What You Learn After 40 years of Leading Through Change with T.J. Coombs – EP.274

(00:00:00) – Intro

(00:01:48) – The drive to lead

(00:05:12) – When you know you’re work is done

(00:07:04) – Evaluating WHO you want to work with

(00:12:17) – “Staple yourself to an order”

(00:15:46) – Favorite questions to ask in order to better understand a business

(00:18:08) – How long do you typically spend as an interim CEO?

(00:20:06) – Involvement in hiring the permanent CEO

(00:23:13) – Leading a turnaround business

(00:31:00) – The key jobs of a CEO

(00:42:56) – The state of the distribution and Install industries

(00:54:41) – Advice to building supply leaders

Alex Bridgeman: TJ, welcome to Think Like an Owner. And this show is all about interviewing CEOs who are building ambitious companies. And you certainly spent a lot of time building ambitious companies, 40 years either being an interim CEO or consultant, board member, advisor, investor across Fortune 500. You’ve had lots of experience in building products, construction, tech, defense, a whole bunch of different areas, especially in turnarounds, which I want to hear all about because I find them fascinating. So, thank you for sharing a few minutes on the podcast and getting to talk about it. 

TJ Coombs: Well, thanks for having me. It’s great to be here and look forward to our conversation. 

Alex Bridgeman: Absolutely. Can you kick us off with kind of where did this drive to lead come from? You mentioned starting at Georgia-Pacific, and it seemed like there were just tons of opportunities after that experience that led to a lot of these different roles for you. 

TJ Coombs: Certainly. Well, first of all, I’m a little congested, so bear with my raspy voice, but I’m fine. Thank God this is a podcast and not where I’m out in person. So, to start off, I’m very, very fortunate to be recruited out of college a long, long time ago by Georgia-Pacific Distribution Division. At that time, they had an incredible management training program that they put a lot of time and effort. And it was all about the basics, but we talked about disciplines. It was an environment where if you were a problem solver, you could grow and opportunities presented themselves. And it was a tremendous environment. So, joining Georgia-Pacific at a very young age, right out of college, three days after graduation, and getting into that environment about, hey, here’s a problem, can you fix it? Can you do this? Especially coupled with the management training program, it really was a tailwind that any young person would have enjoyed. And I certainly did, and so did many of my peers who went on to be industry leaders as well. It was really quite an environment. And I give credit to the corporation for that. From there, moved up through management essentially as a fix it person or a problem solver, as many of us did, and eventually went from one location to the next, to running the Boston office, and then moving to the headquarters in Atlanta, getting into international during NAFTA sales, in sales manufacturing and distribution for Canada, Mexico, worked through that, then moved into corporate strategy work for that division with a team of people, which is essentially a McDonald’s test kitchen, if you will, where we piloted and looked at a lot of things before we did it. It’s easier to, you want to test it out before you make a mistake in a large manner. So that was essentially it. Then moved on, was persuaded to move to a different industry, still in distribution. And that was a very similar challenge, but in a different industry, automotive battery. Basically, I was the competitor to Interstate Champion Performance Series. At the time, it was owned by a different corporation than it is today. But it was a great experience. And from there, with a good friend of mine at the time, we decided to go out and form an operating practice, an operating partner practice that is, a little different than consulting. We eat our own cooking. We stick around and do a lot of the work. And that was about 25 years ago, plus or minus. And that has been the lion’s share of my career since that time, working with companies of all sizes, shapes, private equity, closely held, not too many big strategics, very few, but overall working in this environment, stepping in, running companies for a period of time, sitting on the boards, chairing boards, doing those things, and working with leadership teams during periods of transition so they can be successful, and then you move on. 

Alex Bridgeman: So, on the moving on piece, when did you know that your work was done? Was there usually a defined goal that anyone had and was bringing you in to help them with? Or were some of them more open-ended and it was kind of up to you when you wanted to depart? 

TJ Coombs: Very good question. And it was a cornerstone of the operating partner practice. We always define success as when we leave, not how long we stay. And I can take a ding at the consulting industry, if you will. But that is more about, hey, what’s our next project? What is this? Working with the leadership team or our CEO or president, you want to make sure you’re not there long term. You’re there to get them, give them the help they need because they may not have had that level of perspective or depth of bench during periods of transition. So we always like to put it into a defined period, and there may be some offshoots later on, a little bit of this, little bit of that. But overall, you want to put a beginning, middle, and end because no leader of a company needs to be seen, whether it’s real or perceived, that there is someone behind them really pulling the strings and doing things. And it’s not the case when you do it correctly, but the longer you stay, you don’t want to leave that perception, but more importantly, it doesn’t add any value to the company. So, get in, do what you have to do, build the organization, work with the team, and then exit and come back as needed. You can come back in a board capacity, an annual review advisory capacity, something like that. But on a day-to-day as an operating partner, you need to get in, get it done, and get out. That is the best path forward that I have seen in doing this for quite a long time. 

Alex Bridgeman: How would you evaluate who you wanted to work with? Every company has problems. Some are big, some are small, but everyone’s got something going wrong that they could probably use your help solving. So I would have to imagine the demands on your time would be far greater than what you could actually do. So how do you pick and narrow down not just the things you’re most excited about, but which management teams do you think are actually going to be receptive to your input and help? How do you evaluate those two dynamics? 

TJ Coombs: That is the first and the most substantial and significant hurdle, not just for an operating partner, whether it’s myself or anyone else going in, but for the company themselves. The old expression, you can’t pick up anything with a closed fist applies to these situations. 

Alex Bridgeman: I haven’t heard that before. I like that. 

TJ Coombs: You cannot. And you have a company that may be dealing with issues that they may not recognize and they don’t want to recognize. There was a great adage in a business case, another one I’ll send you, that not always, but overall, the people that get you into a situation very rarely get you out. And that’s not to disparage that you’re there. They own the strategy, the tactics, the plan, the implementation, the personal relationships with their team, everything about it. So, their field of vision gets very narrow because they refuse or just don’t want to or dismiss or don’t feel that there is a need to assess and look at anything in a broader perspective. So a long answer to a very good and short question. When I or many of my peers, we go in to talk to a company in any industry and we meet with the core constituents, typically the board if it’s closely held or private equity firm, if they say, we know what our problem is, they are right here, we just need you to address that, that’s a difficult conversation. It may or may not work, but typically it doesn’t. You need to go in with a broad perspective of at least a wide field of vision for an assessment. Because when you pick up an operating partner to work with, you’re picking up scar tissue, experience, I like to think a little bit of wisdom, but over the course of the years, we’ve seen so many of these situations, again on an operating role, we stuck around to implement the ideas. And so, if the purpose, if they called us in, any operating partner, they recognize they have some need, but defining what that need or how we identify that need, if there’s a lot of resistance to it, it’s probably not a good marriage. If they are wide open or say, come in and take a good look, tell us what you think, spend time here, that is the first step. That determines whether you’ll have a chance of a successful engagement or not. 

Alex Bridgeman: Are there any things you look for that give you a spidey sense, or what in those conversations or maybe facility tours or visits makes the hair on the back of your neck stand up? 

TJ Coombs: Well, a few things. And you can see me laughing because it’s something we deal with a lot. The first thing that gives me hair on the, or call it the spidey sense, and I’ll generalize, when you meet with someone and you’re walking around doing an assessment, and someone says, no need to worry about that, that’s fine, that goes to the top of the list. Because that means it’s been dismissed. The other aspect is doing the assessment, and you and I talked about this off camera, was understanding what is that eye level at any of these operations, what really goes on, and getting down there and working on the… for a business to be successful in the true sense of the word, you need to be consistent from the boardroom to the shop room floor in any business. So you have to see how that works. You have to get down there. When you see those inconsistencies, yeah, they get on the list and you have to start to address and catalog those. Typically working with companies during an assessment phase, I spend very little if any time at the headquarters. For most of the manufacturing distribution, other type of industrial entities, I spend in the plants, in the shop room, seeing where the cash register rings, seeing how the supply chain works, the manufacturing process. You don’t have to get into the detailed process design of it all, but you can get to a place where you see how, as we talked earlier, how those handoffs work and where there are breakdowns that you can see objectively that others cannot see because they’re too deep into it. 

Alex Bridgeman: And you mentioned, you sent me a phenomenal case called Staple Yourself to an Order that was essentially you following an order from a customer reaching out to buy something to actually receiving it and being billed and customer support. It sounds like you do a pretty close version of that as part of any of the work that you do once you’re in a company. What does that look like for you in some of the experiences you’ve had? 

TJ Coombs: That’s critical. I’m glad you enjoyed the business case. I tend to overshare that, but it’s an important one, and it is part of the foundation of what any operating partner would do. If you don’t understand that, that order-to-cash cycle, you really can’t understand the business. Now, the other aspect is, when I say the business, you do not need to be industry intimate to understand it. You need to understand how the entire cycle works, from whether it’s manufacturing to the customer’s hands, how that takes place. There’s a big misconception that if you’re in the widget business, you have to have 20 years of widget experience to understand the business. There is some nuances to that, but to understand the staple yourself to the order type mentality, it is how does the business flow? Where do you go from order to cash? How does it- manufacturing, the entire business cycle. You have to understand that. So spending time in the field is critical because you will see, you being an operating partner or an independent, you will see things that people that are really into the weeds and industry intimate, they’ve been doing the manufacturing and they’re worried about the left-handed lathe, that they need a new one, they’re focused on that. They’re not focused on the other issues in the handoff and every aspect. That’s that business case, and that mentality is critical. But you have to be comfortable going out there and doing it. Again, an operating partner is just that operating. We’re in the field, we’re doing that. And consultants have their role. But we go in as someone who has sat in that chair, been there, done that, have empathy for the people doing that job today. That is first and foremost, I think, the most value add an operating partner can have. I think the other large part here is there is a tendency for people in business to spend too much time on financials and other type of financial reporting. And it is critical to understand, it’s critical to look at that. But there’s one predecessor before you filter that information. You’re printing history. You’re printing results people and activities have done, because activities drive outcome, activities drive cost. Getting back to the entire business cycle of the business, those activities drive what people are analyzing. The disconnect is you’re looking at the result, but you’re not looking out, how did each piece work together to give you that? So you can look for different- And it’s very important to understand that. And we all live and die in financials and look at them. But the answer is never in the spreadsheet. The answer is in the business. And you have to get in there. You have to get into the gearbox and you have to get in with an understanding of the people that are doing it. Again, not to go in and just make broad platitudes of this or that. There’s a lot of fine tuning that takes place. 

Alex Bridgeman: Are there any questions you really like asking folks on shop floors or who are interacting with customers every day, cash register? What do you like asking to start understanding the business more? 

TJ Coombs: Honestly, the best answers come from the shop floor. It’s amazing. Particularly manufacturing distribution. And there’s a lot of wonderful programs out there. You’ve heard them all – Total Quality Management, Six Sigma, Lean Manufacturing. But they all come down to one thing, which is really a disciplined and a highly iterative process with the people that are working in the business every day. One prior client a few years ago, we put together a really extensive operational audit and continuous improvement plan, but it was all boiled- it all came up from the folks on the floor. You go out, you spend time with them, ride a forklift with them, build a pallet full of material, fill an order, get in a truck, go for delivery. What works? What doesn’t work? What could be different? What could be better? You’d be amazed at the simple, yet highly effective ideas that they have that unfortunately don’t make it all the way up. And that’s not bad management. It’s just you have to have a tool to capture that and put it in place in real time. So not every idea is a good one, but some of the best ideas ever seen in many, many, both in the corporate world and as an operating partner, have come from the folks on the floor. Incredible ideas. So, you have to be able to listen, but… Presence is 80% of management. But you have to be down there and do this. So as an incremental resource coming into work with a business, we have the time to go do that. It’s a bit of a luxury, if you will, compared to what the day-to-day operating people under tremendous amount of pressure, they don’t have the time that we do typically. So, we’ll come in and do that and then help facilitate the best of breed ideas, process improvement, et cetera, that will impact the business in a positive way. 

Alex Bridgeman: And so, it sounds like a lot of this is what you might do in some of your interim CEO roles as part of your first couple weeks, couple months in the role. Maybe before diving into what else you would do, how long does a typical interim CEO position look like for you? Because I imagine that affects a lot of how you spend the first couple of weeks and months in that role. 

TJ Coombs: It’s typically six months to a year. You don’t want to be there longer. And being an interim CEO or an interim executive in any capacity, you have a great deal of- it really is a great opportunity to implement a lot of things because you can be the change agent and then pass off the day-to-day operations to someone who doesn’t have to implement or own the change. Many times, changes are controversial. And because you’re typically changing the business architecture from within with a team that has done it that way for a very long period of time. And getting that out of the way, a lot of heavy lifting, but if you’ve ever renovated a house and you have to move a bearing wall, you know what it’s like. I know it holds the place up, but we’re going to have to have an interim post there and then we’re going to put a header and fix it. The goal is, the end goal is good. But again, getting back to an operating partner time period, six months to 12 months is about it. You need to know what is the role of the new CEO, because if you’re an interim, you’re getting someone ready to come in and do something different than the prior person did. Different position, different strategy. Now, the old cliché, strategy drives structure. If you’ve changed strategic direction, you fundamentally change everybody’s position description who’s involved in the business one degree or another, actually at the leadership level. So get in, get your plan, and then begin the search or developing, which is the best way, developing someone from the ranks to step into that role, or if you have to look outside, you have that amount of time. 

Alex Bridgeman: Are you typically also responsible for some of the role involved in hiring the long-term CEO? Is that something you’re also doing? 

TJ Coombs: Yes, absolutely. You’re on the panel, you’re working with the search firms, you’re working with the board or the private equity firm or the other close- the ownership structure, whatever that may be. But absolutely. And getting them on board. As an interim, but also you’re not looking for heir apparent, you’re looking as someone generationally would do, and you’re looking for the right person for the new type of structure for the company. So yes, absolutely. It’s a key part of that role. 

Alex Bridgeman: Because the thinking or part of what I was thinking about was, as you learn more about the company, you’re going to learn more about what is the right profile of person we need to run this business, not just for what the business has already done, but what you see are the challenges that need to be addressed and the long-term new structure for the business. So I imagine that your view of who the right CEO is long-term, it’s going to change and have its own iterations pretty quickly. 

TJ Coombs: That’s a great point and it’s a very big part. Let’s go back to the generational CEO who would come in and every day, generally speaking here, would come in every day and do what they did every day and basically be a maintenance manager running the business as they see on a day-to-day basis. Then you get into a period of trouble or transition or a lack of alignment with whatever ownership structure it is. And what do they want? They want a plan to grow in many ways, grow margin, grow revenue, grow volume, grow geographically, whatever that may be. So that’s going to demand some form of a strategy. That strategy is, okay, we’re going to, instead of doing what we do every day and doing it well, we’re going to do this, that and the other in different product lines, geographies, et cetera. Well, getting back to what we talked about, that is a change in strategy. That’s a change in skill set to try to make that happen. So to your point, absolutely. You need to find that ideal candidate who is curious, a good student, has a passion for the growth, wants to lead versus be an administrator. Broad generalities here, but I think most people in business have seen really, really great maintenance managers and they’ve done a good job for what they were supposed to do. But making the leap to be a growth manager is a different thing. So that individual is someone who can really drive and build a company, and more importantly, build the team below them so that you have the organization that can put it on their shoulders and carry it forward. That’s a different skill set than just running something every day. 

Alex Bridgeman: A lot of your interim experience has been in turnarounds, which I would love to talk about. And it sounds like it’s going to have its own dynamic in here too. Can you talk about some of those experiences and how you approach them and what are probably number one, two, three within starting one of those experiences?

TJ Coombs: So similar to the core operating partner engagements, on the turnaround piece, it really starts with an assessment. There is a problem. The problem is typically the symptom. What is the real problem? We have to get to that. So if people say our sales are off, well, that’s not the problem. That’s a symptom. Why are your sales off? Is your product not good? Is your distribution network not servicing? Are your sales team out of step? On and on and on. That’s a symptom. So you have to get down to what the problem is. And typically it’s multifaceted in a turnaround. It’s no different than any type of sports team that’s been around too long and they get comfortable. You have to get up and challenge yourself every day. And it just happens. There’s a life cycle to these businesses. So if you’re in a turnaround situation, number one is getting in and doing the assessment, similar to what we talked about before. And that has to be unimpeded. There can be no sacred cows in that process. You have to be able to take a look and spend time and really come back to the ownership structure, whoever that may be, and say, here’s what we see. And at that point, that is, if you can’t agree upon the problem, then you’ll never agree upon the solution. So that is the first hurdle right there. Assessment, okay, let’s say, yes, we agree with that. Now, what do we need to do? Now you need to come up with, how do we turn this around? How do we trim our sales, or do we need a wholesale refit in port? It’s a wide range, and doing turnarounds for all this time, I’ve seen virtually everything on the spectrum. Okay, we’ve got to go into dry dock, pardon the naval analogies, but we go into the dry dock, or, hey, wait a second, we can fix this while we continue to move. You have to come up with that plan. That plan also has to be agreed upon by the ownership structure. And then from there, getting back to the skill sets required, how does the current team, how capable are they of performing to the new standard, the new direction? How capable are they and how willing they are. A lot of time, it’s the willingness and ability vector. They may be willing, but they may not have the ability. They may have the ability, but they just don’t want to. So you really have to go through this process and take the business out again for C-trials, give it a good shakedown, we’re going to try this, and see how the organization stands up to the new path forward or not. That’s the third big hurdle. We get the problem, we talked about a solution, now we field tested the team. Then how do we need to move resources around, augment resources, make changes as necessary? How do we build capabilities, whether it’s internal training or whatever? It’s easy to come up with ideas. People can think far, leaders especially, can think far, far, far faster than anyone can implement. So coming up with a few basic, good, really solid first step foundational things and putting them in place. Implementation is 90% of the success early on. It’s also infectious. When you start seeing that you come into an organization that needs some form of, quote unquote, a turnaround, people may be tired, may be skeptical. You’re new. They’ve tried- you’ve heard all the excuses that you have, tried it before, et cetera, et cetera. You have to come in and get a few basic singles on the board. And it’s not performative. It’s very important. Success, especially in change and turnaround, is very, very infectious. Once people start seeing this works, great. The other part, when they see something that fails, as long as they can participate, why did it fail and how do we get it better next time, they will participate. So that is the next step. Then from there, you put in your operating metrics. Where do we want to be by such and such a time? What should all these activities drive? What outcome should we get? Then you get there, then you’ll see your cream rise to the crop on leadership in all levels. You don’t have to be a CEO to be a great leader. Some of the best leaders I’ve ever seen have been the field superintendents for an install sales commercial business, the people that actually make sure things are done proper. So it’s at all levels, and it takes a while. It takes patience, and you have to have a full participation of the organization to whatever degree they can contribute. 

Alex Bridgeman: One other element here is in turnarounds, there’s often a need for urgency and speed that might be different from a company that’s profitable but needs general improvement. How do you ensure that you’re moving quickly and able to make assessments quickly and these important, like narrowing down to the key changes and then moving on them with some sense of speed and urgency? How do you make sure you do that? Because that seems like an added level of difficulty in any of these situations. 

TJ Coombs: A great level of difficulty, and there’s different aspects to it. Everyone wants speed. Everyone wants things to be done quickly. Counterintuitively, sometimes you have to slow down to go fast. An error, an unforced error out of haste can be devastating. So I think first is when you come up with your assessment, how do you move ahead as expeditiously as possible, first of all, how much gas is in the tank? What do we have for financial depth, cash, other major things, investor patience? You name it, there are other details that come up, whether it’s key contracts, we’re going to lose the contract in defense, so we have to get it fixed before that comes up again, or some other hard stop that’s driving you to a time frame. You have to deal with it, come up with it, get in there and time box your implementation to that because you don’t have a choice. You don’t have a choice. You’re going to run out of cash. You’re going to run out of customers. You’re going to run out of suppliers. You’re a distributor. They may want to pull your line. What is that hard stop that’ll dictate that time frame? So you have to have a very practical and well-measured, but very sober, if you’re going to go quick, and quite often you have to, you don’t have a choice, set of expectations that it may be a bumpy ride, but once we get to the other side, we’re going to be in a better place. If you have a company that says, we probably got three or four years, well, you still need a degree of urgency, but your glide path may be different, and that will allow you to limit your liabilities along the way. It’s a risk-reward curve, essentially. 

Alex Bridgeman: How has all of these experiences influenced what you view as the key jobs of a CEO? 

TJ Coombs: Wow. It really has evolved over time. If you look what’s gone on in so many of these industries in the past 20 years, especially with roll-ups, consolidation, introduction of technology, you really need to have a sharp edge in terms of looking towards the future, more so than ever before. Not that CEOs didn’t, but the pace of change introduction, from my perspective, it’s almost like Moore’s Law. Business is speeding up. It’s such a change. You have to be very quick in terms of seeing beyond the horizon as best you can. And there are so many leaders out there that do that well. I think to be a successful president, CEO, executive of any capacity. You have to be someone who’s very forward looking, but also someone who can build great teams that are nimble, agile, and can participate and move quickly and adapt. It’s not, if you go back to the old business cases from the 50s, hey, we’re going to put a new plan in, we’ll take five years to study it, then we’ll do it and everything will be great. You get a gold watch and you retire. That was the speed of business back then, and people thought it was fast. We’re in an entirely different environment today, and the leadership requirements need someone who is always looking forward, yet has the capability to build an organization of people that can implement and be aligned with where they’re going. 

Alex Bridgeman: So for those CEOs that maybe struggle to do that, especially on the hiring and team side, what’s typically going wrong? What’s being missed?

TJ Coombs: It’s the same problem… They feel they have to be involved in every decision. They feel they have to have more control. They don’t delegate as well as they should for whatever reason it may be, whatever motivation they don’t delegate. There’s an old adage out there, another cliche which is applicable. Sometimes to gain control, you’ve got to lose control and… hire really good people, encourage them, give them latitude to make decisions, come up with best of breed, and let them own the answers, own the solutions, and most of all, eat their own cooking. So it’s great, getting back to you can think a lot faster than you can do, people have a lot of ideas. Okay, great, do it. Now, how did that work? You own it. But too many of the leaders today feel like, okay, well, we’ll have a meeting, we’ll make that decision, and that’s okay. But at the same time, are you as a CEO or chief executive making that decision, or are you distilling what your team is saying and getting essentially a war council to come up with, that is the best decision. Not only do we feel it’s the best decision, we understand it. And most of all, we have a high confidence we can implement it with a degree of success and get the results we want. The choke points and indecision at the top or delay of decision-making is a death knell for any company when that’s bottlenecked at that level. You need someone who can really foster the best ideas and leverage their teams. 

Alex Bridgeman: That sounds similar to the Bezos adage of two-way doors, make those decisions quickly and think through the deeper ones, the one-way doors a little bit longer. 

TJ Coombs: And learn as you go along. Hey, why didn’t it work? Okay, well, it wasn’t necessarily a bad idea. We had one leg of the stool missing. But you have that dialogue cable. That’s an excellent example. 

Alex Bridgeman: What are some other examples or lessons like that that you’ve picked up on overtime that you like to share with CEOs? 

TJ Coombs: I’m in the field. What I’m seeing more and more of, and many of my clients, if they ever watch this, will laugh because this is my drumbeat, get out of the office, get in the field. You’re spending too much time at headquarters. How many days a month are you with customers? How many days a month are you with suppliers? How many days a month at you’re different operations, albeit manufacturing, distribution, et cetera? That is where, especially in this day and age with the tools and the technologies that are available now that we didn’t have when I first and my friends and peers didn’t have when we first got going, you can be a CEO anywhere. It doesn’t matter. And matter of fact, the more time in the field, you experience this in real time, people see, you’re going to, you as a leader are going to benefit from what an operating partner does. Hey, I’m walking the shop floor. Fred over here just gave me three good ideas. Joe mentioned something that I never really thought of. And we’ll have that discussion and we’ll keep rolling it forward. The trap of being in the office is, one, it gets too comfortable. Staff meetings, and all that stuff’s important, but it can be done from anywhere, anytime. And the best CEOs that I see both in virtually every industry are the ones that are heavily deployed and are passionate about being in the field. 

Alex Bridgeman: How do you see really effective CEOs build that into their schedule? Is there a routine that each week has, or is it a little more impromptu based on where they need to spend time? What are some ways they can implement that? If your whole week looks like staff meetings and planning and headquarters type stuff, how do you start mixing in more visits? 

TJ Coombs: Think of it as an athlete. I always like to say, for leaders, you want to bring the athlete out in the individual. An athlete, if you’re going to train for an event, you’re going to train for a triathlon, a marathon, you’re going to train for a boxing match, whatever it may be, you have a training regimen. It’s scheduled. You’re getting up. You’re doing this. You’re not eating this. You’re working out here. Yes, you may have to sacrifice, but it is a discipline. It’s the same with any leader trying to do more of that than less. You can’t get sucked in to the staff trap of you have to be here for this. You’ve got to be here for that. No, this is where the business is. You set the tone. You set where it happens. If people need a conference call, great. We’re doing this by Zoom. Do it by Zoom. You want to have a- you want to do a phone call, do it by a phone call, do it by carrier pigeon, but do it from the field. And it is a discipline. It has to be very- it’s not going to happen on its own. Matter of fact, typically, well, I got to go, but no, I got to be here tomorrow to approve the following things. Or no, HR wants to get me into a meeting about some new policies, or I’ll put it off until next week. Can’t. You have to set the tone, the tenor, that’s where you’re going to be. That is the state of play. And the leader has to set it, and it has to be done, not only disciplined, but it has to be done with a cadence, and the organization will understand and adapt. 

Alex Bridgeman: I’m thinking more about site visits here as a sidebar. This kind of gets to a soapbox that I have that you and I were talking about on… Products and services would be a lot better if the CEO used their own product or service, very similar concept here that you’re talking about too. 

TJ Coombs: We talked offline about this, but years ago in a call center environment, they didn’t think they had a problem. So I had the leadership team all call in and try to use their own call center thing. Boy, what a sobering experience that was for them. So we got aligned on the problem pretty quickly. But if they weren’t participating in the business, they wouldn’t see it. They’d rely on the reports from their subordinates. Oh, everything’s great. 

Alex Bridgeman: Yeah. You’ve got to get the unfiltered experience. 

TJ Coombs: Do you want to run a business or do you want to run a Potemkin village? And you want to run a business. You want to see the good, the bad, the ugly in real time. And you want to be that- you want to be fluent in every aspect of it. You’re also going to become much more effective because over time, you will be a respected leader because you are there. You’re not sitting in an armchair, in the head office issuing edicts. You get on the floor, get your fingernails dirty once in a while. It’s good for you. 

Alex Bridgeman: It’s probably also a good example for the rest of your team that if you’re willing to see exactly what the customer experience is and see every part of the business, then they know that any report they give to you is going to be fact checked by your own experience looking at those facts. 

TJ Coombs: Hey, I got this report from a customer, they said this- or a vendor, who we have distribution rights for their product. They said, hey, this isn’t working. Instead of just saying I talked to so and so, I actually went down and met with so and so, walked the floor, looked what was going on, explored every action, and there was some validity to it, and we’ve taken corrective action. You’re exactly right. Lead by example, and the leadership team is the best farm team for future executive leadership. If they’re raised and trained and participate in this mode, you don’t- culturally, it’s going to be a lot of continuity when this CEO goes off to the happy golfing ground somewhere. And so, yeah, you’re right. You need to have that consistency. And that’s part of the culture. And culture is an overused term. I mean, it’s overused because I think it’s been de-valued. The participation and active management has to be the culture. There’s a lot of other things about parties and this and that and everything, people call it culture and those are events. But the culture is that interactive, on the floor, in the field leadership. You’re not there to oversee and micromanage and what’s going on and to second guess. You’re just there to make sure everything’s running according to the plan that, remember we talked earlier, you’re going to set the direction for the company and you’re going to go a new direction with new goals and new products, services, everything else to some degree. If you change strategy, you’re going to change everything about it one degree or another. You want to make sure that that is understood and that’s being implemented. And your team at all levels is comfortable asking you, why are we doing this? Why is this important? Why am I behaving different today than I was a year ago? Well, we’re addressing a new market where we’re adding a new location. We’re taking on a new product line. We’re raising our prices by giving a better service model. That’s why you’re doing this, all very important for the underpinning of the execution of what we’re trying to do. Good people, now I get it, understand I’m not doing this just because someone said it’s a good idea. We’re doing it because it makes a difference. 

Alex Bridgeman: One industry you spent a lot of time in is in building products and distribution. I would love to hear some of your view and perspective on how that industry has evolved in the last couple of decades from your view. 

TJ Coombs: It’s unbelievable. You take a look at the consolidation of everything from manufacturing to distribution, one step, two step, and through the construction cycle. There are so many great examples out there, what’s going on, and there’s been some good things and some things that people aren’t so favorable, but it’s here. The building products industry is a commodity industry in many, many ways, and it’s hard to break from that. But you look at the rollup of all the independents, whether it’s lumber yards, manufacturing, distribution, two step distribution especially, as well as independent lumber yards and supply houses. It’s staggering. The future of the industry is going to look entirely different in 10 years than it does today in so many ways. And you have so many great leaders out there trying to implement things. But… the nub of it, in my opinion, is going to be because it is such a commodity type business, it is, whether it’s steel or wood products or concrete or whatever it may be, the differentiator, again, in my opinion and experience, is going to be who can be the most nimble, who can be the most adroit, who can serve the customer quickly and efficiently, who can get out there, get it done, make sure the order is accurate, really disciplined, because price doesn’t equal cost. And if you’re a major general contractor, you’re putting up a big project and you’re relying on some form of supplier and any one of the divisions to provide you with something great, great price, fantastic. Like the terms of the contract, that’s good. Okay. But guess what? If it’s not there, it’s 6:30 AM on a Monday, so your crews can get to work, or if there’s any other issue and you’re delayed, that’s no good. That price doesn’t mean anything. So really doubling down on scope and scale of delivery, on the discipline and really just that serve- If you can excel at that service model, you will be successful. Again, there are many, many smart people, far smarter people than I in the building products industry. The service model is going to be big. The construction side of things is going to merge more with the supply side in terms of installed sales. And there are some great examples of companies doing install, rolling that up now where you have recourse. Instead of finding that framer who built your apartment complex and you have a warranty issue and they’re moved out of Georgia and now they’re down in Texas, you got to chase them down for a warranty issue, you have a company that stands behind it. You have a degree of professionalism. So I think you’re going to see a lot of things in building products across everything geared towards higher service, higher disciplines, more integrated systems to the end user, the commercial business that needs that building, et cetera, that will satisfy them. Money comes when people start buying or leasing properties, not how long they’re in construction. So expediting that in a very efficient and effective manner is where I think this measure of success is going to be. There’s not a lot of room left for more consolidation. There will be some. But there’s not a lot of left out there compared to what there was. If you go back 40 years, it was completely the inverse of where it is today. 

Alex Bridgeman: The install sales piece is really interesting because installing and distributing are completely different business models. So how did the two interact? And it seems like there’s just a lot of ways for that to be a very challenging combination for one company to manage. 

TJ Coombs: Oh, and you hit on the main point. So, while I spent a lot of time in the component industry, trusses, wall panel, things of that nature over the years, and people associate it with the lumber yards, and for good reason. It’s lumber, it’s in a yard. But seeing they’re two different businesses. Lumberyard is a distribution model. Components is a manufacturing model. And failure to recognize that is responsible for so much of the failure of componentry. I got a great guy. He’s been running this lumberyard for five years. I’m going to put him in charge of the truss plant. Now you’re manufacturing something. You’re not picking up something on a pallet and putting it on a truck and delivering it. You’re manufacturing. You’re responsible for design. You have quality control. It’s manufacturing. If you recognize that, you can be successful. And on the installed sales, then you take it to the next level. Okay, we’re going to, whether it’s whatever product, we’ll stick with framing as a good example. Does the truss plant manager make a good install sales guy? No, because now you’re talking about construction. What are the expertise on the job site? How do you get there? How do you look at quality control? As long as you identify there’s different skill sets for each, whether it’s the lumber yard, componentry, or the fulfillment end, if you recognize that and stick to that discipline, you will be successful. But if you think it’s one entity, it’s not. Like we talked earlier about the proverbial relay race when you were running track in high school, you got to practice the handoffs. And that’s where success is defined. The other aspect is install sales is going to become more and more important as labor becomes more and more of an issue. How many kids today are getting in to the construction trades? How many high schools have shop programs anymore? How many kids do you see working on construction sites? My generation, that was very common. Today, it’s not. So you need to have more assembled on site versus built on site. And it works, but it requires a lot of planning and discipline. And many companies out there are really, really excelling at it. And I think that’s where you’re going to see a great deal of the money, effort and focus both on the large strategic companies, private equity companies that have rolled up many of these businesses and other companies, both regional and local. If they want to be successful, they’ll focus on that. You’re a home builder. Well, I know that Acme Supply has been around for 50 years and they’re going to do my installed insulation. Guess what, if I have a problem in a year, I know Acme is going to be here. But if I have Joe Blow with a magnetic sign and a pickup truck, I don’t know where to find them. So there’s a great deal of value, what I’ll consider latent value, that is yet to be tapped into. And I think that’s a major focus moving forward. 

Alex Bridgeman: What kind of role does technology have in a lot of that coordination of information? The customer tells you something they want done on this day. You’ve got to coordinate with your vendor and then distributor and then install team. That’s a massive coordination challenge. And where do you see technology fitting into that? 

TJ Coombs: Good question. And so you’re talking to someone who probably is closer to an abacus than artificial intelligence. But all kidding aside, good technology, good systems follow good processes. So let’s leave the technology aside. If you define the process to fulfill, let’s go with the example of install sales. There is a process, no different than what we talked about earlier, stapling yourself to the order. That process is defined, you can find the technologies to support that and make that happen. Now, there’s another shiny object. Again, I’m a bit jaded, but having been through so many ERPs and so many versions of technology rollouts, good, bad, and indifferent, but there is the temptation to look for the shiny object in technology. Far, far smarter people than I can determine what that is or not. I go back to a very basic rule in any industry, not necessarily building products, any industry. You can have state of the art or state of the industry in technology. State of the industry, you’ll get paid for. State of the art, who knows the gap between industry and art, if you’re ever going to get the excess capability. If you buy any type of technology in your life, you go, wow, I only use it for this much, but it does all this, but it doesn’t really add any value to me, that’s kind of in the shiny object sphere. So I think technology plays a massive role and there is super smart people out there that can- that are looking at this and tying it to a service model and tying it to customer service. But at the same time, you got to understand your customers. If you’re in building products… and a customer wants to know where their order is, and you’re making them talk to an AI bot, that’s not going to go well. It may work for some, won’t work for most. But if you’re going to use that for project management, scheduling, everything else along that works and expedites and adds value, it’s out there. I can’t get too specific on what it is, but I think the technology piece is massive. And you can look at that going back 40 some odd years. When my generation started in the building products industry, we were valuable people, not that we were the greatest, we were good, but what did we do for customers? We delivered them pricing. We took care of customer claims. We helped manage their inventory. We did product training. I can go on and on. All that stuff’s gone away. You don’t need an outside sales rep for any of that anymore. Matter of fact, it takes up their time. They don’t need it. So where do you- technology will continue to have a major role. It is a supportive tool, not a strategy. And I caution any leader to go, when you’re looking at technology, how does it support what I’m doing? Too many people get enamored with it and say, well, if I just used AI to run my business, I can get rid of 30% of the people. That’s not the case. So, it’s a balance. It’s measured. Good technology, good systems follow really, really good business processes. Business processes start with a manual understanding, getting back to the shop room. What do we need to put in place? How do we need to reinforce it? How do we measure it? How do we manage? Use technology to support all those things, but get your systems buttoned up before you do it. 

Alex Bridgeman: In closing, what is some advice that you’re giving to building supply leaders today? 

TJ Coombs: Much of what we talked about. Really double down on intentional management… Know what you’re doing before you do it. And it sounds over simplistic, but what is- where are you going? And is your team aligned? People can get distracted with what goes on day to day. Business happens. Nothing happens at right angles in business. So get a plan, stick to the plan, modify the plan as needed, but only for good reasons. And so many companies you talk to when people go to work there, well, I’m not sure where we’re going, what’s the direction? People like knowing where they’re going, what makes a difference in their job in every aspect of the business, whether it’s building products or anything else. So I think that the best leaders coming up, and there’s so many across the building products industry, too many to name, too many of my peers and friends and colleagues, both in the strategic side and the private equity side. They’re doing an outstanding job. The common thread they have is they are strategic thinkers and very good at building teams and implementing in a measurable way, not some rah-rah, we’re going to go this hill or do that, but it’s a very, very disciplined and successful model of management. The days of waiting for it to come to you are long, long over. Headwinds are pretty significant. You look at what’s going on with many of the sectors now with being rolled up by private equity and others, and you need to be quick on your feet and you’ll be successful. 

Alex Bridgeman: I love it. Well, TJ, thank you for sharing your time on the podcast. It’s been a ton of fun, and I’m excited to continue chatting about building supply offline too. But thank you in the meantime for sharing your time on the podcast. I appreciate it. 

TJ Coombs: It’s an honor to be here. Thanks for having me and we’ll talk soon.