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As we enter 2020, we hope you will forgive a little walk down memory lane for us. As we write this, almost exactly 15 years ago, Rich and his dad (Grandpa Joe Schmitt) were writing their last column together. Neither knew that it was to be their last column but they did know Joe’s lungs, decimated by asbestos from the Navy and from a life in the plumbing industry, were fragile.
In a glass-half-full view, these fragile, abused lungs lasted more than 80 years, so we felt blessed and thought those lungs did pretty great. This month, we are recalling a column (lightly edited) from 2004 that readers liked and we hope you enjoy its topic of setting your sights on being a great wholesaler. We wish all of our readers a great 2020.
“There is an old joke about two guys who are walking in the woods and come upon a large, angry bear. The bear growls and acts like it is going to attack. One of the guys calmly kneels down and adjusts his running shoes. The other guy watches in disbelief and says, ‘I don’t know why you’re doing that. You can’t outrun a bear.’ The first guy replies, ‘I know I can’t outrun the bear — I just need to outrun you.’
“In the business world, this equates to a wholesaler comparing current corporate operations to the bumbling competitors he now faces. If the situation is a charging bear, then the comparison may work. In wholesaling, this sloppy attitude is what makes some wholesalers sitting ducks for their competitors. Pretty good salespeople, pretty good buyers, pretty good collections people, etc. As Garrison Keillor says about his fabled hometown Lake Wobegon, ‘All the children are above average.’
“For wholesalers, the challenge is to set their sights on world-class performance. If you read the industry performance reports, operating at the above-average level isn’t really that great. In most segments, the ROI or ROTA for ‘above-average’ companies — those in the third quartile — represents a less-than-spellbinding investment.
“High-performance wholesalers are in the top quartile of their industry and are fighting to be at the top of the top quartile. They set their standards beyond their local competition and look to lead their industry. They seek people who can outrun not only their teammates, but any team that their competitors can reasonably assemble. In high-performance wholesaling, the goal is to assemble a world-class team that compares well to any team, anywhere.
“Some wholesalers feel comfortable in a small niche that has allowed them to slowly progress without much regard for the quality level of their team. They may be able to eke out a living over the next several years with this kind of mentality, but shouldn’t delude themselves into thinking that it will work over the long haul.
“The companies with the best chance for long-term success are constantly aspiring and conspiring to be great. They want great people, representing great products, backed by great systems, sold from great branches, delivered in great trucks with great drivers.
“You get the idea — great everything. They know that truly great companies are tougher to compete against. Great companies often convince potential competitors to bypass or avoid direct territorial confrontation. The competitors know they aren’t good enough to win the race and instead look to other markets with slower races. Great wholesalers can often convince customers to pay more — and often make more money, even after paying the increased costs associated with being great.
“A long-time industry friend recently gave us a copy of ‘Good to Great’ by Jim Collins. Our book-giving friend knows we are always looking for great books to recommend and new ideas that will improve our personal game plan and upgrade the quality of our help to clients.
“One of the ideas the book presents is that many companies ‘settle’ for being good. They finally achieve the level of good or pretty good, but instead of continuing their climb toward greatness, they relax, start to coast, and lose speed and momentum. This often causes them to digress from good to less than-good and sometimes to not good at all.
“The lack of passion for greatness is like hitting the top of the hump on a roller coaster — they stop the slow, steady upward movement, they creep over the top and then start accelerating downward from the pinnacle. The ride down is always faster than the ride up — and often quite terrifying.
“‘Good to Great’ also reinforces some of our long-held ideas regarding people. Collins shows statistically that great leaders and great people are part of the formula for achieving and then sustaining greatness over long periods. He puts a new spin on the people idea by saying that your strategy and best practices come second. Collins’ view is that your first priority is to assemble a great team and then work with that great team to determine a plan to take your company to the great level.
“Many companies use their current, pretty good ‘T-ball’ team to develop strategic and operating plans. Sometimes the plans are lackluster and unambitious. Since the main goal is to ‘not rock the boat,’ they are designed like T-ball, which means everyone on the team can get a hit. But this only works if they can always play against similarly unskilled competitors.
“With rising national competition, these mediocre plans are questionable at best. Other times, the plans are so ambitious that a group of all-stars couldn’t possibly carry them out.
“The process doesn’t happen overnight, so you should start the journey immediately. Begin with a critical review of your company, your people and your processes to identify the areas where you are not currently great. This is not a time to kid yourself. Look hard and be realistic. Don’t settle for above average, OK, pretty good or acceptable.
“Working with a client long ago and far away, we discovered the company’s problem was second-rate everything. When it came to personnel, classifying some of them as second-rate was a charitable stretch of reality. The solution had to be a radical upgrade of the quality of all personnel. So the first step in its recovery plan was to quickly assemble a core group of great people. The mandate went out that all hires at any level were to be superior people. No exceptions.
“You may be thinking to yourself, great people will cost more than the current OK team. Probably true. As with all greatness in any field, it does come with some heavy overhead. It cannot be avoided. Great people expect to be paid more. The good news is they are worth more and are, in reality, almost always a productivity bargain. We say ‘almost’ because your management team must upgrade its expectations. When you pay great money, you should expect — and demand — great performance.
“You may be wondering what you will do with your second- and third-rate current staff. Certainly, you need them for continuity of the business, but an amazing thing will happen when you start infusing the organization with top-quality people.
“Many people are stuck in a rut where they compare their personal performance to the people sitting next to them. They aspire to be just a little faster (read that a little better) than their teammates, or the bumbling competitor’s players. Their sights are set too low. Some of the brighter members of your team may have set a comfortable pace that is just slightly better than their peers. No stretching, work just a little harder than the guy next to them. This doesn’t rock the boat.
“Since the compensation program is designed to give equal raises as contrasted to performance-based raises, it pretty much guarantees the standard equal raise. Above all, it certainly doesn’t strain that big muscle inside their heads. There are no thoughts of setting world records. They just don’t want to be last.
“The infusion of great people can break the above-average mindset. Quite excitingly, some of your people will feel the enthusiasm and be motivated to raise the level of their personal game. These are current employees who have the ability to be great but, at some point, had their will to excel sucked from them by their teammates and the company’s lack of respect for excellence. Like many athletes, they tend to play at a higher level when teamed with excellent teammates.
“Conversely, some of your current people will burn up under the new, faster pace set by great teammates and become merely cinders on the track. The good will start driving out the bad. The short way of saying it is that people move up or out.
“Our bet is that, like our client, you have no one in your organization with the guts to hire and nurture top-quality, high-intellect, highly motivated employees. In truth — and this happens more often than you might believe — it is quite possible that even you, as the owner, do not have the patience to manage the extended search it might take to find your first great employee.
“The exciting thing about this process is that once you have your first great employee, you have an ally who understands the problem and who can work with you in identifying new members for your forthcoming great team.
“The first step is to decide that you want to be great. You then must commit to the personal investment in finding great people for your team. We have found that it is almost impossible to delegate the process of finding great employees to one of your not-so-great managers. He will be threatened even by the interview with high-quality prospects and certainly not have the guts to hire one. Then, after you hire the great people, you must be involved in their ongoing evaluation and development.
“You can’t expect any of your second-rate current employees to comfortably evaluate or enthusiastically train people who clearly are sharper than they are. They will feel threatened and not help the new person, possibly sabotaging the process in an effort to demonstrate that the company doesn’t really need or want great people. It becomes a contest of survival and a pathetic reversal of Darwin — survival of the dumbest.”
We hope you enjoyed our trip down memory lane. Happy Holidays and a prosperous New Year from our family to yours!