- You Built NCC With the End in Mind First, Tell Us About Your Vision
- The Basics of ESOP (Employee Stock Ownership Plan)
- Tell Us About GGOB (Great Game of Business)
- Can You Implement ESOP & GGOB at the Same Time?
- How Do You Balance Growth, and the Company’s Ability to Manage It?
- What Was The Moment Your Team Really Got ESOP?
- WATCH THE FULL INTERVIEW
Kathy: You also mentioned that similar to me you took a look at what you wanted to build. Visioning, thinking about the business with the end in mind first. So talk to us about that.
Kevin: Yeah, that gets deep pretty quickly and we can go there. It’s like what is my actual purpose, what am I trying to do? I’m kind of a planner so I like to look forward and say okay let’s get there. Believe it or not I might have been early with learning that and didn’t know it at the time. I remember coaching a football team, Kyle's team (my son) and that group of kids. I remember the first page of the playbook I wrote, “man these guys hit!” When I met with the football team I said “you guys know why I wrote that?” Lots of ideas, but none were actually right. What I wanted was coaches to come to me after the game and say “man, those guys hit!” That’s what I wanted! It kind of sets your mind if you think about where you want to get you make tiny, little adjustments along the way in that direction. I think if you begin with the end in mind, then it’s easier to figure out how to get there. So, in that stage of my career whenever it was, I didn't describe the timeframe very well, but in that stage in my career it was like okay, where do you actually go? Are you happy with this as it is, do you want to just keep it where it is? Do you want to sell it? Do you want to retire, do you want to go fishing (maybe!)? Do you want to do something different and you get all tangled up in that. It’s like why is the sky blue, what is my purpose, what is happiness type question? I’ll never forget in college, we had like one minute left in class in philosophy and this kid says “I have one more question, but what IS life?” I was like “there is one minute left in class!” Anyway, it was one of those types of questions and it took me a while to get there but I think everybody in the world has this goal that they want to make a difference right? So, I realized I wanted to make a positive difference. It’s so simple but it took me so long to get there. Once I realized that, I realized that while I have this great mechnizim, this great tool in order to do that, and let’s page NCC about that. Let’s make that THE purpose of NCC; to create a positive impact on our employees lives, our customers, on our vendors, on our team because frankly it’s the only tool that I have. So that’s what became kind of the goal of NCC.
Kathy: You talked a little bit about the decision to become an employee owned or ESOP business, so tell us a little bit about “why” and the “how” around ESOP. And was that the first step before changing GGOB and EOS?
Kevin: So an employee owned company is essentially, I mean you can make this description as simple as you want or as complex. So obviously I’ll go for simple! First of all, from an employee perspective lets just talk about that. If you're an employee in an employee owned company, it's amazingly simple. You work there, you accumulate shares; there's different ways and different values of those shares. As you accumulate shares, there is a value to each share. When you retire, you get the shares in cash value. So, basically, it’s flat out, it's an additional benefit. You work there, you accumulate shares, the longer you work there the more stares you get. The better the company does, the more the shares are worth. And that’s one of the keys, right? It’s one of the keys for both making it an ownership culture so people feel like they have a stake in the outcome. And also giving people a real “thing” that they can get engaged in, be a part of and by the way, make a huge difference in. So any other investment, not any other investment, but most other investments you put your money in and whatever happens, happens. You can do your diligence, to get in the right spot with it where you think the performance is going to be impacted positively. But, the reality is most of it is out of your control. So the beauty of being a part of an ESPO is, well number one, it doesn't cost you anything. But, number two you can affect the value of the company with the way you perform in the company. It's an amazing tool, it's not the simplest thing in the world behind the scenes, but from an employee perspective it really is that simple. It’s definitely not for every selling owner, you definitely sell at a discount, but I believe if you look at the rewards from, and I don't mean financial people, but if you look at the rewards for creating an environment like this, it far out exceeds any discount or difference between a strategic sale or not. And talk about a good partner, I mean, the last thing in the world I would want would be a strategic partner that kind of tells me what to do. I mean, I’m an only child, and I don't necessarily like to be told what to do. So, now I have shared ownership with people who understand what they're talking about. And they're not sitting in an office far, far away pretending that they understand. So, I mean it’s literally the greatest partners you could ever possibly have, people that have the same interest as you and grow in value in the company. So it's an amazing, amazing thing. It’s literally one of the most valuable things that I’ve ever done in my life in business certainly. I think I’m the most proud of and I think one of the best decisions I’ve ever made.
Kathy: Not every employee that works for you really understood how to run a business. You know, I think that is where breaking a business came into play? So, let's talk a little bit about that.
Kevin: Yeah, this is an incredible story of a company really. It's the story of Jack Stack and his rise, he hasn't fallen, his only rise from the time when he was, I guess, a plant manager or general manager at a remanufacturing facility in Springfield MO. Corporate came in and said, “we are shutting you down,” and Jack, said “what do you mean, I’m hitting all my numbers” and then since learned that there is this huge hole in business today where people think they are doing the right things, because he was, as far as he knew. And ultimately the only scoreboard that actually matters are the financials. Right? So, what he did was he designed a system called “The great game of business.” He employed it in his company, and then companies, I don’t know how many companies he has, but he’s a tremendous success story. He employed this methodology in each of his companies. Then, I think ten years ago maybe a little bit more, he started a company called “The Great Game of Business,” wrote the book and now that portion or that company within his family of companies also shows private companies like us, both of us, how to run your company from an open book perspective. This is what puts it in context, he teaches people how to make money and they will then figure out how to improve it. It’s kind of that simple. People like to win or at least winners like to win and people like to be engaged in something where they can see how they are making a difference. So it's a really good tool for that.
Kevin: I get a lot of questions about, are they (ESOP & GGOB) competitive with one another? Which one should I do first? Can they really work with each other? I think there is no question they can work with each other. I don't think they are competitive, they might be competitive if you only have so much time to invest or so much time to spend in a particular year. But, I think they complement each other really well. I tried to take what I consider the key points, at least for us out of each and make it concise where I feel like the strengths are. If we start with great game, the ultimate scoreboard and you're literally working out the financial, so forget about key metrics that you hope all align to improving your profitability. You're working on your ultimate scoreboard right to the point of attack. It builds trust, you can see how you make an impact and then it opens up discussions about the numbers. Then if you look at the EOS, I think before anything else this is an organizational tool. There’s a really, really good mechanism for accountability, also focused on alignment. There are some really good people tools in there as well. So, both of them are probably saying, ‘okay you're missing this, this and this;’ if there are implementers or people from those companies in this call. And they are probably right, but for us, these are the key differences in how they work together.
Lisa: How do you balance growth, and the company's ability to manage it?
Kevin: Yeah, well, I think we are always struggling with that and I don't think there is really an answer. I will say, if you look at so; our company, the way we used to operate just didn’t scale. We got it up to like 30 million and we were just pulling our hair out. It was nuts! So we backed off and then kind of rebuilt it and we are close to that again today, if not there. But, you have to be set up for success. You have to have a structure that is scalable. So if your business is centered around a few key individuals, where if there are known bottlenecks in your business you need to look to solve those things. We figured out a model that I know works! We have done it a couple times, we are doing a third one; January 4th, 2021 it will be launched. We plan on doing one per year, like I said, “it’s nuts!” We have a model that we believe in and it’s probably wrong in half a dozen ways, but we will just fix along the way. I think just being agile along the way to fix what you thought was right that wasn’t is probably one of the more important keys to any like that.
Lisa: Either system, we would love to hear an experience from EOS and GGOB, what would you say was the moment your team “got it?” Did you get comments, did you see a turn around, is there something that made you realize, YES, the lightbulb when on?
Kevin: It’s probably when we opened up the books to the team and showed them our income statement. I think everybody thinks we are getting insanely rich, and there is just so much money; what are they doing with all that money? The reality is, it’s not necessarily near that. So I think showing people how everything affects everything else in the income statement was probably that moment for us.