Some people, like Steve Watts of The McGregor Co., are born with the “wiring” to see big picture trends and lead a diverse group of individuals toward an innovative new strategy. And he feels fortunate to have been in a role that allowed him to apply his talents to their fullest as the leader and facilitator of innovative change at McGregor for more than 30 years.
“My role was to try to be an advance scout and sort out what’s coming over the horizon,” says Watts, who recently retired at the end of the year. “What are the opportunities and the challenges and how do we make progress towards a goal that positions us well into the future.”
Organizations tend to take on the personality of their founders, and McGregor is no exception. Watts describes company founder and namesake Sherman McGregor as a leader who “was never giddy when times were good or overly concerned, at least outwardly, when times were a little bit tougher. He was quick to bring us back down to earth when we were flying high and he was equally quick to reassure us when the going got tougher. He taught me that the best way to lead in good and bad times was to act as though neither would last very long, and they seldom do.”
So inciting change even in the best of times is something that’s been built into the culture at the retailer over decades. But while that has created more of a culture of innovation at McGregor, it doesn’t mean that there are shortcuts available in the process. Getting an organization to act as one and change course may take adding more or less of certain ingredients, but the basic recipe Watts employed was always the same.
“Leaders who are able to make necessary changes in good times must do more than just see what lies ahead and figure out what must be done,” says Watts. “They must be able to convey a sense of urgency, articulate a course of action, and be willing to have their recommendations vetted, and potentially improved, by those who will be most affected. This requires ability, passion, confidence, and above all the ‘trust’ of those being led.”
And culturally, the employee team must mirror these attributes says Watts. “It takes a shared sense of purpose and personal sacrifice to leave our comfort zones and willingly work harder in the short run to accomplish something that we hope will be more than worth the price paid in the long run. It takes discipline to create and abide by high standards regardless of whether or not it is temporarily easy to achieve financial goals. And it takes trust to follow others in a new direction when the need to do so isn’t always readily apparent.”
Case studies provide the best example of innovation. And at McGregor, one of the most significant changes Watts led during a period of relative prosperity occurred in the late 1990s when the company made the sea-changing decision to unbundle crop protection service and product pricing.
“For 50 years we had bundled everything we did into the price of our crop protection products, and it worked quite well,” says Watts. “There was no reason in the short term to change that, unless you looked at the tea leaves and tried to sort out what was going to happen in the future.”
Originally launched as McGregor 2000 and today known as the Farm Partner program, it created a scenario where virtually every McGregor customer using the company’s crop production consulting services are now paying separately for those services.
Undoing a decades old practice would not be easy, but the signs of change were clear. In the late 1990s, the combination of trends that came to pass would prove to be deadly for many retail operations. Growers were getting larger, more diversified and less reliant on retailers. The rapidly growing World Wide Web opened the door on product price transparency. The rapid introduction of generic crop protection products would send their value plummeting. And the emergence and early successes of biotechnology threatened to pull billions more dollars of crop protection spending out of the market.
“When we added it all up, it pretty clearly indicated to us that things were going to change, and it was going to be harder and harder to bundle all services into the cost of product,” recalls Watts.
In hindsight, leading innovation would seem like a slam dunk given the weight of evidence. But ushering change after 50 years of doing things the same way, especially during a time when the business was still successful, was not going to be an easy sell.
Leading and directing the change is a multi-step process, and being successful requires that every step be followed and followed through. It starts with the leadership, who must build the case for making change once the need is identified.
From Watts’ perspective, a new initiative will only get off the ground if it can be successfully articulated both to the leadership ranks and the rank and file employees. Of particular importance is addressing the impact that each employee can expect as a result of what’s being proposed. If the homework is done properly then “ninety percent of what I thought should be done should carry through,” he says, and the other 10% should provide positive and constructive change. If it’s done poorly, an idea could get changed far more than that or even die. Usually when that happens, it’s because we didn’t do enough homework.”
Specific to the process of making a case for change, the first thing they look at in considering the change is what kind of collateral damage the business could experience with customers or employees. “What are the negative financial ramifications of making this change in the short run?” Then the positive side is developed and applied to create a compelling argument for change – a process that, in the case of unbundling services, took years to unfold and build.
“You must be willing to make a convincing argument, and not just make a statement,” says Watts. “That means laying out your ideas to employees, receiving feedback, carefully considering that feedback, and making any necessary changes.” The case must also be able to “defeat” feedback that is neither helpful nor accurate. “You have to be able to defend your ideas. That builds confidence, rather than just saying, ‘because I told you so.’ People need to be sold on the idea and not made to do things – they need to feel they have had their say and that their concerns have been considered. When that happens they are much more willing to get behind what you are attempting to do, even when you are trying to make enormous change in good economic times.”
Watts says that when the process brings detractors into the fold, they can become your biggest allies. “While they don’t buy in quickly, when they do they push all their chips into the middle of the table and they do not back away after they have made a commitment,” he explains. “The ones that are a bit more skeptical and require you to defend what it is you think needs to be done bring out the best ideas and the best implementation plans.”
In the unbundling example, the initial discussions with McGregor’s 40 licensed consultants at that time did not go over without dissent. “There would be significant risk to taking marked-down products to producers to be more competitive on a product basis while charging separately for services formerly bundled into the price of our products,” says Watts. “But we put the focus square on our ability to deliver value with those services with our consulting services as the centerpiece.”
The last challenge is bringing the change to customers, and you can expect that some will not want to walk with you. “There are going to be casualties when you make a significant change,” says Watts. “We don’t look at our customer relationships in a cavalier way, but we recognize that it is impossible to make progress without some casualties. Often it is the customers who are most passionate about maintaining the status quo who aren’t going to be farming for the long term, and we are not part of their retirement plan. We can’t run our business for them – we have to manage the business to survive beyond their time in farming. We have to do it without burning bridges and we never try to create casualties, but we accept that they are going to come, and that we need do what is necessary to position the company for the future and not stay with what worked in the past.”
Having a culture of innovation as a foundation at McGregor has made Watts’ work somewhat less complex, but maintaining that culture by hiring the right employees right off the bat has proven a bit more challenging.
“I think that is probably the toughest challenge – identifying with very little information those individuals that will make the grade and those that won’t,” says Watts. “There tends to be a high washhout in our culture with new personnel, and we have maybe 20% turnover in the first two years. But in general, if we have people for five years we have them for a career.”
Culture may not necessarily prevent a less than ideal candidate from being hired, but Watts say that “it’s the culture that prunes the tree.”