Inspired to Grow
As we start 2015 let's take a look at what inspires Affiliated Distributors' Market Leaders to grow their businesses. In the recent AD Today, several AD Members shared their inspirational motivation and strategies as they help their companies grow.
Growth Strategies and Recognition
Tammy Miller, CEO, Border States Electric, Fargo, ND, said her company’s most important growth strategy has been defining their vision and strategy. “In 2006, we were a $450 million sales organization and established a new strategic plan,” she said. “The plan contained four strategic goals, including one to grow sales to $1 billion in five years. We achieved our aggressive sales goal on time, even with the Great Recession sandwiched in the middle. We were successful because we had a well-defined strategy with measurable goals, clear deadlines, executive ownership, accountability, empowerment, a consistent communication plan, and rewards. Our well-defined and well-articulated plan included action items for every employee, which allowed all our employee-owners to see how they could contribute to our growth and success. Getting everyone aligned with our goals and sharing the rewards drove execution of our aggressive sales goals. Our growth and success has enhanced career opportunities for our employee-owners and our ability to Give Back to the communities where we work and live.”
Scott Shively, President, Shively Bros. Inc., Flint, MI, recognized the opportunities due to fiscal soundness. “We are a financially solid long-term Employee Stock Ownership Plan (ESOP) company and explained the risk-reward aspects of our growth project which was 100% approved. We endeavor to say ‘Yes’ to our customers, as we have 67 years of experience and are usually able to come up with a win-win solution for all parties.”
He said the strategy they employed was to “set up a North American (USA, Canadian, Mexican) distribution network to facilitate a customer request for a Cutting Tool & Abrasive Commodity Management Program.”
Miller also realized her company’s opportunity for growth through an ESOP and Border States’ financial soundness. “We had a new management team that was ready to take the company to the next level,” she said. “But more importantly, the Employee Stock Ownership Plan supports an outstanding participatory culture that goes beyond the daily tasks of our positions at Border States. It gives us a connection to something more and moves us to work hard to build something together. Employee-ownership drives our growth and success and is the motivation that turns vision into action.”
Lenin Juarez, Managing Partner, Action Gypsum Supply, LP, Houston, TX, recognized that the market they were in has been active in construction and saw the opportunities to launch and grow. He said, “Our strategy was to grow the company and keep it and not flip. I feel strongly about legacies and growing and not disposing, but keeping it for future generations has always been my credo.”
To facilitate growth, Juarez made certain that his team and company were managed well and he “made sure that we were not up to our necks in debt; we made sure we adhere to pay-as-you-go policies. I have an aversion to debt and take it only as necessary,” he said.
Juarez continued, “We are a green field company in that we prefer to construct new operational facilities from the ground up. There are great opportunities in takeovers, but growth works better for us when we rely on the people we know and the resources we have. We see it as better opportunity to green field to start ... knowing the market and the industry, we feel it is better for us to build from the ground up by expansion. We are not opposed to the idea of looking at a new business but it has to be the perfect scenario.”
Inspiration to Act
Miller was encouraged to take action from a rewards-benefits analysis. “We are a 100% employee-owned company through our ESOP. Growth drives stock value and ESOP account values. I knew adopting a more aggressive growth strategy would provide greater rewards for our employee-owners. Greater financial rewards motivate employee-owner performance, which elevates customer service. Our strategy offers employee-ownership at a growing company, and this growth provides a return on investment to our employee-owners that outpaces the market benchmarks. Growth also makes infrastructure investments more affordable, gives us credibility with large customers, and increases our relevancy with key Vendors.”
Juarez saw the opening and seized it. “I had been with the company for 23 years and I thought it was time to make the leap,” he said. I saw the opportunity to grow and the time was right to do it. Most often, we have to have a manager on staff who we know can run the new location, or we become aware of a solid sales area that may have lost a player. Our moves are based on both criteria … we have the right people and we see an opening in a business area.”
Shively proceeded per his company program. “This and all of our growth has fundamentally been based on our Quality Process Program we implemented in 1984 that was then ISO Certified in 1997. We were inspired by Dr. William Edwards Deming, an American engineer, statistician, professor, author, lecturer, and management consultant, who put on a one-week workshop that our President at the time, Bob Kerlin, attended. Among Deming’s ‘14 Points on Quality Management,’ a core concept on implementing total quality management and a set of management practices to help companies increase their quality and productivity, are: Create constancy of purpose for improving products and services; Improve constantly and forever every process for planning, production and service; Adopt and institute leadership; and Drive out fear.”
“Also, Jim Collins, author and teacher of growth principles for companies, wrote a book, ‘Good to Great.’ The principles in that book have enabled us to have ‘The right people on the Bus,’ which has enabled us meet the newer challenges we have faced,” Shively said.
Juarez has also seen that the time to act for Action Gypsum Supply is predicated upon the abilities of its people. He said, “The personnel we have to run our growth facilities must be in place, and we KNOW and TRUST these people, so we grow by expansion. We know we can count on them to run things properly. If we were to buy new companies and we had to rely on people we don’t know, we would not be sure what we would get at those new locations. We have our own folks, we KNOW the people we put in charge, we sift the pool of talent that we have, and if we don’t have what we need, then we look for someone we know who has the experience and reputation we need to keep our quality of business at the level we and our customers are accustomed to.”
AD Supports Growth
These leaders have received help in many ways from their association with Affiliated Distributors and they applaud the assistance and inspiration they have obtained.
Miller said, “We are Members of several AD Divisions, including Electrical Supply, Industrial Supply and PVF. AD has contributed to our growth and profitability through focused marketing and planning programs, key Vendor alignment and sharing best practices with other successful Distributors. But, not as obvious, AD has provided a networking forum where we meet and get to know other successful Distributors. We have had four significant acquisitions since 2006; two of the companies we acquired, Nunn Electric and Harris Electric, were Distributors we got to know and respect through AD.
Juarez added, “AD has absolutely helped in our growth program. What we, as a company, have gained from AD is an invaluable pool of resources, knowledge and experience from our fellow Members. We have gained an enormous amount of best practice information by getting together with others in our business niche. Learning from them and from the AD executive staff has been a tremendous help for us.”
Shively points to AD leadership sharing advice and networking. He said, “Bill Weisberg attended a meeting with us and one of our customers in 1997, and the AD Team has been regularly involved with our practices and growth as well. This project was years in the making, and as we needed support, AD was there when we needed them. Whether it was attending a meeting with a customer, key Supplier engagement, or just good old-fashioned networking, they were there for us.”
Advice to Others
Best practice sharing is a key element to growth for most AD Affiliates.
Miller advises that a company who is contemplating adopting a new growth strategy should consider the following guidelines that have helped Border States grow profitably and provide a good return to the employee-owners:
- Understand your strengths, weaknesses, opportunities and threats
- Establish a clear vision with well-defined strategies
- Set measurable stretch goals and keep score
- Attract, develop and retain the best talent
- Set clear levels of authority and empower employees to be creative and decisive
- Hold people accountable
- Communicate clearly and frequently, and get feedback
- Celebrate success and give credit to those who have earned it
- Reward those who helped accomplish your goals
“Following these guidelines should help your company grow and grow well,” she said.
Shively advises engagement. “Involve ALL of your team members and make sure that they are on board,” he said. “It is mandatory that you know ALL OF YOUR COSTS so you can be flexible, and respond quickly for various pricing models; and keep your financial partner in the loop each and every step along the way.”
What inspires you to grow? Please share in the comments section below.