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STRATEGY
:STRATEGY Strong leadership and strategic thinking key for effective governance
When Don Krusel took over as President and CEO of the Prince Rupert Port Authority in the 1990s, the Port’s fortunes had, for over 75 years, been inextricably linked to the health of resource industries such as forestry, fisheries, coal, and grain. Downturns in those sectors and competitive disadvantages in supply chain logistics translated into slumps in the Port’s bulk and general cargo business. During a particularly difficult stretch in the late 1990s, Krusel even recalls discussions with the Board of Directors to declare bankruptcy. So, how did a port that was close to bankruptcy at the turn of the 21st century manage to become the fastest growing North American port by 2010? While timing, world markets and economic trends all played a role, strategy and leadership were at the heart of the transformation. Two attributes Krusel holds in spades.
As this year’s keynote speaker for the Association of Pacific Ports Annual Conference, Krusel’s advice to Port Commissioners and Senior Executives on how to rise above routine business planning and develop a true strategic direction for the future of their port is something that will be of great interest.
Krusel’s success in transforming the Port of Prince Rupert wasn’t just a oneoff lucky break. Following his retirement from the West Coast port, Krusel started receiving calls from a number of port and port-related executives looking for strategic advice. One of those calls came from Mario Girard, CEO at the Port of Quebec. “He was at the birth of a very interesting project,” said Krusel. “Similar to Prince Rupert, Quebec is mainly focused on bulk products and Mario had a vision of bringing containerization to the port. After a few initial consultations and a presentation to the ...how did a port that was close to bankruptcy at the turn of the 21st century manage to become the fastest growing North American port by 2010?
Board to describe the steps we took in Prince Rupert, I was brought on as Managing Director for the project.”
Known as Project Laurentia, the development of a container terminal at the Port of Quebec was not just about putting in some concrete and gantry cranes. “This was so much more than that,” Krusel said. “It was about creating a whole new supply chain. That’s why we called it Project Laurentia rather than the ‘Port of Quebec Container Terminal Project’. We wanted to emphasize that this was a much bigger vision about more than just the port. That’s kind of the strategic thinking that ports need to practise.” Indeed, Krusel assisted in attracting an international operator and investor for the project — Hutchinson Ports — and additional necessary components for developing a new supply chain for the East Coast through the Port of Quebec. For inland transportation, CN Rail not only came in as a willing participant, but the project marked the first time they committed to become an investor in port infrastructure. They are now a joint venture partner with Hutchinson in the investment and development of the terminal.
While the project has been held back because of environmental regulations, Krusel believes the concept and argument for a deep water, big ship container terminal on the St. Lawrence River is strong and it’s only a matter of time before a container terminal will be developed in Quebec City to satisfy trade demands on the East Coast of Canada.
Both the Port of Prince Rupert and the Port of Quebec stand as good examples of how strong leadership and effective governance can come together to develop strategies that can, quite literally, change the course of a port’s future. Krusel notes that understanding the difference between strategic planning and business planning is key. “All of us can easily get absorbed by the ‘busy-ness’ of day-to-day activities and we very quickly fall into the quicksand of being too busy to deliver a strategic plan,” he said. “You end up chopping down trees as quickly as you can to stack up the firewood, but you really don’t see the impact of what you’re doing on the forest. And then suddenly, you’ll get confronted with something like COVID-19 or a sudden surge or decline in traffic and before you know it, it’s time to get back into the strategic
As keynote speaker at this year’s APP Conference, Don Krusel will share his insights on successful strategic planning.
planning cycle again. So rather than being a major focus, the strategic plan starts to take on a ‘check-the-box’ routine — and innovative strategy never emerges from a check-the-box process.”
Krusel went on to say that the result ends up being tweaks to an operational plan that was developed years previous. “True strategic planning can only occur once you’ve removed yourself from the quicksand. It means rising above the day-to-activities and taking a broad view of the marketplace, evaluating it, and determining where your organization is going to fit. The magnetism of that day-to-day activity sucks you away from that broad view and therefore it’s very difficult to create the future — rather, the future is creating you.”
To demonstrate the inherent dangers of such strategic planning, Krusel points to the automotive industry as an example. “A port that has built a business model on the movement of automotive parts needs to consider the future of that industry,” he said. “What does the future look like for the internal combustion engine and the traditional manufacturing of vehicles? While internal combustion engine vehicles have thousands of parts, the electric engine has much fewer. There are going to be big changes in the movement of auto parts in the future. Are you rising high enough above today’s traditional industry to consider the impact on your own business when it changes?”
Liquid bulk ports should also be considering the long-term impact of efforts to move away from oil and gas “How many terminals that rely solely on moving oil and gas are considering what the future looks like 20 or 30 years from now? They should be developing a strategy now so that they can evolve along with the transition that is inevitably going to happen.”
Krusel recognizes that it’s always easier to ‘say you should’ and quite another thing to actually carry out an effective strategy development process. He further recognizes that acquiring a board or commission that includes all of the desired skills and knowledge can be difficult given the limited control a port has over the appointment process. “Unlike other organizations that have a process of seeking out specific skill sets and experience to augment their board,
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appointments to port boards and commissions will often have a connection to the current governing body and will therefore be more politically minded rather than business-minded.” The process is even more pronounced when port commissioners are elected. “Often, the commissioner will run on a platform that may or may not fit with the long-term vision of the port.”
Regardless of a board’s make-up however, Krusel believes their main role should be to ensure proper leadership and a proper strategy are in place. “Leadership and strategy are inextricably linked. You can’t have a good strategy without good leadership and good leadership is founded on a good strategy,” he said, adding that it is up to the CEO to deliver both. “As long as the board maintains the confidence and trust in the constant delivery of that strategy, they should allow the CEO to continue to drive the process.”
He went on to say that it’s up to the CEO to keep the board focused on strategy. Board packages need to be structured with this in mind. “Keep the dialogue and discussion on the goals and objectives within the strategy. The more you talk about daily operations, the more board members will respond to that and get caught up in the minutia of day-to-day activities. But the more you talk about strategy and are able to report on progress, the conversation will naturally gravitate to that. And the more dynamic and innovative the strategy is, the more you’ll draw your board into it.”
First things first though, coming up with that bold, innovative strategy can be a challenge. Krusel has advice for that as well. “Some leaders aren’t really ‘strategy’ people or may be too caught up in current operations to see the bigger picture. It’s okay to admit that. If it’s a large corporation, they might want to consider a Chief Strategy Officer or bring in a strategic advisor during the annual review to facilitate the process.”
And while having a bold strategy is key, communications is just as essential. “You must be able to effectively communicate the strategy and if you do that, especially if you’re thinking about the next generation, you’ll be able to draw strong talent to the organization, people who are excited about where the organization is heading.”
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