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DPI Client Interview
Lebanon Seaboard

	Kathy Bishop, CEO of Lebanon Seaboard

It could happen to any company. And it has. Consider what amazon.com is doing to its competitors. And what Canon did to Xerox. It could be the result of a new technology, an unexpected merger, or just a start-up with a new way of doing business. How do you prepare for such an event? And what can you do if it happens?

These are the very questions the management team at Lebanon Seaboard, a privately-held manufacturer of fertilizer and seeds, asked as they began the Stealth Competitor segment of DPI's Strategic Thinking Process. In developing a "stealth competitor" model, the stated goal is to create a competitor with the expressed intent of putting the company out of business. As Lebanon Seaboard's people began to construct their model, it was so compelling that they saw it as their future and immediately set about making it a reality.

"We saw a combination of things that absolutely could happen out there and that would be a major problem for us if it did," says Lebanon Seaboard CEO, Kathy Bishop. "The result was a very realistic Stealth Competitor option. We said, 'That's got to be us. We're the ones who need to do that before anyone else does, because it changes the rules totally, and that's where we want to be.' "

But that's the future. Let's start at the beginning.

Times were tough in the U.S. agricultural products business back in 1998 and weren't showing any signs of improving. This was a significant problem for Lebanon Seaboard, which had begun its life more than fifty years before as a supplier of fertilizer to farms in Pennsylvania. Along the way, the company branched out to supply fertilizer and seed to golf courses and landscapers. By 1998, the mix was about a fifty-fifty split between the declining farm division and the non-farm division.

"Our farm business wasn't very profitable," Bishop says. "It was struggling and had been for a long time. A lot of that had to do with the general state of agriculture in the U.S. It had become a commodity business, and we really needed to be much bigger to be successful. And even if we were successful, we'd be in a highly price-competitive business that wouldn't be growing. That's not the type of business I wanted to pour resources into.

"We were having constant internal conflicts–whether we were sales oriented, consumer oriented, or production oriented. We didn't know DPI's Driving Force terms yet but we knew what was wrong."
        – Kathy Bishop

Kathy Bishop made attempts to lead more strategically oriented discussions among the top managers, hoping to find a resolution to these entrenched disputes. But no common ground could be reached. So she decided to seek outside help in the form of DPI's Strategic Thinking Process.

"I have an MBA, and my area of concentration happens to be strategy," Bishop explains. "I've spent most of my career working with troubled companies in strategy formulation, so I think I know a little bit about it. I have also worked with management consultants and I have a very dim view of many of them. I can say that because I was one. I have a very clear understanding of how they're misused and what they can and cannot be used for. I hold a particularly dim view of strategy consultants. They're at the bottom of the heap. Outsiders simply can't understand the business well enough to tell management what they should do. They can't grasp the cultural underpinnings, the value systems, the historical context you have to operate in. Outsiders can get some of that if you're willing to pay to have them around long enough to learn from you. But it takes too long and costs too much to have them tell you what you already know. Their work usually goes on the shelf and gets ignored."

Not wishing to become mired in a lengthy and costly strategic planning project, she decided to look for a method that would enable Lebanon Seaboard's people to analyze the situation themselves and come up with their own solution.

"I knew we needed a different approach–to come at it from a different angle," she says. "I knew we needed someone to help sort this out, but I didn't want to lead it. We needed someone impartial. So reading Mike Robert's book Strategy Pure and Simple, I thought, 'That's it!' It was an approach that fit with the way we think and manage here. We had been involved in Deming's QIP principles and in self-directed work teams. I don't like 'flavor of the month' management fads. This seemed like sound business practice that would fit into the culture here. And the concepts of Driving Force and Areas of Excellence really intrigued me. I could see that the root of our problem was that we were unclear about these concepts. We were pursuing too many and none of these all at once."

A group of some twenty-five managers went through the Strategic Thinking Process under the guidance of a skilled DPI facilitator. The process enabled the group to look systematically at every crucial aspect of the business in order to construct a future strategic profile that would lead them forward.

A group of some twenty-five managers went through the Strategic Thinking Process under the guidance of a skilled DPI facilitator.

The non-farm side of the business was much more market driven, depending on differentiated products and marketing expertise.

"It was obvious in the first session with DPI that these two groups were incompatible because we were looking for synergies and there weren't any. We were looking for a common Driving Force. It was a struggle every time we tried to put the two together. There was no integration of production, sales, purchasing–no way to leverage anything from one group to the other.

"So in the midst of one of these sessions, the senior sales manager of the farm group said, 'You know, trying to force the farm group into this just doesn't work. There are no synergies. You ought to sell it.' Well, I almost fell off my chair! I was hoping that people would somehow see that it was something we should consider. But never in my wildest dreams did I think anyone would voice it in a room where half the people's jobs depended on that business. But the logic of the process made it that obvious."

In the end, the decision was made to sell the farm division, with the remaining business adopting a Customer Class Driving Force. The customers were defined as homeowners and professional landscape managers. But there was a problem. The company had no foundation for the Areas of Excellence–market research and customer loyalty– that a Customer-Class Driving Force demands.

"We had no skills in those areas. I mean none. We didn't even have anyone with a marketing title. We had never done any market research or really marketing of any kind. So all of the Critical Issues revolved around putting in place the structure that would allow us to develop these skill sets that would ultimately be those Areas of Excellence," says Bishop.

The company spent the next couple of years building the organization to support the Areas of Excellence and creating the new products that would enable them to grow in the landscaping and consumer categories.

But by 2003, new forces in the market were making the business tougher than ever. Consolidation between competitors, new EPA regulations and the growing importance of Home Depot, Lowe's and other category killers were making it nearly impossible to make money in the fertilizer and seed businesses.

"There was a time about two or three years ago when there wasn't a single, solitary large company in the industry that was profitable and had a positive tangible net worth. In twenty years I have never seen such a ruthless marketplace," says Bishop.

Time to revisit the Strategic Thinking Process to look for new ways to grow the business.

"I first wanted to do a selfcheck to make sure our Driving Force was right, that we're not fundamentally flawed. But we came to all the same conclusions we came to the first time through. We looked at our thinking carefully to make sure we weren't just getting 'group think.' We also came to realize that our Areas of Excellence weren't really excellent yet, so we knew we had to work on those some more."

Since the second run through the Strategic Thinking Process, the company is re-energized, moving full speed toward this new future.

Bishop declines to describe the new model in detail but says that it "changes the rules in a way we don't think our competitors can imitate because they're stuck in their rules of the game. It's difficult for the leaders in an industry to change. They have too much at stake."

Since the second run through the Strategic Thinking Process, the company is re-energized, moving full speed toward this new future.

"We came up with a totally different list of Critical Issues than the ones we had five years ago. We're doing what's necessary to make this new vision a reality. We're marching down that list ruthlessly. It's very action oriented. It's 'get those results and move on.' It amazes me how committed our people are to these objectives. My job is so much easier. I no longer have to convince and cajole. We're all in this together, keeping on schedule, keeping on track, continuing to push obstacles out of the way.

"After we finished the process I had a conversation with one of our managers that hadn't been through it the first time. I said, 'You have a sense of urgency about the Critical Issues, much more than I had been able to get from you. Why?' "

"That's what makes the DPI process so powerful. People come to own the conclusions because they helped construct them."
        – Kathy Bishop

He said, 'I understand it now. You can't understand this the same way if you don't go through the process.'

Says Bishop, "That's what makes this process so powerful. People come to own the conclusions because they helped construct them. You get buy-in from everybody that goes through this process. There's no two ways about that."

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