out pretty well for us and also the driver that wound up getting that rookie test.
Mario Andretti was the one who went on to test and I think he was able to make the most of that opportunity as well.
You stopped driving race cars in the early '60s... what is one current track you most wish you could race?
There are many different tracks where I would have liked to have the opportunity to compete. Some of the great tracks in Europe and even ones that we have now here in the United States.
Our team has been fortunate to compete and win at tracks all over the world. I have said before that one race where I would love to see our cars visit Victory Circle is the 24 Hours of Le Mans. That is such a unique and historic event.
It would be great to get a chance for Team Penske to compete there someday.