CEO Roundtable: Planning for Growth
Six manufacturing experts discuss how best to conceive and implement strategic growth.
John Connelly (director of consulting, Enterprise Minnesota): Let’s start out with planning. Think about the roles and the positions in a company that help determine strategy and those who help execute it.
Sarah Richards (CEO, Jones Metal Inc.): I have two co-owners, a sister and a brother, and we’ve worked hard to revisit the owners’ plan at least annually. Between myself, my co-owners, and the leadership team, we really work together to determine exactly what strategic direction we’re going to go.
Then it’s really important to bring in the second line, or the emerging leaders. They not only have their fingers on our pulse, but they really understand our customers and suppliers because they’re working with them daily. I also enjoy bringing in some of the newest members of our team, who bring fresh eyes to what we’re trying to do. We try to harness that energy and those new ideas when we’re looking at strategic planning. Right now, we’re in the process of refreshing our strategic plan, and it’s including about 25 percent of our total workforce from all different departments. The group gets a little bit smaller as we get further into the process.
Ron, I know you’re thinking about this, too. Would you comment?
Ron Kirscht (president, Donnelly Custom Manufacturing): Early on, our strategic planning group consisted of just three people and an external resource. Our rationale at the time was that we had to make some very basic decisions about our service offerings and in terms of scaling the company. They were very intense, small groups. Then as we evolved, planning included our core management team. This last time around we started looking at our organization. Our company now was 32 years old, fairly mature, and pretty good sized. But we identified that we’re not getting any younger. A lot of people on our core management teams have been with the company for 15, 20, 25, 30 years. So one of the things that’s going to be changing is leadership. We worked with Enterprise Minnesota on a process that looked at 21 business categories, and we also looked at succession planning and ownership issues and things like that.
We’ve got 24 people on our planning team; it’s the largest planning team that we’ve used. We include all the functional managers within the organization, individual contributors or team leaders or supervisors who really put in some time in the business. They have a new and a fresh perspective and a deep and abiding stake in the future of their organization.
I’m excited to hear ideas from that next group of leadership, the folks who’re going to be around 10 or 15 years from now, to see the alignment of their abilities, their experience, and their belief in the organization.
So Steve, another aspect of planning is how far into the future you look. What time frames do you try to keep in mind?
Steve Palmer (president and CEO, North Central Door Company): We just went past 50 years of being a business; obviously we want to be around for another 50 years, so we start with that. You always have to circle back to your long-term vision, even when you get into your shorter planning time frames.
You’re looking out three to five years and getting more into the details of the work, the tactics that you’re going to deploy with your strategies and formulate those around short time frames. Then, of course, in manufacturing things can change quickly so you have to be prepared, you have to have contingency plans in place, as well, know what your short term objectives and goals are.
John, J&B is on track to be a billion-dollar business, and so planning goes on in lots of areas. How do you wrap time frames into your planning process?
John Meyer (continuous improvement manager, J&B Group): Time frames vary based on the division or the specific area. We’re a company of 700 people, reaching a billion dollars. We’re almost always in some sort of a planning mode, whether it’s looking at a 20-year strategy, a three-year strategy, or the next day’s operations. The trick is to prioritize appropriately.
You’ve all heard the phrase “culture eats strategy for breakfast.” Culture always comes first at J&B, whether we’re looking at an acquisition, looking at a warehouse expansion, or even our relationships with customers and suppliers. We’re always looking at whether it’s a good fit for us from a cultural standpoint.
Ron mentioned 21 different categories of things to research and consider during planning. I’m curious, Steve, what bubbles to the top of your list as you move into the structured part of trying to plan. What details of the current state mean the most to you?
Steve Palmer: A really strong marketing strategy has to start with knowing yourself as a business. How do you define your company? How do you distinguish yourself from the competition? How can you take that message to the market? And how can you develop a successful partnership with the customers out there who need what you have to offer? That’s what rises to the top for me right now, particularly now that we’re in a pretty mature market.
We’ve been talking about planning, I think we’re starting to move into executing planning and trying to involve the people that you’re counting on to carry it out. Thoughts about that?
Sarah Richards: It’s our job to make sure that the vision is there, that the initiatives are in place, and that we have agreed on some focus within those initiatives. Then I need to make sure that we have projects and timelines and to make sure that everybody has the resources and as smooth a road as possible to accomplish things.
One of the hardest things for me to learn was how to delegate. I’m kind of a natural doer. But we really try to understand our role and as owners as a leadership team. When you’re small, it’s not always easy to know who could fill our shoes. When I talk to our leadership team about that, they usually have a go-to person within their ranks that kind of fills that emerging leader role. They just actually involve them and assign it, and you’d be surprised at how well they do and how much comes back. Maybe even different than you thought, maybe even better.
Steve, I know you think about this a lot too, having an organization that you’re trying to engage and delegate and hold accountable. Your thoughts?
Steve Palmer: When I started with North Central Door, there were a lot of unclear lines of who was accountable for what—which can lead to a lot of disruption and finger pointing between department managers. I was fortunate with a previous employer that the division manager was familiar with implementing a formal framework of accountability. We clearly defined the scope of accountability for each member of the leadership team. Then we also worked on a lateral scale to show how managers should work with others on the same level of authority in the organization, how they negotiate with each other to get things done. It really helped with the decision-making and the communication among department managers.
So, John, given the pace of growth at J&B, you have a significant commitment to developing leaders. I’m curious about your thoughts on the connection between the development and succession of leaders and strategic initiatives. Does one get in the way of the other?
John Meyer: We’ve formalized leadership development in the last few years. It is an invitation-only program that takes about 25 associates through more than three years of development. It embeds mentor relationships so that there’s a lot of organic thought sharing within the organization, rather than having an official strategy kind of driving itself.
The other side is accountability and respect. J&B was founded on respect. It’s on the back of our businesses cards and has been driven into everything. Where more traditional organizations use more of a top-down approach, we’ve got an organization that forces a lot of discussion and collaboration. It’s effective, because we have a lot of changes going on; once everyone’s on the same path, things can go very quickly.
Six experts invested their time at Enterprise Minnesota’s 2016 Statewide Manufacturing Peer Council to share their experiences in a panel entitled Growing Your Enterprise.
One thing to consider is always how important communication is as the bridge between planning and implementing. Sarah, what efforts need to be there in order to present, to discuss and to promote plans?
Sarah Richards: Communication is critical. You are in trouble from a culture standpoint if you can’t answer a couple questions for the person on the frontline, from their perspective. One is, “What are they trying to do?” And the second question is “What’s in it for me? Why should I care?” They are tougher to answer that you think.
I think it’s really important to keep the strategic conversation going. At Jones, we have a partner, PDP Solutions, that helps us publish an electronic newspaper with metrics that are readily available and understandable to the frontline. We use that newspaper to regularly visit strategic initiatives. It may not say strategy update, but it might talk about a key industry that we’ve been targeting, or a new customer opportunity. Something else that we tend not to do is share some of the bad with some of the good, and we also tend not to celebrate enough, for sure. They think I’m nuts, but every time we get a new order, we should ring a bell. We tend not to celebrate the small things, but the more you do, that the more you make relevant everything we’re working on.
Ron, it feels like communication is always on your mind.
Ron Kirscht: People make a fatal error when they try to control results instead of influence thinking. If you influence thinking to get people working voluntarily to meet predetermined objectives, you unleash the power of the organization and the potential of the people. You have to sell, not tell. It’s a process of selling.
One of the keys, if you’re going to change, you have to create dissatisfaction. People don’t want to change. You know, you think you do, but you really don’t. If you’re not dissatisfied with the results your present actions are getting, change is not imminent, but if you’re dissatisfied, you know what? That was good enough, but it’s not good enough anymore, and here’s why it’s not good enough, we’ve got to do better and here’s why we have to do better, and this is how we might do better. You create that dissatisfaction so someone else says, “I’d rather go there than be here.”
Another thing is you never want people to see themselves in isolation when they’re going through change. In the absence of communication, nothing else matters because change is not going to occur. Leadership will be frustrated, “Man, we had dreamed the perfect dream. Nobody went there.” That’s a failure of leadership, that’s not a failure of people.
I appreciate Sarah’s reminder that a big part of what you need to communicate about plans is where we’re headed, because people need a reason to get away from the day-to-dayness, as Sarah reminds us. John, say something about communications of plans at J&B.
John Meyer: I’d also like to make a quick shout-out to PDP because we utilize them at one of our facilities. They offer a great tool for the frontline associates to see that information cascades down from our strategies. Our organization is, I think, very fortunate. I’ve been at companies that are 700 people big, and a lot of times you don’t see leadership at those organizations. We’re very fortunate that our leadership keeps us focused by putting on a quarterly road show in which the top executives meet with every single team of associates in all our facilities.
Steve, I find that organizations have to find an ongoing balance between thinking forward with the need to produce and ship today. How does that balance strike you?
Steve Palmer: It’s prioritizing what’s important in the long term. You can get wrapped up in the day-to-day. I’m good with checklists. I’ll write down what we’re doing today and how those things are going to contribute to a growing, profitable company that’s, finding new customers—just to make sure we don’t get lost in things that might be not as important. Again, I can find accountability in how we delegate those day-to-day responsibilities to qualified people, leaving me more time to look on what’s important for the long-term success of the company.
Let’s talk about measures. We use measures to evaluate performance and to frame goals, and one of the challenges with measures is when you use them, you usually get what’s measured. We have to think about right measures and right behaviors. Sarah, what are the measures that work best for Jones Metal?
Sarah Richards: We’re working on that right now. We have a new ERP system that we just launched after Labor Day. You all are jealous. We measure many of the same things that you all do, some of the table stakes, content delivery, productivity, profitability. We’re now going to have a better tool to measure things more closely related to productivity: direct vs. indirect, time for different people, sales conversion rate.
Greg, measurement is something you think about between management systems and operational excellence. I’m interested in your perspective on measures and right behaviors.
Greg Langfield (business growth consultant, Enterprise Minnesota): We’ve been talking about alignment of employees and how they think about their job day-to-day and then making decisions that are in line with the vision and the strategy moving forward. It’s a challenge to get that down to a tactical level. Ron was saying influence thinking, and I think that’s a way to try to get the right behaviors in the organization. Some things I think about are, does it tell a story? Do my measures tell a story? Sometimes we get caught up in measures that tell a partial story and we think we’re doing pretty good, and the end of it is we’re just missing out on the other metric to complete the story. For example, if you just focus on on-time delivery but don’t look at schedule attainment, you could have costs in terms of expedited freight or overtime. In the meantime, on-time delivery could be looking good, so you just want to think about it in a way that tells a complete picture there.
Ron, I want to go back to something you mentioned earlier about the significance of funding operations and funding growth. We’re talking about measures, budgets, maybe, and we’re talking about strategic initiatives. What’s the fit between financial measures and strategic initiatives?
Ron Kirscht: I think there’s more than a casual link between the two from the standpoint that if you’ve got initiatives that are going to cost several million dollars and you’re willing to fund it to $500,000, then you’re wasting people’s time and ruining their belief systems. Eisenhower said that the plan is nothing, but planning is everything. When you are creating a budget, you’re really saying, how are we going to operate the business? Are we going to be strong and on the upswing, or are we going to be trying to maintain, or are we trying to have a controlled descent? You put that forward, and throughout the year you’ve got to be continually updating your forecast to what your original plan was. Are we going to end up in a different place based on the direction we’re going, and is that good or bad, and what do we need to do to respond to it?
In terms of measurements, key performance indicators, you can only really reliably measure four attributes. One is quality, one is quantity, one is efficiency, and the other is timeliness. Everything else is a little iffy in terms of if you’re actually getting a meaningful measurement.
Steve, what are some of the key measures that you’re paying attention to at North Central Door?
We put metrics in place for all members of the leadership team who are part of the accountability process, which includes quality, quantity, cost and time. We make sure that measurements and standards of performance are balanced against one another so that we’re not driving one behavior over another—behavior that might impede one measurement over another. We make sure that we’ve balanced metrics so that we can achieve the overall goal and performance that we want.
We also want to ensure that we promote activities that help improve the effectiveness of our managers and not just create pencil-whipping exercises that have no value to him or his employees. Finally, we ensure that everything is achievable, not a slam dunk, but a stretch goal. We also try to ensure that our metrics of performance don’t become a tool for reprimanding a person but an opportunity to repair deficiencies.
This article represents a paraphrased adaption of a panel discussion, entitled Growing Your Enterprise, at Enterprise Minnesota’s 2016 Statewide Manufacturing Peer Council. The discussion was moderated by John Connelly, director of consulting at Enterprise Minnesota. Participants included:
Mary Connor, business growth consultant, Enterprise Minnesota
Ron Kirscht, president, Donnelly Custom Manufacturing
Greg Langfield, business growth consultant, Enterprise Minnesota
John Meyer, CI manager, J&B Group
Steve Palmer, president and CEO, North Central Door Company
Sarah Richards, CEO, Jones Metal, Inc.