This is the fifth and final post in The 9Stucks Boot Camp Series.
These five posts illustrate a real example of a stuck project from start to finish. As I said in the first post (‘A Fresh Pair of Eyes’), when I began this project 20 years ago, I had no idea that StorageCo was stuck, nor had I done any thinking about the 9Stucks diagnostic. This was where I saw first hand many of the issues and patterns that would form the 9Stucks.
The project was nearing an end, so I began to share my findings and recommendations with the two owners – Pete (the CEO) and Susan, the EVP.
As I said in the third post (‘Logjams and the 80/20 Rule’), the Logjam product line was hurting the overall company performance. I told the owners they should sell it. Pete (the CEO) basically agreed with me, but his sister Susan was very luke warm to the idea. Pete suggested that we all go to dinner to discuss the pro’s and con’s of selling the product line. We went to a popular, busy Italian restaurant a few miles from their offices.
This is where the fireworks started. Pete and Susan were sitting across from each other at the table (and I was to their side). As we talked about the potential sale of Logjam, they started to argue (loudly!). They ended up standing face to face at the table in the middle of the crowded restaurant yelling at each other. This was not going well…
The next morning one of the members of the Board of Directors called and asked “What did you say to them!!?” Since he was a long-time family friend, he was able to help diffuse the tension. Susan was being emotional about the Logjam line because it was the original part of the business founded by their grandfather. It was their most significant Sacred Cow. When we were able to get Susan to think with her head instead of just her heart, she became convinced that it was time to change the structure of the company.
Looking back, StorageCo had 8 of the 9Stucks:
Ditch: There was family conflict, but it was not serious. The siblings did not have a shared understanding about what their problems were let alone know how to fix them. In addition, they could not agree on the longer term focus/direction of the business.
Moment: Many Sacred Cows were impediments to change.
Slow Lane: The overall management team needed to be upgraded and there were some good people in the wrong roles.
Another World: Even though their industry was changing rapidly, the company was holding onto product lines and products that were stagnating in front of their eyes.
Rut: Inefficient processes and poor quality had a negative impact on their relationships with customers, both large and small.
Fog: The business model was overly complex. It created internal conflict and added unnecessary costs.
Maze: Working capital and cash flow were continually under stress due to poor systems and excessive spending needed for costly repairs to old equipment.
Rough: There was a wide range of process, plant and equipment problems.
Logjam was quickly purchased by a competitor for a purchase price of over one time sales. It was a great price and a win-win for both companies.
Once Logjam was gone many, many good things transpired:
- The organizational structure was reorganized and key people were given new roles. Logjam’s product manager became the head of the Specialty line; she ultimately became President
- The old, antiquated plant that housed Logjam was closed; all company personnel were moved to the remaining newer plant, greatly improving communication and company spirit
- The proceeds from the sale were invested back into the company; new production equipment was added that gave them more capacity and enhanced capabilities to design and make more innovative and higher margin products
- The new equipment and systems enabled better processes, better quality and better customer service
- New information systems were installed
- The new equipment spurred a fresh burst of product innovation that made them the clear market leader in the Specialty line
- The company was more focused; no more confusion around the business model or what ‘Pete and Susan’ want to do with the company
Pete and Susan had the courage to seek advice and to bring about substantial change.
And, 20 years later, I’ll bet you still use or have seen this company’s products.