Capitalism at Its Best

Change the Game™ Podcast

Transitioning to Open-Book Management from Top-Down

Posted by Rob Shear on Apr 6, 2021 11:00:00 AM

Rob Shear, General Manager of SRC Lexington, shares his West Point background and how he made the shift from top-down management to being the leader of a Great Game of Business championship company.

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Rob Shear Header 4-6-21

 

 

Episode with guest: Rob Shear

General Manager of SRC Lexington

(This episode was recorded in March of 2021.)

 

Key Episode Take-Aways:

1. Sharing the wealth with people in the company is something that most would be open to if they understood it. (click to jump to this topic below)  And I think, you know, most people would not be against the concept of sharing the wealth with people, with employees. I mean, I think that's something that sounds good. But when you get into it, it's so much harder and more complicated to do, especially if the culture of the company that you're trying to change is one of, you know, sort of traditional management. And, you know, you ask about the challenges, I think we just didn't know what we didn't know

2. If the company does well, people start to see that everyone does well. (click to jump to this topic below)  You know, we paid bonuses quite a bit, the first couple of years. And I think that was something that people started to see that, hey, if we do well, everybody does well.

3. Scheduling time away from your business to work on your business is important. (click to jump to this topic below)  Every quarter we will go off site and we will take the time to focus on the strategy and long-term planning for the business, so four times a year, two days, and I think it's so important to take that time, away from the business to work on the business. And, you know, work on that stuff. And so, what we've developed that into is, you know, we've got it, we've got a strategy. You know, we've got, you know, strategic anchors that these are the three or four things that are going to distinguish us from the competition.  

 

Continue scrolling to read the full episode transcription.


Announcer 0:03

The "Change the Game" Podcast is sponsored by Prairie Capital Advisors, helping businesses think forward. For more information, visit prairiecap.com/ggob. That's prairiecap.com/ggob.

Announcer 0:24

Welcome to the "Change the Game" Podcast, where we share stories of open-book management and highlight capitalism at its best. Thank you for tuning in to this episode of the "Change the Game" Podcast. In this episode, Rich and Steve talked to Rob Shear from SRC Lexington about his West Point background and how he made the shift from top-down management to being the leader of a Great Game of Business championship company. Here's your hosts Rich Armstrong and Steve Baker. 

Steve Baker 0:55   

Welcome to the "Change the Game" Podcast where we are changing the game by doing business differently and highlighting stories of capitalism at its best. I'm Steve Baker, and with me as always is Rich Armstrong, president of the Great Game of Business and co-author of our new book Get in the Game: How to Create Rapid Financial Results and Lasting Cultural Change. Hello, Rich. 

Rich Armstrong 1:17   

Good morning, Steve. How are you? 

Steve Baker 1:20   

Excellent. We are really going to have fun. Today we are privileged to have a really special guest with us today. Rob Shear who is our general manager at SRC of Lexington. Rob, normally we do a big introduction. But we thought we'd ask some questions because you have such an interesting background. How are you doing today? 

Rob Shear  1:39   

Good doing well, Steve. Thanks. 

Steve Baker  1:41   

Awesome. Well, let me start by doing something a little uncomfortable. Because I don't know if veterans like this or not. But you you're a graduate of West Point and an army veteran, you are a tank commander as I understand it. And so, if I say thank you for your service, is that received appropriately?  

Rob Shear  1:59   

Sure. 

Steve Baker  1:59   

 Yeah. Okay. Yeah. Yeah, for sure. What a crazy background to the now being remanufacturing. I mean, I'm just trying to put those things together. How did your experience in the army, in the military in general shape your career? 

Rob Shear  2:14   

I mean, I think, you know, going to, to West Point, I think the biggest thing that probably helped me with is having discipline, having, you know, self-discipline, because it's, it's so regimented there, but you know, you got to, to push yourself. And so, I mean, I think having that self-discipline is helpful in business. And in the job that I'm in now, you know, even before my company was bought by SRC, in 2009, we, I was always here in kind of a remote location, to where I don't, I didn't have a manager over me here, and my location, so we're 550 miles from Springfield. So, you know, my boss is there, and I'm, you know, I'm here. And I think, you know, you got to have a lot of self-discipline be self-motivated, because I don't have peers or a boss here. And I think that self-discipline, from the military, and from West Point, helped me, the other thing I think it helps with was, when you go to West Point, you know, everybody there is good at something good athlete, good students, maybe, you know, do a lot of activities in school, but everybody who goes there, fails at something and probably fails miserably. And I mean, I had several experiences of that, where I went to West Point, and I was probably my best area was I was a good student there. And, but, you know, like, we you had to play sports and you had to do intramurals and, you know, they had something there where you have to box if you're if you're a male, you have to box the feet, you know, the women do self-defense. But, man, I don't know how I made through that. You know, I mean, I just remember leaving the gym every day. You know, like, my nose hurt in my mouth tasted like leather from getting, you know, punched so much. And, you know, I mean, I think it this job that I've had here, we've had a lot of setbacks, and I think you just got to be resilient. And I think that that, you know, that everybody tasting failure, it helps with that. 

Steve Baker  4:35   

Oh, for sure. Well, I love that idea of self-discipline, because I had to learn that on my own because I went to art school and it was quite the opposite. It was like, Well, I have a noon class. I'm not getting up that early. And so, you finished up your military obligation and you went on to get an MBA at the Kellogg School of Management at Northwestern. And then you went to work For Komatsu in remanufacturing What was that transition like? 

Rob Shear  5:07   

So, I, when I went to get my MBA, I actually worked while I was doing that. So, I worked for a company called Cardinal Health up there in Chicago, would go to school at night. And there was a guy that I went to school with, from my first class, we really kind of hit it off, he worked for Komatsu. And he was a guy that worked in their corporate office up there in the Chicago area. And we spent three, two and a half years in groups together. You know, it's very collaborative at Kellogg. And there's a lot of group work. And we would work together on these groups. And it's funny because a couple of the other guys in our group were Caterpillar guys and caterpillars, Komatsu's big competitor, and we just, just the four of us, just had a lot of camaraderie. And he was always trying to get me to come work at a Komatsu. And he had these crazy ideas of how he was going to get me in there to you know, this job or that job. He had an idea that we were going to go, and we were going to buy a Komatsu distributorship together. And I was like, You're crazy. And then finally, they had a job that it you know, after a couple years, he's like, hey, this job is coming open down in Lexington, Kentucky, to run this factory, and it's a remanufacturing plant. And so, you know, I didn't really do a formal interview he introduced he, you know, the guy that I'd be reporting to was also his boss. And they offered me the job. And, you know, I didn't really know what I was getting into, because remanufacturing it's so different. It's such a different business. But in 2003, after I finished my MBA, you know, I switched jobs and came to work for Komatsu and came down here. 

Rich Armstrong 6:55   

Great, great. Well, hi, Rob, and I'm so glad you could join us that things seem to be going really well with Komatsu until sometime in early 2009. And can you take us through what transpired then and how you were introduced to SRC? 

Rob Shear 7:13   

Sure. So, I joined Komatsu in 2003. And then we did some benchmarking with SRC in 2004 2005. I mean, I actually took my whole factory there in groups in 2007, we actually drove, you know, groups of 20 or 30 people out to see SRC, because we found out that SRC was really the benchmark in terms of remanufacturing. And we wanted to improve so we knew SRC, and then they knew us a little bit. The guy that I ended up working for 11 years, Ron Winn, I met him in 2004. At his factory, John Deere Reman the region factory. And so, he and I knew each other a little bit prior. And so, in 2008, the economy started to turn down and throughout the fall, you know, things were not looking good. And at the same time, Komatsu, you know, the corporate Komatsu Limited in Japan started looking at the reorganization of remanufacturing. And they had a factory in Indonesia that they wanted to direct more volume to, well, the volume there was going down, it was going down throughout the world. And so, they started looking at whether it would be beneficial to shut a bunch of the remand factories in different parts of the world. So, they did a study, and I was I was part of that. And, you know, I argued that hey, look, you need to keep this factory going. You need it, it's different than other things. And they really had their mind set on closing this factory. So, in February of 09, they made that decision. You know, we started making plans. And another guy who worked at Komatsu mentioned to me said look, we should call SRC and see if they would buy the business. And I didn't have any thought at that time that SRC would buy it and continue to operate it. I thought that they would shut it down and then move the assets to Springfield. And so, we flew out in March of 2009 to meet with Jack Stack. And you know, Jack, his concept of this was different than ours, it was like, you know, you're coming to us for help. So, you could keep your factory going. And I just never had the thought that they would consider that and that's, that's what they that's what we worked on. You know, kind of working out with them over the next six months a deal for them to buy the factory, continue to operate it and you know, SRC’s values were just so different than Komatsu was one of the main purposes of them buying factory was to save some of our jobs. And I think they felt an affinity to Komatsu because the Komatsu in the United States had been International Harvester at one time, and of course, SRC bought the factory that they had from, from my age. So, you know, it just worked out, you know, really well for us. 

Rich Armstrong 10:31   

You mentioned the value differences, once the acquisition or the purchase was made, that transition of that culture, the SRC culture into what you had, you had there at Komatsu. What were some of the biggest concerns where were some of the things you had to overcome in that transition? 

Rob Shear 10:53   

Right. So, yeah. So obviously, Komatsu, you know, that they exist to make money and for their shareholders, and, you know, even in Japan, I think there's a little bit more of a stakeholder capitalism than in the United States. But Komatsu really looks to protect its factories in Japan. And, you know, they, the, the value is not, hey, you know, like, in Japan, if the factory was down, they would keep those people working. And in the United States, it's not so much it's more the way Komatsu runs it here is, look, if we have to close a factory, we have to close a factory. And so that was really a foreign concept, to Komatsu. And, you know, some of us had read the Great Game of Business.

1. Sharing the wealth with people in the company is something that most would be open to if they understood it.

And I think, you know, most people would not be against the concept of sharing the wealth with people, with employees. I mean, I think that's something that sounds good. But when you get into it, it's so much harder and more complicated to do, especially if the culture of the company that you're trying to change is one of, you know, sort of traditional management. And, you know, you ask about the challenges, I think we just didn't know what we didn't know, when we became part of SRC. And, you know, just a quick story, of course, Rich, you remember this, but Rich came to Lexington, almost as soon as we became part of SRC, and SRC didn't parachute, some big implementation team into Lexington, because that's just not how we work. The expectation was that the team here would implement the Great Game. And Rich essentially came to us and said, Hey, I'm here to help. You know, but, you know, Rich helped set up our huddle boards. And we started having huddles almost right away. So, you know, I mean, I think the biggest thing was probably we didn't know what we didn't know, you know, in terms of becoming a part of SRC. 

Rich Armstrong 13:08   

It is interesting, is that it you Did you see that there was a different style that you used in managing your entire workforce? I mean, you had kind of that. And I don't know if it was like this, I mean, was it more of a top-down kind of command-and-control environment and that kind of environment that you went to a transparent environment with Great Game? And what, like, not only for you, yourself, but you know, your rest of your leadership team making that transition? 

Rob Shear 13:37   

Right. It's a hard transition, because like I said, you know, most people, if you explain the concept to them, they wouldn't be against it. But a lot of managers have a difficult time making that transition. And I know I did. You know, I liked the idea of the transparency and started having huddles right away. We did, I think we did a pretty good job of educating people from a financial literacy standpoint, but I don't think we got how you get employees involved in helping to manage the business. So, you know, quick story, we were SRC sent an HR manager over here, that was on my staff for a period of time. And we're, you know, we're all there in a meeting, and he's talking to us, and, you know, he was talking about something and then one of the employees, one of our employees said, when do we start voting on everything? And, you know, so the employee's idea of how they're involved in our idea of how you involve people was just not a concept that we, understood, and I would argue that, you know, it was a long transition for us from 2009 to where we are today, and we probably really didn't start to get it for about five or six years. I mean, we did, you know, we did some good things. You know, the huddles, I think we're good, but I think people here got frustrated. Because they, you know, we had the idea of the employee engagement and involvement, but we just probably didn't do a very good job of getting people involved and didn't know how to do that. 

Steve Baker 15:13   

So, I liked that you point that out. I mean, it wasn't like all doves and rainbows as Jack says, you know, there was work there. And obviously, your discipline came into play. I really like the fact that you went from the command-and-control structure of the army to the command control structure of Komatsu to this open-book thing, and now we're, you know, quote unquote, voting on things? Of course, you were. But I don't want to, you know, when you started to see a transformation, what can you talk about some of those wins? They weren't, like, immediate, but what were some of the key points that helped turn things around? 

Rob Shear 15:52   

Right. I think that, for the first few years, we did well as a business.

2. If the company does well, people start to see that everyone does well.

You know, we paid bonuses quite a bit, the first couple of years. And I think that was something that people started to see that, hey, if we do well, everybody does well. You know, we gave our first Aesop certificates after a period of time. And you know, it was kind of a slow burn over time that people some of the people that joined here in 2009 now have well into the six figures in their ESOP's and those people are huge believers. Now, I think a big turning point was probably in 2015. We were having terrible morale problems. Here we were. We were doing an expansion. We were renovating our offices. So, we had people who were normally in the offices all scattered throughout the factory, sitting at desks everywhere. We were renovating our dyno; our engine test cells. And you know, it's a lot of change. And we were trying to make the transition to where we were not just going to supply Komatsu, we were going to sell product to other customers. And so, people weren't happy. I mean, I had a rebellion brewing within the company, I had some of the managers on my team, my own team, who were kind of in, you know, anybody out there can attest to there's politics in the workplace. But I had a lot of politics on my team. And, you know, I had a conversation with my boss, and he said, Look, you know, Jack is really concerned about this. And, of course, we do employee surveys, and people can make anonymous comments, he'd read some of those. And he said, Look, Jack is going to come down, we're going to come down. And, you know, if we're in a huddle, and somebody mouths off, you know, Jack might just fire him right there on the spot. And I was like, wow, I mean, that's, that's powerful. That's crazy. And, you know, I was thinking, Well, yeah, you know, get it, Jack. And then I thought to myself, he's coming down here, because I'm not doing my job. And you know, because we don't have things trade here ourselves. And that was a moment for me, where I realized that I am responsible for the culture here. And that I'm responsible for who is on my team who reports to me. And over the next couple of days, I'm somebody that has not always been the best at dealing with people problems for people that report to me, I tend to put things off and not deal with them. And I'm sure some people out there can probably identify with that. But, you know, I, over the next couple of years, I got those people off my team. It's like, Look, if you don't want to come along, you know, you don't have to work here. And we built a team that is cohesive and is ready to, you know, have the culture that we want to have. And I said to myself at that time, like, I am the one person in this factory, who has 100% control over my working environment. And my you know, kind of well-being because I control who works here, I control what the culture is here. So, you know, really, I decided, like, I'm in charge of the culture, I'm in charge of the strategy, I'm going to focus on those things. And then I would say that that point was probably it was a turning point for me personally, 

Steve Baker 19:29   

that's interesting. Let's, I want to dig into that a little bit Rich, so I like how you just took it from. Here's the business, Rob. And then there's the ROB Rob, and you kind of found a way to synthesize those or somehow integrate them, which I think is really interesting because a lot of people listening are leaders at all levels of organizations, and they're going you know, this work life thing that we talk about may not exist. It's just a kind of a flow between it was obvious challenge, you know, for you to do that in 2015. But was it a challenge for you overall, to go from a command-and-control background to the Great Game? You know, what was it like, personally, for you in making that transition?

Rob Shear 20:15   

I think once I really, really understood what it meant to engage people and get them involved, I think the more comfortable I've become with that over time, and I think, you know, you guys wrote the Get in the Game book. If I had that book, then if we had the level of training and development that we have for leaders at SRC, then we have now, and I think we just got better and better. I mean, I don't think it was bad, then I think it just, it's so much better. Now. If we'd had it, then I think I would have understood sooner. What it is to get people involved. And it's not that important, you know, you've got, you know, but like, I think, Steve, you and I have talked about Holacracy, before where you don't have any leaders, the employees are just running the business, that's not what it is. But you've put mechanisms in place to get input from people, and then you have to show them that you're going to take that input and do something with it. And then the leadership still manages the company, still sets the strategy. But you know, you take that input, and then maybe the people that are out there, they don't know what they need to know, you got to go out and educate them about the business. And you got to take that input. And you know, the people, they do the job every day, they have valuable input to give, and you got to do something with it. So, it doesn't mean that you've got to do what everybody wants you to do all the time. It's not that but you need to listen to people. 

Steve Baker 21:51   

Awesome. 

Rich Armstrong 21:52   

I think it's interesting. Rob, you bring up the point about, you know, what focus we have to do in terms of building up the leaders and, you know, back when SRC acquired Komatsu, that factory, that there wasn't a lot of that going on, right. So, we were making assumptions a lot within our company that I think a lot of companies struggle with, as they grow, is that, hey, the culture is just the culture come in, and you'll see it in and experience it, and it will just take hold naturally. But that's not the case. And you're one of those, you know, acquisition, especially being an acquisition, that's clear in Kentucky, that, you didn't have an opportunity just to have a mix of SRC folks that were used to that culture in your culture, you had to completely transition in. So, I think you had to be intentional about it. And one of the things that I saw you guys do to make it intentional, is that you wanted to define the culture. So, you had to set your values, right, you had to say these are the values these are this is what we, this is how we will define the culture. And if people don't fit, they don't fit, but we're going to work toward getting people to, understand what we really want the organization to feel like and look like, can you talk about that process? If that was transferred, formative in terms of you know, building your culture there? 

Rob Shear 23:19   

Right. Yeah, I think one of the great things about the, the Great Game is that, you know, you can really adapt it in a lot of different ways. You know, it's a philosophy, but we felt like we needed more than just that. So, when we did, we define like a core purpose, like, why are we here? And core values, our core purpose is to make a better life for our employees. And you know, to me that it means more than just, and somebody said it we had our off-site the other day. It's not a big ESOP. That's not it. I mean, I want everybody to have equity and then to retire with big ESOP, that you can have. I mean, I knew an ESOP company in Chicago when I was up there. And they didn't do any education. And the ESOP wasn't I didn't even know what an ESOP was, but it sounded like the people that had a lot were very entitled. And so, you have to work your culture beyond just providing a stake in the outcome. So, making a better life is we want people to have good pay benefits, all those kinds of things. But we want to have the kind of culture that we want to have and people to, you know, really like being here and being engaged. And then we set some core values we looked at the employees here that were really it the people that everybody looks to and says that is an awesome employee, I'd like to clone that person. And that we use that to help develop our core values. So, win win, Gotta Wanna, and humble pro and everybody knows Gotta Wanna, and I mean, I don't think I have to explain that but like, you don't want somebody that you have to prod. You'd want somebody you have to hold them back. Right. And then win win, you know, one of our big things is customer partnerships and relationships, we want people that are not going to look at things as a zero-sum game and try to grind the other person or other group in the ground. So, we work with that way with each other here. We work that way with our suppliers and with our customers because it fits our business. And then humble Pro, you know, like a humble professional. And, you know, you look at the person, the employee who is like the quiet person who just does their job, and they're like, really good at it. And if somebody needs help, they'll help them. So, like a sports analogy would be, you know, you think about the wide receiver who at the press conference, he's like, Look, if the quarterback was hitting me in the numbers, every time I'll be getting a lot of catches and scoring a lot of touchdowns. And then never taking responsibility for what they do. It's not that person. So, I say to people, I'm like, we want Tebow, but not T.O, right. Terrell Owens who was always kind of like a cocky guy. So, I apologize if you're a T.O fan out there. Or if you think Tebow, Tim Tebow's obnoxious, but he's a humble Pro. Like, he was great at what he did. And you know, of course, he, you know, a Christian, he gave all the credit to God, but I mean, he's a very humble person. And that's the kind of person that we want here. And we've, you know, during the, you know, during the pandemic, you know, we, had some choices we had to make, and we decided we were not going to lay people off because we didn't have work here. And it was really harrowing. And at the end of we did, we did a furlough for a while we did something to where the people furloughed could take advantage of the pandemic unemployment and get their full pay while they were off. And then when we brought everybody back, there was a lot of consternation that people had about are we going to have to short people's hours, we didn't want to do that. But we made the decision, we were going to bring people back, we were going to find work for them, even if we didn't have enough work. And, you know, we decided to not bring three people back from the furlough, because they weren't culture fits here. And one of those people, when they left to go on the furlough, the people in the department were really rude. They were like, man, we were so relieved that that person is gone for three months. And I said to myself, I was like, then why would we bring them back? And, you know, so we would, if they have been a fit, we would have brought them back. And we would have said, Hey, we'll find work for these people. But I think you've got to say that you're willing to hire and fire for values. 

Steve Baker 27:51   

That goes back to what you said earlier, Rob, about taking ownership of your culture. I mean, that's a tough decision that had to be made, but it made the culture better and stronger. I love it. 

Rob Shear 28:00   

Right. And we made the distinction. You know, I had a comment on a survey case, or like recently, about Well, you did you said you didn't lay anybody off, but you did. And, you know, it's hard to make that distinction. But, you know, I mean, we brought, you know, 45 people back and then these three, we didn't just because the culture is really important to us here, you know?  

Steve Baker 28:26   

Yeah. 

Rich Armstrong 28:27   

Rob, while we have you here on the podcast, you are one of the leaders within SRC, that's really has embraced high involvement planning, and the ownership around strategy for your business unit. And that's, a practice of the Great Game of Business that many companies don't get to write, but it can be a big part of the sustainability of the Great Game, and I was curious, just to talk about that in your process a bit and how that's evolved. 

Rob Shear 29:04   

Sure. So, um, you know, Rich, you know, you and I started kind of working on this in 2016. You know, of course, we've always done the annual cycle of sales and marketing, business planning that kind of thing. And, you know, you came to me in 2016 and said, hey, I've got this, you know, this process that I want to try out and, you know, we started working on it basically, like it's a playbook and it's in you know, get the game and, uh, you guys work with your clients on this now. But you started coming to Lexington every three months, we would do essentially a two-day meeting with the leadership and you would facilitate it and, or we would, you know, maybe we would go off site and we started working on the strategy. And, you know, you at some point I took that over, I've facilitated myself, but we've continued that so

3. Scheduling time away from your business to work on your business is important.

every quarter we will go off site and we will take the time to focus on the strategy and long-term planning for the business, so four times a year, two days, and I think it's so important to take that time, away from the business to work on the business. And, you know, work on that stuff. And so, what we've developed that into is, you know, we've got it, we've got a strategy. You know, we've got, you know, strategic anchors that these are the three or four things that are going to distinguish us from the competition, to where if we do these things, and these combinations of things, then we're not going to have to be the low-price alternative, we can charge more for our service because people value it. And so that's really what we've what we've worked on over time. And, and I think it's had a flywheel effect, it started to sustain itself. And, and I mean, I just, believe in it, you know, 

Steve Baker 30:56   

that's the magic is to keep it going. Right systems Outlast people. And we want this thing to last a long, long time. So, man, it's been fun talking with you. I wish we had even more time. But we do have a final question for you. We always like to wrap up these podcasts by asking the one kind of Oprah question, what should we be asking you that we haven't? 

Rob Shear 31:22   

Um, you know, I mean, I think what's the, you know, what's the key to success? If you're a company that hasn't been had this culture and you want to get it? And I think, you know, the, the answer to that is probably, you know, if I could go back in time, you know, I would get a coach. You know, if I had the Get in the Game methodology I would have, I would have read that book, because the Great Game of Business is a great story. But what I think you guys have written is that this is the How to, these are the steps. These are the nuts and bolts. And so, you know, get a coach and, you know, read the book, and I mean, you know, obviously, you got to buy into it if you're the top leadership. But that's what I would say. 

Steve Baker 32:09   

Awesome. Well, it's been a real pleasure, Rob. Thanks for being with us, Rob. Shear SRC of Lexington. 

Rob Shear 32:17   

Thanks, guys. 

Rich Armstrong 32:18   

Thank you, Rob. 

Steve Baker 32:20   

Well, folks, let's keep the conversation going. Be sure to send us your questions, your stories, your best practices, your ideas, challenges, and victories. And remember, you are not alone. The global Great Game of Business community is one of the most sharing there is on the planet. And that is capitalism at its best. Thanks for joining us, and we'll see you next time. 

Announcer 32:42   

The "Change the Game" Podcast is produced by the Great Game of Business To learn more, visit greatgame.com. 

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Topics: Company Culture, Leadership, Manufacturing, Transparency, business planning

About The Podcast

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Hosted by Rich Armstrong and Steve Baker the Change the Game podcast highlights true life stories of organizations influencing positive change by doing business differently. They’re teaching people how business works and closing the gap between the haves and have-nots. It’s capitalism at its best. Inside each episode, you’ll discover stories of entrepreneurs who are Changing the Game.

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