A Lesson for Budding Entrepreneurs

 


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RR Donnelley, the largest Commercial Printer in the world, was and is a great company to work for. My career was going just great – I had gained a reputation as a Troubleshooter and Turnaround Manager, perhaps also some would say a bit of a Maverick. Whilst I provided the drive and hands-on change management – Donnelley supplied the comfort of having a multi-billion dollar corporation behind me. Specialist staff, experienced operations people and top-class executives always available to help when necessary. My projects had included closing down a disastrous union-dominated site, transforming a government-owned print facility into a dynamic highly productive enterprise, saving a multi-million pound long-term manufacturing contract from being lost to the late Robert Maxwell, and removing an entire Management Board that did not understand the meaning of strategy.

I would not underestimate the skills required to undertake any of these assignments, but what made them achievable was Donnelley’s full backing and encouragement. However, the particular project I will uncover now was somewhat more challenging, due mainly to a successful outcome despite not having any Corporate backing or support.

The Donnelley division I was running had moved from a basket case (£10m sales/ £1m loss) to a profitable, high growth, award-winning company. The young workforce had been cajoled and threatened to out-perform our competitors or face closure. We trebled our training budget, got rid of the managers who had become obstacles to success, and encouraged the employees to take an active part in running the business, including making decisions on recruitment, investment, quality, customer service and product development. The division had won a multi-million pound two year contract with IBM under the noses of the sitting local supplier who was located almost next door to the IBM assembly line. Despite the fact that our plant was 200 miles from the IBM assembly line – we had won 90% of the IBM business. Our plant had become a winner and was held up by our customers and suppliers as a model of how committed employees can make a real difference to profitability, service and quality levels.

So when the new contract came up for renewal, we were confident that we would hold on to what we had worked so hard for. Although the process was on a Tender basis, we decided to not only present the Tender Documents, but also requested time to present our case via a PC Presentation (this was the early 1990’s before the digital revolution) involving Cartoon characters and employees – with a voiceover from yours truly and one of our ‘sexy voiced’ customer service ladies. Knowing our desire for the unusual the IBM purchasing group had gathered together their senior and middle management teams to be in attendance in their management auditorium for our show. We received a tremendous applause and encouragement.

Within weeks the good news came through that we had been awarded a new two-year contract with additional volumes. But the contract was clear – IBM would award the contract based on us creating a “near-site" facility to be located within a short distance from their assembly line in Scotland. It was vital to them that key suppliers were “clustered’ near to their assembly line.

I was delighted to present our appropriation for a new “near site" facility in Scotland underwritten by the new sales contract, at the following months Board Meeting in Chicago. Only one problem though – my boss suddenly announced that there was a freeze on new capacity/plants being approved for the foreseeable future!

Back in the UK I wondered what could be done without corporate support, they had backed me all these years until now. I knew that I would have to face IBM sooner or later and try and explain our problem. It was then that I decided to find a solution rather than give my customer a problem.

Allan Glen was MD of one of our supply companies based in Glasgow - he and I were good pals as well as business associates. I found myself sitting in his office a few days after returning from Chicago. I always liked walking around plants (management by walking about is still a good philosophy today), and during this particular tour Allan showed me his warehouse, which was empty. He also said that he often employed temporary employees to take care of busy periods. The penny dropped – within an hour Allan agreed to let me have the use of his empty warehouse and also supply me with enough employees to start our “near site" operation. Being a short distance from IBM’s Assembly line I had the perfect solution and could avoid going cap-in-hand to the Chicago head office.

Within two weeks we had re-painted the warehouse and rented a portable office for our one manager (transferred from our UK Division). Alan supplied us with some 80 temporary employees working 24hour shifts and we simply covered his costs plus a margin for his co-operation. We had a “Virtual Factory" we did not own nor had we a lease on the building; we had no employees on our payroll except the manager and he was on our division payroll in any case.

IBM were delighted that we had moved so fast and increased the volumes to us. A few months later back in Chicago I was summoned to the Chairman’s office to explain why we had sales of over $500,000 per month in Scotland – a place where as far as he was aware we did not have a facility. The Chairman listened to my story carefully – maybe we should put you in charge of our investment strategy – Congratulations!

Postscript

Within six months Chicago had approved the building of a state of the art Fulfilment Centre in Cumbernauld, Scotland. The Cumbernauld fulfilment operation is still in business today more than 10 years after this event, now trading successfully under the name Modus Link. The “near site" business model was exported to the USA and today Modus Link are a highly successful Supply Chain Management Company.

Allan Glen sold his warehouse and plant to a Supermarket chain and moved to a state of the art building in Cumbernauld, Scotland – coincidently next door to the one we moved into to.

Message for new executives and those budding entrepreneurs: Learn what strengths large companies have and where their weaknesses are. Play to their advantages, but don’t be afraid when they turn you down, as they surely will - you can either leave in a huff or fight for your customer.

Never give up when you know you have the customer on your side, a winning team and good knowledge of your market. You should pretend that you have all the resources you might need, even if many are against you. Don’t quit, do what is right and be kind to your friends. Your Network costs you little and may even save your skin one day!

This article is dedicated to Allan Glen who put up with my crazy ideas and trusted me with his money. “Lang may his lum reek"

http://www.sidewalksolutions.co.uk

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