Every once in a while I come across a situation marked with incongruous and unexpected elements that, when summed up, can only be labelled as completely bizarre. One such situation started in the boardroom of Walker Ideas, a very successful inside-outsourcing service provider to the food industry. Walker operates at dozens of facilities dedicated to performing services that their customers strategically exited. As such, Walker is a key partner to their customers, or so they allow themselves to believe.
One of Walker’s key customers is a candy manufacturer for whom they’ve been providing inside-outsourcing services for the past ten years. Recently Walker was informed by this key customer of deficiencies in Walker’s ability to keep up with their changing environment and meeting their ongoing needs. Also, the key customer toured several of Walker’s competitors through their facilities to obtain proposals for providing services that would relinquish their reliance on Walker.
In the boardroom, Walker’s leadership team was deep in emotional dialogue surrounding the potential loss of this key piece of business. Irrational statements were flung about from every direction.
“How is it we are being blindsided by this customer?” Rick, the CEO, exclaimed.
“This is nothing more than a market test to push down our prices,” John, the CFO, stated.
“It’s hard to believe that after all we have done for them, we would be treated in this manner,” responded Cheryl, the HR Director.
“They don’t remember just how bad it was before we cleaned up their mess,” said Tyler, the Director of Operations.
The barrage of negative comments continued for a good twenty minutes. Highly compensated, educated senior leaders all acted like petulant children with a strong sense of entitlement. The conversation was interrupted by a knock at the door and Chris, one of the Regional Operation Directors, asked to speak to Tyler. Tyler returned to the meeting with a printed copy of an e-mail which told Walker Ideas that their key customer’s Plant 2 was being awarded to one of their competitors. Walker would retain the business of Plants 1, 3, and 4. Tyler read the e-mail to drooped heads, all now quiet. The previous volley of irrational statements was over as reality set in. Plant 2 represented 20% of Walker’s business with this key customer, and Walker now had a competitor on-site.
“That bitch Susanne finally got her way. She’s had it out for us ever since she was promoted to the senior indirect buyer position,” Tyler ranted.
“Finish the reading the email,” Rick directed Tyler.
Tyler continued to read. The e-mail informed the team of the transition plan outlined by Susanne. Walker Ideas was to turn over to Potential Inc., the newly appointed service provider, copies of all schedules, standardised work, and training records for Walker’s Plant 2 operation, allowing for a smooth transition of services from Walker to Potential.
“This is complete unadulterated crap. Why would we give our competitors our information?” John stated harshly.
“They cannot enforce that request,” Cheryl chimed in.
“We are not going to do this. Let Potential struggle just like we had to,” Tyler said, and the balance of the room nodded their agreement.
“Tyler, get Susanne on the phone, and let her know we will not comply with her request,” Rick told Tyler.
As Tyler reached for his phone, I stood up and walked over to a white board located on a side wall. I’d been attending Walker’s executive leadership team meetings for the past two years on a 90-day incremental basis in an advisory capacity. Rick had approached me to play this advisory role and provide support as they continued to grow.
“Rick, before Tyler places that call, I’d like to draw the room’s attention to a few things we should consider,” I stated.
“Dean, as always we value your input, but we need to make this call and take our stance,” Tyler said, scrolling through the contacts on his phone.
“Tyler, that call will end up being the biggest mistake of your career,” I said very matter-of-factly.
“Why do you say that?” Rick asked.
“If you give me ten minutes of your time, I will show you. Surely you can wait that long before you shoot yourselves in the foot,” I said sternly.
The room fell silent, and Rick said, “Go ahead.”
For the next five minutes, I questioned the group and pulled together a quick fact summary. Walker had been doing business with this key customer for ten years, starting with services in Plant 2, the plant that had just been awarded to Potential Inc. Over the ten years, Walker had invoiced $250,000,000. The account had grown an average of 15% each year on both the top and bottom lines, with the exception of the last three years. The number of services provided by Walker to this customer had grown from the initial one to seven. Walker had been able to package and market what they had done for this key customer to other manufacturers, resulting in a 23% growth of new business across all of their businesses. This key customer had supported the promotion of key Walker personnel, allowing Walker the opportunity to re-locate key talent to other locations to support growth. As the facts became clear, the group became much less emotional and started to process the reality of how critical this customer had been to their success over the years.
“So what has happened?” John asked.
“Now that is the first intelligent question to come out of this team so far this morning,” I said, staring at Rick.
“Susanne happened,” Tyler said cynically.
“Tyler, I’ve been attending these meetings for two years, and during the two years you have indicated that this key customer was becoming more and more disenchanted with your service. True or false?” I asked, staring at Tyler.
Looking around the room for support, Tyler reluctantly answered, “True.”
“Susanne is the messenger, and the message is clear and precise,” I said to the group.
“What’s the message?” asked Cheryl.
“Change or…… change,” I stated. “With all due respect to the team, you needed to be hit over the head to get the message. If you continue to act with your current level of entitlement and complacency, you will lose business. You see this in your own numbers each and every quarter, but instead of being proactive and making necessary changes, you continue to rationalise your off-course behaviour,” I pointed out, allowing my eyes to connect with everyone in the room.
“What about the phone call to Susanne?” Tyler asked.
For the next five minutes, I presented this loss of business as a great opportunity for Walker to show Susanne they heard the message and were more than capable of becoming a future partner with them. The team quickly realised what Susanne was requesting was nothing proprietary, and by Walker complying they showed Susanne a strong level of professionalism.
“If you go on-line and visit Google, YouTube, Wikipedia, and the like, you can research and obtain information about all of your services. What Susanne is asking from you is not what makes you unique. Your service culture is what makes you unique, and you are being told you need a tune-up to become more aligned and more innovative,” I said.
Tyler, I will make the call to Susanne. We are going to take the high road. When we are finished with this transition, Susanne will see Walker as her supplier of choice,” Rick stated.
“It will also send a very strong message to our people in Plants 1, 3, and 4 about who we are and how we treat our customers,” Cheryl added.
“Excellent point,” Rick said.
Rick placed the call to Susanne, and forty-five days later, Plant 2 transitioned to Potential. The launch was a great success mainly due to the professional role Walker played during the transition. Two weeks after it was complete, Susanne called Rick to compliment him and to inform him that his professional attitude was a discussion with her bosses. Susanne went off the record and apologised to Rick for having to reposition the Plant 2 business to Potential. She added that Plant 2 was the first step in removing Walker completely if Walker did not shape up and start to pay attention to what they needed. Susanne pointed out that as they continued to outsource, they could not afford for service providers to become the problems they were hired to solve. She went onto to tell Rick that she was going to be outsourcing another line of service, and Walker would be single-sourced for the opportunity if the proposal was competitive. Susanne closed out the call by telling Rick that Walker had regained their vitality, and it was obvious throughout Plants 1, 3, and 4.
After hearing the news from Rick on how well things had gone with Susanne, I couldn’t help but replay how such an opportunity could have taken a fatal turn if the team had not taken two steps back and calculated the costs associated with making decisions based on prejudicial attitudes. It’s very bizarre how quickly win/lose can become win/win, and how win/win can become win/lose, if we don’t ponder all of the consequences.