≈ The Real Value of a Company – The Lesson of The Susquehanna Hat Company ≈

∞ Leadership and Building a Business, AI Aside ∞

Anybody ever heard of the Susquehanna Hat Company? Yes, I understand you have to be older than dirt and I understand even if you are that old, you still have to possess a certain sense of humor to have heard of it. The Susquehanna Hat Company made, well, hats, but the people that owned the company weren’t nice. Abbott and Costello presented in a clear and concise manner what happens when a company doesn’t do things the right way. Click here for that classic routine and the context of this Blog. (And please remember, it was the 1950’s…). 

So, what’s the relevance of an old vaudeville comedy routine to the real value of a company? Actually, it’s simple. Value reaches deeper than numbers.

The Harvard Business Review provides a textbook description of how to determine the value of a company. There are formulas examining cash flows, market caps, enterprise value, EBITDA and a host of other financial indicators. Far be it from me to argue with HBR, very far. Those are all relevant factors in considering what the value of a business is, but it falls short in not including an intangible, which is the "sustainable value" of a business, in its valuation criteria.

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Market, revenue, profit, growth rate, technology, wonderful. Can AI replace half the staff before lunch? Wonderful. But none of that measures the real health and strength of a business, because that isn't found in the numbers. Products change. Markets evolve. Margins fluctuate, technology that seemed revolutionary eighteen months ago is an afterthought with an annual subscription fee. The companies that succeed over the long haul go beyond the newest products or the newest technology.

I've spent much of my career helping companies grow, acquire businesses, restructure, raise capital, and prepare for exits. In multiple industries, people with distinctive personalities, in different markets. After a while, you notice patterns, and one pattern repeats itself as consistently as the heating bill going up in the winter. 

Sustainable companies aren't built by founders alone, they’re built by founders that understand the value of a team culture that encourages things be accomplished together. That distinction is becoming even more important as artificial intelligence reshapes every aspect of a business. 

The Rules Are Changing

AI is remarkably good at handling repetitive tasks, analyzing data, and producing competent work in seconds. It has significantly reshaped many entry-level white-collar jobs, and totally messed up some of the traditional paths for the young up and comers to gain experience.

That creates a ripple effect.

Fewer entry-level opportunities mean fewer people learning the business from the ground up. Suddenly, retaining good people becomes far more valuable than constantly replacing them. Hiring is expensive, Turnover is even more expensive because you can’t buy the experience that, btw, you’ve already paid for. Losing internally developed knowledge and genuine collaborative relationships is expensive. The companies that thrive will be the ones that create environments where talented people don't want to leave.

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The Human Advantage

Ironically, as technology becomes smarter, human skills become more valuable.

Critical thinking. Complex reasoning. Creativity. Empathy. Communication. Adaptability. Collaboration. AI can set the agenda and summarize a meeting, but it can't replace the live exchange of thoughts, physical reactions and discussions that happen at the actual meeting. (Live or on name your video conferencing app).

Businesses solve complex problems and make game-changing decisions on the basis of people working together, exchanging ideas and knowledge. Product development depends on engineering communicating with sales. Sales needs marketing. Marketing needs customer service. Finance eventually reminds everyone somebody has to make money. Communication isn't a "soft skill." It's critical infrastructure.

Nice Is Good Business

Somewhere along the way, many businesses convinced themselves that empathy and profitability were somehow competing ideas. They're not. I'm not suggesting everyone should gather in a Kumbaya moment. I've sat in enough boardrooms to know constructive disagreement is healthy, (and that it can be pretty entertaining).

You don't have to like everyone you work with. You do have to respect them. Respect means listening. Sharing credit. Helping colleagues succeed. Giving honest feedback without a smirk on your face or having to duck a paperweight. When the culture encourages working and playing well with others, trust grows, politics shrink, teams become stronger, and stronger teams build stronger companies. Funny how that works. 

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Leadership Must Become a System

Every successful business begins with the leader’s vision and passion, exactly how it should be. The willingness to ignore the overwhelming odds of failure is a pre-req for the job. But eventually every growing company reaches the same crossroads. If every important decision still requires the top honcho’s approval, it’s being done wrong. That's not leadership. That's a rush hour backup on a holiday weekend.

Decision-making has to be spread throughout the organization. People need context, not constant supervision. Values need to be woven so deeply into the company that teams make decisions consistent with the organization's mission, even when the leaders aren't in the room.

Hire Great People. Then Trust Them

Let them think. If you hired right, they’re smart, motivated people who understand your industry. People can’t perform if they don’t know what’s going on. Share information instead of simply giving instructions. Employees will be all in on solving difficult problems, they just need a full perspective to do that. Empower people to anticipate and participate in change. Solicit their ideas. Trust people to help you make decisions, don’t tell them what decisions to make. If you're always the smartest person in the room, you've hired the wrong room. 

Give Them a Reason to Stay

As employees develop these uniquely human skills, they become more valuable. Not just to you. To everyone. That's why retaining talent will become one of company leadership's greatest challenges. People stay where they have purpose. Where they're respected. Where they're challenged. Where they can grow. Where they enjoy being. Creating that atmosphere isn't an expense, it's an investment. Development of a committed management team isn't a luxury, it's succession planning.

And if you really want people to work like owners, give them the opportunity to become owners. Whether it's equity, stock options, profit sharing, or meaningful performance bonuses, ownership changes how people think. A paycheck says, "You work here." A piece of the company says, "We're building this together." That's a profound mental shift.

(Sorry, free coffee, even deep blend mocha double-cream cappuccino lattes just don’t do it anymore).

Final Thoughts

The companies that create lasting value won't simply be the ones that adopt AI faster than everyone else. It’ll stop being magic and just be the norm. The winners will build better cultures. They'll balance technological innovation with human development. They'll create leadership systems instead of leadership control.

They'll invest in communication, collaboration, empathy, creativity and critical thinking, the qualities technology can’t replicate. Most importantly, they'll build organizations where people genuinely want to come to work because they know they're respected, challenged, and part of something meaningful.

Technology will continue to evolve. Products will change. Markets will shift. But one truth has survived every business cycle I've witnessed - the greatest asset any company will ever have walks through the front door every morning.

Take care of those people, and they'll take care of everything else.

(It goes without saying that the opinions here are mine. To those that know me, I have many opinions).

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