This course focuses on the common growth challenges faced by existing private businesses when they attempt to grow substantially.
Eric Barger's Growth Plan
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Del curso dictado por University of Virginia
Grow to Greatness: Smart Growth for Private Businesses, Part I
419 calificaciones
University of Virginia
419 calificaciones
De la lección
Creating a Growth Plan
This module dives into the logistics of creating a growth plan for Barger
& Sons, Inc. The required reading is Edward D. Hess, "C.R. Barger &
Sons, Inc.," Case Study. Eric Barger faces a big growth challenge. His
primary product is concrete septic tanks. His product does not differ from
his competitor's products. His business is not well known. He does not
sell to the end user. His customers buy based primarily on price. His
business has stopped growing and is not that profitable. His father has
said the business must grow or it will be closed. Your assignment is to
use the concepts you learned in the previous modules to create a growth
plan for this business. For this assignment, please list all the growth
ideas you can create for him to consider. Do not narrow his choices, but
be realistic with your ideas. It will help you to think about growth
options using the four ways to grow a business: improvements, innovation,
scaling, and strategic acquisitions. A second way to think about his
growth options is in functional business terms: product design; supply of
raw materials; product manufacturing; product pricing and terms; product
sales; delivery; customer service; technology; and marketing. Your end
work should be a list of realistic growth ideas.
Conoce a los instructores
Edward D. HessProfessor of Business Administration
Darden School of Business
Welcome ladies and gentlemen. There it is, the last class.
A time of joy and a time of sadness. Continuing our search for the
understanding of, what is smart growth? And this week, you had a great
assignment. This week was, learn by doing.
This week was create a growth plan for Eric Barger's company.
And, and not only create it, I asked you to go on the class
discussion, the discussion forum and share and learn from each other.
And then, I trusted you, I knew you wouldn't look at it til after
you did all that. I gave you the case b, so you could
sort of, read what Eric did. And I hope you did all of that and
processed it. I hope you thought about it.
If you own a business, I hope you sat back and said, hmm,
what did Eric really do? With, what was this about? Well, how does that applied
to me? Can I do something similar in my business? Even though I'm in a completely
different business? Because the purpose, the purpose of this
course, is to give you some tools and some way of thinking, that you can go and
apply them, use them, build a better business.
Build a business that provides real, more value to your customers,
more meaning to your employees and more joy and fulfillment in every way to you
and your family. That's what this is all about,
that's what this is all about, helping people live and achieve their dreams,
that's what this is all about. Okay, lets dig right in, C.R.
Barger and Sons. Now, I know some of you, when you were
looking at the slide says, what is that thing? Alright? Now, that came from the
company website. And that's a picture of the type of
concrete casings they put in the ground when they're building houses a septic
tank. And what this shows you is,
and nothing very fancy, okay? It is a, just a concrete product that's created by
concrete going into a form and you learned in the case, case A, case A, that
this business had a problem. Growth had stalled.
What do we mean? Growth had plateaued and in fact, it was going down.
And Eric's father didn't like that and said, son, you got to either turn this
business around or we going to shut it down, okay?
Think about that. Turn around or shut down,
okay? Now, the product had become a commodity.
Think about that, what does that mean? What does that mean, commodity? We talked
about that yesterday. A commodity is a product or service that
basically, sells based on price. That means the product is not different.
Eric's competition saying, sells the same thing he sells. So, what's the difference
to the customer? The difference to the customer is price.
If Eric is selling this, and I'm making up this number now, okay, at $1000, and
the customer, I mean, his competition, is selling the same exact product at $800 or
$900, who you going to buy from? Now, I'm assuming you're not married to Eric's
sister, or you're not a relative, or there's not some other reason.
I'm assuming you are an arm's length consumer, with no friendship,
relationship, okay? You going to buy one of these.
That was Eric's problem. That was the problem I delivered to you,
alright? You also learned there was low brand recognition in the community and as
I said before, alright, Eric Turn this around or we're shutting down.
Now, what did he do that you found interesting? Now, there were lots of
things he did, but I want you to think, what's the coolest, coolest thing Eric
did? Think for a second. Stay with me and think.
And then, I want you to say it out loud. And who knows? Maybe I can hear it.
How 'bout this? Wasn't it really cool about his brand? What did he create as a
brand? Number 1 in the number 2 business.That's cool and creative,
right? What else did he do that was cool and interesting? Well, he created
software. Now, what was Eric's background? Eric was
an engineer, he loved technology. And he wrote software,
2 types of software. 1 that allowed him to manage his raw
materials and input to make his con-, to basically make him cast his form,
okay, better. So, we could basically have just in time
inventory. And you know what that means, if you have
a business. You want to have ready what you need in
the near future because you don't want to carry lots of inventory.
And then, the other was a management tool to manage The timing of the process from
the order to the delivery and everything could be scheduled to maximize what?
Efficiencies, productivity What. are efficiencies? What's the impact of
efficiencies? Why do you want efficiencies? because efficiencies allow
you to lower your cost. If you lower your cost, you can stay
competitive against bigger competitors and if you lower your cost, you can
increase your profit margin. Well, what's productivity? Well,
productivity is if, I get more efficient, the same number of employees can do more
work because I've got technology to help them.
Technology that can basically help them be faster, better, do more.
So, this software was a big thing. Then it was very interesting, about
standards, standards. Eric you see, through trade associates,
was involved in the creation of standards to make his products more green, in
order, they basically comply with new National standards.
By doing that, by being on the forefront of the standards movement, Eric created a
competitive advantage for himself, because as you read in the case, he was
the only one. He was the only one in east Tennessee
that. could build those concrete forms, septic
tanks and other products that met those standards.
Standards helped create a competitive advantage and made his products more
valuable to the consumer and also allowed him to basically, charge higher prices
for his products because of the improved, improved quality and environmental
standards of his products. What else did he do? Well, you had to be
surprised, okay?. Any of you ever been to a construction
site, m'kay? Whether it's a commercial construction or
a home building site, okay? ¡And you know that everything sort of works.
You try to keep all your workers working all the time.
Well what's the big thing in the construction industry that hurts?
Downtime, people waiting around for a delivery.
Well, Eric said, wow, what if I made an on time delivery
guarantee to my home builders or my commercial builders that were putting my
products in the ground? And you know, I talked to Eric about this
and his family thought he was crazy because, you know, you get in traffic
jams, stuff happens. You know, you can be lifting the concrete form and septic tank
onto the truck and something could happen, it could break,
had to be taken off, a new one put on, alright? You can get a flat tire on the
truck, right? Your truck driver and delivery
person, okay, is hungry and wants to stop, and gets into a conversation with a
pal at McDonald's or somewhere. There are lots of things that can
basically happen. And Eric said no, I'm going to change the
culture of this company, I'm going to basically, get my employees much more
motivated and we're going to offer an on-time, on-time guarantee.
And what does guarantee mean? What's guarantee mean? It means, if I don't
deliver it within a certain time frame, okay, I give it to you, it's free.
Whoa! That's a game changer, folks. That is a game changer.
That is a competitive game changer. Because in order to do that, Eric had to
have the right processes, the right people and engagement.
See how this all comes to fit together? Everything you try and grow comes back to
people, processes, controls, alright?
And the right people with the right processes and the right management
controls to manage the situation to deliver high performance, high value to
your customer. And this on time guarantee, okay, on time
delivery guarantee was a game changer. Alright, let's see what else he did.
Well, he first came up with a growth strategy and he had some goals, 7 goals.
He had lots of goals folks, alright? These, is 7 a magic number? No.
Could he have had 2, 3? Yes. More than 7's too many, alright? He
wanted to create product differentiators. Well, we know what that is, isn't it? How
does my product differentiate from my competition? But differentiate in a way
that's meaningful. Meaningful to my buyer, to my customer,
to my consumer. He wanted to become more efficient,
manufacturing efficiency, brand awareness, remember? One of the
problems was, not a lot of people knew him, knew of his company.
He wanted to find, if I can create new customers by expanding geographically.
He wanted to say, can I do, find a new customer segment,
move more into different types of commercial development?
Can I be a first mover, incorporating new national standards? Can I make service,
actual service, a differentiator? Now, let's go through each of these and look
at what, and just review what he did. And you've been through this, so I'm not
going to go into great detail. I'm just going to give, we're just going to make
some high, high points. Look at this word, right here.
He became only, the only East Tennessee manufacturer to offer watertight,
traffic-rated grease interceptors. Only,
this is the standards part, all right? And you're going to see how he
did this in a minute, what he did, okay? He used monolithic baffle walls.
Now, don't ask me what that is. I'm not an engineer.
Eric was an engineer. He played to his strengths, but he
basically enhanced the structural integrity of his product.
He became the only East Tennessee manufacturer specializing in tanks to be
certified by the leading trade industry most rigorous standards.
Now, think about it. If he's the only one that can meet the
highest standards, from environmental issues, quality issues
and water and sewage is important to local governments and to community and
the health and welfare of the community. It's only natural that the county
governments, the local governments would want septic tanks, interceptors to be of
the highest national standard quality. And they did,
in East Tennessee. And what did that do? It created the
opportunity for Eric to meet that need. And as you see, he went, put his company
through rigorous third party certification processes.
Brought in experts. Led to more disciplined and
technologically advanced manufacturing processes, higher quality products.
All playing his engineering strength, all pretty cool.
Here's the software. He developed PreCast-IT! inventory
management software, 'kay? Basically, to manage, if you will, alright? His raw
materials, his inventory. He developed software to automate
production and supply schedules. Now, Eric, Eric's neighbor was a
technology guru, software engineer, who had retired, okay, from Oak Ridge
National Laboratories. Which is a big, famous laboratory outside of Knoxville.
And at night, they wrote the software that Eric used.
Now, what's interesting about this is, Eric used it in his business, but Eric,
okay, was ahead of his time. He realized he also had a new product.
And he basically licensed that software to other companies like his all over the
United States and other states. And he create a new revenue source and raised
the standards, environmentally, in the entire industry.
But it was a new revenue source, a new revenue source,
customer service. He really engaged, no longer were, were
his truck drivers, who delivered the product, delivery people.
Delivery people became customer service people.
Delivery people who deliver and drop became embrace the customer people, okay?
He focused on training, gave his people training.
Got 'em certified, helped 'em advance for their career,
which gave their work more meaning. They were becoming more professional.
And we talked about the on-time delivery. Branding, we talked about the new slogan,
we're number one in the number two business.
He strategically advertised on interstate highway billboards,
radio sports programs. He participated in industry trade associations, and he did
something really, really smart. Eric wrote articles for industry trade
associations. Now, think about this.
Eric goes in to you, to sell you a product. And in that sales pitch, he
says, I'm an expert on septic tanks. And you say to yourself, sure, sure,
everybody says they're an expert. Eric says, no, I am an expert.
Here's the leading industry trade magazine.
They published my article. And, you know what publishing the article
does? It legitimizes, validates. Eric. Eric writing articles in those
industry trade magazines took Eric to the highest level.
And then, Eric was even smarter. He gave, he gave, subscriptions to those
industry trade magazines where he wrote articles to architects, engineers,
county, city, government engineers, so people would see his articles.
And Eric built a reputation as the expert in his part of the world in this whole
product line. That is cool.
That is shrewd. That is smart growth.
This is what I just talked about, community outreach free publications.
Then he went to the internet. And what Eric did was, remember,
he used, he basically sold and licensed his software, he was like, into being
open. On his website, he would basically give
all of his designs to everybody to help them.
And he answered questions, he gave white papers, alright?
He answered questions for home owners. He didn't hoard.
He said, we are the expert and we're here to make society better.
A fascinating story, and what was the results? He added 12 more states
geography. He increased his home builders, okay.
He did all the website type of business, alright.
And what he really did, okay, is, here's the numbers, a 400% increase over 2003
sales. He grew his full time employees To 15
from 4.5, but 4 * sales, 4 * sales, higher margins.
He not only turned this business around, ladies and gentlemen,
he made this little business that his father was going to shut down, in to the
biggest business in the family line of businesses, and the most profitable.
A great success story, a great story, and you learned all the things he did,
alright? And you could put 'em into buckets,
improvements, innovations, scaling. He looked at strategic acquisitions, but
he told me, he said, Ed, you know what? I found out all those other companies were
in worse shape than I was. I didn't want to buy their problems,
I can be better just fixing my problems. A good, good way, alright, to look at
what Eric did and how he did it. Alright, let's take a break here, short
break, two or three minutes. And what I'd like you to do is, to sit
back and think about this. Based on what Eric did, what are the two
or three things I want to do tomorrow in my business?
To start thinking about, what am I going to focus on? Write them
on a piece of paper. You always got that piece of paper and
pencil nearby. I know you've learned.
Take two, three minutes and write these three things down.
Then I'm going to come back and talk about the final exam.
Then we're going to do just a quick review of the course and talk about where
we're going from here. Be right back to you.
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