Editor's Note: On June 7, 2012, opened thier newly-expanded manufacturing center in Jackson, Minn. You can see our coverage of the event here. In the interview below, the Atlanta Journal Constitution caught up with AGCO CEO Martin Richenhagen to talk about managing the Fortune 500 company and more.
Can you think of a Fortune 500 CEO who's managed an Olympics team to a gold medal while simultaneously occupying the corner office?
Think no further than Duluth-based AGCO (No. 292 on Fortune’s list with $8.8 billion in sales) and its chairman, president and CEO, Martin Richenhagen. In the 2008 Olympic Games in China, Richenhagen, 59, managed his native Germany’s dressage team, which won the equestrian event. Decades earlier, dressage was responsible for launching his business career.
Richenhagen, a former French literature teacher, talks about his unusual career path and what he’s learned from training horses and leading the world’s No. 3 farm equipment manufacturer, with brands like Massey Ferguson and Challenger.
Q: Would you please talk about your experience training horses?
A: I studied theology and philosophy in college, and became a French literature teacher in high school in Germany. I financed my studies in college by running a dressage barn. This was my first business.
Dressage is like ballet on horses. For most normal people, it’s a little boring. But the fun part is to train the horses to do things you want them to do, when you want them to be done. It’s pretty much like management or like teaching kids.
Horses can achieve a lot if the rider knows how to motivate them to do things. If you try to force them to do things, it doesn’t work. It’s a fine art. If you do not have consequences and let them do everything they want to do, they will try to dominate you.
You need the right combination of carrots and stick. Too much stick generally doesn’t work. Using only carrots works only with very gifted horses.
Q: How does that translate into leading employees? Hiring?
A: You try to put as little pressure on people as possible. You try to make the challenges interesting, and you need an ambitious target to do that. But if you are too ambitious, if it’s impossible to achieve, it takes away the motivation.
A target has to be measurable. It has to be discussed and agreed upon. You shouldn’t come up with targets top-down. They should be negotiated in an organization.
With respect to hiring, I never read the resume before I talk to somebody. I want to see people before I have any first opinions. It makes me more curious. I read the resume after the interview. Then maybe I’d have a second round.
I’m interested in more than A students. I’m interested in what people did differently from the standard way. Does the candidate have international experience or did he or she do something interesting in life – being a backpacker in India for three months?
Q: How did your dressage barn lead you into the manufacturing business?
A: Through my hobby, so to speak, I met people from a different world. I was teaching at the time and also doing dressage. Typically, a horse sport is expensive. You meet people who have money. One of my sponsors was the owner of a steel mill in Germany. I taught him how to do dressage, along with his wife and daughters.
He advised me to focus on one thing and do it well – instead of spreading myself between teaching and dressage. He always was joking about that with me. One day, he offered me a job.
I started as a trainee. I knew several languages, so I became a correspondent in sales. It was a very low position, primarily handling customers in the export business. But then I started to do everything I possibly could in that company, from purchasing to controlling to manufacturing. I tried to be eager to learn and to be flexible. I ended up as the chief operating officer, reporting to the owner.
Q: That steel company eventually was acquired by another firm. Then you switched to farm equipment manufacturing, working for a European competitor of AGCO before you became CEO of the Duluth company in 2004. What’s been your biggest contribution? Largest mistake?
A: I would like to have the numbers speak. In 2003, before I took over, earnings per share were about $1.20 and sales were $3.5 billion. This year, earnings will be $5.50 per share and revenue will be more than $10 billion. Our debt load has been reduced substantially. We have a very global footprint, selling in about 150 nations. We will discuss a dividend for the first time with our board in October.
The mistakes we made are more operational mistakes. We started to invest more heavily in research and development. That’s a good thing, but when you do that, you make mistakes. Not everything you want to develop works, because you may not have the skills and know-how.
On one idea for a combine harvester, we had a wrong concept. I knew this would probably not work, but I didn’t stop it. This was a mistake. It taught me to speak up a little more when you see things going into the wrong direction. I should have taken more time analyzing the idea, and maybe get some external experts in.
You can’t avoid mistakes. In a previous company I worked for, the question was always, who did it? In our culture it’s what happened, what did we learn and how can we make sure we improve next time?
Q: How does a CEO of a big public company have time to lead an Olympics team?
A: I stay close to the sport by being an international dressage judge six or seven times a year. When I was asked in 2004 to be the German manager for the 2008 Games, I felt honored. I thought about whether I could do it. After I decided to accept, I took almost no vacation for four years. Then, I told my board I’d like four weeks in a row off to go to Hong Kong, where the dressage event was to take place. The whole team went there four weeks before the Games started, because of the different climate.
The good thing is that when you’re with horses, you forget all the rest. Back at the company, it was all organized, with the help of the chief financial officer. I just had to focus on managing the team. But it would be too time-consuming to do permanently. This is a one time in your life thing if you run a company.