CHARLES MIZRAHI: I want to pay the respect and honor to who the ship was named after. Could you tell me about that one more time, please?

MIKE ABRASHOFF: It was named after Edward Benfold. He was a medic in the Korean War.

MIKE ABRASHOFF: One afternoon, he was tending to two wounded Marines in a foxhole when several enemy soldiers stormed the foxhole, throwing grenades into it. At the age of 21, Benfold decided he was going to become a leader. He picked up those grenades, stormed the oncoming enemy soldiers — blowing them and himself up in the process — and saved the lives of two wounded Marines who I used to take to sea, on his ship, every six months or so.

MIKE ABRASHOFF: In addition to naming a ship after him, he was awarded the Medal of Honor. I used to tell his crew: “Make sure Edward Benfold is smiling down upon us today and that you never go wrong when you do the right thing.” It was about instilling a sense of values, honor, courage and integrity, which I connected back to Benfold.

MIKE ABRASHOFF: People complain about the younger generation today… that they have no values. I disagree. They don’t hear about values. They have nobody to show them what those values are. But if we take the time to connect with them, they’re hungry for it. That was a lesson for me. I was bashful when talking about values. But once I saw the response from the crew — that they were hungry for it — it gave me more courage as a captain to try to do better.

CHARLES MIZRAHI: My guest today is Mike Abrashoff, former Navy captain and leadership expert. At the age of 36, the Navy selected Mike to become commander of the USS Benfold. At the time, he was the most junior commanding officer in the Pacific Fleet — on a ship that was plagued by low morale, high turnover and abysmal performance evaluations.

CHARLES MIZRAHI: You thought that this ship could improve. Yet, 12 months later, the ship was ranked No. 1 in performance using the same crew. People were amazed, and the lesson was clear. Leadership matters, and culture is everything. I recently sat down with Captain Abrashoff to talk about the management techniques that turned his ship from worst to first and how they could be applied to any business.

CHARLES MIZRAHI: Alright, Mike Abrashoff. Thanks so much for coming to the show. I greatly appreciate it.

MIKE ABRASHOFF: Thanks for having me, Charles.

CHARLES MIZRAHI: My pleasure, really. My honor. I never served in the military. I chose the way easier path of going into the world of making money. I look at a guy like you who… First of all, you have a family tradition of serving in the Navy, right?

MIKE ABRASHOFF: My father served in World War II. I’ve got a nephew who’s a major in the Marine Corps and another nephew who’s a lieutenant junior grade on a ship in San Diego.

CHARLES MIZRAHI: You have two in active duty now, right?

MIKE ABRASHOFF: Correct.

CHARLES MIZRAHI: Amazing. And, of course, your accomplishments, which I want to talk about today. Out of all of the books I’ve read about the military, I’ve never seen a book like yours. I want to hold it up here. Definitely run out and get this book: It’s Your Ship: Management Techniques from the Best Damn Ship in the Navy.

CHARLES MIZRAHI: Former Commanding Officer, Mike Abrashoff, you take what you have instituted in the Navy and apply it to regular management techniques that businesses can use today. In fact, I think teachers and schools can apply these principles and techniques. Am I off on that, or not?

MIKE ABRASHOFF: I get emails from teachers, principals, pastors of churches, as well as business leaders from all over the world who realize that they’re nothing without the people that deliver excellence for them. How we connect with those people — how we get them to take ownership and accountability in a time when nobody wants to take accountability for their actions — that’s what we’re struggling with right now.

MIKE ABRASHOFF: That’s what I laid out in the book, from my experience 20 years ago, about how you get connected people to take accountability and responsibility for their actions. At the end of the day, it was the crew that turned their ship around to be the best ship in the Pacific.

CHARLES MIZRAHI: I definitely want to get into that. That is just fascinating. I read this. I learned so much about the ship. You were commander, and how you got that ship is a story in and of itself. And what you did with those… I believe 310, right?

MIKE ABRASHOFF: Correct.

CHARLES MIZRAHI: — in a very short span of time is really the stuff of books. There you go. Anyways, let’s get to the first thing: You didn’t go to Harvard, you don’t have an MBA and you didn’t read — or even study — in school. I don’t know how many management or theoretical principles you really thrust into this position.

MIKE ABRASHOFF: The training I had for that was when, right before that tour, I got selected to be the No. 2 military assistant to the Secretary of Defense, William Perry.

CHARLES MIZRAHI: How did you get selected to that? You’re like me. I graduated in the top 98% of my high school class. I think you graduated in the top 80% of your college class.

MIKE ABRASHOFF: Right, at the Naval Academy.

CHARLES MIZRAHI: Good. So, you’re a lot smarter than I am. How did you get to be the No. 2 guy?

MIKE ABRASHOFF: Each service was asked to provide three nominees, and I was not the Navy’s No. 1 pick. We all went back for interviews, and I ended up with the job. I wasn’t the smartest. I didn’t have the best record. It took me a year to get up the courage to ask the Secretary of Defense why he hired me. He said that he didn’t hire me — the staff did. Unbeknownst to the 12 of us, they were surreptitiously interviewing us while we were waiting to get in to see him. When he asked them, they almost unanimously wanted me to be on the team.

CHARLES MIZRAHI: I love it. By the way, that’s a life lesson for anyone going out on interviews for jobs. Really treat the receptionist, or that first person you meet, with the utmost respect. Many times, they have undue influence on the hiring process.

MIKE ABRASHOFF: Absolutely.

CHARLES MIZRAHI: Wow! You got the No. 2 position.

MIKE ABRASHOFF: It’s called junior military assistant. The senior military assistant is probably our most demanding three-star job that we have.

MIKE ABRASHOFF: Colin Powell had the job. John Kelly had the job. Admiral McRaven had the job. As you can imagine, the office is a pressure-packed, stressful place. That’s where I got my MBA in management — by juggling different requirements under severe pressure. I would work 18 hours a day. I’d feel guilty going home after that because I felt like I was making a difference and learning so much. I was getting so much professional satisfaction. So, it was a tough 27 months. I didn’t take one day off in 27 months.

CHARLES MIZRAHI: How old were you when you got this job?

MIKE ABRASHOFF: Thirty-four years old.

CHARLES MIZRAHI: You were 34 years old. Before that, what were you doing?

MIKE ABRASHOFF: I was the second-in-command of a cruiser by the name the USS Shiloh. I’ve made seven deployments to the Middle East in my career. These were all building blocks, preparing me to take command of the ship.

CHARLES MIZRAHI: So, you weren’t just some regular guy. You had a good resume behind you.

MIKE ABRASHOFF: I wasn’t the smartest, but I’d like to think that not many people worked harder than I did. Even today. I left the Navy 20 years ago.

MIKE ABRASHOFF: In the publishing industry, I’m considered one of the hardest-working authors. In the speaking industry, I’m considered one of the hardest-working speakers. When you start out — not on the top rung of the economic ladder — you don’t get to where you are without a lot of hard work. I will take hard workers over pedigree any day of the week.

CHARLES MIZRAHI: We had Governor Mike Huckabee on the show some time ago, and he was catching chickens in Arkansas at 10 years old. He said, “There’s got to be a better life than this.” He worked his way up from a real working-class family. They didn’t even own their own house until he was in high school. Then, just years later, he’s in the governor’s house. He was in the governor’s mansion at 40 years old.

MIKE ABRASHOFF: I built our house, but there were 10 people living in it and we only had one bathroom. So, when I bought my first home — it has four bathrooms in it — I visited every one every day, just because.

CHARLES MIZRAHI: Because you can.

CHARLES MIZRAHI: Governor Huckabee basically said: “I was always the first one to get there and the last one to leave.” Success — 90% of it — is just showing up.

MIKE ABRASHOFF: And working hard and having the determination to make a difference.

CHARLES MIZRAHI: At 34, you had a pressure cooker of a job and were working just a heartbeat away from the Secretary of Defense. The responsibilities you had… First of all, it’s a 24/7 job, right?  You don’t rest. The Defense Department never rests.

MIKE ABRASHOFF: They gave me a secure telephone, for home, in case I got called in the middle of the night. In the middle of the night, if something went bad, the National Military Command Center would call me first. I’d have to go and take the secure option to take the call. So, you’re really on call 24/7 for the entire time you have the job.

CHARLES MIZRAHI: What are you learning? You said that’s where you got your MBA, in a half-kidding way. You’re around extremely successful people — people who are at the top of their game, controlling a military of 6 or $700 billion per year of expenditures, one million-plus people and one of the strongest militaries in the world. What are you learning? What’s the takeaway?

MIKE ABRASHOFF: William Perry taught me that leadership isn’t about charisma — it’s about leading with a sense of humility. I would come to call his leadership style “excellence without arrogance.” He didn’t care what your rank was. You could be a private or general. If you had an idea about how to improve a process by 1%, he wanted to hear from you. He was about continuous improvement. He’s the one who got Congress to pass acquisition reform. It used to be that if we wanted to get a pencil, we would have to put in a form in triplicate and get it signed by the chain of command. He saw how inefficient that was, so he really implemented policies that brought sound business practices to the military.

MIKE ABRASHOFF: I sat there and watched him. I was a gofer. I wasn’t a policy advisor, but I saw how he thought and got to the bottom of making the best, most efficient decision. I would sit there and play a game with him. If I was the Secretary of Defense, based on what had been presented, what decision would I make?

MIKE ABRASHOFF: Before he ever decided, I would always play the role of Secretary of Defense and say, “What decision would I make?” If I made the same decision, I thought, “Gee, I can think like the Secretary of Defense.” If he made a different decision, it meant I needed to fill a gap in my learning or training. So, that’s how I discipline myself to think at a higher level.

CHARLES MIZRAHI: Wow. Outstanding! For 27 months, you really… I’m just going to say the word “apprenticeship.” There’s no better term for it. I think that’s outstanding. If I had to do it all over in the finance business, I would pay to get Warren Buffett coffee every morning. What I could learn by being around those type of people is absolutely amazing. So many young people today… When they get their first job, their [main] question is: “How much am I going to make?”

CHARLES MIZRAHI: You should be paying them! You have zero experience, and they’re supplying the money and the experience. What are you supplying? You’re showing up.

MIKE ABRASHOFF: William Perry taught me to be intellectually curious, never accept where we were and always try to improve. I took that attitude with me to the ship and tried to ingrain it in the crew. We were going to be 1% better today than we were yesterday and 1% better tomorrow than today. If we could do that at the end of the year, that’d be a 270% compounded improvement. I’ll take that any day of the year.

CHARLES MIZRAHI: I believe Sam Walton said: “Success is not doing one thing 1,000% better, it’s doing 1,000 things 1% better.” When I used to leave my business, I said, “How did I push this business forward by 1%?” Before you know it, you’re up 20 or 30%. You’re changing everything.

CHARLES MIZRAHI: Everyone thinks it’s that big, monumental change and that “Eureka!” moment. It’s just a lot of blocking and tackling.

MIKE ABRASHOFF: It’s all it is. It’s blocking and tackling. I agree 100%.

CHARLES MIZRAHI: What I like about your book is that you outline pretty simple steps. So, when you finish reading it, you’ll say, “That’s common sense!” You didn’t reinvent the wheel here. It’s not the theory of relativity. It’s pretty common sense. I want to get into it. I want to stop yapping away. Let’s get right into this because I am really excited.

CHARLES MIZRAHI: I was so excited when we had a conversation a couple of weeks ago — when we were just getting to know each other. When I read your book… I love it because it’s simple, replicable and anyone can do this. You don’t need to go to Harvard! You don’t need a Wharton degree! It’s basic common sense — which is not so common.

CHARLES MIZRAHI: So, you’re 36 years old when the Navy selects you to be a commander of a ship. How does that work? Do you get to pick it, or whatever comes up?

MIKE ABRASHOFF: The Navy has a selection board of nine admirals that sit there and review everybody’s records. Only the top 30 or 40% will ever get command of their own ship. Then, the assignment process after that is lore. I wish it was very scientific, but my tour with William Perry was up in January of 1997. You have to go through four months of training. Whatever the next ship is, is what you get. There was really no rhyme or reason as to how I got assigned to USS Benfold. It was all a matter of timing.

CHARLES MIZRAHI: The timing couldn’t have been any better to get the USS Benfold. That was a stellar ship.

MIKE ABRASHOFF: I was terrified at the time. I didn’t realize, before I got there, that we had one of the highest accident rates of any ship in the Navy, some of the poorest performance metrics and some of the lowest retention [rates]. But, it was one of the newest ships that had the latest and greatest technology. That technology was nothing because the crew wasn’t engaged to man it, bring it to life and operate it. When I realized that was my opportunity, that’s what I focused on — the culture to connect with them and say, “Hey. We need to own this, and we’re going to stop pointing fingers. We’re going to stop feeling sorry for ourselves, and we’re going to own it.” At the end of the day, they’re the ones who delivered the excellence.

CHARLES MIZRAHI: If I recall, the Pacific Fleet had 86 ships at the time, correct?

MIKE ABRASHOFF: Roughly.

CHARLES MIZRAHI: And the USS Benfold was ranked?

MIKE ABRASHOFF: We rank No. 1 and we pretty much know who the bottom five or six are. We were at the bottom based on accidents, retention, discipline and performance.

CHARLES MIZRAHI: OK.

MIKE ABRASHOFF: We weren’t the worst, but we were down there.

CHARLES MIZRAHI: You were definitely not. Your ship was like your education: the top 85% of your class, right?

MIKE ABRASHOFF: Right. It was an opportunity.

CHARLES MIZRAHI: Oh yeah. There was so much more room to go. When you’re No.1, there’s only one place to go.

CHARLES MIZRAHI: So, now you’re 36. You are now commander of the USS Benfold, a ship. By the way, before this interview, you told me something amazing and I want to pay the respect and honor to who the ship was named after. Could you tell me about that one more time, please?

MIKE ABRASHOFF: It was named after Edward Benfold. He was a medic in the Korean War.

MIKE ABRASHOFF: One afternoon, he was tending to two wounded Marines in a foxhole when several enemy soldiers stormed the foxhole, throwing grenades into it. At the age of 21, Benfold decided he was going to become a leader. He picked up those grenades, stormed the oncoming enemy soldiers — blowing them and himself up in the process — and saved the lives of two wounded Marines who I used to take to sea, on his ship, every six months or so.

MIKE ABRASHOFF: In addition to naming a ship after him, he was awarded the Medal of Honor. I used to tell his crew: “Make sure Edward Benfold is smiling down upon us today and that you never go wrong when you do the right thing.” It was about instilling a sense of values, honor, courage and integrity, which I connected back to Benfold.

MIKE ABRASHOFF: People complain about the younger generation today… that they have no values. I disagree. They don’t hear about values. They have nobody to show them what those values are. But if we take the time to connect with them, they’re hungry for it. That was a lesson for me. I was bashful when talking about values, but once I saw the response from the crew — that they were hungry for it — it gave me more courage as a captain to try to do better.

CHARLES MIZRAHI: So, you took Benfold, and that spirit permeated the ship. When every sailor woke up in the morning, they were on a special ship.

MIKE ABRASHOFF: One of my department heads told me that he couldn’t wait to wake up in the morning and come to work because that’s how much fun the sailors had on the ship — and how much satisfaction they got. We were trying new things. We were challenging every rule, custom and tradition. If my crew, the people actually doing the work, could come up with an idea of how to do something better, we’d try it. And if it worked, we’d pass it up the chain of command. We were a hotbed of innovation and creativity, constantly trying new things in the Navy.

CHARLES MIZRAHI: So, the crew was demoralized. From what I remember reading, when the previous captain left the ship, they applauded.

MIKE ABRASHOFF: They cheered. I’d never seen such a blatant sign of disrespect in my career.

CHARLES MIZRAHI: First of all, just the nerve they had to do that to a superior officer. Secondly, I don’t want to get into the way he commanded to deserve this type of disrespect — I don’t want to say earned it — but to be the recipient of it is just not nice. It kind of sucks.

MIKE ABRASHOFF: I was embarrassed. I was terrified that this was the crew I was taking over. I had never experienced anything like that in my career. My command master chief was the senior enlisted guy. I’d forgotten this in the heat of the moment, but when that happened, I turned and bowed to the crew. It sent a signal to them that things were going to change and that I’d work for them. So that was the root problem. They felt like they were stepping stones for his career. I wanted to be the stepping stone for their careers. People will respect you more if they think that you care about their careers and promotions more than you care about your own.

CHARLES MIZRAHI: If you help enough people get what they want, they’ll help you get what you want. It’s pretty simple. It’s obvious, but most people just don’t get that.

CHARLES MIZRAHI: It reminds me of CEOs who leave their companies. The stock rises 10% and you’ve got to feel really terrible. The company feels so much better without you that shareholders are bidding up the price. It’s just the biggest slap in the face.

MIKE ABRASHOFF: My sister worked for one of the largest money center banks. When the CEO left, they had a party, but nobody showed up.

CHARLES MIZRAHI: That’s got to be terrible. Alright. Be that as it may. I’m not a Navy person, and I don’t know much about the military apart from what I read from books and make-believe I know. What I think I know is that the Benfold was a USS destroyer, correct?

MIKE ABRASHOFF: It was a guided missile destroyer. We carried 90 Tomahawk cruise missiles.

CHARLES MIZRAHI: What is the value of a ship like that?

MIKE ABRASHOFF: At the time, it was about $2 billion. Now, it’s probably $3.4 billion to build.

CHARLES MIZRAHI: OK. So, to put this in terms that I can understand: You have a 36-year-old CEO, which is you, in charge of 310 employees in a company that’s intrinsic value is over $2 billion.

MIKE ABRASHOFF: And, I’ve got budgets I have to live within. I’ve got performance metrics that we have to have to hit.

CHARLES MIZRAHI: And you have divisions, right? You have five departments or so.

MIKE ABRASHOFF: Correct.

CHARLES MIZRAHI: OK. You have five department heads that report to you on a daily basis. You have something that most companies don’t have. You literally have the power of life and death on your ship.

MIKE ABRASHOFF: It’s an awesome responsibility. Everything I did on that ship was not for my own self-promotion. I never wanted to have to write the parents of any of my sailors — telling them that their sons or daughters weren’t coming home because we didn’t give it our best. When you don’t care about your promotion, but care about doing the right thing, it frees you up from not being stuck in a bureaucratic maze or accepting “that’s the way we’ve always done it” as a reason for why we do things. Instead, [you can] create an intellectually curious organization where people are constantly striving to improve every day.

CHARLES MIZRAHI: OK. Thirty-six years old. How big are you? You’re a pretty big fella, no?

MIKE ABRASHOFF: I’m 6’4. I played football at the Naval Academy — an undistinguished career, but I played nonetheless.

CHARLES MIZRAHI: What position?

MIKE ABRASHOFF: Offensive tackle.

CHARLES MIZRAHI: Alright. So, you were about 250 or 240 (pounds) at the time?

MIKE ABRASHOFF: Yes, 240.

CHARLES MIZRAHI: OK, so you’re a 6’4, 240-pound person. You take command just by walking in the room. Now you get on this ship and 310 sailors just applauded the commander who left — who they had very little respect for, if any. You now take a ship that is at the bottom rank. You have your work cut out for you. You wake up that next morning and say, my first task is…?

MIKE ABRASHOFF: I got my five department heads together and changed the way they were evaluated.

MIKE ABRASHOFF: Previously, to get command of your own ship, you had to be ranked one or two of the five in your annual evaluations. It was a cutthroat business — to the point where sometimes they didn’t support each other. That filtered down to the lowest levels in their departments. So, there was no collaboration and cooperation across departments.

MIKE ABRASHOFF: The first thing I did was change the way they got evaluated. The No. 1 criterion was how well they collaborated with each other and how well they drove that collaboration down to the lowest levels in their departments.

CHARLES MIZRAHI: And that was a game-changer?

MIKE ABRASHOFF: Yes, a game-changer.

MIKE ABRASHOFF: What’s funny is that if you asked me what caused the ship to do so well, I would say it was the five of them collaborating.

MIKE ABRASHOFF: My biggest failure — I give myself an F in this — and I didn’t realize this until I was writing the book… Benfold is one ship of a 10-ship aircraft carrier battle group. In two years, I didn’t do a thing to help a fellow ship or ship captain because we had a culture where we didn’t collaborate, ask for help or give help. If that aircraft carrier had sunk because one of the other ships didn’t do its job, it would not have mattered that we were the best. That’s the opportunity I missed — improving the performance of the entire battle group by getting the ship captains to collaborate better.

CHARLES MIZRAHI: Let’s go back a second. Say you and I work together, and we’re the head counselors at a camp. The first thing we would do, according to what you’re telling me, is get those four or five divisions under us and set the record straight on how we want things to go.

MIKE ABRASHOFF: Exactly — and not the outright backstabbing, narking or internal politicking that goes on in organizations.

CHARLES MIZRAHI: Excellent. Now, you have five department heads?

MIKE ABRASHOFF: [Yes, they’re] department heads.

CHARLES MIZRAHI: OK. So, you changed the criteria of how they were graded and how they advanced. You made it collaborative instead of their own silos where everyone was out for their own. You don’t need a business school for that one, right? You work people together instead of working them separately – against each other. OK, next.

MIKE ABRASHOFF: I got the crew together, and I would walk the ship and listen to sailors. I asked them what our purpose was and they said, “Well, we’re here to get you promoted.” No, that’s not our purpose.

MIKE ABRASHOFF: The next thing I did was I got the whole crew together and told them a story from August 2, 1990. I was stationed on a different ship in the Middle East. At 4:30 in the morning, Saddam invaded Kuwait. We had 21 unknown fighters coming directly at our ship. We sounded the general quarters alarm, and I got to my radar screen. I was looking at these 21 fighters and thought, “We’ll be able to shoot down many of them.” But I gave us only a 50% chance of being able to shoot down all 21. The first thought that went through my mind that morning was: “My life insurance is paid out and my will is up-to-date.”

MIKE ABRASHOFF: For several tense minutes, we tracked these fighters. Just as we were getting ready to fire the first missile at them, they hung a right turn into Saudi Arabia.

MIKE ABRASHOFF: We later found out it was the Kuwaiti Air Force fleet in Kuwait that morning. That story made the front page of the Wall Street Journal. After the excitement died down, I started thinking, “I don’t like a 50% chance of survival.” I wondered what we could have or should have been doing differently while we had the opportunity to put ourselves in the position to control our own destiny.

MIKE ABRASHOFF: That’s what’s at stake today for the U.S., businesses and individuals: How do you control your own destiny? For me, it was collaboration. We did not collaborate across the five departments on that particular ship.

MIKE ABRASHOFF: So, I got the crew together and told them that story. [I told them:] “I’m not going to put you in a position where you have only a 50% chance of survival. We are going to put ourselves in a position where we control our own destiny. Everything we do from this day forward — training, process improvement and taking ownership — is going to be about winning and winning overwhelmingly.” That was the second thing I did after taking command.

CHARLES MIZRAHI: I just want to point out — and I was wrong about this — simply because someone signs up for the Navy, it doesn’t mean that the Navy has that crewman for the rest of their life. It’s a transitory workforce.

MIKE ABRASHOFF: Absolutely. We have roughly 320,000 people in the military. I don’t know what the statistic is today, but we bring in probably 100,000 new people every year. It may be more or less, but it is transitory. Then, within a ship, officers typically have 18 to 30-month tours. Enlisted people typically have five- or six-year tours on the same ship. People are always coming and going. You don’t want them leaving all at the same time, so all their rotation dates are staggered. That way, you have some stability in the manning profile.

CHARLES MIZRAHI: So, you’re really stuck with a crew that is constantly fluid. Some of them could be out tomorrow, and new guys could come in the next day.

MIKE ABRASHOFF: The average age of my sailors was 23.5, and only 10% had been to college. So, I was getting kids right off the farm in Iowa and saying, “You’ve got to learn how to launch this Tomahawk cruise missile.” The training involved is astronomical to get people to the level of performance that we need them.

CHARLES MIZRAHI: How do you keep them signed up? How do you keep them engaged? How does any business or school keep their best people connected and reupping?

MIKE ABRASHOFF: Again, I’m talking to a sailor. He was getting out the next day and I said, “Why are you getting out?” He said, “Captain, nobody ever asked me to stay.” I’m here thinking, “Maybe we overthink this. Maybe if they know that I want them to stay, and I look them in the eye and tell them that, they’ll stay.”

MIKE ABRASHOFF: So that’s what caused me to start interviewing every sailor on the ship individually. What would it take them to continue their careers in the Navy? We were talking big bucks to get somebody recruited into the military — into the Navy — and get them through the first eight weeks of boot camp. [It] costs something like $75,000 per person. Then we’re also giving them $30,000 signup bonuses. You’re talking over $100,000 invested in somebody just in the first eight weeks after they join the military. That’s a huge investment. If you lose them, you’re not getting a return on your investment.

MIKE ABRASHOFF: In interviews, we asked, “What would it take for you to continue your career?” Some wanted training, different schools or to go back to a ship on the East Coast and be closer to their families. I would ask them nine months ahead of their contract end date so that I had time to actually make a difference. If you give me nine months to solve a problem, I can generally solve it. In the quarter before I took command of the ship, our retention rate was 8%. In my last year, our retention rate was almost 100%.

CHARLES MIZRAHI: Slow down. What does 8% mean? You have someone who signed up for the Navy and finished their five-year tour of duty?

MIKE ABRASHOFF: A three, four or five-year [tour]. Only 8% were electing to continue their careers after their contracts were up.

CHARLES MIZRAHI: So, I had 100 people come to me. For 92, that was the end of their naval career?

MIKE ABRASHOFF: Correct.

CHARLES MIZRAHI: How did you shift that? To what number?

MIKE ABRASHOFF: Almost 100. In two groups, it was 100%. In a different group, it was 91%. When you average it out, it’s almost 100%. It was one sailor at a time. I had never seen it done before, but I was going to ask them to stay. I was going to find out what it would take to get them to stay. If I could get it for them, then hopefully they’d stay with us. Because we didn’t have turnover, the constant churn of people unexpectedly [leaving], we were able to get to the next level of performance.

CHARLES MIZRAHI: You did something that was so complicated… I say that jokingly. You listened to their problems and what motivated them, and did your best to solve that problem.

MIKE ABRASHOFF: Organizations have their culture and mission statements on the walls, but everybody walks past and pays no attention to them. To me, culture is: “Would you want your son or daughter to come work for you and see you in action every day?” If you’re proud, you’re on the right track. What I wanted to do was create a culture where I would be proud for my own family members to come be a part of it. At the end of the day, we’re dealing with somebody else’s sons or daughters.

CHARLES MIZRAHI: They’re all someone else’s sons and daughters. What were some of the simple things that the sailors said to you that no one ever asked them before you came around?

MIKE ABRASHOFF: One asked me if I knew how many times they painted the ship in the previous year. I said no. He said six times. Every time they painted the ship, it took them a month to paint it. So, every other month they were painting the ship. He also asked me, “Have you ever painted your home?” I said yes. He said, “It sucks, doesn’t it?” And I said, “What’s your point? We’ve been painting ships for 244 years.” He said, “Did you ever stop to notice why we we paint the ship every other month?”

MIKE ABRASHOFF: Whenever a new piece of equipment is added topside, to the hull of the ship, it’s being held in place with nuts, bolts, screws, washers and fasteners that are made out of ferrous metal that rusts in saltwater. When it rusts, it streaks rust stains down the side of the ship. He said, “Have you ever heard of stainless steel?” I said, “You mean the stuff that doesn’t rust in saltwater?” I walked past this during my first 16 years in the Navy and never thought to challenge it. The people who procured the equipment were not operators. They never considered how the operators had to spend their days maintaining the equipment that they were buying. They were giving it to the lowest bidder. To them, labor was free.

MIKE ABRASHOFF: To me, labor isn’t free. When I started looking at this, I had sailors hanging on the mast in safety harnesses, trying to paint. And, I had sailors hanging over the side. It was inherently dangerous, and they were doing $5/hour work. How demoralizing was that? We scoured the globe looking for the right materials so we could change the stuff out. We spent about $25,000. We did other things — flame spraying and powder coating everything we could — but we didn’t have to paint the ship again for the next 10 months. That program was implemented on every ship in the Navy for reducing corrosion. Corrosion is a multibillion-dollar problem for the U.S. Navy because its [ships] sit in saltwater. It came from a 21-year-old sailor.

CHARLES MIZRAHI: Amazing. So, your best ideas usually bubble up right from the bottom, and you’ve got to just listen to them?

MIKE ABRASHOFF: They’re the ones doing the work.

CHARLES MIZRAHI: They’re doing the work. Wow. That’s absolutely amazing. Super. What were some of the others? Just give me one more because I find this so amazing. With all the Navy commercials, recruitment centers and advertisements, no one thought for one second… I find that so often in business. The amount of turnover is so great, and you see how much money they spend to just get one employee. But to retain that employee, they would spend a fraction of the money.

MIKE ABRASHOFF: I used to say it’s cheaper to retain the employees that you have than to lose and replace them. The same goes for customers. It’s cheaper to retain the customers you have than replace them. Take the financial crisis in 2008. I didn’t have a lot of assets. But for the whole crisis, I never heard from my financial adviser. I didn’t hold him accountable, but I wanted to hear from him on what the plan was to keep my assets safe. I left him. He never called to find out why I left. If you don’t know why somebody is leaving, you can’t fix the problem and keep future customers and clients. I used to ask my sailors when they left, “Why are you leaving?” If it was a systemic problem that I could fix, I’d fix it.

CHARLES MIZRAHI: Has that been instituted throughout the Navy since? Or, is that just on an ad hoc basis?

MIKE ABRASHOFF: I’m not sure. I know that my book is used in a lot of leadership curriculum throughout the Navy, but I don’t know if that’s been implemented Navy-wide.

CHARLES MIZRAHI: OK. The next thing you did was create discipline. You buffered that up somewhat, no?

MIKE ABRASHOFF: We got featured in Fast Company magazine and the Harvard Business Review. I was sitting in my chair during my last week in command of the ship, and thinking “Why would a business magazine want to write about us?”

MIKE ABRASHOFF: I started thinking about nontraditional statistics that wouldn’t show up anywhere. One of them was our disciplinary rate. I compared my last 12 months in command to my predecessors’. In his last 12 months, he had 28 disciplinary cases — of which he threw 23 sailors out of the Navy. In my last 12 months, I had five cases on four sailors. One guy rolled the dice and went twice. When people feel more connected to their work and organization, discipline improves and they comply with the directives and standards that you set for them.

CHARLES MIZRAHI: Don’t you think that the people who should know — who went to business schools and read about everything — should be doing these kinds of things? I’m really asking myself a rhetorical question…

CHARLES MIZRAHI: Why aren’t they getting this? Why does it take someone like you — [a person] from the Navy, who didn’t have a business background and was an offensive lineman? How did you come up with these things? What were they missing?

MIKE ABRASHOFF: In all honesty, the companies that hire me are the ones that already get it and want to get an additional edge. The ones that don’t hire me are so messed up in so many other ways that they never think to bring somebody else in and learn from others. The appeal to me has been that I don’t get to choose our missions. I don’t get to choose the people I work with. I can’t go back and ask for more money to get the job done. I had to play the hand that was dealt. What I hear in business a lot are excuses: “Gee, if I just had better people,” or “Gee, if I had a better location,” or whatever. You [should] play the hand that you’re dealt, own it and make the best of it. I think that’s been part of my appeal to the business community.

CHARLES MIZRAHI: It’s much easier to complain about the problem — to not do anything, blame everyone around you and say, “If had more money, budget, marketing…” or “better salespeople and territories…” It’s a never-ending game of want. Just grow where you plant it.

MIKE ABRASHOFF: Exactly.

CHARLES MIZRAHI: There’s one thing that I think is so simple and overlooked: You listen aggressively. Share with me what that means.

MIKE ABRASHOFF: I came across a sailor one day and he said, “Captain, we have a term to describe the organization on this ship. This ship is like a tree full of monkeys. You’re the monkey at the top of the tree. On every branch, there’s different levels of monkeys. We’re the monkeys on the bottom branch. Whenever you look down from the top of the tree, all you ever see are smiling faces. When we look up from the bottom branch, we have an entirely different view of the organization.”

MIKE ABRASHOFF: When he said that to me, I started putting myself in their boots and viewing the operation through their eyes. It was then that I realized I had a multicultural workforce. I had a multigenerational workforce, and each group spoke a different language. I’d been trying to communicate with them in my language instead of communicating in theirs. I bet you 50 or 60% of my day was either spent listening to the messages that they were trying to send me or communicating back about where we were going, why it was important and why it was in their best interest. What I tried to do was connect people to purpose. I could do that by listening aggressively, finding out where the gaps were and then communicating with them about our high standards.

CHARLES MIZRAHI: Simple stuff, but it works. Last thing for you: When you used to go around to companies and speak, could you get a good sense, when you walked into the building, of what type of company you were dealing with in terms of how they dealt with their people?

MIKE ABRASHOFF: One time, I was an admiral’s aide and we were going to visit our first ship together. He said, “Mike, I’m going to teach you how you’ll be able to learn, within 45 seconds of going on a ship, whether or not it’s going to be a good ship. It’s going to be a direct reflection of the commanding officers’ personality.” He said that if people look me in the eye when they’re talking to me, smile, and it’s a clean environment, they have a shot at being a good ship. There’s no such thing as a good, dirty ship in the Navy. I look for those factors whenever I walk into any establishment.

MIKE ABRASHOFF: Take Chick-fil-A. When you walk into Chick-fil-A, every employee is looking you in the eye, smiling and taking great pride in themselves and what they’re doing. I have never had a bad experience in any Chick-fil-A in this country. You could walk into the restroom and almost eat off the restaurant floor. That’s how clean Chick-fil-A is. I’m not here to bad-mouth KFC, but the experience… You don’t know what you’re going to get when you walk in a similar establishment.

MIKE ABRASHOFF: It all comes from the top. The people at the top need to understand the enormous impact they have on everybody else down the chain of command. If something is important to them, it will become important to your people. To answer your question: I can tell. I’ve trained myself. The minute I walk into an establishment, I can tell you what kind of establishment and or what kind of experience it’s going to be based on the reception you get from the people on the front line.

CHARLES MIZRAHI: When I used to run my own money management firm and go to many financial planning firms and allocators, I sat in the reception area.

CHARLES MIZRAHI: In 30 seconds, what they offer you, how they greet you and how they smile can tell you if you’re going to do business with them or if there’s no chance that you’re ever going to.

MIKE ABRASHOFF: Or, [you can] just watch people as they walk through the reception area. If they’re employees, and they have a scowl on their face or are miserable, you’ll think, “Boy, this isn’t a good place.”

CHARLES MIZRAHI: Yeah. I remember this one place where the receptionist rose to greet you when you walked into the lobby. It’s a simple thing. That’s not by accident. Whoever trained that person said, “You rise when a guest comes in.” Then, they had someone come out — it was like a machine — and ask, “What can I offer you?” They would bring it to you on a tray and come back and remove it when you were done. Back in the day, when we didn’t have cell phones, they asked, “Would you like to make a phone call?” or “Would you like a private office?” [This was] before I even met the person that I was there to meet!

CHARLES MIZRAHI: Right off the bat, you got a sense of someone training that person from the top down. This was the kind of place I wanted to do business with.

MIKE ABRASHOFF: We choose how we show up. We can choose to be miserable, or we can choose to be optimistic and upbeat. People want to work with people who are optimistic and upbeat. I used to tell my sailors, “If you see a visitor walk onboard the ship, walk up to them, look them in the eye, shake their hand and say, ‘Welcome to the best damn ship in the Navy.'” You should see visitors’ eyes light up because they don’t get it anywhere else. It’s just an attitude. It’s just part of the vibe. We’re the ones who choose what that initial experience is like for people who go into business with us.

CHARLES MIZRAHI: Before I let you go, there’s one thing I wanted you to share with me: Culinary school. Tell me about that.

MIKE ABRASHOFF: The day after I took command of the ship, I took my parents onboard to have lunch in the captain’s cabin. [It was] a big, big deal. It was the worst food I’d ever had in my life. How you could ruin chicken nuggets was beyond me. But, we managed to ruin chicken nuggets. I was there thinking, “Gee, if this is how the captain and his guests are getting treated, what are we feeding the crew?” So, I went down to have lunch with the crew. Captains don’t eat with the crew, but I decided that it was worse food than what I was getting.

MIKE ABRASHOFF: Then, you have to ask yourself why. You [have to] start going through all the things that contribute. One thing is the quality of food that you’re procuring from providers, which, because of William Perry, I learned that I could change providers if we weren’t getting the quality we wanted from our current providers. Nobody joins the Navy to be a cook, but recruiters have quotas to fill on the 30th of every month. If you walk into a Navy recruiting station on the 30th… You could have a 1590 on your SAT, but if he needs to fill a quota for a cook, you’re going to be a cook. So, we put non-volunteers into the job and didn’t give them any training.

MIKE ABRASHOFF: I took every variable apart, and one of them was training. I said, “I’m going to treat him special. I’m going to send him to culinary school in San Francisco.” So, I took a hit to the budget.

CHARLES MIZRAHI: One second. You had discretion to do that? Any captain could have done what you did, right?

MIKE ABRASHOFF: Correct. But I had a limited pot of money for training, so I had to have to offset that somewhere else.

CHARLES MIZRAHI: Fine. But you had discretion to play with that pot of money and divide it any way you wanted?

MIKE ABRASHOFF: I did.

CHARLES MIZRAHI: So, you got the biggest value-add out of the dollars you allocated. You said, “This will be the place I get the most bang for my buck.”

MIKE ABRASHOFF: Correct.

MIKE ABRASHOFF: After we got the Spokane trophy for best ship in the Pacific Fleet, my admiral came over and asked, “What was your No. 1 priority since you took command?” I said, “It’s the food.” He hit me on the shoulder and asked again: “Really, what was your No. 1 priority?” And I said, “It was the food.” We started serving gourmet-quality food on our ship for the same amount of money that we were serving lousy food. It just sent a signal that we cared about our people. They started taking notice, and it just upped the standards. They [started] taking greater pride in themselves and their ship — just with those little things. It was about tearing the process apart and improving every input that went into serving food on a Navy ship.

CHARLES MIZRAHI: From what I understand, the Navy started something with culinary schools, correct?

MIKE ABRASHOFF: Correct. They created their own culinary school. For the first time. We’re giving people the training in order to be cooks. It’s a novel concept. We never did it before. [We] just throw them right into the job.

CHARLES MIZRAHI: I just feel terrible that when you left the Navy for this, no one sat down with you and said, “Captain Mike, how can we make you stay?”

MIKE ABRASHOFF: They did. But I had an entrepreneurial urge that I wanted to satisfy and couldn’t get by putting PowerPoint presentations together. I love the military. I love the people. I love the mission. I have a tremendous amount of respect for it. I had gotten to the point in my career where sitting behind a desk for the next five or six years wasn’t going to satisfy me, personally. That’s why I moved on.

CHARLES MIZRAHI: Now, you’re a public speaker and you travel throughout the world speaking about the techniques that took one of the worst ships to the first ship?

MIKE ABRASHOFF: I’ve got a website: apgleadership.com. My book is It’s Your Ship: Management Techniques from the Best Damn Ship in the Navy. The publisher thought I might sell 20,000 copies. I’ve now sold over 1.1 million copies.

CHARLES MIZRAHI: Let me point out something because I also have a business book: Getting Started in Value Investing. I was told, back in the day, when the book was published, that if you sell over 1,000 books in the business category, that’s considered a lot. Many books don’t even sell 1,000. And you sold how many?

MIKE ABRASHOFF: I sold 1.1 million.

CHARLES MIZRAHI: How many languages has it been translated into?

MIKE ABRASHOFF: About 10 different languages. Last year, at this time, the Warren Buffett of Canada — his name is Prem Watsa, have you heard of him?

CHARLES MIZRAHI: Of Fairfax Financial? Yeah.

MIKE ABRASHOFF: Prem bought about 11,000 copies of It’s Your Ship. So, there was an enormously successful guy who came to Canada from India with nothing.

MIKE ABRASHOFF: Now, he’s the Warren Buffett of Canada and he’s trying to get his people to the next level. He has bought 11,000 copies of the book. That proves my point right there. I’ve come to know and respect him. One of the honors of my lifetime has been getting to know William Perry and learning from him. But I have learned from Prem as well. What an extraordinary leader he is, and a visionary, to have created this $20 billion dollar —

CHARLES MIZRAHI: Out of nothing! From zero!

CHARLES MIZRAHI: I was a shareholder for many years of Fairfax Financial — full disclaimer — and know the company very well. The way Prem treats his people… He treats them like family. If you read his shareholder letters — which, if you’re interested in learning about business, definitely read his letters — he just heaps praise on everybody. The blame is all his. All the problems are all his. It’s the exact opposite of the way most leaders lead.

MIKE ABRASHOFF: Exactly. He’s got a very small staff of maybe 15 people. Everything is decentralized. He invests in people, and they know what the standards are. He sets them loose, and they deliver year after year.

CHARLES MIZRAHI: Yeah. Outstanding. The book, It’s Your Ship — Prem Watsa has bought 11,000. Boy, oh boy. You get a business school education from a book that costs around $20.

CHARLES MIZRAHI: Captain Mike Abrashoff, it’s been an honor and a privilege to have this time with you. Keep fighting the good fight. It’s outstanding what you did in the Navy and what you’re doing now with American business by helping others through this book. I’m just thinking: If high school and college kids got this book… It’s not just that they can become entrepreneurs, do the simple things and not learn the stupid mistakes, but they can see that business isn’t complicated. It’s about buying, selling and making things, and treating people like you’d want to be treated.

MIKE ABRASHOFF: That’s all it is. It’s not rocket science.

CHARLES MIZRAHI: I wonder what rocket scientists always say. But yeah, definitely not rocket science. Beautiful.

MIKE ABRASHOFF: It’s not brain surgery!

CHARLES MIZRAHI: Captain Mike, thanks so much, man. I greatly appreciate it. Thanks again.

MIKE ABRASHOFF: You’ve got it, Charles. Happy holidays.

CHARLES MIZRAHI: Same to you.

CHARLES MIZRAHI: Thanks for listening to this episode of The Charles Mizrahi Show. If you’re a new listener, welcome. If you’ve been listening for a while, we’re glad to have you back. Either way, we’d love to know what you think of the show. Please leave a review! If you listen to the podcast on Apple podcasts, reviews make it easier for others to find the show. You can also see a video of the interview on The Charles Mizrahi Show channel on YouTube.