Jeff Meyer's Blog

Last weekend I read an article in Business Week about Samsung Electronics.  Early in my career, I used to read about successful companies, and then try to implement exactly what they did in our company.  Over the years I’ve learned to be more cautious. As it turns out, not every successful business strategy from another industry works equally well in our hardwood lumber business.

The article about Samsung reminded me of this lesson.  I was fascinated that Samsung has taken a completely different approach to the smart phone market than Apple.  And yet both companies are wildly successful.  Quoting from the article, “Apple’s approach is fewer models, each of them exquisitely designed.  Samsung’s is try everything, and fast.”  Later in the article, one analyst comments “Samsung has taken differentiation to a new art.  If I want something in between an iPad and an iPad Mini, I can’t get that from Apple.”  Samsung, on the other hand, is quick to create multiple variations on the products they offer.

The lesson here?  One formula doesn’t work for all businesses, all organizations, or even all people.  One could look at Apple, see their success and assume that emulating them is the best path.  Who wouldn’t want to be like them?  However, their biggest competitor, who appears to be gaining ground on them, is taking exactly the opposite approach.

So how do I apply this to our hardwood lumber business?  We’re essentially in a commodity business.  For us, trying many different things, being willing to fail, and not being afraid to end up with a variety of products tailored to different customers, seems like the better strategy.  This entails being able to create products quickly, and letting them die if they don’t work.  We’re not there yet, but we’re getting better.  Reading about Samsung inspired me.

So, the ultimate take away for me is that the best leaders are not those who go out and try to copy other successful companies.  Rather, success more often comes from searching for organizations that best fit your marketplace and way of doing business, and then tailoring and tweaking their approach to fit your culture and situation.  You may be doing something exactly the opposite of some of the most successful companies in the world, but that’s OK.  I hate to vote against Apple, but for us the Samsung approach seems better.  For someone else, the opposite may be true.

“The good news is I move fast.  The bad news is I often move alone.”  This quote from a woman named Lisa Thorne burned into my brain as I read it in John Maxwell’s recent book Everyone Communicates Few Connect.

Last month I talked about John Maxwell’s CD on diversity, and how it added a new dimension to my thinking on leadership.  This month I’d like to stay on the leadership wagon with Maxwell (next month I promise to move onto something new!) and talk about the leadership principle embedded in Ms. Thorne’s quote.

Leaders tend to move quickly, to multi-task, to move from one thing to the next rapidly.  Before we became leaders, we were individual achievers, and this ability was largely what made us successful.  We moved faster than the next guy, shifted gears more quickly than the guy right behind us.  Early in my career I was all about this.  I was faster and better than most, and it lead to individual success.

But all that changes when you move into a leadership role.  The heart of effective leadership, according to Maxwell, is connecting with people.  Only by connecting with people at a personal, emotional level can you really lead them.  And to connect with people, you need to slow down and go at their pace.  That takes patience.  It also takes energy.  It’s also counter intuitive for those of us wired to always go faster.

As a strong individual achiever, that’s been hard for me.  I can think of several times when my leadership in our hardwood lumber business suffered because I was going at my pace, not the pace of the person with whom I needed to connect.  I was all about getting there faster and more efficiently.  And often I did.  But at the end of the day, I was there alone, without the team I needed to accomplish the task.  I didn’t slow down enough to develop the connections necessary for people to want to come along with me.  This remains a challenge for me, but at least one of which I’m now aware.

Henry David Thoreau captured this “slow down” principle well when he said “The man who goes alone can start the day.  But he who travels with another must wait until the other is ready.”  Think about where you may need to slow down in order to connect better with those around you.  You may be surprised at the results!

For years, John Maxwell has served as my leadership mentor.  A recent CD of his titled “Embracing Diversity in Teams” provoked my thinking in a way I thought worth sharing.

In Embracing Diversity, Maxwell argues that leaders make the best decisions when they have diverse leadership teams.  By diversity, Maxwell doesn’t necessarily mean racial, ethnic or gender diversity, although all these types of diversity help.  Rather, he says, we naturally tend to surround ourselves with people like ourselves, people who think like us, and who have experiences and perspectives similar to our own.  This may make us comfortable, and maybe help us avoid conflict, but it won’t lead to the best decisions, answers and strategies.  Instead, just like Abraham Lincoln did when he included political enemies in his cabinet because they gave him a different perspective, we should include people different than us in our “inner circle”. Even people who irritate or frustrate us!

So let’s make this personal.  By nature, I’m not a person who welcomes or embraces conflict.  However, I’ve learned that I make the best decisions when I engage people who think differently than me, even if it leads to meetings where temperatures rise and tempers flare.  I’ve found this to be true in the hardwood lumber business, but I’m sure it’s also true in the computer business, the health care business, or any other business.

As a reader of this blog, you may not be in an official position of leadership.  However, what Maxwell says applies equally to you.  Think about creating diversity in your “personal network.”  Form a personal network of people to whom you go for advice.  But in choosing them, don’t choose your best friends or the people you get along with best.  Rather, choose people that think differently than you, that challenge you, maybe even get under your skin.

Rarely do the best decisions or answers come from one person; rather, they most often come from people with different perspectives and backgrounds robustly discussing an issue or question and coming to an answer better than any one of them could have.  When I’ve followed this path, we’ve made better decisions in our hardwood lumber business.

Last week I received a Christmas card from one of my oldest and best friends.  He closed his Christmas message by observing that we transition from one year to the next with a sense of “loss, progress and hope.”  As I reflected on these words, it struck me that they contain a helpful message for us as we close one business year and open another.

Loss.  We start each year with stretch goals, lofty aspirations, well honed strategies, grand plans.  Some we achieve, but many we don’t.  As the calendar turns, we realize that we will never get this year back.  Some possibilities of which we dreamed  are lost forever.  Some failures are not our fault.  But others are.  Regardless of the numbers, we always finish the year with at least a tinge of regret.

Progress.  Often we don’t notice progress day to day.  It seems like we’re standing still.  But if we look at where we were 365 days ago, and then where we are now, there’s a difference.  Sometimes a big difference.  At Baillie we’ve added a couple of businesses, added some new customers and suppliers, penetrated some markets more deeply, and built our team.  In some sense, I’m sure the same is true for you.  As the year comes to a close, spend a few moments reflecting on how you’re different now than you were a year ago.  How your business has improved.  How you’ve improved personally.  Allow yourself to feel good about your progress.

Hope.  Those of you who live in Buffalo know that sometimes hope is all there is.  After all, we’re Bills fans.   This requires eternal hope.  But the same applies to our businesses, our careers, our departments, our personal lives.  No matter how much we’ve succeeded or failed, no matter how many relationships we’ve built or botched, no matter how many smart decisions or bad judgment calls we’ve made, the new year brings hope.  A blank slate, a fresh start, untapped opportunities.  Live with a selective memory, live convinced that next year will be better than this one.  This is hope.

The hardwood lumber industry has seen some tough times in the last 5 years.  But each year I hear lumbermen enter the new year with hope, with optimism, with the thought that things can and will be better.  My wish for you is that you enter the new year with a sense of hopefulness in your heart.  Not a blind hope.  Not an unrealistic hope.  In fact, you may need to do a few things to make your hope a reality.  Maybe you need to change a few things in your business.  Maybe you need to change a few things in yourself.  Maybe there’s some area in which you need to grow.  Now is the time to face those realities, to make some hard decisions, to put a plan in place.

Although I’m sure 2013 will provide another year mixed with loss and progress, travel hopefully.  All the best this holiday season and for 2013.

Consistent readers of this blog know that I usually write about topics that fall into two general categories.  Half the time I write about a leadership, management or sales idea I’ve learned recently.  The other half of the time I try to explain what some housing or lumber statistic means for the hardwood lumber market.  Hopefully you’ve found these topics at least moderately interesting, and maybe even helpful.

Recently, however, I’ve gotten some interesting feedback from two readers.  To my surprise, they expressed a desire to hear more of my own opinions on the hardwood industry and markets.  I do confess that it’s always easier to write about someone else’s thoughts and ideas, and somewhat more intimidating to lead with your own thoughts.  That being said, let me take a crack at satisfying at least these two readers.  I’m not sure how original these thoughts are, but hopefully they can serve as a window into how we see things at Baillie.

First, at Baillie our thinking always starts with sales.  So naturally we spend lots of time thinking about what makes a good sales person.  For us, “being a resource” is right at the top of the list.  A 30 year old story that my father tells explains this best.  Back in the 70′s when an equipment salesman called on him, he always referred him to our production manager.  With one exception.  Maurice Roy.  Maurice sold kilns, and I’m not sure that his kilns were really any better than others.  Unlike other salesmen, however, Maurice always came armed with something important:  information.  Information about the lumber markets, information about something he’d seen during his travels, or information about something interesting he’d recently read.  His information was his ticket in the door, and probably ultimately the reason he sold more kilns.  If you’re a sales person, or you employ or influence a sales person, think about what information your customer will find interesting and helpful.  It may have nothing to do with your product.   But if you bring him helpful information consistently, he’ll gradually begin to see you as a valuable resource.

My second thought relates to sales also.  Conventional sales wisdom, and almost all sales training, advises sales people to ask the right questions.  In other words, one way or another get your customer to tell you what he wants and needs.  What this advice misses, however, is the fact that many, if not most, of our customers don’t really know what they need.  No disrespect to our customers intended, but if they knew what they needed they probably would have already figured out how to get it.  Instead, through deep observation and independent study of their customers’ production processes, sales processes and products, top sales people figure out one or two things they can teach their customer.  Things their customer didn’t know they needed.  And yet things that cause a light bulb to go on in the customer’s head when they hear it. Sales person as teacher, not just sales person as questioner.  Finding something worthwhile to teach your customer is hard work, but it’s worth the effort.  It will help him view you more and more as a resource, not just a sales person.

So there you have it.  Maybe not the most profound thoughts ever, but ideas that we’re trying to apply at Baillie.

“Home Building Surges as Confidence Grows” announced the Wall Street Journal in a feature article about home building last week.  The headline certainly sounded encouraging, and the article’s contents did not disappoint.  Let me share with you some interesting statistics from the article.

• Housing starts in September rose to an annualized rate of 872,000, the highest since July of 2008.This was up 15% from August, and up nearly 35% from a year ago September.

• The September housing start number is up from a low of 478,000 in April, 2009.

• In September, the number of new building permits (an indicator of future construction) rose nearly 12% to 894,000, again the highest since July, 2008.

• One builder in Florida reported starting construction on three developments, with nearly all 136 homes in these developments already under contract.

• Inventories of homes listed for sale have declined to the point where it would only take 6.1 months to sell all the homes listed compared to 8.2 months last September.

This all points to a slow but steady increase in the domestic demand for hardwood lumber, undoubtedly good news.  But where does this put us compared to historical levels for housing starts?  Well, since 1959 the US has averaged roughly 1.5 million housing starts per year.  The current improved rate in September is not even up to 60% of that long term average.  Obviously we still have a long way to go.

So what conclusions can we draw from this?  First, although improved, we certainly can’t yet call the domestic hardwood lumber market strong.  It’s improving, and there are pockets (geographically and by industry segment) that seem quite a bit better, but overall it’s still a lukewarm market that’s improving quite slowly.

The good news, however, is that the long term trends don’t lie.  Sometime in the next 3-6 years I believe we will see a return to a robust domestic hardwood lumber market.  Will we hit 1.5 million housing starts?  I’m not sure, but given that on average 1.27 million new households are formed per year it’s hard to imagine that it won’t be somewhere close to that number.  The long term demographic trends and attitudes toward home ownership would have to change drastically for us not to get close.

So what to do?  Keep improving your business, making it more efficient and more focused on designing products that will please your customers.  If you do that you should be positioned to profit from the rebound when it inevitably comes.

I recently finished reading the classic marketing book titled Positioning.   Al Ries and Jack Trout wrote this book several decades ago, but it’s remarkable how applicable it is to business today.  Often we think about advertising and marketing as convincing the customer that our product or service is something they should buy.  We think our goal is to change the mind of the customer.  “Nonsense”, say Reis and Trout.  Instead, they say, start with what’s already in the customer’s mind and build on that.  The minds of our customers are on overload, so trying to discover what is already in their mind and building on that is much more achievable than trying to change their mind.

The authors give the example of a Long Island bank named the Long Island Trust Company.  Long Island Trust wanted to see how they could enhance their market share onLong Island, so they did some market research to discover how customers rated them compared to five national banks.  The market research covered four general categories (how many branches, full range of services, quality of service and large capital base), as well as two categories specific to Long Island (helping Long Island residents, helping Long Island economy).  The bank was dismayed to discover that they ranked dead last in the first four categories, all of which are pretty important.  A ray of hope shown through, however, when it came to the categories specific toLong Island.  They were delighted to discover that they ranked first in each of these!

So what to do?  Conventional logic suggests shoring up the four important general categories where the bank ranked last.  I think that’s where most of us would start.  But, according to Ries and Trout, the problem is that it’s almost impossible to directly change the customer’s mind about these categories once their opinions are formed.  So instead, the bank focused on building on the uniqueLong Islandcategories where the bank already ranked first.  They devoted all marketing resources to promoting how the bank helped Long Island residents, and how it helped to grow theLong Islandeconomy.  Their marketing said nothing about number of branches, range of services, quality of service or capital base.  Instead, with laser like focus, they promoted specifically how they helped Long Island residents and theLong Islandeconomy.  Well, on the heels of this marketing campaign, the bank grew and flourished.  And most surprisingly, when the bank repeated the research 15 months later, the bank ratings in the other four categories (where it ranked dead last initially) improved dramatically even though they hadn’t even talked about those categories!

The moral of the story?  Find out where your customers already view you positively.  Then focus your resources on developing and promoting that strength.  If you do this correctly, the customer’s perception of you will most likely improve in all areas.  Reading this book by Ries and Trout has made me rethink how we should be positioning ourselves in the hardwood lumber business.  Hopefully it can do the same for you in your business.

Last spring a friend shared with me some fascinating research taken from a study of several thousand sales reps.  The results of this research were published in a book titled The Challenger Sale:  Taking Control of the Customer Conversation.  It sounded intriguing, so I read the book.  The findings were both surprising and counterintuitive, turning some of my assumptions about selling on their head.  Let me share a few of them with you.

Selling is all about relationship building.  That’s what we’ve always heard.  The only problem, according to the authors, is that it’s just not true.  It’s not that relationships aren’t important; it’s just that ultimately they are not what drive customers to buy.  Here’s a snapshot of the authors’ argument.

The authors say that there are five basic types of sales people.  In this blog I’ll just focus on two, the Relationship Builder and the Challenger.  The Relationship Builder is just what you think, someone who builds and nurtures strong relationships, is generous with his time, is always accessible, and makes sure the customer’s needs are met.  The Challenger, on the other hand, teaches, pushes and challenges.  The Challenger teaches the customer something new, tells (doesn’t ask) them what they need, and pushes them out of their comfort zone.  The Challenger is less concerned with making friends, and more concerned with pushing the customer to see his business differently.  He’s assertive, and sometimes makes his customer uncomfortable by forcing him to see painful things.  All of this, of course, requires a deep understanding of the customer’s business, which the Challenger has.

So back to the study.  Of the five types of sales people, no one type dominated the “average sales rep” category.  However, here’s the surprise.  Amongst the “star performers”, 50% of them were Challengers and only 7% were Relationship Builders! Of the five sales types, in terms of star performers the Challengers came in first and the Relationship Builders came in last.

Now as someone who values relationships deeply, I found these findings both troubling and unsettling.  I still think relationships are pretty darn important.  And, like anything else, I approach this research with a healthy dose of skepticism.  However, the methodology that the authors used is sound, so I think we’re naïve if we don’t look for a kernel of truth in their conclusions.  Although customers may not admit it, I believe that they value most someone who pushes them, teaches them, challenges them, even makes them feel uncomfortable.  Consciously or unconsciously, customers gravitate toward people who make their business better.

Now clearly all different types of sales people can be successful, but my main take away from this study was that we need to introduce a dose of “Challenger” into our hardwood lumber sales people.  From what I’ve read, although certain people are born with more Challenger skills, acting as a Challenger is something anyone can learn.  The authors suggest that even someone who is by nature a Relationship Builder can significantly improve their performance by learning some Challenger skills.

So once you’re done being mad at the author for down-playing relationships, think about how you might introduce an element of Challenger into your people.

A couple months ago I read a Harvard Business Review article titled “Creating Sustainable Performance.”  The subtitle to this article was “If you give your employees a chance to learn and grow, they will thrive – and so will your organization.”  The first paragraph included a quote that caught my attention and made me want to share the article with you.  The quote read as follows:

“Happy employees produce more than unhappy ones over the long term.”

This article prompted me to reflect on how I spend my time at Baillie.  I surely spend lots of time figuring out how we can produce and sell more.  But I’m not sure if I devote enough time to making our employees happy.

But what does it mean to be happy?  Interestingly enough, the authors say it’s not the same as being “content.”Rather, they say the word “thriving” describes more precisely what they mean by happy.  “Thriving employees”, they say, have a bit of an edge, are highly energized, but know how to avoid burnout.  Thriving employees have vitality (they are alive, passionate and excited) and are always learning (gaining new knowledge and skills).

So how does an organization help its employees to thrive?  The article offers four ideas:

1. Allow employees at all levels the discretion to make decisions.  With decision-making ability comes a sense of control.  Appropriate decision-making discretion at all levels makes a big difference!
2. Sharing more rather than less information.  Doing a job in a vacuum is tedious and uninspiring.  Seeing how your work fits within the organization’s strategy and mission is energizing.
3. Minimize incivility.  One study showed that half the employees who had experienced “uncivil behavior” in the work place intentionally decreased their efforts.  In other words, treat people with dignity.
4. Offer performance feedback.  The quicker and more direct the feedback, the better.

At this point you may be thinking that this only applies to people who run businesses.  Personally, I think it has much broader application.  Whether you supervise a group of people, or simply work on a team where other people’s performance matters to you, trying to adopt these principles should improve your results.  Reading this article made me reflect on how I can do a better job of helping people thrive at Baillie.  Hopefully it will do the same for you.

Last week I was traveling in Northern Europe.  Although I expected pessimism from the customers I visited, I wasn’t quite ready for what I experienced.  In the 12 years I’ve been traveling in Europe, on this trip I met the most negative reaction to business conditions that I’ve ever experienced.  And as I’m travelling, I’m reading article after article in the business papers about how stock and other capital markets worldwide are heading south,how employment and other U.S. economic indicators are going in the wrong direction, and how manufacturing and housing in China is slowing down.

So for those of us in the hardwood lumber business, what do we make of all this?  Should we re-trench and pull back our horns?  Get ready for another recession in the industry?  Is there any reason to have any level of optimism?

Well, this maybe the most contrarian statement that you’ve read all year, but I think there is plenty of reason to be optimistic.  Here’s why.  Quite simply, in the midst of all this negative news, in the midst of customers telling us that business isn’t good, there’s not an excess of lumber.  Sometimes we miss this fact.  Usually when markets are as poor as they are today, inventories are piling up in everyone’s sheds.  Today, that’s not the case.  There doesn’t appear to be significant excess inventory anywhere in the supply chain.  Although logs were plentiful at northern sawmills through the late winter and early spring, they are less so today.In the south, logs have been tight for a while.  Prices aren’t great, but lumber is moving.  And summer doesn’t appear to be bringing any excess of supply.

So why the optimism?  Well, when the decision makers in Europe finally do get a handle on their financial problems, and when the housing market in the US starts to bump up, and when the housing market in China stabilizes, I think demand will actually outstrip supply for some period of time.  We all know the hardwood lumber industry has lost significant sawmill capacity, and, due to financing and personnel constraints, I don’t think that capacity will come back on line quickly when the market turns.  That will leave those of us who are still in the hardwood lumber business with the opportunity to experience some strong pricing and margins as business improves.  We may need to wait, we may need to be patient, but I believe that it will come.