Kiolbassa: What a Journey It Has Been
By Michael Kiolbassa, President
What a journey it has been…
“Are you kidding me? I am completely conscious of all of my commitments!” I answered as Jim, the “resource” that I had brought in to lead my YPO [Young Presidents’ Organization, a global CEO peer membership group] chapter retreat, asked us to write down an unconscious commitment that we had. Psycho-babble…I thought. Fear was what was really going through my mind. Because in my attempt to resuscitate my chapter’s engagement level with each other, I was really in the process of resuscitating my own ability to look hard at myself and my leadership of my family company.
I am the third generation to lead my family’s meat packing and sausage manufacturing company and we all know the statistics surrounding the success of the third generation…not good. But for 22 years, I had grown the company significantly, successfully shifting our focus from a commodity driven cattle and hog slaughtering operation to a value-added branded sausage company that was well regarded in our industry for quality and service. I grew the value of the enterprise and successfully managed through the dynamics of a father-son working relationship. But there was something wrong and Jim was probing hard. When I called “bullshit” on his question, he looked at me and said, “Michael…you have a lot of unconscious commitments!” And he was right.
So I dug deep and came up with one. I wrote down that I have an unconscious commitment to have my finger in every part of our business. I love to micromanage. He said, “Good…that’s a good one! Now, how do you live out your UCC?” I said, “Well, I am the sales manager, I buy all of the raw materials for our products, I set all of the promotions, I get involved when production issues come up, and basically don’t trust others to get things right.” “Great” Jim responded. “How does your UCC serve you?” “Well, it makes me feel like I’m in control. It makes me feel like I am earning my paycheck. After all, this is mine and my family’s largest asset and I need to know what is going on in all the areas of the company!” “Great” Jim replied again. “Now, the question that I really want you to think about…Is it working for you?”
Wow. What a great question to ask someone. Was it working for me? Absolutely not! I was stressed. Our bottom line was not growing as fast as our top line. We were not achieving our potential. From a personal level, I know that I wasn’t being the best husband or father because of the stress and I hadn’t slept well in a long time.
Jim asked me “What’s at risk if you change?” I replied, “Well, loss of control, loss of power and prestige within the company, loss of income…if we didn’t execute well, temporary frustration as people learn the things that I already knew.” He said, “Ok. Are you willing to change?” As the clarity around how foolish I had been started to hit me square in the face, I said, “Yes. I am willing to change.”
What makes this conversation and exercise with Jim so annoying to me is that I am, at heart, a culture geek. It started when I was in college and my favorite business school class was Organizational Behavior and Management. I loved how the dynamics of an organization help make it successful. After college, I worked for a large commercial bank as a credit analyst and continued to read about successful organizations in books like In Search of Excellence by Tom Peters and Robert Waterman Nuts by ….. which was a book about Southwest Airlines wildly successful culture and many others. When I made the move to join our family company in 1987, culture was one of my primary focal points.
My father was a hard-working and very capable leader of our company. He had been forced into leadership at the company when my grandfather, the founder of our company, became sick with a brain tumor and died at the age of 45. That was 1958 and my father dropped out of college to run the business. It wasn’t necessarily what he had in mind for a career, but he did an amazing job of keeping the business going and growing it significantly. He led by example and his employees respected him greatly. When he expanded our operation into cattle and hog slaughtering in the late 1970s, the business became more complex and difficult to manage. However, he was conservative from a financial perspective and successfully weathered every storm that came his way. He valued people and they valued him. He was one of only a few meat packing operations in our city that was non-union…and that is a testament to the way he treated his employees.
I wanted to build on that culture; but I also wanted to grow the company and change our focus from slaughtering to our branded sausage business. This took me out of the plant quite a bit on store visits, working on various advertising initiatives, meeting with buyers at local grocery stores, etc. and while I was driving, I would always be listening to books on tape that focused on culture and personal self-improvement. This included many books that would come in handy years later when my focus on culture re-appeared. But my focus at that time was on growing our business.
As our business grew and I took on more responsibilities, I became President of the company in 1999, I still focused primarily on growth and not on culture. I tried to spend time with employees as much as I could, but my travel schedule really did not permit the kind of time that it takes to develop deep relationships. In 2002, I hired our first significant non-family employee since 1977, an engineer who quickly became an important operations manager. He had an impressive resume from larger companies, some of whom had great cultures, and we would talk…just talk…about how important culture was to a company’s success. Like many sons in family businesses, I took on my father’s work ethic and, as we grew, I worked harder and harder. I was always the sales manager, but when my father had heart bypass surgery in 2005, I took on additional roles in the company and again, although I knew the importance of culture in the success of a business, I simply did not have the time to focus on it. Or, I should say that I decided to focus on the tasks of our business instead of our people.
Fast forward 13 months later and my exercise to name my unconscious commitment with Jim at our YPO chapter retreat. After my answer that I was ready for change, Jim walked me through a set of action plans designed to break through my fears and to off-load all of the tasks that I had “acquired” over the years. I was so emotionally exhausted after our meeting that I took a three-hour nap before I drove home. On the drive back home, I committed emotionally to the action plans on which we had worked, which was a crucial commitment for me. The next day, I met with all of my direct reports and gave them their new assignments. Without any exceptions, each one of them was grateful and eager to take on the responsibility. The engineer that I hired back in 2002 even told me, “Michael, it’s about time!”
The next year, we had another chapter retreat and Jim was there again. He asked how things were going and I said “Great!” We still had a lot of work to do, but my team was learning and growing. I was still focused on growth, but I was much happier. At the retreat, we spent a lot of time talking about culture and our leadership to build a great culture. I felt convicted because I saw so many missed opportunities in our company and came back from that retreat committed to focusing on culture!
I also committed at that retreat (with the encouragement of my fellow YPO chapter members) to hire a strong VP of Sales (whom I had been courting for several months) and an HR manager. This would allow me to have the time and energy to focus on refining our culture. Six months later, in February 2012, I hired a 25-year veteran of the largest protein company in the world, to be our VP of Sales. In the same month, I hired a veteran HR manager to build our HR systems and processes in line with my cultural vision for our company.
That month, I also began to take out to lunch individual employees so that I could get to know them better on a personal level. These were “line” level employees, and some couldn’t speak English so I would take our HR manager with me to translate. The lunches were meant for me to get to know them better and learn about their families, hobbies, etc., but the conversation would inevitably turn to business. A steady refrain from all of the employees that I took to lunch was: “Hey Michael, I love working for you, but my boss is an asshole!” What I discovered is that, as we grew the company––we now had about 90 employees––we took high-performing machine operators and made them leads and supervisors without giving them any leadership training! Not very smart and in the summer of 2012, I began looking for a leadership development program that would help train our supervisors how to lead.
Our HR manager suggested several different companies and consultants that we could bring in to train our team. One of them was Holt Development, the training arm of The Holt Companies, a diversified family owned company whose primary assets are Caterpillar dealerships across the country and the San Antonio Spurs, a professional basketball team known for their successful culture. Their model of leadership development is Values Based Leadership, first developed by Ken Blanchard in the 1980s. I actually had read the book Managing by Values which highlighted Holt back 20 years earlier when I was reading about great company cultures, so it was familiar to me. It also happened to be the most expensive program that we were looking at so I asked Holt if they could give me some references from companies who had invested in VBL and I could find out first-hand how successful the program had been.
Holt suggested that I call Charlie Luck, the CEO of Luck Companies in Richmond, Virginia to get an idea of not just the success of VBL in his company, but also of the commitment that it will take to successfully integrate VBL into our culture. I researched Charlie and found out that he was a YPO-er, and reached out to him for a phone call. When Charlie called back, the first 30 minutes of our call was an interrogation of me by Charlie to see if I was committed enough to take on VBL and investing in our culture. After convincing him that I was, he invited me to Richmond to stay with him and his wife and meet his team to discuss the power of VBL in his organization. That was one of the best decisions I have ever made.
I came back from that trip convinced that if we were going to invest the time and money into a leadership development program, Values Based Leadership was the only one that I wanted. We hired Holt to help us define our Vision (Why we exist), our Mission (What we do) and our Core Values (How we do it). It took several months for us to finally nail these down because we wanted everyone in our organization to be involved in their development. We conducted numerous focus groups within our company that drilled down into the subtext of our VMV so that everyone in our organization knew what was meant by our Vision “to enrich the lives of others” and our Core Values of Integrity, Teamwork, Commitment, and Continuous Improvement.
About this same time, I had just read Brene Brown’s book Daring Greatly and we incorporated some of the terminology in her book (for example, “normalize discomfort” under Continuous Improvement) to define some of our Core Values. The result was a one-page document that everyone in our company had participated in building that defined exactly why we exist, what we do and how we do it. We printed large scale versions of this in both English and Spanish and put them inside the plant, in our breakroom and throughout our public access areas. You can’t escape them!
Holt began to train our senior team on the VBL “toolkit” which included DiSC, Situational Leadership, Conflict Resolution, Principles of Persuasion and Influencing. In an effort to celebrate our Vision, Mission and Core Values, we began every meeting (at all levels) with VBL stories that highlighted when a team member (we began calling our employees “team members” when we adopted VBL) exhibited our core values or used the VBL tools in a difficult situation. We leaned on our Vision, Mission and Values and our toolkit when addressing tough issues and they quickly became the “backbone” of our company. Now, I wasn’t necessarily needed for tough decisions because our VMV gave clarity to our entire organization about what was important. It was exciting for me to see the power of VBL in our company.
Because we had a “good” culture base to begin with, VBL took root fairly quickly. I know that this doesn’t always happen, but we knew that we needed this and were ready for it. It has been easier for some of our team members than others. Charlie was right…it was very difficult at times to use, especially when we had been doing things differently for many years. We had some “colorful” discussions over tough people issues; but at the end of the day, we stayed focused on our VMV and in most cases, found the best decision even if it wasn’t the quickest and easiest. Even today, we have varying levels of mastery of the tools, but we are definitely aligned on the Vision, Mission and Values.
Even with VBL taking roots in our company, in 2013, we faced our most difficult trial since I had been with the company. Since our VP of Sales had come onboard in early 2012, our sales had skyrocketed. We experienced a 25% growth in sales his first year and we were on our way to that same growth in 2013. However, all of the systems and processes that we had in place were not functioning now. We had simply outgrown them and were operating at a very poor level. Almost every one of our key metrics (yield, fill rate, lbs./labor hour, quality) were going in the wrong direction. We had problems even processing a PO! And although we were showing a solid profit through the 1st half of the year, we were running out of cash and had to borrow on our line of credit for the first time ever. At the same time, our senior team was prodding me about building a new plant to handle our growth while I am trying to figure out how to build cash. To say that we were not aligned is an understatement.
In July, I reached out to Verne Harnish, founder of Young Entrepreneurs Organization, now called EO and the CEO of Gazelles Growth Institute, a consulting firm for high growth companies. I had traded emails with Verne when I bought his book, Mastering the Rockefeller Habits and receive his weekly email. Verne suggested that I buy a book written by Jack Stack titled, The Great Game of Business. I actually knew of Jack and the Great Game from my earlier readings back in the late 1980s…what a coincidence.
It all came to a head in August, 2013 when because of a misalignment between production and sales (production had made product based on forecast, not actual POs), we lost more money in that month than we had made in many years! I was just finishing the GGOB book and grabbed a young leader in our company, Michael Johnson, to go with me to Jack’s annual convention of GGOB practitioners called The Gathering of Games. MJ and I went to The Gathering, met Jack and were immediately convinced that this methodology of Open Book Management could improve the financial literacy of our team and help us get back on track. The only problem was that opening the books at this time could run some people…good people off!
I decided that I had nothing to lose so I made the decision to hire the GGOB consultants to come in and help us through this process. I anointed MJ as our GGOB leader, and he would be the one leading our huddles and working with the GGOB team to teach financial literacy to our team (I felt too close to the situation and thought that I might be too intimidating to our team if I led the process). We made preparations and opened our books to all of our mid and senior-level managers in October 2013. (My father suffered a stroke in September, 2012 and I hadn’t yet hired a Controller to take over most of his responsibilities by this time…our new Controller came on board in November, 2013). When we opened the books at that meeting, the conversations at the company changed immediately. Although no one in that meeting had a high level of financial literacy, they instinctively knew that things needed to change. From a cultural level, the transparency that was created by opening the books created a level of trust within our company that transformed us in a way that magnified our VMV exponentially. That trust unleashed a tremendous amount of creativity in our company that continues to astound me. I found the sense of ownership throughout all levels of our company breathtaking and humbling. Overnight, I felt the weight of our company’s operational and financial challenges fall off of my shoulders and picked up by all 180 of our team members. It was the greatest day in my business life.
Although my father is mostly retired, he retains the title of CEO and I have weekly meetings with him regarding the company. When I showed him our “scoreboard” which displays our income statement to the organization, he told me: “Michael, that’s the smartest thing you ever did!”
Although the conversations changed immediately, it took time to turn the financials around. However, we stayed focused on teaching financial literacy to our team members through mini-games and drawing a line of site for each one of them to their department “critical number” which leads to our organization’s “critical number” and the transformation has been powerful. The foundation of VBL enabled us to quickly integrate the GGOB teaching methods and we were named the Great Game of Business “Rookie of the Year” less than 12 months into implementing the program. That award is a testament to the culture of our company.
What a journey it has been. And if anyone thinks that culture is soft, they can think again. Our culture, centered around Values Based Leadership and teaching financial literacy through the Great Game of Business, has allowed us to continue our explosive growth, but now our bottom line is growing faster than our top line. We have found capacity within our plant that will allow us to continue our growth while building cash. Our team members are set to get their first bonus checks and engagement has never been higher. We have initiated a Kiolbassa Business Leadership (KBL) class that is developing a new generation of leaders of our company. MJ has been promoted to VP of Organizational Development and charged with developing systems and processes that will integrate the VBL tools and financial literacy throughout our company as we grow. I have never been more energized and more conscious of my “unconscious” commitments!