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Joe McKinney

McKinney Lumber, Inc., Muscle Shoals, Alabama

Verne Harnish has identified four common growing pains for Fast Growth companies at various stages of development: generating revenue, amassing cash, maintaining gross margins and predicting profitability. Which challenge is weighing most heavily on your company now and how are you working to overcome it?

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We have always been pretty good at generating revenues. We find doing it profitably and predictably in the issue. Right now, predicting profitability and managing overhead costs are the real issues inside our company. We believe in designing measurements for everything we want to improve. Communicating those measurement and the objectives for the measurements allows everyone to understand where we need to go. We have just realigned the accountability organization chart and assigned top level managers to get our operational numbers and our financial-based numbers in true alignment. If there is a discrepancy, the managers are to track it, find it, and fix it. There are definite goals and timeframes for the process. As long as you know where you are, what direction your moving and at what speed, changing to get where you want to go should not be a difficult challenge. If you don’t know these things, there is no way to know what to do to get the desired results.

Verne Harnish has identified three major stumbling blocks for Fast Growth companies: inability of leadership to grow, inability of management and engineers to assemble systems and structures to handle new complexities and growth, inability of the company to position itself within a larger market containing harsh competitors and in-depth strategies. Has your company run up against any of these stumbling blocks? If so, how are you working to resolve the problem?

The development of the people to move from one league to another is a very difficult, time consuming and expensive process. I believe success lies in having the correct people who understand and are willing to continually learn, change and challenge the process. It is a work in progress with us.

What benefits have you reaped from identifying your company’s core principles early in the game and sticking close to those principles? What do you do to keep those core objectives at the forefront of your business strategies?

With core ideologies, you know how you should act and conduct business. It describes how we operate and what we stand for. This allows everyone in the company to know what to expect in almost any circumstance. We talk core ideologies on a regular basis, even tracking problems of day-to-day activities to small violations of our core ideologies. Even the production people’s ability to get pay increases is affected by their knowledge of principles, measurements, and goals.

Do your employees engage in a regular huddle session where they can exchange progress reports and questions? If so, what are the benefits and challenges of such a meeting?

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Yes, all employees meet within their areas once a week to discuss personal things, work related issues, and their “dollarized” measurements for their area. From that meeting they know how much their area contributed to the company in dollars for the previous week. Then we have a company-wide meeting on Tuesdays to report each groups numbers to the rest of the company. No one is required to attend but one person from each area must be there to answer any questions about their area. The numbers take about 30 minutes and then we discuss some business-related issue or have an education-type discussion on many business related issues. From this meeting the company wide numbers are distributed back out to all the division and facilities so everyone knows how the company is doing and what we need to improve.

Challenges are making sure the measurements are correct and accurate. Benefits are that everyone knows what is going on and with the education sessions can better understand the issues of the company at any given time. This gets more people concerned and working on the problems and celebrating the successes.

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