January, 2005

Kimal Lumber: Entrepreneur of the Year

At Kimal Lumber, entrepreneurship drives growth

By Greg Brooks

Every organization has its mavericks. You know the type: full of ideas and eager to do great things, but living by the credo that it’s easier to ask forgiveness than permission. Many companies struggle with them. They can be star performers, but they can also be prima donnas, and managing them is like herding cats.

Al Bavry doesn’t mind. He’s one of them.

As a young man in the early 1960s, the president, CEO, and self-described "resident psychiatrist” at Nokomis, Fla.-based Kimal Lumber was more interested in hot cars than his future career. He worked as a carpenter’s helper and flipped burgers at McDonald’s before landing a position as a yard hand at a local lumberyard.

It was a job he could sink his teeth into. "I was like a sponge,” says Bavry, and six years later, he was managing. In 1969 he moved to another local independent as a manager—just in time to see it acquired by Wickes Lumber.

It was no surprise; Wickes Corporation was buying everybody those days. Wickes Lumber was the industry’s undisputed powerhouse, the only true national chain until Home Depot, with greater market share than Depot has today. For Bavry, it was a step up to the big leagues.

"My first year with Wickes, I wound up at their national kickoff meeting,” he recalls. "At a reception that first evening, an elderly gentleman with a martini in hand walked up and introduced himself as Dan. What a warm, friendly person—he seemed to take a personal interest in everyone he met.” Bavry didn’t find out until later that he’d just met Dan FitzGerald, CEO of Wickes Corporation.

Two years later, FitzGerald was gone. "What we didn’t know at that meeting was that Dan was dying of cancer,” he says. At the following kickoff meeting, a new CEO, E. L. McNeely, gave the keynote speech. He left the room the moment he finished.

"He didn’t stick around to meet the ‘common’ store managers—we were beneath him,” says Bavry. "For the first time, I think I recognized the true importance of people in the equation. It wasn’t a numbers game to be played out on spreadsheets. It was the positive chemistry between managers, employees, and customers that made it all come together.”

Bavry continued with Wickes for the next ten years, but he was increasingly out of step with an increasingly regimented corporate culture. "E. L. was your consummate accountant type,” he says. "His orientation was to the given quarter, with very little thought about long-range planning.”

In 1981, Wickes Corporation went into Chapter 11 bankruptcy. Bavry, with partner Kim Pavkovich and six employees, launched Kimal Lumber.

Today, Kimal is a $42 million firm with 180 full-time employees in four divisions: two lumberyards, a truss plant, and a door-and-window facility with an attached showroom. It almost didn’t happen.

"Wickes was determined not to let us get a foothold,” recalls Bavry. "They were out cutting prices from day one.” All Kimal had going for it was creativity and hustle, but a small cadre of contractors threw their support behind Bavry and Pavkovich until they got the company on its feet.

"We were pretty much a bunch of mavericks, and we all had that entrepreneurial spirit,” says Bavry. "It was the beginning of what I deem a well-structured, ‘loose-tight’ organization.”

Every successful company is built around a group of veterans who operate more like partners than employees. That group defines your identity, and there was never any question about what Kimal wanted to be. "We are truly dedicated to service,” says Bavry. "With a lot of companies, it’s a buzzword. Here, it’s a religion.”

But it’s the way that dedication plays out on a day-to-day basis among individuals in the group that ultimately defines you. Like Bavry, outside sales rep Pat Astle was a refugee from the corporate world; she spent seven years as a regional manager with Weyerhaeuser before joining Kimal in the early 80s.

Kimal survived its early years because a few builders decided this was a business worth building. For the past 20 years, Astle has been returning the favor.

Her $10+ million in 2004 sales came primarily from custom builders, but includes everything from production builders to owner-builders. She manages the volume with a team of three sales service reps—"all women,” she says, "the only all-woman sales team in the company.”

While all good sales reps function as co-superintendents, few do it with the same dedication. "My team and I are on every jobsite every day,” says Astle. "We’re an unpaid $40,000-per-year superintendent for our customers.”

If daily visits seem like overkill, that’s the difference between a buzzword and a religion.

For one thing, it creates interdependence. Astle’s largest customer accounts for $4 million of her total sales, but he’s hardly a 1,000-lb. gorilla. "He started as an owner-builder and found that he liked building houses,” she says. He develops projects; she manages his jobsites.

It also leads to a degree of trust that can make negotiating a moot point. Recently, says Astle, "One of my builders told me, ‘You know, I used to think price was everything until you guys came aboard my team. You manage everything, you save me money. Price isn’t all that important in the long run—just take good care of me.’”

As word gets around, it ultimately reverses traditional roles in prospecting. "The framers and masons we work with on a daily basis are my contractors of tomorrow,” says Astle. "They call me ‘Miss Pat,’ and I get calls all the time saying, ‘Miss Pat, I don’t know if you remember me, but I used to work for so-and-so and now I’m going to be building houses. Would you come talk to me?’”

For Astle, it isn’t just service that defines Kimal—it’s the freedom to provide service the way she believes it ought to be done. "Al lets us be entrepreneurs,” she says. "You can do anything you want as long as you assume the responsibility.”

This is what "loose-tight” is all about. Some dealers strive to create a perfect system, then seek out people they can plug into it. Kimal seeks out exceptional people, then surrounds them with the resources they need to grow.

Like Bavry, outside sales rep Rodney Evans kicked around in the trades for a while after high school before landing a job as yard hand with Kimal. Bavry rotated him from department to department, then he spent nearly two years working under other sales reps before going out into the field on his own.

When he did, "Al didn’t say, ‘Here are the six accounts I want you to target,’” says Evans. "He said, ‘Here are the tools and knowledge to become a sales rep—go build your own base.’ I like to target the high-end builder, and he gave me the opportunity to do what I was most comfortable doing.”

Today, Evans generates a comfortable $5 million per year with just ten active accounts, all building homes at price points ranging from $1 million to $10 million.

Again, it was a lesson learned at Wickes that pointed the way. "I was always volunteering for things,” says Bavry, and at one point, the lumber division’s staff psychologist—that’s right, a full-time psychologist on the payroll—formed a focus group of managers to brainstorm motivational techniques.

"We were talking during a break,” says Bavry, "and he said something to me I’ll never forget: ‘If you treat people like dummies, they won’t let you down.’ The reverse is true, too.”

It’s no secret that treating people like professionals generates a sense of ownership, but it’s relatively easy to do when you’re small. Your veterans won’t let you do otherwise, and you have plenty of personal contact with everyone else.

That’s the "loose” half of loose-tight, and by 1992, it had become clear that it had its limits. Explains Bavry, "We were at a point where sales were at about $11 million. I was the general manager overseeing practically all our operational and sales activities—translated, I’d become the best darn ‘micro-manager’ around.”

He brought in consultant Bill Thompson, and they began to develop a structured system to cultivate Kimal’s unique culture. "Institutionalized entrepreneurship” sounds like the perfect oxymoron—until you see it in action.

At the Englewood yard, for example, the crew is involved in everything from yard layout to internal procedures to equipment purchases. "Everything is designed around the person doing the job,” says operations manager Jeff Koerbel. "They have the freedom to make decisions on what they need to make their jobs easier.”

The result is exceptional productivity: $12 million per year with 20 employees, or $600,000 in sales per employee, more than double the industry average.

Some companies push decision-making authority to the front lines in pursuit of a flatter organizational chart. With Bavry, it’s more basic than that. "When you find people who want to grow with the company, you don’t ever want to lose those people,” he says. That means giving them jobs they can sink their teeth into.

Most often, it comes out in little projects that pay off in a big way. For example, engineered wood division manager Paul Ambrose’s crew decided that hand carts would be an easier way to move cut truss components, and wanted to design their own. "That was three or four forklifts we didn’t have to buy,” says Bavry.

In Nokomis, Kimal leased property adjacent to its yard years ago from a paving company that never bothered to tear down its 100-foot radio tower. Not long after, general manager George Fishtorn was approached by a start-up wireless Internet service provider who needed a tower and was willing to provide free high-speed Web access in exchange.

As the ISP grew, it needed more towers. "I seem to have a knack for finding things,” says Koerbel, so he and his crew dug up enough used components to build two more towers. "Those towers would have cost close to $50,000 to put up; we got the material for under $10,000.”

Later this year, when the door and window plant moves out to the property where the engineered wood division is located, the entire company will be on the system. At $1,100 per month per location for a T-1 line, free high-speed Web access will save almost $40,000 per year.

But once in a while, small projects generate a new way of doing business. Like a lot of dealers in the 90s, Kimal assigned a counter salesperson to each of its outside sales reps (OSR), to provide technical and administrative support.

"It was informal at first,” says sales service rep (SSR) Georgette Clark. "We were just helping out.” It wasn’t long before those teams realized they could do a lot more if the relationships were formal.

Today, the program has evolved into a full-blown apprenticeship—and a career path. "We’re the OSRs of the future if we want to be,” says Clark. And oh, by the way, the salesman she supports "can take a two-week vacation if he wants. He has no problem handing me the car keys and going.”

The toughest thing about cultivating entrepreneurship is that it’s totally intangible—how do you know it’ll ever pay off? Bavry cites the management parable about the Chinese bamboo: You plant a seed, then water and fertilize it. Nothing happens. You continue to water and fertilize it for the next four years and still nothing happens.

Then in the fifth year, the seed sprouts and reaches 90 feet in six weeks. "Did the bamboo grow 90 feet in six weeks or in five years?” he asks. To Bavry, it’s the Wickes lesson again: Think long-term.

And it works. In its first 11 years of existence, Kimal grew to $11 million. Over the next 12, the company quadrupled in size.

In 1943, at the height of World War II, Allied intelligence discovered that the Germans were about to introduce jet-powered aircraft. The Allies had nothing to match, and to close the gap, Lockheed Martin formed an elite group of scientists and engineers called the Advanced Development Programs division.

They worked in such total secrecy that they weren’t even allowed to identify the division to phone callers, so they called it the "skunk works” after a popular cartoon. They developed the first operational American jet fighter in 143 days, and went on to invent the first Mach 2 fighter, both the U-2 and SR-71 high-altitude reconnaissance aircraft, and the Stealth fighter.

The idea of a sequestered group dedicated to developing innovative ideas has found its way into the corporate world, but as Christopher Hoenig notes in the July 1, 2000 issue of CIO magazine, "a skunk works is much more than an R&D lab. Its high degrees of secrecy, autonomy, talent, and resources focus on breakthrough changes in how business is done.”

And that fit Kimal to a tee. "Al is not like a lot of people who don’t want change,” says Lloyd Chalker, general manager at the Englewood branch. "He not only wants change, he wants to be the first guy on the block to have something new.”

The problem, of course, is that it isn’t enough to have it; you have to be able to sell it, too. That’s how Kimal’s marketing and development program came about.

It had always been clear that pioneering new products required an extra level of support. During the 90s, Kimal was the first in the market with engineered wood. Chalker, who joined Kimal two years ago after retiring from Trus Joist, was the rep who helped Kimal drive those products into the market.

Plus, Kimal had developed its own house brands such as Kimal Dense-Dry, a proprietary line of 1- and 2-inch kiln-dried, pressure-treated boards graded for appearance to Kimal’s specs. Moreover, there were programs to be developed that would drive business but weren’t product-related, such as a specifier’s guide on CD (see "Best Practices,” LBM Journal, August 2004).

It made sense to have an in-house group dedicated to those projects. The opportunity finally came when business development rep Debbie Liscum turned in her resignation.

"My husband took a job in North Carolina,” explains Liscum. "Al kept saying, ‘You can’t go,’ and I kept saying, ‘I don’t want to, but I have to.’” Shortly before she left, she and Bavry were at a vendor seminar and the topic of home-based employees came up. Suddenly the lights went on. "We sat through the seminar but we missed the whole thing,” she says. "We were passing notes back and forth, planning things out.”

The marketing and development team was formed with Liscum, purchasing agent Bob Hewitt, and counter salesman Tom Geriak. Its mandate was simple: Seek out ways to help builders build faster, better, or most cost-effectively, and make it happen.

"We work under the radar, spearheading a program or product,” explains Liscum. "Each skunk works project has a manager, but we talk among each other and often with customers to share ideas, come up with a plan, and decide how it’ll be executed. We also test it out on a select group of customers or colleagues before we introduce it as a bona fide program.”

Currently, for example, the team is working on TimberSIL, a non-toxic, non-corrosive wood preservative (see "Pressure Cooker,” LBM Journal, November 2004). In this case, the challenge isn’t simply to sell it to builders, but also to get code approval.

The key is to earn—and maintain—credibility. The team not only evaluates new products, but tests them extensively on their own.

Explains Geriak, "Code officials may not be receptive to Kimal Lumber reps, but they are receptive to the executive officer of the local home builders’ association. We spend a lot of time building those relationships. After a while, they understand that you’re there for their edification and not just to sell to them.”

The team also works to drive deeper penetration of existing products such as Trus Joist’s Timberstrand framing lumber. Says Bavry, "Even to this day, our competition sells it as a ‘Gee, if you have to have it, we’ll order it for you’ thing. We stock it, we promote, and we sell it, and we’ve done a tremendous job with it.”

The team’s role can be as basic as providing support for Kimal’s salespeople and contractors. "When a customer has something on a blueprint that nobody is familiar with, there’s a pretty good chance that one of us is,” says Geriak.

But it can also be as far-reaching as Kimal’s latest major initiative. The company is building a 7,500 square foot, state-of-the-art facility that will be split between offices for its engineered wood products design team and what it calls the Kimal Learning Center. "Everyone who knows about it is getting pretty excited,” says Hewitt. "Remodelers and builders are saying, ‘We need the education; we need to know what’s going on.’ The world is changing, and building is changing.”

Kimal is changing, too—and quickly. Bavry likes to think of each division and each major initiative as an "engine” driving future growth, and Fishtorn is actively working on building new engines.

Some will be revenue-generators. "We’re installing windows and doors,” he says, "and we added installed trim a little over seven months ago.”

Fishtorn is spearheading a project to expand the company’s installed sales programs. Others are refinements to reflect the changing marketplace. Kimal’s core customers are local custom builders, but national production builders are playing a larger role. "We’re focusing on setting up our main yard as a pure stick yard to handle that kind of business,” he says.

Still others are designed to improve efficiency, like GPS tracking systems in all delivery trucks. "If a pickup comes in and you know where all your trucks are, you can call them up and say, ‘Oh, by the way, swing by and pick this up,’” he explains.

Nothing earth-shaking, right? Actually those projects are in the works, too, but even if the company was willing to talk about them, there wouldn’t be much to say. They’ll change dramatically before they’re rolled out, and no one knows how they’ll change.

Least of all Bavry, and that’s exactly how he wants it. "Whether it’s designing hand carts to move truss lumber or redesigning a work order to make it easier to understand, we encourage people to tap into their creative side.”

Just don’t forget the other half of the equation. "Too often, people fall in love with the process,” he adds. "Once the goal is clear and we’re sure where we’re headed, we focus, focus, focus on execution.”

And good things happen as a result.