Could You Reverse a Business Disaster?
By leadership author and keynote speaker Ross Shafer
I’m Ross Shafer and I want to thank you for finding the Relevant Leaders Club where each week I post videos to help you grow your business and your career. Today’s question is this: Could you run a company if the serious threat of bankruptcy were looming? Could you reverse a disaster? C’mon, it’s much easier for a leader to run a company when business is bright and rosy, but you need to be a leader who can face reality, jump into an unexpected firestorm, and rescue your company from market obliteration. A leader like that is the one who should cash big checks and sit in the big corner office.
Young Jon Vrabely is exactly that kind of leader. In 2005, Jon Vrabely was one of several vice presidents at Huttig Building Products, headquartered in St. Louis, Missouri. Their revenue was topping $1 billion as they enjoyed serving what seemed to be an endless supply of new housing starts. As you know, in 2006, the mortgage crisis caused the bottom to fall out of the U.S. housing market; making Huttig a direct casualty. Huttig’s revenues went from $1.1 billion to about half that. As you can imagine, the board of directors were a little more than panicked. A lot of lame ideas were floated to save the company and yet there were still some people, totally oblivious, and who thought the market would eventually turn around. Cycles are NO business plan. 41-year-old John Vrabely was the only one with the courage to tell his senior leaders, “this is a 125 year old company and Huttig’s current strategy will kill us in a year.” He backed up his claim with a step-by-step plan to turn everything around. The board was so blown away by his bold approach (which was carefully researched) that they immediately replaced their long-time CEO with the 41-year old Jon Vrabely.
As the housing market continued to nosedive, Vrabely had no fear about systematically terminating old strategies. He wrote off two projects that represented a $16.1 million investment because they were draining cash. He closed 18 of their 45 distribution centers. His toughest duty was laying off almost half of the workforce (about 400 people), many of whom were his friends. Vrabely said, “I was NOT going to see this legacy company go under on my watch.” Yet, while he was cutting costs at Huttig, Vrabely also knew his competitors were hurting. So, Huttig aggressively went after his competitor’s best talent, their product lines, and even bought struggling competitors at deep discounts. It’s been a long, slow road back. Since 2012, Huttig has added back approximately 200 people, sales have risen 8.1%, and the company is generating positive earnings. Jon Vrabely is the model leader who was brave enough to face reality – defy conventional wisdom – and even risk his own career by insisting his board of directors listen to the TRUTH. Bravo to you, Jon!
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