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BRIAN KENNY: Welcome to Cold Call, the podcast where we dive deep into the groundbreaking ideas and Harvard Business School case studies. It’s one thing to lead a company through growth, it’s another to lead it through collapse more than once and still emerge stronger. Today’s case follows a fourth generation family leader at the helm of a century-old industrial company operating in one of the world’s most carbon intensive, cyclical, and capital heavy industries.

Over 25 years, he transformed a domestically anchored business into a multinational player, only to see it battered by a triple crisis across its core markets. What followed wasn’t just survival, it was reinvention. Digital transformation in a heavy industry, bold commitments to decarbonization, a move from commodity producer to customer-centric solutions provider, and one of the hardest decisions any family CEO can face: whether to pass the torch to an outsider.

This is a story about resilience, values, technology, sustainability, governance, and succession under pressure. Today on Cold Call, we’ll discuss the case, “Transforming a Titan,” with Professor George Serafeim and guest Dimitri Papalexopoulos. I’m your host, Brian Kenny, and you’re listening to Cold Call on the HBR Podcast Network. And I only have to say your last name one more time.

DIMITRI PAPALEXOPOULOS: I’m impressed how well you did it.

BRIAN KENNY: Thank you. George Serafeim’s research spans the fields of accounting, finance, management, and strategy. His book, Purpose and Profit: How Business Can Lift Up the World, explores the changes and opportunities in building high performance, purpose-driven organizations that have a measurable, positive impact on society. That’s a lot, George. Welcome.

GEORGE SERAFEIM: Thank you very much. Thank you for having us.

BRIAN KENNY: It’s great to have you back on the show. We love having you here. Dimitri Papalexopoulos, the protagonist in today’s case, is chair of the board of directors of Titan Cement International, where he served as CEO for many years, and you are also a graduate of HBS. Welcome.

DIMITRI PAPALEXOPOULOS: Nice to be here.

BRIAN KENNY: I’m going to start with you if you could, George. When you first began looking at Titan, what struck you as the central leadership dilemma at the heart of the case?

GEORGE SERAFEIM: Well, it’s a very human dilemma, right, Brian? And what is interesting about this company is that it’s really at an inflection point. As you mentioned before, it has gone through a series of crisis, and now it’s facing some really important transformation moments on digitalization and AI, on decarbonization, or moving towards differentiation. So who is the right leader is a critical dilemma inside the case. And I can tell you, people disagree a lot inside the class.

BRIAN KENNY: Yeah. I’m not surprised.

DIMITRI PAPALEXOPOULOS: People disagreed a lot within the family.

GEORGE SERAFEIM: There you go.

BRIAN KENNY: I want to hear more about that when we get into that part of it. So you took over, this is amazing to me. At the age of 34, you were first appointed as CEO. Is that right?

DIMITRI PAPALEXOPOULOS: That’s correct.

BRIAN KENNY: Can you just quickly tell us a little bit about the history of the company? It’s been around for a long time. You took over a storied organization.

DIMITRI PAPALEXOPOULOS: Yeah. There’s an old story that says there’s three kinds of CEOs in the world: entrepreneurs, hired guns, and lucky sperm. So I fall firmly into that third category. So the company was founded in 1902, has been listed since 1912, which is an interesting twist because it has exposed us to both the public markets and a long-term steward of the business in the shape of the shareholding family. And those two characteristics have built over time.

Now, when I took over as a CEO, it actually felt a lot less dramatic than the question makes us sound today because… And that’s partly a characteristic of family businesses, that those transitions tend to be gradual more than abrupt. And given to the fact that we have something of a consensus culture, the story is less about the heroic CEO who individually changes the world.

BRIAN KENNY: Oh, don’t sell yourself short. Come on.

DIMITRI PAPALEXOPOULOS: And it’s about being at the right place at the right time to a certain extent and riding the wave. And I think what happened then, I found myself at the right place at the right time. Greece had just joined the European Union. It had become possible to invest meaningfully outside of Greece, and we came very late to the globalization party, but it was the right time to internationalize the business, and that’s what we focused on doing for the next few years.

BRIAN KENNY: Did you go into the role with any idea in mind about what you wanted to accomplish? Were you thinking that far ahead as a young man stepping into this role? Were you thinking about legacy at that time?

DIMITRI PAPALEXOPOULOS: No, I was not thinking about legacy, although I was very conscious of the legacy imposed on me.

BRIAN KENNY: Of course.

DIMITRI PAPALEXOPOULOS: And one of the challenges I think at that point in time was to find that balance between, on the one hand, giving opportunities to young people and new ideas, while at the same time respecting continuity and the people who carry the knowledge and the values with them. And in a generational transition of that nature, that gap is important to keep in mind.

BRIAN KENNY: And George, we know legacy happens whether you plan on it or not. You’re going to have a legacy. The early decisions that Dimitri made when he was in that role and that the firm made were really important to where the firm is today. And one of those decisions was that they chose geographic diversification over industrial diversification. You could choose to expand into different verticals within your industry or you could choose to expand your global footprint. Why was that such an important early decision for them?

GEORGE SERAFEIM: It’s fascinating to me, Brian, because if you observe around the world, what is happening in many markets and many countries around the world is that successful companies like Titan are leveraging their political connections and banking connections and reputation, brand to attract capital and talent and really industrially diversify. That’s why you observe so many companies around the world having an industrial diversification, basically strategy. And Titan chose to actually geographically diversify. Stick to what we know how to do, which is in the cement business and go abroad. That comes with some strengths, but also risks to it. The strengths come from really leveraging your core competitive positioning and your know-how, but it also comes with a weakness that you’re really now expanding the organization to go to markets where you’re not a big player anymore. So you’re a newcomer. And I think that has real tension to it. And the twist in the story is that it happens to be that the geographies that you go face crisis after crisis.

BRIAN KENNY: Of course, yeah.

GEORGE SERAFEIM: So you go to Florida, crisis. You go to Egypt, crisis. Of course, back in your home country, Greece, crisis. So it is a perfect storm in many ways that acts as a really great reflection for leaders to think about the question of resilience inside the organization.

BRIAN KENNY: Yeah. And as a Greek company for all those years before you made that move to globalization, you understood the Greek culture and the way business was transacted in Greece, but then you have to learn a whole new set of rules and things depending on what markets you’re going into. What strengths were you able to tap internally within your organization and where did you have to really develop muscles that you didn’t have to be a global company?

DIMITRI PAPALEXOPOULOS: I think we had some clear strengths on which to build. Engineering talent, we knew our business, we understood our business well. And the good thing about cement is cement to cement. And we didn’t have to compete against Procter & Gamble in marketing cement in America. So we had some engineering culture to build on. We had a good understanding of what it’s like to work with local communities, which is important in the cement business because you have a very interactive relationship with local communities. And we had a good understanding of the fundamentals of the business. What we lacked was international experience, and that we made up in a couple of ways, we tried to make up in a couple of ways, because I must say as an aside here that with hindsight, this probably sounds more organized than it felt at the time. It felt at the time more like what I see the startups I see today where they have a clear north, but they sort of adapt by the seat of the pants management all the time. So we didn’t have a very clear concept of how we would adapt. But what transpired over time was, A, create a lean corporate center, devolve a lot of the responsibility for the business to the business units, to the local, because it’s a very local business, and a very lean corporate center, and then work on two things, the values, which we articulated when we started growing internationally. So up to that point, we never needed to articulate the values. It was a Greek family.

BRIAN KENNY: Yeah, you knew, everybody knew what the values were.

DIMITRI PAPALEXOPOULOS: And then when we went to the US and Serbia and Egypt, suddenly it was necessary to articulate those values. And we actually went through a process of doing that was very helpful. And the last component I think that was very important was tapping into the Greek diaspora. George is a good example of that. So a lot of Greeks, and that was connecting glue for the first few years, but Greeks who all had experience abroad in Germany, in the US, and therefore could connect us to that outside world.

BRIAN KENNY: Yeah. I mean, that makes perfect sense. And I think you might be being a little hard on yourself by saying that it wasn’t that clear cut. You didn’t have that true north. I think business is messy. I think-

DIMITRI PAPALEXOPOULOS: No, we did have a true north. It was the organizational, the how-to was a problem, not where we wanted to go.

BRIAN KENNY: I see. Got it. Got it.

GEORGE SERAFEIM: There’s a great quote actually in the case on that, which says that, “Titan has become an international company, but somebody forgot to tell them.” And I think that is a catalyst for creating a stronger culture through the values, tapping into the talent outside with the diaspora. And also something else, Dimitri that is in the case that I found very interesting, which is you launch a series of joint ventures with larger competitors in some of those markets as a mechanism for transferring the capabilities and learning. And I found that very interesting.

DIMITRI PAPALEXOPOULOS: Yeah. We have no qualms about copying and learning from others. So we partnered with two leading companies in our sector because we figured they had done globalization way before us and we had a lot to learn and we did learn a lot. But I would put the most value on that true north you described, and young people who never thought as Greeks going up in a Greek company in Greece, that they would be given an opportunity to live the dream of building a multinational company against those behemoths in the industry. And what we lacked in terms of deep knowledge and of doing business abroad, we more than made up with youthful experience.

BRIAN KENNY: Right, right. One of the things Dimitri said, George, that I think is interesting too, they adopted a lean central presence and they really tried to localize the business, which makes a lot of sense. But we know that’s really hard to do and there are trade-offs when you do that because we’ve had a lot of cases on Cold Call where people have struggled with that. Can you talk a little bit about some of those trade-offs?

GEORGE SERAFEIM: First of all, this whole idea about centralization versus decentralization, if you will, is a huge one in most organizations. And I think the way that… to think about the advantage and the disadvantages is that the advantage is really about leveraging local knowledge that exists in the employees and the people that are operating in those markets. So you go to Egypt, you go to Florida. I mean, the people that are working there know the business better than Dimitri knows the business sitting back in Athens. I mean, that’s the reality, right?

DIMITRI PAPALEXOPOULOS: Absolutely.

BRIAN KENNY: Buying business in Florida couldn’t possibly be more different than business in Egypt.

GEORGE SERAFEIM: Absolutely. Absolutely. There are just different regulations, different customer expectations, different way of doing business, all kinds of different things. So decentralization basically allows you to align effectively decision rights with where information resides inside the organization. The problem with it is alignment. That it’s not clear that it’s that easy for you to align then all of those people not to be thinking about their small turf but to be thinking about the broader organization. So how do you establish actually an empowerment mechanism inside the organization while at the same time allowing enough commonality inside the organization. So we’re all part of Titan. We’re not small turfs and then we’re fighting over resources in between us. So I think that’s the critical challenge.

BRIAN KENNY: So one of the quotes in the case that jumped out at me too, your sister, Alexandra, is that right?

DIMITRI PAPALEXOPOULOS: Yeah.

BRIAN KENNY: After the case describes rapid growth over an extended period of time where you couldn’t make a wrong move, she said, “15 years of being able to do no right emerged.” So what happened? What were some of the things that you encountered as the case goes on and unfolds?

DIMITRI PAPALEXOPOULOS: Well, we thought we were diversifying geographically because one of the things we were carrying with us as history was a lost decade in the 1980s in Greece where three out of four companies in our sector went bankrupt and we barely survived partly out of dumb luck partly because we buttoned down a bit earlier to survive. And we said, “This is not going to happen to us again.” So we will diversify. We will go to Egypt, we will go to the US, we will go to other places. And we thought, what is the probability that all of these will tank at the same time? It’s like basic portfolio theory. And then it happened. We had a big presence in Florida, that’s where the subprime crisis started. Egypt went through a revolution and Greece went bankrupt. More or less, our three largest markets at that time, more or less at the time time collapsed and that’s tough. We did everything by the book. We sold peripheral assets, we cut costs, we cut costs in a way that tried to preserve the fiber of the business. So we didn’t fire that many people, but we cut costs in other ways. But what I think made a big difference in that time, and it speaks to the resilience point the two of you made earlier, is when you have 120 years of history and you say, “We’ve been through the German occupation during the Second World War, we’ve been through the socialist experiment in Greece in the 1980s, and we are here, we’ve survived for 120 years and we know what it takes to survive another 120.” And that goes a long way towards reassuring people that sitting as a captain of that ship, failure is not an option, jumping ship is not an option, and whatever happens we’re going to make it through. And that creates a sense of urgency certainly exists when things are bad, but also there’s a sense of relative safety that we’re all in this together.

BRIAN KENNY: Yeah. And I would remind our listeners that you’re in the cement business and when you have something like what happened in 2008 with the housing collapse, construction basically stops in a lot of the world. Is that true?

DIMITRI PAPALEXOPOULOS: Volumes in Greece went down 82% and remained at minus 80% roughly for 10 years. Volumes in Florida, which is another big market that George mentioned, went down 75%. They came back up faster than in Greece, but there’s a limit to what cost-cutting can do when your volume goes down 80%.

BRIAN KENNY: Sure. And we know, George, you know this, you’ve looked at family firms in the past, oftentimes they fracture for any number of reasons. It could be personalities, it could be impact on the business. So despite what Dimitri says about the history, that’s not always going to solve the problem. You can’t always get people to rally behind that. What have you observed about Titan and maybe other similar firms where the family has been able to hold the governance together and push through these challenges?

GEORGE SERAFEIM: And you mentioned, I think the most important word, which is governance. And I think when it comes to family businesses, sometimes in some family businesses, the mistake has been that the business is run for the family instead of the family helping nurture a business. I think that is a big distinction between those two approaches that I have observed. So the question is, what does a family bring to a business? And one of the things that emerges in the discussion, especially as we look at resilience and a business that might be 80% down, is commitment. So you actually have a tremendous amount of commitment that can come from a family and the legacy and the heritage and the type of pride that this gives you. But what is the disadvantage of this, which is that if you let my interest versus your own interest and so forth, it might lead to a fractured decision-making process and a slow decision-making process in an environment where you would have to make fast decisions.

BRIAN KENNY: Sure.

GEORGE SERAFEIM: So that’s a little bit of the trade-off and what you shouldn’t let a family do to its business.

DIMITRI PAPALEXOPOULOS: One of the things I would add there, if I may, is that we actually were lucky enough to participate in a course by Harvard Business School lecturer 25 years ago about leading a family business. And I took my whole family, my cousins, my siblings, my uncle, and it was wonderful in two or three ways. One, it showed us that all family businesses have the issues that George described. There’s no cookie cutter answer, there’s no simple answer. Every family must find its own businesses, but being able to have those decisions rationally and not emotionally at the right time and developing the common language with which to discuss them is key. And that served us in very good stead when the difficult times came, we were able to have those conversations in a non-emotional and constructive way.

BRIAN KENNY: Yeah, that makes sense. That’s great.

GEORGE SERAFEIM: These are some really difficult decisions. And some of them are, you can think about it as abstract. For example, Dimitri cutting CapEx in the business, but what happens when Dimitri cuts dividends? Well, now that’s a completely different story. So you can see actually how in some families that can lead to a very strong pressure on the dynamics. And in some other families, it might lead to everybody coming together and saying, “We actually need to get this done. We need to support the business.” So families come in different flavors. I don’t know if you have a reflection on that.

DIMITRI PAPALEXOPOULOS: The reflection on that is that McKinsey did a study many years ago that had came to four… It compared the long-term shareholder return over 20 years of a big sample of companies, both European and North American. And it compared two sets of companies, dispersed ownership and family controlled by some definition of family controlled. And it came to four conclusions. One, on average, the two groups did equally well. Second, family businesses had a much wider dispersion of possible outcomes. They were capable of the best and the worst, which makes sense to me to George’s point.

BRIAN KENNY: Sure.

DIMITRI PAPALEXOPOULOS: Third conclusion, family businesses run by the eldest son tend to significantly under perform. I sent that off, which again, intuitively makes sense. It’s a social thing. And fourth conclusion, family businesses run by a non-family member tend to significantly over perform.

BRIAN KENNY: Okay. And we’re going to get into that shortly. But what I’m hearing generally speaking though is the family really has to be on the same page. Everybody has to be aligned to that true north to really be thinking about the longevity of the business in a similar way for it to really succeed over the long haul. That’s my takeaway here.

DIMITRI PAPALEXOPOULOS: That’s the aspiration. Doesn’t always work exactly that way.

BRIAN KENNY: Of course, yeah. The case gets into the transformation of the business itself, George. So I do want to turn to that because that was one of the things that really intrigued me about it was here we are in this mature industry, we’re in the construction industry. People don’t think about that as a place where a lot of innovation happens, even though it does. It really does. But can you talk a little bit about how the firm started to think about AI and digitization in the context of that industry?

GEORGE SERAFEIM: It’s just fascinating to me. And I have to admit, I have to give you this story, Brian. I learned about this from Dimitri as we’re sitting on a panel together speaking, and he started saying about how doubling the profitability of this cement plant through AI and making, if not the first cement plant in the world fully run in a closed loop from AI, one of the first. And I was just shocked by it. I said, cement, kind of boring. So first I doubted Dimitri, so I had to go down to Miami and see it for myself. And it’s incredible, actually. It’s incredible. It’s truly incredible. And for me, there are a couple of things that are emerging from that discussion and from the case in the classroom when we’re discussing it. A couple of things relate to how they did it. For me, one of the most important things is that if you think about it, what is happening right now, most organizations are experimenting with AI.

BRIAN KENNY: Sure.

GEORGE SERAFEIM: They have lots of pilots, and what are they measuring is the number of use cases of those pilots. And they all come to me and they say, “George, we’re making incredible progress. We have 267 pilot cases.” I’m saying, “All right, which one actually really makes a difference?” And how much has it improved the financials of the organization? And then you hear some nice stories, but nothing concrete. And what I see in the Titan case, and this comes up in the discussion, is that they’re focusing on one or two use cases. They are going big in the core of the organization, not in the periphery of the organization, but to the control room and the actual production process. And they’re going somewhere where the results are measurable. Because if the results are not measurable, you actually don’t have an accountability inside the organization. I can tell you some nice stories, but then has it moved the needle, who knows? But if it’s measurable, it does two things. One, it increases the accountability inside the organization, and then it creates also a cultural flywheel effect. So one of the things that we do in the classroom, we say, “How many plant managers do you think that initially would say, sure, do it in my plant?” Most of them probably would say, “Not here.”

BRIAN KENNY: No way.

GEORGE SERAFEIM: “Don’t break this. This is working. Don’t break this.” But once it works, what do you think they will do? Next day, they will call you and say, “When are you coming next?” So it creates that culture flywheel effect once you can actually apply something where the result is measurable and you can focus yourself. And I think that is a very different approach than the one that I’m observing most organizations practicing with AI right now.

BRIAN KENNY: Yeah. Dimitri, would you describe the culture within the firm as having been highly innovative prior to this? Or was this a spark that made everybody feel like-

DIMITRI PAPALEXOPOULOS: That’s a loaded question.

BRIAN KENNY: We can take chances now. We might actually do this.

DIMITRI PAPALEXOPOULOS: Let me reflect a bit on what George said. The way this started really was in the depths of Greece being bankrupt and the rest of our markets are doing well. And in 2013, ’14, so ours is a capital intensive business. If you want to grow, if you want to really improve, you have to invest serious capital. We didn’t have any capital to invest, yet we had good people who were sitting around and dealing with crisis year after year after year gets you tired. So we said, “What can we do that’s people intensive, not capital intensive?” And there were some people, surprisingly, not all of them young, that really wanted to try something different. It was a time of the first California taking the lead. And so, we went into this, we said, as George said, no big dreams, we’re going to be the first digital cement company. What can we do here and now that will have an impact and will convince the rest of organization that’s battle weary that this is worth it. So we started with two or three things, the most important, as it turns out, with the benefit of hindsight application was what we call the realtime optimizer, which runs the plant on AI. And the key thing, and I think that’s important was, to Georgia’s point, getting what we call the “cement heads” to talk to the “digiheads,” because typically, and if you see that in other organizations I come across, you have digital people saying, “This is what we have to do and you guys don’t understand.” And then you have, in our example, the cement head saying, “This is what we have to do. You don’t understand.” And getting those two to work together was the biggest challenge and finding the right integrators who could get those two to speak to each other was key. But once that happened and the first results came in, it was like a light went on, and in many ways, it changed the mindset of our engineering culture from one of being conscientious and improving everything all the time, just a bit every year, but without taking risk, to one of innovation is interesting, it’s fun. We can do things that are more transformative. And what we underestimated as a good side effect of all this adventure was how much it changed that spirit of innovation from an industry and a company that were not innovative at all. The product is almost the same as it was 100 years ago, to one where experimenting with new things and try new things is actually well looked upon.

BRIAN KENNY: Yeah. It’s almost the same as it was, but it’s not entirely. The product itself is not entirely the same. So I do want to talk about the ESG aspects. George, you and I have had many conversations about cases you’ve written about sustainability over the years and how that whole industry has… how it’s reshaped whole industries. Can you talk a little bit about how Titan approached this and some of the things that they did on the sustainability side?

GEORGE SERAFEIM: So the first thing is to understand the product and the industry. So this is an incredibly important product for society. This is the second most consumed commodity after water, cement.

BRIAN KENNY: We’re sitting it right now.

GEORGE SERAFEIM: We’re living everywhere around it. So it’s incredibly important, but at the same time, is incredibly carbon intensive. It generates a lot of greenhouse gas emissions, basically. So now if you think about it from a long-term business planning perspective, and I think this is also important. So this is not a business that you can say, “Well, let me invest a little bit of capital and then I changed my mind next year.” The investments that you’re making are going to be lasting decades to go. So you need to be thinking about what is going to be the operating environment that a plant, a specific product, a specific business line is going to be competitive for decades to come. And then you need to think about, for example, carbon that is a very, very important part of this business, as potentially an expense that is going to hit your income statement or reliability that is going to be on your balance sheet. An expense, if it’s right now, you’re paying something for it because you might be regulated and you might be paying taxes on it. Or even if you are not as a liability because there’s going to be a future economic obligation once the market actually changes over time. And when I look at it through that perspective, either from an income statement perspective or from a balance perspective, then I would want a company that is going to be resilient to that liability and that expense item.

So how can you now take the appropriate actions, whether that is about changing your energy mix, for example, that you’re consuming to create cement, whether that is becoming more efficient with what is called clinker, for example, that goes as part of the process and it’s a major contributor to the carbon emissions, how you are using alternative materials, which the company has been innovating in terms of procuring in order to reduce the clinker ratio as part of the product. All of those dimensions, or as the next case describes CCS as part of the case, carbon capture and storage, for example, elements. How you are actually making those investments right now to position the company to be competitive in the future when those liabilities will start accumulating. So there’s a lot of actually important discipline in the thinking of the organization, in my mind, when you’re actually starting to think those items inside your financial statements, either as expense items or liability items, as some of those regulations and market requirements can change.

BRIAN KENNY: And the last thing that I will say, Brian, is that this is a future and a journey that is going to be uneven. So right now in 2026, we are sitting in an environment where in some sense regulations are being pushed back. Yes.

GEORGE SERAFEIM: But that doesn’t matter because you are going to make investments for a long time from now. And I can assure you, a few years later, we’ll be having a different conversation. And then a few years later, a different conversation.

BRIAN KENNY: We know that pendulum swings back and forth.

GEORGE SERAFEIM: The pendulum swings back and forth. But the question is when you’re actually allocating resources and you have a specific time horizon that is tied to your operating cycle and your business cycle, the question is, how do you make long-term planning decisions that are going to be the best decisions for the business?

DIMITRI PAPALEXOPOULOS: Having said that, it’s one of the first things we discussed today, which I will not totally agree with you on. And that’s because we started off that way. We started off very defensively. This is going to be a big burden on our business. Once we internalize the cost of carbon, our product becomes more expensive, our costs go higher. How do we deal with that liability? And the way we’ve shifted this over time is, yes, it is a potential liability, but it’s also a huge opportunity because for decades we basically ran for century plus a commodity business competing mostly on cost, partly on quality.

And now, you reach a point where you can for the first time segregate, you can for the first time propose greener products, you can for the first time fine tune products in a way that gives them the lowest carbon footprint for each application. So for the first time, instead of being production driven, we have gone into really understanding the customer in a way, quite honestly, we paid lip service to understanding the customer, but if you tell me after 30 years in the business, do I really understand the construction business? I don’t. And now, we finally have to start to understand it and going in depth and finding niches and finding opportunities and innovating enough to have greener products or more resilient products or, or, or is again, a mindset shift that we’re going through right now. So it’s not just about lemon, it’s also about lemonade.

GEORGE SERAFEIM: So let me agree with your disagreement, if that makes sense. Which is then I guess I disagree with myself. I don’t know. I’m confused, but I think you’re making a really important point, which is once you actually recognize and you’re disciplined about the state of the world that you will be playing, you actually turn the risk into an opportunity, which is basically what you’re describing, which is basically, this is going to be a liability, but it’s going to be a liability for my competitors as well. So what can I do to differentiate myself and turn that into an asset for myself? And I think that is next level in my mind.

In some sense, this is not going to happen if it doesn’t happen the first step first, which is you need to recognize that there is a different state of the world. And then, the more advanced companies, and that’s one of the interesting things that you observed with Titan and with the leadership that Dimitri has had is that they actually recognize that because it’s going to be a liability and expense for everybody else, how do I turn this into an opportunity for differentiation, decommodification as well, which is say the case describes?

BRIAN KENNY: Did your customers recognize what you were doing? And you’re becoming a solutions provider now instead of just selling a commodity at this point. Did they see that? Did you call that out to them?

DIMITRI PAPALEXOPOULOS: You are way ahead of us. We are trying to get there. And I think the reality is people are talking about green premium and the reality is with the exception of the Magnificent Seven and a few others, there’s very few people willing to pay a green premium.

BRIAN KENNY: I see, okay.

DIMITRI PAPALEXOPOULOS: And so, I think it’s a work in progress. You start with niches, you start with very specific opportunities. For example, we have developed a new product that’s ocean resistant so we can use it to protect Florida from the incursion of water.

BRIAN KENNY: Please do that.

DIMITRI PAPALEXOPOULOS: So there’s some aspects of that, but we’re still at the early stages of that transformation. We are proud of what we’ve done as a company in digital. We are proud of what we’re doing in decarbonization. When it comes to customer orientation, we are still lagging significantly what you will find in other parts of the economy.

BRIAN KENNY: Let’s talk about succession. Most people in the United States have their frame of reference for Succession as a TV show that’s on HBO that paints a very bad light on family businesses. Yours was not like that, but I’m wondering, at what point after more than two decades in the leadership role, did you decide it’s probably time for us to think about changing the leadership?

DIMITRI PAPALEXOPOULOS: There were two or three things weighing on my mind. One is, as we’ve discussed now, in an industry that traditionally had changed very little, there were three concurrent transformations happening at speed at the same time, decarbonization, digitalization, and decommoditization, and that required less of an operating mindset, which we always had as a company and more of a transformation mindset. And I thought that I was the wrong person after 26 years at the helm to drive a much faster pace of transformation along those lines, and that an outside-in look or a fresh look was appropriate. And the second consideration was to the point we discussed early on family businesses, how they’re run. As our business over the last few decades has increased in size and complexity, we have outgrown our traditional family run model. So it felt like a good opportunity, relatively early age to make that transition, which is fraught. When a family business is run for 120 years with a family member CEO, making that transition is not always easy. And I wanted to do it at an early enough age where my sister and I who’ve been doing this together for so many years, could stay on the board and guide that transition, keeping our egos in check, but being there as guarantors of that transition.

BRIAN KENNY: George, we know that this is an extremely difficult thing for any family business, any family firm that’s been around for this long. As you observed Titan, were there things that you saw here that made this particularly tricky or challenging?

GEORGE SERAFEIM: Well, it’s a particularly tricky situation because of where the organization stands. And it’s important to go back to the history of the organization and the fact that the organization has been under stress. What happens inside an organization? If you’re just an employee that has been around and you go through crisis after crisis after crisis, you’re just tired. I asked that question actually. I was teaching the case just last week and I said, “How do you feel if you are Dimitri in 2013, 2014, 2015?” And lots of people said different things, but the one word that kept emerging was tired.

It was just everybody said, “I would just be tired if I was inside the organization.” So that is one element. So that the strengths that allow you to go through the crisis, which is prudence, stewardship, control, can also become blockers in terms of the next stage of the transformation stage. So you’re taking that organization if you are coming in. So that is a very, very particular thing. You need to have the EQ to understand that. You cannot be a bull in the [inaudible 00:39:38] a new CEO. The second element, you need to have, what Dimitri was saying before, you need to have just the ability to transform. This is an organization that is going through multiple transformations. And I think the third element that makes it very interesting is that Dimitri is going to be there.

BRIAN KENNY: Yeah, I was going to bring that up.

GEORGE SERAFEIM: Dimitri is going to be there. And one of the things that you hear multiple times is that a lot of people are really reluctant to go as a CEO in an organization that the previous CEO is going to be there. And it creates some really interesting dynamics. I have taught the case now enough where I have had CEOs saying, “I wouldn’t go on to go there.” One fascinating thing to me was when I talked to Marcel that took over as CEO, he also said to me initially I was a little worried about that, but what is interesting is that the more we discussed after, he told me that he sees this as a strategic strength right now. The fact that you have a knowledgeable long-term shareholder and a thought partner with Dimitri now being the chair of the board, sees it as an enormous amount of strength, but in many cases, it hasn’t been.

BRIAN KENNY: Of course.

GEORGE SERAFEIM: We know many cases-

BRIAN KENNY: We’ve had them on Cold Call. We’ve talked about those.

GEORGE SERAFEIM: Where actually, the new CEO has been undermined by the previous CEO that has stayed inside the company. We know a couple of famous companies where this has happened. So I think those elements add a tremendous amount of complexity to that succession decision.

BRIAN KENNY: Yeah. And I think, first of all, you don’t look tired at all, Dimitri.

DIMITRI PAPALEXOPOULOS: Thank you. I don’t feel tired.

BRIAN KENNY: We’re coming to the end of our time. So I have one question left for each of you and I’ll give George the final word because he’s the faculty member. So I know where my bread is buttered. But I would love to hear from you in this new role that you’re in now, but as you think about the future for the firm, what are you thinking would look like success five years from now for Titan?

DIMITRI PAPALEXOPOULOS: One of the things I would say is I didn’t fully know what to expect and how it transitioned to my new role. And a lot of people were saying, “You will miss the adrenaline. How can you do this to yourself this young?” I’ve actually enjoyed taking some distance after 26 years and being able to sit in meetings and keep my mouth shut and listen carefully and take in things and learn new things. So I’m actually enjoying my role and looking at the business in a different way, doing more thinking and less implementation. And I think moving along those three axes of transformation will keep us very busy over the next five years. And I think the next five years will be much less about exploring new geographies, more about branching out and strengthening ourselves in existing geographies by using our digitalization skills and our decarbonization skills to make lemonade.

BRIAN KENNY: So the last question for you would be what I always like to end on, which is if there’s one thing you want our listeners to remember about the Titan case, what would it be?

GEORGE SERAFEIM: I think the first thing is, I call this many times the title of the session when I teach Titan is, “Innovating Within Constraints.” A lot of people don’t want to actually have a case about Google and Apple innovating. They say, “There’s just so much cash.” Of course, I can innovate if I throw a bunch of billion dollars. How do you do it when you don’t have cash? That is actually what is really interesting here, which goes back to Dimitri, which is like, we didn’t have a lot of capital. Here’s what we came on. And I think that spirit, that entrepreneurial spirit inside organization that can come from a small pocket inside the organization and then it can spread once you see the results is something that many organizations are looking at. So this idea that innovation is not about just throwing capital in it, but it’s actually about creating that entrepreneurial spirit that flywheel affect inside the organization is one element. And the second thing, and this is how I conclude the case, is I ask, especially in our CEO programs, I say, “Are you leading in a way that the organization becomes more dependent on you over time or less dependent on you over time?” And that is a really important question to ask because if you’re leading in a way that becomes more dependent on you over time, things might not go very well over time.

BRIAN KENNY: That’s a great insight. George, Dimitri, thank you for joining me on Cold Call.

DIMITRI PAPALEXOPOULOS: Thank you for having us.

GEORGE SERAFEIM: Thank you for having us.

BRIAN KENNY: If you enjoy Cold Call, you might like our other podcasts: Climate Rising, Coaching Real Leaders, IdeaCast, Managing the Future of Work, Skydeck, and Think Big, Buy Small. Find them wherever you get your podcasts.

If you have any suggestions or just want to say hello, we want to hear from you. Email us at [email protected]. Thanks again for joining us. I’m your host Brian Kenny, and you’ve been listening to Cold Call, an official podcast of Harvard Business School and part of the HBR Podcast Network.