By Rick Mullen, Maintenance Sales News Associate Editor
During Dirk Beveridge’s video presentation titled “Building for Tomorrow During Uncertainty,” he emphasized leaders must not take their eyes off the future, while navigating the current COVID-19 pandemic crisis. Beverage is the owner of UnleashWD, a design, innovation and strategy firm that consults and works with independent distributors.
“Yes, we must manage for today. We must manage through the uncertainty that is hitting us every day, but, as leaders, we can never take our eyes off tomorrow,” Beveridge said. “I think it is absolutely critical for leaders to understand the important role they play in innovating for the other side of the pandemic — and we will see the other side.
“Our job is to ensure we come out of this pandemic stronger than we went in. As leaders, our role is, not just to manage for today, but also to manage through the crisis — which is absolutely possible to accomplish.”
Beveridge recalled a recent interaction he had with Rick Fantham, president/CEO of Hajoca, a North American distributor of plumbing supplies. They discussed how leaders might guide their organizations to the other side of the COVID pandemic, while keeping their eyes on tomorrow — on the horizon.
Fantham told Beveridge he was leading his organization through uncertainty by focussing on the following four phases:
■ Resilience — “This phase began when COVID first became a reality, and we realized it was going to impact our employees’ lives,” Fantham said. “So, right at the beginning, our focus was 100 percent on the safety and health of our employees.”
For Fantham’s company, this phase was pretty much completed in just a few days.
“In seven to 14 days, we were able to put processes in place to ensure the health and safety of our people,” Fantham said. “We then moved onto the ‘readiness’ phase.”
■ Readiness — While the distribution company continued to focus on the health and safety of employees, the primary emphasis shifted to protecting the business as an entity, Fantham said.
“We had to look at the financials — at what was going to happen to revenue as a result of COVID,” Fantham said. “We also discussed what is going to happen because of the disruption of the supply chain.
“We had to react quickly to ensure we were going to be able to do business, while meeting the needs of customers and the marketplace.”
However, Fantham reported, the company was “blindsided” by the severe disruption of the supply chain, which prompted further analysis, as well as the analysis of the company’s processes, capabilities and uniqueness to be able to get through the pandemic.
Fantham said the readiness phase was completed in about 30 to 60 days.
■ Reliability — This phase kicked off with Fantham suggesting leaders must work to shift the company’s mindset from a “defensive” posture to an “offensive” posture.
“We took the opportunity to look at the marketplace and what opportunities may come out of the pandemic crisis, with a view to promoting a mindset of ‘playing to win,’” Fantham told Beveridge.
Establishing a mindset of winning during the pandemic, and coming out stronger on the other side, proved to be the most difficult and longest phase, Fantham said.
■ Recovery — When Beveridge spoke, there were signs economies in some regions of the country were opening more and more. That trend continued until the recent significant uptick in COVID cases related to the Delta Variant, which has thrown a wrench in the works when it comes to economies getting more back to “normal.”
Nonetheless, Fantham’s “recovery” phase paradigm indicates, as economic growth resumes, leaders must be the ones who are prepared to seize opportunities as they arise.
“Playing to win, and ensuring we are positioned to seize the opportunities that positive economic growth presents, is what I call, ‘shifting to tomorrow,’” Beverage said. “As leaders, I believe that is our role and our responsibility.”
THE TYRANNY OF THE URGENT
The managing of a business during the pandemic crisis has proven to be daunting to some business leaders, as the day-to-day issues and challenges are coming at them hot and heavy.
“Have you asked yourself lately, ‘Where did the day go?’ Have you said something like, ‘I was busy all day, but I didn’t seem to accomplish anything,’” Beveridge said. “That type of thinking does not allow us to play to win.
“As leaders, a trap we often fall into is what I call the ‘tyranny of the urgent,’ which is heightened during uncertainty. Every day there is a new problem. Every day there is a new crisis. Every day we need to develop a new solution to something that is impacting business — it is urgent and you have to take care of it, now.
“I’ve got this meeting to attend. I got that customer calling me. I have to get on the phone to this vendor — daily activities are all wrapped up in the urgency of getting business done today.
“One CEO said to me recently, ‘The majority of distributors are dealing with the day-to-day and they are not lifting their eyes toward the horizon. They can’t think about tomorrow. They can’t think about playing to win. They are just keeping their heads above water.’
“We have the opportunity to change the mindset, so that we can do what is necessary to play to win and to shift toward tomorrow.”
Beveridge offered a framework to move from the “tyranny of the urgent” to the “freedom of strategy.”
“When we are in the tyranny of the urgent, we are very tactical and have lost the ability to think strategically,” Beveridge said. “As leaders, if we are going to shift our thinking toward tomorrow and come out of this crisis stronger than when we went in, we must become more strategic.
“While trapped in the tyranny of the urgent, we are slaves to someone else’s agenda. If we are simply reacting to the problem of the day, that means somebody else’s problem has landed on our desk and has taken control of our activities.”
What Beveridge calls the “freedom of strategy” — in other words, to develop the discipline to become more strategic — stands in contrast to the tyranny of the urgent.
“Freedom of strategy means we are making the decisions,” Beveridge said. “We decide what is important, what has meaning and what has purpose. That is how we are going to play to win.”
Beveridge cautioned, while trapped in the tyranny of the urgent, the best a company can do is restore things to how they were — there is no growth, improvement or progress.
“When we establish the mindset of being strategic, in addition to having the discipline to get away from the day-to-day, that is where we, as leaders, create value for our organizations,” Beveridge said. “We are building on something that doesn’t yet exist. That is where value is created. It is more than simply solving a problem. When we are trapped in the tyranny of the urgent, we must be honest with ourselves that we have ceded control, not just of our day, but also of our personal dreams and those of our teams and organizations.
“When we move to that strategic mindset, we gain control. We have a strategy we are going to implement. We are going to have to be agile and pivot at times, but we have identified what it takes to come out strong.
“When we move from tactical and urgent to strategic, we are recognizing and acknowledging there is something more to build toward.”
COMING OUT OF THE PANDEMIC STRONGER
Beveridge referenced a sales officer, whom he has worked with over the years, who has said many times, “What you want to become is much more important than what you are today.”
“Think about the conversations you have had during this pandemic. Have your conversations been more about what you need to do today (the tyranny of the urgent)?” Beveridge asked. “I’m not saying we can ignore that, but have we been able to build in the discipline and see the need to have the conversations about what we want to become on the other side of the pandemic?”
Beveridge gave the example of how one executive leader led his company during the worldwide financial crisis of 2007–2008, also known as the global financial crisis (GFC).
Brenden Deely is currently the CEO of Banner Solutions, a door hardware business. During the financial crisis of 2007-2008, he was the CEO of L&W Supply, a distributor of construction supplies and building materials in Terre Haute, IN, Beveridge said.
During his tenure at L&W (2002-2015), in spite of the 2007-2008 financial crisis that shut down the economy, he grew the distributorship from $800 million in annual revenue to $2.5 billion.
“He found a way to come out of the financial crisis of 2007-2008 stronger than when he went in. How he did it is instructive for everyone of us,” Beveridge said. “The financial crisis forced Deely, as a leader, to step out of the tyranny of the urgent and to think strategically.
“Deely asked, ‘Who are we? We are a distributor of building materials.’ He said, ‘If we are really honest, we are really no different that anybody else.’ He knew L&W Supply was a market leader, and probably enjoyed better margins than most competitors, but that was because of sales. Did L&W Supply really operate differently? Did the company have different values than others?”
Deely came to the conclusion that his company was not being operated differently than the competition. However, he did see an opportunity to move the company in a positive direction.
“Deely decided what he needed to do in the middle of the financial crisis, was to get his leadership team together for a two-day retreat,” Beveridge said. “They came together over a weekend to talk about what could be done to come out of the crisis stronger.”
Deely realized it was not his job alone to lead the company forward. From that point, the thrust of the effort was going to have to be handled by his leadership, who needed to figure out how to proceed.
Deely had to set the stage for his leaders to figure it out. So, before he sent them to work, he told the leadership team members they had a mission comprised of three components.
“Deely said, ‘No. 1, I need you to figure out how we are going to come out of this crisis stronger than when we went in — that’s it. That is your job as leaders,’” Beveridge said. “‘No. 2,’ Deely said, ‘I need you to think bigger and bolder than you ever have before. We are very good at incremental change. We are very good at solving the problems of the day. That is not what I am asking you to do. Your job is to think about innovation and transformation — real change in this organization. No. 3, your mission is to change the rules of the industry. Look around you. The financial crisis is going to change the rules. It is going the change how business is done.’”
To further bring home his point to his leadership team, Deely told them a story.
“Let’s look at L&W Supply a little differently,” Deely said. “We are the market leader. We are the biggest. We have the scale that others don’t. In fact, people look at us like they look at an aircraft carrier out in the middle of the ocean. That aircraft carrier is huge. It is tough. It is strong.
“As leaders of L&W Supply, what you and I must recognize is this aircraft carrier is not sailing in smooth waters. This big ship of ours is in the middle of a perfect storm, and, if we are really honest with each other, you know what we are doing? Every day we are running down below deck into the bilge bailing water just to stay afloat. How we are operating is not working.”
“He told that story to give his leadership the opportunity to think big, to come out of the crisis stronger, and to change the rules of the industry — then, they went to work,” Beveridge said.
Deely’s leadership team did a “deep dive” into the industry.
“They looked at the industry from top to bottom. They looked at market size. They looked at competitors. They looked at internal capabilities — their own strengths and weaknesses. They looked at their internal capabilities compared to other industries,” Beverage said. “Deely’s team knew they needed to get outside of just the building materials segment.
“They knew they could learn from the jan/san industry, the electrical industry, etc., and not just distributors. At Unleash, we call that the ability to ‘lift and shift.’
“They also did a ‘deep dive’ on their customers. They talked to customers. Deely’s team made its mission, during the financial crisis, to get into the minds of customers deeper than they ever had before.”
Ultimately, what Deely’s leadership team found was there were no meaningful, consistent customer service standards.
“Everybody just said, ‘We will get you the right products at the right time at the right place,’” Beveridge said.
With the lack of defined standards companies could apply to separate themselves, Deely’s leadership team saw the opportunity to change the rules of the industry.
“They went to work reimagining L&W Supply from top to bottom,” Beveridge said. “They looked at every touch point with customers, from the time they went to the website, to when they requested an RFD (request for delivery), to when an order was placed, to when it was delivered, to when the invoice was created — every touchpoint.
“The leadership team looked at company standards and compared them to industry standards. To change the rules of the game, it was agreed the company must redefine the standards of every touchpoint along the customer’s journey.”
Then, the L&W Supply leadership team devised a strategic plan to transform the business and drive innovation.
“In order to do that, they had to invest differently in technology, change hiring requirements and the talent of who they were going to bring into their organization,” Beveridge said. “Furthermore, the team had to rethink and re-engineer their sales process.
“The results were unbelievable. They came out of that financial crisis stronger — from $800 million in annual revenue to $2.5 billion. The numbers are one thing, but, the point is, all that growth started with one simple belief — ‘how we are operating is not working.’
“I think, if we are honest with ourselves, we can take the same mantra to our businesses. We can talk to our teams about the need and opportunity to come out of the COVID pandemic stronger.”
Beveridge offered three ideas on how companies can leverage uncertainty during the pandemic to achieve similar results that Deely’s leadership team accomplished.
“First, we must leverage extreme ‘external’ pressure. If you want your team members to think about coming out stronger on the other side, it must be understood and internalized that they can’t just talk about it. The focus can’t just be on people’s health, although that is critical,” Beveridge said. “We must be able to tell a story, like Deely did, and talk about external pressures and the disruptive forces that are changing the way business is done.
“If your team does not believe business practices are changing, they are going to fight any need for change or transformation. They are going to continue to say, ‘All we need to do is solve the problems of today.’
“So, No. 1, as leaders, we must get our arms around the disruptive forces that are changing the way business is done, and we must be able to articulate that in a way that moves people to see the need to change.”
The second idea is to leverage extreme “internal” pressure.
“Extreme internal pressure says we must identify the individuals on our team who want to be part of the change. I call them the ‘loyal opposition.’” Beveridge said. “As a leader, what I want to do is look at my employees from top to bottom, east to west. I want to look at everybody on my team. Title doesn’t matter. Function doesn’t matter.
“I want to find those individuals — the ‘troublemakers’ — who want to break the rules and are fed up with the status quo. They are tired of fixing the same problem month after month. These are the individuals who know we must change if we are going to play to win.”
Beveridge said the “troublemakers” will help redefine a company for the future.
“The ‘troublemakers’ are going to push you to shift toward thinking for tomorrow. They are loyal. They love the company, but they also know it must change,” Beveridge said. “So, you are going to find those individuals and put them on the team, just like Deely did.”
The third idea is the need to have a “coherent alternative.”
“You must have a strategy. Your team is going to look to you, as the leader, to develop an alternative for doing business today,” Beveridge said. “As you shift to tomorrow, you are going to look for that strategic plan.”
THREE KEY PHASES
Beverage said there are three key phases in leading a company’s team to build toward tomorrow. The first is to define new rules for doing business in today’s marketplace.
“The way business is done is changing more rapidly than ever before, and COVID is the great accelerator,” Beveridge said. “We need to have a conversation about the rules changing how business is done. How are sales changing? How is supply changing? How are social movements in the country going to impact our businesses going forward?
“In the second phase, we must spend time asking ourselves where are the opportunities for profit going forward? L&W Supply found it in its service standards, in reimagining the customer journey.”
At the center of the second phase is a company’s customers.
“We must put customers at the center of our strategic thinking, just as L&W Supply did,” Beverage said. “We must ask questions such as, ‘What are our customers moving toward? What are they moving away from? What pains are they trying to eliminate in their operations? What gains are they trying to achieve?
“The key is going through a process to think about what profit opportunities are going forward. Then, the third phase is to put together a strategic plan — a strategic sequence of moves.”
During the third phase, Beveridge said, a leadership team will likely have to say “no” to many ideas hatched in the first two phases.
“On the other hand, we are going to have to ask ourselves, ‘What are we going to say yes to, to ensure we come out of the pandemic stronger on the other side?’
“The COVID-19 pandemic has changed our country, our communities and our industries.”