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SMART MANAGEMENT As the ballpark philosopher said...


You can observe a lot by watching A


s some of you may know, I am a long-time fan of Yogi Berra. I must admit that it


started when I was very young and, frankly, I confused him with the car- toon character Yogi Bear. Even after I got older and decided that I was a Pirates fan, I still liked Yogi for his passion, his sense of humor and his simple wisdom. So I start this column with another Yogi quote — from the ballplayer not the bear. (I reserve the right to quote the bear in future columns, especially since I under- stand that both Yogi and BooBoo have agreed to do a 3D biopic of their lives…some actors never forget their humble roots.) According to Yogi, “You can ob-


serve a lot by watching.” I think he is right and if we all follow his sugges- tion, we can improve many facets of our business and personal lives. I want to start the year with a list of things I have observed in our industry or have learned from many generous people who have shared their wisdom and observations with me. I will state up front that there is little science but much common sense behind these observations.


Over time, owners and management often lose touch • They probably walk past or are


confronted with many of the com- pany’s problems and opportunities every day. We all are. They have just become numbed or tune out the prob- lems and opportunities as they rush from fire to fire. Unfortunately, they sometimes rush past the gasoline that is making the fires burn so hot. • Their perception of customers


and competitors comes from sales re- ports and second- or third-hand cus- tomer contacts or from fictional stories about competitors as told by the sales team. • Some of the next generation have


been shielded from the business as they grew up and are now more inter- ested in the executive title than in the actual hard work that goes with the


• Managers tune out and don’t see root causes


• It’s a TEAM! • Do you need a pricing manager?


• Stability threshold gets taller every year


• Good business revolves around good people


title. (I know that many of the next generation are getting a tough intro- duction to the business in this econ- omy and are working their tail off. My hat is off to them.) • Prescription: 1. Get tuned-in to your business –


Take some time to “observe a lot.” Walk through each location slowly and take notes about what you see — the good, bad and ugly. 2. And then take the time to act on


those observations. For a reprint on things to observe during your walk e- mail me at rich@go-spi.com. 3. Walk through every area of


your business looking at it as a cus- tomer does. How does it stack up against your competition and does it fit your vision of how it should look and operate? 4. On another occasion, walk


through every area of your business looking at it as an employee does. How does it stack up to your vision of how it should look and operate? 5. Ask yourself, “Do our people


operate as a team or like a group of free-lance free-agents?” If your com- pany is tending toward free-lance free-agents, you might want to con- sider: a. Sometimes they act this way be- cause there are no procedures. b. Sometimes it is because you re-


ward the renegades and not the reli- able. c. Sometimes your procedures are


stupid and they ignore them — not in protest but because they care.


like professional sports where the number of players on the field/court is limited, you are allowed to, at your convenience, replace the diva with two pretty good players and endure a lot less trauma. Whatever the cause, the situation


must be remedied because great teams sing from the same sheet of music and work toward common ob- jects. Great companies build processes and procedures that are based upon best practices. • After they are in place, every-


body does these activities the com- pany way. If someone has a better idea, they can always suggest it and it may become the new “company way.” But until the “new way” is ap- proved and adopted, the old way is the only way. • When your processes require ex-


perience and judgment but you hire people with little experience and questionable judgment, the results are often predictably bad. • Creating checklists for the im-


portant and critical activities to doc- ument the process and to promote compliance improves consistency. Asking that some important check- lists be initialed or signed helps to in- sure compliance and accountability.


Price management is critically


important to the highest performers I know that I am like a broken


record on this one. (For those of you too young to know what a record is, look it up on Google. Sometimes


stack up against your competition and does it fit your vision of how it should look and operate?


d. Sometimes people resent author-


ity or any attempt to limit their indi- viduality. (In a past life, I had an employee suggest that it was unethical for the company to inhibit her from doing her very best work for a cus- tomer. I suggested that the customer was operating with a budget and only willing to pay for her “good” work. However, the customer was willing to accept her personal donation of time to the project. She declined.) e. Sometimes team members start


to believe they are like ______. (Fill in the blank with your favorite NFL, NBA or MLB prima donna diva who thinks he is the team and not just a member of the team.) Often you can get these people to rejoin your team. When you cannot make progress, un-


• Be sure to visit www.thewholesaler.com for web exclusive articles and videos! •


when a record was broken it would skip backward and repeat the same part of the music over and over until someone intervened. It’s like when a CD gets a scratch and repeats the same music over and over or when you press the Repeat button. For those of you too young to remember CDs, it’s like when an MP3 file has a CRC error and repeats the same music over and over. ) • If you are selling more than


$10M of product, you need a pricing manager. Remember at $10M, a sin- gle point of additional gross margin can be $100K in bottom line profit. • Few wholesalers really manage


pricing to its full extent and so if you are struggling, this is one of the very first areas to attack.


Walk through every area of your business looking at it as a customer does. How does it


•THE WHOLESALER® — JANUARY 2011


BY RICH SCHMITT Management specialist


Prescription – Really get going on


price management. Admit that there is more to be done and get someone assigned to the task.


Size matters — That’s the size of the business • Over the years, we have ob-


served that after wholesaling busi- nesses reach a certain size, they are more stable and viable. That thresh- old has been growing over the years based upon inflation, the evolving re- gional and national competitors and with the introduction of technology into the industry. My observation is that the threshold is currently at about $20M. There seem to be a couple fac- tors in this equation: 1. At $20M, the company is large


enough to support some good non- owner people who supplement the ownership’s skills and energy. 2. The company can employ some


full time experts in key roles where smaller company’s must rely on multi-role, multi-taskers who wear many hats but do not have time to be- come an expert in most areas. 3. The company has enough finan-


cial strength to weather some of the ups and downs of the world. a. We have also observed a second


threshold where the company out- grows the energy or abilities of the founder/owners and where a strong professional management team is re- quired. That seems to be around $50M but may vary based upon the founder/owner’s situation. b. Prescriptions – i. If you are not at $20M, get into


growth mode. While the economy is weak, your growth initiatives may make your current situation better and when the economy gets back on track you will be positioned to grow the company to a stronger and more stable size. ii. If you are approaching $50M, take


a hard look at your team to determine if the existing team has the horsepower you will need to grow the company.


Breadth matters too –


• A very narrow focus can, but not always, be dangerous. (Turn to Look and... page 00.)


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