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Blog for the hardwood lumber industry.

It Was the Best of Times and the Worst of Times

“It was the best of times, it was the worst of times.”  The first sentence from Charles Dickens’ famous novel A Tale of Two Cities captures well the state of the hardwood lumber industry over the last five years.  For most hardwood lumber producers, the last six months have been among the best times that they’ve ever experienced.  And yet, the pain of much of the previous five years remains seared in our memories.  So how do we handle these two radically different images at war in our minds?  As I’ve thought about this, I’ve come up with some advice for myself.  Maybe some of this will work for you.

 

  • There’s an old stockbroker’s saying that goes something like this:  “Don’t confuse brains with a bull market.”  So, in our context, enjoy the good times while they last, but don’t let them convince you that you’re suddenly a lot smarter than you were a year or two ago.  The current runaway market will end sooner or later, and it isn’t our smarts that has created it.  We need to enjoy it while we can, but be ready for it to return to normal.
  • Don’t let rising prices and increasing margins cover up sloppy operations and sales practices.  It’s easy to be lulled to sleep by increasing sales and margins, and not look hard enough at what’s “underneath the covers.”  We need to keep pushing just as hard for the half percent efficiency increase, or the 1% gross margin increase, as we did in the depths of the recession.  It’s just as important now in good times as it was in poor times.
  • Keep investing.  When business is good, there’s a temptation to think that it’s not as important for us to keep investing in our business.  I’m not just talking about equipment, but also about investments in IT and other areas that make our businesses more efficient and cost effective.  Continuing to invest will give us a cost advantage when things turn back to normal.
  • Work harder than ever at getting close to our customers.  The temptation in times like these can be to think “we’re in the drivers’ seat.”  At all cost, don’t give into this temptation.  Suppliers and customers need each other and the pendulum swings back and forth.  Don’t be afraid or embarrassed to raise prices, but travel and work hard to keep strong personal connections and relationships, and don’t present a “take it or leave it” attitude.
  • Proactively look for talent that we can add to our team, whether it’s in production, operations, sales or support functions.  Don’t wait until someone leaves to try to fill a spot.  With our business growing again, we will need more and better talented people.  Try to get ahead of the curve in hiring these people in advance, even if we don’t have a position open for them right now.

 

These are a few thoughts that I remind myself of these days.  Hopefully one or two of them will help you.

Give and Take

At the end of last year I read the book Give and Take by Adam Grant.  Quite simply, it was the best book I’ve read in the last year.  Adam is an interesting guy.  He’s the youngest tenured professor at the University of Pennsylvania Wharton School of Business, and has done research on some really interesting aspects of business.

The book identifies three different kinds of people: Givers, Takers and Matchers.  The definition of each of these groups is what you might expect.  Givers naturally give more than they get, and instinctively act in the interest of others.  Takers like to get more than they give.  And Matchers strive to preserve an equal balance between giving and getting.

The fundamental premise of Grant’s book is that while it takes some time for Givers to build up goodwill and trust, eventually they establish a reputation and relationships that enhance their success.  In fact, research shows that people who help and regularly give their time to their colleagues actually earn more and get more promotions than Takers or Matchers in the long run.  Studies also show that the most productive people are people who give often.

In the middle of the book, things get really interesting.  Grant makes a distinction between “Selfless Givers” and “Otherish Givers”.  He says that when you really analyze Givers you find that they tend to fall at both the top and the bottom of the success ladder, while Takers and Matchers tend to land more in the middle.  So, what’s the difference between Givers who succeed and Givers don’t?  According to Grant, it’s whether or not they can look out for themselves at the same time as they give.

“Selfless Givers” don’t think enough about themselves.  They think only of others, and are prone to end up as doormats.  People take advantage of them.  On the other hand, “Otherish Givers” are both others-oriented and self-oriented.  For me, the most fascinating point Grant makes is that self-interest and others-interest are completely independent motivations; a person can have both at the same time.  These two characteristics are not opposites such that you need to choose one or the other.  In fact, they can complement one another.  Successful Givers care about benefitting others, but they also have ambitious goals for advancing their own interests.  Givers who do both of these things end up being more successful than Takers or Matchers.

Grant’s ideas were very helpful to me personally.  Our stated purpose in our hardwood lumber business at Baillie is “To Help Others Succeed.”  We occasionally get into discussions about whether or not one can take this too far.  In other words, is it possible to be so exclusively focused on others that it hurts your performance?  Grant’s idea that focusing on helping others and advancing your own self-interest are not opposite things, but are actually separate motivations that can both be present at the same time and can actually complement each other, really helped me as I think about our purpose.

If you are able, read this book.  I’m interested in your opinion of Grant’s ideas.