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12 FEBRUARY 2011
Lessons from a 160-year-old start-up
by Deborah Mills-Scofield
Can an old company learn new tricks? Deborah Mills-Scofield found that, with the right kind of management, it can be as vital and entrepreneurial as a new company just entering the marketplace.

In 2005, Menasha Packaging Company (MPC) in Neenah, Wisconsin – part of the $1 billion, 160-year-old Menasha Corporation – was not doing well. As the largest, and original, business in Menasha Corporation, it was a niche player in a commodity-based market without the economies of scale and scope to compete with the ‘big guys’.

Team leader and family member, Mike Waite, did the unthinkable: he and his new leadership team embarked on the creation of a plan (what some called a ‘blue ocean’ vision) to move the company away from commodities toward value-based products and services.

A bet-your-career proposition

The planning process to achieve this began in 2005 by looking at the world around the company – market trends, current business lines, existing customers (and their customers’ customers). One of the critical data-gathering activities was interviewing customers to understand their issues and concerns; this created a relationship between MPC and its customers. Waite, its president, and others met with customers (current, prospect, and even lost customers) to attune the new MPC to the ‘voice of the customer’. In short order, this closer-than-ever relationship with customers allowed MPC to evolve products and services that were innovative – and in demand.

The result was a ‘bet-your-career’ plan, but the team felt they had no other choice. It focussed on their people, their products and their processes. MPC’s management specifically targeted three areas that could result in increased value to their customers, their employees and shareholders. It was the ‘and’ path – focusing on employee advantage and customer advantage (which go hand-in-hand).

The gamble paid off. While the bigger integrated firms had been dismissing them, MPC became a formidable competitor. Instead of just taking market share, it created new solutions in new markets. Profits in the year 2008, despite the severe recession, were tremendous for MPC. Their new product and service offerings not only helped them weather, but grow, through the economic crisis. In fact, 2009, was another growth year; and the company is expecting profits in the double digits in 2010.

There’s much to be learned from the path MPC’s managers followed. But, at the heart of their efforts was a new way to manage the people who worked inside MPC.

Total accountability

The first cultural change Waite and his top team undertook was to build trust between leadership and employees. To do so, the entire management team signed a letter to all employees stating that they were holding themselves accountable to the plan, the new mission, and the values of the company and inviting all employees to hold them accountable as well. Yet, in truth, everyone had to be accountable – and that required a new culture inside MPC with a new level of trust.

Amazingly, this cultural transformation of trust happened within the first 18 months of the transition. The two overarching challenges Waite and his management team faced were (1) gaining and keeping employees’ trust, and (2) creating an innovative culture. To accomplish this, MPC’s human resource leaders translated the goals, strategies and tactics from top-to-bottom so everyone, including foremen or machine pressmen, understood the goal and what role they played in the company’s growth. To reinforce the new culture, communications through videos, quarterly reports, newsletters, emails and other communication efforts showcased employees’ autonomy and problem-solving skills.

But the lasting value is in having created an innovative culture. Leadership, at all levels, was ‘walking the talk’ on safety and committing the required resources (workers, time and finances), while also insisting on a lean business model. But management showed it cared about employee health and welfare: unequivocally connecting work demands and deadlines to safety concerns (as opposed to pure cost-cutting) built employees’ trust in leadership. Leadership could now push forward with innovation.

MPC granted each facility a high level of autonomy from corporate interference and thus unleashed an entrepreneurial culture. Employees were suddenly finding ways to improve operations, cross-functional teams formed, and customers came up with solutions for retailers. Employees were rewarded for taking charge and making a difference. Leadership stepped in only to help eliminate or reduce challenges and make opportunities available.

Total success

As mentioned, all of this proved successful and augurs well for the future of the company. The tangible benefits to MPC include increased market share, revenues, profits and return on investment (ROI) numbers both before and during the recession. Before the recession, the company’s return on net assets increased consistently by seven per cent – and even up to 17 per cent on higher non-commodity products and services. During the recession, sales increased by significant double digits due to capitalising on 2008’s investments and facility alignments. Retail and the consumer product goods (CPG) market sales increased in the down market. Gross margins were the highest they’d been in five years. MPC is now a market leader, and many customers view them as a vital part of the merchandising process.

The intangibles, however, are more powerful. As you walk into various facilities, you can feel the energy; people in the plants smile and quickly say “Hi!”; workers and managers are laughing and helping each other out. MPC is now a ‘cool’ place to work; attracting and retaining workers is easier. Employees actively test ideas – some work, some don’t – and that’s okay. The packaging company is investing in training, education and equipment to allow its people to try new ways of working, easier ways to make products and new ways to put things together.

Lessons learned

It’s all about people.
MPC expects all of its people, at all levels, to live the core values – they are not mere words or platitudes; they are real and they make a difference.

The real risk is the status quo.
Succumbing to the traditional view – the way things have always been done – is often the path to demise, not growth. Few companies recognise the status quo as the real risk; they should.

The biggest inhibitor to success (and innovation) is complacency after initial success.
By continually challenging each other and employees, by sharing what is happening in the market now, MPC keeps its edge and avoids complacency.

Know your customers and their customers, better than they know themselves.
One of MPC’s competencies is understanding the job that its customers are hiring the company to do for them and being able to translate that into solutions that create real value for MPC’s customers and their customers’ customers.

If you don’t execute, don’t plan.
Hold people accountable: integrate the plan with people’s daily work and communicate why it matters and how they can make a difference by bringing the plan to life. MPC is a role model for executing great plans. While MPC’s managers will tell you there is still room for improvement, just look at their bottom line.

Deborah Mills-Scofield (www.mills-scofield.com) operates a management consultancy in Oberlin, Ohio. Her work is featured on our Management Information eXchange (www.managementexchange.com/users/ahc3wpgttl).
Source:

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