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DPI Client Interview
Neil McDonough, President, FLEXcon Inc.

	"It was obvious this was what we needed to help us understand our future direction."

$100,000,000. Eight zeros. For some of today’s mega-companies, a hundred million dollar year may not seem like a lot, but for Spencer, Massachusetts-based FLEXcon in 1986 it was an important milestone, one they had been working toward for thirty years.

As FLEXcon President Neil McDonough recalls, "My father started the company in 1956, and it took ten years to grow it to a million. It took another ten to grow it to ten million in 1975. So from that point we had it as a long-held goal to get to a hundred million and to do it in ten years. When we got there in 1986, the whole company gave a sigh of relief. There were celebrations and congratulations. But there was no sense of what we should do from there."

Then Director of Marketing, McDonough was looking for a way to create new goals for the company and a means to reach them. In other words he was looking for a way to develop a growth strategy to take FLEXcon to the next level, whatever that would be.

"I happened to read The Strategist CEO, Mike Robert’s second book," says McDonough. In it he read a description of the Strategic Thinking Process. He immediately recognized it as the means for FLEXcon’s management to leverage its knowledge and experience, creating its strategy together. He passed the book along to CEO Myles McDonough and then-President Mark Ungerer who agreed they should give it a try. "It was obvious this was what we needed to help us understand our future direction."

So they had Robert take his management through the process, and today McDonough sees it as a critical turning point in the company’s history.

In McDonough’s estimation, the company had been very strong from an operational standpoint, but lacked the future vision it needed. The Strategic Thinking Process changed that for good. "As a company," he says, "we always had a cultural sense of our strategy." We could describe ourselves as a pressure-sensitive films manufacturer. We had always done a pretty good job of declining opportunities that would drift us away from that. But we didn’t have a good sense of what we needed to do to grow our core strength.

"We were very department oriented. Although we had monthly staff meetings, they tended to be presentations from the departments, not about where we were going in the future. It became very difficult to do new things. Each idea had to be sold to the people who would implement it. But once we went through the Strategic Thinking Process any new ideas were in effect pre-sold. The result was that everything was easy to accomplish if it was part of what we said our strategy would be. Everybody was on-board, no explanations needed."

The Strategic Thinking Process enabled the management to agree on a Driving Force and a better definition of what FLEXcon would be and become. As McDonough describes it, "Deriving from the Strategic Thinking Process, our Driving Force is Technology/Know-How. Around here we talk more about the Know-How than the Technology because everybody thinks technology is high-tech. The Know-How is combining a customer’s applications needs with our coating and laminating and film selection know-how, or material development expertise, to make a product that works on that application. Given that as our core strength and our Driving Force, it leads us into so many different areas."

In the ensuing ten or so years, FLEXcon has charged ahead. Sales have swelled to over $350 million, a new plant has been added in Scotland to serve the European market, and products now range widely from labels for shampoo and wine bottles to membranes for touch pads, and holographic security indicia. Yet these products all stem from its agreed-upon Driving Force - its specialized know-how in the development of adhesive-backed materials. And Strategic Thinking as well as other DPI Critical Thinking Processes have become an important part of the culture.

"We didn't have a good sense of what we needed to do to grow our core strength."

As McDonough remembers it, "For the first three years or so after going through the Process, our way of applying it as a decision-making filter was not as formal as taking (which we’ve done since then) our Business Concept and turning it into a literal filter of yes/no answers to seven or eight questions. All we had to do was describe an opportunity in terms of what we had said in the Strategic Thinking session and make a decision based on that.

"Today when we’re evaluating each situation such as developing a new product, we’re looking at strategic fit and ease of implementation. To determine the strategic fit, we have taken our Business Concept, two paragraphs long, and turned it into eight simple yes or no questions, such as," Will this bring us closer to the customer? Will this allow us to fragment the market? Will we bring new materials to this application?

"It’s not a matter of right or wrong," he continues, "and you don’t have to have a perfect yes on every single one. It just gives you the tools to compare various alternatives. If you’ve got one with six yesses and two no’s, and another one with two yesses and six no’s, it doesn’t take a genius to know which one to pick.

"It also forces people to ask those questions, and it opens up the idea to challenges. It enables us to say not just whether it will bring us closer to the customer, for example, but how. It puts all those issues on the table. It takes the idea beyond someone’s opinion and allows open questioning."

McDonough also recognizes that even the best strategy needs to be evaluated on a regular basis. He feels that the right timeframe for his business in its particular environment is six years for a complete review of the Strategic Thinking Process, with a "quick gut check" every three years.

FLEXcon management has even done the ST Process from the standpoint of its competitors. "Craig Bowers (a DPI partner) helped us through that. By putting ourselves in our competitors’ shoes, we got a much better understanding of how they may react to any given situation. They have different strategies and different Driving Forces than ours.

"We’ve gone through the full-blown process three times, with different numbers of people. These sessions haven’t led to any changes of direction."

"The real value in revisiting the strategy on a regular basis is not in changing direction, but in getting our Business Concept more and more refined, understanding our situation better, and developing the list of Critical Issues to bring us closer to that vision that we’ve got for our future," McDonough states.

Critical Issues, in the parlance of DPI’s process, are initiatives that must be accomplished for the strategy to succeed. Having a strategy is one thing, getting it done is another. The disciplined management of these Critical Issues drives the deployment of a successful strategy.

Ask Neil McDonough what the Critical Issues are, and he knows them off the top of his head. So do his key managers. "The Critical Issues are blended into our monthly staff meeting," he explains. "Each is broken out into small assignments. Each has a Key Champion responsible for it. It’s never been a problem of people neglecting those issues because these people are all part of coming up with the agreement that those are the key issues."

Critical Thinking Processes - Part of the FLEXcon Fabric

"If you're going to tackle complex issues, you've got to embed these concepts in your company's culture."

The company also uses DPI’s Strategic Product Innovation process to direct the use of its new product development resources. Most companies use SPI to continuously search out and evaluate new products, customers and markets. But FLEXcon uses the process somewhat differently because its customers supply a steady stream of new ideas for products. FLEXcon, therefore, uses the SPI process as a strategic filter to evaluate these many opportunities.

As McDonough explains, "Most of our product developments aren’t thought up in the lab. They’re actually thought up by the customer. We want to respond quickly, and our previous processes were flawed in that they created obstacles to getting things approved and implemented. Now people can quickly evaluate Strategic Fit, Ease of Implementation, Cost/Benefit, and everybody has the right, if not the obligation, to get working on the project. Approvals now may come as disapprovals and they’re usually done by the people involved. They have the tools to evaluate the criteria themselves and can then get access to resources to pursue the project.

"New products are the lifeblood of our company. We put this process into place about eighteen months ago. And after eighteen months 30% of our sales come from new products. We started with a goal of 30% in three years. Obviously, we blew that away. Through the first four months of this year, we came up with 179 products, using combinations of materials we had never made before. We made and sold them. So this has been very successful for us!"

Driving Future Growth

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