Ballard Pritchett, CEO, CorePeelers International

Ballard Pritchett, President & CEO of CorePeelers USA, Inc. He is a co-founder of the Houston Food Bank in Texas, the Navigate Leadership Learning Programme in New Zealand, The Leadership Institute of New Sudan in South Sudan, The Alliance of Professional Consultants in Colorado, and has advised and served on many corporate and charitable Boards of Directors.

 

I was once asked by a colleague/partner to engage with a manufacturing company he had recently acquired.  He bought it with the intention of improving its operating efficiencies, making better use of its talent, and growing its customer base.  At the time of the purchase, this company mostly sold into the USA automotive supply chain as a third-tier supplier.  My colleague asked me to take over operations, while the former owner/seller stayed available under an employment agreement.

One of my first investigations was to see how much it cost to make the company’s products.  In its 20+ year history, the company had made about 3,000 different parts for the second-tier component assemblers.  Most every die and tool it had ever used was still around in one factory or warehouse or another.  All the parts were still listed in the company database.  (Of course, when you make parts for automobile manufacturers, you may have a contractual obligation to make spare parts later if requested.)  The factory did not feel well organized.  But here is what I found that told the story best.  The company had a daily “just-in-time” delivery requirement for eight parts in current use by a big-name customer.  Whatever else needed to be done in the factory that day, the requested quantity of these eight parts had to go out the door.  And I calculated that the production costs for four of the parts, without any overhead allocation, were higher than the sale price.  In truth, those were the older parts.  The four newer parts had an above-cost price, but not enough to cover much overhead.  As a whole, the business with this customer was conducted at a loss.  So, I shared this information with the new owner and the prior owner at a meeting of the three of us.  The new owner looked firmly at the prior owner/business seller and asked if this could be true.  The answer?  “I am pretty confident that probably is true.  That is just the way this business works.  You bid to make a part, and if you get the work, the first few years you make some money.  The customer requires the price to go down every year.  So, then you lose money.  But you have to keep bidding for new business, because otherwise you are only losing money.”  And not only that.  If the daily delivery was ever late or incomplete, the customer would charge back highly punitive fees against the supplier.  The new owner, initially unfamiliar with some of the unusual ways of the automotive supply industry, was not pleased.  This is an example that makes a point: most companies have either customers or products they would be better off without.

This case is from a particularly difficult industry – supplying USA automotive assemblers.  But something similar is not all that rare in other industries.  How does this happen?  There are two reasons.  First, many businesses do not know their unit costs all that accurately.  Second, and more to the point, all opportunities to sell to and serve customers derive from the world, from the relevant environment of the business.  While what is true inside a business can provide competitive advantage, the opportunities always come from the world.  What our business offers in the way of products and services enables us to meet opportunities that already exist – not to create them.  This means that, over the passage of time, as the economic world evolves, what a business has created to enable it to respond to prospects and customers has left in place many artifacts related to what was once useful.  Many of those left-over capabilities, processes, policies and information diminish in value over time.  Ways of doing things in a business that were once a source of advantage often outlive their usefulness.

Not only do these left-over layers of business artifacts cost money to retain, they also diffuse the focus of the people in the business.  They become distractions and impediments to progress.  The person working to make or ship the just-in-time products usually has no idea whether his work today is making the company a more or less valuable business.  He or she is just doing the assigned task, without any real connection to what moves the business forward.  And this is costly, for that employee, the company, and future customers.

We at CorePeelers International often find that for a business to grow in value and thrive in its organisational life, it is a good practice to peel away layers of business activity that are not key. A business’s future ability to create significant value for its customers, and then to capture a sustainable share of that created value, depends on addressing new opportunities as they emerge.  But the old artifacts of the business are just as good at attracting attention and energy from the workforce and the executives as are the newer production requirements, skill upgrades, and organisational learning on which future success depends.

Yet peeling away some layers of physical artifacts and organisational behavior is not the whole story about a business becoming future-ready.  It is also an empowering practice to peel away some of what can cause us to lose our balance of attention, our ability to recognize our world’s clamor for attention and yet still hear our inner guides.  A thriving organization knows and feels its “core,” and leverages it.  Our core should be a constant source of guidance for us, no matter what the world of customers is wanting.  Our core is where we know our purpose, where our “Why?” lives.  Our core is where we affirm our values and choose our mission.  Our core is where we develop our vision of what we want our future to look and smell and sound and feel like.  Our core as a business not only guides a thriving organization, it also energizes it.  Our core generates motivation and dedication.  Our core opens us up to inspiration.  It allows us to embrace awe and wonder whenever we allow those always-waiting moments of awareness to dawn.  Our core is what allows us to connect with each other as fellow journeyers, and to come together in truly great teams.

Peeling away less-useful layers of organisational activity helps us be more engaged with our core more often.  This then gives us a better way of aligning our efforts, our opportunities, and our relations with customers so that it all functions better.  If we work toward the world from strong connection to our core and good alignment of our resources, we will have many fewer customers we would be better off without.  At CorePeelers International, we call this “Living from the Inside Out.”  Better success comes when we select and engage with opportunities the world presents that align with our core and take advantage of our essential strengths.

Life is too short to do business with people who are happy for us to fail.  More importantly, life is too short to waste opportunities to relish who we are, and to leverage that inner core to create more valuable relationships with the outer world.  Life, as people and as a business, is almost always largely about change.  We have learned to peel away enough layers often enough to Live From the Inside Out.  We have found this practice to be empowering, enriching, rewarding and worth sharing.  And we love to offer our client partners mutual discovery about how we can Live From the Inside Out in collaboration.

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