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Growing up on a farm, I came to modern business with a certain perspective. Farmers, at least in my youth, were extremely frugal, spending cash money carefully and making do with many assets and practices that perhaps qualified as “what was available” as opposed to “best available.” I think even farmers have abandoned much of this philosophy now.
Yet, it has stuck with me. I hope you don’t think I am arrogant when I say this, but I have always viewed business, and in my case, industry, as a bit of a spendthrift. A paper mill wastes more money before lunch than a farmer of my parents’ generation would waste in a lifetime, even when accounting for inflation.
What this means, if I am right, is that you have tremendous opportunities to beat your competition on the cost side of the balance sheet. Add superior products, marketing and logistics to that and you can’t help but win.
Being competitive starts with the people who work for your firm. A close second is the culture of your company. Let’s talk about both of these.
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Superior people are essential if you hope to successfully compete. Surprisingly, these people do not necessarily need to be the most intelligent as measured by grades received in school. In fact, I (and Google agrees with me now) will suggest that academic grade point averages are seldom indicators of future performance. Attitude, Drive and Street smarts (let’s call this “ADS”) are far more important. A person with ADS will always keep the big picture in mind and will know when they need more help from those with better academic intelligence than themselves.
Read about Abraham Lincoln. Dorothy Kearns Goodwin’s “A Team of Rivals” is a good place to start. Once when Lincoln was filling out some sort of form, under the question, “Education?” he wrote “deficient.” This from a man who could cite from memory nearly all the works of Shakespeare. Nevertheless, he knew his limits and gathered about himself those who could fill in those limits. ADS people can do this.
One of my clients thinks the qualities are so important, they administer the PI test to every job applicant. This is the first thing they do. If you don’t score well on PI, you are done. What is PI? It is the “Predictive Index.” I’ll give them a free plug—go to www.piworldwide.com to see for yourself.
Small and professional: Check out the latest edition of Economic Development Arguments.
The other issue for this week is your corporate culture. I am often involved in starting up new mills. I tell the senior staff the same thing every time: you have one chance to set your culture. Can cultures be changed? Yes. How do you change them? With a very professional, dynamic leader and you change them fast. Changing a culture is risky and dangerous. However, sometimes it is the only thing that will save an enterprise.
I have watched the culture in one entity in our industry for over 25 years. My only conclusion to save it is to move it halfway across the country and invite no one of the existing staff to come along. This culture was poisoned long ago by one person. The effects of that poisoning linger to this day. Bottom line—it’s tough to make a great culture, but easy to kill it.
A friend of mine once led a large company in our industry. It was during the time when it became popular to do away with the receptionist and install a phone and phone list in the lobby instead. He didn’t do this. I asked why. I’ll paraphrase his answer: “Hypocrisy. Don’t you think I know we waste more money in the back end of our mills before lunch than a receptionist costs in a year?”
Much of what passes for management in our industry is merely window dressing. Yet, it is effective people coupled with effective management that can make all the difference in your mill’s performance. Regularly, in our mature industry, mills are surprised when visitors from on high arrive to discuss an eminent shutdown plan. In shrinking markets, there will be shutdowns, but your job is to make sure that your mill is not the one going out of business. In fact, being at the top of the scale in your grades should be your only goal.
Given a choice of superior people or another competitive asset, which would you choose? Please take our weekly quiz here.
Competitiveness involves safety, too. One can fairly easily determine the competitiveness of a mill by looking at its safety record.
Be safe and we will talk next week.
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