Sponsored by MidWestOne Bank, this is the latest edition of the CBJ’s new podcast feature with Nate Kaeding and notable Iowa business and cultural leaders, available first to CBJ members. Listen to this episode below, and subscribe on Spotify, iTunes, Google Play, Stitcher and SoundCloud.
By Nate Kaeding
Duane Smith is the executive chairman of TrueNorth Companies, an insurance and financial services firm known for reinventing and reinvesting in itself. Duane is one the firm’s six founders and served as the CEO until recently. His entrepreneurial roots and ability to innovate new business models shaped much of the firm’s evolution. His son, Jason Smith, is president and CEO now, which has given Duane a little more time to spend with his hobbies. He’s exploring them as an entrepreneur, of course. I caught up with him while he was buying and selling classic cars at a Barrett-Jackson auction in Scottsdale, Arizona.
Duane’s reflections on success are more than a past-tense narrative on how a Corridor business was established and found success… his story is a guide for how businesses in the future should adapt and innovate in order to scale.
I learned a lot and I think you will, too.
How did you get into insurance and entrepreneurship?
I grew up in Lamont – a small northeast Iowa town of 500 people. It was almost like Mayberry. One grandfather owned the hardware store. Another grandfather owned the plumbing and heating business. I had my first paper route at 10 [and a] lawnmowing business at 12. I grew up in an entrepreneurial family. After I graduated from UNI, I actually went back to my hometown.
The banker had passed away. My dad had a heart attack in the ‘70s. They sent him home and said he couldn’t do manual labor at the plumbing and heating business any longer. The banker said, “You know everybody in town, Jim, why don’t you take over for the bank?” So, my dad went from being the plumber to the banker. It actually worked out very well. He bought a small insurance agency out of the barbershop … that’s how I got my start in the insurance business.
What does the word ‘entrepreneurship’ mean to you?
Part of my journey, quite frankly, has been that discovery [of entrepreneurship]. We established TrueNorth in 2001 and spent a fair amount of time establishing our purpose and our ‘why.’ The industry had been incredibly good to us. There were six of us that started the company in 2001. We merged three companies together and put together our vision statement, which was, “To build a legacy company with an entrepreneurial platform to attract, develop, and coordinate high-performing talent.” That’s really been our guiding light for TrueNorth over the last 20 years.
I have a term for mistakes in business – I use the term ‘tuition payments.’ If you look at [business] mistakes in the same light [as tuition], it’s a lot easier to embrace those payments – as long as you learn from them. One of the tuition payments we made was growing from $90 million to $250 million in sales from 2001 to 2008. We erroneously thought everybody wanted to be an entrepreneur. We handed out our business card and our checkbook and said, “Okay, now go do what we did.” What we found out is that a lot of people want to be an entrepreneur, but can’t operate on an entrepreneurial level, [especially] without a playbook and some degree of process and operational structure.
So in 2008 we stepped back, tore the company apart, put it back together again and developed what we call a structured entrepreneurial platform. That was predicated upon Jim Collins’ book, “Good to Great.”
We looked at successful companies like General Motors, Kmart and Sears that, 30 years later, were in bankruptcy. We built our own model, which we call ‘structural entrepreneurialism.’ It’s predicated on four critical indicators: Profit, client experience, people/culture and growth.
We figured out a model, not only to define, measure and manage the profit element, but also to define, measure and manage the other three.
Everybody in the organization understands that all four of these have to be in balance. So that’s my long-winded comment about entrepreneurialism. We embrace it. It’s part of our daily life.