David Luck grabbed a sheet of paper and quickly sketched a graph. On the horizontal axis he wrote "entrepreneurialism;" on the vertical one, "discipline." Then he circled the lower-right quadrant.
"Lots of startups are high on entrepreneurship and low on discipline," he said. However, as they grow, many companies slide left, to the low-entrepreneurship, low-discipline area, which he labeled "bureaucracy." Or they move to the upper left, pushing discipline but slacking on entrepreneurship–a quadrant Luck called "hierarchy."
The goal should be an organization that's great in both entrepreneurialism and discipline, he said. That's the quadrant where you'll find world-class businesses, and that's where he wants ABC to go.
Lots of other companies do, too, but what might make ABC Supply different is the route it has chosen. In essence, ABC started its annual meeting in February by going backward–setting down in writing the core purpose and vision that it has had for decades but never needed to declare when Ken Hendricks was CEO. Only afterward did it progress to an ambitious set of plans.
"When Ken was alive, he'd speak almost exclusively about values," Luck said during a March 17 interview with ProSales at ABC's Beloit, Wis., headquarters. "When Ken died, we had all understood these things. And now we've formally documented them."
Hendricks founded ABC in 1982 and built it to where, by 2008, it counted more than 360 branches nationwide and nearly $2.9 billion in annual sales. ABC sells primarily to contractors and describes itself as a wholesale distributor of roofing, siding, and windows. But 2008 was a painful year. Hendricks died just before Christmas 2007 from a fall at a construction site at his home, and the surviving Hendricks family members as well as the rest of ABC Supply had to regroup. Luck, the company's president and COO since 1998, moved into the CEO slot.
Luck said it became clear that some employees feared Hendricks' passing would mean the end of the core values he always stressed. In a sense, Luck said, the writing of a core purpose and vision "is his gift to the company."
That core purpose declares: "ABC is dedicated to promoting and preserving the American dream by helping people accomplish the extraordinary–based on our fundamental belief that everyone has within themselves the ability to do great things." And the visionary goal states: "ABC will strive to always be recognized as one of the best places to work in America." ABC also has seven core values: respect, opportunity, work hard/have fun, entrepreneurial spirit, family, give back, and American pride.
With those values as its bedrock, ABC has set an ambitious mission and goals for the next five to seven years: become "the biggest, best, and easiest service company distributing select exterior building products." Its specific goals reflect that broad reach: No. 1 market share on core products; 500 locations; $5 billion in sales; 90th percentile in associate engagement; 90th percentile in customer engagement; and 10% EBITDA (earnings before interest, taxes, depreciation, and amortization).
Many dealers are entrepreneurial, but "an entrepreneurial organization can only get as as big as the boss's arms can reach," Luck said. To grow beyond that reach, "You have to come up with a different way." That starts with common values, he said, plus a bias toward decentralization along with performance measures tied to company objectives.
"The vast majority of our customers don't care that we're national," he said.