TOUGH CALL: Frozen in Time
As the general manager of one of the leading independent dealers in your market, you’re in a pretty good place. The company you work for, Icon Lumber, is a recognized pillar of the community. Well into its second century of operation, and its fourth generation of family ownership, your company recently became one of the inaugural inductees of the LBM Century Club. Some of your customers are the sons and grandsons of Icon Lumber’s early clientele. It’s tradition. No question about it; your company’s rich history is a source of pride for you and your team.
In many ways, your job would be hard to top. The current owner, who isn’t actively engaged in the business, made clear that he hired you to run the company so that he wouldn’t have to. Your marching orders were clear: keep the business running smoothly and profitably, but first and foremost, remember that you’re a steward of their family’s legacy. You’re to protect the business that their forebears forged over decades of hard work.
You’re in a pretty good place…but it’s not perfect. In fact, over the past couple of years, it’s gotten increasingly frustrating for you, key members of your team, and some of your biggest customers. Because, as it turns out, the way that the owner defines protecting the company’s legacy conflicts with the reality of running a business in a dynamic and highly competitive market.
Example: technology. While the vast majority of lumberyards in the U.S. that utilize business/point of sale software, Icon Lumber is one of the 8% that still does things the old fashioned way. In fact, your company’s one computer doesn’t even have Internet access. “If it was good enough for my dad, it’s good enough for us,” goes the refrain each time you bring it up to the owner. “The lumber business hasn’t changed that much. It’s still sticks, millwork and hardware. Plus, it’s a huge investment, and I don’t see how we could ever justify the cost.” Your arguments of increased operational efficiencies, the ability to accurately track inventory turns and margins, fall on deaf ears.
Meanwhile, each step forward by the competition (truck mounted forklifts, online account access, the hottest new products, etc.) effectively puts you another step behind—a fact that hasn’t gone unnoticed by your customers. “Bob, you know I like buying from you. But your company’s refusal to change makes it very difficult for me to keep saying no to your competition.”
That’s the problem in a nutshell. The reality is that the best way for you to serve Icon Lumber’s storied history is to stay relevant and competitive, and to position the company for its next century. But until the absentee owner agrees and authorizes much-needed changes, Icon Lumber is effectively frozen in time. While sales are solid in today’s housing market, you’ll be severely handicapped when you’re fighting for business during the next downturn. What would you do?
|1. MOVE ON. With no indication that the owner will sign off on necessary investments, you’re effectively the captain of a soon-to-be-sinking ship. Get off now.
2. INSIST. Explain to the owner how Icon Lumber is in serious danger of ceding its leadership role to more aggressive, more innovative, and hungrier competitors.
3. START SMALL. Identify one improvement that’s likely to have immediate results, then sell him on it. Use those positive results to leverage future investments.
4. INTERVENTION. If he won’t listen to you, schedule a meeting that includes some of your biggest customers and vendor partners. There’s power in numbers.