Enterprise Minnesota Magazine - Fall 2017 by Enterprise Minnesota

NO SWEAT?

Hardly. A companyâ&#x20AC;&#x2122;s looming success is the result of remarkable entrepreneurial perseverance.

Helping Manufacturing Enterprises Grow Profitably FALL 2017

Overcoming the Skills Gap

How toRetain YOUR EMPLOYEES A program of strategic leadership development to help you cope with the skills gap

Enterprise Minnesota 310 4th Avenue S. Suite #7050 Minneapolis, MN 55415

Fifty-four percent of manufacturers say they have a formal strategic plan to achieve profitable growth. Is your company one of them? Call us today at 800-325-3073 or reach us at enterpriseminnesota.org for a free 90 minute consultation with one of our strategy experts.

We can help you grow profitably! Scan here to learn more about how we can help your business. 310 4th Ave. S., Suite 7050 â&#x20AC;˘ Minneapolis, MN 55415

FALL 2017

HOW TO RETAIN YOUR EMPLOYEES

A program of strategic leadership development to help you cope with the skills gap.

THE RIGHT PEOPLE IN THE RIGHT SEATS ON THE RIGHT BUS

NO SWEAT?

Five years ago, CEO Eric Gibson upended his workforce with a dramatic reorg that better matched people with processes. His challenge ever since has been to keep them there.

2 In the Nick of Time Enterprise Minnesota’s 2017 Esteemed Colleague helps address the skills gap by developing leaders.

Hardly. A company’s looming success is the result of remarkable entrepreneurial perseverance.

Back Home on the Range

Concrete Thinking

Why Oh Why Oh Why

Jeff and Gina Halter take a chance with a long-time Hibbing business.

In the face of the recession, Wells Concrete made a very prescient market pivot.

An interesting author suggests that buyers make decisions when they perceive why you are in business.

Visit the Enterprise Minnesota website for more details on what’s covered in the magazine at www.enterpriseminnesota.org.

Subscribe to The Weekly Report and Enterprise Minnesota® magazine today! Get updates on the people, companies, and trends that drive Minnesota’s manufacturing community. To subscribe, please visit www.enterpriseminnesota.org/subscribe. FALL 2017 ENTERPRISE MINNESOTA /

bob kill

In the Nick of Time Enterprise Minnesota’s 2017 Esteemed Colleague— our MVP—helps manufacturers address the skills gap by developing their leaders

robably an under-reported aspect of Minnesota’s skills gap is that not only manufacturers are facing the prospect of losing an increasing number of experienced and valuable employees to retirement, and having to replace them with a dwindling pool of younger prospects who have neither sufficient skills or, often, the desire to acquire them. We all know that for every manufacturer in Minnesota’s economy there are two others that rely on those manufacturers for a meaningful part of their revenue. In some way or another, they sometimes face the same challenges. We’re one of them. Enterprise Minnesota’s consultants have been helping manufacturers grow profitably for almost three decades. Some of our more experienced and most effective employees have worked here for almost that entire span of time. And guess what! Some of them have retirement fully on their radar. The increased urgency for us is that as a consultancy, our “product” is our people. I confess that the prospect of not being able to build our bench with the next generation of employees who share the expertise and the high standards of our current folks in the past has given me more than a little heartburn. But I’m happy to say that if anything, we’re evolving even stronger, as you’ll see in the pages of this magazine. For one, in just one month, we added three very strong new consultants (see page 16). For another, in the past year we added Abbey Hellickson, a dynamic and creative professional to head our Leadership and 2

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Talent Development consulting services. Abbey, who is the author of this month’s cover story (page 22), is so strong and effective that after just one year on our staff, she was recently named Enterprise Minnesota’s “Esteemed Colleague” during our annual rewards and recognition event, making her essentially our MVP, selected by a vote of her coworkers. Abbey helps manufacturers engage their workforce, maximize productivity, improve company culture, and strengthen their leadership teams. Drawing on a wealth of experience in talent and leadership development, she enables companies to drive performance at all levels of their organizations and develop the effective leaders they need to build and sustain profitable growth. Her timely attitude is that manufacturing executives can address a myriad of HR issues—the skills gap being just one, a big one—by internally and intentionally developing their leaders. She says, for example, that most manufacturers can depict the brand they use to market and sell their products (even if it isn’t part of a formal strategy), but many haven’t yet considered their “employment” brand, how they market the company to current and future employees. Abbey’s advice has become one of our hottest services. And we’re glad she’s here. Chances are, you will be too. Bob Kill is president and CEO of Enterprise Minnesota.

Helping Manufacturing Enterprises Grow Profitably

Publisher Lynn K. Shelton

Custom Publishing By

Contributing Photographers Pete Crouser Patrick Kelly

Contacts To subscribe subscribe@enterpriseminnesota.org To change an address or renew ldapra@enterpriseminnesota.org For back issues ldapra@enterpriseminnesota.org For permission to copy lynn.shelton@enterpriseminnesota.org 612-455-4215 To make event reservations events@enterpriseminnesota.org 612-455-4239 For additional magazines and reprints contact Lynet DaPra at lynet.dapra@enterpriseminnesota.org 612-455-4202 To advertise or sponsor an event chip.tangen@enterpriseminnesota.org 612-455-4225

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CREATIVE CULTURE

Back Home on the Range Jeff and Gina Halter take a chance with a long-time Hibbing business

family with ties to the Iron Range has returned to take over another family’s legacy. Jeff and Gina Halter purchased Range Steel Fabricators (RSF) from Ray Lee of Hibbing on July 1, 2016. Prior to that, three generations of the Lee family owned the business dating back to the 1920s. “We wanted to come back home,” Jeff Halter said. “Gina was born and raised in Grand Rapids, and I’ve always thought of Grand Rapids and the Range as my home.” The duo returned to the Range from Orlando, Fla., where they were recruited by a real estate developer. “After going away for a while and having a professional career for 20 years, I was really not liking what I was doing. I needed a professional change,” Halter said. “We moved down to Florida for a great opportunity, but it wasn’t home. It didn’t feel right. The schools, they were different. This was just an opportunity to get home, get back up north.” The Halters also wanted their three children to grow up on the Range. “We wanted to raise them in an environment we’re comfortable with,” Halter said. “So this was really about changing careers with me and getting the kids to a place we’re more comfortable having them go to school and raising them. Those are the two main reasons.” With a background as an operations executive, being at the helm of a business and working in a steel manufacturing plant are both new challenges for Halter. “I have no background in metal fabrication. I ran operations at several different groups,” he said. “A lot of the Six Sigma and lean principles that are key to

Jeff and Gina Halter purchased Range Steel Fabricators (RSF) from Ray Lee of Hibbing in 2016. Prior to that, three generations of the Lee family owned the business dating back to the 1920s.

manufacturing were part of my job, but it wasn’t in a manufacturing environment… so it’s a big shift for us.” During the past 20 years, Halter mostly worked in financial service and real estate development. “This is definitely a different endeavor for us, which is why we wouldn’t have ever started a place like this from scratch,”

he said. “That is why we decided to go the acquisition route.” This is also Halter’s first go at owning a business. “I did run large segments of Ameriprise Financial, and then I had close to 100 people working for me,” he said. “So a lot of those years are highly correlated to this, although we didn’t own the place.”

FALL 2017 ENTERPRISE MINNESOTA /

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Located at 2212 Fifth Ave. W. in Hibbing, RSF is a steel and aluminum fabrication and machining manufacturing facility. The business’ specialties are precision machine components and structural metal fabrication. “A lot of that work is done for the mines,” Halter said. “A lot of our projects that go out there are going to be structural support assemblies; materials handling units, whether they be tanks or conveyer systems; and other things like that.” Halter said Hibbing is a great location for a business like RSF. “It’s crucial to have a business like this close to all these big industrial facilities — from the mining focus to the paper mills and Minnesota Power and things like that,” he said. “The mines especially have evolved over the last 40 or 50 years as the plant changes and they make remodels and adjustments and re-engineer processes. We have to be able to get out there in an hour’s notice with a tape measure and hard hat on and be ready to do a field verification to be able to come back here and quickly replace and re-engineer a tank for them, as an example.” About half of RSF’s business is with the mines. “That’s ballpark. It ebbs and flows a bit,” Halter said. “Being right in Hibbing, we’re committed to the local plants. We can be out there within the hour, come back the same day and start working on it. I think that’s very valuable to them, and I think if they get a breakage out at the mines, I don’t think they’re going to want to wait a week to get someone up here.” RSF does some business outside of the Range. It services businesses from Bemidji, Minn., to Superior, Wis., as well as up to the North Shore and half way down to the Twin Cities, Halter said. “But largely our revenue is coming from the area’s paper mills and mines and utilities plants,” he added. Since the Halters took over RSF last year, it has grown significantly. “When we started here, we had seven people on payroll. There’s 17 now,” Halter said. “Those seven people that were on payroll when we started here have eight, 10, 12 years of tenure with the company. That’s what we were looking for. A place where there’s already a core foundation of knowledge that we can rely on, since we knew we were doing a big career shift.”

RSF employs one engineer and another who’ll be a senior at Iron Range Engineering in the fall. “Those are the roles that really require education,” Halter said. In the shop, the company is broken into two different functions: fabrication, which is big steel, welding and projects for the mines and paper mills; and the machine shop. “On the fab shop side, which is where the majority of the employees are, some of them have gone through the Mesabi Range welding program, and some have not,” Halter said. “It can definitely be a learning on the job type of role.” Gina Halter noted that they have also made changes to the business’ marketing and technology. “From those aspects, the communication has been improved greatly,” she said. “There wasn’t even a website in place. There was no Facebook page. There weren’t many computers. They didn’t even have WiFi.” The Halters are also putting brochures together to showcase what RSF does. “Our big focus is modernizing technology and processes so that we can grow,” Jeff said. “The bottom line is to be cheaper for new customers. In manufacturing it’s all about efficiency. If you’re efficient, you can bid lower. If you can bid lower, you’re going to strike a relationship with a new customer.” The ultimate goal of the Halters is to continue to grow

the business. “We have dreams of moving from more of a welding job shop to a modernized manufacturing facility,” Jeff said. “We find that a lot of people might not be familiar with Range Steel, so getting our name out there is huge. We want to be the place where the fabricators want to work. We want to be the place they’re knocking on the door.” To do that, a large part of the plan is to grow the machine shop side of the business. “We do have a healthy desire to grow and help Hibbing,” Jeff said. “Part of that for us is to grow our business to go outside of the Range. I’m a firm believer in bringing in money from outside the area so customers outside of the Range are supporting Iron Range workers, and that means growing the machine shop for nonmining related work.” Gina agreed.

“Our big focus is modernizing technology and processes so that we can grow,” Jeff said.

FALL 2017 ENTERPRISE MINNESOTA /

“In turn, that will also create more jobs for Hibbing,” she said. “Hopefully that means more technological jobs, which would be better for the area.” But the Halters promise not to abandon the mining industry. “That’s in no way what we’re doing,” Jeff said. “Our core will always be structural steel and mechanical components for the mines, paper mills and power plants, but also finding ways to grow and sell to the (Twin) Cities and bring their money up here.” The Halters are 100 percent believers that RSF will continue to succeed in the

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“I have no background in metal fabrication. I ran operations at several different groups. A lot of the Six Sigma and lean principles that are key to manufacturing were part of my job, but it wasn’t in a manufacturing environment … so it’s a big shift for us.” future. Their involvement as owners can only benefit the business, Jeff opined. “There is hands-on ownership by both Gina and I,” he said. “I’m involved 70 or 80 hours a week. If I need to be down on the floor, I’m down on the floor. We believe in not having a company with four or five departments where a customer is going to get passed through. I’m the point of entry, and I’m the point of delivery. So I think that goes a long way for accountability and what we’re going to deliver.” No matter what’s in store for RSF moving forward, the Halters are in it for the long haul. “We moved our entire family up here. We put our entire life savings on the line. We’re committed,” Jeff said. “… And if we’re that committed, we’re going to execute for a new client.” This article, by Tony Potter, first appeared in the Hibbing Daily Tribune.

STUDENTS

Future Manufacturers Leonardo’s Basement gives students a chance to ‘tinker and explore’ Say Hello to

anufacturers who worry that young students are not getting exposed to the culture of “making stuff” that will eventually lead to careers in manufacturing would be encouraged by a recent visit by Enterprise Minnesota executives to Leonardo’s Basement. Bob Kill, Enterprise Minnesota’s president and CEO, joined Lynn Shelton, the organization’s director of marketing and legislative relations, and recently toured the facility in the company of Steve Jevning, its executive director. The school was founded in 1997, after a dozen elementary-age students at Clara Barton Open School—a Minneapolis public school—asked their parents about forming an after-school club where they could choose and direct their own projects, create and build solutions to problems, and go on field trips. They wanted to learn, but they wanted to learn in a place that was “not like school.” They craved hands-on learning and interactivity with peers who had similar interests in active learning. The parents incorporated Leonardo’s Basement as a tax-exempt, non-profit educational organization one year later.

FIRST CHOICE BANKING ON A FIRST NAME BASIS Founders chose the name for several reasons: First, Leonardo da Vinci remains the best representation of a curious and observing mind. He is the exemplary Renaissance man—integrating engineering, art, science and technology. Second, the name conveys our interest in discovery and experimentation and the informal nature of heading into the “basement,” where tinkering and exploration is encouraged. Third, the founders believe in helping individuals to learn how they learn and to help them discover their passions while developing personal and technical skills. Instructors are partners, supporting individual learners on their journey to become modern-day da Vincis.

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Timing the market perfectly, Wells last year hit revenues over $200 million, with 85 percent of the growth in architectural concrete.

Concrete Thinking Stuck with a $34 million unfinished new building in the face of the recession, Wells Concrete made a very prescient market pivot

lot of Minnesota manufacturers proved their mettle with how they responded to the economic ravages of the 2009 recession, but probably none more than the executives at Wells Concrete, who transformed what could have been a devastating blow to their growing business into a product shift that has since nearly quadrupled their annual revenue at the time. In 2009, Wells was a company that, since its founding in 1951, had delivered steady growth as a manufacturer of highquality precast structural concrete—the kind used in stadiums, parking structures and buildings. But the recession dried up those markets almost immediately and without warning.

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Wells President Dan Juntunen, CFO at the time, remembers that the single most difficult aspect of the recession was “no predictability. Everybody openly admitted they didn’t know where things were going.” Washington couldn’t define its policy agenda, banks couldn’t anticipate the effects of emerging regulations, and developers couldn’t predict how their appraisals would come in. Worse yet, Wells was two-thirds finished with a costly and over-budget $34 million new plant in Albany, about a half hour north of St. Cloud, right on Interstate 94. “What do you do? We had a fair amount of debt at that time,” Juntunen remembers. “I guess you just work

through it.” Wells’ agile response was a turn-on-adime switch to precast architectural concrete, a growing market that builders use for trim, facing or cladding. “The push for architectural was purely out of necessity,” Juntunen says. But it worked. Timing the market perfectly, Wells last year hit revenues over $200 million, with 85 percent of the growth in architectural concrete. It is not the first time Wells seized a market opportunity. In the early ’50s not long after its founding, the company entered the world of pre-stressed concrete, a system of strengthening concrete with metal strands that greatly improve its structural strength, opening it for use

Dan Juntunen, President/CEO, Wells Concrete

Wells’ agile turn-ona-dime response to the recess was a switch to precast architectural concrete, a growing market that builders use for trim, facing or cladding. in large buildings, slabs, bridges and dams. Until about 10 years ago, Wells focused primarily on agricultural markets. “The perfect customer was a large dairy producer,” Juntunen says. Today it is much more diversified. Wells has helped construct some 200 schools over the last three years, with increased work in offices, industrial applications and churches. That, plus most notably the U.S. Bank Stadium, home of the Minnesota Vikings. The architectural concrete process combines the strength and durability of structural concrete with an ability to achieve high quality decorative and durable affects, all within the controlled environment of a factory instead of on site. In addition, precast concrete structures offer greater longevity than steel, and provide superior energy efficiency. Juntunen says that 90 percent of the sixinch wall panels include three inches of insulation. Wells also just introduced a line of walls that includes pre-installed

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Wells is now at the industry forefront of concrete processes that make stamped concrete take on the look of stone, cobblestone, or brick, all reflecting a variety of colors or textures.

Marvin Windows, eliminating the need for scaffolding or lifts for construction workers on site. Another reason contractors appreciate architectural concrete is that all the manufacturing is done in a plant, greatly dimin-

ishing onsite risk of injury or accidents. This year-round construction enables Wells to avoid the typical gyrations of supply and demand in the traditional construction season. Wells is now at the industry forefront

of concrete processes that make stamped concrete take on the look of stone, cobblestone, or brick, all reflecting a variety of colors or texture. Wellsâ&#x20AC;&#x2122; Albany plant is in the process of creating a showroom that reveals various looks and uses. Wells received some local prestige with the work that it did on the new U.S. Bank Stadium and for what it is doing in the Target Center renovation and for what it will do in the new soccer stadium. The Vikings work created a sense of pride within the company, Juntunen says,

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MORE INNOVATION

Get more at UMore Wells’ new plant in Rosemount leverages onsite relationships Wells has also innovated the marketplace with the creative use of a new plant on 1,800 acres on a site in Rosemount, owned by the University of Minnesota and once used for agricultural research. Called the UMore site, Wells opened a 58,000-squarefoot facility that collaborates with the Dakota Aggregates mining operation and a concrete processing plant owned by Cemstone, both also located at UMore. Dakota Aggregate secured a 60year lease on 1,800 acres of the site because, Juntunen says, it contains the best aggregate reserves in the state. When Cemstone built a ready-mix plant on the same site, he said it made sense for Wells to collocate with its own facility. The efficiencies were too good. “The aggregate never hits a truck,” Juntunen explains. “It goes from the ground to a conveyor system, to Cemstone’s plant, to our beds, and it never leaves the site. So, the bottom line is our carrying costs are a relatively small fraction of our other three primary plants. But, it gives us the bandwidth for another $25 to $40 million dollars’ worth of volume with really no carrying costs.”

especially because of the fast-tracked nature of the project and the fact that its asymmetric style required a lot of creative work. “The schedule was really intense,” Juntunen says. “I think we came out of it extremely well, too, in terms of how we dealt with that intensity. It’s something everybody liked to be a part of.” To commemorate the job well done, Wells bought a suite, and distributes most of the tickets to employees. “People that arguably would never have an opportunity to go to a game get to go, and they go in a suite, and say, ‘Hey, my employer built this,’ you know? And so, that has been a really big morale boost.”

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LIVING LEGENDS

Passion Disguised as a Business

Todd Warner has been in the classic boat business for 43 years. mahoganybay.net

lassic boat aficionado Todd Warner admits that the recession of 2008/9 hit all manufacturing hard, but nothing like people in the boat business. “Things changed over night,” he recalls. “We had a 90 percent contraction within the boat industry.” When things go bad, the boats are the first to be asked to leave, and the last to be asked back to the party.” Which was particularly bad for Warner, whose company, Mahogany Bay, had at the time a 35-year history in virtually every aspect of the classic wooden boat business, from buying, selling, restoration, storage, service, and manufacturing boat, either through original design or re-creations of historical water craft. Trouble was, he was sitting on an inventory that was widely considered one of the world’s most extensive and most valuable collection of wooden boats.

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He decided to sell off most of his boats, in various stages of repair, in an auction that attracted world-wide attention as well as about 1,000 potential buyers and 5,000 spectators. When it had concluded, he had sold about 130 boats for about $4 million. Among the boats were two that sold for more than $300,000 each. “Back then it was about survival,” he remembers. “I did that to make sure I met all my obligations, and it was a hell of a sale. Right now, I look pretty smart for having done that when I did.” Warner keeps his business strong in part to preserve the rich heritage of the classic wooden boat culture he grew up in. Mahogany Bay still maintains a full team of restoration service, storage, interior repair and engine rebuilding. We provide all these services. People are less able to tend

to these issues themselves. They more than ever need a company like Mahogany Bay that has the experience and skillset that can support owning a classic boat, especially when the entry level has come down.” The market for new boats is thriving again, Warner says. But there are still tremendous bargains for classic boats. Warner still extols the innovative craftsmanship, quality, and timeless design of classic boats. “The truth is that those principles and that value system still stands tall today,” he says, adding that owning a classic boat is more affordable than at any time over the past 25 years. “What I see is that there are birds’ nests on the ground,” he says. “There are restored classic boats for sale in the $15-$45,000 range. Those are unbelievable values.” “It’s a buyers’ market, which is OK. I am going to trade in boats no matter what the

PHOTOGRAPH BY PETE CROUSER

Classic boat enthusiast Todd Warner has earned a national reputation and run a profitable business through 43 years’ experience with wooden boats.

#InnovateMN market might be. They are still rare. They are still great works of art. They are still one of the most satisfying experiences you can have on the water.” Looking forward, Warner is fully engaged in tapping into what he predicts will be a resurgence in interest in the style of classic boats. He has designed and is ready to start taking orders on a 55-foot art deco commuter, a retro modern boat based on a 1937 original, “probably the most beautiful boat ever built,” he says. List price? $3,650,000. With modern power, an aluminum hull and fiberglass, he said it is the perfect combination of

Warner has designed and is ready to start taking orders on a 55-foot art deco commuter, a retro modern boat based on a 1937 original, “probably the most beautiful boat ever built,” he says. List price? $3,650,000. With modern power, an aluminum hull and fiberglass, he said it is the perfect combination of classic look with modern technology. classic look with modern technology. “I’m a passion disguised as a business,” he says now. Warner has been drawn to classic boats since his early youth, when his father first started to collect them. “They were giving all these boats away back when I was a kid. Nobody wanted them.” That interest inspired son Todd to get into the boat business and stay for 43 years. “I have been in, and loved, and been around classic boats my whole life. He remembers rowing a wood boat as a five-year-old. “Then I was running them with little two horse-powered Johnsons, and then five, and then a ten, and then a twenty-five, and before I knew it, it was an in-board.”

Manufacturing is key to Minnesota’s economy. That’s a lot of jobs – with a lot of stories to tell. We’ve launched a campaign to celebrate the innovative and entrepreneurial ecosystem that is unique to Minnesota. Do you have a story about an innovative product or service? We want you to be part of the Minnesota story! Tweet using #InnovateMN and we’ll show the world a whole different side of Minnesota!

www.mn.gov/deed/business #InnovateMN

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THE STATE OF MANUFACTURING

Stronger Alliance > Two Premier Industrial Parks > 5 to 80 Acre Lots > Shovel Ready Sites > Access to I-94, U.S. Hwy. 10, MN Hwys. 15 and 23 and St. Cloud Regional Airport > Fastest Growing Labor Force in MN and Nation (MN DEED)

Your First Stop for Business Locations, Financing Resources and Development Opportunities St. Cloud Economic Development Authority Cathy Mehelich, Executive Director cathy.mehelich@ci.stcloud.mn.us 320.650.3111

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/ ENTERPRISE MINNESOTA FALL 2017

Annual survey earns even greater visibility through collaboration with Minnesota’s Initiative Foundations

he release of Enterprise Minnesota’s ninth annual State of Manufacturing® survey reached a larger and higher level audience in 2017 thanks to a new strategic alliance with selected Initiative Funds around Minnesota. Matt Varilek, president of the Initiative Foundation based in Little Falls, cosponsored a rollout event at St. Cloud State University. He said his interest in the State of Manufacturing evolves from how important the manufacturing sector is to advancing economic development in central Minnesota. “Enterprise Minnesota brings great expertise to that sector both by working with individual firms, plus surveying macro trends,” he said. “They are a very natural partner for us, and we have been very pleased with that relationship over time.” He appreciates the survey because it annually reveals the trends and challenges that manufacturers are facing. “Doing the survey creates an opportunity to generate news about the importance

of the manufacturing sector, because it’s sometimes easy to forget and perhaps even take for granted the contributions of manufacturers to our economy,” he says. He also applauds the opportunity to gather manufacturers—and others who care about manufacturing—to share their perspectives on the results of the survey. “It brings it all to life,” he said. Lynn Shelton, director of marketing and legislative relations, said the collaboration with the Initiative Foundations brings greater visibility to the State of Manufacturing® survey at the local level, because they are powerful community advocates within their regions.

GROWING PAINS?

MAY 10

Steele County History Center OWATONNA Moderator: Tim Penny, president, South Minnesota Initiative Foundation Panelists: • Steve Cremer, president, Harmony Enterprises, Harmony • Nicole Griensewic Mickelson, executive director, Region Nine Development Commission, Mankato • Craig Porter, president, PasticCert, Inc., Lewiston • Natalie Siderlus, business development representative, DEED, St. Paul • John Wade, chair, Journey to Growth, Rochester • Bill Wright, vice president of U.S. operations, Viracon, Owatonna

You should see an architect about that.

Facility Assessments

Master Planning

Building / Site Design

MAY 18

St. Cloud State University, Atwood Memorial Center ST. CLOUD Moderator: Bob Kill, president & CEO, Enterprise Minnesota, Minneapolis Panelists: • Twyla Flaws, personnel manager, Clow Stamping Company, Merrifield • Laine Larson, superintendent, • Brainerd Public Schools, Brainerd • Lance G. Louis, chief operating officer, Louis Industries, Paynesville • Casey Mahon, president, St. Cloud Window, Sauk Rapids • Matt Varilek, president, Initiative Foundation, Little Falls

Reed Becker, AIA

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Risk Prevention Employee Benefits Business Insurance

MAY 22

Southwest Minnesota State University, Conference Center Moderator: Bob Kill, president & CEO, Enterprise Minnesota, Minneapolis Panelists: • Jeff Breitzman, president, Bedford Technology, Worthington • Cal Brink, executive director, Marshall Economic Development Authority, Marshall • Jacque Peters, Human Resources and Benefits Manager, Chandler Industries, Montevideo • Wayne Wormstadt, superintendent, Windom Area Schools, Windom

MAY 23

Northwest Minnesota Foundation BEMIDJI Moderator: Bob Kill, president & CEO, Enterprise Minnesota, Minneapolis Panelists • Steve Cochems, president, Anderson Fabrics, Blackduck • Dave Goetz, CEO, Cass Forest Products, Cass Lake • James Hess, superintendent, Bemidji Area School District, Bemidji • Steve Palmer, president & CEO, North Central Door Company, Bemidji

ADDING ACTUAL VALUE TO THE INSURANCE RELATIONSHIP

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FALL 2017 ENTERPRISE MINNESOTA /

ATTENTION

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STAFF ADDITIONS

Entperprise Minnesota Enhances its Staff

Growing ISO consulting practice gets additional firepower

nterprise Minnesota recently added two ISO professionals and one business developer to its staff. Patricia (Pat) Pearson and Dan Schlinger have both been named business growth consultants, specializing in Enterprise Minnesota’s rapidly growing ISO consulting practice. “Successful manufacturers understand that utilizing an ISO business management system is not about compliance, it is about performance,” said Bob Kill, Enterprise Minnesota President & CEO. Prior to joining Enterprise Minnesota, Pearson served as director of quality assurance at Harvey Vogel Manufacturing Co. in Woodbury and as vice president of corporate quality at DuFresne Manufacturing in Vadnais Heights. She has also served as an evaluator for the Performance Excellence Network and was a member of its advisory board. Pearson holds a mini-MBA from St. Thomas University and is a certified lead auditor for ISO 9001, ISO 13485, ISO 14001, and AS9100. She also holds certifications in project management and six sigma black belts from St. Thomas University.

Schlinger has experience designing and implementing ISO 9001 and AS9100 management systems and will support Enterprise Minnesota’s manufacturing clients. Schlinger began his career as a CNC machinist and progressed on to become a machining supervisor and a quality engineer. Most recently, Schlinger served as a quality assurance manager for Domaille Engineering in Rochester and as a quality regulatory affairs specialist for Rochester Medical Corporation in Stewartville. Schlinger is a certified lead auditor for ISO 9001 and AS9100 and is an American Society for Quality certified quality engineer. Dawn Loberg will serve as a business development consultant. Loberg most recently served as a regional account executive for Aramark Uniform Services. Prior to that she worked at the NFIB and US West, among other employers. A native of Sartell, Loberg received her BS in marketing and management from St. Mary’s University in Winona. She has also completed MBA coursework at Moorhead State University.

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New employees, Pat Pearson, Dan Schlinger, & Dawn Loberg. 16

/ ENTERPRISE MINNESOTA FALL 2017

Four Questions

INNOVATIONS

Gabrielle Gerbaud, executive director, the Minnesota Trade Office

hat led you to the MTO? My experience at Polaris involved everything from sales to operations. I represented Polaris in Latin America and Europe, and then eventually the whole world. It was a great job that I did for six years. One Sunday night I was sitting at home when I saw the opportunity at the MTO. I said to my husband, “This is it. I found it.” So I applied and was eventually hired. I am thrilled to be here representing the State of Minnesota. It’s really a mix of everything I’ve done for the last 20 years. Does the breadth of your experience bring a different perspective than manufacturers might otherwise expect? This job allows me to put all my previous experience to work. A major component of this job is understanding small and medium-sized business perception and perspective. That’s my background. I understand the challenges of a company that has just 10 or 12 employees. Your livelihood and the livelihoods of 10 people depend on your decisions on a daily basis. I understand the struggles of a manufacturing company, problems in production, deadlines, and all the input from the different parts of the world, and what it implies, and how it affects the manufacturing side at a medium-level corporation. This experience allows me to better serve the business owners and companies that look to the MTO for trade assistance. How important is increased trade to Minnesota’s economic agenda? Increased trade is key to our state’s economy. Exports of Minnesota agricultural, mining and manufactured products have grown to more than $19 billion in annual sales. Minnesota businesses exported 1,044 different products to 207 countries last year. State exports supported almost 120,000 jobs in Minnesota in 2015. Who can be against growth? As you know, there was a decrease in exports last year but

it was due mostly to the exchange rate. We’re up five percent already in the first quarter of 2017. Your readers may not know this, but 80 percent of the small and medium companies in Minnesota are exporters. That is a huge number, and it’s growing. Every month, every year, we see new companies popping up; small companies that start growing steadily, and we’re there to lead them when they start thinking internationally. Who’s your sweet spot customer? Where can your office have the most impact? Not all companies are aware of what we do. We’re trying to make sure that we reach out to every single small and medium manufacturer—even the larger ones—just to make sure they understand what is available to them through the MTO. You have a product. It works. You have your distribution system. You’re selling. Suddenly, you ask, should

I am thrilled to be here representing the State of Minnesota. It’s really a mix of everything I’ve done for the last 20 years. we expand, where do we expand? Should we think about exporting? That’s where the MTO can help. The moment you contact us, we’ll provide several services. If your product can be exported, we can help identify the right markets. We can help determine what certifications you need and help navigate through all the paperwork. From there we can help find the logistical solutions to ship your product. We can do all that for free. Plus, we can provide a grant to match up to $7,500 for all those activities, even if it’s just to meet with potential importers in another country. We’ll help you to navigate every single step of the way.

In April 2017, Gabrielle Gerbaud was named executive director of the Minnesota Trade Office (MTO). As part of the Minnesota Department of Employment and Economic Development, the MTO provides export assistance to Minnesota manufacturers, specializing in assisting small and medium-sized companies. A native of Spain, Gerbaud speaks fluent Spanish, French and English. She previously held international sales management positions at Medina-based Polaris Industries, where she worked closely with distributors in Central and South America and helped develop two company-owned subsidiaries in Latin America. Prior to Polaris, Gerbaud was: managing owner of the Hotel Punta Couso in Santiago de Compostela, Spain; general secretary and business development manager for the Thomson Prometric standardized-testing firm in Madrid, Spain and Manchester, England; and international relations manager for E.N. Mercasa, an organization within the Ministry of Agriculture that is responsible for food policy in Spain. Gerbaud holds bachelor’s degrees in economics and international relations from Boston University. She has traveled to 29 countries on business and worked with 12 other countries on business matters during her career.

FALL 2017 ENTERPRISE MINNESOTA /

THE RIGHT PEOPLE IN THE RIGHT SEATS ON THE RIGHT BUS

Five years ago, UMC’s president Eric Gibson upended his workforce with a dramatic reorg that better matched people with processes. His challenge ever since has been to keep them there.

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n 2012, about six months after Eric Gibson took over as president of Ultra Machining Company (UMC), he gathered six senior managers in a local hotel meeting room for an unusual two-day reassessment of employees. The walls around them were covered with 170 Post-It notes, each containing the name of a current employee. Over the best part of two days, those managers would walk around the room and “draft” any employee they thought would optimally fill out their work rosters with personnel who were best qualified to do the jobs. No one was off-limits. The exercise consisted of four 90-minute drafts, each successive one perfecting the proceeding round. Gibson used the first day to facilitate discussions about strategy that ranged from potential growth opportunities, customer mix and product offerings. “Before we started having the discussion about people, I wanted to set a clear direction of what we wanted the business to look like, how it is going to be successful,” Gibson recalls. He said participants also never lost sight of the fact that they were talking about people’s livelihoods. The rules included no disparagement about individuals. “We stuck to the facts,” he says. “It was about the issues, not the people. We had this set of rules.” At the same time, he says, “there was a lot horse-trading—‘I’ll trade two of my production people for one of your engineers,’ that kind of thing. They had a great time with it, but it was also very serious. It was obviously about the future of the company.” After concluding the draft, Gibson and his team took two weeks to work

through communications planning and HR-related issues, since some people would be changing grade levels with different compensation structures. They announced the changes on a Friday morning in three tiers. The first consisted of eight employees who would be immediately terminated. The next included people who they figured may or may not embrace the change, and the third was for employees who would have new jobs. “We were done by 1 o’clock,” he says. The changes took place immediately. On the following Monday morning, 35 percent of UMC’s employees had new or different responsibilities.

As a newly installed CEO, Gibson was confronted by a “friends and family” culture, common among longtim e family-run entities, but rarely experienced in “corporate” America.

“We made it all in one fell swoop,” Gibson says. “Literally, over the weekend we moved people’s desks; we moved people around. So, when they came in Monday morning, if they were reporting to a new manager, they were sitting somewhere different as well.” Subsequently, six other employees determined they didn’t like the fit and “weeded themselves out,” according to Gibson. * * * The event was six months in the

offing. As a newly installed president, Gibson was confronted by a “friends and family” culture, common among long-time family-run entities, but rarely experienced in “corpo-rate” America. Many jobs were performed by people without optimal qualifications. During an early walk-through on the manufacturing floor he asked why a certain individual was charged with facilities mainte-nance. “He used to snowmo-bile with this guy, and he could fix anything,” he was told. “They thought it’d be good to bring him in and put him in charge of maintenance.” “Everybody had a relationship with somebody,” he recalls. “We had ex-wives reporting to somebody else’s husband. We just had all sorts of crazy familial, friendship, and neighborhood relationships.” Gibson quickly concluded

that his first objective would be to “get the right people in the right seats on the right bus.” He devoted six months to analyzing incumbent talent, identifying talent gaps, and ensuring that his leadership team shared his conclusions. “We spent a lot of time talking about personnel, organizational structure, expectation setting, and goals.” Gibson reports there was little pushback. “We shocked the system so much the first couple of weeks people didn’t even know where to push back at. That was part of our strategy. Instead of tearing the Band-Aid off slowly, we wanted to make the changes quickly.” And it worked. Today the company has revenues between $40-$45 million with 210 employees. Under Gibson’s guidance, revenues have stabilized at about a controllable 10-12 percent annual clip.

Eric Gibson was hired to be a manufacturing change agent, but his impressive resume included not one minute of managing manufacturing operations.

FALL 2017 ENTERPRISE MINNESOTA /

“We didn’t want to take on business we couldn’t serve, where we’d have one year of great numbers and one year of crummy numbers. We wanted to take the peaks and valleys out of our growth curve. The last five years we’ve been able to do that pretty successfully.” BACKSTORY In some ways, the backstory of UMC’s employee re-draft shares the same bold originality as the event itself. It reveals how a perceptive owner grasped the cold reality that only an outsider could super-charge the culture of his family-owned enterprise in way that would achieve his aspirations, and how he bet on a CEO/change agent whose resume included not one minute of Among UMC’s workforce challenges, according to Gibson, is transferring knowledge that can managing manufacturing operations. only be learned on the job. “We’ve got a lot of very senior machinists who have grown up with Don Tomann took the helm of UMC us over the years and have a lot of internal knowledge that we’re finding hard to transfer to in 2007 from his father, Terry, who 40 the next generation.” years earlier had founded the company in the family’s garage. By 2012, Don was overseeing a precision machining operation the right bus. Like other manufacturers whose fortunes are closely that reported annual revenues between $20-25 million, whose 160 knitted to their ability to attract and retain skilled workers, Gibson’s employees worked in a 72,000 square-foot state-of-the-art facility in operation is balancing the threat of increasing retirements with the Monticello. need to recruit a new generation of employees who possess the He hired Eric Gibson to be the CEO/change agent to superskills and inclination to want to do those jobs. charge the culture of his family-owned enterprise in way that would “What really gives me heartburn is that we’ve got a lot of very achieve its potential. Curiously, Gibson’s impressive resume insenior machinists who have grown up with us over the years and cluded not one minute of managing manufacturing operations. His have a lot of internal knowledge that we’re finding hard to transfer choice was Gibson, who had notched a long and successful career to the next generation,” he says. in corporate America, mostly in sales and marketing, but with some To illustrate, he recalls shooting the breeze on the shop floor HR and finance thrown in along the way. Born in Fargo, he grew with a machinist who’s worked for UMC for 35 years. Right in up in Portland, Oregon and graduated from Oregon State with a the middle of a sentence, the machinist held up a finger to request biology degree. He moved to Minnesota after marrying and worked a brief break in the chat. He walked over to a machine, opened its through a number of companies, including eight years at Guidant, doors, removed a part, flipped it in the work molding, clamped a manufacturer of cardiovascular medical products, and 10 years at it back down, closed the doors, hit a button, and returned to the local giant Medtronic. conversation. According to Gibson, Tomann knew he already had sufficient Gibson wondered if he had not heard an alarm or some other manufacturing expertise in the building. What he needed was a indication that the machine needed tending. “No,” the employee team-builder, someone who understood sales and marketing, and said. “I could just feel the vibration. I knew it was in the middle of a how to motivate people. tool change.” “Being an old sales guy, I didn’t feel like it was a risk, because I “You can’t teach that,” Gibson says. “I can’t put somebody in front was confident that I knew how to get people in the right positions to of a computer and say, ‘Hey, watch this video, and it will teach you be successful. To me it didn’t mathow to recognize the subtle vibrations in your ter whether it was in machining, machine that will tell you where your part’s at.’” pharmaceuticals, medical devices, He says he’s temporarily encouraged that or medical foods. All those areas many seasoned employees aren’t automatically Gibson’s major challenge required getting the most out of the hanging up their tool belts at age 62. Growing team you had in place and making technological sophistication on the shop floor thereafter has been sure that you gave them the support has meant that skilled positions are less physikeeping the right people and the direction that they needed, cally demanding than they have been in the and that was really what I was past. “They don’t take as big a toll on the body in the right seats on the confident in. Maybe I was young, as it used to, when they had to actually manuright bus. and dumb, or naïve, but I just didn’t ally crank machines and move things around,” think it was a huge risk.” Gibson says. “And we’re trying to work with Gibson’s major challenge them. As long as they’re sharp and they’re thereafter has been keeping the doing what they need to do, we’re more than right people in the right seats on happy to keep those individuals.” 20

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At the other end of the HR spectrum UMC pursues generous and creative ways to find and recruit the next generation of employees who will pick up the responsibilities vacated by retirees. To attract them, UMC has established working pipelines with local technical colleges, as well as apprenticeship programs. They also engage in aggressive bonus structures. In one recent program, UMC is offering a whopping $5,000 bonus for certain machinists willing to staff a weekend shift. Employees will receive $500 after 30 days on the job, $2,000 after six months, and another $2,500 upon their one-year anniversary. On top of that, they will receive $2,500 after each year of service on the weekend shift. Gibson is also aware of the evolving attitudes of the millennial generation of employees, who are famously less likely to stick with employers as long as their Gen X and baby boom predecessors, who want more flexibility in their work day, and place a greater emphasis on time away from the job. Instead of bemoaning the attitudes, UMC under Gibson embraces them. UMC’s workweek shifted to four 10-hour days, giving every employee “The cost and time investment in onboarding a new employee is great continual three-day weekends. On top of that, new employees for any business. So, if they leave after a year, it disrupts personnel, but start with 15 days of paid time off (PTO) from the get-go, a benalso hurts the bottom line as well,” Gibson says. efit that employees used to earn after, say, five years on the job. “If we’re going to attract and retain fice,” he says. Any new machine millennials, we’ve got to change the The front office, for example, now way we think,” Gibson says. “We can’t pushes customized ERP reports directly acquired by UMC has back-load everything anymore. We’ve to managers every morning. Rather to be accompanied by got to have some of these things frontthan creating their own reports by logloaded as well.” ging in, creating, sorting and picking some form of automatio n To develop a more socially-cohesive through database queries, managers that equates to the culture, UMC maintains an employeereceive automated reports in their inbox equivalent of a quarter run committee that plans outings. at the start of every day. “We automated They’ve taken brewery tours and travthat whole process,” Gibson says. time employee. eled en masse to see the St. Cloud Rox, Gibson’s approach is calculated. Any a collegiate wooden bat baseball team. new machine acquired by UMC has to UMC is also about to launch a probe accompanied by some form of autogram in which employees can seek mation that equates to the equivalent of personal advances, either through a quarter-time employee. “Everything a tech-track or a management track. we buy either has bar feeders, autoMachinists can work to attain Machinmatic opening doors, or laser probing ist I, II, or III status. Gibson has already on the inside to do the measurements,” identified four employees on the machine floor as potential leads all functions that can operate without a live-body attendant. Their or supervisors, and is working with St. Cloud Technical Cominnovations even include some patent pending processes, he says. munity College and other educational organizations to develop a “Our goal is to help the machinists get more out of what we want specialized curriculum to prepare them to advance. them to do, which is think through the process, not physically, but UMC’s objective is to hold on to employees as long as posmentally. That’s really where we’re going to try to keep improvsible. Admitting that “nobody stays at a business for 25 years ing as we go forward.” anymore,” Gibson likes to quote the old marketing adage that the Technology aside, Gibson continues to emphasize that “peocost of finding a new customer is usually about four times greater ple” side of the business represents the path to UMC’s ongoing than retaining a current one. success. “I’ve always had the philosophy if you take care of your “The same is true for employees,” he says. The cost and time employees, they will take care of your customers.” investment in onboarding a new employee is great for any busiHe’ll judge his success in five years out, he says, “if I see more ness, so if they leave after a year, it disrupts personnel, but also people in leadership roles that I didn’t have to hire from the outside; hurts the bottom line as well as our personnel, he says. “So, we that I was able to grow internally. I’ll see people retiring and not try to do everything we can to keep people there.” having to worry about funds, finances, and health care, because we For the past four years, UMC has taken strides to use technolwill have helped them think that through with 401(k)s and investogy to maximize the productivity of the employees it keeps. ments they’ve made in their HSAs. It will be about the success of Gibson places a premium on automation (he disdains the word my teams and people. After we look at that, we’ll be able to see “robotics” as too limiting). “In this business, automation goes good revenue growth and everything that you’d expect to see in a everywhere from the production floor right out to the front ofbusiness as well.” FALL 2017 ENTERPRISE MINNESOTA /

Overcoming the Skills Gap

HOW TO

By Abbey Hellickson

RETAIN YOUR EMPLOYEES A program of strategic leadership development to help you cope with the skills gap Talent is an urgent concern for many Minnesota manufacturers. Our State of Manufacturing Survey® reveals that “attracting and retaining qualified workers” and “future leadership within the company” are both top 10 concerns of Minnesota’s manufacturing executives. “Qualified workers” was named by 32 percent, up from 19 percent in 2010. These findings explain in part why Enterprise Minnesota places such a high priority on talent. We consider talent to be one of four puzzle pieces that holistically help a company to compete and grow profitably. The others are: • Successful Strategy combines core values, mission and vi-

sion with a focus on growth and revenue generation.

• Continuous improvement principally deploys lean con-

cepts to continually improve your organization.

• ISO management systems provide the single most effec-

tive way to create and streamline optimal processes for your company.

I focus on talent, the “people” part of the puzzle. I encourage organizations to consider their own definition for talent. The definition I use for talent has two parts. The first part is a basic definition, “An aptitude or a skill.” This provides the base of what talent is, but I want to take this definition deeper, and reference Gallup Organization’s definition of talent, “A reoccurring pattern 22

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of thought, feeling or behavior that can be productively applied.” For me, the concept of productively applying employees’ aptitudes and skills is how we can leverage our people to add value to our organizations. This creates a foundation to develop from. Once we have determined a definition for talent we want to define how we are going to manage that talent. Each organization is

going to have its own definition TALENT MANAGEMENT: LIFE CYCLE of talent management, and I encourage companies to consider this. I define talent management as “having the correct number of people with the proper skills Productivity and in the right position at the Zone right time.” Manufacturers that focus on managing their talent, and are able to do it well, absolutely create a competitive Recruitment Development Retention Transition advantage and outpace competitors. Continuously developing the skill set of employees helps you meet your current needs, while building for the future, and this ongoing focus is your competitive edge. My clients understand that the effective use of its talent is the only way a company can strategically market and grow; lean nies struggle to attract quality employees, but how many think about the brand they’ve created to bring employees up its operation; and conceive and implement an ISO managein? Organizations that manage talent well consider who ment system. In other words, talent is the reflection of the skills they are targeting to work for their organization, how they within your company. are messaging to this audience. They do an excellent job of We want to help you figure out where that future leadership is telling their employment story, by providing insight to their going to come within your organization. culture, work environment and expectations. Recruitment A company’s Talent Management Life Cycle consists of four is happening all of the time, not just when positions are phases. available. • Recruitment: How you attract employees into your organization. Most employers can describe the brand they • Development begins with how you “onboard” new hires, use to sell products, but not nearly as many can describe and never ends. The longer an employee stays with the their “employment” brand. Think about it. Many compacompany, the more his or her skills need to be continuously

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“Creating metrics around your development efforts allows you to measure the value you are receiving from the investment you are making in your employees.”

refreshed in anticipation of future needs. We call this the Productivity Zone because it is where employees contribute their greatest value to the company. You want employees to stay in this zone as long as possible.

• The Retention phase aligns with development. The more development we provide the more likely we are to retain our employees, and the longer they work for us the more development we want to provide to keep their skills up and fresh. Another component of retention ties back to the recruitment phase. Retention is a method of measuring if we are being consistent in delivering on whether our culture and work environment are what we indicated it would be like.

• Employees enter the Transition phase

when they leave the company. Employers can sometimes plan for this, such as with retirements, but mostly they can’t. The strategic challenge of the Transition phase is to capture that employee’s relevant knowledge before they walk out the door. This is frequently complicated by the fact that knowledge can be “tribal,” not necessarily related to technical skills as much as to the context of how it gets done.

involvement and analysis and monitoring. Talent management must align to strategy. Even companies that don’t have a formal business strategy have an intrinsic sense of their company’s goals. When considering a new initiative or organizational goal it is critical to consider if your employees have the skill sets they need to successfully implement these. Consider this: I once worked with a company that rolled out a new software system. I asked, “How did it go?” She said, “Horrible. We forgot to train the people to use a computer.” The company was so focused on using new software to improve their processes, that they forgot that many employees lacked the necessary computer skills. When asked to log in to run a job, they didn’t know how. They’d never done it before. The employer had neglected to align talent with strategy. It happens, and when it does, it negatively impacts morale and your ability to achieve your goals. Talent management strategies will rarely succeed without the involvement of senior managers, beginning with the highest levels. I once worked for a large company in which the CEO’s belief in talent management was so strong that he personally kicked off every single development event, always testifying

EMPLOYEE INVOLVEMENT

Successful talent management efforts have four core elements. They are: align to strategy, leadership involvement, employee

Organization Needs Values Strategy Goals Mission Vision

Desired Competencies Open Positions & Opportunities

Individual Needs

IPDP

Development Needs

Annual Goals

Strengths

Career Plans

(Individual Performance Development Plan)

TALENT MANAGEMENT: COMPONENTS

Analyze and Monitor Skills Gaps

Align to Strategy

Employee Involvement

Leadership Involvement

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Adapted from Talent Management Formula

—Bersin by Deloitte

to how important it was to achieve his company’s overall business results. His involvement left an unambiguous imprint on employees. It said: “This is important. Pay attention. They’re developing you because your role is to help this organization be successful.” This level of buy-in must devolve to every leader in the company. HR might organize and manage the overall talent management program, but its ultimate success depends directly on the involvement of every single leader within your organization. They are the people who are actually developing the employees. We want them to understand their roles and have the resources they need to implement the programs. Employee engagement, the third component, isn’t as obvious

as it may seem. Many employers target a high performer for a particular path without first considering whether that employee may want to travel along a different one. Successful employers identify where their company’s needs intersect with the needs of their individual employees. The organization knows what it needs to achieve to be successful: its values, strategies, goals, mission, and vision. This success depends on employees who develop competencies to support these; therefore, management creates positions and opportunities, and recruits people to fill them. Employees, on the other hand, receive annual goals from the company, but they also have their own vision of what they want to accomplish in their careers. Successful companies create an individual performance development plan that marries the employees’ strengths, development needs and career desires with the organization’s needs. Doing this in partnership with the employee creates a win-win that positively impacts both. The Analysis and Monitoring component is the “rubber “The effective use hits the road” of talent of its talent is the management. The first three set up the orgaonly way a company components nization for a strong foundacan strategically tion, the fourth component is where talent management market and grow; happens. When considerlean up its operation; ing analysis and monitoring, organizations will want to and conceive and look at both their current and implement an future needs to allow them to have a proactive approach ISO management in their development efforts. system.” The largest part of this component is developing a tool or method to track your employees’ development. Many organizations utilize a Skills Matrix to do this. A skills matrix allows you to identify the competencies needed, evaluate employees’ capacity to perform these competencies, conduct an analysis of need and performance to determine gaps, develop a plan to fill the gaps and monitor progress. Another factor to consider under analysis and monitoring is the concept of essential skills; essential skills have been called a number of names over the years “soft skills, critical skills….” I like the term essential skills, these are the skills that are the foundation to an organization’s culture and what you expect from each and every employee. Examples of essential skills are Respect, Teamwork and Communication. Organizations who determine their essential skills and monitor and track performance develop strong cultures. LEADERSHIP DEVELOPMENT

Business guru Peter Drucker once said in the Harvard Business Review that “leaders are not born; they are grown.” I believe every organization can successfully grow its leaders merely by putting a little focus and a little energy into the process. There are six steps you can take to develop leaders within your organization, some of which align with what we covered under talent management.

Abbey Hellickson is a business growth consultant who helps Minnesota’s manufacturers engage their workforce, maximize productivity, improve company culture, and strengthen their leadership teams. Drawing on a wealth of experience in talent and leadership development, Abbey enables companies to drive performance at all levels of their organizations and develop the effective leaders they need to build and sustain profitable growth. Prior to joining Enterprise Minnesota, Abbey served as the director of business and workforce education at Rochester Community and Technical College and as a corporate training instructor for Fastenal.

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“The longer an employee stays with the company, the more his or her skills need to be continuously refreshed in anticipation of future needs.”

Align to business strategy and talent management. You want to develop leaders in ways that will help you achieve your overall goals and strategies. We want to ensure that the investment you are putting into your employees will add value and is aligned to your strategy to assist in moving the organization in the direction intended.

Identify your leadership competencies. It is important that you identify the competencies we want in our leaders. Owners sometimes mistakenly equate leadership competencies with the competencies of their current leadership team. I want you to put aside your current leaders and think about the overall competencies you need to be successful. Think about the foundational competencies you want to see among all your leaders. Then think about competencies at different levels. Consider your frontline leaders and your line supervisors. What about middle managers or senior managers? They’re all going to be slightly different. Identify leaders. It’s fairly simple to identify your current leaders. But think also about your potential leaders. How many people in your organization exhibit good technical skills and might get promoted to leadership? This requires some thought. Experienced manufacturers have learned that the best technical performer is not necessarily the best potential manager. This is the key piece: By creating your own separate skill sets for your leaders, you can evaluate if that individual is ready to move into that leadership position. You then want to review their competencies and their performance. We want to look at their competencies of both our current and our potential leaders, and we want to review their performance. How are they doing? 26

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Identify skills gaps. Then we want to look at how we analyze and monitor present and future skills gaps. I encourage organizations to use a skills matrix for their leadership team as well. This allows you to evaluate and monitor leaders’ skills, clearly identify gaps and determine methods of closing those gaps. In addition to the skills matrix, the utilization of an individual development plan is an excellent way to discuss current skills and the goals you have for future development with current or potential leaders. Implementation of development. At this point, you know what competencies you need to work on. There are probably a lot of them. It’s time to prioritize. Think about which competencies will have the greatest impact on your organization. That’s where you want to start, I encourage organizations to have no more than five leadership competency development areas.

“Talent management strategies will rarely succeed without the involvement of senior managers, beginning with the highest levels.”

Once you have prioritized your competencies it is time to determine how you are going to assist your employees in gaining these skills. There are a number of methods to go about leadership development. Here are a few methods that are popular:

• Applied learning – many organizations use this method

by assigning a stretch project or job assignment to allow that individual to develop new skills and trial a role. This gives them the opportunity to grow and learn within the organization.

• Mentoring – there are a number of benefits that come

from mentoring programs within an organization. Pairing a senior leader with an emerging leader creates a strong culture, grows leaders’ skills and allows for a strong relationship to be developed that can benefit the organization as a whole. When talking with individuals who had a chance to be a mentor, they share how surprised they were with the amount they learned and grew from the experience, in addition to the growth that occurred in the mentee.

“Not all leadership development has to be on the job.”

• Peer Groups – having

an opportunity to share ideas with others at similar levels is an excellent way to develop leadership skills. Peer group members learn from each other, and when they are comfortable enough to provide feedback—both positive and constructive—there is a large amount of learning and development that occurs.

• Courses – there are a number of formal leadership devel-

opment programs that are available to leaders at all levels. These programs are designed to provide knowledge based on theory-based and research-based best practices. Participants can learn from both instruction and other participants.

COMPETITIVE ADVANTAGE

I’ll end with another nod to competitive advantage. Your business strategy should be the foundation for how you look at talent management, which ensures that people have the skills they need to deliver your strategic outcomes. If you focus on the impact that leaders have on your company, and invest in the development of growing those leaders, and each leader is committed to individually developing each person within the organization, this absolutely leads to this competitive advantage. Competitors can replicate your products, we protect our products, correct? Competitors can’t replicate your people, they can’t replicate the talent you have throughout your organization. As we continuously grow and improve our employees’ knowledge, skills and abilities, that leads us to this competitive advantage. If we invest in our employees and we invest in their development, this builds and fosters retention. When we’re able to retain them, we create a mag-

There are a number of ways to develop leaders, it’s also important to be creative, not EMPLOYEE INVOLVEMENT all development has to be on Competitive the job. I worked with one Advantage organization that provided Individual leadership experience by Development putting them on a community Leadership committee. It created a posiDevelopment tive image for the organizaTalent tion because they were active Management in the community, and two, Business they allowed that individual Strategy the time to go out, sit on that committee and participate. That individual grew in their leadership by serving on that committee and gained some leadership roles that they were netic culture. We create this attraction where people want to then able to bring back within the organization. As a new posicome and work for us. tion came open, they were more skilled for the roll. I once had a client approach me, absolutely at his wits end. Sometimes we can be really innovative and come up with “I can’t find people for the life of me, and I am not able to some creative options grow our employee’s leadership skills.. meet my customer demands because I just don’t have the It’s easier to identify a course or class that you can go to, but right skill sets, my crews are short. I don’t know what I’m how do we get them to bring those skill sets back into the going to do.” I introduced him to talent management, about organization? How do we get them to actually have and apply how he could meet his needs by developing people within his experiential learning? That’s sometimes the hard piece. Having organization. some creativity around that, and thinking a little bit differently He started with an onboarding program. “I’m going to start can help us find some solutions. with orientation,” he said. “I’m not currently doing an oriMeasure and evaluate. entation. Maybe that’s part of the problem.” He had success with that, so he started to focus on building the skill sets of This may be our last step, but it is something you definitely want his leaders. He discovered that his leaders wanted to develop to consider up front. Creating metrics around your development the people who worked for them. He actually created his own efforts allows you to measure the value you are receiving from academy. He started his own training program. Those leaders the investment you are making in your employees. The best way became the trainers, and the relationship that they built with to go about measuring development efforts is to consider lookeach other has given him an advantage over his competitors. ing at pre and post assessments. Consider what areas you want His business grew. Today he is known for quality and excelto create metrics around. The number one measure that I look at lence and his ability to get the job done. The concept of talent is retention rates, strong leaders directly impact your ability to and talent management truly lives through this individual and retain employees. I encourage organizations to look at metrics throughout his company. So, I truly encourage you to consider they use on a regular basis and measure the impact leadership how you build talent within your organization. development has on these as well. FALL 2017 ENTERPRISE MINNESOTA /

Entrepreneurs

No Sweat?

Not hardly. A Hopkins-based startup is securing a promising future because of an innovative product in an untapped market niche, but also because of the almost incomprehensible tenacity of Justin Johnson, its founder and CEO.

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The brothers invested a large portion of their friends-and-family proceeds to produce one million NoSweat hockey helmet inserts. To their horror, the entire run was flawed. turing and transportation) and others, from farming to food service to the military. Adding CFO Jon Marshalla and Chief Sales Officer Collin Iacarella along the way, the company is deploying an aggressive social media strategy based on thought-leader endorsements. The company has recently inked sports-centered deals with Golden Tate, a wide receiver with the Detroit Lions, and Brandon McManus, a placekicker with the Denver Broncos. For baseball, they scored Houston Astros’ pitcher Dallas Keuchel. And in hockey, they recently secured an endorsement from T.J. Oshie, a right winger with the

Washington Capitals. In hockey alone, NoSweat has already earned bulk sales agreements with 20 NHL teams, which it expects this year to grow to all 31 teams in the league. In addition, the company has a 20,000-product standing order with the NHL referee’s association. Working gradually to expand beyond its retail presence with mom-and-pop sporting goods network, NoSweat has also developed a power presence on Amazon, making over 2,000 sales during a 30-day period.

n its face, NoSweat’s litany of triumphs stand alone as an impressive record of entrepreneurial accomplishments for a company driven by young executives whose drive and discipline sometimes outpaced their limited experience. Beginning as college students with no real-world experience in business or product development, Justin Johnson led them with laser focus to develop and patent a product. The brothers conceived and developed a market with very disciplined and gradual distribution channels. They raised more than 1.8 million in capital, and

PHOTOGRAPH BY PATRICK KELLY

wenty-seven-year-old CEO Justin Johnson can be forgiven for his unabashed enthusiasm for his company. NoSweat is a Hopkins-based company, operated by three high school and college buddies, based on the very simple concept that people who wear helmets or hats for work or play tend to sweat under their lids. And they don’t want to. And, until NoSweat, there was no solution to that problem. Starting out when they were still students at Gustavus Adolphus College in St. Peter, brothers Justin and JT Johnson adapted the technology around superabsorbent polymers (SAPs) to develop and patent a disposable helmet/hat-liner that absorbs and eliminates forehead moisture (through its Dri-LID™ Technology) and extinguishes most related odors (through its No Scent™ Technology). Beginning their business in 2011 with a laser focus on a hockey product, the business today appears to be on the verge of greatly expanding many markets: sports (baseball, football, golf, hockey, lacrosse, and cycling) and creating new b-to-b distribution channels with safety relevance (industrial, construction, manufac-

Left to right: CFO Jon Marshalla, CEO Justin Johnson, and sales director Collin Iacarella.

FALL 2017 ENTERPRISE MINNESOTA /

demonstrated cool restraint in growth. While just a freshman at Gustavus, Justin Johnson pressured school officials to allow him to enroll in an upper division class on entrepreneurial business along with his brother, JT, then a senior. He thought it would be fun to collaborate with his brother to conceive and manufacture a product and then bring it to market. But what product. The brothers were kicking around some ideas over dinner at home in Hopkins one night when their stepfather, Chad Sulheim, gave them an idea. A hockey buff with 20 years of experience officiating high school hockey games, Sulheim explained that virtually anyone who played the game—from mites through the NHL—would be drawn to a product that absorbed sweat inside their helmets. The nonporous plastic construction of a hockey helmet generates an unstinting stream of forehead sweat that continually drips into a player’s face while skating. Players can’t merely wipe it away because face protectors—either the metal cage variety or clear plastic shields—impair easy access to their faces. Sweat bands might stop the moisture, but only temporarily and would likely worsen later leaks. Skull caps might wick the wetness, but still wouldn’t give it anywhere to go. In the end, many hockey players concocted makeshift liners by quietly cutting up maxipads and taping them inside the helmet. Justin and JT liked the niche, a growing market of some 520,000 hockey players and officials who shared the same common problem with no common solution—at

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least not yet. They scoured the internet for products or registries and found none. So, the brothers developed their own. Justin estimates they invested “10 times the hours” of other students assembling their plan. They consulted material suppliers and potential machine builders to conceive how to bring his product to market. In the process of finishing the class, they filed for two patents, a trademark, and created a stand-alone website. Filing for the patent about a product for which he had limited familiarity was, Justin said, “diving into the deep end of R&D. It wasn’t easy.” To test the market, they reshaped an existing product to fit a hockey helmet and tested with thousands of hockey players. “They loved it,” Justin says. Not standing still, Justin founded an “entrepreneurs’ club” at Gustavus and started making frequent 45-minute trips from Gustavus to the Twin Cities to solicit input on his product and business from local entrepreneurs. “We had a product that works, had the patents in place, wrote a solid nondisclosure agreement, and met with everyone and anyone.” To date, he says, only one businessperson declined to meet with him. “That’s the nice thing about the community around here,” he says. When Justin graduated, he and JT were ready to launch. JT, although a new father and three years into building a business as a broker for Northwestern Mutual Insurance, joined his brother in their parents’ basement, working 18 months without a paycheck to perfect the elements of a business plan. They refined their product, plotted their markets, sharpened processes, and arranged some angel financing of about $583,000 between 2011 and 2012, with volunteer support from high school friend Jon Marshalla, a business technology consultant at Deloitte.

They thought they were on their way. The brothers invested a large portion of their friends-and-family proceeds in a custom manufacturing contract to produce one million NoSweat hockey helmet inserts, with which they would begin marketing aggressively. To their horror, the entire run was flawed. The manufacturing process used to seal the adhesive in the final product simply didn’t work. The inserts leaked. “That’s when the uphill battle began,” Justin recalls. “They basically thought that the product just needed some glue and pressure and it would keep all the sweat inside. They had experts there that knew all about this stuff. They were completely wrong.” This left the devastated young entrepre-

“Anyone else probably would have thrown in the towel. I’m not one to give up. Can’t isn’t in my vocabulary.” —CEO Justin Johnson neurs with a depleted inventory and barely enough money to keep the lights on. With a young family to support, JT was forced to leave the company. But Justin persevered. “I was by myself for about two years,” Justin remembers. “Anyone else probably would have thrown in the towel,” he says. “I’m not one to give up. Can’t isn’t in my vocabulary.” He credits his girlfriend (now wife) Erica Ewald, his mother Colleen Aldritt, and Marshalla for seeing him through the crisis. Plowing ahead with single-minded determination, Justin developed what he calls a “bizarre” fix for the flawed products that required him to hand-seal each of them for reuse. (He says he fixed 700,000 of them over the next two years.) He used his limited inventory to test markets and all the sales channels, assess marketing ideas, identify stores to sell it, and get a little bit of traction built up so that he could really tell “we had something here and we could sell it to get some investor capital,” he explained. As product became available, he started circulating helmet inserts to hockey thought leaders, beginning with local referees. With each sale, he’d staple a few free three packs and encourage the recipients to share. And he gradually developed a network of “mom

NoSweat manufacturers disposable helmet/hat-liners that absorb and eliminate forehead moisture (through its Dri-LID™ Technology) and extinguishes most related odors (through its No Scent™ Technology). It started with hockey, but the business today appears to be on the verge of greatly expanding many markets: sports (baseball, football, golf, hockey, lacrosse, and cycling) and creating new b-to-b distribution channels with safety (industrial, construction, manufacturing and transportation) and others, from farming to food service to the military.

and pop” retail sports operations to sell the inserts, often including a free three-pack with the sale of new helmets and the hope that people would experience the product first hand. His lack of inventory also enabled him to resist the temptation to prematurely expand his product line for a marketplace that was virtually endless. Everyone sweats, and most people wear hats or helmets who could benefit from the product. Sports alone would yield opportunities in football, baseball, even lacrosse. But he envisioned safety hard hats, food service, and the military. He kept his focus on hockey. “I was advised over and over by successful people that focus is the only way anything will succeed, and that’s what we did. So, we focused on hockey, which we knew would work extremely well. By August 2015, NoSweat’s determined resurgence convinced Marshalla, still at Deloitte, that the company was ready to attempt a formal private placement memorandum. Over four months, he sensed investor hesitance when he got what he calls the “Shark Tank” questions. “Who are you guys? Who’s running the company? You’re still working at Deloitte, are you going to run with this?” That he’d come on full time once the money was raised wasn’t enough. So, by January 2016 Marshalla formally joined the team as CFO. “Jon quit his job before actually trying the product himself,” Justin points out with pride. Financing turned around. Marshalla says he received a new reaction. “Whoa, you left Deloitte to do this? There must be something here. “It put more validity to the pitch, and my conviction that the company had some

legs,” Marshalla says. “It was pretty cool to see. We definitely raised some money quicker after that point.” NoSweat ultimately raised $650,000 in that round, earmarking the funds to scale manufacturing to meet potential demand. It began, Justin says, the “take this thing to the moon plan.” “Justin was killing himself by trying to run all aspects of the company,” Marshalla says. “It definitely wasn’t viable to continue to hand-seal the product. The only way out was to develop a new manufacturing process, get some fresh product and take everything he had learned and start to

NoSweat has already earned bulk sales agreements with 20 NHL teams, which it expects this year to grow to all 31 teams in the league. implement it at a larger scale. The production component that still bedeviled them was integrating the adhesive. “We had to come up with a way to do it ourselves,” Justin says. The earlier “face plant” taught him that they would never again manufacture any product “without a really good test or at least a small production line in place that was flexible.” Through “a lot of Googling” and about 50 phone calls to random equipment-andpart suppliers and manufacturers, Johnson and Marshalla located a machine in Pennsylvania they thought they could integrate into their high-speed production line to apply adhesive.

“It was like trying to find a 1913 Model “T” transmission that still works. That’s what it felt like.” The equipment acquisition enabled the company to go online in February. Collin Iacarella joined NoSweat as national sales manager in 2016 after spending more than five years as a senior coronary sales rep at Medtronic. Now equipped with the high-speed production capacity to meet demand, he focused on finding high visibility endorsements for the helmet inserts that would drive sales, both to teams and at the retail level. Local referees, and then NHL referees. They sponsored a suite at the NHL awards in Las Vegas and at the NHL All-Star game to inspire interest among players. Their first big break came when New York Rangers’ defenseman Marc Staal sustained a serious cut on his eyebrow during a playoff game. A trainer inserted a NoSweat insert into his helmet to keep sweat from dripping into the wound. “He absolutely loved it,” Justin says. The entire Rangers team quickly became NoSweat users; the next year five teams were using it. Now 20 teams are on board. They expect to have all NHL teams by next season. Iacarella is emphasizing that NoSweat’s market growth will evolve from innovative nontraditional promotion and advertising. He’s using a “really hyper targeted” Facebook campaign, an association with iHeart media, and a concerted effort at creating b-to-b distribution networks. “At the end of the day, we’ve got a great product,” he says. “We’ve got a great brand. Ultimately we want to become a multiproduct company. And down the road, the ultimate goal of any start up obviously is to generate a nice return for investors.”

FALL 2017 ENTERPRISE MINNESOTA /

Final Word

Why Oh Why Oh Why An interesting author suggests that buyers make decisions when they perceive why you are in business

irst of all, for those of us who have long commutes—and these days even short distances require long commutes!—I commend the virtues of audiobooks. My current favorite is Start with Why: How Great Leaders Inspire Everyone to Take Action, an inventive yet common sense approach to marketing that I think might speak volumes to small and medium-sized manufacturers who fight for market share in an ever more competitive marketplace. Published in 2009, it’s not a new book, but its message is timeless. Author Simon Sinek explains that the essence of all marketing can be described as three components that reside within concentric circles—something he calls the Golden Circle. The outer ring is an understanding of what you do, which everybody can describe: “We make widgets.” Next, also fairly (but not always) obvious comes

People don’t buy what you do, they buy why you do it. Consumers do understand features and benefits, but those assets—the how?— don’t drive behavior. how we do it. These are your product differentiators, how you are better or different from your competitors. The center of the circle, the most valuable and by far the most difficult to conceive, is why? The example he uses is Apple. If Apple behaved like its competition, it would say, “Buy our computers. They are beautifully designed and easy to 32

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Lynn Shelton is director of marketing and legislative relations at Enterprise Minnesota.

use.” But Apple doesn’t behave like its competition, Sinek says. Apple answers the why by saying, “We think differently. Everything we do challenges the status quo.” It gives customers a reason to connect emotionally with the Apple cause. Their sales proposition starts with why: The way we challenge the status quo is that we make computers that are beautifully designed and easy to use. This little tweak created the cult of Mac and explains why Mac users are so slavishly

loyal (and who gladly pay a premium for the product.) It also explains why Apple was able to dominate the market for MP3 players and mobile phones, when competitors flopped. Gateway failed in its attempt to market flat screen TVs. Dell’s PDA was a market flop. Why, because people perceived them to be nothing more than computer makers. What did they know about flat screens or PDAs? A lot, it turns out, but consumers didn’t connect with their why. People don’t buy what you do, they buy why you do it, Sinek says. Consumers do understand features and benefits, but those assets—the how?— don’t drive behavior. I’m not a manufacturer, of course, but I have a hunch that this kind of innovational attitude might enable small and medium-sized manufacturers to rethink their marketing approach. This doesn’t mean you don’t think about how you differentiate the features of your product, how you sell it, where you market it, or how you price it. I’m also fascinated by how answering the why? might empower a company’s culture, its vendor relationships, its prospective employees, and even its community connections. For busy folks in need of a Cliff’s Notes-style summary, I’ll add this “Sam Malone” addendum. You may recall an episode of Cheers in which bartender Sam spends a feverish week reading all through War & Peace so that he can use dinner conversation to impress girlfriend Diane’s former paramour—an English professor named Sumner Sloan (TMI, I know, but I loved that show). As they are leaving Diane says, “Oh, we can watch the movie this weekend.” Sam, stunned, exclaims: “There’s a movie?!” Sinek explains his concept in a TED talk. Other people have seen it. It has been viewed 33,440,102 times.

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