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 Several TEC members have been making money in Williston. Some are participating as subcontract suppliers to tier one vendors who are already there. Other TEC member firms are (literally) on the ground, building roads and providing staffing services. Still others are working on waste water treatment alternatives for the process known as " fracking."
An impressive example of a TEC member firm who anticipated the boom in Williston, is an old line, made in America, metal fabricating and manufacturing company located in a suburb of Milwaukee. Through a rigorous strategic planning process, the company identified specific energy related markets as opportunities that took advantage of their strengths. They calculated they could shore up their identified weaknesses, apply some resources in terms of people and money and enter a new market. This piece of the strategic planning process was initiated in 2007. It was tweaked every year along the way.
In hindsight, it looks easy. Identify your strengths and weaknesses. See the opportunities and threats. Apply some resource. Voila. Williston.
Not exactly. It took the commitment of the CEO to spend real money on the planning process, when everyone else in the company was "too busy to plan." A recession was looming. Time to hunker down. Well, yes and no.
By definition, the strategic planning process is taking the organization "out there" somewhere. When management is doing strategic work, there are no immediate results to give the leadership team feedback relative to the intended course of direction. It is, a leap of faith. A belief that the process will save the day. It requires courage. It requires leadership.
The alternatives? Most organizations end up slogging it out with a plethora of competitors...known and unknown. They fight for market share. They offer lower and lower prices to compete. They commoditize their products and services. They don't make much money.
Call it a Blue Ocean or Williston. "Out there," there are new markets. "Out there," there is more than enough to go around.
 TEC 33 member, Gary Wenzel, hosted a meeting of TEC 31 recently. TEC 31 is a new group going through the forming, storming and norming process. I asked Gary to host the meeting at his company to give the members of this new TEC group a glimpse of "the possible."
Gary Wenzel is president of Capitol Stampings Company. The plant is located at 27th Street and North Avenue in Milwaukee. Gary was part of an ownership group that purchased Capitol Stampings out of receivership in 2005. The plant was originally constructed by Steeltech in 1990. Steeltech went bust in 1999.
Capitol Stampings currently employs 85 full time workers. Most of the workers are from the neighborhood. The workers earn a family supporting wage. They have decent benefits. Their jobs, based on performance, are reasonably secure.
When Gary arrived in 2005, customers were rejecting 7000 Parts Per Million. Not good if you are trying to earn more work from existing or new customers. The people at Capitol Stampings worked to reduce bad parts to the current 500 PPM. 500 PPM is world class and low enough to garner an audience with some highly desirable OEM customers. More business followed. How did this happen? Gary explained several cultural shifts that occurred over the years at Capitol Stampings. They needed African Americans to work with Hispanics to work with Caucasians. The new management team set clear performance expectations. They started treating all employees fairly and impartially. They terminated some people who were unable to align with the new culture. The leadership team was consistent. And, they persisted when the inevitable challenges might have pushed them off course.
The "new management team" was comprised of several people from the outside, like Mike Krajna, Ron Zeronis and Scott Wise. It also included several people from the inside, like Dan Hewitt and John Willmering. Gary worked to find the right seats on the bus for this blend of the right people.
The members of TEC 31 were inspired by the blend of new technology; new and old equipment; and people....people who energized this factory on 27th and North. The place was rocking. They were making money. And, they were accomplishing a mission that had more to do with reviving a neighborhood than anyone who wasn't part of it could hope to understand. The Capitol Stampings story can be an inspiration to all of us who believe that business is one of the keys to creating "the possible." Well done to Gary Wenzel, his leadership team and the people of Capitol Stampings who are accomplishing this in-process transformation.
 I met Larry Johnson in the mid-70's. He was recruited by a small, family owned company as part of a transition to a professional management team. I worked in inside sales at the time. I was part of the home grown talent, which meant I had very little exposure to the tools and ways of a professional manager. Larry was with Honeywell prior to joining our firm. He was part of their avionics group at the time, yet came to our low tech, high energy firm. Some years later, I asked him why he joined a relatively small company in Milwaukee when he could have gone almost anywhere in the corporate world. He said it felt better to be a "bigger fish in a smaller pond." And, it worked. Larry and the others he recruited to join the company helped turn a nice little, profitable company into a very attractive, highly profitable company. The company was eventually acquired by Reliance Electric. Reliance was a $1.5 billion publicly traded company headquartered in Cleveland. We had become a really professionally managed organization by then. After the the Reliance deal, Larry became president of our still relatively small company. I left in 1980 to join a firm involved in mergers and acquisitions. Larry left a few years later to head up another nice little, privately owned firm in Watertown. He helped that firm grow, as well. The firm was eventually sold, at a handsome multiple of EBITDA, I suspect. Larry then became president of the Kelly Company in Milwaukee. After a period of time, he bought the company, bringing several of his senior managers along for the ride. He sold the company in 1999. Just before the deal closed, Larry was diagnosed with Parkinson's Disease. A while later, he came up with prostate cancer. My friend, who had made a lot of money for other people, finally had some real money of his own. He knew the quality of his life would never be the same. I became Larry's brother-in-law when I married Larry's wife's sister. We all travelled together. Played golf. Ate really well. Went fishing. We talked about business. We talked about life. Larry died on Saturday, October 22nd. I have been using Larry's "professional management training" throughout my career and, perhaps most importantly, for the past 16 years of my TEC life. My members have heard Larry Johnson speaking to them along the way. His legacy will live well beyond what he might have imagined when he came to Milwaukee from Minneapolis 35 years ago. It lives on in all of us.
 I settled in to prepare for a meeting of TEC 44 last month. I intended to review the issues the group's members wanted to bring to the table and other agenda items that needed to be covered during our meeting.
As I got ready, I noted a flurry of e-mails suggesting the group had taken control of the agenda. Two members sent written copies of their "issues" to the group. One member advised he was ill and unable to attend. Two others sent their "accountabilities" from the prior meeting. Everyone sent their Z-Factor Score. I was left with very little to do.
At the TEC meeting the next day the members of TEC 44 continued to take control of the process. The group introduced a new accountability protocol. The members worked a remarkably difficult issue without much intervention from the chair. They remained after the meeting ended to discuss what they had experienced during the day.
TEC 44 had become "Armed & Dangerous." Armed & Dangerous is a concept developed by TEC Resource Specialist, Don Schmincke. Schmincke segmented TEC groups into three categories of health. The least effective segment, the "Seminar Club," almost totally relied on the leader to create value. An improvement was the "Shared Destiny" group which took a modicum of responsibility for its own performance, but continued to rely on the chair to provide value. According to Schmincke, the Armed & Dangerous group was the highest performing group, taking full responsibility for group health and effectiveness.
In addition to TEC groups, Don Schmincke's concept of group behavior applies to management teams and groups of all forms. If you are interested in an outline from Don Schmincke on how to create teams that are "Armed & Dangerous," please let me know. From a group leader's perspective, it is way less work and way more productive.
Something happened in June. Then, it happened again in July. As the months are closed and the financial statements printed, almost all of my TEC members are reporting that something weird is going on. And, it isn't good.
Some members say orders softened unexpectedly. Some noted a decrease in their backlogs. Some saw raw material costs increase to unforeseen levels, eroding relatively healthy profit margins. Others told me they felt uncomfortable with what was going on "out there." They were suddenly queasy. Even the TEC members who were able to maintain margins said things just didn't feel right. It was hard to explain.
Most of these CEOs began contemplating corrective action. Put a hold on that equipment purchase for a while. Want to hire two people? Get by with one for now. This is also about the time most TEC chairs start asking TEC members about Plan B. That is, a business plan that allows the company to make money with 20% less revenue. After the last recession, numerous TEC members reported that having a Plan B saved them from decision making in crisis. They knew what to cut, who to lay off and what to stop doing...in advance.
The current uncertainty feels somehow different than the financial meltdown of 2008. This uncertainty has led a few members to construct a Plan B1. That is, what do we need to do to take advantage of a 20% premium, above plan, in revenue. Competitors may be paralyzed into non-action. Market share may be there for the taking. The Balance Sheet gets particularly important here.
This is no esoteric exercise. It is a highly desirable time to create Plan B, at least until that ugly feeling goes away. It is also, however, an opportune time to create Plan B1. Others may miss the opportunity created by the uncertainty.
 I participated in three TEC meeting retreats with different TEC groups over the past three weeks. Each was an overnight meeting at a very nice resort. The members participating in the retreats knew each other to varying degrees. While the intended purpose of each retreat was similar, the actual outcome varied from group to group. One group secured the services of a noted outside facilitator. The agenda for this retreat was chocked full of group exercises. Pre-meeting homework was required of the participants. There was little down time. The TEC members in attendance got what they expected. Plenty of action. But not much of a retreat. I was the facilitator for the second meeting. The agenda was a bit more flexible. To be sure, this TEC group worked for the day and a half we were together. But there was sufficient "white space" during the meeting for unplanned and unstructured member interaction. An optional group activity - trap shooting - at the conclusion of the meeting, added a semi-competitive, fun event for participating members. Once again, I facilitated the third meeting. This meeting had several new TEC members in attendance. Our group activity - a canoe trip down the Wisconsin River - was planned for the afternoon of the first day of the retreat. It was not optional and created a unique environment to get to know people that dinner at a fine restaurant could simply not allow. Again, members worked during parts of the retreat, but the bonding opportunity was the key to the success of the event. Members of each group reported different degrees of satisfaction with their group retreats. The first group reported "too much stuff" on the agenda. The evening dinner for this group included a "working dinner" with a facilitated team building exercise. The fun meter was on low for this group. They got what they bargained for, but didn't totally appreciate the result. Group number two was better. But again, I allowed the agenda to become too crowded and was unable to get to everything that needed to be discussed. A special follow up meeting needed to be scheduled to address a member issue that was omitted from the proceedings. The third group got it about right. They worked. Had some fun. They got to know each other better on a beautiful sunny afternoon floating down the river. This group reported the highest member satisfaction with the event overall. Webster's defines a retreat as "a period of group withdrawal for prayer, meditation, study and instruction under a director." The corporate retreat is indeed good for the soul. The lesson learned here is to build in sufficient time for people to get know each other as people.
 I am reading Bob Lutz's latest book..."Car Guys vs. Bean Counters: The Battle for the Soul of America." For car guys and business people, the book is a candid assessment of what happened to the once mighty General Motors...from the perspective of a high ranking insider. Lutz shares his insights about what went wrong with the American automobile industry based on his nearly five decades in leadership positions with GM, Ford and Chrysler. I know some of his comments will resonate with a few of my TEC members who sell products to the auto industry. For example, Lutz states the operations component of the automobile business has been "thoroughly optimized" and doesn't vary much from one company to the next. He believes all car companies accomplish manufacturing and supply chain management reasonably well, with no significant competitive advantage accruing to the one who can beat the snot out of suppliers more effectively. Lutz does toss around plenty of blame for the failure of the American automobile industry. Legacy costs. The UAW. Government imposed fuel efficiency standards. Japanese transplants in lower wage, non-union southern states with young, healthy workers. He takes personal credit for significantly improving product development during his return engagement with GM. The Chevrolet Volt is at the top of his personal innovations list. It is his book, after all. Lutz reserves most of his ire, however, for two main culprits. First, he takes on the really smart MBAs and finance people whose mission it was to maintain orderly processes at all costs and see "how much they could cut before the customer started to complain." Second, he cites a culture of "corporate infallibility and self-worship" that discouraged honest disagreement. The really smart MBAs and finance people had the data. No need to create any unnecessary friction. Go along. Get along. Lutz blamed the final decision to seek a government bail out and then Chapter 11 bankruptcy protection on their GMAC finance unit and the unforeseen doubling of gas prices in 2008. Oddly, the same screw up that took down the M&I Bank, was largely responsible for GM's eventual demise. GMAC was making so much money through its residential mortgage unit in the sub prime housing market that they just couldn't quit. Then, the really smart MBAs and finance people didn't plan for the run up in gas prices. GM was left with big cars and bigger trucks and a five billion dollar quarterly drain on cash. All corporations have a culture. The title of Lutz's book implies the Bean Counters caused the demise of the American automobile industry. The dysfunctional culture created over many decades and many CEOs and other insiders certainly contributed mightily to the devastation.
 I work with CEOs for a living. For the most part, they maintain a positive mental attitude, even in the face of adversity. Many are visionaries. Most are entrepreneurs. They see opportunities where others see problems. When I get outside my work with TEC, I sometimes meet a different mindset. I meet people living in a recession that ended two years ago. I meet people complaining about the lack of jobs and opportunity. The entrepreneur is somehow wired to look at the situation through a different lens....a lens of possibility. Take real estate, for example. We all know that real estate is in a depression. Residential housing prices are at levels not seen since 2002. Commercial real estate is even worse. It has yet to find the bottom, we are told. It is interesting to note that I have several TEC members who are aggressively investing in real estate - both commercial and residential. The real estate opportunity goes something like this. The bank gets a piece of real estate back through foreclosure or "jingle mail." The bank doesn't want the real estate and is able to make a deal at a very low purchase price, assuming the buyer can come to the table with "hard money." The hard money buyer gets the property at a price that allows him or her to spend a bit more repairing and remodeling. The low purchase price and reasonable remodeling costs allow the buyer to sell the property at a profit or cash flow a future mortgage out of rental income. Entrepreneurs see these opportunities and take action on their individual assessment of risk and reward. They reason that real estate deals like these may never come around again. They seize the opportunity where others are afraid. Sometimes they win. Sometimes they don't. But our entrepreneurs will carry the day. The entrepreneurial spirit is alive and well. It is two people looking at the same situation and choosing different interpretation of the opportunity. Don't be mislead. The entrepreneur is dead. Long live the entrepreneur.
 When I met with TEC 44 member, Jeremy Cherny, for our regularly scheduled One On One last month, Jeremy was working diligently on an "apples to apples" comparison between his firm and a competitor's offering. Jeremy is president of Tobin Solutions. Tobin Solutions is an IT consulting firm. Jeremy's apples to apples outline contained the usual laundry list of things that IT consulting firms do. Network support. Remote support. On-site repair. Training. Preservation. Consulting. On and on went the list attempting to prove that even though Tobin Solutions solution appeared to be more expensive than the competitor's proposal, the client would be better off because they would get more IT stuff. As with most TEC members, Jeremy was open to some feedback. I remembered a newsletter that was produced by the Grunau Company, another TEC member company. Their position was that apples to apples comparisons actually commoditized the work they did, playing into a low bidder industry mentality. The Grunau Company reasoned that no two apples were actually alike. And, you generally couldn't tell much of a difference until you ate both and tasted the difference. They wanted their people to understand that it is the intangibles that created value for the customer and sustainable differentiation for the company. In the end, Jeremy reworked his proposal eliminating the apples to apples comparison. Instead, he focused on the intangibles that created value in the mind of his client. Time will tell if Jeremy is successful in securing the new business. We know now, however, that if he wins it won't be because he was the low bidder. If you would like a copy of The Grunau Company newsletter containing their thoughts on the folly of apples to apples comparisons, please feel free to contact me.
 Most TEC groups have participated in a process we call The New Normal. The New Normal exercise is a facilitated brainstorming process where TEC members identify things we know now that will be different in the future. Some of the bullet points typically include: - Inflation - Higher interest rates - Higher taxes - Smaller cars, houses and buildings - Social media increasing role - Globalization - Energy costs more - Health care costs more - Green is good Only a partial list, but you get the idea. The intent of the exercise is to give TEC members a little better visibility of the future. And, then, allow them the opportunity to prepare contingency plans in anticipation of "the new normal." The most unusual item that makes the list of most of the TEC groups that run the exercise is "civil/social unrest." We started doing this exercise in June of 2009. Well in advance of the protests in Greece, Tunisia, Egypt, Libya and Madison, Wisconsin. As a result of The New Normal exercise, most members prepared plans for higher raw material costs. Some members locked in low, long term interest rates. A few members actually paid taxes in advance rather than following the deferral strategy that has been in vogue for years. A handful heeded the civil unrest warning and prepared contingency plans - both professionally and personally. We have now seen several businesses targeted with boycotts, union intimidation and previously unimaginable threats against some of the most respected companies in Wisconsin. Did they have a contingency plan for "civil/social unrest?" Does your firm have a plan for The New Normal? If you would like a summary list of the bullet points that turned up on TEC's The New Normal list, please contact me.
 Recently, a TEC member of mine promoted a bright young man to the position of General Sales Manager. The bright young man had performed well in a series of increasingly responsible positions within the company. The promotion gave him a significant opportunity in prime time. Within one month, under the direction of the new General Sales Manager, sales increased and margins improved. The second month was even better. During the third month the company achieved record sales and profits. Truth be told, after surviving the downturn in the business cycle, the company and the CEO needed a big time boost in top line revenue and Gross Profit. Unfortunately, the management style of the bright young man appeared to change after he was afforded more authority. His leadership style became directive. He created inter-department animosity with his new found command and control persona. In short, he became a bully. My TEC member had experienced bullies before. When he was about 8 years old, he recalled having to punch the neighborhood bully in the mouth to get him to go away. The bully never bothered him again. He also knew that the management style of the new General Sales Manager flew directly in the face of the team building effort on which he had been working for the past several years. The question was more sales, more margin and more money now or declaring "an intolerable." My member chose the intolerable. He told the bright young man the negative effect the intolerable behavior was having on the organization. He also told the story of the bully from his childhood. He made it clear....real clear....that this type of behavior would not be tolerated regardless of the short term gain. It was "an intolerable." The bright young man took it in stride. He said he understood. He would change his behavior. He was sure he could get the job done without the intolerable. Time will tell. TEC Resource Specialist, Pat Murray, describes the concept of intolerables in his presentation titled "Leadership...The Inside Moves." If you would like a CD copy of the presentation, please let me know. Do your people know The Intolerables?
 When my partner and I were attempting to buy our first small business, we quickly learned a very important lesson about buying small privately held companies. All small businesses are worth $1 million. More accurately, every small privately held company is worth $1 million....per owner. This small business owner valuation principle had a tendency to price our target companies out of the ballpark. An unrealistic opinion of value based on the seller's objectives rather than an objective review of earnings and, perhaps more importantly, future earnings forced us to disqualify some interesting acquisition prospects. It also may have cost some small business owners the opportunity reap some of the rewards of a lifetime of work. A TEC member of mine is currently negotiating to buy a competitor. There are three owners of the target company. They are all in their late 60's. The owners have not kept up with technology in this capital intensive business. The management team is weak, at best. The company has not made money in three years. The owners want to "get out." Asking price? $3 million. My member doesn't want the outdated equipment. He doesn't want the people. He doesn't even want some nicely located real estate, owned personally by the sellers. He is willing to buy the customer list. Fair market value? To be determined. There is a better way. Kraig Kramers, a TEC Resource Specialist, has been instructing TEC members on the use of a relatively straightforward process for valuing companies that turns out to be remarkably accurate. Many members run the formula every year to get a realistic picture of how their companies are doing and how they are doing as CEOs. The Kramers' estimate of fair market value can also save small business owners from pricing themselves out of the market. All business are not actually worth $1 million.
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Several TEC members have been making money in Williston. Some are participating as subcontract suppliers to tier one vendors who are already there. Other TEC member firms are (literally) on the ground, building roads and providing staffing services. Still others are working on waste water treatment alternatives for the process known as "fracking."
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