Beyond the Company: Growing Leadership Through Stronger Ecosystems

In this episode of Leadership Quotient, Lindsay Guzowski, CEO of The Crucible, speaks with Ellen Chang, Managing Director at CapZone Impact Investments, about why long-term value creation depends on building ecosystems, not just individual companies. Drawing on leadership experience from the U.S. Navy, Northrop Grumman, and impact investing, Ellen shares why great leaders make people feel heard and seen, how patient capital changes the way investors think about leadership, and why collaboration often creates stronger outcomes than zero-sum competition.

Transcript

SPEAKER_00 0:00

Welcome to Leadership Quotient, a podcast by The Crucible, where we explore how leadership teams and investor-backed companies are built, aligned, and scaled for impact. I'm your host, Lindsay Gazowski, and in each episode we'll talk with the people shaping value behind the scenes, from operating partners to investors to advisors to C-suite executives about what it really takes to drive performance through leadership. On today's episode of the Leadership Quotient podcast, I chat with Ellen Chang, Managing Director at CapZone Impact Investments, about growing ecosystems, not just companies, collaborative competition, and being a decent person. Ellen, welcome to Leadership Quotient. Your background has a lot of different components that probably contributed substantially to your views on leadership and how you developed your own leadership style.

SPEAKER_01 1:15

Gosh, that's a long and involved question. So I'll give it a shot. I started my career in the Navy. I was looking for uh someone to pay my way to college because we didn't have uh enough resources to do so. And I landed on a Navy scholarship. So that ended up giving me a bridge to a paid way through college, but also a career immediately thereafter. Um, that was probably the most formative step I took, not just in college, but the subsequent decade after, where I spent 10 years as an active duty officer in the Navy. Um, these structures, the military services, are are largely apprenticeship based. So so we had uh so I had the privilege of being taken under the wing by seasoned officers, but also seasoned enlisted to help me understand the culture, but also the the ethos within the services. Um and it's very very much a team, team-oriented um duty, honor, country type of type type of an environment. Um what I've learned in the Navy continue persists uh throughout my time because I had the chance to work with work with many different people and manage um teams of teams of of teams, which which help me understand how we actually motivate people. How do we how do they how do we help them feel heard and seen and and listened to? And you know, there was a there's a fallacy that the military can just fire people, and and that's really not true. But continuing on my journey, um I I left and then went to business school after eight and a half years of active duty service, and I vaulted into the financial world. So I spent some time at JP Morgan. Um, and that was a I of all the banks that I was interviewing, I really felt drawn to JP Morgan given some of the principles um it actually stands for. And the JP Morgan I joined is not the JP Morgan of today for those of those in the financial services. It was still um a lot smaller before Jamie Diamond came in, but it still had a very much uh collegial, or at least in my in the bank I joined, a collegial culture that respected individuals. I took that, I got recalled to 9-11, so I didn't spend a lot of time there. Um, but I ended up getting getting back into national security. My second decade is really with a large engineering firm, uh Northrop Grumman. So, so based on my um capability in the Navy, also some of my financial experience, I got pulled into Northrop Grumman and led teams in engineering services. That pulls me into then in 2015 when I left Northrop Grumman, as I saw the opportunity for a lot of the space and drone types of technology companies coming to for. And this is 10 years ago. So, so how I got into the investor space is I literally left myself and actually joined a team uh here in San Diego where we were starting to do some investment and commercialization work for parts of the government, but just a couple uh different groups here in San Diego. I was frustrated with the lack of long-term perspective, I should say, within within a lot of funds, especially since in the in the area that I invest in, which is deep tech, deep technologies, hardware. Um, and so I started to look for um I I happen stance, got introduced to cap zone impact investments where I'm at right now. And it's a very unique niche type of uh investment fund. It's an opportunity zone fund, but because of the opportunity zone structure, it necessitates leaving capital in place for 10 years, which is very, very different. And so that's where I find myself today at Cap Zone Impact Investments. It's it's focused a little bit more on real assets, but what I have found is my propensity or my understanding of deep technology hardware companies has had utility at CapZone where we're looking for infrastructure for manufacturing, for example. And I'm able to work with and source tenants from the cadre of startups that are growing really fast. And so that that brought me for full circle to where I'm a managing director at CapZone, um, working on essentially public-private partnerships for infrastructure. We work with the Department of War or a state within an opportunity zone fund that ideally actually bring back brings back manufacturing or brings back jobs, you know, uh for the Americans.

SPEAKER_00 6:10

That's fantastic. And one of the interesting things as you were describing that story is that a lot of the a lot of the places where you were grown and built as a leader are very large organizations. And yet you still talk to them about them in terms of the teams. Talk to me a little bit about how the Navy differed from JP Morgan differed from Northrop Grumman in how they viewed leading teams and growing the enterprise or achieving the mission that that team was taxed with.

SPEAKER_01 6:55

Uh I would say tacitly speaking, the the Navy leadership ethos is dominant throughout. And certainly everyone has different personalities and there's archetypes of what not to do, because people can overwork people, etc. But the general ethos of how of the fact that you can't you can't accomplish and you can't stand on um, I should go back, you can't accomplish something large without a a broad understanding of how to bring a team together is really really dominant in the Navy. I think in Northrop, because there's a lot of veterans inside Northrop, there's and they tend to work with national security, there's some of that, but I think it's a lot more diffuse in general, I would say. And I would say in in just the complete commercial world, it's even more diffuse. And so you set you still have kind of, I think it depends on the founder of a company or maybe the the lead of a specific area of a company to really per where the culture permeates. Um that that's the difference I've seen. And what what what I've seen in just um the the you know 15 years since I've been at, I guess 14 years since I've been at Northrop Grumman, I would say I see veterans finding each other, you know, like even in different clusters, depending on on where where we are. And in this day and age where with national security at the front and center, where we have, you know, I don't know if you would call Iran a war or a conflict or um and also supply chain challenges, given that we do have a near peer, you do find a lot of folks not uh that are national security, uh national security adjacent actually very interested in this sector these days. And and so so you have a lot of different personalities. Why I bring that up is because you're starting to see the different um, you're starting to see the veterans with some some background being able to bring bring what they have, you know, to the fore, where they they're comfortable with people with different personalities. I think that's the biggest difference. I've worked with people with all kinds of personalities. We have to, we have to actually develop their skill sets. It's it's my job as an officer to develop the skill set. So I've always taken it upon myself to do that. I think in industry, um uh folks that do that tend to be a little bit more women. And I don't think that it's rewarded as much and it needs to be compensated.

SPEAKER_00 9:35

Yeah, that's an interesting point because I think that frequently there's a perception that, especially in large organizations or bureaucratic organizations, that the structure provides almost a homogenization and an ability to manage through structure and expectations as opposed to really having to learn about the different types of people that are going to be there and being able to get the most out of each one.

SPEAKER_01 10:01

Correct, correct. And I'll go back to what I used, uh the terms I've used earlier. People want to be heard and seen. Yes. And when they when you do that, um they light up, right? And I I I'm a guilty, I can get too busy and I forget that, right? And so I have to remind myself, people want to be heard and seen. Yeah.

SPEAKER_00 10:24

There's also a an interesting perception that people that come out of very large organizations struggle when they come into smaller enterprises because it's seen that, well, you've been very siloed, you've done a single thing, you have had people doing things for you, um, you may lack grit. What was your experience in going from some of these larger organizations into smaller ones? And do you see do you see that as a common failure point, or is it a misperception?

SPEAKER_01 11:01

I don't think I have enough data um to to really really say. I I've actually thought about this question quite a bit because I haven't I personally haven't had that much of a challenge um in bridging the gaps. And I don't know if it's just my personality or their circumstances. Meaning, um, the Navy, I know it's a large organization, but in in in general, the Navy of all the services is is at least 20 years ago when you didn't have satellite communications and everyone knowing what you did all the time. And I'll put that caveat out there, you were like the alone and unafraid group because no one could reach you. You're on a ship out in the middle of nowhere, you're like 30 people. Sure. So it is like you figure you figure, yeah, it's like a small company. You're always in these small groups. You think about the Navy SEALs, they're in small groups. So so you have to be entrepreneurial per you have to be entrepreneurial and you have to figure it out. And I didn't even know that was a skill set that everyone's learning. Um I would say I do see other service members sometimes having a challenge. And I think people are are just out of their comfort zone. I think it's less of a large organization issue, it's more of an out-of-the-comfort zone issue. And uh so I personally haven't had a challenge. I've also been one of those that I've kind of been thrown in in situations and you have to figure it out. I was the one who went my first two tour of duty, I was the one thrown out in like overseas of our of our graduating class of 30. And I just kind of took took it in stride. So it's probably it could be part personality, part con contextual. Um how do you how how would one navigate it? I I think what we do is reach out to different friends and try to help bridge that bridge those those different experiences. Um yeah.

SPEAKER_00 13:02

It it sounds like given your background that you personally are fairly resilient and adaptable, regardless. But I have also seen a fair number of former Navy people being very successful in investor-backed companies. And it hadn't occurred to me until you just said it that yeah, you're in on these boats and it is just you guys, and you have to figure it out. And it's a smaller entity with less less overhead um than other groups might have.

SPEAKER_01 13:33

Yeah, definitely. At least if you're operational, correct. If you look at the whole organization, folks coming out of uh what I call the procurement bureaucracy in in Washington, DC, that might be a little bit different.

SPEAKER_00 13:45

So and you mentioned that uh you guys are really invested because the opportunity zone nature of things on a longer timescale than a lot of investment groups.

SPEAKER_01 13:59

Yes.

SPEAKER_00 14:00

What leadership attributes do you think are necessary for the people running these companies with that longer horizon, but still in the investor backspace?

SPEAKER_01 14:15

I think patience is one. Um I don't know if that's an attribute. Um strategic planning. Let me go back. Why I say patience? You don't it it's hard to know what's going to happen in 10 years. Technology cycles seem to be a lot shorter, and and there seems to be a disconsonance between certain technologies, like the chip industry is going really, really fast. And I want to talk technology because I'm in technology, and then you have these other technologies that are going a lot slower. And so that so you're seeing you're seeing these, uh, I guess the the rhythms are a little bit different. And and so over 10 years, you really have to be a little strategic and patient. You have to like withstand a few several market cycles or be be ready to. Um, and I when I why I bring that up is because some of the philosophy is how do you how does one from the investment side help the portfolio companies? How are you thinking? Yes, it's an investment. Um, yes, you're not in the front seat, but I find that there's ways that on the from the investor side you can really help the portfolio company. I don't I think I see in the venture world uh these a concept called VC platforms growing where the investor group is trying is working to to to help help those companies. But I don't I don't necessarily see that pervasive. I think I think a lot more could be done to de-risk um to de-risk companies, especially in a in a 10-year what I also am like like the longer horizon of uh why I like it is I think there's a little bit more time to realize in an investment thesis. I think oftentimes some uh the the market structure or or the fund structure might cause an aberration and and exit values, given that there's some pressure to to realize certain types of returns. And so that gets to possibly not building the best American company.

SPEAKER_00 16:14

Right. And I think that it's uh one of the unique uh uh structural uh challenges that private equity and venture are seeing today is that hold periods are extended for these portfolio companies. Yes. So when they originally invested thinking it was gonna be three to four years and now it's six to seven, it requires a different structure, a different perspective, where if you know you're investing for 10 years, there's the opportunity to create that up front. Absolutely planning for strategically exactly to find a management shift at some point in that 10 years, or to have talent planning that enables you to grow an individual into what that business is going to become, or simply waiting out an investment cycle, or you know, as you noted, uh supply chain issues or you know, international conflict that might be creating short-term disruptions.

SPEAKER_01 17:15

Correct. Yeah, yeah. I like how you lay that out. I think that's a really good framework to think through because I I think there's been the market has wanted to go back to however it was for a long time, but it's not it's not going to. We probably should just accept that, especially as companies stay private so much longer. I mean, the public markets have reversed with the private markets in terms of the numbers that exist and persist. And and so I really like the fact that you think through that. That you have to grow and you have to structure a company so that you're assuming that you're going to grow talent. And maybe maybe it's even around growing the ecosystem, because if the ecosystem actually is more is fuller and has more capability, there's more options for companies to to exit and grow and develop and go do it again, so to speak.

SPEAKER_00 18:09

So when you're thinking about growing talent and growing the larger ecosystem, how do you approach that? How do you guys think through that structure, that strategic, you know, human element?

SPEAKER_01 18:25

Sure. I think it's less of uh so that I think it's less of a structure and maybe it's in an ethos, but how do you do pay it forward? For example, companies, don't it's not always a zero-sum game for companies and for invest and for investment. Can we actually help each other out? Uh I find that I find that when one enters this space or actually enters a conversation with that in mind, there's a lot more give and take, there's a lot more added, you know, kind of everyone's in it together, and it fosters a more a healthier environment. And I've seen that positively grow in many different cases. Like, for example, if it's a deal and you want to get really um combative with a deal, I just don't think it's very constructive. I think it's more, more um generative if if one is trying to find a collaborative way to go about something. And I think that's particularly important in the sector I work in. It tends to be infrastructure, it tends to be national security. When I was at Northrop Grumman, we used to we use these two terms, frenemies or competimes. Like you're you never know when you're going to be partnering with your with your arch enemy at some on some contract. Like it happens all the time. And so that's just the nature of the industry. And I it's it's it fosters some healthy, healthy competition, but also collaborative competition. I think that's I think that's healthier for us. When it gets to be us versus them, zero sum, it's it's a little bit, it's it can get caustic, and I don't think that's beneficial.

SPEAKER_00 20:02

That's a really interesting perspective on things because I get the sense from a lot of investors that they want to find the company that can win. Uh or you know, being being able to beat out the other technologies in the space, you know, first mover effects and or you know, scale or other other elements there, as opposed to thinking through okay, how do we grow great companies over time with solid people that can create a more fundamentally robust corporate environment?

SPEAKER_01 20:38

Yeah. I think sometimes it's true. I think everybody wants to win, but I think over time, maybe not over time, but at least in some of the investor communities I've been I've been in, you know, the the syndication ethos is there. I mean, especially if you're on the earliest stage side. And even now, when you look at the super uh large deals, I mean, they have to be syndicated, they're just not enough. There's too much risk, especially in if it's a venture exit, anyways, it'll it'll be too much risk. And so people want to diversify that risk. And so you're going to end up collaborating with other investors, anyways. There might there, I I I surmise that there's probably hard negotiations with terms and final structures.

SPEAKER_00 21:21

So, in those environments, how do you navigate the different leadership cultures, the different leadership ethos that the different groups are bringing to the table as you're attempting to grow these individual companies?

SPEAKER_01 21:37

How do I how do I personally navigate? I tend to be one of those that studies the situation a little bit more before before jumping in. I I tend to be that I'm not necessarily introverted, but I but some people might think I am, depending on the the conditions and the experience level I have with certain groups. So so I I would not I wouldn't say. Have a form formula, but that's just tends to be how I approach it. And I I I'm always trying to get to yes as a group. I think that's healthier. I still know we our firm just went through is going through something where there's some negotiations going on, and I just find it more positive if it's like, can we get to yes as a group?

SPEAKER_00 22:27

It's it's interesting when you were saying about appearing um introverted because you're assessing the situation. It's actually one of the elements in the crucible that we measure is how people process information real time and understanding how that works for their leadership style. And I have to, every time I'm I'm sharing the task, describe no, this is not an extroverted to introverted scale. It is rather how is someone going to engage with the information and return their their decision on what they've learned. And if I think there's a lot of misinterpretation for people that survey first and then respond versus those who react because there are people who react that can be very introverted, and there are people that survey and respond who are very much not.

SPEAKER_01 23:19

Right, right. It's how they're processing. And some people have to what they use the term, or people use the term think out loud. Yes. Yeah. For sure.

SPEAKER_00 23:31

So, what advice would you have for the executives within portfolio companies that are in these spaces in terms of leadership skills to develop or how to think about leadership in a way that would be more enriching for themselves and their companies?

SPEAKER_01 23:55

Yes. Um, there's probably three. I think the first one being be transparent, be approachable and trend, like don't I you know it can be very uncomfortable, especially if you find yourself in a new situation, you're not sure, not sure of yourself. But I think by being transparent, I think other human beings come to help to surround. Like like CEO, especially CEO, they can find themselves in very lonely situations. So, so so being able to be that way is good. I I think possibly getting some outside sounding board help is also helpful because being a CEO, you're you're the only one. You don't, it's hard to have peers right in the company. You you have different conversations with um with advisors. Um, so so you could find advisors. I find myself as an investor often being an advisor to some of the CEOs because it's it's just different, it's outside of the company. Um, so so don't be afraid of of finding that sort of help. And I think another another one is just I think it's hard, especially in this environment where everything takes time, but it if can you actually spend time? Can you actually help people see and be seen? I think when you do that, you probably get return in spades on either um enthusiasm, loyalty, um, passion. Um, certainly there's all these, you know, I'm I'm talking a lot of soft skills. There's certainly a lot of hard, hard, hard, hard, hard, basically management skills that that CEOs should have. But these are these are kind of more softer elements that I think help people navigate uh that leadership position.

SPEAKER_00 25:55

And I think they're the elements that tend to be underappreciated when people are going through hiring processes or when thinking about whether or not to invest in a founder. Um, a lot of the discussion tends to focus around the product or the existing capabilities, not necessarily leadership style and skills.

SPEAKER_01 26:14

Yeah, yeah. And I think, yeah, for and and the way I invest is and and yes, you look at all the numbers, et cetera. But the thing is we would really invest in people, especially in the earliest stage. Um, because there's two things. You're gonna be in a marriage, if you will, for at least a long time. So you're gonna have to know people um or be with somebody for for a long time. I think by also understanding a personality fit, the investor group can better help the portfolio company leadership team, right? So so so there's always this fit question that persists that that I think should not be discounted.

SPEAKER_00 26:58

Excellent. Yeah, you're you're certainly speaking my language on that front. So as we wrap up here, um given the changing nature of the world we currently find ourselves in, do you have any higher level thoughts on what what we need out of leadership, what we need to grow grow American business and and where we need to see ourselves heading?

SPEAKER_01 27:33

Sure, sure. It it's quite a noisy and chaotic environment these days. There's a lot of angst, there's a lot of performative, performative conduct, I guess, if one, if one were to look on the news, right? So so I literally was at the Naval Academy about a month ago, and and some of the midshipmen were a little bit concerned. And as officers, you're never political. And I I basically said we need to, you need to have your own personal leadership, and everyone's gonna bring it back to the center. This is not about you, it's not about me, it's about us. And so we have to we have to just do that as personal leadership. And I hope we all do that as Americans because it's just not helpful um to focus on the differences. There's there's plenty of other people outside of America that that are different. So so that's what I would say. I think I think it's a it's a personal leadership thing. It's not just a CEO thing. I think it's a it's a every every person thing. And I think by doing that, I think and I see business, um, businesses as as playing along a lot of that. I think I think a lot of businesses are fairly rational. I think we just need to make sure we're not wrapped up, get too, too wrapped up in in the differences.

SPEAKER_00 28:49

Fantastic. Sounds like uh you're emphasizing be decent people, be decent to each other, and make sure people are seen and and feel heard.

SPEAKER_01 28:57

The golden rule. The golden rule. Great. Well, thank you, Ellen. Thank you. Thank you so much for the conversation.

SPEAKER_00 29:12

And that wraps up another inspiring episode of Leadership Quotient. Thank you to Ellen for sharing her operating experience and board-level perspective. To our listeners, if you found this conversation valuable, be sure to subscribe to Leadership Quotient wherever you get your podcasts. You can also learn more about The Crucible and how we're helping investor back companies align leadership teams for scale at thecrucible.com. We'll see you next time for more real conversations on leadership, talent, and value creation.