Transcript: Why Stewardship is Far Better than Ownership // Pete Ochs, Capital III

The Flourishing Culture Podcast Series

“Why Stewardship is Far Better Than Ownership“

April 20, 2020

Pete Ochs

Intro: COVID-19 pandemic is causing all of us to look for some inspiration to give us some courage as we lead in these challenging times. Listen in on today's podcast as we talk with a seasoned entrepreneur about biblically based foundations for an organization to flourish in good times and bad.

Al Lopus: Welcome to another episode of the Flourishing Culture Podcast, where our goal is to equip and inspire you to build a flourishing workplace. As we all face today's leadership challenges as a result of the COVID-19 pandemic, we believe having a healthy culture is more important now than ever before. We are here to help you eliminate toxicity, improve your employees’ engagement, speed up new innovation, and grow your organization's impact.

And before we meet our guest today, I urge you to subscribe to this podcast. As a result, you’ll receive our action guide. It’s our gift to help you lead your organization’s culture to the next level. To subscribe, simply go to bcwinstitute.org/podcast. Hit the Subscribe button, and receive our free action guide.

If you can share this podcast with others, and rate it, it would mean a lot to me. Thank you.

And now, let's meet today's special guest.

It’s my pleasure to welcome Pete Ochs, who is the founder and chairman of Capital III. Capital III is an impact-investing enterprise focused on creating economic, social, and spiritual capital, headquartered in Wichita, Kansas.

Pete, I'm so glad that you’re here to be with us on the Flourishing Culture Podcast.

Pete Ochs: Al, it’s my pleasure. Not only you, but your business, Best Christian Workplaces, has meant a lot to us over the years, and we've learned so much from that. And the way you helped our people and helped us understand what we need to do better has really been grateful. So it's my pleasure to be here.

Al: Here we are, sitting across from each other in our virtual broadcasting studio, and literally it is virtual and remote. But as we’re recording this conversation, we're in the early stages of the COVID-19 crisis. And if there's one word that best describes what this current time means to you, what word would you choose, Pete?

Pete: Well, I don't mean this to sound trite because we are on the Flourishing Podcast; I would say the word is flourishing, and I would say that because I think oftentimes we don't really understand how good we have it until we don't have it, and in the last few weeks, our lives have really changed. And in some sense, we've gone from what we thought was flourishing to what we don't think is so flourishing. But in some sense, I think God's really using this time to take us back to what true flourishing should really mean. And so, yeah, my word for the day would be flourishing.

Al: Well, I certainly appreciate your reflection on that. Every person brings their unique life story to each relationship and every conversation, and that's certainly true for you. And your company, Capital III, was started as a result of a major life experience that led you to understand the difference between ownership and stewardship, so tell us that story.

Pete: So, Al, I grew up a Kansas farm kid, went to work in the commercial banking business, started my own investment banking company at the age of 30. And the first two or three years of that were really difficult, that towards the first decade of that, as I was approaching 40, I realized I'd become financially successful but I wasn't very significant. And through the help of just being in God's word and then a couple of mentors coming alongside of me, I came to the realization that I had viewed myself as an owner and not as a steward. And so when I made this switch—and it literally happened within a month or two—when I understood that I was really not an owner but a steward, it changed the way I viewed life. And so I really moved from this concept of ownership to stewardship, and it revolutionized the way I viewed life.

And so I really believe that business should be—we're not just here to maximize shareholder value, but we're here to be a catalyst for flourishing. So in that sense, we want to create good jobs, we want to have a great community, and we want to challenge our team members to really question their purpose in life. And so that one experience really changed my life.

Al: And before we go on, an obvious question would be, what's the story behind the name of Capital III, your company?

Pete:  We would define flourishing as really requiring three things, and it comes from Genesis 2:15-18. So in verse 15 it says, God put man in the garden to work and attend it. So that's the first thing we need is material provision, and we get that through work. So that's what we would call the first form of capital, economic capital.

The second thing we need is in verse 18. It says it’s not good for man to be alone, and so I'm going to create a suitable helper. The second thing we need is really deep, authentic relationships. We call that social capital.

And the third thing we need is in verse 16 and 17. It says, by the way, don’t eat the fruit of that tree over there, because then you'll know the difference between good and evil. And I think that's the first time God gave us a moral code, as it were. Essentially, we would call that a purpose for life. And of course, for those of us who are followers of Christ, it's really that personal relationship with Him.

So Capital III really stands for three forms of capital. We want to create economic, social, and spiritual capital.

Al: Yeah, triple bottom line. I love that, Pete.

And give us maybe one of the most exciting ways you've actually seen this vision lived out through Capital III.

Pete: Al, we've got several different companies. I'm an entrepreneur. So one of the companies we have is actually about 10 years old, and it's located in Honduras. We wanted to take this philosophy of capital theory and see if it’d work in the third-world countries. So 10 years ago, I did some creative searching and wound up in Honduras and were really building run-of-river hydroelectric projects in Honduras. So if we look at just economic capital, what happens here is we're literally paying our workers five times what they make. Let’s say farming. Most of them are in small villages and make about a thousand dollars a year. So we're paying them five, ten, fifteen thousand dollars a year, depending what they're doing. So economically, they're much better off.

Socially, we're providing electricity. So these are run-of-river hydroelectric projects. Thirty percent of Honduras doesn't have electricity. So we're creating good, clean electricity through an environmentally clean way of doing that. We also started a farmers cooperative. We've got about 400 members, 400 farmers, who were in a cooperative, and we showed them how to farm and give them better techniques, etc.

From a spiritual-capital perspective, we started a seminary. We’ve graduated about 60 students down there. We've planted 13 new churches. And we've come alongside of a kids camp, and they are ministering to about 3,000 young Honduran kids every summer.

So that would be kind of an example of creating economic, social, and spiritual capital through our platform of business.

Al: Well, that’s a fantastic story. And it's fascinating to me, having worked in the highlands of Guatemala with the rural poor there, and how you're able to do all three things where even some nonprofits can maybe help with the economic part, but they don't really follow through necessarily with the social and spiritual. But that's a great story.

It was only last summer when you invited me to speak at your Enterprise Stewardship conference that equips virtuous leaders, as you describe it, and I love that term. And I remember being with you on the ground, seeing one of your manufacturing plants inside a prison, of all places, there in Kansas. What really inspired me was to see the transformation of your employees at Seat King, which is to design the perfect seat that balances cost control and customer satisfaction. But how does one go about setting up a thriving company inside a prison? How did that all come about?

Pete: Well, Al, I would like to tell you it was because I'm such a nice, generous guy. But unfortunately, that all happened because I didn't have enough workers. And one of our companies, it was rapidly growing, so a rapidly growing manufacturing company in Hutchinson, Kansas, and we couldn't find enough entry-level manufacturing folks to come work for us. So we began to hire work-release folks from the prison. And after about two or three months of that, I said, “This is really a good deal.” I went to the warden, and I said, “I need some more of these guys. Can you give me some more?” He said, “I'm actually out of men that qualify for work release, but we've just opened up 20,000 square feet of manufacturing space in the prison that we would normally put inmates to work at, and we don't have anything for them to do. So if you can figure out how to move your business inside the walls of the prison, I’ve got 1200 men in here ready to go.” And I said, “This is perfect.”

And so literally, within a few weeks, we had hired eight or 10 inmates, we moved part of our manufacturing facilities behind the walls. That was in 2006. And today we're actually in two different prisons, employing almost 200 inmates on any given day at two different companies.

Al: And you’re making such a huge difference in their lives.

Give us a sense of what the difference is in terms of what they're able to earn working for you versus making license plates or doing other projects that they have in the prisons.

Pete: Al, most inmates who work for the State of Kansas are paid somewhere between 50 cents and a dollar per day to do these things that the state might manufacture, as you mentioned, like license plates. We actually pay these men what we call market-driven rates. We don't even set their wage. The State of Kansas does. So if we need a welder, we'll go to the State and say, “We need a welder. Do you have somebody that qualifies?” And they'll say yes, and he might have four years’ experience, so we’ll pay him $15 an hour. So typically we'll pay between $10 and $15 an hour for entry-level manufacturing, depending on what they're doing. And this is a huge benefit to the men.

Al: Yeah. Wow. And we could talk a lot more about that. That's a remarkable difference. A dollar a day versus $10 or $15 per hour. We’re going to come back to that.

But, you know, as I recall, you actually bought Seat King, the company we visited there, during the great recession around 2008 or 2009, as I recall. And here we are right now in the midst of the COVID-19 crisis. Given the tragedy, or the difficulty at least, before us, is there any sense of hope that you can offer to our listeners?

Pete: Great question. And I have been here—this is amazing, that as I look back, I'm in my late 60s, and as I look back at my life, I have gone through four or five of these, about every seven or 10 years, and I think there's probably a biblical thing that we see going on here. And so the first few of these that I went through, I was literally in a panic. And it's not that I don't worry of it even now, but I think the biggest difference for me, Al, is that I have truly come to try to live with the understanding that I'm just the owner—I'm just the manager; I'm not the owner. And consequently, Lord, it’s Yours, and if you want this thing to crater, well, then, teach me what I need to learn from it, okay? And so when I truly understand ownership versus stewardship, it takes all the burden off me, and I just have to keep reminding myself of that.

And I go back to what I call a James 1 moment: consider it pure joy, my brothers, when you encounter trials of various kinds, knowing that the testing of your faith develops perseverance and that perseverance has its perfect result that you may be mature and complete, not lacking anything. God gives us trials so that we can become mature and complete. So embrace the trial, figure out what God wants you to learn, and ask Him. The next few verses say, if any man lacks wisdom, let him ask of God. So ask for the wisdom; He’ll give it to you.

Al: There you go.

So, how have you been personally experiencing this hope that you just described, particularly these last couple of weeks, maybe even month?

Pete: I just—I know that on the backside of this thing, it will be better. I do know that there's hope. And it happened before. And I think we go through these trials, and I am really asking God to—instead of worrying so much about the finances of the company, turn that over to Him, and let me focus on the needs of our people. And one of those is finances. People need—how can we help them? Thankfully, we don't believe in a totally debt-free company, but we operate on very little, if any, debt. And consequently, that's allowed us to weather some of these storms. So financially, that's allowed us to get through this month. And then we can turn our attention to how we're going to socially and spiritually come alongside our people and help them however we can.

It's a great opportunity for us to share the Good News and the hope that we have in Jesus. And so I think that's really what I'm trying to focus on through this time.

Al: Yeah. So being prepared financially helps you be able to focus on the social and the spiritual aspect of it.

I trust you’re enjoying our podcast today. We’ll be right back after an important word for leaders.

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Al: And now, back to today’s special guest.

Certainly, every leader wants every employee to feel hopeful and project hope to their colleagues. And at BCWI, one of the things that we see helping transform organizational cultures over and over is what we call life-giving work. Life-giving work is one of our eight integrated elements that make up the BCWI FLOURISH Model. And unfortunately, leaders take for granted the value that work gives a person, and something that I experienced as I was interviewing your employees in the prison. In your mind, what is so important between the connection between meaningful work and a person's self-worth?

Pete: Yes. Al, I grew up on a western Kansas farm, so work was just something that I took for granted. It was there. We did it. I just thought everybody did it. I didn't realize the power of work until we got into a prison and started employing these inmates. Most of them never had a job. Many of them can't even read a tape measure when they come to us. And so when we started having high expectations for these men and gave them a job and gave them—I just cannot believe the transformation that happened to these men, many of them who had never worked, that began to work. And all of a sudden, this self-worth just began to grow and light up, that you could just see the transformation take place.

And I think it goes back to the Genesis 2:15. You know, I put man in the garden to work and attend to it. That happened before the fall. And unfortunately, after the fall, we began to take back our own moral authority instead of understanding that that moral authority really came from God. And when we did that, work that should be worshipful is now a secular thing, and we worship our work. And so just seeing these men and seeing them work diligently is just an amazing thing to see what's happened to their self-worth.

Our recidivism rates are very low compared to the normal population of the inmates that go back. And I would think that a real reason for that is that when they come out, they have this individual responsibility that they have now taken on. They have this self-worth, they have this self-dignity because they have worked. And I think that's a huge part of the reason for why most of them don't come back.

Al: Well, I saw that, just in person as we were interviewing one of your line workers there and manufacturing seats, and he was in prison, had a long sentence because he had murdered somebody, actually. And you could see him describe how his life had changed just from having a job that gave him a sense of worth, that he was earning a good wage, that he was able to actually use some of that money to help his family and others. It was just so visible to see that sense of self-worth that came out of just having a good, steady, competitive, money-making job. That was just gratifying.

You know, Pete, as we talk about the triple bottom line, you've already mentioned economic, social, and spiritual capital as part of the triple bottom line. Let's go to the next question and that is, so what is the key to actually creating a triple bottom line in business? What's the key?

Pete: We have this saying: you can't have a transformed business without a transformed steward leader. So if we're really going to have transformed businesses, we personally have to go through a transformation. And oftentimes, I don't think that's easy for us to do. And I think oftentimes, as in my own cases I referred to a few questions ago, God oftentimes will bring some kind of a trial along to help us really understand what our purpose in life should be. So we have to go through a personal transformation before we can have business transformation.

Al: So being a transformed steward leader is the key to a triple bottom-line business. I love that.

Let's talk a little bit about you've written a book, a great book, called A High Impact Life, and who listening doesn't want to have and be known as having a high-impact life? And the byline is Love Your Purpose, Live with Passion, and Leverage Your Platform. Tell me, Pete, what motivated you to write the book?

Pete: Al, actually, it started probably 20 years ago, or maybe not quite that long, maybe 15 years ago. I was thinking about my grandkids, and I wanted to leave them, basically, my philosophy of life, so I started writing down things. And then I began to talk on this to a few people.

And at the same time, we had just gone through 9/11, and 9/11 was another transformational point in my life. Ten years prior to that, I'd made the transformation from what I call success to significance. I went from ownership to stewardship. And unfortunately, I thought that stewardship meant financial generosity. So during the ’90s, we put the hammer down on our businesses, made as much money we could, and gave them away. They gave a lot of this money away. Then 9/11 rolled around, and we came ever so close to financial bankruptcy. And I looked at God and I said, “Don't You understand what I've done for You?” And it was interesting. Once again, it didn't take very long. And through the help of some mentors, I really came to understand that God didn't want my money; He wanted me. And I think this was where I went, at the age of 40, I went from success to significance. At the age of 50, I went from significance to surrender. And that's something we just don't want to do. Doesn’t make sense?) want to do.

Now, I would like to tell you that I spend all my life being surrendered. I don't. I probably still spend a lot of time being significant. But I think if we're going to live lives of high impact, we have to be surrendered people.

Al: Surrendered people. From success to significance to surrender, that is a transformational journey, for sure.

You know, I'll have to tell you, there's another truth in your book that really jumped out and spoke to me. It's the two words, spiritual capital. Rarely do you hear those two words together. So what is spiritual capital, and what's the essential transformational truth about spiritual capital that we need to know, that you can share with us?

Pete: Sure. So we have economic capital, which is a really material provision, and we have to have that. Social capital is essentially great relationships. But spiritual capital is really, in some sense, the moral code that God’s given us to create economic and social capital.

For instance, I can tell you I'm an avowed free-market capitalist, that free-market capitalism without a moral code winds up, typically, in greed. But economic capital, free-market capitalism, with a moral code, I believe oftentimes results in generosity. So spiritual capital is, in some sense, the moral code by which we live. It also gives us the purpose for living. Again, for those of us who are Christians and are trying to follow Jesus on a daily basis, it's that personal relationship with Him and the principles that He's given us in God's word. So spiritual capital, I think, is just absolutely an essential because it gives us our purpose in life.

Al: Also, I remember at our conference, you made a comment about Adam Smith and kind of his view of this.

Pete: Yes. So Adam Smith talks about the invisible hand. And, of course, Adam Smith was one of the kind of original thought leaders on this whole part of the free market, etc.. And I think today we're hearing capitalism is not a good thing. That's partly because there has not been a moral code to derive the goodness of capitalism, as it were. Capitalism is merely a tool, and that tool, the essential thing that makes it good or bad is the hand that holds the tool. So if the hand that holds the tool of capitalism is vicious, it will wind up in all these bad things that we attribute capitalism to. But if the hand that holds the tool of capitalism is virtuous, I believe lots of good things come from that. So capitalism is neither good nor bad; it's a tool. And the critical thing is this goes back to the need for a transformed leader. By being transformed, our hand moves from being oftentimes a vicious hand to a virtuous hand.

Al: Oh, I love all that you’ve been sharing with us today, Pete. I’ve really enjoyed just talking about your transformation and the transformation of many, from success to significance, and then the key, then, to surrender, and how we can't see ourselves as owners but stewards of what God has blessed us with. And the triple bottom line: economic, social, and spiritual capital. These are all examples that you've given us. I love the hydroelectric example. And, yeah, keep up the good work is all I can say.

But from here, is there anything that you'd like to add about what we've talked about that you haven't mentioned so far?

Pete: I’d probably close by just giving you my life verse, which is Psalm 78:72. It's David. It’s talking about David as he was leading the nation of Israel. And it goes like this: so he fed them, according to the integrity of his heart, and guided them with the skillfulness of his hands. So he fed them, according to the integrity of his heart, and guided them with the skillfulness of his hands.

We have four virtues that we like to encourage all of our employees to follow, and those are what we call the Four Cs: character, competence, commitment, and connection. And I think those Four Cs are demonstrated in that one verse. So it says, so he fed them. If you're going to feed someone, you're typically going to sit down and break bread. You are connecting with them. So that's the first C: connect with them. So he fed them, according to the integrity of this heart. If you have integrity, you're being a person of character. So that's the second C. And guided them. If you're going to guide someone, it typically takes commitment. I don't know if you've been on a fly-fishing trip or been on a hike in the mountains, but it takes—a number of times I’ve been fly fishing, and I've always had to have a guide. And I'll tell you, that guide is typically one of the most committed people I know, because I am so poor at doing this, that it just takes a commitment on his part to continually tell me, do it this way. So if you're going to guide somebody, it takes commitment. And it says you have to guide them with the skillfulness of hands. You're going to be competent.

So in that one verse, I see four critical character traits we all need: a connection, character, commitment, and competence.

Al: That’s great, Pete. Thanks. Yes. Character, competence, commitment, and connection.

Well, ladies and gentlemen, Pete Ochs, the founder and chairman of Capital III, an impact-investing enterprise focused on economic, social, and spiritual capital, and the author of the book A High Impact Life: Love Your Purpose, Live with Passion, and Leverage Your Platform. Pete, thanks so much for sharing your wisdom, insights, and stories, and thank you for investing yourself in everyone who's been listening and benefiting from all you've shared with us today.

Pete: Al, it’s been my pleasure. And keep up the good work with Best Christian Workplaces.

Al: Thanks, Pete.

Outro: Thank you for joining us on the Flourishing Culture Podcast and for investing this time in your workplace culture. If there's a specific insight, story, or action step you've enjoyed, please share it with others so they can benefit, too. Please share this podcast with friends on social media, and show your support by rating, reviewing, and subscribing wherever you listen.

This program is copyrighted by the Best Christian Workplaces Institute. All rights reserved. Our writer is Mark Cutshall. Our social-media and marketing manager is Solape Osoba. Remember, a healthy workplace culture drives greater impact and growth for your organization. We'll see you again soon on the Flourishing Culture Podcast.